Allowance for Credit Losses

The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded letters of credit. Management maintains the allowance for credit losses at a level estimated to absorb probable loan losses of the loan portfolio and unfunded letter of credit commitments at the balance sheet date. The allowance for loan losses is based on ongoing evaluations of the probable estimated losses inherent in the loan portfolio, including unexpected additional credit impairment of PCI loan pools subsequent to acquisition. There was no allowance allocation for PCI loan losses at September 30, 2018 and December 31, 2017.

The following table summarizes the allowance for credit losses at September 30, 2018 and December 31, 2017:



	September 30, 2018		December 31, 2017
	(in thousands)
Components of allowance for credit losses:
Allowance for loan losses	$	144,963	$	120,856
Allowance for unfunded letters of credit	4,512		3,596
Total allowance for credit losses	$	149,475	$	124,452

The following table summarizes the provision for credit losses for the periods indicated:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands)
Components of provision for credit losses:
Provision for loan losses	$	6,432	$	1,301	$	23,726	$	7,413
Provision for unfunded letters of credit	120		339		916		329
Total provision for credit losses	$	6,552	$	1,640	$	24,642	$	7,742

The following tables detail activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2018 and 2017:



	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Three Months Ended September 30, 2018
Allowance for loan losses:
Beginning balance	$	74,257		$	53,812		$	4,624		$	6,069		$	138,762
Loans charged-off	(833		)	—			—			(1,150		)	(1,983		)
Charged-off loans recovered	1,131			12			9			600			1,752
Net recoveries (charge-offs)	298			12			9			(550		)	(231		)
Provision for loan losses	9,442			(3,694		)	286			398			6,432
Ending balance	$	83,997		$	50,130		$	4,919		$	5,917		$	144,963
Three Months Ended September 30, 2017
Allowance for loan losses:
Beginning balance	$	51,617		$	55,455		$	4,186		$	5,188		$	116,446
Loans charged-off	(265		)	—			(129		)	(1,335		)	(1,729		)
Charged-off loans recovered	2,320			42			220			366			2,948
Net recoveries (charge-offs)	2,055			42			91			(969		)	1,219
Provision for loan losses	1,017			(198		)	(385		)	867			1,301
Ending balance	$	54,689		$	55,299		$	3,892		$	5,086		$	118,966



	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Nine Months Ended September 30, 2018
Allowance for loan losses:
Beginning balance	$	57,232		$	54,954		$	3,605		$	5,065		$	120,856
Loans charged-off	(1,606		)	(348		)	(167		)	(3,783		)	(5,904		)
Charged-off loans recovered	4,057			396			269			1,563			6,285
Net recoveries (charge-offs)	2,451			48			102			(2,220		)	381
Provision for loan losses	24,314			(4,872		)	1,212			3,072			23,726
Ending balance	$	83,997		$	50,130		$	4,919		$	5,917		$	144,963
Nine Months Ended September 30, 2017
Allowance for loan losses:
Beginning balance	$	50,820		$	55,851		$	3,702		$	4,046		$	114,419
Loans charged-off	(4,889		)	(553		)	(488		)	(3,467		)	(9,397		)
Charged-off loans recovered	3,480			824			903			1,324			6,531
Net (charge-offs) recoveries	(1,409		)	271			415			(2,143		)	(2,866		)
Provision for loan losses	5,278			(823		)	(225		)	3,183			7,413
Ending balance	$	54,689		$	55,299		$	3,892		$	5,086		$	118,966

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the impairment methodology at September 30, 2018 and December 31, 2017. Loans individually evaluated for impairment represent Valley's impaired loans. Loans acquired with discounts related to credit quality represent Valley's PCI loans.



	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
September 30, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	27,662	$	2,782	$	620	$	79	$	31,143
Collectively evaluated for impairment	56,335		47,348		4,299		5,838		113,820
Total	$	83,997	$	50,130	$	4,919	$	5,917	$	144,963
Loans:
Individually evaluated for impairment	$	86,613	$	51,798	$	12,782	$	806	$	151,999
Collectively evaluated for impairment	3,157,009		10,577,813		3,319,203		2,475,231		19,529,256
Loans acquired with discounts related to credit quality	771,658		3,037,879		450,987		169,511		4,430,035
Total	$	4,015,280	$	13,667,490	$	3,782,972	$	2,645,548	$	24,111,290
December 31, 2017
Allowance for loan losses:
Individually evaluated for impairment	$	11,044	$	2,735	$	718	$	64	$	14,561
Collectively evaluated for impairment	46,188		52,219		2,887		5,001		106,295
Total	$	57,232	$	54,954	$	3,605	$	5,065	$	120,856
Loans:
Individually evaluated for impairment	$	85,499	$	60,851	$	14,056	$	3,760	$	164,166
Collectively evaluated for impairment	2,463,566		9,310,964		2,703,688		2,301,981		16,780,199
Loans acquired with discounts related to credit quality	192,360		976,067		141,291		77,497		1,387,215
Total	$	2,741,425	$	10,347,882	$	2,859,035	$	2,383,238	$	18,331,580