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NON-COVERED LOANS AND ALLOWANCE FOR LOAN LOSSES | 9 Months Ended
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Sep. 30, 2014
NON-COVERED LOANS AND ALLOWANCE FOR LOAN LOSSES |
NON-COVERED LOANS AND ALLOWANCE FOR LOAN LOSSES | NOTE 9 — NON-COVERED LOANS AND ALLOWANCE FOR LOAN LOSSES The following table presents the composition of loans receivable, excluding covered loans (“non-covered loans”) as of September 30, 2014 and December 31, 2013:
|  | September 30, |  | December 31, |
|  | 2014 |  | 2013 |
|  | (In thousands) |
Residential: |  |  |  |  |
Single-family |  | $ | 3,472,725 |  | $ | 3,192,875 |
Multifamily |  | 1,176,570 |  | 992,434 |
Total residential |  | 4,649,295 |  | 4,185,309 |
Commercial Real Estate (“CRE”): |  |  |  |  |
Income producing |  | 5,463,209 |  | 4,301,030 |
Construction |  | 287,341 |  | 140,186 |
Land |  | 198,800 |  | 143,861 |
Total CRE |  | 5,949,350 |  | 4,585,077 |
Commercial and Industrial (“C&I”): |  |  |  |  |
Commercial business |  | 6,539,640 |  | 4,637,056 |
Trade finance |  | 744,018 |  | 723,137 |
Total C&I |  | 7,283,658 |  | 5,360,193 |
Consumer: |  |  |  |  |
Student loans |  | 93,179 |  | 679,220 |
Other consumer |  | 1,376,074 |  | 868,518 |
Total consumer |  | 1,469,253 |  | 1,547,738 |
Total non-covered loans(1) |  | 19,351,556 |  | 15,678,317 |
Unearned fees, premiums, and discounts, net |  | (5,171 | ) | (23,672 | )
Allowance for loan losses on non-covered loans |  | (249,268 | ) | (241,930 | )
Non-covered loans, net |  | $ | 19,097,117 |  | $ | 15,412,715 |
(1) Loans net of ASC 310-30 discount. Accrued interest on covered and non-covered loans receivable amounted to $72.8 million and $94.5 million as of September 30, 2014 and December 31, 2013, respectively. At September 30, 2014 and December 31, 2013, covered and non-covered loans receivable totaling $13.94 billion and $10.57 billion, respectively, were pledged to secure borrowings from the FHLB and the Federal Reserve Bank. The Company offers adjustable rate (“ARM”) first mortgage loans secured by one-to-four unit residential properties located in its primary lending areas. The Company offers ARM single-family loan programs with one-year or three-year initial fixed periods. The Company offered in 2013 and prior years, a low documentation program for single family residential loans. These loans require a large down payment and a low loan to value ratio, typically 60% or less. These loans have historically experienced low delinquency and default rates. A majority of the single family residential loan originations in 2013 were originated under this program. In 2014, this program was modified to require not only a large down payment, but additional income or asset information to determine the borrower’s ability to repay. The Company originated $316.8 million and $586.8 million in new residential single-family loans during the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, the Company originated $728.3 million and $1.26 billion, respectively, in new residential single-family loans. The Company also offers ARM home equity lines of credit (“HELOC”) secured by one-to-four unit residential properties located in its primary lending areas. The program is a low documentation program that requires low loan to value ratios, typically 60% or less. These loans have historically experienced low delinquency and default rates. The Company originated $217.0 million and $320.6 million in new HELOCs during the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, the Company originated $710.3 million and $605.2 million, respectively, in new HELOCs. In addition, the Company offers ARM multifamily loan programs that have six-month or three-year initial fixed periods. The Company originated $76.8 million and $90.0 million in new multifamily residential loans during the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, the Company originated $231.5 million and $194.2 million, respectively, in new multifamily residential loans. In addition to residential lending, the Company’s lending activities also include CRE, commercial and industrial, and consumer lending. The Company’s CRE lending activities include loans to finance income-producing properties, construction and land loans. The Company’s C&I lending activities include commercial business financing for small and middle-market businesses in a wide spectrum of industries. Included in commercial business loans are loans for working capital, accounts receivable lines, inventory lines, Small Business Administration (“SBA”) loans and lease financing. The Company also offers a variety of international trade finance services and products, including letters of credit, revolving lines of credit, import loans, bankers’ acceptances, working capital lines, domestic purchase financing and pre-export financing. Consumer loans are primarily comprised of fully guaranteed student loans, home equity lines of credit, auto loans and insurance premium financing loans. All of the loans that the Company originates are subject to its underwriting guidelines and loan origination standards. Management believes that the Company’s underwriting criteria and procedures adequately consider the unique risks which may come from these products. The Company conducts a variety of quality control procedures and periodic audits to ensure compliance with its origination standards, including criteria for lending and legal requirements. Credit Risk and Concentrations — The Company has a concentration of real estate loans in California. As of September 30, 2014, the Company had $5.95 billion in non-covered commercial real estate loans and $4.65 billion in non-covered residential loans, of which approximately 80% are