Acquisitions, Divestitures and FDIC Indemnification Asset

The Bank is party to a loss sharing agreement with the 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 has agreed to reimburse the Bank for 80 percent of the losses. On losses exceeding $29 million, the FDIC has agreed to reimburse the Bank for 95 percent 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 $19.4 million for losses and carrying expenses and currently carries an immaterial balance in the indemnification asset. The balance of loans covered by the loss share agreement at September 30, 2018 and December 31, 2017 totaled $3.5 million and $4.3 million, respectively. The only loans still covered by the loss share agreement are the single family loans.

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 September 30, 2018 and 2017 are shown in the following tables:



						2018
(Dollar amounts in thousands)	Commercial			Consumer		Total
Beginning balance, July 1,	$	1,598		$	—	$	1,598
Discount accretion	—			—		—
Disposals	(16		)	—		(16		)
ASC 310-30 Loans, September 30,	$	1,582		$	—	$	1,582




						2018
(Dollar amounts in thousands)	Commercial			Consumer		Total
Beginning balance, January 1,	$	1,896		$	—	$	1,896
Discount accretion	—			—		—
Disposals	(314		)	—		(314		)
ASC 310-30 Loans, September 30,	$	1,582		$	—	$	1,582



						2017
(Dollar amounts in thousands)	Commercial			Consumer		Total
Beginning balance, July 1,	$	1,983		$	—	$	1,983
Discount accretion	—			—		—
Disposals	(47		)	—		(47		)
ASC 310-30 Loans, September 30,	$	1,936		$	—	$	1,936




							2017
(Dollar amounts in thousands)	Commercial			Consumer			Total
Beginning balance, January 1,	$	3,451		$	1,430		$	4,881
Discount accretion	—			—			—
Disposals	(1,515		)	(1,430		)	(2,945		)
ASC 310-30 Loans, September 30,	$	1,936		$	—		$	1,936