Loans Receivable and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Schedule of Loans Receivable

The following table presents loans receivable as of June 30, 2014 and December 31, 2013:

	June 30, 2014			December 31, 2013
(amounts in thousands)
Construction	$	11,544		$	14,627
Commercial real estate/multi-family		21,150			24,258
Commercial and industrial		4,039			5,814
Residential real estate		14,600			18,733
Manufactured housing		3,141			3,293
Total loans receivable covered under FDIC loss sharing agreements (1)		54,474			66,725
Construction		51,377			36,901
Commercial real estate/multi-family		2,820,492			1,835,186
Commercial and industrial		299,122			239,509
Mortgage warehouse		9			866
Manufactured housing		133,307			139,471
Residential real estate		283,713			145,188
Consumer		2,015			2,144
Total loans receivable not covered under FDIC loss sharing agreements		3,590,035			2,399,265
Total loans receivable		3,644,509			2,465,990
Deferred (fees) costs, net		(405	)		(912	)
Allowance for loan losses		(28,186	)		(23,998	)
Loans receivable, net	$	3,615,918		$	2,441,080

(1) Loans that were acquired in two FDIC-assisted transactions and are covered under loss sharing agreements with the FDIC are referred to as “covered” loans throughout these financial statements.

Non-Covered Loans and Covered Loans by Class and Performance Status

Non-Covered Loans

The following tables summarize non-covered loans by class and performance status as of June 30, 2014 and December 31, 2013:

	June 30, 2014
	30-89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
(amounts in thousands)
Commercial and industrial	$	478	$	0	$	478	$	1,974	$	295,073	$	1,597	$	299,122
Commercial real estate		267		0		267		8,714		2,777,671		33,840		2,820,492
Construction		0		0		0		451		50,419		507		51,377
Residential real estate		597		0		597		834		272,555		9,727		283,713
Consumer		4		0		4		0		1,673		338		2,015
Mortgage warehouse		0		0		0		0		9		0		9
Manufactured housing (5)		6,228		4,208		10,436		727		117,817		4,327		133,307
Total	$	7,574	$	4,208	$	11,782	$	12,700	$	3,515,217	$	50,336	$	3,590,035

	December 31, 2013
	30-89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
(amounts in thousands)
Commercial and industrial	$	10	$	0	$	10	$	123	$	237,453	$	1,923	$	239,509
Commercial real estate		0		0		0		9,924		1,788,144		37,118		1,835,186
Construction		0		0		0		2,049		33,922		930		36,901
Residential real estate		555		0		555		969		133,158		10,506		145,188
Consumer		0		0		0		0		1,728		416		2,144
Mortgage warehouse		0		0		0		0		866		0		866
Manufactured housing (5)		7,921		3,772		11,693		448		122,416		4,914		139,471
Total	$	8,486	$	3,772	$	12,258	$	13,513	$	2,317,687	$	55,807	$	2,399,265

(1) Includes past due loans that are accruing interest because collection is considered probable.

(2) Loans where next payment due is less than 30 days from the report date.

(3) Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because of the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans.

(4) Amounts exclude deferred costs and fees and the allowance for loan losses.

(5) Manufactured housing loans purchased in 2010 are subject to cash reserves held at the Bank that are used to fund past-due payments when the loan becomes 90 days or more delinquent. Subsequent purchases are subject to varying provisions in the event of borrowers’ delinquencies.

Covered Loans

The following tables summarize covered loans by class and performance status as of June 30, 2014 and December 31, 2013:

	June 30, 2014
	30-89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due (1)		Non- Accrual		Current (2)		Purchased- Credit Impaired Loans (3)		Total Loans (4)
(amounts in thousands)
Commercial and industrial	$	0	$	0	$	0	$	217	$	3,304	$	518	$	4,039
Commercial real estate		0		0		0		628		13,070		7,452		21,150
Construction		0		0		0		2,412		526		8,606		11,544
Residential real estate		3		0		3		1,012		11,770		1,815		14,600
Manufactured housing		53		0		53		83		2,863		142		3,141
Total	$	56	$	0	$	56	$	4,352	$	31,533	$	18,533	$	54,474

	December 31, 2013
	30-89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due (1)		Non- Accrual		Current (2)		Purchased- Credit Impaired Loans (3)		Total Loans (4)
(amounts in thousands)
Commercial and industrial	$	295	$	0	$	295	$	2	$	3,172	$	2,345	$	5,814
Commercial real estate		245		0		245		1,691		13,586		8,736		24,258
Construction		0		0		0		3,382		1,967		9,278		14,627
Residential real estate		90		0		90		564		14,108		3,971		18,733
Manufactured housing		56		0		56		11		3,081		145		3,293
Total	$	686	$	0	$	686	$	5,650	$	35,914	$	24,475	$	66,725

(1) Includes past due loans that are accruing interest because collection is considered probable.