secured by real properties located in California. Deterioration in the real estate market generally, including residential and commercial real estate, could result in additional loan charge-offs and provisions for loan losses in the future, which could have a material adverse effect on the Company’s financial condition, net income and capital. In addition, although most of the Company’s trade finance loans relate to trade with Asian countries and the majority of the Company’s loans are made to borrowers domiciled in the United States. A substantial portion of this business involves California based customers engaged in import and export activities. The Company also offers export-import financing to various domestic and foreign customers. Certain trade finance loans may be guaranteed by the Export-Import Bank of the United States or the Export-Import Bank of China. Purchased Loans — During the nine months ended September 30, 2014, the Company purchased approximately $108.9 million of loans, the majority of which were student loans guaranteed by the U.S. Department of Education. Acquired Loans — In January 2014, the Company acquired $1.19 billion of loans through its acquisition of MetroCorp, as discussed in Note 3 of the Company’s consolidated financial statements. As of the acquisition date, approximately 6% of the acquired loans were credit impaired and accounted for in accordance with ASC 310-30. As of September 30, 2014, there were $55.5 million PCI loans acquired from MetroCorp. Loans Held for Sale — Loans held for sale totaled $239.6 million and $205.0 million as of September 30, 2014 and December 31, 2013, respectively. Loans held for sale are recorded at the lower of cost or fair value. Fair value is derived from current market prices. As of September 30, 2014, all of the loans held for sale were student loans, which are guaranteed by the U.S. Department of Education. There was no loans receivable reclassified to loans held for sale during the three months ended September 30, 2014. During the nine months ended September 30, 2014, $460.8 million of net loans receivable were reclassified to loans held for sale. These loans were purchased by the Company with the intent to be held for investment; however, subsequent to their purchase, the Company’s intent for these loans changed and they were consequently reclassified to loans held for sale. Proceeds from sales of loans held for sale were $232.0 million and $558.3 million for the three months and nine months ended September 30, 2014, respectively, resulting in net gains of $6.2 million and $14.7 million, respectively. Proceeds from sales of loans held for sale were $6.3 million for the nine months ended September 30, 2013, resulting in net gains of $1 thousand. There were no sales of loans held for sale for the three months ended September 30, 2013. Credit Quality Indicators Loans are risk rated based on analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of all repayment sources, the borrower’s current payment performance/delinquency, current financial and liquidity status and all other relevant information. For single family residential loans, payment performance/delinquency is the driving indicator for the risk ratings. However, the risk ratings remain the overall credit quality indicator for the Company as well as the credit quality indicator utilized for estimating the appropriate allowance for loan losses. The Company utilizes an eight grade risk rating system, where a higher grade represents a higher level of credit risk. The eight grade risk rating system can be generally classified by the following categories: Pass, Watch, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the repayment sources. Pass and Watch loans are generally considered to have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. These borrowers may have some credit risk that requires monitoring, but full repayment is expected. Special Mention loans are considered to have potential weaknesses that warrant closer attention by management. Special Mention is considered a transitory grade. If any potential weaknesses are resolved, the loan is upgraded to a Pass or Watch grade. If negative trends in the borrower’s financial status or other information is presented that indicates the repayment sources may become inadequate, the loan is downgraded to a Substandard grade. Substandard loans are considered to have well-defined weaknesses that jeopardize the full and timely repayment of the loan. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. Additionally, when management has assessed a potential for loss but a distinct possibility of loss is not recognizable, the loan is still classified as Substandard. Doubtful loans have insufficient sources of repayment and a high probability of loss. Loss loans are considered to be uncollectible and of such little value that they are no longer considered bankable assets. These internal risk ratings are reviewed routinely and adjusted due to changes in borrower status and likelihood of loan repayment. The following tables present the credit risk rating categories for non-covered loans by portfolio segment as of September 30, 2014 and December 31, 2013:
|  |  |  | Special |  |  |  |  |  |  |
|  | Pass/Watch |  | Mention |  | Substandard |  | Doubtful |  | Total |
|  | (In thousands) |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 3,449,646 |  | $ | 5,169 |  | $ | 17,910 |  | $ | — |  | $ | 3,472,725 |
Multifamily |  | 1,114,395 |  | 5,149 |  | 57,026 |  | — |  | 1,176,570 |
CRE: |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 5,186,262 |  | 72,725 |  | 203,445 |  | 777 |  | 5,463,209 |
Construction |  | 274,293 |  | 6,160 |  | 6,888 |  | — |  | 287,341 |
Land |  | 175,033 |  | 6,378 |  | 17,389 |  | — |  | 198,800 |
