| LOANS |
NOTE 5 — LOANS
The Board of Directors and management review and approve the Bank’s loan policy and procedures on a regular basis
to reflect issues such as regulatory and organizational structure change, strategic planning revisions, concentrations of credit, loan delinquencies and non-performing loans, problem loans, and policy adjustments.
Real estate loans are subject to loans secured by liens or interest in real estate, to provide purchase, construction, and refinance on
real estate properties. Commercial and industrial loans consist of commercial term loans, commercial lines of credit, international loans, and SBA loans. Consumer loans consist of auto loans, credit cards, personal loans, and home equity lines of
credit. We maintain management loan review and monitoring departments that review and monitor pass graded loans as well as problem loans to prevent further deterioration.
Concentrations of credit: The majority of the Bank’s loan portfolio consists of commercial real estate loans and commercial and industrial loans. The Bank has been diversifying and monitoring
commercial real estate loans based on property types, tightening underwriting standards, and portfolio liquidity and management, and has not exceeded certain specified limits set forth in the Bank’s loan policy. Most of the Bank’s lending
activity occurs within Southern California.
Loans Receivable
Loans receivable consisted of the following as of the dates indicated:
| |
|
|
|
|
|
|
|
|
| |
|
September 30,
2011 |
|
|
December 31,
2010 |
|
| |
|
(In Thousands) |
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
$ |
658,550 |
|
|
$ |
729,222 |
|
|
Construction
|
|
|
39,284 |
|
|
|
60,995 |
|
|
Residential Property
|
|
|
56,638 |
|
|
|
62,645 |
|
| |
|
|
|
|
|
|
|
|
|
Total Real Estate Loans
|
|
|
754,472 |
|
|
|
852,862 |
|
| |
|
|
|
|
|
|
|
|
|
Commercial and Industrial Loans:
(1)
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
995,773 |
|
|
|
1,118,999 |
|
|
SBA
|
|
|
118,380 |
|
|
|
105,688 |
|
|
Commercial Lines of Credit
|
|
|
52,514 |
|
|
|
59,056 |
|
|
International
|
|
|
26,073 |
|
|
|
44,167 |
|
| |
|
|
|
|
|
|
|
|
|
Total Commercial and Industrial Loans
|
|
|
1,192,740 |
|
|
|
1,327,910 |
|
| |
|
|
|
|
|
|
|
|
|
Consumer Loans
|
|
|
44,819 |
|
|
|
50,300 |
|
| |
|
|
|
|
|
|
|
|
|
Total Gross Loans
|
|
|
1,992,031 |
|
|
|
2,231,072 |
|
|
Allowance for Loans Losses
|
|
|
(100,792 |
) |
|
|
(146,059 |
) |
|
Deferred Loan Costs (Fees)
|
|
|
294 |
|
|
|
(566 |
) |
| |
|
|
|
|
|
|
|
|
|
Loans Receivable, Net
|
|
$ |
1,891,533 |
|
|
$ |
2,084,447 |
|
| |
|
|
|
|
|
|
|
|
| (1)
|
Commercial and industrial loans include owner-occupied property loans of $811.0 million and
$894.8 million as of September 30, 2011 and December 31, 2010, respectively.
|
Accrued
interest on loans receivable amounted to $5.6 million and $6.5 million at September 30, 2011 and December 31, 2010, respectively. At September 30, 2011 and December 31, 2010, loans receivable totaling $840.6 million and $1.03
billion, respectively, were pledged to secure borrowings from the FHLB and the Federal Reserve Discount Window.
The following
table details the information on the purchases, sales and reclassification of loans receivable to loans held for sale by portfolio segment for the three months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Real Estate |
|
|
Commercial
and
Industrial
|
|
|
Consumer |
|
|
Total |
|
| |
|
(Dollars in Thousands) |
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Held for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
974 |
|
|
$ |
43,131 |
|
|
$ |
— |
|
|
$ |
44,105 |
|
|
Origination of Loans Held for Sale
|
|
|
— |
|
|
|
13,560 |
|
|
|
— |
|
|
|
13,560 |
|
|
Reclassification from Loans Receivable to Loans Held for sale
|
|
|
14,236 |
|
|
|
17,117 |
|
|
|
— |
|
|
|
31,353 |
|
|
Sales of Loans Held for sale
|
|
|
(5,506 |
) |
|
|
(46,238 |
) |
|
|
— |
|
|
|
(51,744 |
) |
|
Principal Payoffs and Amortization
|
|
|
(7 |
) |
|
|
(65 |
) |
|
|
— |
|
|
|
(72 |
) |
|
Valuation Adjustments
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
9,697 |
|
|
$ |
27,505 |
|
|
$ |
— |
|
|
$ |
37,202 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Held for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
14,853 |
|
|
$ |
15,691 |
|
|
$ |
— |
|
|
$ |
30,544 |
|
|
Origination of Loans Held for Sale
|
|
|
— |
|
|
|
1,894 |
|
|
|
— |
|
|
|
1,894 |
|
|
Reclassification from Loans Receivable to Loans Held for sale
|
|
|
1,201 |
|
|
|
4,227 |
|
|
|
— |
|
|
|
5,428 |
|
|
Sales of Loans Held for sale
|
|
|
(13,889 |
) |
|
|
(13,169 |
) |
|
|
— |
|
|
|
(27,058 |
) |
|
Principal Payoffs and Amortization
|
|
|
— |
|
|
|
(148 |
) |
|
|
— |
|
|
|
(148 |
) |
|
Valuation Adjustments
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
2,165 |
|
|
$ |
8,495 |
|
|
$ |
— |
|
|
$ |
10,660 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, 2011, loans receivable of $31.4 million were reclassified
as loans held for sale, and loans held for sale of $51.7 million were sold. For the same period ended September 30, 2010, loans receivable of $5.4 million were reclassified as loans held for sale, and loans held for sale of $27.1 million were
sold. The net proceeds from the sale of non-performing loans were $27.5 million and $24.7 million for the three months ended September 30, 2011 and 2010, respectively. There were no purchases of loans receivable for the three months ended
September 30, 2011 and 2010.
