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NON-COVERED LOANS AND ALLOWANCE FOR LOAN LOSSES | 12 Months Ended
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Dec. 31, 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 non-covered loans receivable as of December 31, 2014 and December 31, 2013:
|  | December 31, 2014 |  | December 31, 2013
|  | (In thousands)
CRE: |  |  |  |  |  |
Income producing |  | $ | 5,611,485 |  |  | $ | 4,301,030 |
Construction |  | 313,811 |  |  | 140,186 |
Land |  | 208,750 |  |  | 143,861 |
Total CRE |  | 6,134,046 |  |  | 4,585,077 |
C&I: |  |  |  |  |  |
Commercial business |  | 7,031,350 |  |  | 4,637,056 |
Trade finance |  | 806,744 |  |  | 723,137 |
Total C&I |  | 7,838,094 |  |  | 5,360,193 |
Residential: |  |  |  |  |  |
Single-family |  | 3,642,978 |  |  | 3,192,875 |
Multifamily |  | 1,177,690 |  |  | 992,434 |
Total residential |  | 4,820,668 |  |  | 4,185,309 |
Consumer: |  |  |  |  |  |
Student loans |  | — |  |  | 679,220 |
Other consumer |  | 1,456,643 |  |  | 868,518 |
Total consumer |  | 1,456,643 |  |  | 1,547,738 |
Total non-covered loans (1) |  | 20,249,451 |  |  | 15,678,317 |
Unearned fees, premiums, and discounts, net |  | 2,804 |  |  | (23,672 | )
Allowance for loan losses on non-covered loans |  | (258,174 | ) |  | (241,930 | )
Non-covered loans, net |  | $ | 19,994,081 |  |  | $ | 15,412,715 |
(1) | Loans net of ASC 310-30 discount.
As of December 31, 2014 and December 31, 2013, covered and non-covered loans receivable totaling $14.66 billion and $10.57 billion, respectively, were pledged to secure borrowings from the FHLB and the Federal Reserve Bank. 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 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. The Company’s residential single-family loans are primarily comprised of adjustable rate (“ARM”) first mortgage loans secured by one-to-four unit residential properties. The Company’s ARM single-family loan programs generally have a one-year or three-year initial fixed period. The Company’s residential multifamily loans are comprised mainly of variable rate loans that have a six-month or three-year initial fixed period. As of December 31, 2014, consumer loans were primarily comprised of HELOCs. As of December 31, 2013, consumer loans were primarily comprised of HELOCs and student 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 December 31, 2014, the Company had $6.13 billion in non-covered CRE loans and $4.82 billion in non-covered residential loans, of which approximately 80% were secured by real properties located in California. Deterioration in the real estate market generally, including residential and CRE, 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, 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. Purchased Loans — During 2014, the Company purchased $113.2 million of loans, the majority of which were student loans guaranteed by the U.S. Department of Education. During 2013, the Company purchased $759.3 million loans, of which 63% of the purchased loans were comprised of student loans that were primarily guaranteed by the U.S. Department of Education. The remaining loans purchased during 2013 were comprised mainly of insurance premium financing loans which were included in the C&I and consumer loan portfolios. Acquired Loans — In January 2014, the Company acquired $1.19 billion of loans through its acquisition of MetroCorp, as discussed in Note 2 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 December 31, 2014, the balance of PCI loans acquired from the MetroCorp acquisition was $50.6 million. Loans Held for Sale — Loans held for sale were $46.0 million and $205.0 million as of December 31, 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. $837.4 million and $97.1 million of net loans receivable were reclassified from loans held for investment to loans held for sale during 2014 and 2013, respectively. Loans transferred were primarily comprised of student loans and C&I loans in 2014 and in 2013. These loans were purchased by the Company with the original intent to be held for investment. However, subsequent to the purchase, the Company’s intent for these loans changed and they were consequently reclassified to loans held for sale. $5.2 million of write-downs related to loans transferred from loans held for investment to loans held for sale were recorded to allowance for loan losses for the year ended December 31, 2014. The Company did not record any write-downs related to loans transferred from loans held for investment to loans held for sale for the year ended December 31, 2013. Proceeds from total loans sold were $1.14 billion, resulting in net gains of $39.1 million during 2014. The majority of loans sold in 2014 were comprised of student loans and commercial loans. In comparison, proceeds from total loans sold were $376.4 million and $428.7 million in 2013 and 2012, respectively, resulting in net gains of $7.8 million and $17.0 million during 2013 and 2012, respectively. Loans sold in 2013 and 2012 primarily comprised of student loans and commercial loans, respectively. 