Company Quick10K Filing
First California Financial Group
Price8.49 EPS0
Shares29 P/E35
MCap248 P/FCF14
Net Debt-50 EBIT31
TEV198 TEV/EBIT6
TTM 2013-03-31, in MM, except price, ratios
10-Q 2013-03-31 Filed 2013-05-10
10-K 2012-12-31 Filed 2013-03-18
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-10
10-K 2011-12-31 Filed 2012-03-15
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-16
10-K 2010-12-31 Filed 2011-03-30
10-Q 2010-09-30 Filed 2010-11-08
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-05

FCAL 10Q Quarterly Report

Note 1 - Nature of Operations and Basis of Presentation
Note 2 - Recently Issued and Adopted Accounting Pronouncements
Note 3 - Securities
Note 4 - Non-Covered Loans and Allowance for Non-Covered Loan Losses
Note 5 - Covered Loans and Fdic Shared-Loss Asset
Note 6 - Foreclosed Property
Note 7 - Goodwill and Other Intangible Assets
Note 8 - Derivatives and Hedging Activity
Note 9-Earnings per Share
Note 10 - Fair Value Measurement
Note 11 - Commitments and Contingencies
Note 12 - Subsequent Event
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm

First California Financial Group Earnings 2013-03-31

Balance SheetIncome StatementCash Flow

10-Q 1 fcal-10q_033113.htm QUARTERLY REPORT fcal-10q_033113.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 10-Q

 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2013
 
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from to
 
Commission file number 000-52498
 


FIRST CALIFORNIA FINANCIAL GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
 

 
Delaware
38-3737811
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification Number)
   
3027 Townsgate Road, Suite 300
 
Westlake Village, California
91361
(Address of Principal Executive Offices)
(Zip Code)
   
Registrant’s telephone number, including area code: (805) 322-9655
 

 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
o
 
Accelerated filer
x
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
29,136,434 shares of Common Stock, $0.01 par value, as of May 8, 2013
 
 
 


 
 
FIRST CALIFORNIA FINANCIAL GROUP, INC.
QUARTERLY REPORT ON
FORM 10-Q
 
For the Quarterly Period Ended March 31, 2013
 
TABLE OF CONTENTS
 

 
2

 

 
Item 1.                      Financial Statements
 
FIRST CALIFORNIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
             
(in thousands, except share and per share data)
 
March 31,
2013
   
December 31,
2012
 
             
Cash and due from banks
  $ 49,865     $ 46,024  
Interest bearing deposits with other banks
    68,035       120,850  
Securities available-for-sale, at fair value
    318,288       381,041  
Non-covered loans, net
    1,011,896       1,043,021  
Covered loans
    97,683       102,431  
Premises and equipment, net
    17,593       18,000  
Non-covered foreclosed property
    14,165       14,895  
Covered foreclosed property
    2,919       3,900  
Goodwill
    60,720       60,720  
Other intangibles, net
    6,516       6,892  
FDIC shared-loss receivable
    40,903       45,345  
Cash surrender value of life insurance
    13,198       13,097  
Deferred tax assets, net
    1,534       1,369  
Accrued interest receivable and other assets
    28,976       25,680  
Assets of discontinued operations       4,998        4,578  
Total assets
  $ 1,737,289     $ 1,887,843  
                 
Non-interest checking
  $ 540,109     $ 636,455  
Interest checking
    113,970       124,765  
Money market and savings
    448,652       478,052  
Certificates of deposit, under $100,000
    55,223       59,311  
Certificates of deposit, $100,000 and over
    200,614       209,249  
Total deposits
    1,358,568       1,507,832  
Securities sold under agreements to repurchase
    10,000       30,000  
Federal Home Loan Bank advances
    97,026       77,054  
Junior subordinated debentures
    26,805       26,805  
FDIC shared-loss liability
    4,027       3,900  
Accrued interest payable and other liabilities
    7,335       8,134  
                 
Total liabilities
    1,503,761       1,653,725  
                 
Commitments and Contingencies (Note 11)
               
Perpetual preferred stock; authorized 2,500,000 shares
               
Series A - $0.01 par value, 1,000 shares issued and outstanding as of March 31, 2013 and December 31, 2012
    1,000       1,000  
Series C - $0.01 par value, 25,000 shares issued and outstanding as of March 31, 2013 and December 31, 2012
    25,000       25,000  
Common stock, $0.01 par value; authorized 100,000,000 shares; 29,293,489 shares issued at March 31, 2013 and 29,271,630 shares issued at December 31, 2012; 29,146,099 and 29,225,851 shares outstanding at March 31, 2013 and December 31, 2012, respectively
    292       292  
Additional paid-in capital
    175,578       175,188  
Treasury stock, 147,390 shares at cost at March 31, 2013 and 45,779 shares at December 31, 2012
    (1,112 )     (255 )
Retained earnings
    33,528       33,451  
Accumulated other comprehensive loss
    (758 )     (558 )
                 
Total shareholders’ equity
    233,528       234,118  
                 
Total liabilities and shareholders’ equity
  $ 1,737,289     $ 1,887,843  
 
See accompanying notes to consolidated financial statements.