C&I: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 6,264,128 |  | 157,768 |  | 117,215 |  | 529 |  | 6,539,640 |
Trade finance |  | 707,963 |  | 19,999 |  | 16,056 |  | — |  | 744,018 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Student loans |  | 88,786 |  | 1,048 |  | 3,345 |  | — |  | 93,179 |
Other consumer |  | 1,372,700 |  | 913 |  | 2,461 |  | — |  | 1,376,074 |
Total |  | $ | 18,633,206 |  | $ | 275,309 |  | $ | 441,735 |  | $ | 1,306 |  | $ | 19,351,556 |
|  |  |  | Special |  |  |  |  |  |  |
|  | Pass/Watch |  | Mention |  | Substandard |  | Doubtful |  | Total |
|  | (In thousands) |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 3,167,337 |  | $ | 8,331 |  | $ | 17,207 |  | $ | — |  | $ | 3,192,875 |
Multifamily |  | 923,697 |  | 1,634 |  | 67,103 |  | — |  | 992,434 |
CRE: |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 4,032,269 |  | 56,752 |  | 212,009 |  | — |  | 4,301,030 |
Construction |  | 127,138 |  | 6,160 |  | 6,888 |  | — |  | 140,186 |
Land |  | 116,000 |  | 9,304 |  | 18,557 |  | — |  | 143,861 |
C&I: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 4,400,847 |  | 92,315 |  | 143,894 |  | — |  | 4,637,056 |
Trade finance |  | 681,345 |  | 22,099 |  | 19,693 |  | — |  | 723,137 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Student loans |  | 677,094 |  | 445 |  | 1,681 |  | — |  | 679,220 |
Other consumer |  | 865,752 |  | 244 |  | 2,522 |  | — |  | 868,518 |
Total |  | $ | 14,991,479 |  | $ | 197,284 |  | $ | 489,554 |  | $ | — |  | $ | 15,678,317 |
Nonaccrual and Past Due Loans The following tables below present an aging analysis of the Company’s non-covered loans and loans held for sale, segregated by portfolio segment, as of September 30, 2014 and December 31, 2013:
|  | Accruing |  | Accruing |  | Total |  | Nonaccrual |  | Nonaccrual |  |  |  |  |  |  |
|  | Loans |  | Loans |  | Accruing |  | Loans Less |  | Loans |  | Total |  | Current |  |  |
|  | 30-59 Days |  | 60-89 Days |  | Past Due |  | Than 90 Days |  | 90 or More |  | Nonaccrual |  | Accruing |  |  |
|  | Past Due |  | Past Due |  | Loans |  | Past Due |  | Days Past Due |  | Loans |  | Loans |  | Total |
|  | (In thousands) |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 5,916 |  | $ | 1,502 |  | $ | 7,418 |  | $ | 2,839 |  | $ | 7,899 |  | $ | 10,738 |  | $ | 3,454,569 |  | $ | 3,472,725 |
Multifamily |  | 6,166 |  | — |  | 6,166 |  | 12,110 |  | 12,690 |  | 24,800 |  | 1,145,604 |  | 1,176,570 |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 14,900 |  | 11,044 |  | 25,944 |  | 27,719 |  | 21,058 |  | 48,777 |  | 5,388,488 |  | 5,463,209 |
Construction |  | — |  | — |  | — |  | — |  | 6,888 |  | 6,888 |  | 280,453 |  | 287,341 |
Land |  | 1,119 |  | — |  | 1,119 |  | 1,266 |  | 2,513 |  | 3,779 |  | 193,902 |  | 198,800 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 29,696 |  | 4,474 |  | 34,170 |  | 6,983 |  | 19,794 |  | 26,777 |  | 6,478,693 |  | 6,539,640 |
Trade finance |  | 750 |  | — |  | 750 |  | 111 |  | 32 |  | 143 |  | 743,125 |  | 744,018 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | 1,350 |  | 1,048 |  | 2,398 |  | — |  | 3,310 |  | 3,310 |  | 87,471 |  | 93,179 |
Other consumer |  | 2,576 |  | 549 |  | 3,125 |  | 118 |  | 390 |  | 508 |  | 1,372,441 |  | 1,376,074 |
Loans held for sale |  | — |  | — |  | — |  | — |  | — |  | — |  | 239,649 |  | 239,649 |
Total(1) |  | $ | 62,473 |  | $ | 18,617 |  | $ | 81,090 |  | $ | 51,146 |  | $ | 74,574 |  | $ | 125,720 |  | $ | 19,384,395 |  | 19,591,205 |
Unearned fees, premiums and discounts, net |  |  |  |  |  |  |  |  |  | (5,171 | )
Total recorded investment in non-covered loans and loans held for sale |  |  |  |  |  |  |  |  |  | $ | 19,586,034 |
(1) Loans net of ASC 310-30 discount.
|  | Accruing |  | Accruing |  | Total |  | Nonaccrual |  | Nonaccrual |  |  |  |  |  |  |
|  | Loans |  | Loans |  | Accruing |  | Loans Less |  | Loans |  | Total |  | Current |  |  |
|  | 30-59 Days |  | 60-89 Days |  | Past Due |  | Than 90 Days |  | 90 or More |  | Nonaccrual |  | Accruing |  |  |
|  | Past Due |  | Past Due |  | Loans |  | Past Due |  | Days Past Due |  | Loans |  | Loans |  | Total |
|  | (In thousands) |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 4,694 |  | $ | 922 |  | $ | 5,616 |  | $ | — |  | $ | 11,218 |  | $ | 11,218 |  | $ | 3,176,041 |  | $ | 3,192,875 |
Multifamily |  | 8,580 |  | 531 |  | 9,111 |  | 19,661 |  | 7,972 |  | 27,633 |  | 955,690 |  | 992,434 |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 12,746 |  | 1,798 |  | 14,544 |  | 13,924 |  | 22,549 |  | 36,473 |  | 4,250,013 |  | 4,301,030 |
Construction |  | — |  | — |  | — |  | — |  | 6,888 |  | 6,888 |  | 133,298 |  | 140,186 |
Land |  | — |  | — |  | — |  | 265 |  | 3,223 |  | 3,488 |  | 140,373 |  | 143,861 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 3,428 |  | 6,259 |  | 9,687 |  | 6,437 |  | 15,486 |  | 21,923 |  | 4,605,446 |  | 4,637,056 |
Trade finance |  | — |  | — |  | — |  | — |  | 909 |  | 909 |  | 722,228 |  | 723,137 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | 541 |  | 445 |  | 986 |  | — |  | 1,681 |  | 1,681 |  | 676,553 |  | 679,220 |
Other consumer |  | 293 |  | 1 |  | 294 |  | 175 |  | 1,263 |  | 1,438 |  | 866,786 |  | 868,518 |
Loans held for sale |  | — |  | — |  | — |  | — |  | — |  | — |  | 204,970 |  | 204,970 |
Total |  | $ | 30,282 |  | $ | 9,956 |  | $ | 40,238 |  | $ | 40,462 |  | $ | 71,189 |  | $ | 111,651 |  | $ | 15,731,398 |  | 15,883,287 |
Unearned fees, premiums and discounts, net |  |  |  |  |  |  |  |  |  | (23,672 | )
Total recorded investment in non-covered loans and loans held for sale |  |  |  |  |  |  |  |  |  | $ | 15,859,615 |
