LOANS

6 Months Ended

Jun. 30, 2011

LOANS

LOANS

NOTE 4—LOANS

• Non-Covered Loans

        When we refer to non-covered loans we are referring to loans not covered by our FDIC loss sharing agreements.

        The following table presents the composition of non-covered loans as of the dates indicated:

Loan Category			June 30, 2011			December 31, 2010
			(In thousands)
Real estate mortgage			$	2,073,868		$	2,274,733
Real estate construction				160,254			179,479
Commercial				640,805			663,557
Consumer				22,248			25,058
Foreign				20,075			22,608
	Total gross non-covered loans			2,917,250			3,165,435
Less:
	Unearned income			(4,114	)		(4,380	)
	Allowance for loan losses			(96,427	)		(98,653	)
		Total net non-covered loans	$	2,816,709		$	3,062,402

        The following tables present a summary of the activity in the allowance for loan losses on non-covered loans by portfolio segment for the periods indicated:

		Three Months Ended June 30, 2011
		Real Estate Mortgage			Real Estate Construction			Commercial			Consumer			Foreign			Total
		(In thousands)
Allowance for Loan Losses on Non-Covered Loans:
Balance, April 1, 2011		$	51,858		$	11,053		$	31,564		$	3,455		$	634		$	98,564
	Charge-offs		(4,354	)		(1,193	)		(2,609	)		(1,165	)		—			(9,321	)
	Recoveries		27			896			308			890			13			2,134
	Provision		6,009			429			(1,004	)		(270	)		(114	)		5,050
Balance, June 30, 2011		$	53,540		$	11,185		$	28,259		$	2,910		$	533		$	96,427

		Six Months Ended June 30, 2011
		Real Estate Mortgage			Real Estate Construction			Commercial			Consumer			Foreign		Total
		(In thousands)
Allowance for Loan Losses on Non-Covered Loans:
Balance, January 1, 2011		$	51,657		$	8,766		$	33,229		$	4,652		$	349	$	98,653
	Charge-offs		(5,566	)		(5,838	)		(5,730	)		(1,325	)		—		(18,459	)
	Recoveries		124			988			925			1,301			45		3,383
	Provision		7,325			7,269			(165	)		(1,718	)		139		12,850
Balance, June 30, 2011		$	53,540		$	11,185		$	28,259		$	2,910		$	533	$	96,427
The ending balance of the allowance is composed of amounts applicable to loans:
	Individually evaluated for impairment	$	4,659		$	2,484		$	8,657		$	—		$	—	$	15,800
	Collectively evaluated for impairment	$	48,881		$	8,701		$	19,602		$	2,910		$	533	$	80,627
Non-Covered Loan Balances:
Ending balance		$	2,073,868		$	160,254		$	640,805		$	22,248		$	20,075	$	2,917,250
The ending balance of the non-covered loan portfolio is composed of loans:
	Individually evaluated for impairment	$	98,860		$	26,069		$	22,113		$	745		$	—	$	147,787
	Collectively evaluated for impairment	$	1,975,008		$	134,185		$	618,692		$	21,503		$	20,075	$	2,769,463

		Year Ended December 31, 2010
		Real Estate Mortgage			Real Estate Construction			Commercial			Consumer			Foreign			Total
		(In thousands)
Allowance for Loan Losses on Non-Covered Loans:
Balance, January 1, 2010		$	58,241		$	39,934		$	17,710		$	2,021		$	811		$	118,717
	Charge-offs		(117,029	)		(63,590	)		(18,548	)		(3,749	)		(306	)		(203,222	)
	Recoveries		1,222			708			1,652			565			133			4,280
	Provision		109,223			31,714			32,415			5,815			(289	)		178,878
Balance, December 31, 2010		$	51,657		$	8,766		$	33,229		$	4,652		$	349		$	98,653
The ending balance of the allowance is composed of amounts applicable to loans:
	Individually evaluated for impairment	$	3,893		$	1,125		$	8,911		$	1,049		$	—		$	14,978
	Collectively evaluated for impairment	$	47,764		$	7,641		$	24,318		$	3,603		$	349		$	83,675
Non-Covered Loan Balances:
Ending balance		$	2,274,733		$	179,479		$	663,557		$	25,058		$	22,608		$	3,165,435
The ending balance of the non-covered loan portfolio is composed of loans:
	Individually evaluated for impairment	$	94,171		$	47,350		$	39,820		$	1,951		$	163		$	183,455
	Collectively evaluated for impairment	$	2,180,562		$	132,129		$	623,737		$	23,107		$	22,445		$	2,981,980

        The following table presents the credit risk rating categories for non-covered loans by portfolio segment and class as of the dates indicated. Nonclassified loans are those with a credit risk rating of either pass or special mention, while classified loans are those with a credit risk rating of either substandard or doubtful.

