Hanmi Financial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Loans (Tables)

Loans (Tables)

9 Months Ended

Sep. 30, 2013

Loans receivable consisted of the following as of the dates indicated:


	September 30,			December 31,
	2013			2012
	(In thousands)
Real estate loans:
Commercial property	$	887,576		$	787,094
Residential property		82,519			101,778

Total real estate loans		970,095			888,872
Commercial and industrial loans:
Commercial term ⁽¹⁾		913,021			884,364
Commercial lines of credit ⁽²⁾		54,374			56,121
SBA loans ⁽³⁾		153,990			148,306
International loans		33,726			34,221

Total commercial and industrial loans		1,155,111			1,123,012
Consumer loans		34,065			36,676

Total gross loans		2,159,271			2,048,560
Allowance for loans losses		(57,639	)		(63,305	)
Deferred loan fees		989			796

Loans receivable, net	$	2,102,621		$	1,986,051

(1)

Includes owner-occupied property loans of $816.0 million and $774.2 million as of September 30, 2013 and December 31, 2012, respectively.

(2)

Includes owner-occupied property loans of $540,000 and $1.4 million as of September 30, 2013 and December 31, 2012, respectively.

(3)

Includes owner-occupied property loans of $145.0 million and $128.4 million as of September 30, 2013 and December 31, 2012, respectively.

Loans Receivable to Loans Held for Sale

The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the three months ended September 30, 2013 and 2012:


				Commercial
	Real Estate			and Industrial			Consumer		Total
	(In thousands)
September 30, 2013
Balance at beginning of period	$	780		$	1,773		$	—	$	2,553
Origination of loans held for sale		—			17,135			—		17,135
Reclassification from loans held for sale to loans receivable		(774	)		(1,760	)		—		(2,534	)
Sales of loans held for sale		—			(11,906	)		—		(11,906	)
Principal payoffs and amortization		(6	)		(14	)		—		(20	)

Balance at end of period	$	—		$	5,228		$	—	$	5,228

September 30, 2012
Balance at beginning of period	$	1,289		$	3,849		$	—	$	5,138
Origination of loans held for sale		—			25,722			—		25,722
Reclassification from loans receivable to loans held for sale		8,917			16,404			—		25,321
Sales of loans held for sale		(8,828	)		(36,050	)		—		(44,878	)
Principal payoffs and amortization		(21	)		(27	)		—		(48	)
Valuation adjustments		—			(519	)		—		(519	)

Balance at end of period	$	1,357		$	9,379		$	—	$	10,736

The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the nine months ended September 30, 2013 and 2012:


				Commercial
	Real Estate			and Industrial			Consumer		Total
	(In thousands)
September 30, 2013
Balance at beginning of period	$	—		$	8,306		$	—	$	8,306
Origination of loans held for sale		—			63,113			—		63,113
Reclassification from loans receivable to loans held for sale		780			7,230			—		8,010
Reclassification from Loans held for sale to loan receivables		(774	)		(1,760	)		—		(2,534	)
Sales of loans held for sale		—			(71,627	)		—		(71,627	)
Principal payoffs and amortization		(6	)		(34	)		—		(40	)

Balance at end of period	$	—		$	5,228		$	—	$	5,228

September 30, 2012
Balance at beginning of period	$	11,068		$	11,519		$	—	$	22,587
Origination of loans held for sale		—			86,311			—		86,311
Reclassification from loans receivable to loans held for sale		41,141			48,651			—		89,792
Reclassification from loans held for sale to other real estate owned		(360	)		—			—		(360	)
Reclassification from loans held for sale to loans receivable		(1,647	)		(132	)		—		(1,779	)
Sales of loans held for sale		(47,531	)		(135,505	)		—		(183,036	)
Principal payoffs and amortization		(190	)		(289	)		—		(479	)
Valuation adjustments		(1,124	)		(1,176	)		—		(2,300	)

Balance at end of period	$	1,357		$	9,379		$	—	$	10,736

Allowance for Loan Losses and Allowance for Off-Balance Sheet Items

Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated:


	As of and for the									As of and for the
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2013			2013			2012			2013			2012
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	59,876		$	61,191		$	71,893		$	63,305		$	89,936
Actual charge-offs		(4,610	)		(3,490	)		(7,223	)		(11,124	)		(34,260	)
Recoveries on loans previously charged off		2,383			1,867			1,320			4,964			3,681