 
3

 

FIRST CALIFORNIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (unaudited)
       
   
Three Months Ended March 31,
 
(in thousands, except per share data)
 
2013
   
2012
 
             
Interest and fees on loans
  $ 15,280     $ 16,990  
Interest on securities
    521       1,771  
Interest on federal funds sold and interest bearing deposits
    59       36  
Total interest income
    15,860       18,797  
                 
Interest on deposits
    1,053       1,371  
Interest on borrowings
    612       944  
Interest on junior subordinated debentures
    149       313  
Total interest expense
    1,814       2,628  
                 
Net interest income before provision for loan losses
    14,046       16,169  
Provision for non-covered loan losses
          500  
Net interest income after provision for loan losses
    14,046       15,669  
                 
Service charges on deposit accounts
    800       831  
Loan sales and commissions
    34       50  
Net gain on sale of securities
    450       1  
Impairment loss on securities
          (28 )
Loss on non-hedged derivatives
    (3 )     (111 )
(Amortization) accretion of FDIC shared-loss asset
    (1,707 )     191  
Other income
    334       301  
Total noninterest income
    (92 )     1,235  
                 
Salaries and employee benefits
    6,786       7,486  
Premises and equipment
    1,388       1,504  
Data processing
    937       790  
Legal, audit, and other professional services
    1,946       915  
Printing, stationary, and supplies
    33       77  
Telephone
    202       210  
Directors’ expense
    116       129  
Advertising, marketing and business development
    268       459  
Postage
    45       56  
Insurance and regulatory assessments
    583       452  
Net gain on and expense of foreclosed property
    (334 )     (245 )
Amortization of intangible assets
    376       431  
Other expenses
    934       721  
Total noninterest expense
    13,280       12,985  
                 
Income from continuing operations before income taxes
    674       3,919  
Provision for income taxes
    283       1,568  
Net income from continuing operations
    391       2,351  
                 
Income from discontinued operations before income taxes
          393  
Provision for income taxes
          159  
Net income from discontinued operations
          234  
                 
Net income
  $ 391     $ 2,585  
                 
Preferred stock dividends
  $ (313 )   $ (313 )
Net income available to common stockholders
  $ 78     $ 2,272  
                 
Net income per common share:
               
Basic
  $ 0.00     $ 0.08  
Diluted
  $ 0.00     $ 0.08  
 
See accompanying notes to consolidated financial statements.

 
4

 

FIRST CALIFORNIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (unaudited)
             
   
Three Months ended
March 31,
 
(in thousands)
 
2013
   
2012
 
             
Other comprehensive income (loss):
           
Unrealized gain (loss) on interest rate caps
  $ 1     $ (46 )
Unrealized gain on securities available for sale
    57       2,580  
Reclassification adjustment for securities gains included in net income
    (450 )     (1 )
                 
Other comprehensive income (loss), before tax
    (392 )     2,533  
Income tax benefit (expense) related to items of other comprehensive income (loss)
    192       (1,053 )
                 
Other comprehensive income (loss), net of tax
    (200 )     1,480  
Net income
    391       2,585  
                 
Comprehensive income
  $ 191     $ 4,065  
 
See accompanying notes to consolidated financial statements.

 
5

 

FIRST CALIFORNIA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
             
   
Three Months Ended March 31,
 
(in thousands)
 
2013
   
2012
 
             
Net income
  $ 391     $ 2,585  
Adjustments to reconcile net income to net cash from operating activities:
               
Provision for non-covered loan losses
          500  
Stock-based compensation costs
    346       810  
Gain on sales of securities
    (450 )     (1 )
Gain on sales of loans
    (34 )     (50 )
Net gain on sale and valuation adjustments of covered foreclosed property
    (463 )     (448 )
Impairment loss on securities
          28  
Amortization of net premiums on securities available-for-sale
    1,637       1,477  
Depreciation and amortization of premises and equipment
    572       535  
Amortization of intangible assets
    375       594  
Change in FDIC shared-loss asset
    1,632       (1,165 )
Loss on disposal of premises and equipment
    1       2  
Increase in cash surrender value of life insurance
    (101 )     (107 )
Change in deferred taxes
    165       1,067  
Increase in accrued interest receivable and other assets
    (3,726 )     (5,091 )
Decrease in accrued interest payable and other liabilities
    (1,709 )     (1,616 )
                 
Net cash used by operating activities
    (1,364 )     (880 )
                 
Purchases of securities available-for-sale
    (25,754 )     (41,750 )
Proceeds from repayments and maturities of securities available-for-sale
    33,571       46,875  
Proceeds from sales of securities available-for-sale
    53,135       8,024  
Net change in federal funds sold and interest bearing deposits
    52,815       (10,050 )
Loan originations, purchases and principal collections
    36,690       (71,888 )
Purchases of premises and equipment
    (163 )     (726 )
Proceeds from sale of premises and equipment
          1  
Proceeds from redemption of Federal Home Loan Bank and other stock
    10       480  
Net proceeds from FDIC shared-loss asset
    2,810       5,264  
Proceeds from sale of non-covered foreclosed property
    730       1,777  
Proceeds from sale of covered foreclosed property
    1,780       5,975  
                 
Net cash provided (used) by investing activities
    155,624       (56,018 )
                 
Net (decrease) increase in noninterest-bearing deposits
    (96,346 )     34,790  
Net (decrease) increase in interest-bearing deposits
    (52,918 )     10,976  
Net (decrease) increase in FHLB advances and other borrowings
    (28 )     13,963  
Proceeds from exercise of stock options
    43        
Dividends paid on preferred stock
    (313 )     (313 )
Purchases of treasury stock
    (857 )     (91 )
                 
Net cash (used) provided by financing activities
    (150,419 )     59,325  
                 
Change in cash and due from banks
    3,841       2,427  
Cash and due from banks, beginning of period
    46,024       40,202  
                 
Cash and due from banks, end of period
  $ 49,865     $ 42,629  
                 
Supplemental cash flow information:
               
Cash paid for interest
  $ 1,836     $ 2,603  
Cash paid for income taxes
  $ 4,790     $ 4,850  
Supplemental disclosure of noncash items:
               
Net change in fair value of securities available-for-sale, net of tax
  $ (200 )   $ 1,494  
Net change in fair value of cash flow hedges, net of tax
  $     $ (14 )
    Covered loans transferred to covered foreclosed property
  $ 341     $ 3,907  
 
See accompanying notes to consolidated financial statements.

