COVERED ASSETS AND FDIC INDEMNIFICATION ASSET (Tables)

6 Months Ended

Jun. 30, 2011

COVERED ASSETS AND FDIC INDEMNIFICATION ASSET [Abstract]

Carrying amounts and composition of covered loans

The carrying amounts and the composition of the covered loans as of June 30, 2011 and December 31, 2010 are as follows:

	June 30, 2011			December 31, 2010
	(In thousands)
Real estate loans:
Residential single-family	$	497,846		$	553,541
Residential multifamily		1,008,114			1,093,331
Commercial and industrial real estate		1,958,440			2,085,674
Construction and land		791,698			1,043,717
Total real estate loans		4,256,098			4,776,263
Other loans:
Commercial business		949,368			1,072,020
Other consumer		104,161			107,490
Total other loans		1,053,529			1,179,510
Total principal balance		5,309,627			5,955,773
Covered discount		(946,301	)		(1,150,672	)
Net valuation of loans		4,363,326			4,805,101
Allowance on covered loans		(6,731	)		(4,225	)
Total covered loans, net	$	4,356,595		$	4,800,876

Covered nonperforming assets, by credit quality indicators

The tables below present the covered loan portfolio by credit quality indicator as of June 30, 2011 and December 31, 2010.

	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
June 30, 2011
Real estate loans:
Residential single-family	$	469,239	$	1,387	$	27,220	$	-	$	497,846
Residential multifamily		837,517		29,981		140,616		-		1,008,114
Commercial and industrial real estate		1,376,656		54,765		518,267		8,752		1,958,440
Construction and land		252,088		67,798		462,774		9,038		791,698
Total real estate loans		2,935,500		153,931		1,148,877		17,790		4,256,098
Other loans:
Commercial business		727,980		65,216		147,463		8,709		949,368
Other consumer		102,713		218		1,230		-		104,161
Total other loans		830,693		65,434		148,693		8,709		1,053,529
Total principal balance	$	3,766,193	$	219,365	$	1,297,570	$	26,499	$	5,309,627

	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
December 31, 2010
Real estate loans:
Residential single-family	$	525,979	$	2,153	$	25,157	$	252	$	553,541
Residential multifamily		1,008,274		15,114		67,366		2,577		1,093,331
Commercial and industrial real estate		1,520,135		89,870		466,588		9,081		2,085,674
Construction and land		328,214		125,688		556,070		33,745		1,043,717
Total real estate loans		3,382,602		232,825		1,115,181		45,655		4,776,263
Other loans:
Commercial business		834,252		64,702		161,401		11,665		1,072,020
Other consumer		106,232		336		922		-		107,490
Total other loans		940,484		65,038		162,323		11,665		1,179,510
Total principal balance	$	4,323,086	$	297,863	$	1,277,504	$	57,320	$	5,955,773

Covered nonperforming assets

The following table sets forth information regarding covered nonperforming assets as of the dates indicated:

	June 30, 2011		December 31, 2010
	(In thousands)
Covered nonaccrual loans(1)	$	242,106	$	379,797
Covered loans past due 90 days or more but not on nonaccrual		-		-
Total nonperforming loans		242,106		379,797
Other real estate owned covered, net		123,050		123,902
Total covered nonperforming assets	$	365,156	$	503,699

_______________________

(1) Covered nonaccrual loans meet the criteria for nonaccrual but have a yield accreted through interest income under ASC 310-30.

Changes in the accretable yield for the covered loans

Changes in the accretable yield for the covered loans are as follows for the periods shown:

	Three Months Ended June 30,
	2011			2010
	(In thousands)
Balance at beginning of period	$	1,068,116		$	771,549
Additions		-			84,556
Accretion		(52,760	)		(3,664	)
Changes in expected cash flows		(34,424	)		133,948
Balance at end of period	$	980,932		$	986,389

	Six Months Ended June 30,
	2011			2010
	(In thousands)
Balance at beginning of period	$	1,153,272		$	983,107
Additions		-			84,556
Accretion		(111,440	)		(7,517	)
Changes in expected cash flows		(60,900	)		(73,757	)
Balance at end of period	$	980,932		$	986,389

FDIC indemnification asset activity

The table below shows FDIC indemnification asset activity for the periods shown:

	Three Months Ended June 30,
	2011			2010
	(In thousands)
Balance at beginning of period	$	717,260		$	980,950
Addition due to WFIB acquisition		-			41,131
(Amortization) Accretion		(15,432	)		10,624
Reductions(1)(2)		(64,293	)		(85,694	)
Balance at end of period	$	637,535		$	947,011

	Six Months Ended June 30,
	2011			2010
	(In thousands)
Balance at beginning of period	$	792,133		$	1,091,814
Addition due to WFIB acquisition		-			41,131
(Amortization) Accretion		(33,709	)		22,092
Reductions(1)(2)		(120,889	)		(208,026	)
Balance at end of period	$	637,535		$	947,011

_______________________

(1) Reductions relate to cash flows received from principal amortization, partial prepayments, loan payoffs and loan sales.

(2) For the three and six months ended June 30, 2011, the reduction amounts of $64.3 million and $120.9 million, respectively,  include charge-offs, of which $42.8 million and $74.3 million, respectively, of these charge-offs are recoverable from the FDIC and recorded in other assets. For the three and six months ended June 30, 2010, the reduction amounts of $85.7 million and $208.0 million, respectively, also include charge-offs, of which $56.1 million and $118.0 million, respectively, is recoverable from the FDIC and recorded in other assets.