Net loan charge-offs		(2,227	)		(1,623	)		(5,903	)		(6,160	)		(30,579	)
Provision charged to operating expense		(10	)		308			117			494			6,750

Balance at end of period	$	57,639		$	59,876		$	66,107		$	57,639		$	66,107

Allowance for off-balance sheet items:
Balance at beginning of period	$	1,320		$	1,628		$	2,348		$	1,824		$	2,981
Provision charged to operating expense		10			(308	)		(117	)		(494	)		(750	)

Balance at end of period	$	1,330		$	1,320		$	2,231		$	1,330		$	2,231

Allowance for Loan Losses by Portfolio Segment

The following table details the information on the allowance for loan losses by portfolio segment for the three months ended September 30, 2013 and 2012:


				Commercial
	Real Estate			and Industrial			Consumer			Unallocated			Total
	(In thousands)
September 30, 2013
Allowance for loan losses:
Beginning balance	$	18,480		$	39,034		$	1,884		$	478		$	59,876
Charge-offs		—			(4,592	)		(18	)		—			(4,610	)
Recoveries on loans previously charged off		726			1,652			5			—			2,383
Provision		(118	)		(1,289	)		(232	)		1,629			(10	)

Ending balance	$	19,088		$	34,805		$	1,639		$	2,107		$	57,639

Ending balance: individually evaluated for impairment	$	25		$	2,014		$	330		$	—		$	2,369

Ending balance: collectively evaluated for impairment	$	19,063		$	32,791		$	1,309		$	2,107		$	55,270

Loans receivable:
Ending balance	$	970,095		$	1,155,111		$	34,065		$	—		$	2,159,271

Ending balance: individually evaluated for impairment	$	6,385		$	35,507		$	1,574		$	—		$	43,466

Ending balance: collectively evaluated for impairment	$	963,710		$	1,119,604		$	32,491		$	—		$	2,115,805

September 30, 2012
Allowance for loan losses:
Beginning balance	$	21,406		$	46,810		$	1,757		$	1,920		$	71,893
Charge-offs		(1,321	)		(5,571	)		(331	)		—			(7,223	)
Recoveries on loans previously charged off		58			1,251			11			—			1,320
Provision		1,080			174			783			(1,920	)		117

Ending balance	$	21,223		$	42,664		$	2,220		$	—		$	66,107

Ending balance: individually evaluated for impairment	$	768		$	5,148		$	398		$	—		$	6,314

Ending balance: collectively evaluated for impairment	$	20,455		$	37,516		$	1,822		$	—		$	59,793

Loans receivable:
Ending balance	$	840,061		$	1,079,814		$	38,415		$	—		$	1,958,290

Ending balance: individually evaluated for impairment	$	16,315		$	41,084		$	1,238		$	—		$	58,637

Ending balance: collectively evaluated for impairment	$	823,746		$	1,038,730		$	37,177		$	—		$	1,899,653

The following table details the information on the allowance for loan losses by portfolio segment for the nine months ended September 30, 2013 and 2012:


				Commercial
	Real Estate			and Industrial			Consumer			Unallocated			Total
							(In thousands)
September 30, 2013
Allowance for loan losses:
Beginning balance	$	18,180		$	41,928		$	2,280		$	917		$	63,305
Charge-offs		(359	)		(10,547	)		(218	)		—			(11,124	)
Recoveries on loans previously charged off		1,776			3,128			60			—			4,964
Provision		(509	)		296			(483	)		1,190			494

Ending balance	$	19,088		$	34,805		$	1,639		$	2,107		$	57,639

Ending balance: individually evaluated for impairment	$	25		$	2,014		$	330		$	—		$	2,369

Ending balance: collectively evaluated for impairment	$	19,063		$	32,791		$	1,309		$	2,107		$	55,270

Loans receivable:
Ending balance	$	970,095		$	1,155,111		$	34,065		$	—		$	2,159,271

Ending balance: individually evaluated for impairment	$	6,385		$	35,507		$	1,574		$	—		$	43,466

Ending balance: collectively evaluated for impairment	$	963,710		$	1,119,604		$	32,491		$	—		$	2,115,805