The following table details the information on the purchases, sales and reclassification of
loans receivable to loans held for sale by portfolio segment for the nine months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Real Estate |
|
|
Commercial
and
Industrial
|
|
|
Consumer |
|
|
Total |
|
| |
|
(Dollars in Thousands) |
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Held for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
3,666 |
|
|
$ |
32,954 |
|
|
$ |
— |
|
|
$ |
36,620 |
|
|
Origination of Loans Held for Sale
|
|
|
— |
|
|
|
28,656 |
|
|
|
— |
|
|
|
28,656 |
|
|
Reclassification from Loans Receivable to Loans Held for sale
|
|
|
33,514 |
|
|
|
38,523 |
|
|
|
— |
|
|
|
72,037 |
|
|
Sales of Loans Held for sale
|
|
|
(27,329 |
) |
|
|
(68,682 |
) |
|
|
— |
|
|
|
(96,011 |
) |
|
Principal Payoffs and Amortization
|
|
|
(21 |
) |
|
|
(1,177 |
) |
|
|
— |
|
|
|
(1,198 |
) |
|
Valuation Adjustments
|
|
|
(133 |
) |
|
|
(2,769 |
) |
|
|
— |
|
|
|
(2,902 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
9,697 |
|
|
$ |
27,505 |
|
|
$ |
— |
|
|
$ |
37,202 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Held for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
— |
|
|
$ |
5,010 |
|
|
$ |
— |
|
|
$ |
5,010 |
|
|
Origination of Loans Held for Sale
|
|
|
— |
|
|
|
21,050 |
|
|
|
— |
|
|
|
21,050 |
|
|
Reclassification from Loans Receivable to Loans Held for sale
|
|
|
30,041 |
|
|
|
73,676 |
|
|
|
— |
|
|
|
103,717 |
|
|
Sales of Loans Held for sale
|
|
|
(27,876 |
) |
|
|
(90,900 |
) |
|
|
— |
|
|
|
(118,776 |
) |
|
Principal Payoffs and Amortization
|
|
|
— |
|
|
|
(341 |
) |
|
|
— |
|
|
|
(341 |
) |
|
Valuation Adjustments
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
2,165 |
|
|
$ |
8,495 |
|
|
$ |
— |
|
|
$ |
10,660 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine
months ended September 30, 2011, loans receivable of $72.0 million were reclassified as loans held for sale, and loans held for sale of $96.0 million were sold. For the same period ended September 30, 2010, loans receivable of $103.7
million were reclassified as loans held for sale ,and loans held for sale of $118.8 million were sold. The net proceeds from the sale of non-performing loans were $73.1 million and $114.6 million for the nine months ended September 30, 2011 and
2010, respectively. There were no purchases of loans receivable for the nine months ended September 30, 2011 and 2010.
Allowance
for Loan Losses and Allowance for Off-Balance Sheet Items
Activity in the allowance for loan losses and off-balance
sheet items was as follows for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the
Three Months
Ended
|
|
|
As of and for the
Nine Months
Ended
|
|
| |
|
September 30,
2011 |
|
|
June 30,
2011 |
|
|
September 30,
2010 |
|
|
September 30,
2011 |
|
|
September 30,
2010 |
|
| |
|
(In Thousands) |
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Beginning of Period
|
|
$ |
109,029 |
|
|
$ |
125,780 |
|
|
$ |
176,667 |
|
|
$ |
146,059 |
|
|
$ |
144,996 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Charge-Offs
|
|
|
(16,551 |
) |
|
|
(20,652 |
) |
|
|
(23,204 |
) |
|
|
(62,384 |
) |
|
|
(94,036 |
) |
|
Recoveries on Loans Previously Charged Off
|
|
|
1,045 |
|
|
|
4,151 |
|
|
|
1,900 |
|
|
|
8,822 |
|
|
|
7,393 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loan Charge-Offs
|
|
|
(15,506 |
) |
|
|
(16,501 |
) |
|
|
(21,304 |
) |
|
|
(53,562 |
) |
|
|
(86,643 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision Charged to Operating Expenses
|
|
|
7,269 |
|
|
|
(250 |
) |
|
|
20,700 |
|
|
|
8,295 |
|
|
|
117,710 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at End of Period
|
|
$ |
100,792 |
|
|
$ |
109,029 |
|
|
$ |
176,063 |
|
|
$ |
100,792 |
|
|
$ |
176,063 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Off-Balance Sheet Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Beginning of Period
|
|
$ |
2,391 |
|
|
$ |
2,141 |
|
|
$ |
2,362 |
|
|
$ |
3,417 |
|
|
$ |
3,876 |
|
|
Provision Charged to Operating Expenses
|
|
|
831 |
|
|
|
250 |
|
|
|
1,300 |
|
|
|
(195 |
) |
|
|
(214 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at End of Period
|
|
$ |
3,222 |
|
|
$ |
2,391 |
|
|
$ |
3,662 |
|
|
$ |
3,222 |
|
|
$ |
3,662 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
table details the information on the allowance for loan losses by portfolio segment for the three months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Real Estate |
|
|
Commercial
and
Industrial
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
| |
|
(Dollars in Thousands) |
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
24,115 |
|
|
$ |
82,845 |
|
|
$ |
1,587 |
|
|
$ |
482 |
|
|
$ |
109,029 |
|
|
Charge-Offs
|
|
|
2,142 |
|
|
|
14,023 |
|
|
|
386 |
|
|
|
— |
|
|
|
16,551 |
|
|
Recoveries on Loans Previously Charged Off
|
|
|
— |
|
|
|
1,014 |
|
|
|
31 |
|
|
|
— |
|
|
|
1,045 |
|
|
Provision
|
|
|
(165 |
) |
|
|
4,961 |
|
|
|
992 |
|
|
|
1,481 |
|
|
|
7,269 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
21,808 |
|
|
$ |
74,797 |
|
|
$ |
2,224 |
|
|
$ |
1,963 |
|
|
$ |
100,792 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
3,630 |
|
|
$ |
25,915 |
|
|
$ |
285 |
|
|
$ |
— |
|
|
$ |
29,830 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
18,178 |
|
|
$ |
48,882 |
|
|
$ |
1,939 |
|
|
$ |
1,963 |
|
|
$ |
70,962 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
754,472 |
|
|
$ |
1,192,740 |
|
|
$ |
44,819 |
|
|
$ |
— |
|
|
$ |
1,992,031 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
47,172 |
|
|
$ |
95,959 |
|
|
$ |
1,158 |
|
|
$ |
— |
|
|
$ |
144,289 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
707,300 |
|
|
$ |
1,096,781 |
|
|
$ |
43,661 |
|
|
$ |
— |
|
|
$ |
1,847,742 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
32,045 |
|
|
$ |
140,504 |
|
|
$ |
2,198 |
|
|
$ |
1,920 |
|
|
$ |
176,667 |
|
|
Charge-Offs
|
|
|
2,864 |
|
|
|
20,131 |
|
|
|
209 |
|
|
|
— |
|
|
|
23,204 |
|
|
Recoveries on Loans Previously Charged Off
|
|
|
1,168 |
|
|
|
688 |
|
|
|
44 |
|
|
|
— |
|
|
|
1,900 |
|
|
Provision
|
|
|
9,394 |
|
|
|
11,122 |
|
|
|
625 |
|
|
|
(441 |
) |
|
|
20,700 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
39,743 |
|
|
$ |
132,183 |
|
|
$ |
2,658 |
|
|
$ |
1,479 |
|
|
$ |
176,063 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
1,457 |
|
|
$ |
25,182 |
|
|
$ |
174 |
|
|
$ |
— |
|
|
$ |
26,813 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
38,286 |