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 indicate s that 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 the borrowers' status and likelihood of loan repayment. The following tables present the credit risk rating categories for non-covered loans by portfolio segment as of December 31, 2014 and 2013:
|  | Pass/Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Loss |  | Total
|  | (In thousands)
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 5,244,022 |  |  | $ | 54,431 |  |  | $ | 313,032 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,611,485 |
Construction |  | 306,923 |  |  | — |  |  | 6,888 |  |  | — |  |  | — |  |  | 313,811 |
Land |  | 179,319 |  |  | 5,701 |  |  | 23,730 |  |  | — |  |  | — |  |  | 208,750 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 6,783,051 |  |  | 128,578 |  |  | 119,133 |  |  | 533 |  |  | 55 |  |  | 7,031,350 |
Trade finance |  | 766,575 |  |  | 10,193 |  |  | 29,976 |  |  | — |  |  | — |  |  | 806,744 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 3,624,097 |  |  | 3,143 |  |  | 15,738 |  |  | — |  |  | — |  |  | 3,642,978 |
Multifamily |  | 1,096,572 |  |  | 5,124 |  |  | 75,994 |  |  | — |  |  | — |  |  | 1,177,690 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other consumer |  | 1,452,953 |  |  | 1,005 |  |  | 2,685 |  |  | — |  |  | — |  |  | 1,456,643 |
Total |  | $ | 19,453,512 |  |  | $ | 208,175 |  |  | $ | 587,176 |  |  | $ | 533 |  |  | $ | 55 |  |  | $ | 20,249,451 |
|  | Pass/Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Loss |  | Total
|  | (In thousands)
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 3,167,337 |  |  | 8,331 |  |  | 17,207 |  |  | — |  |  | — |  |  | 3,192,875 |
Multifamily |  | 923,697 |  |  | 1,634 |  |  | 67,103 |  |  | — |  |  | — |  |  | 992,434 |
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 December 31, 2014 and 2013:
|  | Accruing Loans 30-59 Days Past Due |  | Accruing Loans 60-89 Days Past Due |  | Total Accruing Past Due Loans |  | Nonaccrual Loans Less Than 90 Days Past Due |  | Nonaccrual Loans 90 or More Days Past Due |  | Total Nonaccrual Loans |  | Current Accruing Loans |  | Total
|  | (In thousands)
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 14,171 |  |  | $ | 3,593 |  |  | $ | 17,764 |  |  | $ | 29,576 |  |  | $ | 9,109 |  |  | $ | 38,685 |  |  | $ | 5,555,036 |  |  | $ | 5,611,485 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,888 |  |  | 6,888 |  |  | 306,923 |  |  | 313,811 |
Land |  | — |  |  | — |  |  | — |  |  | 254 |  |  | 2,502 |  |  | 2,756 |  |  | 205,994 |  |  | 208,750 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 3,073 |  |  | 2,884 |  |  | 5,957 |  |  | 5,514 |  |  | 14,689 |  |  | 20,203 |  |  | 7,005,190 |  |  | 7,031,350 |
Trade finance |  | — |  |  | — |  |  | — |  |  | 73 |  |  | — |  |  | 73 |  |  | 806,671 |  |  | 806,744 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 6,375 |  |  | 1,294 |  |  | 7,669 |  |  | 2,894 |  |  | 4,936 |  |  | 7,830 |  |  | 3,627,479 |  |  | 3,642,978 |
Multifamily |  | 4,350 |  |  | 507 |  |  | 4,857 |  |  | 12,460 |  |  | 8,336 |  |  | 20,796 |  |  | 1,152,037 |  |  | 1,177,690 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other consumer |  | 2,154 |  |  | 162 |  |  | 2,316 |  |  | 115 |  |  | 540 |  |  | 655 |  |  | 1,453,672 |  |  | 1,456,643 |
Loans held for sale |  | 642 |  |  | 175 |  |  | 817 |  |  | — |  |  | 3,157 |  |  | 3,157 |  |  | 41,976 |  |  | 45,950 |
Total (1) |  | $ | 30,765 |  |  | $ | 8,615 |  |  | $ | 39,380 |  |  | $ | 50,886 |  |  | $ | 50,157 |  |  | $ | 101,043 |  |  | $ | 20,154,978 |  |  | $ | 20,295,401 |
Unearned fees, premiums and discounts, net |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,804 |
Total recorded investment in non-covered loans and loans held for sale |  |  |  |  |  |  |  |  |  |  |  |  | $ | 20,298,205 |
(1) | Loans net of ASC 310-30 discount.
