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 December 31, 2017:
Loans collectively evaluated for impairment	$	128,275	$	29,771	$	158,046


(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 December 31, 2017:
Loans individually evaluated for impairment	$	31,747	$	48,810	$	80,557
Loans collectively evaluated for impairment		36,278,241		2,000,224		38,278,465

Total	$	36,309,988	$	2,049,034	$	38,359,022


(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 twelve months ended December 31, 2017 and 2016:


	December 31,
	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		(375	)		(62,975	)		(63,350	)		(170	)		(3,413	)		(3,583	)
Recoveries		605			1,558			2,163			1,272			1,603			2,875
Provision for (recovery of) non-covered loan losses		2,629			58,314			60,943			(164	)		12,038			11,874

Balance, end of period	$	128,275		$	29,771		$	158,046		$	125,416		$	32,874		$	158,290

See Note 2, “Summary of Significant Accounting Polices” 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 December 31, 2017:


(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Multi-family	$	8,892	$	11,470	$	—	$	9,554	$	495
Commercial real estate		5,137		10,252		—		3,522		92
One-to-four family		1,966		2,072		—		2,489		50
Acquisition, development, and construction		15,752		25,952		—		10,976		575
Other		48,810		104,901		—		43,074		2,200

Total impaired loans with no related allowance	$	80,557	$	154,647	$	—	$	69,615	$	3,412

Impaired loans with an allowance recorded:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
One-to-four family		—		—		—		—		—
Acquisition, development, and construction		—		—		—		—		—
Other		—		—		—		314		—

Total impaired loans with an allowance recorded	$	—	$	—	$	—	$	314	$	—

Total impaired loans:
Multi-family	$	8,892	$	11,470	$	—	$	9,554	$	495
Commercial real estate		5,137		10,252		—		3,522		92
One-to-four family		1,966		2,072		—		2,489		50
Acquisition, development, and construction		15,752		25,952		—		10,976		575
Other		48,810		104,901		—		43,388		2,200

Total impaired loans	$	80,557	$	154,647	$	—	$	69,929	$	3,412

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

Accordingly, if there was 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 was recorded as a provision for covered loan losses charged to earnings, and the allowance for covered loan losses was increased. A related credit to non-interest income and an increase in the LSA are recognized at the same time, and measured based on the applicable loss sharing agreement percentage.

If there was 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 was recorded as a recovery of the prior-period impairment charged to earnings, and the allowance for covered loan losses was reduced. A related debit to non-interest income and a decrease in the LSA was recognized at the same time, and measured based on the applicable LSA percentage.

The following table summarizes activity in the allowance for losses on covered loans for the years ended December 31, 2017 and 2016:


	December 31,
(in thousands)	2017			2016
Balance, beginning of period	$	23,701		$	31,395
Recovery of losses on covered loans		(23,701	)		(7,694	)

Balance, end of period	$	—		$	23,701