 
6

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
 
Organization and nature of operations – First California Financial Group, Inc., or First California, or the Company, is a bank holding company incorporated under the laws of the State of Delaware and headquartered in Westlake Village, California. The principal asset of the Company is the capital stock of First California Bank, or the Bank. The Bank is a full-service commercial bank headquartered in Westlake Village, California, chartered under the laws of the State of California and subject to supervision by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation, or the FDIC. The FDIC insures the Bank’s deposits up to the maximum legal limit.
 
The Bank serves the comprehensive financial needs of businesses and consumers in Los Angeles, Orange, Riverside, San Diego, San Bernardino, San Luis Obispo and Ventura counties through 15 full-service branch locations.

               Proposed Merger with PacWest
 
On November 6, 2012, First California entered into an Agreement and Plan of Merger, or the Merger Agreement, with PacWest Bancorp, or PacWest. Under the terms of the Merger Agreement the Company will be merged with and into PacWest, with PacWest as the surviving corporation, which we refer to as the PacWest Merger. The Merger Agreement also provides that, simultaneously with the PacWest Merger, the Bank will merge with and into Pacific Western Bank, a wholly owned subsidiary of PacWest, with Pacific Western Bank continuing as the surviving bank.
 
Pursuant to the Merger Agreement, in the PacWest Merger, each outstanding share of common stock of the Company, other than shares held by the Company as treasury stock or by PacWest, will be cancelled and converted into the right to receive a fractional share of PacWest common stock equal to the quotient (which we refer to as the Exchange Ratio) obtained by dividing $8.00 by the volume weighted average closing price of PacWest common stock for a specified period, or the Average PacWest Common Stock Price. However, if the Average PacWest Common Stock Price is greater than or equal to $27.00, then the Exchange Ratio will be 0.2963, and if the Average PacWest Common Stock Price is less than or equal to $20.00, then the Exchange Ratio will be 0.4000.
 
Immediately prior to the effective time of the PacWest Merger, each option to purchase First California common stock will become fully vested and be cancelled in exchange for the right to receive a cash payment calculated based on the Exchange Ratio, and each share of First California restricted stock will vest and will be converted into the right to receive a number of shares of PacWest common stock equal to the Exchange Ratio.
 
First California and PacWest have each made customary representations and warranties in the Merger Agreement and agreed to customary covenants, including covenants regarding the operation of the business of First California and its subsidiaries prior to the closing and covenants prohibiting First California from soliciting, providing information or entering into discussions concerning proposals relating to alternative business combination transactions, except in limited circumstances relating to unsolicited proposals that constitute, or are reasonably capable of becoming, a superior proposal.
 
Consummation of the PacWest Merger is subject to customary closing conditions, including approval of regulatory agencies. The Merger Agreement may be terminated under certain circumstances, including by either party if the PacWest Merger has not occurred by August 6, 2013, if an order is entered prohibiting or making illegal the transaction and the order has become final and non-appealable, or upon a material uncured breach by the other party that would cause the closing conditions not to be satisfied.
 
The Merger Agreement provides certain termination rights for both First California and PacWest and further provides that upon termination of the Merger Agreement under certain circumstances, PacWest will be obligated to pay First California a termination fee of $5,000,000 and under certain circumstances, First California will be obligated to pay PacWest a termination fee of $10,000,000.
 
Upon consummation of the PacWest Merger, the Board of Directors of PacWest will consist of the directors serving on the Board of Directors of PacWest prior to the effective time of the PacWest Merger plus two independent directors designated by the Board of Directors of First California and approved by the Compensation, Nominating and Governance Committee of PacWest.

               On February 13, 2013, the Board of Directors of the Company and the Board of Directors of the Bank committed to a plan to wind down the EPS division. As previously disclosed in the amended Registration Statement on Form S-4 of PacWest, PacWest concluded that the EPS division was not suited to PacWest’s commercial banking business model and PacWest would proceed to exit the EPS division upon completion of the PacWest Merger. As part of the wind down of the EPS division, the Bank will terminate its membership in card processing networks and will no longer issue payment cards. The Bank intends to maintain sufficient operations and staffing within the EPS division to conduct the wind down in an orderly manner.
 
 
7

 
 
The Company has targeted December 31, 2013 for substantial completion of its wind down of the EPS division. In connection with the wind down of the EPS division, the Company currently estimates that it will incur total costs of approximately $2.4 million, of which (i) approximately $633,000 relates to retention costs, (ii) approximately $453,000 relates to severance and employee termination benefits, (iii) approximately $522,000 relates to contract termination costs, and (iv) approximately $780,000 relates to other associated costs. In connection with the Company’s plan to discontinue the EPS division, the Company evaluated various intangible assets related to the EPS division and determined on February 13, 2013 that an impairment charge of $4.8 million was to be recognized for the year ended December 31, 2012. The Company estimates approximately $1.7 million of the total costs will result in future cash expenditures. Therefore, we present the operations of the EPS division as “discontinued operations” for all periods presented.
 
               Consolidation – The accompanying condensed consolidated financial statements include, in conformity with generally accepted accounting principles in the United States of America, the accounts of the Company, the Bank, Wendy Road Office Development LLC, a subsidiary of the Bank which manages and disposes of real estate, and SC Financial, an inactive subsidiary of First California. The Company does not consolidate the accounts of FCB Statutory Trust I and First California Statutory Trust I, or the Trusts, in the consolidated financial statements. The Company does include, however, the junior subordinated debentures issued by the Company to the Trusts on the consolidated balance sheets. All material intercompany transactions have been eliminated.
 