|
|
$ |
107,001 |
|
|
$ |
2,484 |
|
|
$ |
1,479 |
|
|
$ |
149,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
883,568 |
|
|
$ |
1,447,669 |
|
|
$ |
53,237 |
|
|
$ |
— |
|
|
$ |
2,384,474 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
80,461 |
|
|
$ |
155,083 |
|
|
$ |
538 |
|
|
$ |
— |
|
|
$ |
236,082 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
803,107 |
|
|
$ |
1,292,586 |
|
|
$ |
52,699 |
|
|
$ |
— |
|
|
$ |
2,148,392 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
table details the information on the allowance for loan losses by portfolio segment for the nine months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Real Estate |
|
|
Commercial
and
Industrial
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
| |
|
(Dollars in Thousands) |
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
32,766 |
|
|
$ |
108,986 |
|
|
$ |
2,079 |
|
|
$ |
2,228 |
|
|
$ |
146,059 |
|
|
Charge-Offs
|
|
|
14,786 |
|
|
|
46,715 |
|
|
|
883 |
|
|
|
— |
|
|
|
62,384 |
|
|
Recoveries on Loans Previously Charged Off
|
|
|
2,744 |
|
|
|
6,025 |
|
|
|
53 |
|
|
|
— |
|
|
|
8,822 |
|
|
Provision
|
|
|
1,084 |
|
|
|
6,501 |
|
|
|
975 |
|
|
|
(265 |
) |
|
|
8,295 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
21,808 |
|
|
$ |
74,797 |
|
|
$ |
2,224 |
|
|
$ |
1,963 |
|
|
$ |
100,792 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
3,630 |
|
|
$ |
25,915 |
|
|
$ |
285 |
|
|
$ |
— |
|
|
$ |
29,830 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
18,178 |
|
|
$ |
48,882 |
|
|
$ |
1,939 |
|
|
$ |
1,963 |
|
|
$ |
70,962 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
754,472 |
|
|
$ |
1,192,740 |
|
|
$ |
44,819 |
|
|
$ |
— |
|
|
$ |
1,992,031 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
47,172 |
|
|
$ |
95,959 |
|
|
$ |
1,158 |
|
|
$ |
— |
|
|
$ |
144,289 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
707,300 |
|
|
$ |
1,096,781 |
|
|
$ |
43,661 |
|
|
$ |
— |
|
|
$ |
1,847,742 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$ |
30,081 |
|
|
$ |
112,225 |
|
|
$ |
2,690 |
|
|
$ |
— |
|
|
$ |
144,996 |
|
|
Charge-Offs
|
|
|
20,681 |
|
|
|
72,168 |
|
|
|
1,187 |
|
|
|
— |
|
|
|
94,036 |
|
|
Recoveries on Loans Previously Charged Off
|
|
|
3,033 |
|
|
|
4,195 |
|
|
|
165 |
|
|
|
— |
|
|
|
7,393 |
|
|
Provision
|
|
|
27,310 |
|
|
|
87,931 |
|
|
|
990 |
|
|
|
1,479 |
|
|
|
117,710 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
39,743 |
|
|
$ |
132,183 |
|
|
$ |
2,658 |
|
|
$ |
1,479 |
|
|
$ |
176,063 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
1,457 |
|
|
$ |
25,182 |
|
|
$ |
174 |
|
|
$ |
— |
|
|
$ |
26,813 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
38,286 |
|
|
$ |
107,001 |
|
|
$ |
2,484 |
|
|
$ |
1,479 |
|
|
$ |
149,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$ |
883,568 |
|
|
$ |
1,447,669 |
|
|
$ |
53,237 |
|
|
$ |
— |
|
|
$ |
2,384,474 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually Evaluated for Impairment
|
|
$ |
80,461 |
|
|
$ |
155,083 |
|
|
$ |
538 |
|
|
$ |
— |
|
|
$ |
236,082 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Collectively Evaluated for Impairment
|
|
$ |
803,107 |
|
|
$ |
1,292,586 |
|
|
$ |
52,699 |
|
|
$ |
— |
|
|
$ |
2,148,392 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Indicators
As part of the on-going monitoring of the credit quality of our loan portfolio, we utilize an internal loan grading system to identify
credit risk and assign an appropriate grade (from 0 to 8) for each and every loan in our loan portfolio.
Pass-grade (0 to 4)
loans are reviewed for reclassification on an annual basis, while criticized (5) and classified (6 and 7) loans are reviewed semi-annually. Additional adjustments are made when determined to be necessary. The loan grade definitions are as
follows:
Pass: These loans, risk rated 0 to 4, are in compliance in all respects with the Bank’s credit policy and
regulatory requirements, and do not exhibit any potential for defined weaknesses as defined under “Special Mention” (5), “Substandard” (6) or “Doubtful” (7). This is the strongest level of the Bank’s loan
grading system. It incorporates all performing loans with no credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans. Following are sub categories within the Pass grade:
Pass 0: Secured in full by cash or cash equivalents.
Pass 1: A very strong, well-structured credit relationship with an established borrower.
The relationship
should be supported by audited financial statements indicating cash flow, well in excess of debt service requirements, excellent liquidity, and very strong capital.
Pass 2: These loans require a well-structured credit that may not be as seasoned or as high quality as grade 1. Capital, liquidity, debt service capacity, and collateral coverage must all be well above
average. This category includes individuals with substantial net worth supported by liquid assets and strong income.
Pass 3:
Loans or commitments to borrowers exhibiting a fully acceptable credit risk. These borrowers should have sound balance sheet proportions and significant cash flow coverage, although they may be somewhat more leveraged and exhibit greater
fluctuations in earning and financing but generally would be considered very attractive to the Bank as a borrower. The borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans which are
designated this grade must have characteristics that place them well above the minimum underwriting requirements. Asset-based borrowers assigned this grade must exhibit extremely favorable leverage and cash flow characteristics and consistently
demonstrate a high level of unused borrowing capacity
Pass 4: Loans or commitments to borrowers exhibiting either somewhat
weaker balance sheet proportions or positive, but inconsistent, cash flow coverage. These borrowers may exhibit somewhat greater credit risk, and as a result of this, the Bank may have secured its exposure in an effort to mitigate the risk. If so,
the collateral taken should provide an unquestionable ability to repay the indebtedness in full through liquidation, if necessary. Cash flows should be adequate to cover debt service and fixed obligations, although there may be a question about the
borrower’s ability to provide alternative sources of funds in emergencies. Better quality real estate and asset-based borrowers who fully comply with all underwriting standards and are performing according to projections would be assigned this
grade.
