Note 3 - Loans

3 Months Ended

Sep. 30, 2011

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

3.  LOANS

The loan portfolio is classified by major type as follows:

	As of September 30, 2011						As of December 31, 2010
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Commercial and industrial	$	345,968			32.60	%	$	349,891			30.52	%
Real estate mortgage
Residential		39,862			3.76			38,667			3.37
Commercial		664,660			62.63			718,795			62.69
		704,522			66.39			757,462			66.06
Real estate construction
Residential		6,905			0.65			10,983			0.96
Commercial		-			0.00			24,291			2.12
		6,905			0.65			35,274			3.08
Consumer and other		3,860			0.36			3,928			0.34
Gross loans		1,061,255			100.00	%		1,146,555			100.00	%
Unearned discounts, interest and deferred fees		(2,090	)					(2,245	)
Total loans		1,059,165						1,144,310
Allowance for loan losses		(29,969	)					(33,757	)
Loans, net	$	1,029,196					$	1,110,553

The recorded investment in loans is the face amount increased or decreased by applicable accrued interest and unamortized premium, discount, or finance charges, and may also reflect previous direct write-downs of loans.

The recorded investment in loans at the dates indicated is determined as follows (in thousands):

September 30, 2011	Gross Loan Balance		Deferred Loan Fees			Accrued Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	345,968	$	(751	)	$	1,037	$	346,254
Real estate-mortgage		704,522		(1,095	)		2,330		705,757
Real estate-construction		6,905		(1	)		21		6,925
Consumer and other		3,860		(243	)		12		3,629
Total	$	1,061,255	$	(2,090	)	$	3,400	$	1,062,565

December 31, 2010	Gross Loan Balance		Deferred Loan Fees			Accrued Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	349,891	$	(932	)	$	1,116	$	350,075
Real estate-mortgage		757,462		(1,091	)		2,653		759,024
Real estate-construction		35,274		(21	)		94		35,347
Consumer and other		3,928		(201	)		8		3,735
Total	$	1,146,555	$	(2,245	)	$	3,871	$	1,148,181

Loan Origination/Risk Management

The Company selectively extends credit for the purpose of establishing long-term relationships with its customers. The Company mitigates the risks inherent in lending by focusing on businesses and individuals with demonstrated payment history, historically favorable profitability trends and stable cash flows. In addition to these primary sources of repayment, the Company looks to tangible collateral and personal guarantees as secondary sources of repayment. Lending officers are provided with detailed underwriting policies covering all lending activities in which the Company is engaged and that require all lenders to obtain appropriate approvals for the extension of credit. The Company also maintains documentation requirements and extensive credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible so any exposures that are discovered may be reduced.

           The Company has certain lending procedures in place that are designed to maximize loan income within an acceptable level of risk. These procedures include the approval of lending policies and underwriting guidelines by the Board of Directors of each bank, and separate policy, administrative and approval oversight by the Directors’ Loan Committee of MetroBank, and by the Directors’ Credit Committee of Metro United.  Additionally, MetroBank’s loan portfolio is reviewed by its internal loan review department, and Metro United's loan portfolio is reviewed by an external third-party company. These procedures also serve to identify changes in asset quality in a timely manner and to ensure proper recording and reporting of nonperforming assets.

Inherent in all lending is the risk of nonpayment. The types of collateral required, the terms of the loans and the underwriting practices discussed under each loan category below are all designed to minimize the risk of nonpayment. In addition, as further risk protection, the Banks rarely make loans at their respective legal lending limits. MetroBank generally does not make loans larger than $12 million to one borrower and Metro United generally does not make loans larger than $6 million to one borrower. Loans greater than the Banks’ lending limits are subject to participation with other financial institutions, including with each other. Loans originated by MetroBank are approved by the Chief Credit Officer, Chief Lending Officer, Senior Credit Officer, MetroBank’s Loan Committee, or the Director’s Credit Committee based on the size of the loan relationship and its risk rating. Loans originated by Metro United are approved by the Director’s Credit Committee except for certain consumer loans. Control systems and procedures are in place to ensure all loans are approved in accordance with credit policies.  The Company also uses interest rate floors on a majority of its variable rate loans to control interest rate risk within the commercial and real estate loan portfolios.