September 30, 2012
Allowance for loan losses:
Beginning balance	$	19,637		$	66,005		$	2,243		$	2,051		$	89,936
Charge-offs		(9,406	)		(24,079	)		(775	)		—			(34,260	)
Recoveries on loans previously charged off		575			3,053			53			—			3,681
Provision		10,419			(2,317	)		699			(2,051	)		6,750

Ending balance	$	21,225		$	42,662		$	2,220		$	—			66,107

Ending balance: individually evaluated for impairment	$	768		$	5,148		$	398		$	—			6,314

Ending balance: collectively evaluated for impairment	$	20,457		$	37,514		$	1,822		$	—			59,793

Loans receivable:
Ending balance	$	840,061		$	1,079,814		$	38,415		$	—			1,958,290

Ending balance: individually evaluated for impairment	$	16,315		$	41,084		$	1,238		$	—			58,637

Ending balance: collectively evaluated for impairment	$	823,746		$	1,038,730		$	37,177		$	—			1,899,653

Credit Quality of Loan Portfolio

As of September 30, 2013 and December 31, 2012, pass (grade 0-4), criticized (grade 5) and classified (grade 6-7) loans, disaggregated by loan class, were as follows:


	Pass (Grade 0-4)		Criticized (Grade 5)		Classified (Grade 6-7)		Total Loans
	(In thousands)
September 30, 2013
Real estate loans:
Commercial property
Retail	$	448,429	$	11,435	$	4,778	$	464,642
Land		5,430		—		164		5,594
Other		396,021		8,750		12,569		417,340
Residential property		80,568		—		1,951		82,519
Commercial and industrial loans:
Commercial term
Unsecured		82,806		1,797		12,391		96,994
Secured by real estate		764,787		13,568		37,672		816,027
Commercial lines of credit		52,630		198		1,546		54,374
SBA loans		142,346		664		10,980		153,990
International loans		32,046		500		1,180		33,726
Consumer loans		31,342		175		2,548		34,065

Total gross loans	$	2,036,405	$	37,087	$	85,779	$	2,159,271

December 31, 2012
Real estate loans:
Commercial property
Retail	$	386,650	$	3,971	$	2,324	$	392,945
Land		5,491		—		8,516		14,007
Other		366,518		12,132		1,492		380,142
Residential property		99,250		—		2,528		101,778
Commercial and industrial loans:
Commercial term
Unsecured		87,370		663		22,139		110,172
Secured by real estate		710,723		13,038		50,431		774,192
Commercial lines of credit		53,391		863		1,867		56,121
SBA loans		136,058		1,119		11,129		148,306
International loans		34,221		—		—		34,221
Consumer loans		33,707		201		2,768		36,676

Total gross loans	$	1,913,379	$	31,987	$	103,194	$	2,048,560

Analysis of Past Due Loans, Disaggregated by Loan Class

The following is an aging analysis of past due loans, disaggregated by loan class, as of September 30, 2013 and December 31, 2012:


	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Accruing 90 Days or More Past Due
	(In thousands)
September 30, 2013
Real estate loans:
Commercial property
Retail	$	2,270	$	—	$	—	$	2,270	$	462,372	$	464,642	$	—
Land		—		—		—		—		5,594		5,594		—
Other		—		1,768		—		1,768		415,572		417,340		—
Residential property		—		—		561		561		81,958		82,519		—
Commercial and industrial loans:
Commercial term
Unsecured		1,309		389		692		2,390		94,604		96,994		—
Secured by real estate		285		300		415		1,000		815,027		816,027		—
Commercial lines of credit		—		—		—		—		54,374		54,374		—
SBA loans		1,743		1,086		4,542		7,371		146,619		153,990		—
International loans		—		—		—		—		33,726		33,726		—
Consumer loans		316		27		295		638		33,427		34,065		—

Total gross loans	$	5,923	$	3,570	$	6,505	$	15,998	$	2,143,273	$	2,159,271	$	—

December 31, 2012
Real estate loans:
Commercial property
Retail	$	—	$	111	$	—	$	111	$	392,834	$	392,945	$	—
Land		—		—		335		335		13,672		14,007		—
Other		—		—		—		—		380,142		380,142		—
Residential property		—		588		311		899		100,879		101,778		—
Commercial and industrial loans:
Commercial term
Unsecured		918		1,103		1,279		3,300		106,872		110,172		—
Secured by real estate		1,949		—		926		2,875		771,317		774,192		—
Commercial lines of credit		—		188		416		604		55,517		56,121		—
SBA loans		3,759		1,039		2,800		7,598		140,708		148,306		—
International loans		—		—		—		—		34,221		34,221		—
Consumer loans		61		146		538		745		35,931		36,676		—