        Our federal and state banking regulators, as an integral part of their examination process, periodically review the Company's loan risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations. Risk rating downgrades generally result in higher provisions for credit losses.

			June 30, 2011						December 31, 2010
			Nonclassified		Classified		Total		Nonclassified		Classified		Total
			(In thousands)						(In thousands)
Real estate mortgage:
	Hospitality		$	127,463	$	21,580	$	149,043	$	137,952	$	18,700	$	156,652
	SBA 504			55,269		7,417		62,686		55,774		13,513		69,287
	Other			1,747,117		115,022		1,862,139		1,956,905		91,889		2,048,794
		Total real estate mortgage		1,929,849		144,019		2,073,868		2,150,631		124,102		2,274,733
Real estate construction:
	Residential			30,749		3,044		33,793		39,644		25,399		65,043
	Commercial			96,406		30,055		126,461		82,291		32,145		114,436
		Total real estate construction		127,155		33,099		160,254		121,935		57,544		179,479
Commercial:
	Collateralized			355,557		17,597		373,154		342,607		15,820		358,427
	Unsecured			74,390		7,616		82,006		119,326		10,417		129,743
	Asset-based			152,765		2,154		154,919		141,813		1,354		143,167
	SBA 7(a)			20,639		10,087		30,726		29,557		2,663		32,220
		Total commercial		603,351		37,454		640,805		633,303		30,254		663,557
Consumer				21,383		865		22,248		22,949		2,109		25,058
Foreign				20,075		—		20,075		22,608		—		22,608
		Total non-covered loans	$	2,701,813	$	215,437	$	2,917,250	$	2,951,426	$	214,009	$	3,165,435

        The following tables present an aging analysis of our non-covered loans by portfolio segment and class as of the dates indicated:

			June 30, 2011
			30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	865	$	—	$	—	$	865	$	148,178	$	149,043
	SBA 504			—		—		—		—		62,686		62,686
	Other			18,458		2,402		5,697		26,557		1,835,582		1,862,139
		Total real estate mortgage		19,323		2,402		5,697		27,422		2,046,446		2,073,868
Real estate construction:
	Residential			—		—		—		—		33,793		33,793
	Commercial			—		2,136		—		2,136		124,325		126,461
		Total real estate construction		—		2,136		—		2,136		158,118		160,254
Commercial:
	Collateralized			231		590		2,701		3,522		369,632		373,154
	Unsecured			158		—		3,474		3,632		78,374		82,006
	Asset-based			—		—		—		—		154,919		154,919
	SBA 7(a)			780		446		322		1,548		29,178		30,726
		Total commercial		1,169		1,036		6,497		8,702		632,103		640,805
Consumer				85		52		14		151		22,097		22,248
Foreign				—		—		—		—		20,075		20,075
		Total non-covered loans	$	20,577	$	5,626	$	12,208	$	38,411	$	2,878,839	$	2,917,250

        At June 30, 2011 and December 31, 2010, the Company had no non-covered loans that were greater than 90 days past due and still accruing interest. It is the Company's policy to discontinue accruing interest when principal or interest payments are past due 90 days or when, in the opinion of management, there is a reasonable doubt as to collectibility of a loan in the normal course of business. At June 30, 2011, nonaccrual loans totaled $65.3 million. Nonaccrual loans include $14.2 million of loans 30 to 89 days past due and $38.9 million of current loans which have been placed on nonaccrual status based on management's judgment regarding the collectibility of such loans.

			December 31, 2010
			30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	—	$	—	$	—	$	—	$	156,652	$	156,652
	SBA 504			799		462		6,235		7,496		61,791		69,287
	Other			426		2,566		13,936		16,928		2,031,866		2,048,794
		Total real estate mortgage		1,225		3,028		20,171		24,424		2,250,309		2,274,733
Real estate construction:
	Residential			—		—		24,004		24,004		41,039		65,043
	Commercial			—		667		2,145		2,812		111,624		114,436
		Total real estate construction		—		667		26,149		26,816		152,663		179,479
Commercial:
	Collateralized			725		883		1,457		3,065		355,362		358,427
	Unsecured			—		5,966		600		6,566		123,177		129,743
	Asset-based			—		—		—		—		143,167		143,167
	SBA 7(a)			1,254		494		751		2,499		29,721		32,220
		Total commercial		1,979		7,343		2,808		12,130		651,427		663,557
Consumer				407		1,048		—		1,455		23,603		25,058
Foreign				—		—		163		163		22,445		22,608
		Total non-covered loans	$	3,611	$	12,086	$	49,291	$	64,988	$	3,100,447	$	3,165,435

        Nonaccrual loans totaled $94.2 million at December 31, 2010, of which $12.0 million were 30 to 89 days past due and $32.9 million were current.

