Note 7—FDIC Indemnification Asset

The following table provides changes in FDIC indemnification asset:

	Nine Months Ended
	September 30,			September 30,
(Dollars in thousands)	2013			2012
Balance at beginning of period	$	146,171		$	262,651
FDIC indemnification asset recorded for First Federal’s FDIC loss share agreements	29,337			—
Increase (decrease) in expected losses on loans	(1,871		)	(710		)
Additional losses (recoveries) on OREO	(547		)	8,324
Reimbursable expenses	3,855			7,055
Amortization of discounts and premiums, net	(22,106		)	(14,226		)
Reimbursements from FDIC	(39,066		)	(88,773		)
Balance at end of period	$	115,773		$	174,321

The FDIC indemnification asset is measured separately from the related covered assets. At September 30, 2013, the projected cash flows related to the FDIC indemnification asset for losses on assets acquired were approximately $39.0 million less than the current carrying value. This amount is being recognized as negative accretion (in non-interest income) over the shorter of the underlying asset’s remaining life or remaining term of the loss share agreements. Subsequent to September 30, 2013, the Company expects to receive $12.5 million from loss share claims filed, including reimbursable expenses.

Included in the FDIC indemnification asset is an expected “true up” with the FDIC related to both the BankMeridian, N.A. (“BankMeridian”)(acquired by SCBT in July 2011) and Plantation Financial Corporation (“Plantation”) (originally acquired by FFCH in April 2012) acquisitions. This amount is determined each reporting period and at September 30, 2013, was estimated to be approximately $3.7 million related to the BankMeridian acquisition at the end of the loss share agreement (July 2021) and $3.4 million related to the Plantation acquisition at the end of the loss share agreement (April 2017). The actual payment will be determined at the end of the loss sharing agreement term for each of the five FDIC-assisted acquisitions and is based on the negative bid, expected losses, intrinsic loss estimate, and assets covered under loss share. There was no true up expected from the Community Bank & Trust (“CBT”), Cape Fear Bank (“Cape Fear”), or Habersham Bank (“Habersham”) FDIC-assisted transactions as of September 30, 2013.

On July 26, 2013, the Company completed the previously announced merger with First Financial, the bank holding company for The Bank. The Bank has loss sharing agreements with the FDIC related to the Cape Fear (originally acquired by FFCH in April 2009) and Plantation acquisitions which afford The Bank significant protection regarding certain acquired assets. Under the loss sharing agreement for Cape Fear, The Bank assumes the first $32.4 million of losses and the FDIC reimburses The Bank for 80% of the losses greater than $32.4 million and up to $110.0 million. On losses exceeding $110.0 million, the FDIC will reimburse The Bank for 95% of the losses. Under the loss sharing agreement for Plantation, The Bank shares in the losses on certain commercial loans and commercial OREO in three tranches. On losses up to $55.0 million, the FDIC reimburses The Bank for 80% of all eligible losses; The Bank absorbs losses greater than $55.0 million up to $65.0 million; and the FDIC reimburses The Bank for 60% of all eligible losses in excess of $65.0 million. The expected reimbursements under the loss sharing agreement are recorded in the note above.