Total gross loans	$	6,687	$	3,175	$	6,605	$	16,467	$	2,032,093	$	2,048,560	$	—

Information on Impaired Loans, Disaggregated by Loan Class

The following table provides information on impaired loans, disaggregated by loan class, as of the dates indicated:


	Recorded Investment		Unpaid Principal Balance		With No Related Allowance Recorded		With an Allowance Recorded		Related Allowance
	(In thousands)
September 30, 2013
Real estate loans:
Commercial property
Retail	$	2,234	$	2,309	$	2,234	$	—	$	—
Land		—		—		—		—		—
Other		1,169		1,169		649		520		25
Residential property		2,982		3,072		2,982		—		—
Commercial and industrial loans:
Commercial term
Unsecured		10,072		10,361		1,743		8,329		1,371
Secured by real estate		17,948		19,181		17,193		755		163
Commercial lines of credit		830		1,055		830		—		471
SBA loans		5,477		8,785		4,112		1,365		9
International loans		1,180		1,180		608		572		330
Consumer loans		1,574		1,662		399		1,175		—

Total gross loans	$	43,466	$	48,774	$	30,750	$	12,716	$	2,369

December 31, 2012
Real estate loans:
Commercial property
Retail	$	2,930	$	3,024	$	2,930	$	—	$	—
Land		2,097		2,307		2,097		—		—
Other		527		527		—		527		67
Residential property		3,265		3,308		1,866		1,399		94
Commercial and industrial loans:
Commercial term
Unsecured		14,532		15,515		6,826		7,706		2,144
Secured by real estate		22,050		23,221		9,520		12,530		2,319
Commercial lines of credit		1,521		1,704		848		673		230
SBA loans		6,170		10,244		4,294		1,876		762
International loans		—		—		—		—		—
Consumer loans		1,652		1,711		449		1,203		615

Total gross loans	$	54,744	$	61,561	$	28,830	$	25,914	$	6,231

The following table provides information on impaired loans, disaggregated by loan class, as of dates indicated:


	Average Recorded Investment for the Three Months Ended		Interest Income Recognized for the Three Months Ended		Average Recorded Investment for the Nine Months Ended		Interest Income Recognized for the Nine Months Ended
	(In thousands)
September 30, 2013
Real estate loans:
Commercial property
Retail	$	2,243	$	21	$	2,287	$	65
Land		—		—		1,116		80
Other		1,170		13		740		23
Residential property		2,992		33		3,026		92
Commercial and industrial loans:
Commercial term
Unsecured		10,179		148		12,122		555
Secured by real estate		18,023		336		17,358		954
Commercial lines of credit		840		23		1,137		48
SBA loans		5,542		299		5,870		851
International loans		1,197		—		1,342		—
Consumer loans		1,581		27		1,624		54

Total gross loans	$	43,767	$	900	$	46,622	$	2,722

September 30, 2012
Real estate loans:
Commercial property
Retail	$	2,597	$	47	$	2,162	$	95
Land		2,054		45		2,134		136
Other		534		5		937		38
Construction		7,868		29		8,016		207
Residential property		3,279		34		3,265		118
Commercial and industrial loans:
Commercial term
Unsecured		13,723		214		14,079		644
Secured by real estate		19,990		342		21,834		1,300
Commercial lines of credit		1,555		16		1,742		46
SBA loans		6,168		330		7,489		813
Consumer loans		1,257		49		1,021		59

Total gross loans	$	59,025	$	1,111	$	62,679	$	3,456

Summary of Interest Foregone on Impaired Loans

The following is a summary of interest foregone on impaired loans for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2013			2012			2013			2012
	(In thousands)
Interest income that would have been recognized had impaired loans performed in accordance with their original terms	$	1,058		$	1,382		$	3,183		$	4,315
Less: Interest income recognized on impaired loans		(900	)		(1,111	)		(2,722	)		(3,456	)

