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Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2017
Receivables [Abstract]  
Allowance for Loan Losses
Allowance for Loan Losses
A summary of changes in the ALL by loan portfolio type is as follows:
 
 
For the Year Ended December 31, 2017
(in thousands)
 
Commercial Loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
SBA
 
Construction
 
Consumer
 
Mortgage
 
Unallocated
 
Total
Beginning balance
 
$
9,331

 
$
1,978

 
$
2,176

 
$
9,812

 
$
5,755

 
$
779

 
$
29,831

Charge-offs
 
(2,824
)
 
(221
)
 
(13
)
 
(5,978
)
 
(43
)
 
—

 
(9,079
)
Recoveries
 
2,587

 
61

 
911

 
1,242

 
99

 
—

 
4,900

Net (charge-offs) / recoveries
 
(237
)
 
(160
)
 
898

 
(4,736
)
 
56

 
—

 
(4,179
)
Decrease in FDIC indemnification asset
 
(155
)
 
—

 
—

 
—

 
—

 
—

 
(155
)
Provision for loan losses (1)
 
(1,093
)
 
150

 
(678
)
 
5,682

 
117

 
97

 
4,275

Ending balance
 
$
7,846

 
$
1,968

 
$
2,396

 
$
10,758

 
$
5,928

 
$
876

 
$
29,772

 
 
For the Year Ended December 31, 2016
(in thousands)
 
Commercial Loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
SBA
 
Construction
 
Consumer
 
Mortgage
 
Unallocated
 
Total
Beginning balance
 
$
8,582

 
$
2,433

 
$
1,711

 
$
8,668

 
$
4,294

 
$
776

 
$
26,464

Charge-offs
 
(2,349
)
 
(387
)
 
—

 
(5,233
)
 
(1,047
)
 
—

 
(9,016
)
Recoveries
 
923

 
82

 
2,157

 
1,486

 
201

 
—

 
4,849

Net (charge-offs) / recoveries
 
(1,426
)
 
(305
)
 
2,157

 
(3,747
)
 
(846
)
 
—

 
(4,167
)
Increase (decrease) in FDIC indemnification asset
 
331

 
—

 
(1,145
)
 
93

 
24

 
—

 
(697
)
Provision for loan losses (1)
 
1,844

 
(150
)
 
(547
)
 
4,798

 
2,283

 
3

 
8,231

Ending balance
 
$
9,331

 
$
1,978

 
$
2,176

 
$
9,812

 
$
5,755

 
$
779

 
$
29,831


 
 
For the Year Ended December 31, 2015
(in thousands)
 
Commercial Loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
SBA
 
Construction
 
Consumer
 
Mortgage
 
Unallocated
 
Total
Beginning balance
 
$
10,152

 
$
3,015

 
$
1,486

 
$
6,591

 
$
3,475

 
$
731

 
$
25,450

Charge-offs
 
(1,275
)
 
(313
)
 
—

 
(4,399
)
 
(187
)
 
—

 
(6,174
)
Recoveries
 
195

 
227

 
1,265

 
1,372

 
48

 
—

 
3,107

Net (charge-offs) / recoveries
 
(1,080
)
 
(86
)
 
1,265

 
(3,027
)
 
(139
)
 
—

 
(3,067
)
(Decrease) increase in FDIC indemnification asset
 
(50
)
 
—

 
(101
)
 
36

 
(155
)
 
—

 
(270
)
Provision for loan losses (1)
 
(440
)
 
(496
)
 
(939
)
 
5,068

 
1,113

 
45

 
4,351

Ending balance
 
$
8,582

 
$
2,433

 
$
1,711

 
$
8,668

 
$
4,294

 
$
776

 
$
26,464


(1) Net of benefit attributable to FDIC indemnification asset 
As discussed in Note 1, “Summary of Significant Accounting Policies,” the ALL consists of specific allowances on loans individually evaluated for impairment and a general allowance for groups of loans with similar risk characteristics that are collectively evaluated for impairment. The allowance also includes a component to reflect the impact of changes in expected cash flows on acquired PCI loans. The unallocated portion of the allowance reflects a margin for the imprecision inherent in estimates of the range of the probable credit losses.
The following tables present, by loan portfolio type, the balance in the ALL disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans:
 
 
December 31, 2017
 
 
Commercial Loans
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Commercial
 
SBA
 
Construction
 
Consumer
 
Mortgage
 
Unallocated
 
Total
Individually evaluated
 
$
839

 
$
294

 
$
—

 
$
219

 
$
1,249

 
$
—

 
$
2,601

Collectively evaluated
 
6,935

 
1,674

 
2,371

 
10,539

 
4,567

 
876

 
26,962

Acquired with deteriorated credit quality
 
72

 
—

 
25

 
—

 
112

 
—

 
209

Total ALL
 
$
7,846

 
$
1,968

 
$
2,396

 
$
10,758

 
$
5,928

 
$
876

 
$
29,772

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated
 
24,333

 
6,797

 
4,520

 
453

 
29,260

 
—

 
65,363

Collectively evaluated
 
766,143

 
133,955

 
243,344

 
1,741,635

 
603,895

 
—

 
3,488,972

Acquired with deteriorated credit quality
 
20,723

 
456

 
453

 
63

 
4,936

 
—

 
26,631

Total loans
 
$
811,199

 
$
141,208

 
$
248,317

 
$
1,742,151

 
$
638,091

 
$
—

 
$
3,580,966

 
 
December 31, 2016
 
 
Commercial Loans
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Commercial
 
SBA
 
Construction
 
Consumer
 
Mortgage
 
Unallocated
 
Total
Individually evaluated
 
$
993

 
$
156

 
$
—

 
$
235

 
$
1,036

 
$
—

 
$
2,420

Collectively evaluated
 
8,101

 
1,822

 
2,151

 
9,570

 
4,705

 
779

 
27,128

Acquired with deteriorated credit quality
 
237

 
—

 
25

 
7

 
14

 
—

 
283

Total ALL
 
$
9,331

 
$
1,978

 
$
2,176

 
$
9,812

 
$
5,755

 
$
779

 
$
29,831

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated
 
$
20,300

 
$
13,331

 
$
6,394

 
$
398

 
$
14,384

 
$
—

 
$
51,477

Collectively evaluated
 
738,297

 
122,662

 
229,907

 
1,592,261

 
513,821

 
—

 
3,213,532

Acquired with deteriorated credit quality
 
26,140

 
532

 
2,609

 
209

 
7,765

 
—

 
37,255

Total loans
 
$
784,737

 
$
149,779

 
$
238,910

 
$
1,592,868

 
$
535,970

 
$
—

 
$
3,302,264


The determination of the overall allowance for credit losses has two components, the allowance for originated loans and the allowance for acquired loans.
Total loans includes acquired loans of $196.6 million, and $275.5 million, at December 31, 2017, and 2016, respectively, which were recorded at fair value when acquired. The ALL for acquired loans is evaluated at each reporting date subsequent to acquisition. For acquired performing loans, an allowance is determined for each loan pool using a methodology similar to that used for originated loans and then compared to the remaining fair value discount for that pool. For PCI loans, decreases in cash flows expected to be collected is generally recognized by recording an allowance for loan losses. Subsequent increases in cash flows result in a reversal of the allowance for loan losses to the extent of prior charges, or in the prospective recognition of interest income.