        The following table presents our nonaccrual and performing non-covered loans by portfolio segment and class as of the dates indicated:

			June 30, 2011						December 31, 2010
			Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
			(In thousands)						(In thousands)
Real estate mortgage:
	Hospitality		$	7,451	$	141,592	$	149,043	$	4,151	$	152,501	$	156,652
	SBA 504			3,304		59,382		62,686		9,346		59,941		69,287
	Other			28,736		1,833,403		1,862,139		27,452		2,021,342		2,048,794
		Total real estate mortgage		39,491		2,034,377		2,073,868		40,949		2,233,784		2,274,733
Real estate construction:
	Residential			1,099		32,694		33,793		24,004		41,039		65,043
	Commercial			5,976		120,485		126,461		5,238		109,198		114,436
		Total real estate construction		7,075		153,179		160,254		29,242		150,237		179,479
Commercial:
	Collateralized			5,294		367,860		373,154		6,241		352,186		358,427
	Unsecured			6,558		75,448		82,006		9,104		120,639		129,743
	Asset-based			15		154,904		154,919		15		143,152		143,167
	SBA 7(a)			6,122		24,604		30,726		6,518		25,702		32,220
		Total commercial		17,989		622,816		640,805		21,878		641,679		663,557
Consumer				745		21,503		22,248		1,951		23,107		25,058
Foreign				—		20,075		20,075		163		22,445		22,608
		Total non-covered loans	$	65,300	$	2,851,950	$	2,917,250	$	94,183	$	3,071,252	$	3,165,435

        Nonaccrual loans and performing restructured loans are considered impaired for reporting purposes. Impaired loans by portfolio segment are as follows as of the dates indicated:

		June 30, 2011						December 31, 2010
Loan Category		Nonaccrual Loans		Performing Restructured Loans		Total Impaired Loans		Nonaccrual Loans		Performing Restructured Loans		Total Impaired Loans
		(In thousands)
Real estate mortgage		$	39,491	$	59,369	$	98,860	$	40,949	$	53,222	$	94,171
Real estate construction			7,075		18,994		26,069		29,242		18,108		47,350
Commercial			17,989		4,124		22,113		21,878		17,942		39,820
Consumer			745		—		745		1,951		—		1,951
Foreign			—		—		—		163		—		163
	Total	$	65,300	$	82,487	$	147,787	$	94,183	$	89,272	$	183,455

        The decrease in the real estate construction impaired loan segment is due to the foreclosure on undeveloped land located in Ventura County which secured two non-covered loans with an aggregate balance of $23.0 million. The decrease in the commercial impaired loan segment is due to two loans that have performed in accordance with their restructured terms for at least 12 months and have been removed from this category.

        The following tables present information regarding our non-covered impaired loans by portfolio segment and class as of and for the dates indicated:

			June 30, 2011						December 31, 2010
			Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
			(In thousands)
With An Allowance Recorded:
Real estate mortgage:
	Hospitality		$	17,749	$	17,891	$	1,284	$	15,081	$	15,138	$	564
	SBA 504			617		617		20		4,161		6,180		280
	Other			47,252		49,904		3,355		47,188		47,343		3,049
Real estate construction:
	Residential			2,076		2,079		7		8,301		11,956		673
	Other			14,555		17,981		2,477		5,341		5,701		452
		Total real estate		82,249		88,472		7,143		80,072		86,318		5,018
Commercial:
	Collateralized			4,871		6,510		3,737		2,192		2,363		1,174
	Unsecured			6,312		14,766		4,673		9,361		9,445		7,696
	SBA 7(a)			3,063		3,182		247		1,999		2,123		41
Consumer				34		37		—		1,125		1,127		1,049
	Total other			14,280		24,495		8,657		14,677		15,058		9,960
With No Related Allowance Recorded:
Real estate mortgage:
	Hospitality		$	—	$	—	$	—	$	667	$	667	$	—
	SBA 504			3,304		4,652				5,185		6,320		—
	Other			29,938		32,805		—		21,889		29,191		—
Real estate construction:
	Residential			617		617		—		22,676		23,208		—
	Other			8,821		9,896		—		11,032		12,603		—
		Total real estate		42,680		47,970		—		61,449		71,989		—
Commercial:
	Collateralized			1,997		2,133		—		20,519		20,668		—
	Unsecured			714		777		—		224		236		—
	Asset-based			15		15		—		15		15		—
	SBA 7(a)			5,141		6,588		—		5,510		7,239		—
Consumer				711		782		—		826		876		—
Foreign				—		—		—		163		238		—
	Total other			8,578		10,295		—		27,257		29,272		—
Total:
	Real estate mortgage		$	98,860	$	105,869	$	4,659	$	94,171	$	104,839	$	3,893
	Real estate construction			26,069		30,573		2,484		47,350		53,468		1,125
	Commercial			22,113		33,971		8,657		39,820		42,089		8,911
	Consumer			745		819		—		1,951		2,003		1,049
	Foreign			—		—		—		163		238		—
		Total non-covered loans	$	147,787	$	171,232	$	15,800	$	183,455	$	202,637	$	14,978

