Loans Held for Sale

3 Months Ended

Sep. 30, 2011

Loans Held for sale [Abstract]

LOANS HELD FOR SALE

8 – LOANS HELD FOR SALE

As of September 30, 2011 and December 31, 2010, the Corporation’s loans held for sale portfolio was composed of:

	September 30, 2011		December 31, 2010
	(In thousands)
Residential mortgage loans	$	8,498	$	19,148
Construction loans		5,107		207,270
Commercial and Industrial loans		—		20,643
Commercial mortgage loans		—		53,705
Total	$	13,605	$	300,766

Non-performing loans held for sale totaled $5.1 million (construction) and $159.3 million ($140.1 million construction loans and $19.2 million commercial mortgage loans) as of September 30, 2011 and December 31, 2010, respectively.

At the end of the fourth quarter of 2010, the Corporation transferred $447 million of loans to held for sale at a value of $281.6 million. This resulted in charge-offs at the time of transfer of $165.1 million. During the first quarter of 2011, these loans with a book value of $269.3 million were sold to CPG/GS in exchange for $88.5 million of cash, an acquisition loan of $136.1 million and a 35%, equity interest in CPG/GS. The Bank’s 35% interest in CPG/GS is subordinated to the interest of the majority investor in CPG/GS, which is entitled to recover its investment and receive a priority 12% return on its invested capital. The Corporation’s equity interest of $41.7 million as of September 30, 2011 is subordinated to the aggregate amount of its loans to CPG/GS in the amount of $208.1 million as of September 30, 2011 and to the interest and priority return of CPG/GS’s majority investor. Further details of this transaction are discussed in Note 11. At September 30, 2011, the only related balance remaining from loans transferred in the fourth quarter of 2010 amounted to $5.1 million.