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Covered Assets and FDIC Indemnification Asset
 9 Months Ended
Sep. 30, 2013
Covered Assets and FDIC Indemnification Asset [Abstract]  
Covered Assets and FDIC Indemnification Asset
(a) Covered Loans: Loans acquired in an FDIC-assisted acquisition that are subject to a loss share agreement are referred to as “covered loans” and reported separately in the Condensed Consolidated Statements of Financial Condition.  Covered loans are reported exclusive of the expected cash flow reimbursements from the FDIC.

The following table presents the major types of covered loans at September 30, 2013 and December 31, 2012. The classification of covered loan balances presented is reported in accordance with the regulatory reporting requirements.
(dollars in thousands)
September 30, 2013
 
City Bank
 
North County Bank
 
Total
Commercial
$
10,169

 
$
10,868

 
$
21,037

Real estate mortgages:
 

 
 

 
 

One-to-four family residential
2,663

 
8,467

 
11,130

Multi-family residential and commercial
91,974

 
44,157

 
136,131

Total real estate mortgages
94,637

 
52,624

 
147,261

Real estate construction:
 

 
 

 
 

One-to-four family residential
4,185

 
2,066

 
6,251

Multi-family and commercial
7,749

 
4,423

 
12,172

Total real estate construction
11,934

 
6,489

 
18,423

Consumer - direct
2,109

 
5,406

 
7,515

Subtotal
118,849

 
75,387

 
194,236

Fair value discount
(11,965
)
 
(10,855
)
 
(22,820
)
Total covered loans
106,884

 
64,532

 
171,416

Allowance for loan losses
(12,772
)
 
(2,254
)
 
(15,026
)
Total covered loans, net
$
94,112

 
$
62,278

 
$
156,390


(dollars in thousands)
December 31, 2012
 
City Bank
 
North County Bank
 
Total
Commercial
$
13,863

 
$
15,148

 
$
29,011

Real estate mortgages:
 

 
 

 
 

One-to-four family residential
3,783

 
10,412

 
14,195

Multi-family residential and commercial
132,280

 
52,303

 
184,583

Total real estate mortgages
136,063

 
62,715

 
198,778

Real estate construction:
 

 
 

 
 

One-to-four family residential
4,764

 
3,000

 
7,764

Multi-family and commercial
12,369

 
6,374

 
18,743

Total real estate construction
17,133

 
9,374

 
26,507

Consumer - direct
2,698

 
7,521

 
10,219

Subtotal
169,757

 
94,758

 
264,515

Fair value discount
(28,980
)
 
(18,196
)
 
(47,176
)
Total covered loans
140,777

 
76,562

 
217,339

Allowance for loan losses
(2,727
)
 
(525
)
 
(3,252
)
Total covered loans, net
$
138,050

 
$
76,037

 
$
214,087





The following table presents the changes in the accretable yield for the three and nine months ended September 30, 2013 and 2012, for each respective acquired loan portfolio:
(dollars in thousands)
Three Months Ended September 30,
 
2013
 
2012
 
City Bank
 
North County Bank
 
City Bank
 
North County Bank
Balance, beginning of period
$
29,223

 
$
15,999

 
$
63,623

 
$
26,845

Accretion to interest income
(3,023
)
 
(2,354
)
 
(5,247
)
 
(3,694
)
Disposals
(4,927
)
 
(400
)
 
(1,718
)
 
(2,796
)
Reclassification (to) from nonaccretable difference
—

 
—

 
—

 
4

Balance, end of period
$
21,273

 
$
13,245

 
$
56,658

 
$
20,359

 
(dollars in thousands)
Nine Months Ended September 30,
 
2013
 
2012
 
City Bank
 
North County Bank
 
City Bank
 
North County Bank
Balance, beginning of period
$
49,168

 
$
19,567

 
$
78,004

 
$
29,574

Accretion to interest income
(10,791
)
 
(7,343
)
 
(16,552
)
 
(11,443
)
Disposals
(11,555
)
 
(2,845
)
 
(4,441
)
 
(5,517
)
Reclassification (to) from nonaccretable difference
(5,549
)
 
3,866

 
(353
)
 
7,745

Balance, end of period
$
21,273

 
$
13,245

 
$
56,658

 
$
20,359


(b) Covered Other Real Estate Owned: All OREO acquired in FDIC-assisted acquisitions that are subject to an FDIC loss share agreement are referred to as “covered OREO” and reported separately in the Condensed Consolidated Statements of Financial Condition.  Covered OREO is reported exclusive of expected reimbursed cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered OREO at the lower of the loan’s appraised value, less selling costs, or the carrying value.

