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COVERED ASSETS AND FDIC INDEMNIFICATION ASSET (Tables) | 9 Months Ended
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Sep. 30, 2011
COVERED ASSETS AND FDIC INDEMNIFICATION ASSET [Abstract] |
Carrying amounts and composition of covered loans | The carrying amounts and the composition of the covered loans as of September 30, 2011 and December 31, 2010 are as follows:
|  | September 30, |  |  | December 31, |
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Real estate loans: |  |  |  |  |  |
Residential single-family |  | $ | 470,368 |  |  | $ | 553,541 |
Residential multifamily |  |  | 959,188 |  |  |  | 1,093,331 |
Commercial and industrial real estate |  |  | 1,883,843 |  |  |  | 2,085,674 |
Construction and land |  |  | 718,938 |  |  |  | 1,043,717 |
Total real estate loans |  |  | 4,032,337 |  |  |  | 4,776,263 |
Other loans: |  |  |  |  |  |  |  |
Commercial business |  |  | 884,772 |  |  |  | 1,072,020 |
Other consumer |  |  | 101,158 |  |  |  | 107,490 |
Total other loans |  |  | 985,930 |  |  |  | 1,179,510 |
Total principal balance |  |  | 5,018,267 |  |  |  | 5,955,773 |
Covered discount |  |  | (871,931 | ) |  |  | (1,150,672 | )
Net valuation of loans |  |  | 4,146,336 |  |  |  | 4,805,101 |
Allowance on covered loans |  |  | (6,434 | ) |  |  | (4,225 | )
Total covered loans, net |  | $ | 4,139,902 |  |  | $ | 4,800,876 |
Covered nonperforming assets, by credit quality indicators | The tables below present the covered loan portfolio by credit quality indicator as of September 30, 2011 and December 31, 2010.
|  |  |  |  | Special |  |  |  |  |  |  |  |  |  |
|  | Pass/Watch |  |  | Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
|  | (In thousands) |
September 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential single-family |  | $ | 445,223 |  |  | $ | 2,586 |  |  | $ | 22,559 |  |  | $ | - |  |  | $ | 470,368 |
Residential multifamily |  |  | 785,022 |  |  |  | 31,755 |  |  |  | 142,411 |  |  |  | - |  |  |  | 959,188 |
Commercial and industrial real estate |  |  | 1,304,704 |  |  |  | 47,389 |  |  |  | 523,480 |  |  |  | 8,270 |  |  |  | 1,883,843 |
Construction and land |  |  | 251,416 |  |  |  | 42,955 |  |  |  | 418,318 |  |  |  | 6,249 |  |  |  | 718,938 |
Total real estate loans |  |  | 2,786,365 |  |  |  | 124,685 |  |  |  | 1,106,768 |  |  |  | 14,519 |  |  |  | 4,032,337 |
Other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  |  | 665,944 |  |  |  | 41,116 |  |  |  | 169,913 |  |  |  | 7,799 |  |  |  | 884,772 |
Other consumer |  |  | 99,350 |  |  |  | 176 |  |  |  | 1,632 |  |  |  | - |  |  |  | 101,158 |
Total other loans |  |  | 765,294 |  |  |  | 41,292 |  |  |  | 171,545 |  |  |  | 7,799 |  |  |  | 985,930 |
Total principal balance |  | $ | 3,551,659 |  |  | $ | 165,977 |  |  | $ | 1,278,313 |  |  | $ | 22,318 |  |  | $ | 5,018,267 |
|  |  |  |  | Special |  |  |  |  |  |  |  |  |  |
|  | Pass/Watch |  |  | Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
December 31, 2010 |  | (In thousands) |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential single-family |  | $ | 525,979 |  |  | $ | 2,153 |  |  | $ | 25,157 |  |  | $ | 252 |  |  | $ | 553,541 |
Residential multifamily |  |  | 1,008,274 |  |  |  | 15,114 |  |  |  | 67,366 |  |  |  | 2,577 |  |  |  | 1,093,331 |
Commercial and industrial real estate |  |  | 1,520,135 |  |  |  | 89,870 |  |  |  | 466,588 |  |  |  | 9,081 |  |  |  | 2,085,674 |
Construction and land |  |  | 328,214 |  |  |  | 125,688 |  |  |  | 556,070 |  |  |  | 33,745 |  |  |  | 1,043,717 |
Total real estate loans |  |  | 3,382,602 |  |  |  | 232,825 |  |  |  | 1,115,181 |  |  |  | 45,655 |  |  |  | 4,776,263 |