Special Mention or 5: A Special Mention credit has potential weaknesses that deserve management’s close
attention, as the borrower is exhibiting deteriorating trends that, if not corrected, could jeopardize repayment of the debt and result in a “Substandard” (6) grade. Credits which have significant actual, not potential, weaknesses are
assigned lower grades than this grade.
Substandard or 6: A Substandard credit has a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. A credit graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility
that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.
Doubtful or 7: A Doubtful credit is
one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events that may work to strengthen the credit, and therefore the amount or timing of a possible loss
cannot be determined at the current time.
Loss or 8: Loans classified Loss are considered uncollectible and of such little
value that their continuance as active Bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that the loan should be charged off now, even though partial or full
recovery may be possible in the future. Loans classified Loss will be charged off in a timely manner.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pass
(Grade 0-4)
|
|
|
Criticized
(Grade 5) |
|
|
Classified
(Grade
6-7)
|
|
|
Total Loans |
|
| |
|
(In Thousands) |
|
|
September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
277,240 |
|
|
$ |
8,810 |
|
|
$ |
26,103 |
|
|
$ |
312,153 |
|
|
Land
|
|
|
4,382 |
|
|
|
— |
|
|
|
3,786 |
|
|
|
8,168 |
|
|
Other
|
|
|
281,879 |
|
|
|
16,445 |
|
|
|
39,905 |
|
|
|
338,229 |
|
|
Construction
|
|
|
8,391 |
|
|
|
14,080 |
|
|
|
16,813 |
|
|
|
39,284 |
|
|
Residential Property
|
|
|
53,878 |
|
|
|
— |
|
|
|
2,760 |
|
|
|
56,638 |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
107,581 |
|
|
|
14,423 |
|
|
|
45,969 |
|
|
|
167,973 |
|
|
Secured by Real Estate
|
|
|
644,301 |
|
|
|
45,992 |
|
|
|
137,507 |
|
|
|
827,800 |
|
|
Commercial Lines of Credit
|
|
|
40,544 |
|
|
|
9,059 |
|
|
|
2,911 |
|
|
|
52,514 |
|
|
SBA
|
|
|
91,184 |
|
|
|
746 |
|
|
|
26,450 |
|
|
|
118,380 |
|
|
International
|
|
|
23,876 |
|
|
|
— |
|
|
|
2,197 |
|
|
|
26,073 |
|
|
Consumer Loans
|
|
|
41,803 |
|
|
|
696 |
|
|
|
2,320 |
|
|
|
44,819 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
1,575,059 |
|
|
$ |
110,251 |
|
|
$ |
306,721 |
|
|
$ |
1,992,031 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
302,696 |
|
|
$ |
18,507 |
|
|
$ |
38,568 |
|
|
$ |
359,771 |
|
|
Land
|
|
|
3,845 |
|
|
|
— |
|
|
|
37,353 |
|
|
|
41,198 |
|
|
Other
|
|
|
265,957 |
|
|
|
20,804 |
|
|
|
41,493 |
|
|
|
328,254 |
|
|
Construction
|
|
|
12,958 |
|
|
|
25,897 |
|
|
|
22,139 |
|
|
|
60,994 |
|
|
Residential Property
|
|
|
59,329 |
|
|
|
— |
|
|
|
3,315 |
|
|
|
62,644 |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
134,709 |
|
|
|
24,620 |
|
|
|
63,739 |
|
|
|
223,068 |
|
|
Secured by Real Estate
|
|
|
617,200 |
|
|
|
107,645 |
|
|
|
171,086 |
|
|
|
895,931 |
|
|
Commercial Lines of Credit
|
|
|
40,195 |
|
|
|
8,019 |
|
|
|
10,841 |
|
|
|
59,055 |
|
|
SBA
|
|
|
68,994 |
|
|
|
731 |
|
|
|
35,965 |
|
|
|
105,690 |
|
|
International
|
|
|
38,447 |
|
|
|
4,693 |
|
|
|
1,027 |
|
|
|
44,167 |
|
|
Consumer Loans
|
|
|
48,027 |
|
|
|
347 |
|
|
|
1,926 |
|
|
|
50,300 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
1,592,357 |
|
|
$ |
211,263 |
|
|
$ |
427,452 |
|
|
$ |
2,231,072 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is
an aging analysis of past due loans, disaggregated by loan class, as of September 30, 2011 and December 31, 2010:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
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, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
219 |
|
|
$ |
3,756 |
|
|
$ |
— |
|
|
$ |
3,975 |
|
|
$ |
308,178 |
|
|
$ |
312,153 |
|
|
$ |
— |
|
|
Land
|
|
|
— |
|
|
|
— |
|
|
|
360 |
|
|
|
360 |
|
|
|
7,808 |
|
|
|
8,168 |
|
|
|
— |
|
|
Other
|
|
|
765 |
|
|
|
— |
|
|
|
1,092 |
|
|
|
1,857 |
|
|
|
336,372 |
|
|
|
338,229 |
|
|
|
— |
|
|
Construction
|
|
|
— |
|
|
|
— |
|
|
|
6,142 |
|
|
|
6,142 |
|
|
|
33,142 |
|
|
|
39,284 |
|
|
|
— |
|
|
Residential Property
|
|
|
1,763 |
|
|
|
463 |
|
|
|
218 |
|
|
|
2,444 |
|
|
|
54,194 |
|
|
|
56,638 |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
846 |
|
|
|
921 |
|
|
|
1,270 |
|
|
|
3,037 |
|
|
|
164,936 |
|
|
|
167,973 |
|
|
|
— |
|
|
Secured by Real Estate
|
|
|
2,134 |
|
|
|
5,214 |
|
|
|
2,782 |
|
|
|
10,130 |
|
|
|
817,670 |
|
|
|
827,800 |
|
|
|
— |
|
|
Commercial Lines of Credit
|
|
|
— |
|
|
|
300 |
|
|
|
754 |
|
|
|
1,054 |
|
|
|
51,460 |
|
|
|
52,514 |
|
|
|
— |
|
|
SBA
|
|
|
5,213 |
|
|
|
6,976 |
|
|
|
8,625 |
|
|
|
20,814 |
|
|
|
97,566 |
|
|
|
118,380 |
|
|
|
— |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,073 |
|
|
|
26,073 |
|
|
|
— |
|
|
Consumer Loans
|
|
|
361 |
|
|
|
382 |
|
|
|
536 |
|
|
|
1,279 |
|
|
|
43,540 |
|
|
|
44,819 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
11,301 |
|
|
$ |
18,012 |
|
|
$ |
21,779 |
|
|
$ |
51,092 |
|
|
$ |
1,940,939 |
|
|
$ |
1,992,031 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7,857 |
|
|
$ |
7,857 |
|
|
$ |
351,913 |
|
|
$ |
359,770 |
|
|
$ |
— |
|
|
Land
|
|
|
— |
|
|
|
— |
|
|
|
25,725 |
|
|
|
25,725 |
|
|
|
15,471 |
|
|
|
41,196 |
|
|
|
— |
|
|
Other
|
|
|
— |
|
|
|
— |
|
|
|
7,212 |
|
|
|
7,212 |
|
|
|
321,043 |
|
|
|
328,255 |
|
|
|
— |
|
|
Construction
|
|
|
10,409 |
|
|
|
— |
|
|
|
8,477 |
|
|
|
18,886 |
|
|
|
42,108 |
|
|
|
60,994 |
|
|
|
— |
|
|
Residential Property
|
|
|
522 |
|
|
|
— |
|
|
|
1,240 |
|
|
|
1,762 |
|
|
|
60,883 |
|
|
|
62,645 |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
2,208 |
|
|
|
2,781 |
|
|