Commercial and Industrial Loans. Generally, the Company’s commercial loans are underwritten on the basis of the borrower’s ability to service such debt as reflected by cash flow projections. Commercial loans are generally collateralized by business assets, which may include real estate, accounts receivable and inventory, certificates of deposit, securities, guarantees or other collateral. The Company also generally obtains personal guarantees from the principals of the business. Working capital loans are primarily collateralized by short-term assets, whereas term loans are primarily collateralized by long-term assets. As a result, commercial loans involve additional complexities, variables and risks and require more thorough underwriting and servicing than other types of loans. Indigenous to individuals in the Asian business community is the desire to own the building and land which house their businesses. Accordingly, while a loan may be principally driven and classified by the type of business operated, real estate is frequently the primary source of collateral.

Real Estate Mortgage - Commercial  and Residential Mortgage Loans. The Company makes commercial mortgage loans to finance the purchase of real property, which generally consists of developed real estate. The Company’s commercial mortgage loans are collateralized by first liens on real estate. For MetroBank, these loans typically have variable rates and amortize over a 15 to 20 year period, with balloon payments due at the end of five to seven years. For Metro United, these loans have both variable and fixed rates and amortize over a 25 to 30 year period, with balloon payments due at the end of five to ten years. Payments on loans collateralized by such properties are dependent on the successful operation or management of the properties. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans. In underwriting commercial mortgage loans, consideration is given to the property’s historical cash flow, current and projected occupancy, location and physical condition. The underwriting analysis also includes credit checks, appraisals, environmental impact reports and a review of the financial condition of the borrower. The Company also originates two to seven year balloon residential mortgage loans with a 15 to 30 year amortization primarily collateralized by owner occupied residential properties, which are retained in the Company’s residential mortgage portfolio.

Real Estate Construction Loans. The Company makes loans to finance the construction of residential and non-residential properties. The majority of the Company’s residential construction loans in Texas are for single-family dwellings that are pre-sold or are under earnest money contracts. The Company also originates loans to finance the construction of commercial properties such as multi-family, office, industrial, warehouse and retail centers. Construction loans involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company will be able to recover the entire unpaid portion of the loan. In addition, the Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminable period of time. While the Company has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.  

           Consumer Loans. The Company, through its subsidiary Metro United, offers a wide variety of loan products to retail customers through its branch network. Loans to retail customers include automobile loans, lines of credit and other personal loans. The terms of these loans typically range from 12 to 60 months depending on the nature of the collateral and the size of the loan.

 Loan review process. In addition to MetroBank’s loan portfolio review by its internal loan review department and Metro United's loan portfolio review by an external third-party company, other ongoing reviews are performed by loan officers and involves the grading of each loan by its respective loan officer. Depending on the grade, a loan will be aggregated with other loans of similar grade and a loss factor is applied to the total loans in each group to establish the required level of allowance for loan losses. For both Banks, grades of 1-10 are applied to each loan, with loans graded 7-10 requiring the most allowance for loan losses. Factors utilized in the grading process include but are not limited to historical performance, payment status, collateral value, and financial strength of the borrower. Oversight of the loan review process of both Banks is the responsibility of the Audit Committee. Differences of opinion are resolved among the loan officer, compliance officer, and the Chief Credit Officer. See “Allowance for Loan Losses and Reserve for Unfunded Lending Commitments” below for additional discussion on loan grades.