			Three Months Ended June 30, 2011					Six Months Ended June 30, 2011
			Weighted Average Recorded Investment(1)		Interest Income Recognized			Weighted Average Recorded Investment(1)		Interest Income Recognized
With An Allowance Recorded:
Real estate mortgage:
	Hospitality		$	17,749	$	168		$	17,448	$	366
	SBA 504			206		9			103		21
	Other			38,411		339			29,382		870
Real estate construction:
	Residential			2,076		16			2,076		37
	Other			14,555		89			10,260		165
		Total real estate		72,997		621			59,269		1,459
Commercial:
	Collateralized			4,295		11			3,816		52
	Unsecured			6,312		6			6,283		12
	SBA 7(a)			2,083		20			1,994		40
Consumer				34		—			34		—
	Total other			12,724		37			12,127		104
With No Related Allowance Recorded:
Real estate mortgage:
	Hospitality		$	—	$	—		$	—	$	—
	SBA 504			3,304		—			3,304		—
	Other			21,650		629			20,501		795
Real estate construction:
	Residential			617		—			617		—
	Other			8,821		61			8,821		122
		Total real estate		34,392		690			33,243		917
Commercial:
	Collateralized			1,973		(2	)		1,855		(1	)
	Unsecured			670		—			668		—
	Asset-based			15		—			15		—
	SBA 7(a)			5,062		11			4,944		20
Consumer				688		—			652		1
Foreign				—		—			—		—
	Total other			8,408		9			8,134		20
Total:
	Real estate mortgage		$	81,320	$	1,145		$	70,738	$	2,052
	Real estate construction			26,069		166			21,774		324
	Commercial			20,410		46			19,575		123
	Consumer			722		—			686		1
	Foreign			—		—			—		—
		Total non-covered loans	$	128,521	$	1,357		$	112,773	$	2,500

(1)

For the loans reported as impaired as of June 30, 2011, amounts are calculated based on the period of time such loans were impaired during the reporting period.

• Covered Loans

        We refer to the loans acquired in the Los Padres and Affinity acquisitions subject to loss sharing agreements with the FDIC as "covered loans" as we will be reimbursed for a substantial portion of any future losses on them under the terms of the agreements.

        The following table reflects the carrying values of covered loans as of the dates indicated:

Loan Category		June 30, 2011			December 31, 2010
		(In thousands)
Multi-family		$	286,615		$	321,650
Commercial real estate			407,257			444,244
Single family			139,238			157,424
Construction and land			67,343			87,301
Commercial and industrial			24,135			34,828
Home equity lines of credit			6,235			5,916
Consumer			864			1,378
	Total gross covered loans		931,687			1,052,741
Less: discount			(92,847	)		(110,901	)
	Covered loans, net of discount		838,840			941,840
Less: allowance for loan losses			(32,888	)		(33,264	)
	Covered loans, net	$	805,952		$	908,576

        The following table summarizes the changes in the carrying amount of covered acquired impaired loans and accretable yield on those loans for the period indicated:

		Covered Acquired Impaired Loans
		Carrying Amount			Accretable Yield
		(In thousands)
Balance, January 1, 2011		$	879,486		$	(290,665	)
	Accretion		36,898			36,898
	Payments received		(130,536	)		—
	Increase in expected cash flows		—			(10,472	)
	Provision for credit losses		(8,800	)		—
Balance, June 30, 2011		$	777,048		$	(264,239	)

        The table above excludes the covered loans from the Los Padres acquisition which are accounted for as non-impaired loans and totaled $28.9 million and $29.1 million at June 30, 2011 and December 31, 2010, respectively.

        The following table presents the credit risk rating categories for covered loans by portfolio segment as of the dates indicated. Nonclassified loans are those with a credit risk rating of either pass or special mention, while classified loans are those with a credit risk rating of either substandard or doubtful. It should be noted, however, that these loans are covered by loss sharing agreements with the FDIC.

		June 30, 2011						December 31, 2010
		Nonclassified		Classified		Total		Nonclassified		Classified		Total
		(In thousands)
Real estate mortgage		$	555,665	$	175,211	$	730,876	$	622,837	$	180,944	$	803,781
Real estate construction			13,658		38,328		51,986		21,370		51,729		73,099
Commercial			13,302		8,972		22,274		14,630		16,219		30,849
Consumer			229		587		816		722		125		847
	Total covered loans	$	582,854	$	223,098	$	805,952	$	659,559	$	249,017	$	908,576

        Our federal and state banking regulators, as an integral part of their examination process, periodically review the Company's loan risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations.