Business Combinations (Tables)

6 Months Ended

Jun. 30, 2014

The following table provides a breakout of Merger related expense for the three and six months ended June 30, 2014.



(in thousands)
	Three Months Ended		Six Months Ended
	June 30, 2014		June 30, 2014
Personnel	$	15,075	$	15,488
Legal and professional	8,752		13,924
Charitable contributions	10,000		10,000
Investment banking fees	9,573		9,573
Contract termination	8,853		8,853
Communication	1,839		2,011
Other	3,439		3,665
Total Merger related expense	$	57,531	$	63,514

Sterling Financial Corporation [Member]

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed at Estimated Fair Values

A summary of the consideration paid, the assets acquired and liabilities assumed in the Merger are presented below:



(in thousands)
	Sterling
	April 18, 2014
Fair value of consideration to Sterling shareholders:
Cash paid			$	136,200
Liability recorded for warrants' cash payment per share			6,453
Fair value of common shares issued			1,939,497
Fair value of warrants, common stock options, and restricted stock exchanged			50,317
Total consideration			2,132,467
Fair value of assets acquired:
Cash and cash equivalents	$	253,067
Investment securities	1,378,300
Loans held for sale	215,208
Non-covered loans and leases	7,122,989
Premises and equipment	124,881
Residential mortgage servicing rights	62,770
Other intangible assets	54,562
Non-covered other real estate owned	8,140
Bank owned life insurance	193,246
Deferred tax asset	295,371
Accrued interest receivable	23,553
Other assets	147,338
Total assets acquired	9,879,425
Fair value of liabilities assumed:
Deposits	7,086,052
Securities sold under agreements to repurchase	584,746
Term debt	854,737
Junior subordinated debentures	156,171
Other liabilities	80,679
Total liabilities assumed	$	8,762,385
Net assets acquired			1,117,040
Preliminary goodwill			$	1,015,427

Schedule of Loans Acquired

The following table presents the acquired purchased impaired loans as of the acquisition date:



(in thousands)	Purchase impaired
Contractually required principal payments	$	604,136
Nonaccretable difference	(95,614		)
Cash flows expected to be collected	508,522
Accretable yield	(110,757		)
Fair value of purchased non-covered impaired loans	$	397,765

Pro Forma Results of Operations

The operations of Sterling are included in our operating results beginning on April 19, 2014, and contributed the following net interest income, provision for loan losses, non-interest income and expense, income tax benefit, and net income for the three and six months ended June 30, 2014.



(in thousands)	Sterling Stand-alone
	Three Months Ended			Six Months Ended
	June 30, 2014			June 30, 2014
Net interest income	$	101,254		$	101,254
Provision for loan losses	7,735			7,735
Non-interest income	22,302			22,302
Non-interest expense, excluding merger expense	65,132			65,132
Merger expense	57,531			57,531
Income tax benefit	1,101			1,101
Net loss	$	(5,741	)	$	(5,741	)



(in thousands, except per share data)
	Pro Forma
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net interest income	$	234,503		$	214,107		$	458,792		$	427,140		^{(1), (2)}
Provision for non-covered loan and lease losses	15,399			2,993			20,799			9,981
Recapture of provision for covered loan losses	(703		)	(3,072		)	(132		)	(2,840		)
Non-interest income	48,785			71,567			94,107			138,718			^{(3), (4), (5)}
Non-interest expense	175,480			241,906			349,705			419,915			^{(6), (7)}
Income before provision for income taxes	93,112			43,847			182,527			138,802
Provision for income taxes	36,637			12,822			68,905			45,039
Net income	56,475			31,025			113,622			93,763
Dividends and undistributed earnings allocated to participating securities	83			197			196			380
Net earnings available to common shareholders	$	56,392		$	30,828		$	113,426		$	93,383
Earnings per share:
Basic	$	0.26		$	0.14		$	0.52		$	0.43
Diluted	$	0.26		$	0.14		$	0.52		$	0.43
Average shares outstanding:
Basic	216,960			216,040			216,700			215,992
Diluted	220,531			218,476			219,748			218,424

(1) Includes $5.1 million and $33.6 million of incremental loan discount accretion for the three months ended June 30, 2014 and 2013, respectively and $31.9 million and $69.8 million for the six months ended June 30, 2014 and 2013, respectively.

(2) Includes a reduction of interest expense of $1.0 million and $5.6 million related to deposit and borrowing premiums amortization for the three months ended June 30, 2014 and 2013, respectively and $5.9 million and $11.4 million for the six months ended June 30, 2014 and 2013, respectively.

(3) Includes a reduction of service charges on deposit of $288,000 and $1.4 million as a result of passing the $10 billion asset threshold for the three months ended June 30, 2014 and 2013, respectively and $1.7 million and $2.9 million for the six months ended June 30, 2014 and 2013, respectively.

(4) Includes a loss on junior subordinated debentures carried at fair value of $190,000 and $966,000 for the three months ended June 30, 2014 and 2013, respectively and $837,000 and $1.9 million for six months ended June 30, 2014 and 2013, respectively.

(5) The six months ended June 30, 2014 includes the reversal of the $7.0 million loss on the sale of the six stores.

(6) Includes $347,000 and $2.0 million of incremental core deposit intangible amortization for the three months ended June 30, 2014 and 2013, respectively and $2.1 million and $4.1 million for the six months ended June 30, 2014 and 2013, respectively.

(7) The three and six months ended June 30, 2014 were adjusted to exclude $70.7 million and $79.4 million of merger expenses, respectively, the three and six months ended June 2013 were adjusted to include these charges.

Financial Pacific Holding Corp [Member]

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed at Estimated Fair Values

A summary of consideration paid, the assets acquired and liabilities assumed at their fair values in the acquisition of FinPac are presented below.



(in thousands)
	FinPac
	July 1, 2013
Fair value of consideration:
Cash			$	156,110
Fair value of assets acquired:
Cash and equivalents	$	6,452
Non-covered loans and leases, net	264,336
Premises and equipment	491
Other assets	8,015
Total assets acquired	279,294
Fair value of liabilities assumed:
Term debt	211,204
Other liabilities	8,757
Total liabilities assumed	$	219,961
Net assets acquired			59,333
Goodwill			$	96,777

Schedule of Loans Acquired

Non-covered leases acquired from FinPac are presented below as of acquisition date:



(in thousands)	FinPac
	July 1, 2013
Contractually required payments	$	350,403
Purchase adjustment for credit	$	(20,520	)
Balance of non-covered impaired leases, net	$	264,336

Pro Forma Results of Operations



(in thousands, except per share data)	Pro Forma
	Three Months Ended			Six Months Ended
	June 30, 2013			June 30, 2013
Net interest income	$	105,297		$	210,809
Provision for non-covered loan and lease losses	3,688			13,253
Recapture of provision for covered loan losses	(3,072		)	(2,840		)
Non-interest income	35,019			69,824
Non-interest expense	92,403			181,794
Income before provision for income taxes	47,297			88,426
Provision for income taxes	16,910			31,094
Net income	30,387			57,332
Dividends and undistributed earnings allocated to participating securities	228			439
Net earnings available to common shareholders	$	30,159		$	56,893
Earnings per share:
Basic	$	0.27		$	0.51
Diluted	$	0.27		$	0.51
Average shares outstanding:
Basic	111,954			111,946
Diluted	112,145			112,133