| Purchase Credit Impaired (PCI) Loans |
PURCHASED CREDIT IMPAIRED ("PCI") LOANS
Below is a summary of PCI loans by category at December 31, 2015 and 2014: | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | (in thousands) | Weighted- Average Risk Rating1 | Recorded Investment PCI Loans | | Weighted- Average Risk Rating1 | Recorded Investment PCI Loans | Commercial and industrial | 6.70 | $ | 3,863 |
| | 6.57 | $ | 4,012 |
| Real estate loans: | | | | | | Commercial - investor owned | 6.98 | 25,272 |
| | 7.07 | 39,066 |
| Commercial - owner occupied | 6.30 | 19,414 |
| | 6.35 | 22,695 |
| Construction and land development | 6.28 | 6,838 |
| | 6.16 | 7,740 |
| Residential | 5.44 | 19,287 |
| | 5.54 | 25,121 |
| Total real estate loans | | 70,811 |
| | | 94,622 |
| Consumer and other | 1.89 | 84 |
| | 5.39 | 469 |
| Purchased credit impaired loans | | $ | 74,758 |
| | | $ | 99,103 |
| | | | | | | (1) Risk ratings are based on the borrower's contractual obligation, which is not reflective of the purchase discount. |
The aging of the recorded investment in past due PCI loans by portfolio class and category at December 31, 2015 and 2014 is shown below:
| | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | (in thousands) | 30-89 Days Past Due | | 90 or More
Days Past Due | | Total Past Due | | Current | | Total | Commercial and industrial | $ | — |
| | $ | — |
| | $ | — |
| | $ | 3,863 |
| | $ | 3,863 |
| Real estate: | | | | | | | | | | Commercial - investor owned | 2,342 |
| | 3,661 |
| | 6,003 |
| | 19,269 |
| | 25,272 |
| Commercial - owner occupied | 731 |
| | — |
| | 731 |
| | 18,683 |
| | 19,414 |
| Construction and land development | — |
| | — |
| | — |
| | 6,838 |
| | 6,838 |
| Residential | 1,594 |
| | 130 |
| | 1,724 |
| | 17,563 |
| | 19,287 |
| Consumer and other | 4 |
| | — |
| | 4 |
| | 80 |
| | 84 |
| Total | $ | 4,671 |
| | $ | 3,791 |
| | $ | 8,462 |
| | $ | 66,296 |
| | $ | 74,758 |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2014 | (in thousands) | 30-89 Days Past Due | | 90 or More
Days Past Due | | Total Past Due | | Current | | Total | Commercial and industrial | $ | — |
| | $ | 16 |
| | $ | 16 |
| | $ | 3,996 |
| | $ | 4,012 |
| Real estate: | | | | | | | | | | Commercial - investor owned | 878 |
| | 6,484 |
| | 7,362 |
| | 31,704 |
| | 39,066 |
| Commercial - owner occupied | — |
| | 2,759 |
| | 2,759 |
| | 19,936 |
| | 22,695 |
| Construction and land development | 774 |
| | — |
| | 774 |
| | 6,966 |
| | 7,740 |
| Residential | 2,020 |
| | 1,451 |
| | 3,471 |
| | 21,650 |
| | 25,121 |
| Consumer and other | — |
| | 12 |
| | 12 |
| | 457 |
| | 469 |
| Total | $ | 3,672 |
| | $ | 10,722 |
| | $ | 14,394 |
| | $ | 84,709 |
| | $ | 99,103 |
|
The following table is a rollforward of PCI loans, net of the allowance for loan losses, for the years ended December 31, 2015 and 2014. | | | | | | | | | | | | | | | | | (in thousands) | Contractual Cashflows | | Non-accretable Difference | | Accretable Yield | | Carrying Amount | Balance January 1, 2015 | $ | 178,145 |
| | $ | 65,719 |
| | $ | 28,733 |
| | $ | 83,693 |
| Principal reductions and interest payments | (24,441 | ) | | — |
| | — |
| | (24,441 | ) | Accretion of loan discount | — |
| | — |
| | (10,775 | ) | | 10,775 |
| Changes in contractual and expected cash flows due to remeasurement | (3,574 | ) | | (30,413 | ) | | 12,132 |
| | 14,707 |
| Reductions due to disposals | (33,441 | ) | | (8,541 | ) | | (4,749 | ) | | (20,151 | ) | Balance December 31, 2015 | $ | 116,689 |
| | $ | 26,765 |
| | $ | 25,341 |
| | $ | 64,583 |
| | | | | | | | | Balance January 1, 2014 | $ | 266,068 |
| | $ | 87,438 |
| | $ | 53,530 |
| | $ | 125,100 |
| Principal reductions and interest payments | (35,718 | ) | | — |
| | — |
| | (35,718 | ) | Accretion of loan discount | — |
| | — |
| | (15,747 | ) | | 15,747 |
| Changes in contractual and expected cash flows due to remeasurement | (2,170 | ) | | (7,403 | ) | | (3,234 | ) | | 8,467 |
| Reductions due to disposals | (50,035 | ) | | (14,316 | ) | | (5,816 | ) | | (29,903 | ) | Balance December 31, 2014 | $ | 178,145 |
| | $ | 65,719 |
| | $ | 28,733 |
| | $ | 83,693 |
|
The accretable yield is accreted into interest income over the estimated life of the acquired loans using the effective yield method.
A summary of activity in the FDIC loss share receivable for the years ended December 31, 2015 and 2014 is as follows: | | | | | | | | | (in thousands) | December 31, 2015 | | December 31, 2014 | Balance at beginning of period | $ | 15,866 |
| | $ | 34,319 |
| Adjustments not reflected in income: | | | | Cash received from the FDIC for covered assets | (3,528 | ) | | (9,605 | ) | FDIC reimbursable losses (recoveries) | (1,386 | ) | | 459 |
| Reductions for loss share termination | (5,922 | ) | | — |
| Adjustments reflected in income: | | | | Amortization, net | (2,293 | ) | | (6,342 | ) | Loan impairment (impairment reversal) | (1,113 | ) | | 841 |
| Reductions for payments on covered assets in excess of expected cash flows | (1,624 | ) | | (3,806 | ) | Balance at end of period | $ | — |
| | $ | 15,866 |
|
Outstanding customer balances on PCI loans were $98.6 million and $135.3 million as of December 31, 2015, and December 31, 2014, respectively.
On December 7, 2015, the Company entered into an agreement to terminate all existing loss share agreements with the FDIC. Under the terms of the agreement, the FDIC made a net payment to the bank of $1.3 million. The agreement eliminated the FDIC clawback liability of $3.5 million and the FDIC loss share receivable of $7.2 million. Accordingly, a one-time pretax charge of $2.4 million was recorded in 2015 as a separate component of noninterest expense. See FDIC Loss Share Receivable and Clawback Liability in Note 1 – Summary of Significant Accounting Policies for information on the Company's accounting in prior years. |