Interest foregone on impaired loans	$	158		$	271		$	461		$	859

Non-Accrual Loans, Disaggregated by Loan Class

The following table details non-accrual loans, disaggregated by loan class, as of the dates indicated:


	September 30,		December 31,
	2013		2012
	(In thousands)
Real estate loans:
Commercial property
Retail	$	768	$	1,079
Land		—		2,097
Residential property		1,659		1,270
Commercial and industrial loans:
Commercial term
Unsecured		2,490		8,311
Secured by real estate		5,591		8,679
Commercial lines of credit		830		1,521
SBA loans		9,959		12,563
Consumer loans		1,479		1,759

Total non-accrual loans	$	22,776	$	37,279

Non-Performing Assets

The following table details non-performing assets as of the dates indicated:


	September 30,		December 31,
	2013		2012
	(In thousands)
Non-accrual loans	$	22,776	$	37,279
Loans 90 days or more past due and still accruing		—		—

Total non-performing loans		22,776		37,279
Other real estate owned		290		774

Total non-performing assets	$	23,066	$	38,053

Troubled Debt Restructurings, Disaggregated by Type of Concession and by Loan Type

The following table details troubled debt restructurings, disaggregated by concession type and by loan type, as of September 30, 2013 and December 31, 2012:


	Non-Accrual TDRs										Accrual TDRs
	Deferral of Principal		Deferral of Principal and Interest		Reduction of Principal and Interest		Extension of Maturity		Total		Deferral of Principal		Deferral of Principal and Interest		Reduction of Principal and Interest		Extension of Maturity		Total
	(In thousands)
September 30, 2013
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	768	$	768	$	—	$	—	$	—	$	—	$	—
Other		—		—		—		—		—		520		—		—		649		1,169
Residential property		803		—		—		—		803		—		—		—		—		—
Commercial and industrial loans:
Commercial term
Unsecured		—		205		651		644		1,500		1,271		—		1,983		3,002		6,256
Secured by real estate		2,167		993		263		—		3,423		3,458		—		598		4,487		8,543
Commercial lines of credit		641		—		—		188		829		—		—		—		—		—
SBA loans		915		1,140		773		—		2,828		445		—		70		—		515
International loans		—		—		—		—		—		—		—		1,180		—		1,180
Consumer loans		—		—		—		—		—		—		—		149		—		149

Total	$	4,526	$	2,338	$	1,687	$	1,600	$	10,151	$	5,694	$	—	$	3,980	$	8,138	$	17,812

December 31, 2012
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	1,080	$	1,080	$	357	$	—	$	—	$	175	$	532
Other		—		—		—		—		—		527		—		—		—		527
Residential property		827		—		—		—		827		—		572		—		—		572
Commercial and industrial loans:
Commercial term
Unsecured		—		658		4,558		1,413		6,629		976		—		1,090		3,260		5,326
Secured by real estate		2,317		1,343		318		—		3,978		4,444		—		448		4,547		9,439
Commercial lines of credit		673		—		188		244		1,105		—				—		—		—
SBA loans		2,831		1,287		1,032		—		5,150		484		—		100		—		584

Total	$	6,648	$	3,288	$	6,096	$	2,737	$	18,769	$	6,788	$	572	$	1,638	$	7,982	$	16,980

Troubled Debt Restructuring, Disaggregated by Loan Class

The following table details troubled debt restructuring, disaggregated by loan class, for the three months ended September 30, 2013 and 2012:


	September 30, 2013						September 30, 2012
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(In thousands, except number of loans)
Real estate loans:
Commercial property
Retail ⁽¹⁾		—	$	—	$	—		1	$	131	$	177
Other ⁽²⁾		1		646		649		1		538		532
Commercial and industrial loans:
Commercial term
Unsecured ⁽³⁾		8		1,015		1,002		5		777		759
Secured by real estate ⁽⁴⁾		2		1,365		1,365		3		4,525		4,475
SBA loans ⁽⁵⁾		1		107		91		3		78		89

Total		12	$	3,133	$	3,107		13	$	6,049	$	6,032

(1)

Includes a modification of $177,000 through an extension of maturity for the three months ended September 30, 2012.

(2)

Includes a modification of $649,000 through an extension of maturity for the three months ended September 30, 2013, and a modification of $532,000 through a payment deferral for the three months ended September 30, 2012.