Loans 90 or more days past due are generally placed on nonaccrual status, at which point interest accrual is discontinued and all unpaid accrued interest is reversed against interest income. Additionally, loans that are not 90 or more days past due but have identified deficiencies, including delinquent troubled debt restructurings, are also placed on nonaccrual status. Troubled debt restructurings A troubled debt restructuring (“TDR”) is a modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower. The concessions may be granted in various forms, including a below-market change in the stated interest rate, reduction in the loan balance or accrued interest, extension of the maturity date with a stated interest rate lower than the current market rate or note splits referred to as A/B notes. In A/B note restructurings, the original note is bifurcated into two notes where the A note represents the portion of the original loan which allows for acceptable loan-to-value and debt coverage on the collateral and is expected to be collected in full and the B note represents the portion of the original loan where there is a shortfall in value and is fully charged-off. The A/B note balance is comprised of the A note balance only. A notes are not disclosed as TDRs in subsequent years after the year of restructuring if the restructuring agreement specifies an interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, the loan is not impaired based on the terms specified by the restructuring agreement and has demonstrated a period of sustained performance under the modified terms. TDRs may be designated as performing or nonperforming. A TDR may be designated as performing if the loan has demonstrated sustained performance under the modified terms. The period of sustained performance may include the periods prior to modification if prior performance met or exceeded the modified terms. A loan will remain on nonaccrual status until the borrower demonstrates a sustained period of performance, generally six consecutive months of payments. The Company had $67.2 million and $71.8 million in total performing restructured loans as of September 30, 2014 and December 31, 2013, respectively. Nonperforming restructured loans were $22.4 million and $11.1 million as of September 30, 2014 and December 31, 2013, respectively. Included as TDRs were $2.9 million and $4.3 million of performing A/B notes as of September 30, 2014 and December 31, 2013, respectively. The following tables summarize new TDR modifications on the non-covered loan portfolio and include the financial effects of these modifications for the periods presented:
|  | Loans Modified as TDRs During the Three Months Ended September 30, |
|  | 2014 |  | 2013 |
|  |  |  | Pre-Modification |  | Post-Modification |  |  |  |  |  | Pre-Modification |  | Post-Modification |  |  |
|  | Number |  | Outstanding |  | Outstanding |  |  |  | Number |  | Outstanding |  | Outstanding |  |  |
|  | of |  | Recorded |  | Recorded |  | Financial |  | of |  | Recorded |  | Recorded |  | Financial |
|  | Contracts |  | Investment |  | Investment (1) |  | Impact (2) |  | Contracts |  | Investment |  | Investment (1) |  | Impact (2) |
|  | ($ in thousands) |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 2 |  | $ | 1,474 |  | $ | 1,473 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Multifamily |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | — |  | $ | — |  | $ | — |  | $ | — |  | 1 |  | $ | 119 |  | $ | 117 |  | $ | 117 |
Construction |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Land |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 1 |  | $ | 54 |  | $ | 54 |  | $ | 10 |  | 2 |  | $ | 14,311 |  | $ | 14,310 |  | $ | 4,255 |
Trade finance |  | 1 |  | $ | 190 |  | $ | 111 |  | $ | 14 |  | — |  | $ | — |  | $ | — |  | $ | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Other consumer |  | 1 |  | $ | 509 |  | $ | 504 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
|  | Loans Modified as TDRs During the Nine Months Ended September 30, |
|  | 2014 |  | 2013 |
|  |  |  | Pre-Modification |  | Post-Modification |  |  |  |  |  | Pre-Modification |  | Post-Modification |  |  |
|  | Number |  | Outstanding |  | Outstanding |  |  |  | Number |  | Outstanding |  | Outstanding |  |  |
|  | of |  | Recorded |  | Recorded |  | Financial |  | of |  | Recorded |  | Recorded |  | Financial |
|  | Contracts |  | Investment |  | Investment (1) |  | Impact (2) |  | Contracts |  | Investment |  | Investment (1) |  | Impact (2) |
|  | ($ in thousands) |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 9 |  | $ | 11,454 |  | $ | 8,356 |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Multifamily |  | 1 |  | $ | 2,513 |  | $ | 2,832 |  | $ | — |  | 1 |  | $ | 1,093 |  | $ | 1,082 |  | $ | — |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 2 |  | $ | 5,318 |  | $ | 5,193 |  | $ | — |  | 5 |  | $ | 23,286 |  | $ | 18,722 |  | $ | 219 |
Construction |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Land |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 8 |  | $ | 2,940 |  | $ | 2,167 |  | $ | 1,821 |  | 6 |  | $ | 15,556 |  | $ | 15,518 |  | $ | 4,341 |
Trade finance |  | 1 |  | $ | 190 |  | $ | 111 |  | $ | 14 |  | — |  | $ | — |  | $ | — |  | $ | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | — |  | $ | — |  | $ | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | — |
Other consumer |  | 1 |  | $ | 509 |  | $ | 504 |  | $ | — |  | 1 |  | $ | 651 |  | $ | 644 |  | $ | — |