(2) Purchased loans in FDIC assisted transactions with no evidence of credit deterioration since origination.

(3) Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because of the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans.

(4) Amounts exclude deferred costs and fees and allowance for loan losses.

Schedule of Changes in Allowance for Loan Losses

The following tables present changes in the allowance for loan losses and the FDIC loss sharing receivable for the three and six months ended June 30, 2014 and 2013.

	Allowance for Loan Losses
	For the three months ended June 30,
(amounts in thousands)	2014			2013
Beginning balance	$	26,704		$	26,439
Provision for loan losses (1)		2,730			4,620
Charge-offs		(1,405	)		(3,093	)
Recoveries		157			176
Ending balance	$	28,186		$	28,142

	Allowance for Loan Losses
	For the six months ended June 30,
(amounts in thousands)	2014			2013
Beginning balance	$	23,998		$	25,837
Provision for loan losses (1)		5,631			5,720
Charge-offs		(1,941	)		(3,656	)
Recoveries		498			241
Ending balance	$	28,186		$	28,142

Schedule of FDIC Loss Sharing Receivable

	FDIC Loss Sharing Receivable
	For the three months ended June 30,
(amounts in thousands)	2014			2013
Beginning balance	$	8,272		$	12,043
(Decreased)/Increased estimated cash flows (2)		(156	)		2,504
Other activity, net (a)		983			380
Cash receipts from FDIC		(180	)		(758	)
Ending balance	$	8,919		$	14,169
(1)    Provision for loan losses	$	2,730		$	4,620
(2)    Effect attributable to FDIC loss share arrangements		156			(2,504	)
Net amount reported as provision for loan losses	$	2,886		$	2,116

(a) Includes external costs, such as legal fees, real estate taxes, and appraisal expenses, which qualify for reimbursement under loss sharing arrangements

	FDIC Loss Sharing Receivable
	For the six months ended June 30,
(amounts in thousands)	2014			2013
Beginning balance	$	10,046		$	12,343
(Decreased)/Increased estimated cash flows (2)		(1,622	)		3,722
Other activity, net (a)		1,972			1,232
Cash receipts from FDIC		(1,477	)		(3,128	)
Ending balance	$	8,919		$	14,169
(1)    Provision for loan losses	$	5,631		$	5,720
(2)    Effect attributable to FDIC loss share arrangements		1,622			(3,722	)
Net amount reported as provision for loan losses	$	7,253		$	1,998

(a) Includes external costs, such as legal fees, real estate taxes, and appraisal expenses, which qualify for reimbursement under loss sharing arrangements.

Summary of Recorded Investment Net Charge-Offs, Unpaid Principal Balance and Related Allowance for Impaired Loans

Impaired Loans — Covered and Non-Covered

The following tables present the recorded investment (net of charge-offs), unpaid principal balance and related allowance for impaired loans as of June 30, 2014 and December 31, 2013 and the average recorded investment and interest income recognized for the three and six months ended June 30, 2014 and 2013. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.

	June 30, 2014						For the three months ended June 30, 2014				For the six months ended June 30, 2014
	Recorded Investment Net of Charge offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(amounts in thousands)
With no related allowance recorded:
Commercial and industrial	$	14,988	$	15,406	$	—	$	12,949	$	57	$	12,998	$	66
Commercial real estate		17,640		18,491		—		18,761		45		17,306		103
Construction		2,325		3,594		—		2,325		—		2,476		—
Consumer		83		83		—		44		—		29		—
Residential real estate		1,934		1,934		—		1,943		—		2,239		6
With an allowance recorded:
Commercial and industrial		1,655		1,655		915		1,246		7		1,653		12
Commercial real estate		2,913		2,913		812		2,676		—		2,537		1
Construction		1,553		1,553		671		1,561		—		1,418		—
Consumer		53		53		5		59		1		60		2
Residential real estate		248		248		175		249		1		250		2
Total	$	43,392	$	45,930	$	2,578	$	41,813	$	111	$	40,966	$	192

