Covered Assets and FDIC Loss-sharing Asset (Tables)

9 Months Ended

Sep. 30, 2013

The following is an analysis of our covered loans, net of related allowance for losses as of September 30, 2013 and December 31, 2012:



	September 30, 2013		December 31, 2012
Covered loans:	(dollars in thousands)
Commercial business	$	87,366	$	125,373
Real estate:
One-to-four family residential	44,966		57,150
Commercial and multifamily residential	181,634		233,106
Total real estate	226,600		290,256
Real estate construction:
One-to-four family residential	16,018		25,398
Commercial and multifamily residential	7,146		15,251
Total real estate construction	23,164		40,649
Consumer	37,212		44,516
Subtotal of covered loans	374,342		500,794
Less:
Valuation discount resulting from acquisition accounting	49,445		79,401
Allowance for loan losses	22,737		30,056
Covered loans, net of allowance for loan losses	$	302,160	$	391,337

The following table shows the changes in accretable yield for acquired loans for the three and nine months ended September 30, 2013 and 2012:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(in thousands)
Balance at beginning of period	$	140,511		$	214,061		$	166,888		$	259,669
Accretion	(12,243		)	(19,571		)	(40,240		)	(69,045		)
Disposals	(5,772		)	(3,146		)	(621		)	(8,218		)
Reclassifications from nonaccretable difference	(3,013		)	(2,861		)	(6,544		)	6,077
Balance at end of period	$	119,483		$	188,483		$	119,483		$	188,483

The following is an analysis of the credit quality of our covered loan portfolio as of September 30, 2013 and 2012:



	Pass		Special Mention		Substandard		Doubtful		Loss		Total
September 30, 2013	(in thousands)
Covered loans:
Commercial business:
Secured	$	56,973	$	2,859	$	24,025	$	—	$	—	$	83,857
Unsecured	3,018		396		95		—		—		3,509
Real estate:
One-to-four family residential	36,419		1,854		6,693		—		—		44,966
Commercial and multifamily residential:
Commercial land	11,978		205		7,796		—		—		19,979
Income property	59,736		3,966		11,907		—		—		75,609
Owner occupied	73,045		114		12,887		—		—		86,046
Real estate construction:
One-to-four family residential:
Land and acquisition	4,688		2,759		2,398		—		—		9,845
Residential construction	2,587		—		3,586		—		—		6,173
Commercial and multifamily residential:
Income property	3,847		—		1,936		—		—		5,783
Owner occupied	1,083		—		280		—		—		1,363
Consumer	33,421		35		3,729		27		—		37,212
Total	$	286,795	$	12,188	$	75,332	$	27	$	—	374,342
Less:
Valuation discount resulting from acquisition accounting											49,445
Allowance for loan losses											22,737
Covered loans, net											$	302,160



	Pass		Special Mention		Substandard		Doubtful		Loss		Total
December 31, 2012	(in thousands)
Covered loans:
Commercial business:
Secured	$	71,621	$	1,823	$	45,150	$	—	$	—	$	118,594
Unsecured	4,988		—		1,791		—		—		6,779
Real estate:
One-to-four family residential	44,782		1,344		11,024		—		—		57,150
Commercial and multifamily residential:
Commercial land	16,336		—		10,292		—		—		26,628
Income property	81,205		864		23,315		—		—		105,384
Owner occupied	82,222		3,318		15,554		—		—		101,094
Real estate construction:
One-to-four family residential:
Land and acquisition	4,817		3,273		5,743		—		—		13,833
Residential construction	6,050		—		5,515		—		—		11,565
Commercial and multifamily residential:
Income property	4,419		—		7,901		—		—		12,320
Owner occupied	1,107		—		1,824		—		—		2,931
Consumer	38,973		381		5,162		—		—		44,516
Total	$	356,520	$	11,003	$	133,271	$	—	$	—	500,794
Less:
Valuation discount resulting from acquisition accounting											79,401
Allowance for loan losses											30,056
Covered loans, net											$	391,337

The following table sets forth activity in covered OREO at carrying value for the three and nine months ended September 30, 2013 and 2012:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(in thousands)
Covered OREO:
Balance at beginning of period	$	12,854		$	19,079		$	16,311		$	28,126
Transfers in	3,559			3,096			8,089			8,497
Additional OREO write-downs	(199		)	(730		)	(293		)	(2,769		)
Proceeds from sale of OREO property	(5,408		)	(6,822		)	(19,222		)	(25,202		)
Net gain on sale of OREO	1,924			1,888			7,845			7,859
Total covered OREO at end of period	$	12,730		$	16,511		$	12,730		$	16,511

The following table shows a detailed analysis of the FDIC loss-sharing asset for the three and nine months ended September 30, 2013 and 2012:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(in thousands)
Balance at beginning of period	$	67,374		$	140,003		$	96,354		$	175,071
Adjustments not reflected in income
Cash received from the FDIC	(1,484		)	(14,881		)	(7,871		)	(49,194		)
FDIC reimbursable losses, net	(505		)	(494		)	522			587
Adjustments reflected in income
Amortization, net	(9,890		)	(9,694		)	(29,470		)	(33,418		)
Loan impairment (recapture)	(758		)	(3,193		)	(1,343		)	18,705
Sale of other real estate	(1,479		)	(1,315		)	(5,076		)	(4,881		)
Write-downs of other real estate	220			1,141			373			4,503
Other	81			110			70			304
Balance at end of period	$	53,559		$	111,677		$	53,559		$	111,677

Covered Loans [Member]

The changes in the ALLL for covered loans for the three and nine months ended September 30, 2013 and 2012 are summarized as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(in thousands)
Balance at beginning of period	$	26,135		$	31,784		$	30,056		$	4,944
Loans charged off	(5,006		)	(977		)	(10,031		)	(2,574		)
Recoveries	2,555			2,342			4,391			3,406
Provision (recovery) for loan losses	(947		)	(3,992		)	(1,679		)	23,381
Balance at end of period	$	22,737		$	29,157		$	22,737		$	29,157