Basis of presentation – The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnote disclosures normally required by generally accepted accounting principles for complete financial statements. In our opinion, all normal recurring adjustments necessary for a fair presentation are reflected in the unaudited condensed consolidated financial statements. Operating results for the period ended March 31, 2013 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2013. In preparing these financial statements, the Company has evaluated events and transactions subsequent to March 31, 2013 for potential recognition or disclosure. The unaudited condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto included in the Company’s 2012 Annual Report on Form 10-K.
 
Reclassifications – Certain reclassifications have been made to the 2012 consolidated financial statements to conform to the current year presentation. The effects of reclassification adjustments had no effect upon previously reported net income or net income per common share calculations.
 
Management’s estimates and assumptions – The preparation of the consolidated financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported revenues and expenses for the reporting periods. Actual results could differ significantly from those estimates. Significant estimations made by management primarily involve the calculation of the allowance for loan losses, the carrying amount of deferred tax assets, the carrying amount of covered loans, the carrying amount of foreclosed property, the carrying amount of the FDIC shared-loss receivable and liability, the assessments for impairment related to goodwill and securities, the estimated fair value of financial instruments and the effectiveness of derivative instruments in offsetting changes in fair value or cash flows of hedged items.
 
Allowance for loan losses – The allowance for loan losses is established through a provision charged to expense. Loans are charged against the allowance when management believes that the collectability of principal is unlikely. The allowance is an amount that management believes will be adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluations of the collectability of loans and prior loan loss experience. The evaluation includes an assessment of the following factors: any external loan review and any regulatory examination, estimated probable loss exposure on each pool of loans, concentrations of credit, value of collateral, the level of delinquent and nonaccrual loans, trends in the portfolio volume, effects of any changes in the lending policies and procedures, changes in lending personnel, present economic conditions at the local, state and national levels, the amount of undisbursed off-balance sheet commitments, and a migration analysis of historical losses and recoveries for the prior twenty quarters. Individual loans are also evaluated for impairment and if a portion of a loan is impaired, the impaired amount is charged-off or a specific reserve is allocated for that loan. Various regulatory agencies, as a regular part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgment of information available to them at the time of their examinations. The allowance for loan losses was $18.3 million at March 31, 2013 and $18.2 million at December 31, 2012.
 
 
8

 
 
Non-covered foreclosed property - We acquire, through foreclosure or through full or partial satisfaction of a loan, real or personal property. At the time of foreclosure, the Company obtains an appraisal of the property and records the property at its estimated fair value less costs to sell. We charge the allowance for loan losses for the loan amount in excess of the fair value of the foreclosed property received; we credit recoveries, up to the amount of previous charge-offs, if any, and then earnings for the fair value amount of the foreclosed property in excess of the loan due. Subsequent to foreclosure, the Company periodically assesses our disposition efforts and the estimated fair value of the foreclosed property. The Company establishes a valuation allowance through a charge to earnings for estimated declines in fair value subsequent to foreclosure. Operating income and operating expense related to foreclosed property is included in earnings as are any ultimate gains or losses on the sale of the foreclosed property. Our recognition of gain is however dependent on the buyer’s initial investment in the purchase of foreclosed property meeting certain criteria. The estimated fair value of non-covered foreclosed property was $14.2 million at March 31, 2013 and $14.9 million at December 31, 2012.
 
Covered foreclosed property - All foreclosed property acquired in FDIC-assisted acquisitions that are subject to a FDIC shared-loss agreement are referred to as “covered foreclosed property” and reported separately in our consolidated balance sheets. Covered foreclosed property is reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered foreclosed property at the collateral’s net realizable value, less estimated selling costs.
 
Covered foreclosed property was initially recorded at its estimated fair value on the acquisition date based on similar market comparable valuations less estimated selling costs. Any subsequent valuation adjustments due to declines in fair value will be charged to non-interest expense, and will be mostly offset by non-interest income representing the corresponding increase to the FDIC shared-loss asset for the offsetting loss reimbursement amount. Any recoveries of previous valuation adjustments will be credited to non-interest expense with a corresponding charge to non-interest income for the portion of the recovery that is due to the FDIC. The estimated fair value of covered foreclosed property was $2.9 million at March 31, 2013 and $3.9 million at December 31, 2012.
 
Deferred income taxes – The Company recognizes deferred tax assets subject to our judgment that realization of such assets are more-likely-than-not. A valuation allowance is established when the Company determines that the realization of income tax benefits may not occur in future years. There was no valuation allowance at March 31, 2013 or December 31, 2012. There were net deferred tax assets of $1.5 million at March 31, 2013 and $1.4 million at December 31, 2012.
 
FDIC shared-loss asset – The FDIC shared-loss asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the shared-loss agreements. The difference between the present value and the undiscounted cash flows the Company expects to collect from the FDIC will be accreted or amortized into non-interest income over the life of the FDIC shared-loss asset. Subsequent to initial recognition, the FDIC shared-loss asset is reviewed quarterly and adjusted for any changes in expected cash flows based on recent performance and expectations for future performance of the covered portfolio. These adjustments are measured on the same basis as the related covered loans, at a pool level, and covered foreclosed property. Generally, any increases in cash flow of the covered assets over those previously expected will result in prospective increases in the loan pool yield and amortization of the FDIC shared-loss asset. Any decreases in cash flow of the covered assets under those previously expected will trigger impairments on the underlying loan pools and will result in a corresponding gain on the FDIC shared-loss asset. Increases and decreases to the FDIC shared-loss asset are recorded as adjustments to non-interest income.
 
FDIC shared-loss liability – Forty-five days following the tenth anniversary of the Western Commercial Bank, or WCB, and San Luis Trust Bank, or SLTB, acquisition dates, the Company will be required to perform a calculation and determine if a payment to the FDIC is necessary. The payment amount will be 50 percent of the excess, if any, of (i) 20 percent of the intrinsic loss estimate minus (ii) the sum of (a) 20 percent of the net loss amount, plus (b) 25 percent of the asset discount bid, plus (c) 3.5 percent of total loss share assets at acquisition. The Company’s estimate for the present value of this liability was $4.0 million at March 31, 2013 and $3.9 million at December 31, 2012.
 