(1) Includes subsequent payments after modification and reflects the balance as of September 30, 2014 and September 30, 2013. (2) The financial impact includes charge-offs and specific reserves recorded at modification date. Potential TDRs are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower’s financial difficulty in order to maximize the Company’s recovery. Residential TDRs were restructured through extensions, principal deferments, principal and interest reductions, and other modified terms, for a total of $11.2 million as of September 30, 2014. Commercial real estate TDRs were restructured through principal and interest reductions and principal deferments, for a total of $5.2 million as of September 30, 2014. Commercial and industrial TDRs were restructured through extensions, principal deferment, principal and interest reductions, and other modified terms, for a total of $2.3 million as of September 30, 2014. Consumer TDRs were restructured through other modified terms for a total of $504 thousand as of September 30, 2014. These modifications had an impact of a reduction or deferment of principal and/or interest collected over the life of the loan, and/or an extended time period of collection of principal and/or interest. Residential TDRs modified using A/B note splits totaled $1.1 million as of September 30, 2013. Commercial real estate TDRs were primarily modified through A/B note splits, forbearance of payments and principal and/or interest deferment for a total of $18.7 million as of September 30, 2013. Modifications of commercial and industrial TDRs were restructured through extensions, principal and interest reduction, for a total of $15.5 million as of September 30, 2013. Consumer TDRs were restructured through maturity extensions for a total of $644 thousand as of September 30, 2013. Performing TDRs at September 30, 2014 were comprised of $19.7 million in residential loans, $30.1 million in commercial real estate loans, $16.1 million in commercial and industrial loans, and $1.3 million in consumer loans. Performing TDRs at December 31, 2013 were comprised of $37.6 million in commercial real estate loans, $17.4 million in residential loans, $16.7 million in commercial and industrial loans and $108 thousand in consumer loans. Nonperforming TDRs at September 30, 2014 were comprised of $9.1 million in residential loans, $8.3 million in commercial real estate loans, $5.0 million in commercial and industrial loans and no consumer loans. Nonperforming TDRs at December 31, 2013 were comprised of $3.6 million in residential loans, $3.4 million in commercial real estate loans, $3.5 million in commercial and industrial loans, and $639 thousand in consumer loans. Subsequent to restructuring, a TDR that becomes delinquent, generally beyond 90 days is considered to have defaulted. The following table provides information for loans modified as TDRs within the previous 12 months that have subsequently defaulted for the three and nine months ended and as of September 30, 2014 and 2013:
|  | Loans Modified as TDRs that Subsequently Defaulted |
|  | During the Three Months Ended September 30, |
|  | 2014 |  | 2013 |
|  | Number of |  | Recorded |  | Number of |  | Recorded |
|  | Contracts |  | Investment |  | Contracts |  | Investment |
|  | ($ in thousands) |
Residential: |  |  |  |  |  |  |  |  |
Single-family |  | — |  | $ | — |  | — |  | $ | — |
Multifamily |  | — |  | $ | — |  | — |  | $ | — |
CRE: |  |  |  |  |  |  |  |  |
Income producing |  | — |  | $ | — |  | — |  | $ | — |
Construction |  | — |  | $ | — |  | — |  | $ | — |
Land |  | — |  | $ | — |  | — |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |
Commercial business |  | 1 |  | $ | 967 |  | — |  | $ | — |
Trade finance |  | — |  | $ | — |  | — |  | $ | — |
Consumer: |  |  |  |  |  |  |  |  |
Student loans |  | — |  | $ | — |  | — |  | $ | — |
Other consumer |  | — |  | $ | — |  | — |  | $ | — |
|  | Loans Modified as TDRs that Subsequently Defaulted |
|  | During the Nine Months Ended September 30, |
|  | 2014 |  | 2013 |
|  | Number of |  | Recorded |  | Number of |  | Recorded |
|  | Contracts |  | Investment |  | Contracts |  | Investment |
|  | ($ in thousands) |
Residential: |  |  |  |  |  |  |  |  |
Single-family |  | — |  | $ | — |  | 2 |  | $ | 2,830 |
Multifamily |  | — |  | $ | — |  | — |  | $ | — |
CRE: |  |  |  |  |  |  |  |  |
Income producing |  | — |  | $ | — |  | — |  | $ | — |
Construction |  | — |  | $ | — |  | — |  | $ | — |
Land |  | — |  | $ | — |  | — |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |
Commercial business |  | 1 |  | $ | 967 |  | 2 |  | $ | 500 |
Trade finance |  | — |  | $ | — |  | — |  | $ | — |
Consumer: |  |  |  |  |  |  |  |  |
Student loans |  | — |  | $ | — |  | — |  | $ | — |
Other consumer |  | — |  | $ | — |  | — |  | $ | — |
TDRs are included in the impaired loan quarterly valuation allowance process. See sections below on Impaired Loans and Allowance for Loan Losses for the complete discussion. All portfolio segments of TDRs are reviewed for necessary specific reserves in the same manner as impaired loans of the same portfolio segment which have not been identified as TDRs. The modification of the terms of each TDR is considered in the current impairment analysis of the respective TDR. For all portfolio segments of delinquent TDRs, when the restructured loan is uncollectible and its fair value is less than the recorded investment in the loan, the deficiency is charged-off against the allowance for loan losses. If the loan is a performing TDR, the deficiency is included in the specific allowance, as appropriate. As of September 30, 2014, the allowance for loan losses associated with TDRs was $16.0 million for performing TDRs and $2.4 million for nonperforming TDRs. As of December 31, 2013, the allowance for loan losses associated with TDRs was $13.0 million for performing TDRs and $836 thousand for nonperforming TDRs. Impaired Loans A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all scheduled payments of principal or interest due according