Covered Assets and FDIC Loss-sharing Asset (Tables)

3 Months Ended

Mar. 31, 2014

The following is an analysis of our covered loans, net of related allowance for losses as of March 31, 2014 and December 31, 2013:



	March 31, 2014		December 31, 2013
Covered loans:	(dollars in thousands)
Commercial business	$	64,945	$	72,870
Real estate:
One-to-four family residential	39,056		41,642
Commercial and multifamily residential	163,976		170,879
Total real estate	203,032		212,521
Real estate construction:
One-to-four family residential	10,969		14,781
Commercial and multifamily residential	6,349		6,869
Total real estate construction	17,318		21,650
Consumer	32,541		34,101
Subtotal of covered loans	317,836		341,142
Less:
Valuation discount resulting from acquisition accounting	37,549		43,297
Allowance for loan losses	20,129		20,174
Covered loans, net of allowance for loan losses	$	260,158	$	277,671

The following table shows the changes in accretable yield for acquired loans for the three months ended March 31, 2014 and 2013:



	Three Months Ended March 31,
	2014			2013
	(in thousands)
Balance at beginning of period	$	103,907		$	166,888
Accretion	(10,569		)	(14,477		)
Disposals	(2,826		)	(774		)
Reclassifications from nonaccretable difference	11,031			7,149
Balance at end of period	$	101,543		$	158,786

The following is an analysis of the credit quality of our covered loan portfolio as of March 31, 2014 and December 31, 2013:



	Pass		Special Mention		Substandard		Doubtful		Loss		Total
March 31, 2014	(in thousands)
Covered loans:
Commercial business:
Secured	$	44,916	$	1,276	$	15,549	$	—	$	—	$	61,741
Unsecured	2,728		396		80		—		—		3,204
Real estate:
One-to-four family residential	32,729		1,828		4,499		—		—		39,056
Commercial and multifamily residential:
Commercial land	10,487		—		7,740		—		—		18,227
Income property	58,519		3,945		7,557		—		—		70,021
Owner occupied	65,389		814		9,525		—		—		75,728
Real estate construction:
One-to-four family residential:
Land and acquisition	4,036		—		1,579		—		—		5,615
Residential construction	2,973		—		2,381		—		—		5,354
Commercial and multifamily residential:
Income property	3,761		—		1,523		—		—		5,284
Owner occupied	1,065		—		—		—		—		1,065
Consumer	29,657		—		2,857		27		—		32,541
Total	$	256,260	$	8,259	$	53,290	$	27	$	—	317,836
Less:
Valuation discount resulting from acquisition accounting											37,549
Allowance for loan losses											20,129
Covered loans, net											$	260,158



	Pass		Special Mention		Substandard		Doubtful		Loss		Total
December 31, 2013	(in thousands)
Covered loans:
Commercial business:
Secured	$	48,510	$	2,849	$	18,291	$	—	$	—	$	69,650
Unsecured	2,732		396		92		—		—		3,220
Real estate:
One-to-four family residential	35,066		1,842		4,734		—		—		41,642
Commercial and multifamily residential:
Commercial land	10,778		198		7,589		—		—		18,565
Income property	55,985		3,950		10,657		—		—		70,592
Owner occupied	67,653		111		13,958		—		—		81,722
Real estate construction:
One-to-four family residential:
Land and acquisition	4,674		2,739		1,936		—		—		9,349
Residential construction	3,008		—		2,424		—		—		5,432
Commercial and multifamily residential:
Income property	3,806		—		1,709		—		—		5,515
Owner occupied	1,074		—		280		—		—		1,354
Consumer	30,722		33		3,319		27		—		34,101
Total	$	264,008	$	12,118	$	64,989	$	27	$	—	341,142
Less:
Valuation discount resulting from acquisition accounting											43,297
Allowance for loan losses											20,174
Covered loans, net											$	277,671

The following table sets forth activity in covered OREO at carrying value for the three months ended March 31, 2014 and 2013:



	Three Months Ended March 31,
	2014			2013
	(in thousands)
Covered OREO:
Balance at beginning of period	$	12,093		$	16,311
Transfers in	5,507			1,405
Additional OREO write-downs	(651		)	(65		)
Proceeds from sale of OREO property	(3,103		)	(6,438		)
Net gain on sale of OREO	866			2,598
Total covered OREO at end of period	$	14,712		$	13,811

The following table shows a detailed analysis of the FDIC loss-sharing asset for the three months ended March 31, 2014 and 2013:



	Three Months Ended March 31,
	2014			2013
	(in thousands)
Balance at beginning of period	$	39,846		$	96,354
Adjustments not reflected in income:
Cash payments to (from) the FDIC	1,678			(3,119		)
FDIC reimbursable losses, net	132			363
Adjustments reflected in income:
Amortization, net	(6,452		)	(9,779		)
Loan impairment	1,938			784
Sale of other real estate	(756		)	(1,346		)
Write-downs of other real estate	516			52
Other	(65		)	(194		)
Balance at end of period	$	36,837		$	83,115

Covered Loans [Member]

The changes in the ALLL for covered loans for the three months ended March 31, 2014 and 2013 are summarized as follows:



	Three Months Ended March 31,
	2014			2013
	(in thousands)
Balance at beginning of period	$	20,174		$	30,056
Loans charged off	(4,273		)	(2,382		)
Recoveries	1,806			835
Provision for loan losses	2,422			980
Balance at end of period	$	20,129		$	29,489