Derivative instruments and hedging – For derivative instruments designated in cash flow hedging relationships, we assess the effectiveness of the instruments in offsetting changes in the overall cash flows of designated hedged transactions on a quarterly basis. The Company recognizes the unrealized gains or losses of derivative instruments directly in current period earnings to the extent these instruments are not effective. At March 31, 2013, the Company had $37.1 million notional interest rate caps to limit the variable interest rate payments on our $26.8 million junior subordinated debentures. Our 2013 first quarter effectiveness assessment indicated that these instruments were effective.
 
At March 31, 2013, the Bank had $240 million notional interest rate caps that do not meet the criteria for hedge accounting to manage the interest rate risk associated with its fixed rate securities and loans. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. Derivatives not designated as hedges are marked-to-market each period through earnings.
 
Assessments of impairment – Goodwill is assessed for impairment on an annual basis or at interim periods if an event occurs or circumstances change which may indicate a change in the implied fair value of the goodwill. The implied fair value of goodwill is estimated by comparing the estimated fair value of the Company to the estimated fair value of the Company’s individual assets, liabilities, and identifiable intangible assets. Impairment exists when the carrying amount of goodwill exceeds this implied fair value.
 
 
9

 
 
First California uses independent data where possible in determining the fair value of the Company and in determining appropriate market factors used in the fair value calculations. At December 31, 2012, the annual assessment resulted in the conclusion that goodwill was not impaired. No events occurred or circumstances changed since December 31, 2012 which indicated there was a material change in the implied fair value of goodwill.
 
An impairment assessment is performed quarterly on the securities available-for-sale portfolio in accordance with Financial Accounting Standards Board, or FASB, accounting standards codification guidance related to the consideration of impairment related to certain debt and equity securities. All of the securities classified as available-for-sale are debt securities.
 
If the Company does not intend to sell, and it is more likely than not that the Company is not required to sell a debt security before recovery of its cost basis, other-than-temporary impairment is separated into (a) the amount representing credit loss and (b) the amount related to other factors. The amount of the other-than-temporary impairment related to credit loss is recognized in earnings and other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss). Other-than-temporary declines in fair value are assessed based on the duration the security has been in a continuous unrealized loss position, the severity of the decline in value, the rating of the security, the long-term financial outlook of the issuer, the expected future cash flows from the security and the Company’s ability and intent to hold the security until the fair value recovers. Please see the “Securities” section of Management’s Discussion and Analysis in this document for a detailed explanation of the impairment analysis process. The Company will continue to evaluate the securities portfolio for other-than-temporary impairment at each reporting date and can provide no assurance there will not be an other-than-temporary impairment in future periods.
 
For the three months ended March 31, 2013, we did not recognize an other-than-temporary impairment loss related to available-for-sale securities. For the three months ended March 31, 2012, we recognized a $28,000 impairment loss on a $1.0 million community development-related equity investment.

Discontinued operations – On February 13, 2013, the Board of Directors of the Company and the Board of Directors of the Bank committed to a plan to wind down the EPS division. Accordingly, all income and expense related to the EPS division have been removed from continuing operations and are now included in the Condensed Consolidated Statements of Income under the caption “Income from discontinued operations.” Assets of the EPS division, which are primarily customer accounts receivable, are presented as “Assets of discontinued operations” in the Condensed Consolidated Balance Sheets. Prior periods have been restated. Except where noted, footnote disclosures relate solely to continuing operations.
 
NOTE 2 – RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS
 
In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 provides convergence to International Financial Reporting Standards, or IFRS, to provide common disclosure requirements for the offsetting of financial instruments. Existing GAAP guidance allowing balance sheet offsetting, including industry-specific guidance, remains unchanged. The new guidance is effective on a retrospective basis, including all prior periods presented, for interim and annual periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 did not have a material impact on the Company’s consolidated financial statements.
 
In October 2012, the FASB issued ASU 2012-06, Business Combinations – Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution. ASU 2012-06 requires that when a reporting entity recognizes an indemnification asset as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs, the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. This standard is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The amendments should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from a government-assisted acquisition of a financial institution. Certain transition disclosures are required. The adoption of ASU 2012-06 did not have a material impact on our consolidated financial statements.
 
In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 clarifies that ASU 2011-11applies only to derivatives, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. Entities with other types of financial assets and financial liabilities subject to a master netting arrangement or similar agreement are no longer subject to the disclosure requirements in ASU 2011-11. The amendments are effective for annual and interim reporting periods beginning on or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on our consolidated financial statements.
 
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and to present either on the face of the statement where net income is presented, or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the representative line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. The amendments are effective for annual and interim reporting periods beginning on or after December 15, 2012. The adoption of ASU 2013-02 did not have a material impact on our consolidated financial statements.
 
