NOTE 8—FDIC LOSS SHARING ASSET

The FDIC loss sharing asset relates to assets covered by the loss sharing agreements between the Bank and the FDIC arising from the acquisitions of Los Padres Bank and Affinity Bank and, through the FCAL acquisition, the assumption of the loss sharing agreements between First California Bank and the FDIC arising from FCB's acquisition of Western Commercial Bank ("Western Commercial") and San Luis Trust Bank ("San Luis"). The FDIC loss sharing asset related to Western Commercial and San Luis was measured at its fair value as of May 31, 2013 in conjunction with the FCAL acquisition. The FDIC loss sharing asset related to Los Padres and Affinity was measured at its estimated fair value at the respective acquisition dates.

An increase in the expected amount of losses on the covered assets will increase the FDIC loss sharing asset; such increase is recognized through a credit to FDIC loss sharing income. Recoveries on previous losses paid to us by the FDIC reduce the FDIC loss sharing asset by a charge to FDIC loss sharing income. In addition, decreases in the expected amount of losses on covered assets will decrease the amount of funds expected to be collected from the FDIC and will therefore reduce the FDIC loss sharing asset through higher prospective amortization expense. The FDIC loss sharing asset is being amortized to its estimated value over the lesser of the term of the loss sharing agreements or the remaining contractual life of the assets covered by the loss sharing agreements.

Both the Western Commercial and San Luis loss sharing agreements contain true-up provisions, under which we will owe the FDIC amounts at the end of the loss sharing agreements based on the performance of the covered assets. The true-up liability is included in other liabilities in the accompanying condensed consolidated balance sheets.

The following table presents the changes in the FDIC loss sharing asset for the period indicated:

	FDIC Loss Sharing Asset

	(In thousands)
Balance, December 31, 2012	$	57,475
Addition from the FCAL acquisition		17,180
FDIC share of additional losses, net of recoveries		6,440
Cash received from FDIC		(6,724	)
Net amortization		(18,718	)

Balance, September 30, 2013	$	55,653

The following table presents information about the composition of the FDIC loss sharing asset, the true-up liability, and the non-single family and the single family covered assets as of the date indicated:

	September 30, 2013

	Affinity Bank		Los Padres Bank		Western Commercial Bank		San Luis Trust Bank		Total
	(Dollars in thousands)
FDIC loss sharing asset	$	12,973	$	27,717	$	2,153	$	12,810	$	55,653

True-up liability		N/A		N/A	$	1,510	$	5,071	$	6,581

Non-single family covered assets⁽¹⁾	$	230,053	$	157,504	$	21,844	$	51,879	$	461,280

Single family covered assets	$	14,285	$	77,126	$	—	$	41,319	$	132,730

Loss sharing expiration dates:
Non-single family		3rd Quarter 2014		3rd Quarter 2015		4th Quarter 2015		1st Quarter 2016
Single family		3rd Quarter 2019		3rd Quarter 2020		N/A		1st Quarter 2021
Loss recovery expiration dates:
Non-single family		3rd Quarter 2017		3rd Quarter 2018		4th Quarter 2018		1st Quarter 2019
Single family		3rd Quarter 2019		3rd Quarter 2020		N/A		1st Quarter 2021

(1): Excludes securities.