MetroBank’s and Metro United’s credit department reports credit risk grade changes on a weekly basis to its management and on a monthly basis to its Board of Directors. MetroBank performs monthly concentration analyses and Metro United performs quarterly concentration analyses based on industries, collateral types and business lines. Findings are reported to the Director’s Loan Committee of MetroBank and the Directors’ Credit Committee of Metro United. Loan concentration reports based on type are prepared, monitored and reviewed quarterly and presented to the Directors’ Loan Committee for MetroBank, the Directors’ Credit Committee for Metro United and the Board of Directors of each respective bank.

In addition, the Company reviews the real estate values, and when necessary, orders new appraisals from independent third parties on loans collateralized by real estate when loans are renewed, prior to foreclosure and at other times as necessary, particularly in problem loan situations. In instances where updated appraisals reflect reduced collateral values, an evaluation of the borrower’s overall financial condition is made to determine the need, if any, for possible charge-offs or appropriate additions to the allowance for loan losses. The Company records other real estate at fair value at the time of acquisition less estimated costs to sell.

The following table presents the recorded investment in loans by credit risk profile, and which were updated as of the date indicated (in thousands):

As of September 30, 2011	Commercial and industrial		Real estate- mortgage		Real estate - construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	305,754	$	565,079	$	2,649	$	3,629	$	877,111
7 - “Special Mention”/ “Watch”		10,978		31,988		-		-		42,966
8 - “Substandard”		29,522		108,465		4,276		-		142,263
9 -“Doubtful"		-		225		-		-		225
Total	$	346,254	$	705,757	$	6,925	$	3,629	$	1,062,565

As of December 31, 2010	Commercial and industrial		Real estate mortgage		Real estate - construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	301,919	$	563,003	$	12,831	$	3,732	$	881,485
7 - “Special Mention”/ “Watch”		8,063		45,776		3,536		-		57,375
8 - “Substandard”		40,093		149,988		18,980		3		209,064
9 -“Doubtful"		-		257		-		-		257
Total	$	350,075	$	759,024	$	35,347	$	3,735	$	1,148,181

There can be no assurance, however, that the Company’s loan portfolio will not become subject to increasing pressures from deteriorating borrowers’ financial condition due to general economic and other factors. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program. In addition, management is focusing its attention on minimizing the Company’s credit risk through diversification.

Nonperforming Assets

The Company generally places a loan on nonaccrual status and ceases accruing interest when, in the opinion of management, full payment of loan principal or interest is in doubt. All loans past due 90 days are placed on nonaccrual status unless the loan is both well collateralized and in the process of collection. Cash payments received while a loan is classified as nonaccrual are recorded as a reduction of principal as long as significant doubt exists as to collection of the principal. Loans are restored to accrual status only when interest and principal payments are brought current and, in management’s judgment, future payments are reasonably assured. In addition to nonaccrual loans, the Company evaluates on an ongoing basis other loans which are potential problem loans as to risk exposure in determining the adequacy of the allowance for loan losses.

A loan is considered impaired based on current information and events if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual basis for other loans.  The measurement of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the loan’s observable market price or based on the fair value of the collateral if the loan is collateral-dependent.

The Company requires that nonperforming assets be monitored by the special assets department or senior lenders for MetroBank, and the special asset team consisting of internal credit personnel with the assistance of third party consultants and attorneys for Metro United. All nonperforming assets are actively managed pursuant to the Company’s loan policy. Senior management is apprised on a weekly basis of the workout endeavors and provides assistance as necessary to determine the best strategy for problem loan resolution and maximizing repayment on nonperforming assets.

In addition to the Banks’ loan review process described in the preceding paragraphs, the Office of the Comptroller of the Currency (“OCC”) periodically examines and evaluates MetroBank, while the Federal Deposit Insurance Corporation (“FDIC”) and California Department of Financial Institutions (“CDFI”) periodically examine and evaluate Metro United. Based upon such examinations, the regulators may revalue the assets of the institution and require that it charge-off certain assets, establish specific reserves to compensate for the difference between the regulators-determined value and the book value of such assets or take other regulatory action designed to lessen the risk in the asset portfolio.