 
10

 
 
NOTE 3 – SECURITIES
 
Securities have been classified in the consolidated balance sheets according to management’s intent and ability as available-for-sale. The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of securities available-for-sale at March 31, 2013 and December 31, 2012 are summarized as follows:
 
   
March 31, 2013
 
    Amortized
Cost
    Gross
Unrealized
Gains
    Gross
Unrealized
Losses
    Estimated
Fair
Value
 
   
(in thousands)
 
U.S. government agency notes
  $ 32,556     $ 37     $ (15 )   $ 32,578  
U.S. government agency mortgage-backed securities
    159,609       490       (447 )     159,652  
U.S. government agency collateralized mortgage obligations
    116,082       723       (205 )     116,600  
Municipal securities
    6,870       12       (144 )     6,738  
Other domestic debt securities
    4,121             (1,401 )     2,720  
                                 
Securities available-for-sale
  $ 319,238     $ 1,262     $ (2,212 )   $ 318,288  

   
December 31, 2012
 
   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Estimated
Fair
Value
 
   
(in thousands)
 
       
U.S. Treasury notes/bills
  $ 8,009     $ 2     $     $ 8,011  
U.S. government agency notes
    32,570       62       (24 )     32,608  
U.S. government agency mortgage-backed securities
    166,133       740       (124 )     166,749  
U.S. government agency collateralized mortgage obligations
    162,632       768       (346 )     163,054  
Municipal securities
    7,887       86       (81 )     7,892  
Other domestic debt securities
    4,367             (1,640 )     2,727  
                                 
Securities available-for-sale
  $ 381,598     $ 1,658     $ (2,215 )   $ 381,041  
 
As of March 31, 2013, securities available-for-sale with a fair value of $26.1 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.
 
The following table shows the gross unrealized losses and amortized cost of the Company’s securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2013 and December 31, 2012.
 
    At March 31, 2013  
    Less Than 12 Months     Greater Than 12 Months     Total  
   
Amortized
Cost
   
Unrealized
Losses
   
Amortized
Cost
   
Unrealized
Losses
   
Amortized
Cost
   
Unrealized
Losses
 
 
(in thousands)
 
U.S. government agency notes
  $ 14,013     $ (15 )   $     $     $ 14,013     $ (15 )
U.S. government agency mortgage-backed securities
    84,163       (447 )                 84,163       (447 )
U.S. government agency collateralized mortgage obligations
    34,968       (205 )                 34,968       (205 )
Municipal securities
    4,935       (144 )                 4,935       (144 )
Other domestic debt securities
                4,121       (1,401 )     4,121       (1,401 )
    $ 138,079     $ (811 )   $ 4,121     $ (1,401 )   $ 142,200     $ (2,212 )
 
 
11

 
 
    At December 31, 2012  
    Less Than 12 Months     Greater Than 12 Months     Total  
   
Amortized
Cost
   
Unrealized
Losses
   
Amortized
Cost
   
Unrealized
Losses
   
Amortized
Cost
   
Unrealized
Losses
 
 
(in thousands)
 
U.S. government agency notes
  $ 7,572     $ (24 )   $     $     $ 7,572     $ (24 )
U.S. government agency mortgage-backed securities
    25,756       (124 )                 25,756       (124 )
U.S. government agency collateralized mortgage obligations
    67,055       (336 )     5,820       (10 )     72,875       (346 )
Municipal securities
    4,953       (81 )                 4,953       (81 )
Other domestic debt securities
                4,367       (1,640 )     4,367       (1,640 )
    $ 105,336     $ (565 )   $ 10,187     $ (1,650 )   $ 115,523     $ (2,215 )
 
Net unrealized holding losses were $1.0 million at March 31, 2013 and net unrealized holding losses were $0.6 million at December 31, 2012. As a percentage of securities, at amortized cost, net unrealized holding losses were 0.30 percent and net unrealized holding losses were 0.15 percent at the end of each respective period. Securities are comprised largely of U.S. Treasury bills and notes, and U.S. government agency notes, mortgage-backed securities and collateralized mortgage obligations. On a quarterly basis, we evaluate our individual available-for-sale securities in an unrealized loss position for other-than-temporary impairment. As part of this evaluation, we consider whether we intend to sell each security and whether it is more-likely-than-not that we will be required to sell the security before the anticipated recovery of the security’s amortized cost basis. Should a security meet either of these conditions, we recognize an impairment charge to earnings equal to the entire difference between the security’s amortized cost basis and its fair value at the balance sheet date. For securities in an unrealized loss position that meet neither of these conditions, we consider whether we expect to recover the entire amortized cost basis of the security by comparing our best estimate, on a present value basis, of the expected future cash flows from the security with the amortized cost basis of the security. If our best estimate of expected future cash flows is less than the amortized cost basis of the security, we recognize an impairment charge to earnings for this estimated credit loss.
 
The Company will continue to evaluate the securities portfolio for other-than-temporary impairment at each reporting date and can provide no assurance there will not be further other-than-temporary impairments in future periods.

 
12

 

The following table presents the other-than-temporary impairment activity related to credit loss, which is recognized in earnings, and the other-than-temporary impairment activity related to all other factors, which are recognized in other comprehensive income.
 
   
For the Three Months
Ended
March 31,
 
   
2013
   
2012
 
 
(in thousands)
 
     
Beginning balance
  $     $ 3,643  
Reduction for securities sold
          (663 )
Additional increases to the amount related to the credit loss for which an other-than-temporary impairment was previously recognized
          28  
Ending balance
  $     $ 3,008  
 
The Company owns one pooled trust preferred security, rated triple-A at purchase, with an amortized cost basis of $4.1 million and an unrealized loss of $1.4 million at March 31, 2013. The gross unrealized loss is mainly due to extraordinarily high investor yield requirements resulting from an illiquid market, causing this security to be valued at a discount to its acquisition cost. One credit rating agency has now rated the security Baa3 while another has rated the security B. The senior tranche owned by the Company has a collateral balance well in excess of the amortized cost basis of the tranche at March 31, 2013. Seventeen of the fifty-six issuers in the security have deferred or defaulted on their interest payments as of March 31, 2013. The Company’s analysis determined that approximately half of the issuers would need to default on their interest payments before the senior tranche owned by the Company would be at risk of loss. As the Company’s estimated present value of expected cash flows to be collected is in excess of the amortized cost basis, the Company considers the gross unrealized loss on this security to be temporary.
 