|
6,842 |
|
|
|
11,831 |
|
|
|
211,237 |
|
|
|
223,068 |
|
|
|
— |
|
|
Secured by Real Estate
|
|
|
5,111 |
|
|
|
3,720 |
|
|
|
10,530 |
|
|
|
19,361 |
|
|
|
876,570 |
|
|
|
895,931 |
|
|
|
— |
|
|
Commercial Lines of Credit
|
|
|
454 |
|
|
|
— |
|
|
|
1,745 |
|
|
|
2,199 |
|
|
|
56,857 |
|
|
|
59,056 |
|
|
|
— |
|
|
SBA
|
|
|
2,287 |
|
|
|
8,205 |
|
|
|
13,957 |
|
|
|
24,449 |
|
|
|
81,241 |
|
|
|
105,690 |
|
|
|
— |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44,167 |
|
|
|
44,167 |
|
|
|
— |
|
|
Consumer Loans
|
|
|
596 |
|
|
|
202 |
|
|
|
865 |
|
|
|
1,663 |
|
|
|
48,637 |
|
|
|
50,300 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
21,587 |
|
|
$ |
14,908 |
|
|
$ |
84,450 |
|
|
$ |
120,945 |
|
|
$ |
2,110,127 |
|
|
$ |
2,231,072 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans
Loans are identified and classified as impaired when, non-accrual and principal or interest payments have been contractually past due for 90 days or more, unless the loan is both well-collateralized and
in the process of collection; or they are classified as Troubled Debt Restructuring (“TDR”) loans to offer terms not typically granted by the Bank or when current information or events make it unlikely to collect in full according to the
contractual terms of the loan agreements; or they are classified as Substandard loans in an amount over 5% of the Bank’s Tier 1 Capital; or there is a deterioration in the borrower’s financial condition that raises uncertainty as to timely
collection of either principal or interest; or full payment of both interest and principal is in doubt according to the original contractual terms.
We evaluate loan impairment in accordance with applicable GAAP.
Impaired loans are
measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is
collateral dependent, less costs to sell. If the measure of the impaired loan is less than the recorded investment in the loan, the deficiency will be charged off against the allowance for loan losses or, alternatively, a specific allocation will be
established. Additionally, loans that are considered impaired are specifically excluded from the quarterly migration analysis when determining the amount of the allowance for loan losses required for the period.
The allowance for collateral-dependent loans is determined by calculating the difference between the outstanding loan balance and the
collateral value as determined by recent appraisals. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. We continue to monitor the
collateral coverage, based on recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly.
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, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
8,591 |
|
|
$ |
8,826 |
|
|
$ |
2,263 |
|
|
$ |
6,328 |
|
|
$ |
807 |
|
|
Land
|
|
|
3,543 |
|
|
|
3,543 |
|
|
|
2,363 |
|
|
|
1,181 |
|
|
|
137 |
|
|
Other
|
|
|
21,672 |
|
|
|
21,784 |
|
|
|
2,694 |
|
|
|
18,977 |
|
|
|
2,674 |
|
|
Construction
|
|
|
11,037 |
|
|
|
11,067 |
|
|
|
11,037 |
|
|
|
— |
|
|
|
— |
|
|
Residential Property
|
|
|
2,330 |
|
|
|
2,377 |
|
|
|
2,224 |
|
|
|
105 |
|
|
|
12 |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
18,507 |
|
|
|
19,048 |
|
|
|
607 |
|
|
|
17,900 |
|
|
|
16,238 |
|
|
Secured by Real Estate
|
|
|
64,758 |
|
|
|
66,300 |
|
|
|
31,551 |
|
|
|
33,206 |
|
|
|
6,382 |
|
|
Commercial Lines of Credit
|
|
|
2,342 |
|
|
|
2,419 |
|
|
|
537 |
|
|
|
1,806 |
|
|
|
1,805 |
|
|
SBA
|
|
|
17,432 |
|
|
|
19,356 |
|
|
|
8,709 |
|
|
|
8,723 |
|
|
|
1,490 |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer Loans
|
|
|
1,157 |
|
|
|
1,193 |
|
|
|
283 |
|
|
|
875 |
|
|
|
285 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
151,369 |
|
|
$ |
155,913 |
|
|
$ |
62,268 |
|
|
$ |
89,101 |
|
|
$ |
29,830 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
17,606 |
|
|
$ |
18,050 |
|
|
$ |
6,336 |
|
|
$ |
11,270 |
|
|
$ |
1,543 |
|
|
Land
|
|
|
35,207 |
|
|
|
35,295 |
|
|
|
5,482 |
|
|
|
29,725 |
|
|
|
1,485 |
|
|
Other
|
|
|
11,357 |
|
|
|
11,476 |
|
|
|
10,210 |
|
|
|
1,147 |
|
|
|
33 |
|
|
Construction
|
|
|
17,691 |
|
|
|
17,831 |
|
|
|
13,992 |
|
|
|
3,699 |
|
|
|
280 |
|
|
Residential Property
|
|
|
1,926 |
|
|
|
1,990 |
|
|
|
1,926 |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
17,847 |
|
|
|
18,799 |
|
|
|
6,465 |
|
|
|
11,382 |
|
|
|
10,313 |
|
|
Secured by Real Estate
|
|
|
80,213 |
|
|
|
81,395 |
|
|
|
35,154 |
|
|
|
45,059 |
|
|
|
11,831 |
|
|
Commercial Lines of Credit
|
|
|
4,067 |
|
|
|
4,116 |
|
|
|
1,422 |
|
|
|
2,645 |
|
|
|
1,321 |
|
|
SBA
|
|
|
17,715 |
|
|
|
18,544 |
|
|
|
7,112 |
|
|
|
10,603 |
|
|
|
2,122 |
|
|
International
|
|
|
127 |
|
|
|
141 |
|
|
|
— |
|
|
|
127 |
|
|
|
127 |
|
|
Consumer Loans
|
|
|
934 |
|
|
|
951 |
|
|
|
393 |
|
|
|
541 |
|
|
|
393 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
204,690 |
|
|
$ |
208,588 |
|
|
$ |
88,492 |
|
|
$ |
116,198 |
|
|
$ |
29,448 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
table provides information on impaired loans, disaggregated by loan class, as of the dates indicated:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Average
Recorded
Investment
for the Three
Months
Ended |
|
|
Interest
Income
Recognized
for the Three
Months
Ended
(1) |
|
|
Average
Recorded
Investment
for the Nine
Months
Ended |
|
|
Interest
Income
Recognized
for the Nine
Months
Ended
(1) |
|
| |
|
(In Thousands) |
|
|
September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
8,754 |
|
|
$ |
27 |
|
|
$ |
9,733 |
|
|
$ |
78 |
|
|
Land
|
|
|
16,376 |
|
|
|
12 |
|
|
|
22,192 |
|
|
|
12 |
|
|
Other
|
|
|
21,768 |
|
|
|
282 |
|
|
|
21,879 |
|
|
|
372 |
|
|
Construction
|
|
|
11,057 |
|
|
|
272 |
|
|
|
11,201 |
|
|
|
317 |
|
|
Residential Property
|
|
|
2,364 |
|
|
|
8 |
|
|
|
2,386 |
|
|
|
8 |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
18,972 |
|
|
|
82 |
|
|
|
19,554 |
|
|
|
148 |
|
|
Secured by Real Estate
|
|
|
66,108 |
|
|
|
813 |
|
|
|
64,667 |
|
|
|
1,809 |
|
|
Commercial Lines of Credit
|
|
|
2,398 |
|
|
|
2 |
|
|
|
2,631 |
|
|
|
5 |
|
|
SBA
|
|
|
19,333 |
|
|
|
23 |
|
|
|
20,256 |
|
|
|
63 |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer Loans
|
|
|
1,181 |
|
|
|
1 |
|
|
|
1,286 |
|
|
|
3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
168,311 |
|
|
$ |
1,522 |
|
|
$ |
175,785 |
|
|
$ |
2,815 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
15,523 |
|
|
$ |
— |
|
|
$ |
17,962 |
|
|
$ |
— |
|
|
Land
|
|
|
36,411 |
|
|
|
— |
|
|
|
38,489 |
|
|
|
— |
|
|
Other
|
|
|
12,802 |
|
|
|
— |
|
|
|
13,396 |
|
|
|
— |
|
|
Construction
|
|
|
9,661 |
|
|
|
— |
|
|
|
9,769 |
|
|
|
— |
|
|
Residential Property
|
|
|
1,989 |
|
|
|
— |
|
|
|
2,098 |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
18,714 |
|
|
|
— |
|
|
|
17,718 |
|
|
|
— |
|
|
Secured by Real Estate
|
|
|
115,793 |
|
|
|
224 |
|
|
|
121,660 |
|
|
|
627 |
|
|
Commercial Lines of Credit
|
|
|
4,855 |
|
|
|
— |
|
|
|
4,879 |
|
|
|
— |
|
|
SBA
|
|
|
23,636 |
|
|
|
— |
|
|
|
23,714 |
|
|
|
— |
|
|
International
|
|
|
274 |
|
|
|
— |
|
|
|
188 |
|
|
|
— |
|
|
Consumer Loans
|
|
|
546 |
|
|
|
— |
|
|
|
563 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
240,204 |
|
|
$ |
224 |
|
|
$ |
250,436 |
|
|
$ |
627 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents interest income recognized on impaired loans subsequent to classification as impaired.
|
For the three and nine months ended September 30, 2011, we recognized interest income of $0
and $33,000, respectively, on one impaired commercial term loan secured by real estate using a cash-basis method. For the three and nine months ended September 30, 2010, we recognized interest income of $100,000 and $304,000, respectively, on
one impaired commercial term loan secured by real estate using a cash-basis method. Except for such loan, no other interest income was recognized on impaired loans subsequent to classification as impaired using a cash-basis method.
The following is a
summary of interest foregone on impaired loans for the periods indicated:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
| |
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
| |
|
(In Thousands) |
|
|
Interest Income That Would Have Been Recognized Had Impaired Loans Performed in Accordance With Their Original
Terms
|
|
$ |
3,063 |
|
|
$ |
2,467 |
|
|
$ |
7,143 |
|
|
$ |
9,186 |
|
|
Less: Interest Income Recognized on Impaired Loans
|
|
|
(1,522 |
) |
|
|
(224 |
) |
|
|
(2,815 |
) |
|
|
(627 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Foregone on Impaired Loans
|
|
$ |
1,541 |
|
|
$ |
2,243 |
|
|
$ |
4,328 |
|
|
$ |
8,559 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no commitments to lend additional funds to borrowers whose loans are included above.
Non-Accrual Loans and Non-Performing Assets
Loans are placed on non-accrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when
principal or interest payments become more than 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on non-accrual status
earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on non-accrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are
applied as principal reductions when received, except when the ultimate collectibility of principal is probable, in which case interest payments are credited to income. Non-accrual loans may be restored to accrual status when principal and interest
become current and full repayment is expected.
The following table details non-accrual loans, disaggregated by class of loan,
for the periods indicated:
| |
|
|
|
|
|
|
|
|
| |
|
September 30,
2011 |
|
|
December 31,
2010 |
|
| |
|
(In Thousands) |
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$ |
7,121 |
|
|
$ |
10,998 |
|
|
Land
|
|
|
2,723 |
|
|
|
25,725 |
|
|
Other
|
|
|
3,299 |
|
|
|
8,953 |
|
|
Construction
|
|
|
6,142 |
|
|
|
17,691 |
|
|
Residential Property
|
|
|
1,464 |
|
|
|
1,926 |
|
| |
|
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
10,395 |
|
|
|
17,065 |
|
|
Secured by Real Estate
|
|
|
22,285 |
|
|
|
31,053 |
|
|
Commercial Lines of Credit
|
|
|
2,222 |
|
|
|
2,798 |
|
|
SBA
|
|
|
21,240 |
|
|
|
25,054 |
|
|
International
|
|
|
— |
|
|
|
127 |
|
|
Consumer Loans
|
|
|
1,100 |
|
|
|
1,047 |
|
| |
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
77,991 |
|
|
$ |
142,437 |
|
| |
|
|
|
|
|
|
|
|
The following
table details non-performing assets as of the dates indicated:
| |
|
|
|
|
|
|
|
|
| |
|
September 30,
2011 |
|
|
December 31,
2010 |
|
| |
|
(In Thousands) |
|
|
Non-Accrual Loans
|
|
$ |
77,991 |
|
|
$ |
142,437 |
|
|
Loans 90 Days or More Past Due and Still Accruing
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
Total Non-Performing Loans
|
|
|
77,991 |
|
|
|
142,437 |
|
|
Other Real Estate Owned
|
|
|
289 |
|
|
|
4,089 |
|
| |
|
|
|
|
|
|
|
|
|
Total Non-Performing Assets
|
|
$ |
78,280 |
|
|
$ |
146,526 |
|
| |
|
|
|
|
|
|
|
|
|
Troubled Debt Restructurings on Accrual Status
|
|
$ |
30,686 |
|
|
$ |
47,395 |
|
| |
|
|
|
|
|
|
|
|
Loans on non-accrual status, excluding non-performing loans held for sale of $17.5 million, totaled $78.0
million as of September 30, 2011, compared to $142.4 million as of December 31, 2010, representing a 45.2 percent decrease. Delinquent loans (defined as 30 days or more past due), excluding loans held for sale, were $51.1 million as of
September 30, 2011, compared to $120.9 million as of December 31, 2010, representing a 57.7 percent decrease.