|  | Accruing Loans 30-59 Days Past Due |  | Accruing Loans 60-89 Days Past Due |  | Total Accruing Past Due Loans |  | Nonaccrual Loans Less Than 90 Days Past Due |  | Nonaccrual Loans 90 or More Days Past Due |  | Total Nonaccrual Loans |  | Current Accruing Loans |  | Total
|  | (In thousands)
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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 |
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 |
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 TDR s, are also placed on nonaccrual status. Troubled Debt Restructurings A 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. 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. CRE TDRs were restructured through principal and interest reductions, rate reductions, principal deferments, extensions, and other modified terms, for a total of $8.6 million as of December 31, 2014. C&I TDRs were restructured through extensions, principal deferments, forbearance payments, rate reductions, and other modified terms, for a total of $3.2 million as of December 31, 2014. Residential TDRs were restructured through principal deferments, extensions, principal and interest reductions, and other modified terms, for a total of $12.0 million as of December 31, 2014. Consumer TDRs were restructured through other modified terms for a total of $504 thousand as of December 31, 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. CRE TDRs were primarily modified through A/B note splits, forbearance of payments and principal and/or interest deferment for a total of $17.5 million as of December 31, 2013. Modifications of C&I TDRs were restructured through extensions, and principal and interest reduction, for a total of $15.6 million as of December 31, 2013. Residential TDRs modified using A/B note splits totaled $1.1 million as of December 31, 2013. Consumer TDRs were restructured through maturity extensions for a total of $639 thousand as of December 31, 2013. CRE TDRs modified using A/B note splits, principal reductions, extensions and/or non-market interest changes totaled $9.2 million as of December 31, 2012. C&I TDRs modified using forbearance payments, principal reductions, principal and/or interest deferment and/or maturity extensions totaled $5.0 million as of December 31, 2012. Residential TDRs modified using principal and/or interest deferment and/or rate reductions, extensions, A/B note splits and/or other principal adjustments totaled $33.7 million as of December 31, 2012. Consumer TDRs were restructured through principal deferment totaling $108 thousand as of December 31, 2012. The following table presents new TDR modifications on the non-covered loan portfolio and include the financial effects of these modifications for the years ended December 31, 2014, 2013, and 2012:
|  | Loans Modified as TDRs During the Year Ended December 31,
|  | 2014 |  | 2013 |  | 2012
|  | Number of Contracts |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment (1) |  | Financial Impact (2) |  | Number of Contracts |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment (1) |  | Financial Impact (2) |  | Number of Contracts |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment (1) |  | Financial Impact (2)
|  | ($ in thousands)
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 6 |  |  | $ | 8,829 |  |  | $ | 8,624 |  |  | $ | 43 |  |  | 6 |  |  | $ | 26,021 |  |  | $ | 17,456 |  |  | $ | 219 |  |  | 8 |  |  | $ | 10,118 |  |  | $ | 8,162 |  |  | $ | 1,169 |
Construction |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Land |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 3 |  |  | $ | 1,610 |  |  | $ | 1,059 |  |  | $ | 395 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 13 |  |  | $ | 4,379 |  |  | $ | 3,089 |  |  | $ | 2,205 |  |  | 6 |  |  | $ | 16,220 |  |  | $ | 15,624 |  |  | $ | 4,274 |  |  | 14 |  |  | $ | 5,101 |  |  | $ | 4,374 |  |  | $ | 560 |
Trade finance |  | 1 |  |  | $ | 190 |  |  | $ | 73 |  |  | $ | 14 |  |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 2 |  |  | $ | 2,510 |  |  | $ | 579 |  |  | $ | 1,506 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 9 |  |  | $ | 11,454 |  |  | $ | 8,269 |  |  | $ | — |  |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 12 |  |  | $ | 6,227 |  |  | $ | 5,556 |  |  | $ | 938 |
Multifamily |  | 6 |  |  | $ | 5,471 |  |  | $ | 3,705 |  |  | $ | 7 |  |  | 1 |  |  | $ | 1,093 |  |  | $ | 1,071 |  |  | $ | — |  |  | 16 |  |  | $ | 28,736 |  |  | $ | 28,153 |  |  | $ | 3,344 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other consumer |  | 1 |  |  | $ | 509 |  |  | $ | 504 |  |  | $ | — |  |  | 1 |  |  | $ | 651 |  |  | $ | 639 |  |  | $ | — |  |  | 1 |  |  | $ | 108 |  |  | $ | 108 |  |  | $ | — |
(1) | Includes subsequent payments after modification.
(2) | The financial impact includes charge-offs and specific reserves recorded at modification date.
Subsequent to restructuring, a TDR that becomes delinquent, generally beyond 90 days is considered to have defaulted. The following table presents information for loans modified as TDRs within the previous 12 months that have subsequently defaulted as of December 31, 2014, 2013, and 2012:
|  | Loans Modified as TDRs that Subsequently Defaulted During the Year Ended December 31,
|  | 2014 |  | 2013 |  | 2012
|  | Number of Contracts |  | Recorded Investment |  | Number of Contracts |  | Recorded Investment |  | Number of Contracts |  | Recorded Investment
|  | ($ in thousands)
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | 1 |  |  | $ | 271 |
Construction |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Land |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 1 |  |  | $ | 957 |  |  | 1 |  |  | $ | 570 |  |  | 2 |  |  | $ | 33 |
Trade finance |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | 2 |  |  | $ | 2,830 |
Multifamily |  | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | 1 |  |  | $ | 378 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other consumer |  | — |  |  | $ | — |  |  | 1 |  |  | $ | 639 |  |  | — |  |  | $ | — |
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 $68.3 million and $71.8 million in total performing restructured loans as of December 31, 2014 and 2013, respectively. Nonperforming restructured loans were $20.7 million and $11.1 million as of December 31, 2014 and 2013, respectively. Included as TDRs were $2.9 million and $4.3 million of performing A/B notes as of December 31, 2014 and 2013, respectively. Performing TDRs as of December 31, 2014 were comprised of $28.4 million in CRE loans, $16.2 million in C&I loans, $22.5 million in residential loans and $1.2 million in consumer loans. Performing TDRs as of December 31, 2013 were comprised of $37.6 million in CRE loans, $16.7 million in C&I loans, $17.4 million in residential loans and $108 thousand in consumer loans. Nonperforming TDRs as of December 31, 2014 were comprised of $8.2 million in CRE loans, $5.5 million in C&I loans, $7.0 million in residential loans and no consumer loans. Nonperforming TDRs as of December 31, 2013 were comprised of $3.4 million in CRE loans, $3.5 million in C&I loans, $3.6 million in residential loans and $639 thousand in consumer loans. TDRs are included in the impaired loan quarterly valuation allowance process. See the sections below on Impaired Loans and Allowance for Loan Losse s 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 December 31, 2014, the allowance for loan losses associated with TDRs was $13.1 million for performing TDRs and $1.9 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. The amount of additional funds committed to lend to borrowers whose terms have been modified were immaterial as of December 31, 2014 and 2013. 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 in the heterogeneous category are identified 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. As of December 31, 2014 and 2013, impaired non-covered loans totaled $154.1 million and $183.5 million, respectively. The following tables present the Company's impaired non-covered loans as of December 31, 2014 and 2013:
|  | Unpaid Principal Balance |  | Recorded Investment With No Allowance |  | Recorded Investment With Allowance |  | Total Recorded Investment (1) |  | Related Allowance
|  | (In thousands)
As of December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 57,805 |  |  | $ | 34,399 |  |  | $ | 15,646 |  |  | $ | 50,045 |  |  | $ | 1,581 |
Construction |  | 6,888 |  |  | 6,888 |  |  | — |  |  | 6,888 |  |  | — |
Land |  | 13,291 |  |  | 2,838 |  |  | 5,622 |  |  | 8,460 |  |  | 1,906 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 42,396 |  |  | 10,552 |  |  | 25,717 |  |  | 36,269 |  |  | 15,174 |
Trade finance |  | 280 |  |  | — |  |  | 274 |  |  | 274 |  |  | 28 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 17,838 |  |  | 5,137 |  |  | 11,398 |  |  | 16,535 |  |  | 461 |
Multifamily |  | 37,624 |  |  | 21,500 |  |  | 12,890 |  |  | 34,390 |  |  | 313 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other consumer |  | 1,259 |  |  | 1,151 |  |  | 108 |  |  | 1,259 |  |  | 1 |
Total |  | $ | 177,381 |  |  | $ | 82,465 |  |  | $ | 71,655 |  |  | $ | 154,120 |  |  | $ | 19,464 |
|  | Unpaid Principal Balance |  | Recorded Investment With No Allowance |  | Recorded Investment With Allowance |  | Total Recorded Investment (1) |  | Related Allowance
|  | (In thousands)
As of December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 15,814 |  |  | 13,585 |  |  | 1,588 |  |  | 15,173 |  |  | 207 |
Multifamily |  | 43,821 |  |  | 30,899 |  |  | 10,215 |  |  | 41,114 |  |  | 1,339 |
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 $10.1 million and $17.7 million of covered non-accrual loans as of December 31, 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 table present the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment:
|  | Year Ended December 31,
|  | 2014 |  | 2013
|  | Average recorded investment |  | Recognized interest income (1) |  | Average recorded investment |  | Recognized interest income (1)
|  | (In thousands)
CRE: |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 54,544 |  |  | $ | 1,249 |  |  | $ | 71,856 |  |  | $ | 2,480 |
Construction |  | 6,888 |  |  | — |  |  | 6,888 |  |  | — |
Land |  | 8,633 |  |  | 298 |  |  | 12,453 |  |  | 496 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 36,528 |  |  | 833 |  |  | 38,294 |  |  | 735 |
Trade finance |  | 336 |  |  | 15 |  |  | 1,603 |  |  | 11 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 16,413 |  |  | 342 |  |  | 15,322 |  |  | 154 |
Multifamily |  | 37,128 |  |  | 830 |  |  | 35,799 |  |  | 850 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Student loans |  | — |  |  | — |  |  | 1,664 |  |  | — |
Other consumer |  | 1,259 |  |  | 47 |  |  | 1,561 |  |  | 4 |
