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COVERED ASSETS AND FDIC INDEMNIFICATION ASSET (Tables) | 9 Months Ended
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Sep. 30, 2014
COVERED ASSETS AND FDIC INDEMNIFICATION ASSET |
Composition of covered loans |
|  | September 30, |  | December 31, |
|  | 2014 |  | 2013 |
|  | (In thousands) |
Residential: |  |  |  |  |
Residential single-family |  | $ | 248,377 |  | $ | 290,095 |
Residential multifamily |  | 331,451 |  | 403,508 |
Total residential |  | 579,828 |  | 693,603 |
Commercial Real Estate (“CRE”): |  |  |  |  |
Commercial and industrial real estate |  | 773,098 |  | 1,103,530 |
Construction and land |  | 63,691 |  | 163,833 |
Total CRE |  | 836,789 |  | 1,267,363 |
Other Loans: |  |  |  |  |
Commercial business |  | 307,147 |  | 426,621 |
Other consumer |  | 65,375 |  | 73,973 |
Total other loans |  | 372,522 |  | 500,594 |
Total covered loans |  | 1,789,139 | (1) | 2,461,560 | (2)
Covered discount |  | (148,830 | ) | (265,917 | )
Net valuation of loans |  | 1,640,309 |  | 2,195,643 |
Allowance for loan losses on covered loans |  | (3,910 | ) | (7,745 | )
Total covered loans, net |  | $ | 1,636,399 |  | $ | 2,187,898 |
Collectively evaluated for impairment |  | $ | 290,446 | (1) | $ | 320,185 | (2)
Acquired with deteriorated credit quality |  | 1,349,863 |  | 1,875,458 |
|  | $ | 1,640,309 |  | $ | 2,195,643 |
(1) Includes $290.4 million of covered advances comprised of $191.1 million, $59.6 million, $27.6 million and $12.1 million of commercial and industrial, commercial real estate, consumer, and residential 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) |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Residential single-family |  | $ | 240,954 |  | $ | 555 |  | $ | 6,868 |  | $ | — |  | $ | 248,377 |
Residential multifamily |  | 296,864 |  | — |  | 34,587 |  | — |  | 331,451 |
Total residential |  | 537,818 |  | 555 |  | 41,455 |  | — |  | 579,828 |
Commercial Real Estate (“CRE”): |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial real estate |  | 658,095 |  | 2,790 |  | 112,213 |  | — |  | 773,098 |
Construction and land |  | 23,800 |  | 10,057 |  | 29,834 |  | — |  | 63,691 |
Total CRE |  | 681,895 |  | 12,847 |  | 142,047 |  | — |  | 836,789 |
Other Loans: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 267,073 |  | 13,613 |  | 26,461 |  | — |  | 307,147 |
Other consumer |  | 63,931 |  | 244 |  | 1,200 |  | — |  | 65,375 |
Total other loans |  | 331,004 |  | 13,857 |  | 27,661 |  | — |  | 372,522 |
Total principal balance |  | $ | 1,550,717 |  | $ | 27,259 |  | $ | 211,163 |  | $ | — |  | $ | 1,789,139 |
|  |  |  | 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 |
|  | September 30, |  | December 31, |
|  | 2014 |  | 2013 |
|  | (In thousands) |
Covered nonaccrual loans(1) (2) (3) |  | $ | 79,980 |  | $ | 126,895 |
Other real estate owned covered, net |  | 7,433 |  | 21,373 |
Total covered nonperforming assets |  | $ | 87,413 |  | $ | 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 $9.2 million and $17.7 million of covered advances as of September 30, 2014 and December 31, 2013, respectively; and $70.8 million and $109.2 million of PCI loans as of September 30, 2014 and December 31, 2013, respectively.