The following table provides an analysis of the age of the recorded investment in loans by portfolio segment as of the date indicated (in thousands):

As of September 30, 2011	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Recorded Investment in Loans		Recorded Investment 90 Days and Accruing
Commercial and industrial	$	1,442	$	4,563	$	12,254	$	18,259	$	327,995	$	346,254	$	-
Real estate mortgage:
Residential		106		-		261		367		39,590		39,957		-
Commercial		14,047		2,387		19,742		36,176		629,624		665,800		29
Real estate construction:
Residential		-		-		-		-		6,925		6,925		-
Commercial		-		-		-		-		-		-		-
Consumer and other		7		-		6		13		3,616		3,629		-
Total	$	15,602	$	6,950	$	32,263	$	54,815	$	1,007,750	$	1,062,565	$	29

The following table presents the recorded investment in nonaccrual loans, including nonaccruing troubled debt restructurings, by portfolio segment at the dates indicated (in thousands):

Recorded investment in nonaccrual loans	September 30, 2011		December 31, 2010
Commercial and industrial	$	13,520	$	16,614
Real estate mortgage:
Residential		261		286
Commercial		34,488		48,592
Real estate construction:
Residential		—		196
Commercial		—		5,193
Consumer and other		1		3
Total	$	48,270	$	70,884

Information on impaired loans, which includes nonaccrual loans and troubled debt restructurings, and the related specific allowance for loan losses on such loans as of September 30, 2011 and December 31, 2010, is presented below (in thousands):

As of September 30, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	7,632	$	7,636	$	—	$	12,537
Real estate mortgage:
Residential		261		261		—		272
Commercial		18,512		18,526		—		31,062
Real estate construction:
Residential		—		—		—		49
Commercial		—		—		—		1,301
Impaired loans with an allowance
Commercial and industrial	$	5,888	$	5,894	$	275	$	3,194
Real estate mortgage:
Residential		—		—		—		—
Commercial		15,976		16,007		749		7,676
Total:
Commercial and industrial	$	13,520	$	13,530	$	275	$	15,731
Real estate mortgage		34,749		34,794		749		39,010
Real estate construction		—		—		—		1,350

As of December 31, 2010	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	17,940	$	18,004	$	—	$	14,385
Real estate mortgage:
Residential		286		286		—		265
Commercial		41,012		41,093		—		31,663
Real estate construction:
Residential		197		197		—		2,279
Commercial		5,205		5,213		—		6,330
Impaired loans with an allowance
Commercial and industrial	$	98	$	98	$	57	$	1,037
Real estate mortgage:
Residential		—		—		—		—
Commercial		7,581		7,606		483		13,713
Real estate construction:
Residential		—		—		—		238
Commercial		—		—		—		828
Total:
Commercial and industrial	$	18,038	$	18,102	$	57	$	15,422
Real estate mortgage		48,879		48,985		483		45,641
Real estate construction		5,402		5,410		—		9,675

For the nine months ended September 30, 2011 and 2010, interest income of $118,000 and $84,000 was recognized on impaired loans, which consisted of nonaccrual loans that were paid in full and accruing TDRs. 

Troubled Debt Restructurings

Loans are classified as a troubled debt restructuring in cases where a borrower is experiencing financial difficulty and the Banks make concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate and/or an extension of the maturity date(s). Generally, a nonaccrual loan that is restructured remains on nonaccrual for a minimum period of six months to demonstrate that the borrower can meet the restructured terms. Once performance has been demonstrated the loan may be returned to performing status after the calendar year end.  Effective July 1, 2011, the Company adopted the provisions of Accounting Standards Update (“ASU”) No. 2011-02, “Receivables (Topic 310) – A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.”  As such, the Company reassessed all loan modification occurring since January 1, 2011 for identification as a troubled debt restructuring.