Total impaired loans (excluding PCI) |  | $ | 161,729 |  |  | $ | 3,614 |  |  | $ | 185,440 |  |  | $ | 4,730 |
(1) | Includes interest recognized on accruing TDRs. Interest payments received on nonaccrual loans are 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 r esidential 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 HELOCs 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 or the discounted value of expected cashflows. 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 years ended December 31, 2014, 2013 and 2012:
|  | CRE |  | C&I |  | Residential |  | Consumer |  | Unallocated |  | Total
|  | (In thousands)
Year Ended December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 64,677 |  |  | $ | 115,184 |  |  | $ | 50,717 |  |  | $ | 11,352 |  |  | $ | — |  |  | $ | 241,930 |
Provision for (reversal of) loan losses |  | 6,107 |  |  | 40,371 |  |  | (8,168 | ) |  | 4,240 |  |  | 1,575 |  |  | 44,125 |
Allowance for unfunded loan commitments and letters of credit |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,575 | ) |  | (1,575 | )
Charge-offs |  | (3,294 | ) | (1) | (29,592 | ) |  | (1,103 | ) |  | (5,793 | ) |  | — |  |  | (39,782 | )
Recoveries |  | 1,982 |  |  | 8,635 |  |  | 2,410 |  |  | 449 |  |  | — |  |  | 13,476 |
Net (charge-offs) recoveries |  | (1,312 | ) |  | (20,957 | ) |  | 1,307 |  |  | (5,344 | ) |  | — |  |  | (26,306 | )
Ending balance |  | $ | 69,472 |  |  | $ | 134,598 |  |  | $ | 43,856 |  |  | $ | 10,248 |  |  | $ | — |  |  | $ | 258,174 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3,487 |  |  | $ | 15,202 |  |  | $ | 774 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 19,464 |
Collectively evaluated for impairment |  | 65,695 |  |  | 119,396 |  |  | 43,082 |  |  | 10,247 |  |  | — |  |  | 238,420 |
Acquired with deteriorated credit quality |  | 290 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 290 |
Ending balance |  | $ | 69,472 |  |  | $ | 134,598 |  |  | $ | 43,856 |  |  | $ | 10,248 |  |  | $ | — |  |  | $ | 258,174 |
(1) Includes a charge-off of $523 thousand related to PCI loans acquired from MetroCorp.
|  | CRE |  | C&I |  | Residential |  | Consumer |  | Unallocated |  | Total
| (In thousands)
Year Ended December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 69,856 |  |  | $ | 105,376 |  |  | $ | 49,349 |  |  | $ | 4,801 |  |  | $ | — |  |  | $ | 229,382 |
(Reversal of) provision for loan losses |  | (6,615 | ) |  | 12,821 |  |  | 1,918 |  |  | 8,055 |  |  | 2,157 |  |  | 18,336 |
Allowance for unfunded loan commitments and letters of credit |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,157 | ) |  | (2,157 | )
Charge-offs |  | (3,357 | ) |  | (7,405 | ) |  | (3,197 | ) |  | (2,385 | ) |  | — |  |  | (16,344 | )
Recoveries |  | 4,793 |  |  | 4,392 |  |  | 2,647 |  |  | 881 |  |  | — |  |  | 12,713 |
Net recoveries (charge-offs) |  | 1,436 |  |  | (3,013 | ) |  | (550 | ) |  | (1,504 | ) |  | — |  |  | (3,631 | )
Ending balance |  | $ | 64,677 |  |  | $ | 115,184 |  |  | $ | 50,717 |  |  | $ | 11,352 |  |  | $ | — |  |  | $ | 241,930 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 8,058 |  |  | $ | 14,539 |  |  | $ | 1,546 |  |  | $ | — |  |  | $ | — |  |  | $ | 24,143 |
Collectively evaluated for impairment |  | 56,619 |  |  | 100,645 |  |  | 49,171 |  |  | 11,352 |  |  | — |  |  | 217,787 |
Ending balance |  | $ | 64,677 |  |  | $ | 115,184 |  |  | $ | 50,717 |  |  | $ | 11,352 |  |  | $ | — |  |  | $ | 241,930 |
|  | CRE |  | C&I |  | Residential |  | Consumer |  | Unallocated |  | Total
| (In thousands)
