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COVERED ASSETS AND FDIC INDEMNIFICATION ASSET (Tables) | 6 Months Ended
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Jun. 30, 2014
COVERED ASSETS AND FDIC INDEMNIFICATION ASSET |
Composition of covered loans |
|  | June 30, |  | December 31, |
|  | 2014 |  | 2013 |
|  | (In thousands) |
Residential: |  |  |  |  |
Residential single-family |  | $ | 259,438 |  | $ | 290,095 |
Residential multifamily |  | 361,472 |  | 403,508 |
Total residential |  | 620,910 |  | 693,603 |
Commercial Real Estate (“CRE”): |  |  |  |  |
Commercial and industrial real estate |  | 895,140 |  | 1,103,530 |
Construction and land |  | 73,216 |  | 163,833 |
Total CRE |  | 968,356 |  | 1,267,363 |
Other Loans: |  |  |  |  |
Commercial business |  | 331,117 |  | 426,621 |
Other consumer |  | 68,944 |  | 73,973 |
Total other loans |  | 400,061 |  | 500,594 |
Total covered loans receivable |  | 1,989,327 | (1) | 2,461,560 | (2)
Covered discount |  | (181,357 | ) | (265,917 | )
Net valuation of loans |  | 1,807,970 |  | 2,195,643 |
Allowance on covered loans |  | (4,880 | ) | (7,745 | )
Total covered loans, net |  | $ | 1,803,090 |  | $ | 2,187,898 |
Collectively evaluated for impairment |  | $ | 252,205 | (1) | $ | 320,185 | (2)
Acquired with deteriorated credit quality |  | 1,555,765 |  | 1,875,458 |
|  | $ | 1,807,970 |  | $ | 2,195,643 |
(1) Includes $252.2 million of covered advances comprised of $202.5 million, $29.0 million, $11.7 million and $9.0 million of commercial and industrial, consumer, residential and commercial real estate loans, respectively. (2) Includes $320.2 million of covered advances comprised of $230.6 million, $46.7 million, $30.9 million and $12.0 million of commercial and industrial, commercial real estate, consumer and residential loans, respectively.
Allowance for loan losses disclosures |
Schedule of credit risk rating categories for the covered loans by portfolio segments |
|  |  |  | Special |  |  |  |  |  |  |
|  | Pass/Watch |  | Mention |  | Substandard |  | Doubtful |  | Total |
|  | (In thousands) |
June 30, 2014 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Residential single-family |  | $ | 252,121 |  | $ | 757 |  | $ | 6,560 |  | $ | — |  | $ | 259,438 |
Residential multifamily |  | 327,990 |  | 786 |  | 32,696 |  | — |  | 361,472 |
Total residential |  | 580,111 |  | 1,543 |  | 39,256 |  | — |  | 620,910 |
Commercial Real Estate (“CRE”): |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial real estate |  | 755,244 |  | 3,255 |  | 130,173 |  | 6,468 |  | 895,140 |
Construction and land |  | 25,628 |  | 9,235 |  | 37,461 |  | 892 |  | 73,216 |
Total CRE |  | 780,872 |  | 12,490 |  | 167,634 |  | 7,360 |  | 968,356 |
Other Loans: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 282,018 |  | 7,171 |  | 41,928 |  | — |  | 331,117 |
Other consumer |  | 67,320 |  | 100 |  | 1,524 |  | — |  | 68,944 |
Total other loans |  | 349,338 |  | 7,271 |  | 43,452 |  | — |  | 400,061 |
Total principal balance |  | $ | 1,710,321 |  | $ | 21,304 |  | $ | 250,342 |  | $ | 7,360 |  | $ | 1,989,327 |
|  |  |  | Special |  |  |  |  |  |  |
|  | Pass/Watch |  | Mention |  | Substandard |  | Doubtful |  | Total |
|  | (In thousands) |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Residential single-family |  | $ | 281,246 |  | $ | 733 |  | $ | 8,116 |  | $ | — |  | $ | 290,095 |
