COVERED ASSETS AND FDIC INDEMNIFICATION ASSET (Tables)

9 Months Ended

Sep. 30, 2014

COVERED ASSETS AND FDIC INDEMNIFICATION ASSET

	September 30,			December 31,
	2014			2013
	(In thousands)
Residential:
Residential single-family	$	248,377		$	290,095
Residential multifamily	331,451			403,508
Total residential	579,828			693,603
Commercial Real Estate (“CRE”):
Commercial and industrial real estate	773,098			1,103,530
Construction and land	63,691			163,833
Total CRE	836,789			1,267,363
Other Loans:
Commercial business	307,147			426,621
Other consumer	65,375			73,973
Total other loans	372,522			500,594
Total covered loans	1,789,139		(1)	2,461,560		(2)
Covered discount	(148,830		)	(265,917		)
Net valuation of loans	1,640,309			2,195,643
Allowance for loan losses on covered loans	(3,910		)	(7,745		)
Total covered loans, net	$	1,636,399		$	2,187,898
Collectively evaluated for impairment	$	290,446	(1)	$	320,185	(2)
Acquired with deteriorated credit quality	1,349,863			1,875,458
	$	1,640,309		$	2,195,643

⁽¹⁾ Includes $290.4 million of covered advances comprised of $191.1 million, $59.6 million, $27.6 million and $12.1 million of commercial and industrial, commercial real estate, consumer, and residential loans, respectively.

⁽²⁾ Includes $320.2 million of covered advances comprised of $230.6 million, $46.7 million, $30.9 million and $12.0 million of commercial and industrial, commercial real estate, consumer and residential loans, respectively.

Allowance for loan losses disclosures

Schedule of credit risk rating categories for the covered loans by portfolio segments

			Special
	Pass/Watch		Mention		Substandard		Doubtful		Total
	(In thousands)
September 30, 2014
Residential:
Residential single-family	$	240,954	$	555	$	6,868	$	—	$	248,377
Residential multifamily	296,864		—		34,587		—		331,451
Total residential	537,818		555		41,455		—		579,828
Commercial Real Estate (“CRE”):
Commercial and industrial real estate	658,095		2,790		112,213		—		773,098
Construction and land	23,800		10,057		29,834		—		63,691
Total CRE	681,895		12,847		142,047		—		836,789
Other Loans:
Commercial business	267,073		13,613		26,461		—		307,147
Other consumer	63,931		244		1,200		—		65,375
Total other loans	331,004		13,857		27,661		—		372,522
Total principal balance	$	1,550,717	$	27,259	$	211,163	$	—	$	1,789,139

			Special
	Pass/Watch		Mention		Substandard		Doubtful		Total
	(In thousands)
December 31, 2013
Residential:
Residential single-family	$	281,246	$	733	$	8,116	$	—	$	290,095
Residential multifamily	373,024		785		29,699		—		403,508
Total residential	654,270		1,518		37,815		—		693,603
Commercial Real Estate (“CRE”):
Commercial and industrial real estate	857,376		27,851		211,835		6,468		1,103,530
Construction and land	41,847		9,472		111,616		898		163,833
Total CRE	899,223		37,323		323,451		7,366		1,267,363
Other Loans:
Commercial business	378,086		4,635		43,797		103		426,621
Other consumer	72,053		128		1,792		—		73,973
Total other loans	450,139		4,763		45,589		103		500,594
Total principal balance	$	2,003,632	$	43,604	$	406,855	$	7,469	$	2,461,560

Covered nonperforming assets

	September 30,		December 31,
	2014		2013
	(In thousands)
Covered nonaccrual loans(1) (2) (3)	$	79,980	$	126,895
Other real estate owned covered, net	7,433		21,373
Total covered nonperforming assets	$	87,413	$	148,268

⁽¹⁾ Covered nonaccrual loans include loans that meet the criteria for nonaccrual but have a yield accreted through interest income under ASC 310-30. All losses on covered loans are 80% reimbursed by the FDIC.

⁽²⁾ Net of discount.

⁽³⁾ Includes $9.2 million and $17.7 million of covered advances as of September 30, 2014 and December 31, 2013, respectively; and $70.8 million and $109.2 million of PCI loans as of September 30, 2014 and December 31, 2013, respectively.

