LOANS AND LEASES

3 Months Ended

Mar. 31, 2012

LOANS AND LEASES

LOANS AND LEASES

NOTE 5—LOANS AND LEASES

• Non-Covered Loans and Leases

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

        The following table presents the composition of non-covered loans and leases by portfolio segment as of the dates indicated:

Loan Segment	March 31, 2012			December 31, 2011
	(In thousands)
Real estate mortgage	$	1,896,052		$	1,982,464
Real estate construction		118,304			113,059
Commercial		665,441			671,939
Leases(1)		153,845			—
Consumer		15,826			23,711
Foreign		18,752			20,932
Total gross non-covered loans and leases		2,868,220			2,812,105
Less:
Unearned income		(2,937	)		(4,392	)
Allowance for loan and lease losses		(74,767	)		(85,313	)
Total net non-covered loans and leases	$	2,790,516		$	2,722,400

⁽¹⁾

Does not include leases in process of $13.8 million.

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

	Three Months Ended March 31, 2012
	Real Estate Mortgage			Real Estate Construction			Commercial			Leases		Consumer			Foreign			Total
	(In thousands)
Allowance for Loan and Lease Losses on Non-Covered Loans and Leases:
Balance, beginning of period	$	50,205		$	8,697		$	23,308		$	—	$	2,768		$	335		$	85,313
Charge-offs		(2,190	)		—			(871	)		—		(199	)		—			(3,260	)
Recoveries		329			10			824			—		31			20			1,214
Provision		(6,134	)		(2,232	)		295			458		(692	)		(195	)		(8,500	)
Balance, end of period	$	42,210		$	6,475		$	23,556		$	458	$	1,908		$	160		$	74,767
The ending balance of the allowance is composed of amounts applicable to loans and leases:
Individually evaluated for impairment	$	9,369		$	1,312		$	6,897		$	—	$	262		$	—		$	17,840
Collectively evaluated for impairment	$	32,841		$	5,163		$	16,659		$	458	$	1,646		$	160		$	56,927
Non-Covered Loan and Lease Balances:
Ending balance	$	1,896,052		$	118,304		$	665,441		$	153,845	$	15,826		$	18,752		$	2,868,220
The ending balance of the non-covered loan and lease portfolio is composed of loans and leases:
Individually evaluated for impairment	$	104,923		$	30,026		$	22,544		$	233	$	498		$	—		$	158,224
Collectively evaluated for impairment	$	1,791,129		$	88,278		$	642,897		$	153,612	$	15,328		$	18,752		$	2,709,996

	Three Months Ended March 31, 2011
	Real Estate Mortgage			Real Estate Construction			Commercial			Consumer			Foreign		Total
	(In thousands)
Allowance for Loan Losses on Non-Covered Loans:
Balance, beginning of period	$	51,657		$	8,766		$	33,229		$	4,652		$	349	$	98,653
Charge-offs		(1,212	)		(4,645	)		(3,121	)		(160	)		—		(9,138	)
Recoveries		97			92			617			411			32		1,249
Provision		1,316			6,840			839			(1,448	)		253		7,800
Balance, end of period	$	51,858		$	11,053		$	31,564		$	3,455		$	634	$	98,564
The ending balance of the allowance is composed of amounts applicable to loans:
Individually evaluated for impairment	$	4,913		$	3,113		$	9,524		$	1,049		$	—	$	18,599
Collectively evaluated for impairment	$	46,945		$	7,940		$	22,040		$	2,406		$	634	$	79,965
Non-Covered Loan Balances:
Ending balance	$	2,172,923		$	176,758		$	667,401		$	21,815		$	23,296	$	3,062,193
The ending balance of the non-covered loan portfolio is composed of loans:
Individually evaluated for impairment	$	90,394		$	32,757		$	23,573		$	1,794		$	—	$	148,518
Collectively evaluated for impairment	$	2,082,529		$	144,001		$	643,828		$	20,021		$	23,296	$	2,913,675