to the original contractual terms of the loan agreement. The Company’s loans are grouped into heterogeneous and homogeneous (mostly consumer loans) categories. Classified loans (graded Substandard or Doubtful) in the heterogeneous category are selected and evaluated for impairment on an individual basis. The Company considers loans individually reviewed to be impaired if, based on current information and events, it is probable the Company will not be able to collect all amounts due according to the original contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as an expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent, less costs to sell. When the value of an impaired loan is less than the recorded investment in the loan and the loan is classified as nonperforming and uncollectible, the deficiency is charged-off against the allowance for loan losses. Impaired loans exclude the homogenous consumer loan portfolio which is evaluated collectively for impairment. Impaired loans include non-covered loans held for investment on nonaccrual status, regardless of the collateral coverage, and loans modified in a TDR. At September 30, 2014 and December 31, 2013, impaired non-covered loans totaled $176.7 million and $183.5 million, respectively. Impaired non-covered loans as of September 30, 2014 and December 31, 2013 are presented in the following tables:
|  |  |  | Recorded |  | Recorded |  |  |  |  |
|  | Unpaid |  | Investment |  | Investment |  | Total |  |  |
|  | Principal |  | With No |  | With |  | Recorded |  | Related |
|  | Balance |  | Allowance |  | Allowance |  | Investment (1) |  | Allowance |
|  | (In thousands) |
As of September 30, 2014 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 20,954 |  | $ | 12,697 |  | $ | 6,911 |  | $ | 19,608 |  | $ | 413 |
Multifamily |  | 37,873 |  | 20,610 |  | 14,899 |  | 35,509 |  | 1,467 |
CRE: |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 70,152 |  | 45,456 |  | 16,496 |  | 61,952 |  | 2,349 |
Construction |  | 6,888 |  | 6,888 |  | — |  | 6,888 |  | — |
Land |  | 13,334 |  | 2,860 |  | 5,649 |  | 8,509 |  | 1,931 |
C&I: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 50,191 |  | 7,909 |  | 34,713 |  | 42,622 |  | 20,750 |
Trade finance |  | 368 |  | — |  | 363 |  | 363 |  | 47 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Other consumer |  | 1,261 |  | 1,153 |  | 108 |  | 1,261 |  | 1 |
Total |  | $ | 201,021 |  | $ | 97,573 |  | $ | 79,139 |  | $ | 176,712 |  | $ | 26,958 |
|  |  |  | Recorded |  | Recorded |  |  |  |  |
|  | Unpaid |  | Investment |  | Investment |  | Total |  |  |
|  | Principal |  | With No |  | With |  | Recorded |  | Related |
|  | Balance |  | Allowance |  | Allowance |  | Investment (1) |  | Allowance |
|  | (In thousands) |
As of December 31, 2013 |  |  |  |  |  |  |  |  |  |  |
Residential: |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 15,814 |  | $ | 13,585 |  | $ | 1,588 |  | $ | 15,173 |  | $ | 207 |
Multifamily |  | 43,821 |  | 30,899 |  | 10,215 |  | 41,114 |  | 1,339 |
CRE: |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 73,777 |  | 39,745 |  | 25,523 |  | 65,268 |  | 5,976 |
Construction |  | 6,888 |  | 6,888 |  | — |  | 6,888 |  | — |
Land |  | 17,390 |  | 4,372 |  | 7,908 |  | 12,280 |  | 2,082 |
C&I: |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 48,482 |  | 10,850 |  | 27,487 |  | 38,337 |  | 13,787 |
Trade finance |  | 2,771 |  | 438 |  | 752 |  | 1,190 |  | 752 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Student loans |  | 1,749 |  | 1,681 |  | — |  | 1,681 |  | — |
Other consumer |  | 1,945 |  | 1,546 |  | — |  | 1,546 |  | — |
Total |  | $ | 212,637 |  | $ | 110,004 |  | $ | 73,473 |  | $ | 183,477 |  | $ | 24,143 |
(1) Excludes $9.2 million and $17.7 million of covered non-accrual loans at September 30, 2014 and December 31, 2013, respectively, accounted for under ASC 310-10, of which some loans have additional partial balances accounted for under ASC 310-30. The following tables provide the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment:
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | Average recorded investment |  | Recognized interest income (1) |  | Average recorded investment |  | Recognized interest income (1) |  | Average recorded investment |  | Recognized interest income (1) |  | Average recorded investment |  | Recognized interest income (1) |
|  | (In thousands) |  | (In thousands) |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | $ | 19,668 |  | $ | 87 |  | $ | 13,131 |  | $ | 37 |  | $ | 19,372 |  | $ | 263 |  | $ | 13,464 |  | $ | 117 |
Multifamily |  | 35,547 |  | 177 |  | 43,452 |  | 224 |  | 35,610 |  | 529 |  | 43,465 |  | 680 |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 62,973 |  | 273 |  | 64,130 |  | 406 |  | 64,820 |  | 940 |  | 68,336 |  | 2,113 |
Construction |  | 6,888 |  | — |  | 6,888 |  | — |  | 6,888 |  | — |  | 6,888 |  | — |
Land |  | 8,581 |  | 75 |  | 12,943 |  | 124 |  | 8,676 |  | 224 |  | 13,049 |  | 371 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 42,832 |  | 207 |  | 38,604 |  | 200 |  | 42,403 |  | 619 |  | 42,612 |  | 564 |
Trade finance |  | 363 |  | 4 |  | 1,088 |  | 4 |  | 383 |  | 12 |  | 2,029 |  | 8 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | — |  | — |  | 1,076 |  | — |  | — |  | — |  | 869 |  | — |
Other consumer |  | 1,264 |  | 12 |  | 1,516 |  | 7 |  | 1,259 |  | 35 |  | 1,553 |  | 21 |
Total impaired loans (excluding PCI) |  | $ | 178,116 |  | $ | 835 |  | $ | 182,828 |  | $ | 1,002 |  | $ | 179,411 |  | $ | 2,622 |  | $ | 192,265 |  | $ | 3,874 |