Residential multifamily |  | 373,024 |  | 785 |  | 29,699 |  | — |  | 403,508 |
Total residential |  | 654,270 |  | 1,518 |  | 37,815 |  | — |  | 693,603 |
Commercial Real Estate (“CRE”): |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial real estate |  | 857,376 |  | 27,851 |  | 211,835 |  | 6,468 |  | 1,103,530 |
Construction and land |  | 41,847 |  | 9,472 |  | 111,616 |  | 898 |  | 163,833 |
Total CRE |  | 899,223 |  | 37,323 |  | 323,451 |  | 7,366 |  | 1,267,363 |
Other Loans: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 378,086 |  | 4,635 |  | 43,797 |  | 103 |  | 426,621 |
Other consumer |  | 72,053 |  | 128 |  | 1,792 |  | — |  | 73,973 |
Total other loans |  | 450,139 |  | 4,763 |  | 45,589 |  | 103 |  | 500,594 |
Total principal balance |  | $ | 2,003,632 |  | $ | 43,604 |  | $ | 406,855 |  | $ | 7,469 |  | $ | 2,461,560 |
Covered nonperforming assets |
|  | June 30, |  | December 31, |
|  | 2014 |  | 2013 |
|  | (In thousands) |
Covered nonaccrual loans(1) (2) (3) |  | $ | 86,771 |  | $ | 126,895 |
Other real estate owned covered, net |  | 24,779 |  | 21,373 |
Total covered nonperforming assets |  | $ | 111,550 |  | $ | 148,268 |
(1) Covered nonaccrual loans include loans that meet the criteria for nonaccrual but have a yield accreted through interest income under ASC 310-30. All losses on covered loans are 80% reimbursed by the FDIC. (2) Net of discount. (3) Includes $14.3 million and $17.7 million of covered advances as of June 30, 2014 and December 31, 2013, respectively; and $72.5 million and $109.2 million of PCI loans as of June 30, 2014 and December 31, 2013, respectively.
Schedule of troubled debt restructurings loan activity |
|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 73,234 |  | $ | 141,923 |  | $ | 116,007 |  | $ | 157,736 |
Additions |  | 704 |  | 3,709 |  | 787 |  | 25,793 |
Transfers to covered OREO |  | — |  | — |  | (1,230 | ) | — |
Charge-offs |  | (500 | ) | (3,762 | ) | (1,323 | ) | (7,466 | )
Paydowns/ Reductions |  | (13,414 | ) | (21,622 | ) | (54,217 | ) | (55,815 | )
Balance at end of period |  | $ | 60,024 |  | $ | 120,248 |  | $ | 60,024 |  | $ | 120,248 |
Changes in the accretable yield for the PCI covered loans |
|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 424,005 |  | $ | 503,476 |  | $ | 461,545 |  | $ | 556,986 |
Additions |  | — |  | — |  | — |  | — |
Accretion |  | (64,114 | ) | (84,811 | ) | (125,304 | ) | (166,438 | )
Changes in expected cash flows |  | 27,236 |  | 40,052 |  | 50,886 |  | 68,169 |
Balance at end of period |  | $ | 387,127 |  | $ | 458,717 |  | $ | 387,127 |  | $ | 458,717 |
FDIC indemnification asset liabilities activity |
|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 27,552 |  | $ | 276,834 |  | $ | 74,708 |  | $ | 316,313 |
Amortization |  | (29,303 | ) | (12,696 | ) | (57,793 | ) | (21,382 | )
Reductions (1) |  | (14,111 | ) | (28,820 | ) | (25,953 | ) | (52,055 | )
Estimate of FDIC repayment (2) |  | (8,475 | ) | (15,376 | ) | (15,299 | ) | (22,934 | )
Balance at end of period |  | $ | (24,337 | ) | $ | 219,942 |  | $ | (24,337 | ) | $ | 219,942 |
(1) Reductions relate to charge-offs, partial prepayments, loan payoffs and loan sales which result in a corresponding reduction of the indemnification asset. (2) 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.