As of
September 30, 2011, other real estate owned consisted of two properties, located in California and Washington, with a combined net carrying value of $289,000. During the nine months ended September 30, 2011, seven properties, with a
carrying value of $3.9 million, were transferred from loans receivable to other real estate owned, and 13 properties, with a carrying value of $6.7 million, were sold and a loss of $599,000 was recognized. As of December 31, 2010, other real
estate owned consisted of eight properties with a combined net carrying value of $4.1 million.
Troubled Debt Restructuring
In April 2011, the FASB issued ASU No. 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt
Restructuring, which clarifies the guidance for evaluating whether a restructuring constitutes a TDR. This guidance is effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied
retrospectively to the beginning of the annual period of adoption. For the purposes of measuring impairment of loans that are newly considered impaired, the guidance should be applied prospectively for the first interim or annual period beginning on
or after June 15, 2011.
As a result of the amendments in ASU 2011-02, we reassessed all restructurings that occurred on
or after the beginning of the annual period and identified certain receivables as TDRs. Upon identifying those receivables as TDRs, we considered them impaired and applied the impairment measurement guidance prospectively for those receivables newly
identified as impaired. As of September 30, 2011, the recorded investment in receivables that were newly considered TDRs was $7.8 million, and the allowance for loan losses associated with those receivables, on the basis of a current evaluation
of loss, was $2.0 million.
The following
table details troubled debt restructuring, disaggregated by class of loan, for the three months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended September 30, 2011 |
|
|
Three Months Ended September 30, 2010 |
|
| |
|
(In Thousands) |
|
| Troubled Debt Restructuring |
|
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
|
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Land
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other
(1)
|
|
|
3 |
|
|
|
3,782 |
|
|
|
3,782 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Residential Property
(2)
|
|
|
1 |
|
|
|
458 |
|
|
|
449 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
(3)
|
|
|
29 |
|
|
|
8,279 |
|
|
|
8,131 |
|
|
|
5 |
|
|
|
1,009 |
|
|
|
987 |
|
|
Secured by Real Estate
(4)
|
|
|
7 |
|
|
|
6,706 |
|
|
|
6,115 |
|
|
|
2 |
|
|
|
4,010 |
|
|
|
4,010 |
|
|
Commercial Lines of Credit
(5)
|
|
|
1 |
|
|
|
123 |
|
|
|
120 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
SBA
(6)
|
|
|
17 |
|
|
|
2,684 |
|
|
|
2,615 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer Loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
58 |
|
|
$ |
22,032 |
|
|
$ |
21,212 |
|
|
|
7 |
|
|
$ |
5,019 |
|
|
$ |
4,997 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (
1
) |
Includes a $3.8 million modification through payment deferral.
|
| (
2
) |
Includes a $449,000 modification through payment deferral.
|
| (
3
) |
Loan principal modifications for the three months ended September 30, 2011 were: $6.3
million in reduction of principal or accrued interest, $1.2 million in payment deferral and $700,000 in extension of maturity. For the three months ended September 30, 2010, loan principal modifications were: $912,000 in reduction of principal
or accrued interest and $76,000 in extension of maturity.
|
| (
4)
|
Loan principal modifications for the three months ended September 30, 2011 were: $1.2
million in reduction of principal or accrued interest, and $4.9 million in payment deferral. For the three months ended September 30, 2010, loan principal modifications were: $3.8 million in payment deferral and $201,000 in reduction of
principal or accrued interest.
|
| (
5)
|
Includes a $120,000 modification through extension of maturity.
|
| (
6)
|
Includes a $2.3 million modification through payment deferral and a $273,000 through reduction of
principal or accrued interest.
|
The following table details troubled debt restructuring, disaggregated by class of loan,
for the nine months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended September 30,2011 |
|
|
Nine Months Ended September 30, 2010 |
|
| |
|
(In Thousands) |
|
| Troubled Debt Restructuring |
|
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 |
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
(
1)
|
|
|
2 |
|
|
$ |
2,982 |
|
|
$ |
2,895 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Land
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other
(2)
|
|
|
5 |
|
|
|
5,606 |
|
|
|
5,588 |
|
|
|
2 |
|
|
|
5,392 |
|
|
|
4,628 |
|
|
Construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Residential Property
(3)
|
|
|
2 |
|
|
|
1,325 |
|
|
|
1,315 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
(4)
|
|
|
45 |
|
|
|
14,126 |
|
|
|
13,556 |
|
|
|
12 |
|
|
|
3,227 |
|
|
|
3,110 |
|
|
Secured by Real Estate
(5)
|
|
|
17 |
|
|
|
21,342 |
|
|
|
20,033 |
|
|
|
6 |
|
|
|
13,392 |
|
|
|
13,340 |
|
|
Commercial Lines of Credit
(6)
|
|
|
1 |
|
|
|
123 |
|
|
|
120 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
SBA
(7)
|
|
|
24 |
|
|
|
7,693 |
|
|
|
7,149 |
|
|
|
1 |
|
|
|
82 |
|
|
|
82 |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer Loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
96 |
|
|
$ |
53,197 |
|
|
$ |
50,656 |
|
|
|
21 |
|
|
$ |
22,093 |
|
|
$ |
21,160 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (
1
) |
Includes a $2.9 million modification through payment deferral.
|
| (
2
) |
Includes a $5.6 million modification through payment deferral for the nine months ended
September 30, 2011. For the nine months ended September 30, 2010, loan principal modifications were: $2.5 million in reduction of principal or accrued interest and $2.1 million in payment deferral.
|
| (
3
) |
Includes a $1.3 million modification through payment deferral.
|
| (
4)
|
Loan principal modifications for the nine months ended September 30, 2011 were: $11.3
million in reduction of principal or accrued interest, $1.2 million in payment deferral and $1.1 million in extension of maturity. For the nine months ended September 30, 2010, loan principal modifications were: $1.2 million in extension of
maturity, $1.1 million in reduction of principal or accrued interest and $807,000 in payment deferral.
