COVERED ASSETS AND FDIC INDEMNIFICATION ASSET (Tables)

9 Months Ended

Sep. 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 September 30, 2011 and December 31, 2010 are as follows:

	September 30,			December 31,
	2011			2010
	(In thousands)
Real estate loans:
Residential single-family	$	470,368		$	553,541
Residential multifamily		959,188			1,093,331
Commercial and industrial real estate		1,883,843			2,085,674
Construction and land		718,938			1,043,717
Total real estate loans		4,032,337			4,776,263
Other loans:
Commercial business		884,772			1,072,020
Other consumer		101,158			107,490
Total other loans		985,930			1,179,510
Total principal balance		5,018,267			5,955,773
Covered discount		(871,931	)		(1,150,672	)
Net valuation of loans		4,146,336			4,805,101
Allowance on covered loans		(6,434	)		(4,225	)
Total covered loans, net	$	4,139,902		$	4,800,876

Covered nonperforming assets, by credit quality indicators

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

			Special
	Pass/Watch		Mention		Substandard		Doubtful		Total
	(In thousands)
September 30, 2011
Real estate loans:
Residential single-family	$	445,223	$	2,586	$	22,559	$	-	$	470,368
Residential multifamily		785,022		31,755		142,411		-		959,188
Commercial and industrial real estate		1,304,704		47,389		523,480		8,270		1,883,843
Construction and land		251,416		42,955		418,318		6,249		718,938
Total real estate loans		2,786,365		124,685		1,106,768		14,519		4,032,337
Other loans:
Commercial business		665,944		41,116		169,913		7,799		884,772
Other consumer		99,350		176		1,632		-		101,158
Total other loans		765,294		41,292		171,545		7,799		985,930
Total principal balance	$	3,551,659	$	165,977	$	1,278,313	$	22,318	$	5,018,267

			Special
	Pass/Watch		Mention		Substandard		Doubtful		Total
December 31, 2010	(In thousands)
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:

	September 30,		December 31,
	2011		2010
	(In thousands)
Covered nonaccrual loans (1)	$	245,986	$	379,797
Covered loans past due 90 days or more but not on nonaccrual		-		-
Total nonperforming loans		245,986		379,797
Other real estate owned covered, net		87,298		123,902
Total covered nonperforming assets	$	333,284	$	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						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Balance at beginning of period	$	980,932		$	986,389		$	1,153,272		$	983,107
Additions		-			-			-			84,556
Accretion		(51,307	)		(3,601	)		(162,747	)		(11,118	)
Changes in expected cash flows		(49,581	)		(24,314	)		(110,481	)		(98,071	)
Balance at end of period	$	880,044		$	958,474		$	880,044		$	958,474

FDIC indemnification asset activity

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Balance at beginning of period	$	630,437		$	939,913		$	785,035		$	1,084,716
Addition due to WFIB acquisition		-			-			-			41,131
(Amortization) Accretion		(14,325	)		7,118			(48,034	)		29,210
Reductions (1)(2)		(43,349	)		(79,370	)		(164,238	)		(287,396	)
Estimate of FDIC repayment (3)		(3,606	)		-			(3,606	)		-
Balance at end of period	$	569,157		$	867,661		$	569,157		$	867,661

______________________

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

(2)

For the three and nine months ended September 30, 2011, the reduction amounts of $43.3 million and $164.2 million, respectively, include charge-offs, of which $18.4 million and $92.8 million, respectively, of these charge-offs are recoverable from the FDIC and recorded in other assets. For the three and nine months ended September 30, 2010, the reduction amounts of $79.4 million and $287.4 million, respectively, also include charge-offs, of which $70.8 million and $188.8 million, respectively, is recoverable from the FDIC and recorded in other assets.

(3)	This represents the change in the calculated estimate the company will be required to pay the FDIC at the end of the FDIC loss share agreements, due to lower thresholds of losses.