Allowance for Credit Losses

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Allowance for Credit Losses

ALLOWANCE FOR CREDIT LOSSES (Note 6)

The allowance for credit losses consists of the allowance for losses on non-covered loans and allowance for losses on covered loans related to credit impairment of certain covered loan pools subsequent to acquisition, as well as 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 losses on non-covered loans is based on ongoing evaluations of the probable estimated losses inherent in the non-covered loan portfolio, including unexpected credit impairment of non-covered PCI loan pools subsequent to the acquisition date.

The following table summarizes the allowance for credit losses for the years ended December 31, 2013 and 2012:

	2013		2012
	(in thousands)
Components of allowance for credit losses:
Allowance for non-covered loans	$	106,547	$	120,708
Allowance for covered loans		7,070		9,492
Total allowance for loan losses		113,617		130,200
Allowance for unfunded letters of credit		3,495		2,295
Total allowance for credit losses	$	117,112	$	132,495

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

	2013			2012			2011
	(in thousands)
Components of provision for credit losses:
Provision for non-covered loans	$	17,171		$	25,640		$	31,242
Provision for covered loans		(2,276	)		—			21,510
Total provision for loan losses		14,895			25,640			52,752
Provision for unfunded letters of credit		1,200			(88	)		583
Total provision for credit losses	$	16,095		$	25,552		$	53,335

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2013 and 2012, including both covered and non-covered loans:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
December 31, 2013
Allowance for loan losses:
Beginning balance	$	64,370		$	44,069		$	9,423		$	5,542		$	6,796		$	130,200
Loans charged-off (1)		(19,837	)		(10,846	)		(4,446	)		(5,120	)		—			(40,249	)
Charged-off loans recovered		4,219			1,745			768			2,039			—			8,771
Net charge-offs		(15,618	)		(9,101	)		(3,678	)		(3,081	)		—			(31,478	)
Provision for loan losses		2,799			7,375			2,041			1,898			782			14,895
Ending balance	$	51,551		$	42,343		$	7,786		$	4,359		$	7,578		$	113,617
December 31, 2012
Allowance for loan losses:
Beginning balance	$	73,649		$	34,637		$	9,120		$	8,677		$	7,719		$	133,802
Loans charged-off (1)		(16,103	)		(11,688	)		(3,518	)		(5,339	)		—			(36,648	)
Charged-off loans recovered		4,475			272			701			1,958			—			7,406
Net charge-offs		(11,628	)		(11,416	)		(2,817	)		(3,381	)		—			(29,242	)
Provision for loan losses		2,349			20,848			3,120			246			(923	)		25,640
Ending balance	$	64,370		$	44,069		$	9,423		$	5,542		$	6,796		$	130,200

⁽¹⁾ Includes covered loans charge-offs totaling $146 thousand and $4.0 million during 2013 and 2012, respectively, primarily in the commercial and industrial loan portfolio.

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 for the years ended December 31, 2013 and 2012. 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		Unallocated		Total
	(in thousands)
December 31, 2013
Allowance for loan losses:
Individually evaluated for impairment	$	11,032	$	8,676	$	3,735	$	82	$	—	$	23,525
Collectively evaluated for impairment		40,007		27,235		3,928		4,274		7,578		83,022
Loans acquired with discounts related to credit quality		512		6,432		123		3		—		7,070
Total	$	51,551	$	42,343	$	7,786	$	4,359	$	7,578	$	113,617
Loans:
Individually evaluated for impairment	$	47,303	$	114,638	$	28,313	$	1,094	$	—	$	191,348
Collectively evaluated for impairment		1,772,833		4,814,159		2,456,926		1,526,078		—		10,569,996
Loans acquired with discounts related to credit quality		201,197		543,603		22,349		39,119		—		806,268
Total	$	2,021,333	$	5,472,400	$	2,507,588	$	1,566,291	$	—	$	11,567,612
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	12,088	$	16,581	$	2,329	$	15	$	—	$	31,013
Collectively evaluated for impairment		44,877		25,463		7,032		5,527		6,796		89,695
Loans acquired with discounts related to credit quality		7,405		2,025		62		—		—		9,492
Total	$	64,370	$	44,069	$	9,423	$	5,542	$	6,796	$	130,200
Loans:
Individually evaluated for impairment	$	49,697	$	131,216	$	24,891	$	930	$	—	$	206,734
Collectively evaluated for impairment		1,783,046		4,040,723		2,420,736		1,403,896		—		9,648,401
Loans acquired with discounts related to credit quality		298,600		793,406		26,461		49,197		—		1,167,664
Total	$	2,131,343	$	4,965,345	$	2,472,088	$	1,454,023	$	—	$	11,022,799