The following table presents the recorded investment in troubled debt restructurings that occurred for the three and nine months ending September 30, 2011 (in thousands):

	Three months ended, September 30, 2011						Nine months ended, September 30, 2011
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate mortgage:
Commercial		-		-		-		1	$	7,715	$	7,578

As of September 30, 2011, there have been no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months.  The loan identified as troubled debt restructuring by the Company was previously on nonaccrual status and reported as an impaired loan prior to restructuring.  The modification primarily related to an interest rate reduction and a period of interest-only payments.  The loan restructured during the nine months ended September 30, 2011 is on nonaccrual status as of September 30, 2011.  Because the loan was classified and on nonaccrual status both before and after restructuring, the modification did not impact the Company’s determination of the allowance for loan losses.  As of September 30, 2011, commitments to lend additional funds on loans that were modified as troubled debt restructurings were insignificant.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments

The allowance for loan losses provides for the risk of losses inherent in the lending process and the Company allocates the allowance for loan losses according to management’s assessments of risk inherent in the portfolio. The allowance for loan losses is increased by provisions charged against current earnings and is reduced by net charge-offs. Loans are charged off when they are deemed uncollectible in whole or in part. Recoveries are recorded when cash payments are received. In developing the assessment, the Company relies on estimates and exercises judgment regarding matters where the ultimate outcome is uncertain. Circumstances may change and future assessments of credit risk may yield materially different results, resulting in an increase or decrease in the allowance for credit losses.

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments and is maintained at levels that the Company believes are adequate to absorb probable losses inherent in the loan portfolio and unfunded lending commitments as of the date of the financial statements. The Company employs a systematic methodology for determining the allowance for credit losses that consists of four components: (1) a formula-based general reserve based on historical average losses by loan grade and grade migration, (2) specific reserves on larger impaired individual credits that are based on the difference between the current loan balance and the loan’s collateral value, observable market price, or discounted present value, (3) a qualitative component that reflects current market conditions and other factors precedent to losses different from historical averages, and (4) a reserve for unfunded lending commitments.

In setting the qualitative reserve portion of the allowance for loan losses, the factors the Company may consider include, but are not limited to, concentrations of credit, common characteristics of known problem loans, potential problem loans and other loans that exhibit weaknesses or deterioration, the general economic environment in the Company’s markets as well as the national economy, particularly the real estate markets, changes in value of the collateral securing loans, results of portfolio stress tests, and changes in lending processes, procedures and personnel. After the aforementioned assessment of the loan portfolio, the general economic environment and other relevant factors, management determines the appropriate allowance for loan loss level and makes the provision necessary to achieve that level. This methodology is consistently followed so that the level of the allowance for loan losses is reevaluated on an ongoing basis in response to changes in circumstances, economic conditions or other factors.

           The Company follows a loan review program to evaluate the credit risk in the loan portfolio as discussed under “Nonperforming Assets” above. Through the loan review process, the Company maintains an internally classified loan list which, along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. Loans classified as “substandard” are risk-rated as grade 8, and have well-defined weaknesses such as a highly-leveraged position, unfavorable financial ratios, uncertain repayment sources or poor financial condition, which may jeopardize recoverability of the debt. Loans classified as “doubtful” are risk-rated as grade 9, and have characteristics similar to substandard loans but with an increased risk that a loss may occur, or at least a portion of the loan may require a charge-off if liquidated at present. Although loans classified as substandard do not duplicate loans classified as doubtful, both substandard and doubtful loans include some loans that are delinquent at least 30 days or on nonaccrual status. Loans classified as “loss” are risk-rated as grade 10 and are charged off.

In addition to the internally classified loan list and delinquency list of loans, the Company maintains a separate “watch list” for loans risk-rated as grade 7, which further aids the Company in monitoring loan portfolios. Watch list loans show potential weaknesses where the present status portrays one or more deficiencies that require attention in the short-term or where pertinent ratios of the loan account have weakened to a point where more frequent monitoring is warranted. These loans do not have all of the characteristics of a classified loan (substandard or doubtful) but do show weakened elements compared with those of a satisfactory credit. The Company reviews these loans to assist in assessing the adequacy of the allowance for loan losses.

