LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES | NOTE 8 — LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES The Company’s loan portfolio includes originated and purchased loans. Originated and purchased loans, for which there was no evidence of credit deterioration at their acquisition date, are referred to collectively as non-PCI loans. PCI loans are accounted for in accordance with ASC Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . PCI loans consist of loans acquired from the United Commercial Bank (“UCB”) FDIC assisted acquisition on November 6, 2009, the Washington First International Bank (“WFIB”) FDIC assisted acquisition on June 11, 2010 and, to a lesser extent, a small portion of loans acquired from the MetroCorp acquisition on January 17, 2014. The Company has elected to account for these acquired PCI loans on a pool level basis in accordance with ASC 310-30 at the time of acquisition. Please refer to Note 2 — Business Combination to the Consolidated Financial Statements, included in this report, for further details on the MetroCorp acquisition and Note 8 — Covered Assets and FDIC Indemnification Asset to the Consolidated Financial Statements of the Company’s 2014 Form 10-K for additional details related to the UCB and WFIB acquisitions. The following table presents the composition of the Company’s non-PCI and PCI loans as of December 31, 2015 and 2014 : ($ in thousands) December 31, 2015 December 31, 2014 Non-PCI Loans PCI Loans (1) Total (1) Non-PCI Loans PCI Loans (1) Total (1) CRE: Income producing $ 6,937,199 $ 541,275 $ 7,478,474 $ 5,568,046 $ 688,013 $ 6,256,059 Construction 436,776 1,895 438,671 319,843 12,444 332,287 Land 187,409 6,195 193,604 214,327 16,840 231,167 Total CRE 7,561,384 549,365 8,110,749 6,102,216 717,297 6,819,513 C&I: Commercial business 8,155,991 57,906 8,213,897 7,097,853 83,336 7,181,189 Trade finance 787,800 1,310 789,110 889,728 6,284 896,012 Total C&I 8,943,791 59,216 9,003,007 7,987,581 89,620 8,077,201 Residential: Single-family 2,877,286 189,633 3,066,919 3,647,262 219,519 3,866,781 Multifamily 1,374,718 148,277 1,522,995 1,184,017 265,891 1,449,908 Total residential 4,252,004 337,910 4,589,914 4,831,279 485,410 5,316,689 Consumer 1,931,828 24,263 1,956,091 1,483,956 29,786 1,513,742 Total loans $ 22,689,007 $ 970,754 $ 23,659,761 $ 20,405,032 $ 1,322,113 $ 21,727,145 Unearned fees, premiums, and discounts, net (16,013 ) — (16,013 ) 2,804 — 2,804 Allowance for loan losses (264,600 ) (359 ) (264,959 ) (260,965 ) (714 ) (261,679 ) Loans, net $ 22,408,394 $ 970,395 $ 23,378,789 $ 20,146,871 $ 1,321,399 $ 21,468,270 (1) Loans net of ASC 310-30 discount. The Company’s CRE lending activities include loans to finance income-producing properties, construction and land loans. The Company’s C&I lending activities include commercial business financing for small and middle-market businesses in a wide spectrum of industries. Included in commercial business loans are loans for working capital, accounts receivable lines, inventory lines, Small Business Administration loans and lease financing. The Company also offers a variety of international trade finance services and products, including letters of credit, revolving lines of credit, import loans, bankers’ acceptances, working capital lines, domestic purchase financing and pre-export financing. The Company’s single-family residential loans are primarily comprised of adjustable rate (“ARM”) first mortgage loans secured by one -to- four unit residential properties. The Company’s ARM single-family residential loan programs generally have a one -year, three -year or five -year initial fixed period. The Company’s multifamily residential loans are primarily comprised of variable rate loans that have a six -month or three -year initial fixed period. As of December 31, 2015 and 2014 , consumer loans were primarily composed of home equity lines of credit. All loans originated are subject to the Company’s underwriting guidelines and loan origination standards. Management believes that the Company’s underwriting criteria and procedures adequately consider the unique risks which may come from these products. The Company conducts a variety of quality control procedures and periodic audits, including review of criteria for lending and legal requirements, to ensure it is in compliance with its origination standards. As of December 31, 2015 and 2014 , loans totaling $15.91 billion and $14.66 billion , respectively, were pledged to secure borrowings and to provide additional borrowing capacity from the FHLB and the Federal Reserve Bank. Credit Quality Indicators All loans are subject to the Company’s internal and external credit review and monitoring. Loans are risk rated based on an analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of all repayment sources, the borrower’s current payment performance/delinquency, current financial and liquidity status and all other relevant information. For single-family residential loans, payment performance/delinquency is the driving indicator for the risk ratings. Risk ratings remain the overall credit quality indicator for the Company, as well as the credit quality indicator utilized for estimating the appropriate allowance for loan losses. The Company utilizes a risk rating system, which can be classified within the following categories: Pass, Watch, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the repayment sources. Pass and Watch loans are generally considered to have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. These borrowers may have some credit risks that require monitoring, but full repayments are expected. Special Mention loans are considered to have potential weaknesses that warrant closer attention by management. Special Mention is considered a transitory grade. If any potential weaknesses are resolved, the loan is upgraded to a Pass or Watch grade. If negative trends in the borrower’s financial status or other information indicates that the repayment sources may become inadequate, the loan is downgraded to a Substandard grade. Substandard loans are considered to have well-defined weaknesses that jeopardize the full and timely repayment of the loan. Substandard loans have a distinct possibility of loss, if the deficiencies are not corrected. Additionally, when management has assessed a potential for loss but a distinct possibility of loss is not recognizable, the loan is still classified as Substandard. Doubtful loans have insufficient sources of repayment and a high probability of loss. Loss loans are considered to be uncollectible and of such little value that they are no longer considered bankable assets. These internal risk ratings are reviewed routinely and adjusted due to changes in the borrowers’ status and likelihood of loan repayment. The following tables present the credit risk rating for non-PCI loans by portfolio segment as of December 31, 2015 and 2014 : ($ in thousands) Pass/Watch Special Mention Substandard Doubtful Loss Total Non-PCI Loans December 31, 2015 CRE: Income producing $ 6,672,951 $ 59,309 $ 204,939 $ — $ — $ 6,937,199 Construction 435,112 1,194 470 — — 436,776 Land 172,189 — 15,220 — — 187,409 C&I: Commercial business 7,794,735 201,280 135,449 24,527 — 8,155,991 Trade finance 750,144 13,812 23,844 — — 787,800 Residential: Single-family 2,841,722 8,134 27,430 — — 2,877,286 Multifamily 1,317,550 2,918 54,250 — — 1,374,718 Consumer 1,926,418 883 4,527 — — 1,931,828 Total $ 21,910,821 $ 287,530 $ 466,129 $ 24,527 $ — $ 22,689,007 ($ in thousands) Pass/Watch Special Mention Substandard Doubtful Loss Total Non-PCI Loans December 31, 2014 CRE: Income producing $ 5,243,640 $ 54,673 $ 269,733 $ — $ — $ 5,568,046 Construction 310,259 11 9,573 — — 319,843 Land 185,220 5,701 23,406 — — 214,327 C&I: Commercial business 6,836,914 130,319 130,032 533 55 7,097,853 Trade finance 845,889 13,031 30,808 — — 889,728 Residential: Single-family 3,627,491 3,143 16,628 — — 3,647,262 Multifamily 1,095,982 5,124 82,911 — — 1,184,017 Consumer 1,480,208 1,005 2,743 — — 1,483,956 Total $ 19,625,603 $ 213,007 $ 565,834 $ 533 $ 55 $ 20,405,032 The following tables present the credit risk rating for PCI loans by portfolio segment as of December 31, 2015 and 2014 : ($ in thousands) Pass/Watch Special Mention Substandard Doubtful Loss Total PCI Loans December 31, 2015 CRE: Income producing $ 440,100 $ 4,987 $ 96,188 $ — $ — $ 541,275 Construction — — 1,895 — — 1,895 Land 4,285 — 1,910 — — 6,195 C&I: Commercial business 52,212 819 4,875 — — 57,906 Trade finance 1,310 — — — — 1,310 Residential: Single-family 184,092 1,293 4,248 — — 189,633 Multifamily 130,770 — 17,507 — — 148,277 Consumer 23,121 452 690 — — 24,263 Total (1) $ 835,890 $ 7,551 $ 127,313 $ — $ — $ 970,754 (1) Loans net of ASC 310-30 discount. ($ in thousands) Pass/Watch Special Mention Substandard Doubtful Loss Total PCI Loans December 31, 2014 CRE: Income producing $ 534,015 $ 9,960 $ 144,038 $ — $ — $ 688,013 Construction 589 1,744 10,111 — — 12,444 Land 7,012 5,391 4,437 — — 16,840 C&I: Commercial business 70,586 1,103 11,647 — — 83,336 Trade finance 4,620 — 1,664 — — 6,284 Residential: Single-family 213,829 374 5,316 — — 219,519 Multifamily 230,049 — 35,842 — — 265,891 Consumer 29,026 116 644 — — 29,786 Total (1) $ 1,089,726 $ 18,688 $ 213,699 $ — $ — $ 1,322,113 (1) Loans net of ASC 310-30 discount. Nonaccrual and Past Due Loans Non-PCI loans that are 90 or more days past due are generally placed on nonaccrual status. Additionally, non-PCI loans that are not 90 or more days past due but have identified deficiencies are also placed on nonaccrual status. The following tables present the aging analysis on non-PCI loans as of December 31, 2015 and 2014 : ($ in thousands) Accruing Loans 30-59 Days Past Due Accruing Loans 60-89 Days Past Due Total Accruing Past Due Loans Nonaccrual Loans Less Than 90 Days Past Due Nonaccrual Loans 90 or More Days Past Due Total Nonaccrual Loans Current Accruing Loans Total Non-PCI Loans December 31, 2015 CRE: Income producing $ 3,465 $ 25,256 $ 28,721 $ 11,359 $ 17,870 $ 29,229 $ 6,879,249 $ 6,937,199 Construction — — — 14 — 14 436,762 436,776 Land 1,124 — 1,124 277 406 683 185,602 187,409 C&I: Commercial business 1,992 1,185 3,177 50,726 14,009 64,735 8,088,079 8,155,991 Trade finance — — — — — — 787,800 787,800 Residential: Single-family 7,657 2,927 10,584 92 8,634 8,726 2,857,976 2,877,286 Multifamily 6,320 981 7,301 6,486 9,758 16,244 1,351,173 1,374,718 Consumer 2,078 209 2,287 233 1,505 1,738 1,927,803 1,931,828 Total $ 22,636 $ 30,558 $ 53,194 $ 69,187 $ 52,182 $ 121,369 $ 22,514,444 $ 22,689,007 ($ in thousands) Accruing Loans 30-59 Days Past Due Accruing Loans 60-89 Days Past Due Total Accruing Past Due Loans Nonaccrual Loans Less Than 90 Days Past Due Nonaccrual Loans 90 or More Days Past Due Total Nonaccrual Loans Current Accruing Loans Total Non-PCI Loans December 31, 2014 CRE: Income producing $ 14,171 $ 3,593 $ 17,764 $ 19,348 $ 9,165 $ 28,513 $ 5,521,769 $ 5,568,046 Construction — — — 15 6,898 6,913 312,930 319,843 Land — — — 221 2,502 2,723 211,604 214,327 C&I: Commercial business 3,187 4,361 7,548 6,623 21,813 28,436 7,061,869 7,097,853 Trade finance — — — 73 292 365 889,363 889,728 Residential: 0 Single-family 6,381 1,294 7,675 2,861 5,764 8,625 3,630,962 3,647,262 Multifamily 4,425 507 4,932 12,460 8,359 20,819 1,158,266 1,184,017 Consumer 2,154 162 2,316 169 3,699 3,868 1,477,772 1,483,956 Total $ 30,318 $ 9,917 $ 40,235 $ 41,770 $ 58,492 $ 100,262 $ 20,264,535 $ 20,405,032 PCI loans are excluded from the above aging analysis table as the Company has elected to account for these loans on a pool level basis in accordance with ASC 310-30 at the time of acquisition. Please refer to the discussion of PCI Loans within this note for additional details on interest income recognition of PCI loans. As of December 31, 2015 and 2014 , $37.7 million and $63.4 million of PCI loans, respectively, were on nonaccrual status. Loans in Process of Foreclosure As of December 31, 2015 and 2014 , the Company had $18.0 million and $16.9 million , respectively, of recorded investment in consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdictions, which were not included in OREO. Foreclosed residential real estate properties with a carrying amount of $912 thousand were included in total net OREO of $7.0 million as of December 31, 2015 . In comparison, foreclosed residential real estate properties with a carrying amount of $3.6 million were included in total net OREO of $32.1 million as of December 31, 2014 . TDRs Potential TDRs are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower’s financial difficulty in order to maximize the Company’s recovery. A TDR is a modification of the terms of a loan when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower, it would not otherwise consider. The following tables present the additions to non-PCI TDRs for the years ended December 31, 2015 , 2014 and 2013 : ($ in thousands) Loans Modified as TDRs During the Year Ended December 31, 2015 Number Pre-Modification Post-Modification (1) Financial (2) CRE: Income producing 3 $ 1,802 $ 1,705 $ — Land 2 $ 2,227 $ 83 $ 102 C&I: Commercial business 18 $ 42,816 $ 34,124 $ 6,726 Residential: Single-family 1 $ 281 $ 279 $ 2 Loans Modified as TDRs During the Year Ended December 31, 2014 ($ in thousands) Number Pre-Modification Post-Modification (1) Financial (2) CRE: Income producing 6 $ 8,829 $ 8,624 $ 43 C&I: Commercial business 13 $ 4,379 $ 3,089 $ 2,205 Trade finance 1 $ 190 $ 73 $ 14 Residential: Single-family 9 $ 11,454 $ 8,269 $ — Multifamily 6 $ 5,471 $ 3,705 $ 7 Consumer 1 $ 509 $ 504 $ — Loans Modified as TDRs During the Year Ended December 31, 2013 ($ in thousands) Number Pre-Modification Post-Modification (1) Financial (2) CRE: Income producing 6 $ 26,021 $ 17,456 $ 219 C&I: Commercial business 6 $ 16,220 $ 15,624 $ 4,274 Residential: Multifamily 1 $ 1,093 $ 1,071 $ — Consumer 1 $ 651 $ 639 $ — (1) Includes subsequent payments after modification and reflects the balance as of December 31, 2015 , 2014 and 2013 . (2) The financial impact includes charge-offs and specific reserves recorded at the modification date. The following tables summarize the non-PCI TDR modifications for the years ended December 31, 2015 , 2014 and 2013 by modification type: ($ in thousands) Modification Type Principal (1) Principal and Interest (2) Interest Rate Reduction A/B Note Other Total December 31, 2015 CRE $ 521 $ 791 $ — $ — $ 476 $ 1,788 C&I 16,325 17,799 — — — $ 34,124 Residential 279 — — — — $ 279 Total $ 17,125 $ 18,590 $ — $ — $ 476 $ 36,191 ($ in thousands) Modification Type Principal (1) Principal and Interest (2) Interest Rate Reduction A/B Note Other Total December 31, 2014 CRE $ 691 $ 5,100 $ 2,165 $ — $ 668 $ 8,624 C&I 2,677 73 94 — 318 3,162 Residential 9,756 1,471 — — 747 11,974 Consumer — — — — 504 504 Total $ 13,124 $ 6,644 $ 2,259 $ — $ 2,237 $ 24,264 ($ in thousands) Modification Type Principal (1) Principal and Interest (2) Interest Rate Reduction A/B Note Other Total December 31, 2013 CRE $ 15,923 $ 540 $ — $ 884 $ 109 $ 17,456 C&I 15,488 136 — — — 15,624 Residential — — — 1,071 — 1,071 Consumer — — — — 639 $ 639 Total $ 31,411 $ 676 $ — $ 1,955 $ 748 $ 34,790 (1) Principal modification includes forbearance payments, term extensions and principal deferments that modify the terms of the loan from principal and interest payments to interest payments only. (2) Principal and interest modification includes principal and interest deferments or reductions. Subsequent to restructuring, a TDR that becomes delinquent, generally beyond 90 days, is considered to have defaulted. The following table presents information for loans modified as TDRs within the previous 12 months that have subsequently defaulted during the years ended December 31, 2015 , 2014 and 2013 : Loans Modified as TDRs that Subsequently Defaulted 2015 2014 2013 ($ in thousands) Number of Recorded Number of Recorded Number of Recorded C&I: Commercial business — $ — 1 $ 957 1 $ 570 Residential: Single-family 1 $ 279 — $ — — $ — Consumer — $ — — $ — 1 $ 639 The