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

	March 31, 2012						December 31, 2011
	Nonclassified		Classified		Total		Nonclassified		Classified		Total
	(In thousands)
Real estate mortgage:
Hospitality	$	122,944	$	20,547	$	143,491	$	123,071	$	21,331	$	144,402
SBA 504		50,611		6,949		57,560		51,522		6,855		58,377
Other		1,640,177		54,824		1,695,001		1,690,830		88,855		1,779,685
Total real estate mortgage		1,813,732		82,320		1,896,052		1,865,423		117,041		1,982,464
Real estate construction:
Residential		22,547		2,907		25,454		14,743		2,926		17,669
Commercial		71,087		21,763		92,850		64,667		30,723		95,390
Total real estate construction		93,634		24,670		118,304		79,410		33,649		113,059
Commercial:
Collateralized		402,904		19,092		421,996		395,041		18,979		414,020
Unsecured		65,072		3,471		68,543		75,017		3,920		78,937
Asset-based		145,948		1,233		147,181		149,947		40		149,987
SBA 7(a)		17,152		10,569		27,721		18,045		10,950		28,995
Total commercial		631,076		34,365		665,441		638,050		33,889		671,939
Leases		150,220		3,625		153,845		—		—		—
Consumer		14,873		953		15,826		22,730		981		23,711
Foreign		18,752		—		18,752		20,932		—		20,932
Total non-covered loans and leases	$	2,722,287	$	145,933	$	2,868,220	$	2,626,545	$	185,560	$	2,812,105

        In addition to our internal risk rating process, 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.

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

	March 31, 2012
	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	$	—	$	—	$	—	$	—	$	143,491	$	143,491
SBA 504		2,214		—		448		2,662		54,898		57,560
Other		1,026		3,501		3,069		7,596		1,687,405		1,695,001
Total real estate mortgage		3,240		3,501		3,517		10,258		1,885,794		1,896,052
Real estate construction:
Residential		—		—		—		—		25,454		25,454
Commercial		—		—		—		—		92,850		92,850
Total real estate construction		—		—		—		—		118,304		118,304
Commercial:
Collateralized		516		152		1,800		2,468		419,528		421,996
Unsecured		104		—		151		255		68,288		68,543
Asset-based		—		—		—		—		147,181		147,181
SBA 7(a)		1,467		1,429		171		3,067		24,654		27,721
Total commercial		2,087		1,581		2,122		5,790		659,651		665,441
Leases		—		—		—		—		153,845		153,845
Consumer		65		219		—		284		15,542		15,826
Foreign		—		—		—		—		18,752		18,752
Total non-covered loans and leases	$	5,392	$	5,301	$	5,639	$	16,332	$	2,851,888	$	2,868,220

        At March 31, 2012 and December 31, 2011, the Company had no non-covered loans and leases 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 the collectibility of a loan or lease in the normal course of business. At March 31, 2012, nonaccrual loans and leases totaled $48.2 million. Nonaccrual loans and leases include $7.6 million of loans 30 to 89 days past due and $34.9 million of current loans and leases which have been placed on nonaccrual status based on management's judgment regarding the collectibility of such loans and leases.

	December 31, 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	$	—	$	—	$	—	$	—	$	144,402	$	144,402
SBA 504		718		—		842		1,560		56,817		58,377
Other		12,953		191		13,205		26,349		1,753,336		1,779,685
Total real estate mortgage		13,671		191		14,047		27,909		1,954,555		1,982,464
Real estate construction:
Residential		—		475		—		475		17,194		17,669
Commercial		2,290		—		2,182		4,472		90,918		95,390
Total real estate construction		2,290		475		2,182		4,947		108,112		113,059
Commercial:
Collateralized		275		423		1,701		2,399		411,621		414,020
Unsecured		4		—		151		155		78,782		78,937
Asset-based		—		—		—		—		149,987		149,987
SBA 7(a)		996		646		274		1,916		27,079		28,995
Total commercial		1,275		1,069		2,126		4,470		667,469		671,939
Consumer		72		40		17		129		23,582		23,711
Foreign		—		—		—		—		20,932		20,932
Total non-covered loans	$	17,308	$	1,775	$	18,372	$	37,455	$	2,774,650	$	2,812,105

        Nonaccrual loans totaled $58.3 million at December 31, 2011, of which $2.5 million were 30 to 89 days past due and $37.4 million were current.

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

	March 31, 2012						December 31, 2011
	Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
	(In thousands)
Real estate mortgage:
Hospitality	$	7,165	$	136,326	$	143,491	$	7,251	$	137,151	$	144,402
SBA 504		2,354		55,206		57,560		2,800		55,577		58,377
Other		14,171		1,680,830		1,695,001		21,286		1,758,399		1,779,685
Total real estate mortgage		23,690		1,872,362		1,896,052		31,337		1,951,127		1,982,464
Real estate construction:
Residential		1,075		24,379		25,454		1,086		16,583		17,669
Commercial		4,524		88,326		92,850		6,194		89,196		95,390
Total real estate construction		5,599		112,705		118,304		7,280		105,779		113,059
Commercial:
Collateralized		8,030		413,966		421,996		8,186		405,834		414,020
Unsecured		2,608		65,935		68,543		3,057		75,880		78,937
Asset-based		88		147,093		147,181		14		149,973		149,987
SBA 7(a)		7,416		20,305		27,721		7,801		21,194		28,995
Total commercial		18,142		647,299		665,441		19,058		652,881		671,939
Leases(1)		233		153,612		153,845		—		—		—
Consumer		498		15,328		15,826		585		23,126		23,711
Foreign		—		18,752		18,752		—		20,932		20,932
Total non-covered loans and leases	$	48,162	$	2,820,058	$	2,868,220	$	58,260	$	2,753,845	$	2,812,105

⁽¹⁾

Leases relate to PWE Finance only.