The following tables summarize the activity related to covered OREO for the three and nine months ended September 30, 2013 and 2012:
(dollars in thousands)
Three Months Ended September 30, 2013
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
9,125

 
$
3,802

 
$
12,927

Additions to covered OREO
—

 
282

 
282

Dispositions of covered OREO, net
(5,653
)
 
(3,256
)
 
(8,909
)
Valuation adjustments
—

 
(191
)
 
(191
)
Balance, end of period
$
3,472

 
$
637

 
$
4,109

(dollars in thousands)
Three Months Ended September 30, 2012
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
13,580

 
$
9,420

 
$
23,000

Additions to covered OREO
561

 
744

 
1,305

Dispositions of covered OREO, net
(4,579
)
 
(812
)
 
(5,391
)
Valuation adjustments
$
—

 
$
(103
)
 
$
(103
)
Balance, end of period
$
9,562

 
$
9,249

 
$
18,811

 
(dollars in thousands)
Nine Months Ended September 30, 2013
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
7,399

 
$
6,061

 
$
13,460

Additions to covered OREO
6,777

 
808

 
7,585

Dispositions of covered OREO, net
(10,130
)
 
(5,420
)
 
(15,550
)
Valuation adjustments
(574
)
 
(812
)
 
(1,386
)
Balance, end of period
$
3,472

 
$
637

 
$
4,109

 
(dollars in thousands)
Nine Months Ended September 30, 2012
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
19,341

 
$
7,281

 
$
26,622

Additions to covered OREO
1,517

 
6,961

 
8,478

Dispositions of covered OREO, net
(9,338
)
 
(4,049
)
 
(13,387
)
Valuation adjustments
(1,958
)
 
(944
)
 
(2,902
)
Balance, end of period
$
9,562

 
$
9,249

 
$
18,811



(c) FDIC Indemnification Asset: 

The following table summarizes the activity related to the FDIC indemnification asset for the three and nine months ended September 30, 2013 and 2012:
(dollars in thousands)
Three Months Ended September 30, 2013
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
21,979

 
$
10,853

 
$
32,832

Change in FDIC indemnification asset
(689
)
 
(341
)
 
(1,030
)
Reduction due to loans paid in full
(3,784
)
 
(371
)
 
(4,155
)
Transfers to (due from) FDIC
(1,687
)
 
(521
)
 
(2,208
)
Balance, end of period
$
15,819

 
$
9,620

 
$
25,439

(dollars in thousands)
Three Months Ended September 30, 2012
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
37,587

 
$
17,280

 
$
54,867

Change in FDIC indemnification asset
(2,510
)
 
(252
)
 
(2,762
)
Reduction due to loans paid in full
(415
)
 
(130
)
 
(545
)
Transfers to (due from) FDIC
(5,154
)
 
(1,693
)
 
(6,847
)
Balance, end of period
$
29,508

 
$
15,205

 
$
44,713

(dollars in thousands)
Nine Months Ended September 30, 2013
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
20,390

 
$
14,181

 
$
34,571

Change in FDIC indemnification asset
4,994

 
1,304

 
6,298

Reduction due to loans paid in full
(5,194
)
 
(1,562
)
 
(6,756
)
Transfers to (due from) FDIC
(4,371
)
 
(4,303
)
 
(8,674
)
Balance, end of period
$
15,819

 
$
9,620

 
$
25,439

(dollars in thousands)
Nine Months Ended September 30, 2012
 
City Bank
 
North County Bank
 
Total
Balance, beginning of period
$
43,235

 
$
22,351

 
$
65,586

Change in FDIC indemnification asset
(8,273
)
 
(625
)
 
(8,898
)
Reduction due to loans paid in full
(1,739
)
 
(2,430
)
 
(4,169
)
Transfers to (due from) FDIC
(3,715
)
 
(4,091
)
 
(7,806
)
Balance, end of period
$
29,508

 
$
15,205

 
$
44,713