Covered Assets and FDIC Loss-sharing Asset (Tables)

6 Months Ended

Jun. 30, 2014

The following is an analysis of our covered loans, net of related allowance for losses as of June 30, 2014 and December 31, 2013:



	June 30, 2014		December 31, 2013
Covered loans:	(in thousands)
Commercial business	$	60,287	$	72,870
Real estate:
One-to-four family residential	36,711		41,642
Commercial and multifamily residential	153,765		170,879
Total real estate	190,476		212,521
Real estate construction:
One-to-four family residential	9,444		14,781
Commercial and multifamily residential	3,910		6,869
Total real estate construction	13,354		21,650
Consumer	30,755		34,101
Subtotal of covered loans	294,872		341,142
Less:
Valuation discount resulting from acquisition accounting	32,971		43,297
Allowance for loan losses	19,801		20,174
Covered loans, net of allowance for loan losses	$	242,100	$	277,671

The following table shows the changes in accretable yield for acquired loans for the three and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Balance at beginning of period	$	101,543		$	158,786		$	103,907		$	166,888
Accretion	(10,055		)	(13,520		)	(20,624		)	(27,997		)
Disposals	—			(1,998		)	(2,826		)	5,151
Reclassifications (to) from nonaccretable difference	1,023			(2,757		)	12,054			(3,531		)
Balance at end of period	$	92,511		$	140,511		$	92,511		$	140,511

The following is an analysis of the credit quality of our covered loan portfolio as of June 30, 2014 and December 31, 2013:



	Pass		Special Mention		Substandard		Doubtful		Loss		Total
June 30, 2014	(in thousands)
Covered loans:
Commercial business:
Secured	$	42,653	$	1,151	$	14,206	$	7	$	—	$	58,017
Unsecured	2,168		—		102		—		—		2,270
Real estate:
One-to-four family residential	31,618		—		5,093		—		—		36,711
Commercial and multifamily residential:
Commercial land	10,410		—		7,253		—		—		17,663
Income property	56,858		3,220		7,695		—		—		67,773
Owner occupied	61,344		362		6,623		—		—		68,329
Real estate construction:
One-to-four family residential:
Land and acquisition	3,589		—		1,405		—		—		4,994
Residential construction	420		—		4,030		—		—		4,450
Commercial and multifamily residential:
Income property	1,478		—		1,491		—		—		2,969
Owner occupied	941		—		—		—		—		941
Consumer	27,531		—		3,224		—		—		30,755
Total	$	239,010	$	4,733	$	51,122	$	7	$	—	294,872
Less:
Valuation discount resulting from acquisition accounting											32,971
Allowance for loan losses											19,801
Covered loans, net											$	242,100



	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 and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Covered OREO:
Balance at beginning of period	$	14,712		$	13,811		$	12,093		$	16,311
Transfers in	—			3,125			5,507			4,530
Write-downs	(338		)	(29		)	(989		)	(94		)
Proceeds from sale of OREO property	(2,530		)	(7,376		)	(5,634		)	(13,814		)
Net gain on sale of OREO	1,207			3,323			2,074			5,921
Total covered OREO at end of period	$	13,051		$	12,854		$	13,051		$	12,854

The following table shows a detailed analysis of the FDIC loss-sharing asset for the three and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Balance at beginning of period	$	36,837		$	83,115		$	39,846		$	96,354
Adjustments not reflected in income:
Cash payments from the FDIC	(3,442		)	(3,268		)	(1,765		)	(6,387		)
FDIC reimbursable losses (recoveries), net	(364		)	664			(231		)	1,027
Adjustments reflected in income:
Amortization, net	(5,764		)	(9,801		)	(12,216		)	(19,580		)
Loan impairment (recapture)	1,214			(1,370		)	3,151			(585		)
Sale of other real estate	(965		)	(2,251		)	(1,721		)	(3,597		)
Write-downs of other real estate	276			102			792			154
Other	189			183			125			(12		)
Balance at end of period	$	27,981		$	67,374		$	27,981		$	67,374

Covered Loans [Member]

The changes in the ALLL for covered loans for the three and six months ended June 30, 2014 and 2013 are summarized as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Balance at beginning of period	$	20,129		$	29,489		$	20,174		$	30,056
Loans charged off	(3,842		)	(2,642		)	(8,115		)	(5,024		)
Recoveries	1,997			1,000			3,803			1,835
Provision (recapture) for loan losses	1,517			(1,712		)	3,939			(732		)
Balance at end of period	$	19,801		$	26,135		$	19,801		$	26,135