The amortized cost and estimated fair value of securities by contractual maturities are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
             
   
At March 31, 2013
 
   
Amortized
Cost
   
Fair
Value
 
 
(in thousands)
 
     
Due after one year through five years
  $ 32,555     $ 32,577  
Due after five years through ten years
    98,573       98,871  
Due after ten years
    188,110       186,840  
Total
  $ 319,238     $ 318,288  
 
NOTE 4 – NON-COVERED LOANS AND ALLOWANCE FOR NON-COVERED LOAN LOSSES
 
The loans not acquired in the SLTB and WCB acquisitions and which are not covered by the related shared-loss agreements with the FDIC are referred to as non-covered loans. The non-covered loan portfolio by type consists of the following:
             
(in thousands)
 
At
March 31,
2013
   
At
December 31,
2012
 
             
Commercial mortgage
  $ 449,747     $ 447,689  
Multifamily
    210,185       217,158  
Commercial loans and lines
    152,812       168,325  
Home mortgage
    136,941       149,954  
Construction and land development
    39,119       36,772  
Home equity loans and lines of credit
    37,206       36,709  
Installment and credit card
    4,157       4,586  
Total loans
    1,030,167       1,061,193  
Allowance for loan losses
    (18,271 )     (18,172 )
Loans, net
  $ 1,011,896     $ 1,043,021  
 
 
13

 
 
At March 31, 2013, loans with a balance of $796.0 million were pledged as security for Federal Home Loan Bank, or FHLB, advances. Loan balances include net deferred loan costs of $6.7 million and $6.9 million at March 31, 2013 and December 31, 2012, respectively.
 
Most of the Company’s lending activity is with customers located in Los Angeles, Orange, Ventura, Riverside, San Bernardino, San Diego and San Luis Obispo Counties and most loans are secured by or dependent on real estate. Although the Company has no significant exposure to any individual customer, economic conditions, particularly the recent sustained decline in real estate values in Southern California, could adversely affect customers and their ability to satisfy their obligations under their loan agreements.
 
Changes in the allowance for non-covered loan losses were as follows:
 
   
Three Months
Ended March 31,
 
(in thousands)
 
2013
   
2012
 
             
Beginning balance
  $ 18,172     $ 17,747  
Provision for loan losses
          500  
Loans charged-off
    (39 )     (218 )
Recoveries on loans previously charged-off
    138       125  
                 
Ending balance
  $ 18,271     $ 18,154  
 
The following table details activity in the allowance for non-covered loan losses by portfolio segment for the three months ended March 31, 2013. Allocation of a portion of the allowance to one segment of the loan portfolio does not preclude its availability to absorb losses in other segments.
                                                 
(in thousands)
 
Commercial
Mortgage
   
Commercial
   
Multifamily
   
Construction
and Land
   
Home
Mortgage
   
Home
Equity
   
Installment
   
Total
 
                                                 
Allowance for credit losses:
                                               
Beginning balance
  $ 5,749     $ 6,388     $ 2,851     $ 498     $ 2,223     $ 412     $ 51     $ 18,172  
Charge-offs
          (28 )                 (5 )           (6 )     (39 )
Recoveries
    1       13       101             23                   138  
Provision
    1,511       (1,695 )     311       48       (314 )     126       13        
Ending balance
  $ 7,261     $ 4,678     $ 3,263     $ 546     $ 1,927     $ 538     $ 58     $ 18,271  
                                                                 
Ending balance; individually evaluated for impairment
  $ 72     $ 2,514     $ 65     $ 43     $ 179     $     $ 1     $ 2,874  
Ending balance; collectively evaluated for impairment
  $ 7,189     $ 2,164     $ 3,198     $ 503     $ 1,748     $ 538     $ 57     $ 15,397  
                                                                 
Non-covered loan balances:
                                                               
Ending balance
  $ 449,747     $ 152,812     $ 210,185     $ 39,119     $ 136,941     $ 37,206     $ 4,157     $ 1,030,167  
                                                                 
Ending balance; individually evaluated for impairment
  $ 1,543     $ 17,135     $ 1,445     $ 1,741     $ 7,707     $     $ 81     $ 29,652  
Ending balance; collectively evaluated for impairment
  $ 448,204     $ 135,677     $ 208,740     $ 37,378     $ 129,234     $ 37,206     $ 4,076     $ 1,000,515  
 
The following table details activity in the allowance for non-covered loan losses by portfolio segment for the three months ended March 31, 2012. Allocation of a portion of the allowance to one segment of the loan portfolio does not preclude its availability to absorb losses in other segments.
                                                 
(in thousands)
 
Commercial
Mortgage
   
Commercial
   
Multifamily
   
Construction
and Land
   
Home
Mortgage
   
Home Equity
   
Installment
   
Total
 
                                                 
Allowance for credit losses:
                                               
Beginning balance
  $ 6,091     $ 6,221     $ 2,886     $ 814     $ 1,274     $ 390     $ 71     $ 17,747  
Charge-offs
    (10 )     (83 )                 (98 )           (27 )     (218 )
Recoveries
    1       124                                     125  
Provision
    (227 )     (31 )     426       (251 )     571       (3 )     15       500  
Ending balance
  $ 5,855     $ 6,231     $ 3,312     $ 563     $ 1,747     $ 387     $ 59     $ 18,154  
                                                                 
Ending balance; individually evaluated for impairment
  $ 68     $ 3,811     $ 154     $ 10     $ 173     $     $     $ 4,216  
                                                                 
Ending balance; collectively evaluated for impairment
    5,787       2,420       3,158       553       1,574       387       59       13,938  
                                                                 
Non-covered loan balances:
                                                               
Ending balance
  $ 407,092     $ 170,075     $ 227,355     $ 33,205     $ 138,605     $ 29,513     $ 4,749     $ 1,010,594  
                                                                 
Ending balance; individually evaluated for impairment
  $ 679     $ 14,350     $ 1,537     $ 194     $ 1,395     $     $ 37     $ 18,192  
                                                                 
Ending balance; collectively evaluated for impairment
  $ 406,413     $ 155,725     $ 225,818     $ 33,011     $ 137,210     $ 29,513     $ 4,712     $ 992,402  
 
 
14

 
 
Nonaccrual loans are those loans for which management has discontinued accrual of interest because reasonable doubt exists as to the full and timely collection of either principal or interest. Nonaccrual loans are also considered impaired loans. Total non-covered nonaccrual loans totaled $21.1 million at March 31, 2013 as compared to $14.6 million at December 31, 2012. The allowance for loan losses maintained for nonaccrual loans was $2.3 million and $4.0 million at March 31, 2013 and December 31, 2012, respectively. Had these loans performed according to their original terms, additional interest income of $0.2 million and $0.1 million would have been recognized in the three months ended March 31, 2013 and 2012, respectively.
 