amount of additional funds committed to lend to borrowers whose terms have been modified was immaterial as of December 31, 2015 and 2014 . Impaired Loans The following tables present the non-PCI impaired loans as of December 31, 2015 and 2014 : ($ in thousands) Unpaid Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance December 31, 2015 CRE: Income producing $ 47,043 $ 24,347 $ 15,720 $ 40,067 $ 3,148 Construction 66 — 14 14 1 Land 1,537 632 683 1,315 118 C&I: Commercial business 81,720 31,045 40,111 71,156 15,993 Trade finance 10,675 — 10,675 10,675 95 Residential: Single-family 16,486 4,401 10,611 15,012 584 Multifamily 25,634 16,944 6,783 23,727 339 Consumer 1,240 — 1,240 1,240 60 Total $ 184,401 $ 77,369 $ 85,837 $ 163,206 $ 20,338 ($ in thousands) Unpaid Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance December 31, 2014 CRE: Income producing $ 58,900 $ 35,495 $ 15,646 $ 51,141 $ 1,581 Construction 6,913 6,913 — 6,913 — Land 13,291 2,838 5,622 8,460 1,906 C&I: Commercial business 44,569 12,723 25,717 38,440 15,174 Trade finance 12,967 6,431 274 6,705 28 Residential: Single-family 18,908 6,003 11,398 17,401 461 Multifamily 37,649 21,523 12,890 34,413 313 Consumer 1,259 1,151 108 1,259 1 Total $ 194,456 $ 93,077 $ 71,655 $ 164,732 $ 19,464 The following table presents the average recorded investment and the amount of interest income recognized on non-PCI impaired loans for the years ended December 31, 2015 , 2014 and 2013 : ($ in thousands) Year Ended December 31, 2015 2014 2013 Average Recorded Investment Recognized Interest Income (1) Average Recognized Interest Income (1) Average Recognized Interest Income (1) CRE: Income producing $ 44,043 $ 536 $ 54,544 $ 1,249 $ 71,856 $ 2,480 Construction 14 — 6,888 — 6,888 — Land 2,708 39 8,633 298 12,453 496 C&I: Commercial business 73,513 315 36,528 833 38,294 735 Trade finance 11,402 223 336 15 1,603 11 Residential: Single-family 15,347 242 16,413 342 15,322 154 Multifamily 24,001 312 37,128 830 35,799 850 Consumer 1,251 47 1,259 47 3,225 4 Total impaired non-PCI loans $ 172,279 $ 1,714 $ 161,729 $ 3,614 $ 185,440 $ 4,730 (1) Includes interest recognized on accruing non-PCI TDRs. Interest payments received on nonaccrual non-PCI loans are reflected as a reduction of principal and not as interest income. Allowance for Credit Losses The following tables present a summary of the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2015 , 2014 and 2013 : ($ in thousands) Non-PCI Loans CRE C&I Residential Consumer Total PCI Loans Total Year Ended December 31, 2015 Beginning balance $ 72,263 $ 134,598 $ 43,856 $ 10,248 $ 260,965 $ 714 $ 261,679 Provision for (reversal of) loan losses 3,338 11,640 (7,499 ) (555 ) 6,924 (355 ) 6,569 Charge-offs (1,545 ) (20,423 ) (1,686 ) (600 ) (24,254 ) — (24,254 ) Recoveries 7,135 8,782 4,621 427 20,965 — 20,965 Net recoveries (charge-offs) 5,590 (11,641 ) 2,935 (173 ) (3,289 ) — (3,289 ) Ending balance $ 81,191 $ 134,597 $ 39,292 $ 9,520 $ 264,600 $ 359 $ 264,959 ($ in thousands) Non-PCI Loans CRE C&I Residential Consumer Total PCI Loans Total Year Ended December 31, 2014 Beginning balance $ 70,154 $ 115,184 $ 50,716 $ 11,352 $ 247,406 $ 2,269 $ 249,675 Provision for (reversal of) loan losses 3,264 49,200 (8,167 ) 4,318 48,615 (1,032 ) 47,583 Charge-offs (3,137 ) (39,984 ) (1,103 ) (5,871 ) (50,095 ) (523 ) (50,618 ) Recoveries 1,982 10,198 2,410 449 15,039 — 15,039 Net (charge-offs) recoveries (1,155 ) (29,786 ) 1,307 (5,422 ) (35,056 ) (523 ) (35,579 ) Ending balance $ 72,263 $ 134,598 $ 43,856 $ 10,248 $ 260,965 $ 714 $ 261,679 ($ in thousands) Non-PCI Loans CRE C&I Residential Consumer Total PCI Loans Total Year Ended December 31, 2013 Beginning balance $ 72,385 $ 107,719 $ 49,436 $ 4,995 $ 234,535 $ — $ 234,535 (Reversal of) provision for loan losses (3,287 ) 11,534 2,473 7,218 17,938 2,269 20,207 Charge-offs (3,737 ) (8,461 ) (3,197 ) (2,385 ) (17,780 ) — (17,780 ) Recoveries 4,793 4,392 2,004 1,524 12,713 — 12,713 Net recoveries (charge-offs) 1,056 (4,069 ) (1,193 ) (861 ) (5,067 ) — (5,067 ) Ending balance $ 70,154 $ 115,184 $ 50,716 $ 11,352 $ 247,406 $ 2,269 $ 249,675 The following table presents a summary of the activity in the allowance for unfunded credit reserves for the years ended December 31, 2015 , 2014 and 2013 : ($ in thousands) Year Ended December 31, 2015 2014 2013 Beginning balance $ 12,712 $ 11,282 $ 9,437 Provision for unfunded credit reserves 7,648 1,575 2,157 Charge-offs — 145 312 Ending balance $ 20,360 $ 12,712 $ 11,282 The allowance for unfunded credit reserves is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities. The allowance for unfunded credit reserves was included in accrued expense and other liabilities in the accompanying Consolidated Balance Sheets. Please refer to Note 14 — Commitments, Contingencies and Related Party Transactions to the Consolidated Financial Statements for additional information related to unfunded credit reserves. The following tables present the Company’s allowance for loan losses and recorded investments in loans by portfolio segment as of December 31, 2015 and 2014 and disaggregated by the Company’s impairment methodology: ($ in thousands) CRE C&I Residential Consumer Total As of December 31, 2015 Allowance for loan losses Individually evaluated for impairment $ 3,267 $ 16,088 $ 923 $ 60 $ 20,338 Collectively evaluated for impairment 77,924 118,509 38,369 9,460 244,262 Acquired with deteriorated credit quality 347 9 3 — 359 Ending balance $ 81,538 $ 134,606 $ 39,295 $ 9,520 $ 264,959 Recorded investment in loans Individually evaluated for impairment $ 41,396 $ 81,831 $ 38,739 $ 1,240 $ 163,206 Collectively evaluated for impairment 7,519,988 8,861,960 4,213,265 1,930,588 22,525,801 Acquired with deteriorated credit quality (1) 549,365 59,216 337,910 24,263 970,754 Ending balance (1) $ 8,110,749 $ 9,003,007 $ 4,589,914 $ 1,956,091 $ 23,659,761 (1) Loans net of ASC 310-30 discount. ($ in thousands) CRE C&I Residential Consumer Total As of December 31, 2014 Allowance for loan losses Individually evaluated for impairment $ 3,487 $ 15,202 $ 774 $ 1 $ 19,464 Collectively evaluated for impairment 68,776 119,396 43,082 10,247 241,501 Acquired with deteriorated credit quality 714 — — — 714 Ending balance $ 72,977 $ 134,598 $ 43,856 $ 10,248 $ 261,679 Recorded investment in loans Individually evaluated for impairment $ 66,514 $ 45,145 $ 51,814 $ 1,259 $ 164,732 Collectively evaluated for impairment 6,035,702 7,942,436 4,779,465 1,482,697 20,240,300 Acquired with deteriorated credit quality (1) 717,297 89,620 485,410 29,786 1,322,113 Ending balance (1) $ 6,819,513 $ 8,077,201 $ 5,316,689 $ 1,513,742 $ 21,727,145 (1) Loans net of ASC 310-30 discount. PCI Loans As of the respective acquisition dates, PCI loans were pooled and accounted for at fair value, which represents the discounted value of the expected cash flows of the loan portfolio. The amount of expected cash flows over the initial investment in the loan represent the “accretable yield,” which is recognized as interest income on a level yield basis over the life of the loan. The excess of total contractual cash flows over the cash flows expected to be received at origination is deemed the “nonaccretable difference.” The following table presents the changes in the accretable yield for the PCI loans for the years ended December 31, 2015 , 2014 and 2013 : ($ in thousands) Year Ended December 31, 2015 2014 2013 Beginning balance $ 311,688 $ 461,545 $ 556,986 Addition — 6,745 — Accretion (107,442 ) (219,169 ) (347,010 ) Changes in expected cash flows 10,661 62,567 251,569 Ending balance $ 214,907 $ 311,688 $ 461,545 Covered assets consist of loans receivable and OREO that were acquired in the UCB acquisition on November 6, 2009 and in the WFIB acquisition on June 11, 2010 for which the Company entered into shared-loss agreements with the FDIC. The shared-loss coverage of the UCB and WFIB commercial loans ended as of December 31, 2014 and June 30, 2015, respectively. In addition, during the year ended December 31, 2015 the Company reached