NOTE 5: ALLOWANCES FOR LOAN LOSSES

The following table provides additional information regarding the Company’s allowances for losses on non-covered loans and covered loans, based upon the method of evaluating loan impairment:


(in thousands)	Mortgage		Other		Total
Allowance for Loan Losses at December 31, 2011:
Individually evaluated for impairment	$	490	$	—	$	490
Collectively evaluated for impairment		121,505		15,295		136,800
Acquired loans with deteriorated credit quality		14,227		19,096		33,323

Total	$	136,222	$	34,391	$	170,613


(in thousands)	Mortgage		Other		Total
Allowance for Loan Losses at December 31, 2010:
Individually evaluated for impairment	$	15,877	$	130	$	16,007
Collectively evaluated for impairment		124,957		17,978		142,935
Acquired loans with deteriorated credit quality		4,873		7,030		11,903

Total	$	145,707	$	25,138	$	170,845

The following table provides additional information regarding the methods used to evaluate the Company’s loan portfolio for impairment:


(in thousands)	Mortgage		Other		Total
Loans Receivable at December 31, 2011:
Individually evaluated for impairment	$	324,427	$	5,995	$	330,422
Collectively evaluated for impairment		24,534,477		663,898		25,198,375
Acquired loans with deteriorated credit quality		3,366,456		386,575		3,753,031

Total	$	28,225,360	$	1,056,468	$	29,281,828


(in thousands)	Mortgage		Other		Total
Loans Receivable at December 31, 2010:
Individually evaluated for impairment	$	747,869	$	12,929	$	760,798
Collectively evaluated for impairment		22,239,584		714,293		22,953,877
Acquired loans with deteriorated credit quality		3,874,449		423,420		4,297,869

Total	$	26,861,902	$	1,150,642	$	28,012,544

Non-Covered Loans

The following table summarizes activity in the allowance for losses on non-covered loans for the years ended December 31, 2011, 2010, and 2009:


	December 31,
(in thousands)	2011			2010			2009
Balance, beginning of year	$	158,942		$	127,491		$	94,368
Provision for loan losses		79,000			91,000			63,000
Charge-offs		(105,910	)		(60,785	)		(29,931	)
Recoveries		5,258			1,236			54

Balance, end of year	$	137,290		$	158,942		$	127,491

Please see Note 2, “Summary of Significant Accounting Polices” for additional information regarding the Company’s allowance for losses on non-covered loans.

The following table presents additional information regarding the Company’s impaired non-covered loans at December 31, 2011:


(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired Loans with No Related Allowance:
Multi-family	$	235,100	$	244,684	$	—	$	321,994	$	3,435
Commercial real estate		49,258		52,152		—		63,032		1,397
Acquisition, development, and construction		26,680		27,143		—		42,600		1,141
One-to-four family		1,127		1,520		—		2,649		10
Commercial and industrial		5,995		10,240		—		6,442		60

Total impaired loans with no related allowance	$	318,160	$	335,739	$	—	$	436,717	$	6,043

Impaired Loans with An Allowance Recorded:
Multi-family	$	6,329	$	6,899	$	408	$	10,893	$	187
Commercial real estate		5,648		5,857		53		10,297		—
Acquisition, development, and construction		—		—		—		14,495		—
One-to-four family		285		373		29		71		—
Commercial and industrial		—		—		—		1,837		—

Total impaired loans with an allowance recorded	$	12,262	$	13,129	$	490	$	37,593	$	187

Total Impaired Loans:
Multi-family	$	241,429	$	251,583	$	408	$	332,887	$	3,622
Commercial real estate		54,906		58,009		53		73,329		1,397
Acquisition, development, and construction		26,680		27,143		—		57,095		1,141
One-to-four family		1,412		1,893		29		2,720		10
Commercial and industrial		5,995		10,240		—		8,279		60

Total impaired loans	$	330,422	$	348,868	$	490	$	474,310	$	6,230

The following table presents additional information regarding the Company’s impaired non-covered loans at December 31, 2010:


(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans with No Related Allowance:
Multi-family	$	447,137	$	464,011	$	—
Commercial real estate		120,087		122,486		—
Acquisition, development, and construction		65,453		71,541		—
One-to-four family		3,611		3,707		—
Commercial and industrial		10,919		15,197		—

Total impaired loans with no related allowance	$	647,207	$	676,942	$	—

Loans with An Allowance Recorded:
Multi-family	$	50,153	$	52,209	$	6,756
Commercial real estate		25,700		25,894		1,555
Acquisition, development, and construction		35,355		37,634		7,553
One-to-four family		373		373		13
Commercial and industrial		2,010		2,010		130

Total impaired loans with an allowance recorded	$	113,591	$	118,120	$	16,007

Total Impaired Loans:
Multi-family	$	497,290	$	516,220	$	6,756
Commercial real estate		145,787		148,380		1,555
Acquisition, development, and construction		100,808		109,175		7,553
One-to-four family		3,984		4,080		13
Commercial and industrial		12,929		17,207		130

Total impaired loans	$	760,798	$	795,062	$	16,007

The average balances of impaired loans in 2011, 2010, and 2009 were $474.3 million, $696.5 million, and $469.5 million, respectively. The interest income recorded on these loans, which was not materially different from cash-basis interest income, was $6.2 million, $14.9 million, and $18.3 million in the corresponding years.

Covered Loans

Under the loss sharing agreements with the FDIC, covered loans are reported exclusive of the FDIC loss share receivable. The covered loans acquired in the AmTrust and Desert Hills acquisitions are, and will continue to be, reviewed for collectability based on the expectations of cash flows from these loans. Covered loans have been aggregated into pools of loans with common characteristics. In determining the allowance for losses on covered loans, the Company periodically performs an analysis to estimate the expected cash flows for each of the loan pools. The Company records a provision for loan losses on covered loans to the extent that the expected cash flows from a loan pool have decreased since the acquisition date. Accordingly, if there is a decrease in expected cash flows due to an increase in estimated credit losses compared to the estimates made at the respective acquisition dates, the decrease in the present value of expected cash flows is recorded as a provision for covered loan losses charged to earnings, and an allowance for covered loan losses is established. A related credit to non-interest income and an increase in the FDIC loss share receivable is recognized at the same time, and measured based on the loss sharing agreement percentages.

The following table summarizes activity in the allowance for losses on covered loans for the years ended December 31, 2011 and 2010:


	December 31,
(in thousands)	2011		2010
Balance, beginning of period	$	11,903	$	—
Provision for losses on covered loans		21,420		11,903

Balance, end of period	$	33,323	$	11,903