(1) Includes interest recognized on accruing TDRs. Interest payments received on nonaccrual loans are generally reflected as a reduction of principal and not as interest income. Allowance for Loan Losses The allowance consists of specific reserves and a general reserve. The Company’s loans fall into heterogeneous and homogeneous (mostly consumer loans) categories. Impaired loans are subject to specific reserves. Loans in the homogeneous category, as well as non-impaired loans in the heterogeneous category, are evaluated as part of the general reserve. The general reserve is calculated by utilizing both quantitative and qualitative factors. There are different qualitative risks for the loans in each portfolio segment. The Residential and CRE segments’ predominant risk characteristic is the collateral and the geographic location of the property collateralizing the loan. The risk is qualitatively assessed based on the change in the real estate market in those geographic areas. The C&I segment’s predominant risk characteristics are the global cash flows of the borrowers and guarantors, and economic and market conditions. Consumer loans, excluding the student loan portfolio guaranteed by the U.S. Department of Education, are largely comprised of home equity lines of credit, for which the predominant risk characteristic is the real estate collateral securing the loans. The Company’s methodology to determine the overall appropriateness of the allowance is based on a classification migration model and qualitative considerations. The migration model examines pools of loans having similar characteristics and analyzes their loss rates over a historical period. The Company assigns loss rates to each loan grade within each pool of loans. Loss rates derived by the migration model are based predominantly on historical loss trends that may not be entirely indicative of the actual or inherent loss potential. As such, the Company utilizes qualitative and environmental factors as adjusting mechanisms to supplement the historical results of the classification migration model. Qualitative considerations include, but are not limited to, prevailing economic or market conditions, relative risk profiles of various loan segments, volume concentrations, growth trends, delinquency and nonaccrual status, problem loan trends, and geographic concentrations. Qualitative and environmental factors are reflected as percentage adjustments and are added to the historical loss rates derived from the classified asset migration model to determine the appropriate allowance for each loan pool. When determined uncollectible, it is the Company’s policy to promptly charge-off the difference in the outstanding loan balance and the fair value of the collateral. Recoveries are recorded when payment is received on loans that were previously charged-off through the allowance for loan losses. Allocation of a portion of the allowance to one segment of the loan portfolio does not preclude its availability to absorb losses in other segments. The following tables present a summary of the activity in the allowance for loan losses on non-covered loans for the three and nine months ended September 30, 2014 and 2013:
|  | Residential |  | CRE |  | C&I |  | Consumer |  | Unallocated |  | Total |
|  | (In thousands) |
Three Months Ended September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 45,783 |  | $ | 60,600 |  | $ | 128,479 |  | $ | 11,606 |  | $ | — |  | $ | 246,468 |
(Reversal of) provision for loan losses |  | (835 | ) | (16 | ) | 8,406 |  | 624 |  | (623 | ) | 7,556 |
Provision allocation for unfunded loan commitments and letters of credit |  | — |  | — |  | — |  | — |  | 623 |  | 623 |
Charge-offs |  | (8 | ) | (1,522 | ) | (6,693 | ) | (134 | ) | — |  | (8,357 | )
Recoveries |  | 95 |  | 259 |  | 2,621 |  | 3 |  | — |  | 2,978 |
Net recoveries/(charge-offs) |  | 87 |  | (1,263 | ) | (4,072 | ) | (131 | ) | — |  | (5,379 | )
Ending balance |  | $ | 45,035 |  | $ | 59,321 |  | $ | 132,813 |  | $ | 12,099 |  | $ | — |  | $ | 249,268 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,880 |  | $ | 4,280 |  | $ | 20,797 |  | $ | 1 |  | $ | — |  | $ | 26,958 |
Collectively evaluated for impairment |  | 43,155 |  | 54,751 |  | 112,016 |  | 12,098 |  | — |  | 222,020 |
Acquired with deteriorated credit quality |  | — |  | 290 |  | — |  | — |  | — |  | 290 |
Ending balance |  | $ | 45,035 |  | $ | 59,321 |  | $ | 132,813 |  | $ | 12,099 |  | $ | — |  | $ | 249,268 |
|  | Residential |  | CRE |  | C&I |  | Consumer |  | Unallocated |  | Total |
|  | (In thousands) |
Three Months Ended September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 47,337 |  | $ | 72,830 |  | $ | 105,376 |  | $ | 7,937 |  | $ | — |  | $ | 233,480 |
Provision for (reversal of) loan losses |  | 3,402 |  | (3,169 | ) | (594 | ) | 1,451 |  | 3,445 |  | 4,535 |
Provision allocation for unfunded loan commitments and letters of credit |  | — |  | — |  | — |  | — |  | (3,445 | ) | (3,445 | )
Charge-offs |  | (432 | ) | (574 | ) | (1,387 | ) | (6 | ) | — |  | (2,399 | )
Recoveries |  | 469 |  | 270 |  | 1,243 |  | 83 |  | — |  | 2,065 |
Net recoveries/(charge-offs) |  | 37 |  | (304 | ) | (144 | ) | 77 |  | — |  | (334 | )
Ending balance |  | $ | 50,776 |  | $ | 69,357 |  | $ | 104,638 |  | $ | 9,465 |  | $ | — |  | $ | 234,236 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 809 |  | $ | 6,045 |  | $ | 10,439 |  | $ | — |  | $ | — |  | $ | 17,293 |
Collectively evaluated for impairment |  | 49,967 |  | 63,312 |  | 94,199 |  | 9,465 |  | — |  | 216,943 |
Ending balance |  | $ | 50,776 |  | $ | 69,357 |  | $ | 104,638 |  | $ | 9,465 |  | $ | — |  | $ | 234,236 |
|  | Residential |  | CRE |  | C&I |  | Consumer |  | Unallocated |  | Total |
|  | (In thousands) |
Nine Months Ended September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 50,717 |  | $ | 64,677 |  | $ | 115,184 |  | $ | 11,352 |  | $ | — |  | $ | 241,930 |