an agreement with the FDIC to early terminate the WFIB and UCB shared-loss agreements and made a total payment of $125.5 million for the early termination. As a result, the Company has no remaining shared-loss agreements with the FDIC as of December 31, 2015 . Of the total $1.32 billion in PCI loans as of December 31, 2014 , $1.23 billion were covered under shared-loss agreements. As of December 31, 2014 , $1.48 billion of total loans were covered under shared-loss agreements. FDIC Indemnification Asset/Net Payable to FDIC The Company amortizes the difference between the recorded amount of the FDIC indemnification asset and the expected reimbursement from the FDIC over the life of the indemnification asset. Due to the early termination of the shared-loss agreements entered with FDIC as previously discussed, the Company no longer has a FDIC indemnification asset/net payable to the FDIC as of December 31, 2015 . As of December 31, 2014 , a net payable to the FDIC of $96.1 million was included in accrued expenses and other liabilities on the Consolidated Balance Sheets. The following table presents a summary of the FDIC indemnification asset/net payable to the FDIC for the years ended December 31, 2015 , 2014 and 2013 : ($ in thousands) Year Ended December 31, 2015 2014 2013 Beginning balance $ (96,106 ) $ 74,708 $ 316,313 Amortization (3,906 ) (101,638 ) (99,055 ) Reductions (1) (10,307 ) (33,595 ) (95,536 ) FDIC repayment (2) 110,319 (35,581 ) (47,014 ) Ending balance $ — $ (96,106 ) $ 74,708 (1) Reductions relate to charge-offs, partial prepayments, loan payoffs and loan sales which result in a corresponding reduction of the indemnification asset. (2) Represents the change in the calculated estimate the Company will be required to pay the FDIC at the end of the FDIC shared-loss agreements, due to lower thresholds of losses, with the exception of the amount in the year ended December 31, 2015, which includes the final payments made to the FDIC due to the early termination of the shared-loss agreements. Loans Held for Sale Loans held for sale were $32.0 million and $46.0 million as of December 31, 2015 and 2014 , respectively. $1.69 billion of loans held-for-investment were transferred to loans held for sale during the year ended December 31, 2015 . These loans were primarily comprised of single-family residential and C&I loans. In comparison, $837.4 million and $97.1 million of loans held-for-investment were transferred to loans held for sale during the years ended December 31, 2014 and 2013 , respectively. These loans were primarily comprised of student and C&I loans. The Company recorded $5.1 million and $5.2 million in write-downs related to loans transferred from loans held-for-investment to loans held for sale to the allowance for loan losses for the years ended December 31, 2015 and 2014 , respectively. The Company did not record any write-downs related to loans transferred from loans held-for-investment to loans held for sale for the year ended December 31, 2013 . For the year ended December 31, 2015 , approximately $1.70 billion of loans were sold, resulting in net gains of $27.8 million . Loans sold during the year ended December 31, 2015 were primarily comprised of single-family residential and C&I loans. For the year ended December 31, 2014 , approximately $1.09 billion of loans, mainly comprised of student and C&I loans, were sold, resulting in net gains of $39.1 million . For the year ended December 31, 2013 , approximately $364.4 million of loans, mainly comprised of student and C&I loans, were sold, resulting in net gains of $7.8 million . In addition, the Company recorded a $3.0 million LOCOM adjustment related to the loans held for sale portfolio during the year ended December 31, 2015 . The LOCOM adjustment was included in the net gains on sales of loans in the accompanying Consolidated Statements of Income. The Company did not record any LOCOM adjustment related to the loans held for sale portfolio during the years ended December 31, 2014 and 2013 . |