|
| (
5)
|
Loan principal modifications for the nine months ended September 30, 2011 were: $9.3 million
in reduction of principal or accrued interest, $7.4 million in payment deferral and $3.3 million in extension of maturity. For the nine months ended September 30, 2010, loan principal modifications were: $7.1 million in payment deferral and
$6.2 million in reduction of principal or accrued interest.
|
| (
6)
|
Includes a $120,000 modification through extension of maturity.
|
| (
7)
|
Loan principal modifications for the nine months ended September 30, 2011 were: $6.2 million
in payment deferral and $919,000 in reduction of principal or accrued interest. Includes a $82,000 modification through payment deferral for the nine months ended September 30, 2010.
|
During the three months ended September 30, 2011 and 2010, total TDR loans receivable, excluding loans held for sale, was $21.2
million and $5.0 million, respectively. During the nine months ended September 30, 2011 and 2010, total TDR loans receivable, excluding loans held for sale, was $50.7 million and $21.2 million, respectively. A debt restructuring is considered a
TDR if we grant a concession that we would not have otherwise considered to the borrower, for economic or legal reasons related to the borrower’s financial difficulties. Loans are considered to be TDRs if they were restructured through payment structure modifications such as reducing the amount of principal and interest due monthly and/or allowing for interest only monthly payments for six months or less. A loan designated as a
TDR is considered impaired when, based on the financial condition of the borrower, the value of the underlying collateral and other relevant information, it is probable that we will be unable to collect all principal and interest due according the
contractual terms of the loan agreement. TDR loans are individually evaluated for specific impairment using one of these three criteria: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate;
(2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. As of September 30, 2011, TDR loans totaling $68.7 million, excluding loans held for sale, were subjected to
specific impairment analysis and a $19.0 million reserve relating to these loans was included in the allowance for loan losses. As of September 30, 2010, TDR loans, excluding loans held for sale, totaled $45.8 million and the related allowance
for loan losses was $4.7 million.
The following table details troubled debt restructurings that defaulted subsequent to the
modifications occurring within the previous twelve months, disaggregated by class of loan, during the three months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
September 30, 2011 |
|
|
Three Months Ended
September 30, 2010 |
|
| Troubled Debt Restructuring That Subsequently Defaulted |
|
Number of
Loans |
|
|
Recorded
Investment |
|
|
Number of
Loans |
|
|
Recorded
Investment |
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Land
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Residential Property
(1)
|
|
|
1 |
|
|
|
449 |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
(2)
|
|
|
8 |
|
|
|
3,344 |
|
|
|
1 |
|
|
|
20 |
|
|
Secured by Real Estate
(3)
|
|
|
3 |
|
|
|
3,137 |
|
|
|
1 |
|
|
|
201 |
|
|
Commercial Lines of Credit
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
SBA
(4)
|
|
|
11 |
|
|
|
1,575 |
|
|
|
— |
|
|
|
— |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer Loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
23 |
|
|
$ |
8,505 |
|
|
|
2 |
|
|
$ |
221 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (
1
) |
Includes a $449,000 modification through payment deferral.
|
| (
2
) |
The types of modifications for the three months ended September 30, 2011 were: $2.6 million
in reduction of principal or accrued interest, $757,000 in payment deferral, and $10,000 in extension of maturity. Includes a $20,000 modification through reduction of principal or accrued interest for the three months ended September 30, 2010.
|
| (
3
) |
The types of modifications for the three months ended September 30, 2011 were: $2.4 million
in payment deferral and $773,000 in reduction of principal or accrued interest. Includes a $201,000 modification through reduction of principal or accrued interest for the three months ended September 30, 2010.
|
| (
4)
|
Includes a $1.4 million modification through payment deferral and a $194,000 modification through
reduction of principal or accrued interest.
|
The following
table details troubled debt restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by class of loan, during the nine months ended September 30, 2011 and 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended
September 30, 2011 |
|
|
Nine Months Ended
September 30, 2010 |
|
| |
|
(In Thousands) |
|
| Troubled Debt Restructuring That subsequently Defaulted |
|
Number of
Loans |
|
|
Recorded
Investment |
|
|
Number of
Loans |
|
|
Recorded
Investment |
|
|
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
(1)
|
|
|
1 |
|
|
$ |
1,425 |
|
|
|
3 |
|
|
$ |
4,170 |
|
|
Land
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other
(2)
|
|
|
2 |
|
|
|
1,805 |
|
|
|
— |
|
|
|
— |
|
|
Construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Residential Property
(3)
|
|
|
1 |
|
|
|
449 |
|
|
|
1 |
|
|
|
164 |
|
|
Commercial and Industrial Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
(4)
|
|
|
18 |
|
|
|
6,055 |
|
|
|
2 |
|
|
|
163 |
|
|
Secured by Real Estate
(5)
|
|
|
9 |
|
|
|
10,684 |
|
|
|
3 |
|
|
|
5,828 |
|
|
Commercial Lines of Credit
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
SBA
(6)
|
|
|
17 |
|
|
|
6,013 |
|
|
|
— |
|
|
|
— |
|
|
International
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer Loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
48 |
|
|
$ |
26,431 |
|
|
|
9 |
|
|
$ |
10,325 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (
1
) |
Includes $1.4 million and $4.7 million modifications through payment deferral for the nine months
ended September 30, 2011 and 2010, respectively.
|
| (
2
) |
Includes a $1.8 million modification through payment deferral.
|
| (
3
) |
Includes a $449,000 modification through payment deferral for the nine months ended
September 30, 2011 and a $164,000 modification through reduction of principal or accrued interest for the nine months ended September 30, 2010.
|
| (
4)
|
The types of modifications for the nine months ended September 30, 2011 were: $5.2 million
in reduction of principal or accrued interest, $772,000 in payment deferral, and $82,000 in extension of maturity. Includes a $163,000 modification through reduction of principal or accrued interest for the nine months ended September 30, 2010.
|
| (
5)
|
The types of modifications for the nine months ended September 30, 2011 were: $4.9 million
in payment deferral, $2.5 million in reduction of principal or accrued interest, and $3.3 million in extension of maturity. For the nine months ended September 30, 2010, the types of modifications were: $2.8 million in reduction of principal or
accrued interest and $3.0 million in payment deferral.
|
| (
6)
|
Includes a $5.3 million modification through payment deferral and a $744,000 modification through
reduction of principal or accrued interest.
|
During the three months ended September 30,
2011 and 2010, TDR loans receivable of $8.5 million and $221,000, excluding loans held for sale, defaulted subsequent to classification as a TDR. During the nine months ended September 30, 2011 and 2010, TDR loans receivable of $26.4 million
and $10.3 million, excluding loans held for sale, defaulted subsequent to classification as a TDR.
|