(Reversal of) provision for loan losses |  | (5,625 | ) | (3,839 | ) | 32,621 |  | 876 |  | 421 |  | 24,454 |
Provision allocation for unfunded loan commitments and letters of credit |  | — |  | — |  | — |  | — |  | (421 | ) | (421 | )
Charge-offs |  | (351 | ) | (3,156 | )(1) | (18,917 | ) | (139 | ) | — |  | (22,563 | )
Recoveries |  | 294 |  | 1,639 |  | 3,925 |  | 10 |  | — |  | 5,868 |
Net charge-offs |  | (57 | ) | (1,517 | ) | (14,992 | ) | (129 | ) | — |  | (16,695 | )
Ending balance |  | $ | 45,035 |  | $ | 59,321 |  | $ | 132,813 |  | $ | 12,099 |  | $ | — |  | $ | 249,268 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,880 |  | $ | 4,280 |  | $ | 20,797 |  | $ | 1 |  | $ | — |  | $ | 26,958 |
Collectively evaluated for impairment |  | 43,155 |  | 54,751 |  | 112,016 |  | 12,098 |  | — |  | 222,020 |
Acquired with deteriorated credit quality |  | — |  | 290 |  | — |  | — |  | — |  | 290 |
Ending balance |  | $ | 45,035 |  | $ | 59,321 |  | $ | 132,813 |  | $ | 12,099 |  | $ | — |  | $ | 249,268 |
|  | Residential |  | CRE |  | C&I |  | Consumer |  | Unallocated |  | Total |
|  | (In thousands) |
Nine Months Ended September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 49,349 |  | $ | 69,856 |  | $ | 105,376 |  | $ | 4,801 |  | $ | — |  | $ | 229,382 |
Provision for loan losses |  | 1,180 |  | 223 |  | 3,347 |  | 5,003 |  | 2,297 |  | 12,050 |
Provision allocation for unfunded loan commitments and letters of credit |  | — |  | — |  | — |  | — |  | (2,297 | ) | (2,297 | )
Charge-offs |  | (1,293 | ) | (2,341 | ) | (6,464 | ) | (1,217 | ) | — |  | (11,315 | )
Recoveries |  | 1,540 |  | 1,619 |  | 2,379 |  | 878 |  | — |  | 6,416 |
Net recoveries/(charge-offs) |  | 247 |  | (722 | ) | (4,085 | ) | (339 | ) | — |  | (4,899 | )
Ending balance |  | $ | 50,776 |  | $ | 69,357 |  | $ | 104,638 |  | $ | 9,465 |  | $ | — |  | $ | 234,236 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 809 |  | $ | 6,045 |  | $ | 10,439 |  | $ | — |  | $ | — |  | $ | 17,293 |
Collectively evaluated for impairment |  | 49,967 |  | 63,312 |  | 94,199 |  | 9,465 |  | — |  | 216,943 |
Ending balance |  | $ | 50,776 |  | $ | 69,357 |  | $ | 104,638 |  | $ | 9,465 |  | $ | — |  | $ | 234,236 |
(1) Includes charge-off of $523 thousand relating to PCI loans acquired from MetroCorp. The Company’s recorded investments in total non-covered loans receivable as of September 30, 2014 and December 31, 2013 related to each balance in the allowance for loan losses by portfolio segment and disaggregated on the basis of the Company’s impairment methodology is as follows:
|  | Residential |  | CRE |  | C&I |  | Consumer |  | Total |
|  | (In thousands) |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 55,117 |  | $ | 77,349 |  | $ | 42,985 |  | $ | 1,261 |  | $ | 176,712 |
Collectively evaluated for impairment |  | 4,592,862 |  | 5,819,505 |  | 7,238,997 |  | 1,467,992 |  | 19,119,356 |
Acquired with deteriorated credit quality |  | 1,316 |  | 52,496 |  | 1,676 |  | — |  | 55,488 |
Ending balance |  | $ | 4,649,295 |  | $ | 5,949,350 |  | $ | 7,283,658 |  | $ | 1,469,253 |  | $ | 19,351,556 |
|  | Residential |  | CRE |  | C&I |  | Consumer |  | Total |
|  | (In thousands) |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 56,287 |  | $ | 84,436 |  | $ | 39,527 |  | $ | 3,227 |  | $ | 183,477 |
Collectively evaluated for impairment |  | 4,129,022 |  | 4,500,641 |  | 5,320,666 |  | 1,544,511 |  | 15,494,840 |
Ending balance |  | $ | 4,185,309 |  | $ | 4,585,077 |  | $ | 5,360,193 |  | $ | 1,547,738 |  | $ | 15,678,317 |
Allowance for Unfunded Loan Commitments, Off-Balance Sheet Credit Exposures and Recourse Provisions The allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to these unfunded credit facilities. The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. As of September 30, 2014 and December 31, 2013, the allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions amounted to $11.6 million and $11.3 million, respectively. Net adjustments to the allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions are included in the provision for loan losses. Loans serviced for others amounted to $1.23 billion and $1.35 billion at September 30, 2014 and December 31, 2013, respectively. These represent loans that have either been sold or securitized for which the Company continues to provide servicing or has limited recourse. The majority of these loans are residential and commercial and industrial as of September 30, 2014 and residential and CRE as of December 31, 2013. Of the total allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions, $2.4 million and $3.2 million pertain to loans that were sold or securitized with recourse as of September 30, 2014 and December 31, 2013, respectively. For complete discussion and disclosure see Note 12 to the Company’s consolidated financial statements. Accretable Yield The following table summarizes the changes in the accretable yield for the PCI loans acquired from MetroCorp for the three and nine months ended September 30, 2014:
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, 2014 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 5,767 |  | $ | — |
Additions |  | — |  | 6,745 |
Accretion |  | (1,228 | ) | (3,493 | )
Changes in expected cash flows |  | 669 |  | 1,956 |
Balance at end of period |  | $ | 5,208 |  | $ | 5,208 |

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- Definition The entire disclosure for non-covered loans and allowance for loan losses. Non-covered loans are loans receivable that are not covered by shared loss agreements which allow for reimbursement of certain losses for covered loans. + References No definition available. + Details
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