Schedule of troubled debt restructurings related to covered loans activity

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(In thousands)
Balance at beginning of period	$	60,024		$	120,248		$	116,007		$	157,736
Additions	477			3,453			1,264			29,246
Transfers to covered OREO	—			—			(1,230		)	—
Charge-offs	—			—			(1,323		)	(7,466		)
Paydowns/ Reductions	(13,960		)	(4,839		)	(68,177		)	(60,654		)
Balance at end of period	$	46,541		$	118,862		$	46,541		$	118,862

Changes in the accretable yield for the PCI covered loans

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(In thousands)
Balance at beginning of period	$	387,127		$	458,717		$	461,545		$	556,986
Additions	—			—			—			—
Accretion	(51,296		)	(100,596		)	(176,600		)	(267,035		)
Changes in expected cash flows	10,563			122,140			61,449			190,310
Balance at end of period	$	346,394		$	480,261		$	346,394		$	480,261

FDIC indemnification asset liabilities activity

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(In thousands)
Balance at beginning of period	$	(24,337	)	$	219,942		$	74,708		$	316,313
Amortization	(28,175		)	(39,109		)	(85,968		)	(60,491		)
Reductions (1)	(5,676		)	(20,606		)	(31,629		)	(72,661		)
Estimate of FDIC repayment (2)	(6,272		)	(15,193		)	(21,571		)	(38,127		)
Balance at end of period	$	(64,460	)	$	145,034		$	(64,460	)	$	145,034

⁽¹⁾ Reductions relate to charge-offs, partial prepayments, loan payoffs and loan sales which result in a corresponding reduction of the indemnification asset.

⁽²⁾ This represents the change in the calculated estimate the Company will be required to pay the FDIC at the end of the FDIC shared-loss agreements, due to lower thresholds of losses.

Summary of FDIC receivable activity

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014		2013			2014			2013
	(In thousands)
Balance at beginning of period	$	15,747	$	47,125		$	30,261		$	73,091
Net addition (reduction) due to recovery or eligible expense/loss	443		467			(11,671		)	16,995
Payments to (received from) the FDIC	1,613		(9,396		)	(787		)	(51,890		)
Balance at end of period	$	17,803	$	38,196		$	17,803		$	38,196

Covered loans

Allowance for loan losses disclosures

Summary of the activity in the allowance for loan losses

	Three Months Ended September 30,
	2014									2013
	Covered			PCI Covered						Covered			PCI Covered
	Advances			Loans			Total			Advances			Loans			Total
	(In thousands)
Beginning balance	$	3,692		$	1,188		$	4,880		$	7,100		$	2,529		$	9,629
Provision for (reversal of) loan losses	8,433			(764		)	7,669			(772		)	(192		)	(964		)
Charge-offs	(9,360		)	—			(9,360		)	—			—			—
Recoveries	721			—			721			—			—			—
Ending balance	$	3,486	(1)	$	424		$	3,910		$	6,328	(2)	$	2,337		$	8,665
Ending balance allocated to:
Collectively evaluated for impairment	3,486		(1)	—			3,486		(1)	6,328		(2)	—			6,328		(2)
Acquired with deteriorated credit quality	—			424			424			—			2,337			2,337
Ending balance	$	3,486	(1)	$	424		$	3,910		$	6,328	(2)	$	2,337		$	8,665

	Nine Months Ended September 30,
	2014									2013
	Covered			PCI Covered						Covered			PCI Covered
	Advances			Loans			Total			Advances			Loans		Total
	(In thousands)
Beginning balance	$	5,476		$	2,269		$	7,745		$	5,153		$	—	$	5,153
Provision for (reversal of) loan losses	7,549			(1,845		)	5,704			2,511			2,337		4,848
Charge-offs	(10,260		)	—			(10,260		)	(1,336		)	—		(1,336		)
Recoveries	721			—			721			—			—		—
Ending balance	$	3,486	(1)	$	424		$	3,910		$	6,328	(2)	$	2,337	$	8,665
Ending balance allocated to:
Collectively evaluated for impairment	3,486		(1)	—			3,486		(1)	6,328		(2)	—		6,328		(2)
Acquired with deteriorated credit quality	—			424			424			—			2,337		2,337
Ending balance	$	3,486	(1)	$	424		$	3,910		$	6,328	(2)	$	2,337	$	8,665

⁽¹⁾ Allowance for loan losses of $2.4 million, $645 thousand, $232 thousand and $163 thousand are allocated to commercial and industrial, commercial real estate, consumer and residential loans, respectively.

⁽²⁾ Allowance for loan losses of $3.7 million, $2.2 million, $376 thousand and $161 thousand are allocated to commercial and industrial, commercial real estate, consumer and residential loans, respectively.