Acquired and Covered Loans

12 Months Ended

Dec. 31, 2019

Transfers and Servicing [Abstract]

Acquired and Covered Loans

ACQUIRED AND COVERED LOANS

Covered loans consist of loans acquired by the Company in FDIC-assisted transactions, which are covered by the FDIC Agreements. Acquired loans consist of all other loans that were acquired in business combinations that are not covered by the FDIC Agreements. Both acquired and covered loans are included in loans in the Consolidated Statements of Financial Condition. The significant accounting policies related to acquired and covered loans, which are classified as PCI and non-PCI, and the related FDIC indemnification asset, are presented in Note 1, "Summary of Significant Accounting Policies."

Non-residential mortgage loans related to FDIC-assisted transactions are no longer covered under the FDIC Agreements. These non-residential loans, which totaled $7.8 million and $10.4 million as of December 31, 2019 and 2018, respectively, are included in acquired loans and no longer classified as covered loans. The losses on residential mortgage loans will continue to be covered under the FDIC Agreements through various dates between December 31, 2019 and September 30, 2020.

The following table presents acquired and covered PCI and Non-PCI loans as of December 31, 2019 and 2018.

Acquired and Covered Loans

(Dollar amounts in thousands)

	As of December 31,
	2019						2018
	PCI		Non-PCI		Total		PCI		Non-PCI		Total
Acquired loans	$	161,794	$	1,212,420	$	1,374,214	$	108,049	$	1,247,492	$	1,355,541
Covered loans	5,389		3,713		9,102		5,819		4,869		10,688
Total acquired and covered loans	$	167,183	$	1,216,133	$	1,383,316	$	113,868	$	1,252,361	$	1,366,229

The outstanding balance of PCI loans was $243.0 million and $175.2 million as of December 31, 2019 and 2018, respectively.

Acquired non-PCI loans that are renewed are no longer classified as acquired loans. These loans totaled $523.5 million and $458.0 million as of December 31, 2019 and 2018, respectively.

In connection with the FDIC Agreements, the Company recorded an indemnification asset. The carrying value of the FDIC indemnification asset was $892,000, $2.1 million, and $3.3 million as of December 31, 2019, 2018, and 2017, respectively.

Changes in the accretable yield for acquired and covered PCI loans were as follows.

Changes in Accretable Yield

(Dollar amounts in thousands)

	Years Ended December 31,
	2019		2018		2017
Beginning balance	$	43,725	$	32,957	$	19,386
Additions	16,037		3,699		27,316
Accretion	(20,607)		(12,354)		(15,529)
Other(1)	(146)		19,423		1,784
Ending balance	$	39,009	$	43,725	$	32,957

⁽¹⁾Decreases result from the resolution of certain loans occurring earlier than anticipated while increases represent a rise in the expected future cash flows to be collected over the remaining estimated life of the underlying portfolio.

Total accretion on acquired and covered PCI and non-PCI loans for December 31, 2019, 2018, and 2017 was $35.6 million, $19.5 million, and $33.9 million, respectively.