Schedule of troubled debt restructurings related to covered loans activity |
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 60,024 |  | $ | 120,248 |  | $ | 116,007 |  | $ | 157,736 |
Additions |  | 477 |  | 3,453 |  | 1,264 |  | 29,246 |
Transfers to covered OREO |  | — |  | — |  | (1,230 | ) | — |
Charge-offs |  | — |  | — |  | (1,323 | ) | (7,466 | )
Paydowns/ Reductions |  | (13,960 | ) | (4,839 | ) | (68,177 | ) | (60,654 | )
Balance at end of period |  | $ | 46,541 |  | $ | 118,862 |  | $ | 46,541 |  | $ | 118,862 |
Changes in the accretable yield for the PCI covered loans |
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 387,127 |  | $ | 458,717 |  | $ | 461,545 |  | $ | 556,986 |
Additions |  | — |  | — |  | — |  | — |
Accretion |  | (51,296 | ) | (100,596 | ) | (176,600 | ) | (267,035 | )
Changes in expected cash flows |  | 10,563 |  | 122,140 |  | 61,449 |  | 190,310 |
Balance at end of period |  | $ | 346,394 |  | $ | 480,261 |  | $ | 346,394 |  | $ | 480,261 |
FDIC indemnification asset liabilities activity |
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | (24,337 | ) | $ | 219,942 |  | $ | 74,708 |  | $ | 316,313 |
Amortization |  | (28,175 | ) | (39,109 | ) | (85,968 | ) | (60,491 | )
Reductions (1) |  | (5,676 | ) | (20,606 | ) | (31,629 | ) | (72,661 | )
Estimate of FDIC repayment (2) |  | (6,272 | ) | (15,193 | ) | (21,571 | ) | (38,127 | )
Balance at end of period |  | $ | (64,460 | ) | $ | 145,034 |  | $ | (64,460 | ) | $ | 145,034 |
(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 shared-loss agreements, due to lower thresholds of losses.
Summary of FDIC receivable activity |
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 15,747 |  | $ | 47,125 |  | $ | 30,261 |  | $ | 73,091 |
Net addition (reduction) due to recovery or eligible expense/loss |  | 443 |  | 467 |  | (11,671 | ) | 16,995 |
Payments to (received from) the FDIC |  | 1,613 |  | (9,396 | ) | (787 | ) | (51,890 | )
Balance at end of period |  | $ | 17,803 |  | $ | 38,196 |  | $ | 17,803 |  | $ | 38,196
Covered loans |
Allowance for loan losses disclosures |
Summary of the activity in the allowance for loan losses |
|  | Three Months Ended September 30, |
|  | 2014 |  | 2013 |
|  | Covered |  | PCI Covered |  |  |  | Covered |  | PCI Covered |  |  |
|  | Advances |  | Loans |  | Total |  | Advances |  | Loans |  | Total |
|  | (In thousands) |
Beginning balance |  | $ | 3,692 |  | $ | 1,188 |  | $ | 4,880 |  | $ | 7,100 |  | $ | 2,529 |  | $ | 9,629 |
Provision for (reversal of) loan losses |  | 8,433 |  | (764 | ) | 7,669 |  | (772 | ) | (192 | ) | (964 | )
Charge-offs |  | (9,360 | ) | — |  | (9,360 | ) | — |  | — |  | — |
Recoveries |  | 721 |  | — |  | 721 |  | — |  | — |  | — |
Ending balance |  | $ | 3,486 | (1) | $ | 424 |  | $ | 3,910 |  | $ | 6,328 | (2) | $ | 2,337 |  | $ | 8,665 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment |  | 3,486 | (1) | — |  | 3,486 | (1) | 6,328 | (2) | — |  | 6,328 | (2)
Acquired with deteriorated credit quality |  | — |  | 424 |  | 424 |  | — |  | 2,337 |  | 2,337 |
Ending balance |  | $ | 3,486 | (1) | $ | 424 |  | $ | 3,910 |  | $ | 6,328 | (2) | $ | 2,337 |  | $ | 8,665 |
|  | Nine Months Ended September 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 |
Provision for (reversal of) loan losses |  | 7,549 |  | (1,845 | ) | 5,704 |  | 2,511 |  | 2,337 |  | 4,848 |
Charge-offs |  | (10,260 | ) | — |  | (10,260 | ) | (1,336 | ) | — |  | (1,336 | )
Recoveries |  | 721 |  | — |  | 721 |  | — |  | — |  | — |
Ending balance |  | $ | 3,486 | (1) | $ | 424 |  | $ | 3,910 |  | $ | 6,328 | (2) | $ | 2,337 |  | $ | 8,665 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment |  | 3,486 | (1) | — |  | 3,486 | (1) | 6,328 | (2) | — |  | 6,328 | (2)
Acquired with deteriorated credit quality |  | — |  | 424 |  | 424 |  | — |  | 2,337 |  | 2,337 |
Ending balance |  | $ | 3,486 | (1) | $ | 424 |  | $ | 3,910 |  | $ | 6,328 | (2) | $ | 2,337 |  | $ | 8,665 |
(1) Allowance for loan losses of $2.4 million, $645 thousand, $232 thousand and $163 thousand are allocated to commercial and industrial, commercial real estate, consumer and residential loans, respectively. (2) Allowance for loan losses of $3.7 million, $2.2 million, $376 thousand and $161 thousand are allocated to commercial and industrial, commercial real estate, consumer and residential loans, respectively.

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