Note 7—FDIC Indemnification Asset

The following table provides changes in FDIC indemnification asset:


	Nine Months Ended September 30,
(Dollars in thousands)	2016		2015
Balance at beginning of period	$	4,401	$	22,161
Decrease in expected losses on loans		(23)		(21)
Additional recoveries on OREO		(1,736)		(4,164)
Reimbursable expenses		71		701
Amortization of discounts and premiums, net		(1,475)		(7,120)
Payments to (from) FDIC		853		(3,615)
Termination of Loss Share Agreement		(2,091)		—
Balance at end of period	$	—	$	7,942

As noted above, on June 23, 2016, the Bank entered into an early termination agreement with the FDIC with respect to all of its outstanding loss share agreements. The Bank recorded a pre-tax charge of $4.4 million, which resulted from a $2.3 million payment to the FDIC as consideration for the early termination, plus the amortization of the remaining FDIC indemnification asset of $2.1 million, net of the clawback, as of March 31, 2016. The entire pre-tax charge was recorded in noninterest income through “Amortization of the FDIC indemnification asset” on the consolidated statements of income.

During 2016, the Bank paid a net $853,000 to the FDIC, prior to the termination of the agreements. The indemnification asset was amortized through March 31, 2016. All assets previously classified as covered became uncovered effective June 23, 2016, and as a result the Bank recognizes the full amount of future charge-offs, recoveries, gains, losses, and expenses related to these previously covered assets, as the FDIC will no longer share in these amounts. As of the termination date, covered loans totaled $87.4 million and covered other real estate owned (“OREO”) totaled $3.0 million.