Year Ended December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 66,457 |  |  | $ | 87,020 |  |  | $ | 52,180 |  |  | $ | 4,219 |  |  | $ | — |  |  | $ | 209,876 |
Provision for (reversal of) loan losses |  | 20,977 |  |  | 35,204 |  |  | 3,255 |  |  | 2,295 |  |  | (1,563 | ) |  | 60,168 |
Allowance for unfunded loan commitments and letters of credit |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,563 |  |  | 1,563 |
Charge-offs |  | (27,060 | ) |  | (21,818 | ) |  | (7,700 | ) |  | (1,824 | ) |  | — |  |  | (58,402 | )
Recoveries |  | 9,482 |  |  | 4,970 |  |  | 1,614 |  |  | 111 |  |  | — |  |  | 16,177 |
Net (chargeoffs) recoveries |  | (17,578 | ) |  | (16,848 | ) |  | (6,086 | ) |  | (1,713 | ) |  | — |  |  | (42,225 | )
Ending balance |  | $ | 69,856 |  |  | $ | 105,376 |  |  | $ | 49,349 |  |  | $ | 4,801 |  |  | $ | — |  |  | $ | 229,382 |
Ending balance allocated to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 5,561 |  |  | $ | 2,835 |  |  | $ | 3,131 |  |  | $ | — |  |  | $ | — |  |  | $ | 11,527 |
Collectively evaluated for impairment |  | 64,295 |  |  | 102,541 |  |  | 46,218 |  |  | 4,801 |  |  | — |  |  | 217,855 |
Ending balance |  | $ | 69,856 |  |  | $ | 105,376 |  |  | $ | 49,349 |  |  | $ | 4,801 |  |  | $ | — |  |  | $ | 229,382 |
The following tables present the Company’s recorded investments in total non-covered loans receivable as of December 31, 2014 and 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:
|  | CRE |  | C&I |  | Residential |  | Consumer |  | Total
|  | (In thousands)
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 65,393 |  |  | $ | 36,543 |  |  | $ | 50,925 |  |  | $ | 1,259 |  |  | $ | 154,120 |
Collectively evaluated for impairment |  | 5,977,437 |  |  | 7,796,239 |  |  | 4,768,541 |  |  | 1,455,384 |  |  | 19,997,601 |
Acquired with deteriorated credit quality |  | 91,216 |  |  | 5,312 |  |  | 1,202 |  |  | — |  |  | 97,730 |
Ending balance |  | $ | 6,134,046 |  |  | $ | 7,838,094 |  |  | $ | 4,820,668 |  |  | $ | 1,456,643 |  |  | $ | 20,249,451 |
|  | CRE |  | C&I |  | Residential |  | Consumer |  | Total
|  | (In thousands)
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 84,436 |  |  | $ | 39,527 |  |  | $ | 56,287 |  |  | $ | 3,227 |  |  | $ | 183,477 |
Collectively evaluated for impairment |  | 4,500,641 |  |  | 5,320,666 |  |  | 4,129,022 |  |  | 1,544,511 |  |  | 15,494,840 |
Ending balance |  | $ | 4,585,077 |  |  | $ | 5,360,193 |  |  | $ | 4,185,309 |  |  | $ | 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 December 31, 2014 and 2013, the allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions amounted to $12.7 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 $1.19 billion and $1.35 billion as of December 31, 2014 and 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 were residential and C&I as of December 31, 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, $2.2 million and $3.2 million pertain to loans that were sold or securitized with recourse as of December 31, 2014 and 2013, respectively. For complete discussion and disclosure see Note 15 to the Company’s consolidated financial statements. Accretable Yield The following table presents the changes in the accretable yield for the PCI loans acquired from MetroCorp for the year ended December 31, 2014:
|  |  |  | Year Ended
|  |  |  | December 31, 2014
|  |  |  | (In thousands)
Beginning balance |  |  |  | $ | — |
Additions |  |  |  | 6,745 |
Accretion |  |  |  | (4,960 | )
Changes in expected cash flows |  |  |  | 3,379 |
Ending Balance |  |  |  | $ | 5,164 |

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