Loss Sharing Agreements and FDIC Indemnification Assets: Business Combination and Other Purchase of Business Transactions Policy (Policies)

3 Months Ended

Jun. 30, 2012

Business Combination and Other Purchase of Business Transactions Policy:

Business Combination and Other Purchase of Business Transactions Policy

The loss sharing asset is measured separately from the loan portfolio because it is not contractually embedded in the loans and is not transferable with the loans should the Bank choose to dispose of them. Fair value was estimated using projected cash flows available for loss sharing based on the credit adjustments estimated for each loan pool (as discussed above) and the loss sharing percentages outlined in the Purchase and Assumption Agreement with the FDIC. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC. The loss sharing asset is also separately measured from the related foreclosed real estate.