The following table sets forth the amounts and categories of our non-covered non-accrual loans at the dates indicated:
             
   
At March 31,
2013
   
At December 31,
2012
 
Non-accrual loans
 
(Dollars in thousands)
 
Aggregate loan amounts
           
Multifamily
  $ 731     $ 1,271  
Commercial mortgage
    875       923  
Commercial loans
    12,253       10,793  
Home mortgage
    7,249       1,601  
Installment
    16       22  
                 
Total non-covered nonaccrual loans
  $ 21,124     $ 14,610  
 
Included in non-covered non-accrual loans at March 31, 2013 were sixteen restructured loans totaling $5.3 million. The sixteen loans consist of two home mortgage loans, thirteen commercial loans and one multifamily loan. No interest income was recognized on these loans for the three months ended March 31, 2013. We had no commitments to lend additional funds to these borrowers.
 
Included in non-covered non-accrual loans at December 31, 2012 were seventeen restructured loans totaling $5.3 million. The seventeen loans consist of three home mortgage loans, one multifamily loan and thirteen commercial loans. Interest income recognized on these loans was $119,000 for the twelve months ended December 31, 2012. We had no commitments to lend additional funds to these borrowers.
 
Credit Quality Indicators
 
Loans are risk rated based on analysis of the current state of the borrower’s credit quality. This analysis of credit quality includes a review of all sources of repayment, the borrower’s current financial and liquidity status and all other relevant information. The Company utilizes a ten grade risk rating system, where a higher grade represents a higher level of credit risk. The ten grade risk rating system can be generally classified by the following categories: Pass, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the sources of repayment.
 
Pass 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 risk that requires monitoring, but full repayment is expected. Special Mention loans are considered to have potential weaknesses that warrant close attention by management. Special Mention is considered a transitory grade and generally, the Company does not have a loan stay graded Special Mention for longer than six months. If any potential weaknesses are resolved, the loan is upgraded to a Pass grade. If negative trends in the borrower’s financial status or other information is presented that indicates 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 continuously and adjusted due to changes in borrower status and likelihood of loan repayment.
 
 
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The table below presents the non-covered loan portfolio by credit quality indicator as of March 31, 2013.
                                     
   
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Loss
   
Total
 
   
(in thousands)
 
       
Home mortgage
  $ 127,890     $ 957     $ 8,094     $     $     $ 136,941  
Commercial mortgage
    398,345       42,815       8,587                   449,747  
Construction and land
    37,378             1,741                   39,119  
Multifamily
    200,044       3,504       6,637                   210,185  
Commercial loans and lines
    123,103       10,297       18,373       1,039             152,812  
Home equity loans and lines
    36,702             504                   37,206  
Installment
    3,764       270       123                   4,157  
    $ 927,226     $ 57,843     $ 44,059     $ 1,039     $     $ 1,030,167  
 
The table below presents the non-covered loan portfolio by credit quality indicator as of December 31, 2012.
                                     
   
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Loss
   
Total
 
   
(in thousands)
 
       
Home mortgage
  $ 140,778     $ 961     $ 8,215     $     $     $ 149,954  
Commercial mortgage
    398,915       43,026       5,748                   447,689  
Construction and land
    35,015             1,757                   36,772  
Multifamily
    204,131       5,135       7,892                   217,158  
Commercial loans and lines
    142,184       7,908       17,155       1,078             168,325  
Home equity loans and lines
    36,205             504                   36,709  
Installment
    4,253       271       62                   4,586  
    $ 961,481     $ 57,301     $ 41,333     $ 1,078     $     $ 1,061,193  
 
Loans are tracked by the number of days borrower payments are past due. The tables below present an age analysis of nonaccrual and past due non-covered loans, segregated by class of loan, as of March 31, 2013 and December 31, 2012.
                                           
   
At March 31, 2013
 
   
Accruing loans
30-59 days
past due
   
Accruing loans
60-89 days
past due
   
Accruing loans
90+ days past
due
   
Total Accruing
past due loans
   
Nonaccrual
past due loans
   
Current loans
   
Total
 
 
(in thousands)
 
     
Commercial loans and lines
  $     $ 508     $     $ 508     $ 12,253     $ 140,051     $ 152,812  
Commercial mortgage
    1,434       2,136       128       3,698       875       445,174       449,747  
Multifamily
          2,409             2,409       731       207,045       210,185  
Construction and land
                                  39,119       39,119  
Home mortgage
    330                   330       7,249       129,362       136,941  
Home equity loans and lines
                                  37,206       37,206  
Installment
    276                   276       16       3,865       4,157  
Total
  $ 2,040     $ 5,053     $ 128     $ 7,221     $ 21,124     $ 1,001,822     $ 1,030,167  
 
   
At December 31, 2012
 
   
Accruing
loans 30-59
days past due
   
Accruing
loans 60-89
days past due
   
Accruing
loans 90+
days past due
   
Total
Accruing past
due loans
   
Nonaccrual
past due loans