(3)

Includes modifications of $381,000 through payment deferrals and $621,000 through extensions of maturity for the three months ended September 30, 2013, and modifications of $750,000 through extensions of maturity and $9,000 through payment deferrals for the three months ended September 30, 2012.

(4)

Includes modifications of $1.4 million through payment deferrals for the three months ended September 30, 2013, and modifications of $3.1 million through payment deferrals and $1.4 million through an extension of maturity for the three months ended September 30, 2012.

(5)

Includes a modification of $91,000 through a payment deferral for the three months ended September 30, 2013, and modifications of $48,000 through payment deferrals and $41,000 through a reduction of principal or accrued interest for the three months ended September 30, 2012.

The following table details troubled debt restructuring, disaggregated by loan class, for the nine months ended September 30, 2013 and 2012:


	September 30, 2013						September 30, 2012
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(In thousands, except number of loans)
Real estate loans:
Commercial property
Retail ⁽¹⁾		—	$	—	$	—		1	$	184	$	177
Land ⁽²⁾		—		—		—		1		547		532
Other ⁽³⁾		1		658		649		—		—		—
Commercial and industrial loans:
Commercial term
Unsecured ⁽⁴⁾		14		1,780		1,618		31		5,362		4,940
Secured by real estate ⁽⁵⁾		2		1,365		1,365		5		5,584		5,307
Commercial lines of credit ⁽⁶⁾		1		—		—		1		202		188
SBA loans ⁽⁷⁾		3		273		228		11		1,060		1,000
International loans ⁽⁸⁾		2		1,584		1,180		—		—		—
Consumer loans ⁽⁹⁾		1		149		149		—		—		—

Total		24	$	5,809	$	5,189		50	$	12,939	$	12,144

(1)

Includes a modification of $177,000 through an extension of maturity for the nine months ended September 30, 2012.

(2)

Includes a modification of $532,000 through a payment deferral for the nine months ended September 30, 2012.

(3)

Includes a modification of $649,000 through an extension of maturity for the nine months ended September 30, 2013.

(4)

Includes modifications of $381,000 through payment deferrals and $1.2 million through extensions of maturity for the nine months ended September 30, 2013, and modifications of $2.2 million through extensions of maturity, $1.9 million through reductions of principal or accrued interest and $884,000 through payment deferrals for the nine months ended September 30, 2012.

(5)

Includes modifications of $1.4 million through payment deferrals for the nine months ended September 30, 2013, and modifications of $3.1 million through payment deferrals, $1.9 million through extensions of maturity and $338,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2012.

(6)

Includes a modification of zero through a reduction of principal or accrued interest for the three months ended September 30, 2013, and a modification of $188,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2012.

(7)

Includes modifications of $98,000 through payments deferrals and $130,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2013, and modifications of $551,000 through payment deferrals and $449,000 through reductions of principal or accrued interest for the nine months ended September 30, 2012.

(8)

Includes modifications of $1.2 million through reductions of principal or accrued interest for the nine months ended September 30, 2013.

(9)

Includes a modification of $149,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2013.

Troubled Debt Restructurings that Defaulted Subsequent to Modifications Occurring Within Previous Twelve Months, Disaggregated by Loan Class

The following table details troubled debt restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by loan class, for the three and nine months ended September 30, 2013 and 2012, respectively:


	Three Months Ended								Nine Months Ended
	September 30, 2013				September 30, 2012				September 30, 2013				September 30, 2012
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(In thousands, except number of loans)
Commercial and industrial loans:
Commercial term
Unsecured		—	$	—		3	$	171		1	$	29		6	$	431
Secured by real estate		—		—		—		—		—		—		—		—
Commercial lines of credit		—		—		—		—		—		—		1		258
SBA loans		1		130		6		272		1		130		6		272

Total		1	$	130		9	$	443		2	$	159		13	$	961

Changes in Servicing Assets

The changes in servicing assets for the nine months ended September 30, 2013 and 2012 were as follows:


	Nine Months Ended September 30,
	2013			2012
	(In thousands)
Balance at beginning of period	$	5,542		$	3,720
Additions		1,996			2,148
Amortization		(1,152	)		(720	)

Balance at end of period	$	6,386		$	5,148