	December 31, 2013						For the three months ended June 30, 2013				For the six months ended June 30, 2013
	Recorded Investment Net of Charge offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(amounts in thousands)
With no related allowance recorded:
Commercial and industrial	$	13,097	$	13,159	$	—	$	6,068	$	92	$	5,249	$	118
Commercial real estate		14,397		15,249		—		27,251		206		24,277		337
Construction		2,777		4,046		—		6,214		10		7,075		10
Consumer		—		—		—		89		—		100		—
Residential real estate		2,831		2,831		—		2,168		6		2,436		10
With an allowance recorded:
Commercial and industrial		2,469		3,739		829		1,419		32		886		63
Commercial real estate		2,261		3,167		946		5,838		19		8,095		34
Construction		1,132		1,132		351		5,238		—		6,172		—
Consumer		64		64		17		50		—		45		—
Residential real estate		252		252		199		1,023		1		1,035		2
Total	$	39,280	$	43,639	$	2,342	$	55,358	$	366	$	55,370	$	574

Analysis of Loans Modified in Troubled Debt Restructuring by Type of Concession

The following is an analysis of loans modified in a troubled debt restructuring by type of concession for the three and six months ended June 30, 2014 and 2013. There were no modifications that involved forgiveness of debt.

	TDRs in Compliance with Their Modified Terms and Accruing Interest		TDRs in Compliance with Their Modified Terms and Not Accruing Interest		Total
(amounts in thousands)
Three months ended June 30, 2014
Extended under forbearance	$	167	$	0	$	167
Multiple extensions resulting from financial difficulty		0		0		0
Interest-rate reductions		0		176		176
Total	$	167	$	176	$	343
Six months ended June 30, 2014
Extended under forbearance	$	167	$	0	$	167
Multiple extensions resulting from financial difficulty		0		0		0
Interest-rate reductions		247		303		550
Total	$	414	$	303	$	717
Three months ended June 30, 2013
Extended under forbearance	$	0	$	0	$	0
Multiple extensions resulting from financial difficulty		0		0		0
Interest-rate reductions		93		910		1,003
Total	$	93	$	910	$	1,003
Six months ended June 30, 2013
Extended under forbearance	$	0	$	0	$	0
Multiple extensions resulting from financial difficulty		0		0		0
Interest-rate reductions		93		1,167		1,260
Total	$	93	$	1,167	$	1,260

Summary of Loans Modified in Troubled Debt Restructurings, Recorded Investments and Unpaid Principal Balances

The following table provides, by class, the number of loans modified in troubled debt restructurings and the recorded investments and unpaid principal balances during the three and six months ended June 30, 2014 and 2013.

	TDRs in Compliance with Their Modified Terms and Accruing Interest				TDRs in Compliance with Their Modified Terms and Not Accruing Interest
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
(amounts in thousands)
Three months ended June 30, 2014
Commercial and industrial		0	$	0		0	$	0
Commercial real estate		0		0		0		0
Construction		0		0		0		0
Manufactured housing		0		0		3		176
Residential real estate		0		0		0		0
Consumer		4		167		0		0
Total		4	$	167		3	$	176
Six months ended June 30, 2014
Commercial and industrial		0	$	0		0	$	0
Commercial real estate		0		0		0		0
Construction		0		0		0		0
Manufactured housing		1		47		5		303
Residential real estate		3		200		0		0
Consumer		4		167		0		0
Total		8	$	414		5	$	303
Three months ended June 30, 2013
Commercial and industrial		0	$	0		0	$	0
Commercial real estate		0		0		0		0
Construction		0		0		0		0
Manufactured housing		2		60		7		910
Residential real estate		0		0		0		0
Consumer		1		33		0		0
Total		3	$	93		7	$	910
Six months ended June 30, 2013
Commercial and industrial		0	$	0		0	$	0
Commercial real estate		0		0		0		0
Construction		0		0		0		0
Manufactured housing		2		60		10		1,167
Residential real estate		0		0		0		0
Consumer		1		33		0		0
Total		3	$	93		10	$	1,167

Credit Ratings of Covered and Non-Covered Loan Portfolio

The following tables present the credit ratings of the non-covered loan portfolio as of June 30, 2014 and December 31, 2013:

	June 30, 2014
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
(amounts in thousands)
Pass/Satisfactory	$	283,044	$	2,793,438	$	50,899	$	281,713
Special Mention		13,750		14,838		27		467
Substandard		2,328		12,216		451		1,533
Total loans receivable, non-covered	$	299,122	$	2,820,492	$	51,377	$	283,713

	Consumer		Mortgage Warehouse		Manufactured Housing
(amounts in thousands)
Performing	$	2,015	$	9	$	122,144
Nonperforming (1)		0		0		11,163
Total loans receivable, non-covered	$	2,015	$	9	$	133,307

	December 31, 2013
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
(amounts in thousands)
Pass/Satisfactory	$	228,748	$	1,808,804	$	34,822	$	142,588
Special Mention		10,314		12,760		29		940
Substandard		447		13,622		2,050		1,660
Total loans receivable, non-covered	$	239,509	$	1,835,186	$	36,901	$	145,188

	Consumer		Mortgage Warehouse		Manufactured Housing
(amounts in thousands)
Performing	$	2,144	$	866	$	127,330
Nonperforming (1)		0		0		12,141
Total loans receivable, non-covered	$	2,144	$	866	$	139,471

(1) Includes loans that are past due and still accruing interest and loans on nonaccrual status.

The following tables present the credit ratings of the covered loan portfolio as of June 30, 2014 and December 31, 2013:

	June 30, 2014
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
(amounts in thousands)
Pass/Satisfactory	$	3,700	$	13,325	$	526	$	12,194
Special Mention		0		3,159		0		0
Substandard		339		4,666		11,018		2,406
Total loans receivable, covered	$	4,039	$	21,150	$	11,544	$	14,600

	Manufactured Housing
(amounts in thousands)
Performing	$	3,005
Nonperforming (1)		136
Total loans receivable, covered	$	3,141

	December 31, 2013
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
(amounts in thousands)
Pass/Satisfactory	$	3,688	$	14,330	$	1,967	$	14,137
Special Mention		223		2,989		0		455
Substandard		1,903		6,939		12,660		4,141
Total loans receivable, covered	$	5,814	$	24,258	$	14,627	$	18,733

	Manufactured Housing
(amounts in thousands)
Performing	$	3,226
Nonperforming (1)		67
Total loans receivable, covered	$	3,293

(1) Includes loans that are past due and still accruing interest and loans on nonaccrual status.

Schedule of Allowance for Loan Losses

The changes in the allowance for loan losses for the three and six months ended June 30, 2014 and 2013 and the loans and allowance for loan losses by loan class based on impairment evaluation method are as follows. The amounts presented for the provision for loan losses below do not include the effect of changes to estimated benefits resulting from the FDIC loss share arrangements for the covered loans.

	Commercial and Industrial			Commercial Real Estate			Construction			Residential Real Estate			Manufactured Housing			Consumer			Mortgage Warehouse		Residual Reserve		Total
(amounts in thousands)
Three months ended June 30, 2014
Beginning Balance, April 1, 2014	$	2,443		$	18,852		$	2,342		$	2,307		$	593		$	127		$	40	$	0	$	26,704
Charge-offs		(445	)		(912	)		0			(15	)		0			(33	)		0		0		(1,405	)
Recoveries		135			1			3			18			0			0			0		0		157
Provision for loan losses		1,060			2,148			(158	)		(282	)		(192	)		44			110		0		2,730
Ending Balance, June 30, 2014	$	3,193		$	20,089		$	2,187		$	2,028		$	401		$	138		$	150	$	0	$	28,186
Six months ended June 30, 2014
Beginning Balance, January 1, 2014	$	2,638		$	15,705		$	2,385		$	2,490		$	614		$	130		$	36	$	0	$	23,998
Charge-offs		(445	)		(1,160	)		0			(303	)		0			(33	)		0		0		(1,941	)
Recoveries		225			26			3			242			0			2			0		0		498
Provision for loan losses		775			5,518			(201	)		(401	)		(213	)		39			114		0		5,631
Ending Balance, June 30, 2014	$	3,193		$	20,089		$	2,187		$	2,028		$	401		$	138		$	150	$	0	$	28,186
At June 30, 2014
Loans:
Individually evaluated for impairment	$	16,643		$	20,553		$	3,878		$	2,182		$	0		$	136		$	0	$	0	$	43,392
Collectively evaluated for impairment		284,403			2,779,797			49,930			284,589			131,979			1,541			9		0		3,532,248
Loans acquired with credit deterioration		2,115			41,292			9,113			11,542			4,469			338			0		0		68,869
Total loans receivable, excluding deferred fees and costs	$	303,161		$	2,841,642		$	62,921		$	298,313		$	136,448		$	2,015		$	9		0	$	3,644,509
Allowance for loan losses:
Individually evaluated for impairment	$	915		$	812		$	671		$	175		$	0		$	5		$	0	$	0	$	2,578
Collectively evaluated for impairment		2,017			14,270			390			861			86			32			150		0		17,806
Loans acquired with credit deterioration		261			5,007			1,126			992			315			101			0		0		7,802
Total Allowance for loan losses	$	3,193		$	20,089		$	2,187		$	2,028		$	401		$	138		$	150	$	0	$	28,186

	Commercial and Industrial			Commercial Real Estate			Construction			Residential Real Estate			Manufactured Housing			Consumer			Mortgage Warehouse			Residual Reserve			Total
(amounts in thousands)
Three months ended June 30, 2013
Beginning Balance, April 1, 2013	$	1,990		$	15,223		$	4,279		$	3,248		$	846		$	141		$	54		$	658		$	26,439
Charge-offs		(76	)		(1,481	)		(1,471	)		(65	)		0			0			0			0			(3,093	)
Recoveries		154			8			0			10			0			4			0			0			176
Provision for loan losses		417			2,935			1,509			359			(168	)		(39	)		2			(395	)		4,620
Ending Balance, June 30, 2013	$	2,485		$	16,685		$	4,317		$	3,552		$	678		$	106		$	56		$	263		$	28,142
Six months ended June 30, 2013
Beginning Balance, January 1, 2013	$	1,477		$	15,439		$	3,991		$	3,233		$	750		$	154		$	71		$	722		$	25,837
Charge-offs		(96	)		(1,891	)		(1,471	)		(198	)		0			0			0			0			(3,656	)
Recoveries		165			60			0			7			0			9			0			0			241
Provision for loan losses		939			3,077			1,797			510			(72	)		(57	)		(15	)		(459	)		5,720
Ending Balance, June 30, 2013	$	2,485		$	16,685		$	4,317		$	3,552		$	678		$	106		$	56		$	263		$	28,142
At June 30, 2013
Loans:
Individually evaluated for impairment	$	10,147		$	33,344		$	10,970		$	2,901		$	0		$	77		$	0		$	0		$	57,439
Collectively evaluated for impairment		180,933			1,200,004			31,695			121,973			143,925			1,228			7,560			0			1,687,318
Loans acquired with credit deterioration		5,159			58,034			16,563			15,121			5,507			503			0			0			100,887
Total loans receivable, excluding deferred fees and costs	$	196,239		$	1,291,382		$	59,228		$	139,995		$	149,432		$	1,808		$	7,560		$	0		$	1,845,644
Allowance for loan losses:
Individually evaluated for impairment	$	602		$	1,818		$	1,533		$	327		$	0		$	0		$	0		$	0		$	4,280
Collectively evaluated for impairment		1,477			9,402			279			1,022			76			48			56			263			12,623
Loans acquired with credit deterioration		406			5,465			2,505			2,203			602			58			0			0			11,239
Total Allowance for loan losses	$	2,485		$	16,685		$	4,317		$	3,552		$	678		$	106		$	56		$	263		$	28,142

Changes in Accretable Yield Related to Purchased-credit-impaired Loans

The changes in accretable yield related to purchased-credit-impaired loans for the three and six months ended June 30, 2014 and 2013 were as follows:

For the three months ended June 30,	2014			2013
(amounts in thousands)
Accretable yield balance, beginning of period	$	20,619		$	29,665
Accretion to interest income		(543	)		(1,601	)
Reclassification from nonaccretable difference and disposals, net		(385	)		(415	)
Accretable yield balance, end of period	$	19,691		$	27,649

For the six months ended June 30,	2014			2013
(amounts in thousands)
Accretable yield balance, beginning of period	$	22,557		$	32,174
Accretion to interest income		(1,623	)		(3,672	)
Reclassification from nonaccretable difference and disposals, net		(1,243	)		(853	)
Accretable yield balance, end of period	$	19,691		$	27,649