ACQUISITIONS AND FDIC INDEMNIFICATION ASSET:

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

ACQUISITIONS AND FDIC INDEMNIFICATION ASSET

ACQUISITIONS, DIVESTITURES AND FDIC INDEMNIFICATION ASSET:

The Bank is party to a loss sharing agreement with the Federal Deposit Insurance Corporation (“FDIC”) as a result of a 2009 acquisition. Under the loss-sharing agreement (“LSA”), the Bank will share in the losses on assets covered under the agreement (referred to as covered assets). On losses up to $29 million, the FDIC agreed to reimburse the Bank for 80% of the losses. On losses exceeding $29 million, the FDIC agreed to reimburse the Bank for 95% of the losses. The loss-sharing agreement is subject to following servicing procedures as specified in the agreement with the FDIC. Loans acquired that are subject to the loss-sharing agreement with the FDIC are referred to as covered loans for disclosure purposes. Since the acquisition date the Bank has been reimbursed $24.3 million for losses and carrying expenses. In 2014 the non-single family (NSF) loss period ended eliminating future loss reimbursements only to the extent of recoveries received. There is no estimate for the loans subject to the loss-sharing agreement identified in the allowance for loan loss evaluation as future potential losses at December 31, 2016. Loans covered by the loss share agreement excluding AS 310-30 loans at December 31, 2016 and 2015 totaled $5.1 million and $6.5 million, respectively.

FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, applies to a loan with evidence of deterioration of credit quality since origination, acquired by completion of a transfer for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. FASB ASC 310-30 prohibits carrying over or creating an allowance for loan losses upon initial recognition. The carrying amount of loans accounted for in accordance with FASB ASC 310-30 at December 31, 2016 and 2015, are shown in the following tables:

							2016
(Dollar amounts in thousands)	Commercial			Consumer			Total
Beginning balance	$	4,122		$	1,480		$	5,602
Discount accretion	—			—			—
Disposals	(671		)	(50		)	(721		)
ASC 310-30 Loans	$	3,451		$	1,430		$	4,881

							2015
(Dollar amounts in thousands)	Commercial			Consumer			Total
Beginning balance	$	4,803		$	1,571		$	6,374
Discount accretion	—			—			—
Disposals	(681		)	(91		)	(772		)
ASC 310-30 Loans	$	4,122		$	1,480		$	5,602

During the quarter ended March 31, 2016 the Corporation sold a significant portion of the assets and liabilities of the insurance operation for a gain of $12.8 million. Settlement of the transaction has been completed and the original gain was reduced by $199 thousand during the third quarter of 2016. The total assets, total revenues and net income of the insurance operation for 2015 were $13.0 million, $7.6 million and $168 thousand, respectively. For 2014 they were $15.8 million, $8.3 million and $544 thousand, respectively. The Corporation has chosen to focus its resources on the core banking activities. The sale of the insurance operations eliminated the goodwill of $5.1 million from the original acquisition.