Note 6. Allowances for Loan Losses

The following tables provide additional information regarding the Company’s allowances for losses on non-covered loans and covered loans, based upon the method of evaluating loan impairment:


(in thousands)	Mortgage		Other		Total
Allowances for Loan Losses at June 30, 2017:
Loans individually evaluated for impairment	$	—	$	—	$	—
Loans collectively evaluated for impairment		120,325		32,492		152,817
Acquired loans with deteriorated credit quality		1,396		470		1,866

Total	$	121,721	$	32,962	$	154,683


(in thousands)	Mortgage		Other		Total
Allowances for Loan Losses at December 31, 2016:
Loans individually evaluated for impairment	$	—	$	577	$	577
Loans collectively evaluated for impairment		123,925		32,022		155,947
Acquired loans with deteriorated credit quality		11,984		13,483		25,467

Total	$	135,909	$	46,082	$	181,991

The following tables provide additional information regarding the methods used to evaluate the Company’s loan portfolio for impairment:


(in thousands)	Mortgage		Other		Total
Loans Receivable at June 30, 2017:
Loans individually evaluated for impairment	$	21,549	$	49,661	$	71,210
Loans collectively evaluated for impairment		35,164,278		1,984,950		37,149,228
Acquired loans with deteriorated credit quality		4,595		811		5,406

Total	$	35,190,422	$	2,035,422	$	37,225,844


(in thousands)	Mortgage		Other		Total
Loans Receivable at December 31, 2016:
Loans individually evaluated for impairment	$	29,660	$	18,592	$	48,252
Loans collectively evaluated for impairment		35,402,029		1,900,158		37,302,187
Acquired loans with deteriorated credit quality		1,614,755		89,140		1,703,895

Total	$	37,046,444	$	2,007,890	$	39,054,334

Allowance for Losses on Non-Covered Loans

The following table summarizes activity in the allowance for losses on non-covered loans for the the periods indicated:


	For the Six Months Ended June 30,
	2017									2016
(in thousands)	Mortgage			Other			Total			Mortgage			Other			Total
Balance, beginning of period	$	125,416		$	32,874		$	158,290		$	124,478		$	22,646		$	147,124
Charge-offs		(90	)		(17,646	)		(17,736	)		(153	)		(1,098	)		(1,251	)
Recoveries		180			517			697			1,140			581			1,721
(Recovery of) provision for non-covered loan losses		(3,785	)		17,217			13,432			3,231			2,234			5,465

Balance, end of period	$	121,721		$	32,962		$	154,683		$	128,696		$	24,363		$	153,059

See “Critical Accounting Policies” for additional information regarding the Company’s allowance for losses on non-covered loans.

The following table presents additional information about the Company’s impaired non-covered loans at June 30, 2017:


(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Multi-family	$	10,029	$	12,640	$	—	$	10,331	$	285
Commercial real estate		3,148		8,933		—		5,147		44
One-to-four family		2,173		2,442		—		3,204		26
Acquisition, development, and construction		6,200		15,500		—		6,200		—
Other		49,660		69,896		—		28,181		452

Total impaired loans with no related allowance	$	71,210	$	109,411	$	—	$	53,063	$	807

Impaired loans with an allowance recorded:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
One-to-four family		—		—		—		—		—
Acquisition, development, and construction		—		—		—		—		—
Other		—		—		—		4,370		—

Total impaired loans with an allowance recorded	$	—	$	—	$	—	$	4,370	$	—

Total impaired loans:
Multi-family	$	10,029	$	12,640	$	—	$	10,331	$	285
Commercial real estate		3,148		8,933		—		5,147		44
One-to-four family		2,173		2,442		—		3,204		26
Acquisition, development, and construction		6,200		15,500		—		6,200		—
Other		49,660		69,896		—		32,551		452

Total impaired loans	$	71,210	$	109,411	$	—	$	57,433	$	807

The following table presents additional information about the Company’s impaired non-covered loans at December 31, 2016:


(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Multi-family	$	10,742	$	13,133	$	—	$	11,431	$	627
Commercial real estate		9,117		14,868		—		10,461		143
One-to-four family		3,601		4,267		—		3,079		124
Acquisition, development, and construction		6,200		15,500		—		1,550		414
Other		6,739		7,955		—		8,261		92

Total impaired loans with no related allowance	$	36,399	$	55,723	$	—	$	34,782	$	1,400

Impaired loans with an allowance recorded:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
One-to-four family		—		—		—		—		—
Acquisition, development, and construction		—		—		—		—		—
Other		11,853		13,529		577		4,574		213

Total impaired loans with an allowance recorded	$	11,853	$	13,529	$	577	$	4,574	$	213

Total impaired loans:
Multi-family	$	10,742	$	13,133	$	—	$	11,431	$	627
Commercial real estate		9,117		14,868		—		10,461		143
One-to-four family		3,601		4,267		—		3,079		124
Acquisition, development, and construction		6,200		15,500		—		1,550		414
Other		18,592		21,484		577		12,835		305

Total impaired loans	$	48,252	$	69,252	$	577	$	39,356	$	1,613

Allowance for Losses on Covered Loans

Covered loans are reported exclusive of the FDIC loss share receivable. The covered loans acquired in the AmTrust and Desert Hills acquisitions are, and will continue to be, reviewed for collectability based on the expectations of cash flows from these loans. Covered loans have been aggregated into pools of loans with common characteristics. In determining the allowance for losses on covered loans, the Company periodically performs an analysis to estimate the expected cash flows for each of the pools of loans. The Company records a provision for (recovery of) losses on covered loans to the extent that the expected cash flows from a loan pool have decreased or increased since the acquisition date.

Accordingly, if there is a decrease in expected cash flows due to an increase in estimated credit losses (as compared to the estimates made at the respective acquisition dates), the decrease in the present value of expected cash flows is recorded as a provision for covered loan losses charged to earnings, and the allowance for covered loan losses is increased. A related credit to non-interest income and an increase in the FDIC loss share receivable are recognized at the same time, and measured based on the applicable loss sharing agreement percentage.

If there is an increase in expected cash flows due to a decrease in estimated credit losses (as compared to the estimates made at the respective acquisition dates), the increase in the present value of expected cash flows is recorded as a recovery of the prior-period impairment charged to earnings, and the allowance for covered loan losses is reduced. A related debit to non-interest income and a decrease in the FDIC loss share receivable are recognized at the same time, and measured based on the applicable Loss Share Agreement percentage.

The following table summarizes activity in the allowance for losses on covered loans (which, as of June 30, 2017, are classified as held for sale) for the periods indicated:


	For the Six Months Ended June 30,
(in thousands)	2017			2016
Balance, beginning of period	$	23,701		$	31,395
Recovery of losses on covered loans		(23,701	)		(4,746	)

Balance, end of period	$	—		$	26,649