Policies and procedures have been developed to assess the adequacy of the allowance for loan losses and the reserve for unfunded lending commitments that include the monitoring of qualitative and quantitative trends described above. Management of both banks review and approve their respective allowance for loan losses and the reserve for unfunded lending commitments monthly and perform a comprehensive analysis quarterly, which is also presented to each bank’s Board of Directors for approval. The allowance for credit losses is also subject to federal and California State banking regulations. The Banks’ primary regulators conduct periodic examinations of the allowance for credit losses and make assessments regarding its adequacy and the methodology used in its determination.

The Company maintains a reserve for unfunded commitments to provide for the risk of loss inherent in its unfunded lending related commitments. The process used in determining the reserve is consistent with the process used for the allowance for loan losses discussed above.

The following table presents the allowance for loan losses and recorded investment in loans by portfolio segment as of the date indicated (in thousands):

As of and for the three months ended September 30, 2011	Commercial and industrial			Real estate- mortgage			Real estate - construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	7,136		$	20,590		$	490		$	152		$	2,025	$	30,393
Provision for loan losses		527			74			(2	)		12			264		875
Charge-offs		(597	)		(1,350	)		—			(18	)		—		(1,965	)
Recoveries		260			396			5			5			—		666
Allowance for loan losses at end of period	$	7,325		$	19,710		$	493		$	151		$	2,289	$	29,969
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	275		$	749		$	—		$	—				$	1,024
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	7,051		$	18,961		$	493		$	151				$	26,656
Loans:
Recorded investment in loans	$	346,254		$	705,757		$	6,925		$	3,629				$	1,062,565
Recorded investment in loans individually evaluated for impairment	$	13,520		$	34,749		$	—		$	1				$	48,270
Recorded investment in loans collectively evaluated for impairment	$	332,734		$	671,008		$	6,925		$	3,628				$	1,014,295

As of and for the nine months ended  September 30, 2011	Commercial and industrial			Real estate- mortgage			Real estate - construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	8,187		$	22,016		$	1,993		$	194		$	1,367	$	33,757
Provision for loan losses		1,865			1,907			(2,222	)		(22	)		922		2,450
Charge-offs		(3,222	)		(4,673	)		—			(49	)		—		(7,944	)
Recoveries		496			460			722			28			—		1,706
Allowance for loan losses at end of period	$	7,326		$	19,710		$	493		$	151		$	2,289	$	29,969
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	275		$	749		$	—		$	—				$	1,024
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	7,051		$	18,961		$	493		$	151				$	26,656
Loans:
Recorded investment in loans	$	346,254		$	705,757		$	6,925		$	3,629				$	1,062,565
Recorded investment in loans  individually evaluated for impairment	$	13,520		$	34,749		$	—		$	1				$	48,270
Recorded investment in loans  collectively evaluated for impairment	$	332,734		$	671,008		$	6,925		$	3,628				$	1,014,295

Changes in the allowance for loan losses and unfunded lending commitments as of and for the three and nine months ended September 30, 2010 are as follows:

	As of and for the three months ended September 30, 2010			As of and for the nine months ended September 30, 2010
	(Dollars in thousands)
Allowance for loan losses at beginning of period	$	36,004		$	29,403
Provision for loan losses		4,700			15,028
Charge-offs		(6,115	)		(10,400	)
Recoveries		55			613
Allowance for loan losses at end of period		34,644			34,644
Reserve for unfunded lending commitments at beginning of period		822			1,043
Provision for unfunded lending commitments		(110	)		(331	)
Reserve for unfunded lending commitments at end of period		712			712
Allowance for credit losses	$	35,356		$	35,356