Other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  |  | 834,252 |  |  |  | 64,702 |  |  |  | 161,401 |  |  |  | 11,665 |  |  |  | 1,072,020 |
Other consumer |  |  | 106,232 |  |  |  | 336 |  |  |  | 922 |  |  |  | - |  |  |  | 107,490 |
Total other loans |  |  | 940,484 |  |  |  | 65,038 |  |  |  | 162,323 |  |  |  | 11,665 |  |  |  | 1,179,510 |
Total principal balance |  | $ | 4,323,086 |  |  | $ | 297,863 |  |  | $ | 1,277,504 |  |  | $ | 57,320 |  |  | $ | 5,955,773 |
Covered nonperforming assets | The following table sets forth information regarding covered nonperforming assets as of the dates indicated:
|  | September 30, |  |  | December 31, |
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Covered nonaccrual loans (1) |  | $ | 245,986 |  |  | $ | 379,797 |
Covered loans past due 90 days or more but not on nonaccrual |  |  | - |  |  |  | - |
Total nonperforming loans |  |  | 245,986 |  |  |  | 379,797 |
Other real estate owned covered, net |  |  | 87,298 |  |  |  | 123,902 |
Total covered nonperforming assets |  | $ | 333,284 |  |  | $ | 503,699 |
_______________________
(1) | Covered nonaccrual loans meet the criteria for nonaccrual but have a yield accreted through interest income under ASC 310-30.
Changes in the accretable yield for the covered loans | Changes in the accretable yield for the covered loans are as follows for the periods shown:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
|  | (In thousands) |  |  | (In thousands) |
Balance at beginning of period |  | $ | 980,932 |  |  | $ | 986,389 |  |  | $ | 1,153,272 |  |  | $ | 983,107 |
Additions |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 84,556 |
Accretion |  |  | (51,307 | ) |  |  | (3,601 | ) |  |  | (162,747 | ) |  |  | (11,118 | )
Changes in expected cash flows |  |  | (49,581 | ) |  |  | (24,314 | ) |  |  | (110,481 | ) |  |  | (98,071 | )
Balance at end of period |  | $ | 880,044 |  |  | $ | 958,474 |  |  | $ | 880,044 |  |  | $ | 958,474 |
FDIC indemnification asset activity | The table below shows FDIC indemnification asset activity for the periods shown:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
|  | (In thousands) |  |  | (In thousands) |
Balance at beginning of period |  | $ | 630,437 |  |  | $ | 939,913 |  |  | $ | 785,035 |  |  | $ | 1,084,716 |
Addition due to WFIB acquisition |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 41,131 |
(Amortization) Accretion |  |  | (14,325 | ) |  |  | 7,118 |  |  |  | (48,034 | ) |  |  | 29,210 |
Reductions (1)(2) |  |  | (43,349 | ) |  |  | (79,370 | ) |  |  | (164,238 | ) |  |  | (287,396 | )
Estimate of FDIC repayment (3) |  |  | (3,606 | ) |  |  | - |  |  |  | (3,606 | ) |  |  | - |
Balance at end of period |  | $ | 569,157 |  |  | $ | 867,661 |  |  | $ | 569,157 |  |  | $ | 867,661 |
______________________
(1) | Reductions relate to cash flows received from principal amortization, partial prepayments, loan payoffs and loan sales.
(2) | For the three and nine months ended September 30, 2011, the reduction amounts of $43.3 million and $164.2 million, respectively, include charge-offs, of which $18.4 million and $92.8 million, respectively, of these charge-offs are recoverable from the FDIC and recorded in other assets. For the three and nine months ended September 30, 2010, the reduction amounts of $79.4 million and $287.4 million, respectively, also include charge-offs, of which $70.8 million and $188.8 million, respectively, is recoverable from the FDIC and recorded in other assets.
(3) | This represents the change in the calculated estimate the company will be required to pay the FDIC at the end of the FDIC loss share agreements, due to lower thresholds of losses.

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