Summary of FDIC receivable activity |
|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 19,644 |  | $ | 46,762 |  | $ | 30,261 |  | $ | 73,091 |
Net (reduction) addition due to recovery or eligible expense/loss |  | (5,669 | ) | 8,967 |  | (12,147 | ) | 16,528 |
Payments to (received from) the FDIC |  | 1,772 |  | (8,604 | ) | (2,367 | ) | (42,494 | )
Balance at end of period |  | $ | 15,747 |  | $ | 47,125 |  | $ | 15,747 |  | $ | 47,125 |
Covered loans |
Allowance for loan losses disclosures |
Summary of the activity in the allowance for loan losses |
|  | Three Months Ended June 30, |
|  | 2014 |  | 2013 |
|  | Covered |  | PCI Covered |  |  |  | Covered |  | PCI Covered |  |  |
|  | Advances |  | Loans |  | Total |  | Advances |  | Loans |  | Total |
|  | (In thousands) |
Beginning balance |  | $ | 4,316 |  | $ | 2,202 |  | $ | 6,518 |  | $ | 8,118 |  | $ | 1,992 |  | $ | 10,110 |
Provision for (reversal of) loan losses |  | 70 |  | (1,014 | ) | (944 | ) | 186 |  | 537 |  | 723 |
Charge-offs |  | (694 | ) | — |  | (694 | ) | (1,204 | ) | — |  | (1,204 | )
Ending balance |  | $ | 3,692 | (1) | $ | 1,188 |  | $ | 4,880 |  | $ | 7,100 | (2) | $ | 2,529 |  | $ | 9,629 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment |  | 3,692 | (1) | — |  | 3,692 | (1) | 7,100 | (2) | — |  | 7,100 |
Acquired with deteriorated credit quality |  | — |  | 1,188 |  | 1,188 |  | — |  | 2,529 |  | 2,529 |
Ending balance |  | $ | 3,692 | (1) | $ | 1,188 |  | $ | 4,880 |  | $ | 7,100 | (2) | $ | 2,529 |  | $ | 9,629 |
|  | Six Months Ended June 30, |
|  | 2014 |  | 2013 |
|  | Covered |  | PCI Covered |  |  |  | Covered |  | PCI Covered |  |  |
|  | Advances |  | Loans |  | Total |  | Advances |  | Loans |  | Total |
|  | (In thousands) |
Beginning balance |  | $ | 5,476 |  | $ | 2,269 |  | $ | 7,745 |  | $ | 5,153 |  | $ | — |  | $ | 5,153 |
(Reversal of) provision for loan losses |  | (884 | ) | (1,081 | ) | (1,965 | ) | 3,283 |  | 2,529 |  | 5,812 |
Charge-offs |  | (900 | ) | — |  | (900 | ) | (1,336 | ) | — |  | (1,336 | )
Ending balance |  | $ | 3,692 | (1) | $ | 1,188 |  | $ | 4,880 |  | $ | 7,100 | (2) | $ | 2,529 |  | $ | 9,629 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment |  | 3,692 | (1) | — |  | 3,692 | (1) | 7,100 | (2) | — |  | 7,100 |
Acquired with deteriorated credit quality |  | — |  | 1,188 |  | 1,188 |  | — |  | 2,529 |  | 2,529 |
Ending balance |  | $ | 3,692 | (1) | $ | 1,188 |  | $ | 4,880 |  | $ | 7,100 | (2) | $ | 2,529 |  | $ | 9,629 |
(1) $2.6 million, $666 thousand, $282 thousand and $167 thousand of allowance for loan losses are allocated to commercial and industrial, commercial real estate, consumer and residential loans, respectively. (2) $4.1 million, $2.4 million, $407 thousand and $174 thousand of allowance for loan losses are allocated to commercial and industrial, commercial real estate, consumer and residential loans, respectively.

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