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

	March 31, 2012						December 31, 2011
Loan Segment	Nonaccrual Loans/Leases		Performing Restructured Loans		Total Impaired Loans/Leases		Nonaccrual Loans/Leases		Performing Restructured Loans		Total Impaired Loans/Leases
	(In thousands)
Real estate mortgage	$	23,690	$	81,233	$	104,923	$	31,337	$	87,484	$	118,821
Real estate construction		5,599		24,427		30,026		7,280		24,512		31,792
Commercial		18,142		4,402		22,544		19,058		4,652		23,710
Leases		233		—		233		—		—		—
Consumer		498		—		498		585		143		728
Total	$	48,162	$	110,062	$	158,224	$	58,260	$	116,791	$	175,051

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

	March 31, 2012						December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With An Allowance Recorded:
Real estate mortgage:
Hospitality	$	16,784	$	17,212	$	5,086	$	17,548	$	17,890	$	4,369
SBA 504		563		563		198		1,147		1,245		206
Other		54,762		54,983		4,085		78,349		81,921		6,919
Real estate construction:
Residential		689		707		197		2,766		2,776		409
Commercial		9,431		9,507		1,115		12,477		12,520		1,664
Total real estate		82,229		82,972		10,681		112,287		116,352		13,567
Commercial:
Collateralized		5,048		5,317		4,033		5,515		5,741		3,901
Unsecured		2,395		3,028		2,094		2,864		3,061		2,513
SBA 7(a)		4,124		4,267		770		3,397		3,428		379
Leases		—		—		—		—		—		—
Consumer		283		312		262		433		459		413
Total other		11,850		12,924		7,159		12,209		12,689		7,206
With No Related Allowance Recorded:
Real estate mortgage:
Hospitality	$	—	$	—	$	—	$	—	$	—	$	—
SBA 504		2,354		3,247		—		2,262		3,007		—
Other		30,460		35,522		—		19,515		22,999		—
Real estate construction:
Residential		1,392		1,392		—		611		611		—
Commercial		18,514		21,593		—		15,938		19,536		—
Total real estate		52,720		61,754		—		38,326		46,153		—
Commercial:
Collateralized		5,284		5,507		—		4,759		4,927		—
Unsecured		654		734		—		643		716		—
Asset-based		88		88		—		14		14		—
SBA 7(a)		4,951		6,603		—		6,518		8,181		—
Leases		233		233		—		—		—		—
Consumer		215		278		—		295		351		—
Total other		11,425		13,443		—		12,229		14,189		—
Total:
Real estate mortgage	$	104,923	$	111,527	$	9,369	$	118,821	$	127,062	$	11,494
Real estate construction		30,026		33,199		1,312		31,792		35,443		2,073
Commercial		22,544		25,544		6,897		23,710		26,068		6,793
Leases		233		233		—		—		—		—
Consumer		498		590		262		728		810		413
Total non-covered loans and leases	$	158,224	$	171,093	$	17,840	$	175,051	$	189,383	$	20,773

	Three Months Ended
	March 31, 2012				March 31, 2011
	Weighted Average Recorded Investment(1)		Interest Income Recognized		Weighted Average Recorded Investment(1)		Interest Income Recognized
	(In thousands)
With An Allowance Recorded:
Real estate mortgage:
Hospitality	$	16,784	$	217	$	17,173	$	189
SBA 504		142		—		1,888		—
Other		51,922		566		29,078		211
Real estate construction:
Residential		689		10		2,366		14
Commercial		9,431		115		9,239		39
Total real estate		78,968		908		59,744		453
Commercial:
Collateralized		4,735		46		3,521		11
Unsecured		2,394		40		9,249		5
SBA 7(a)		4,119		43		2,190		9
Leases		—		—		—		—
Consumer		283		4		1,123		—
Total other		11,531		133		16,083		25
With No Related Allowance Recorded:
Real estate mortgage:
Hospitality	$	—	$	—	$	—	$	—
SBA 504		2,354		49		3,250		—
Other		29,447		670		21,869		(9	)
Real estate construction:
Residential		1,392		17		3,625		(35	)
Commercial		18,514		197		8,908		61
Total real estate		51,707		933		37,652		17
Commercial:
Collateralized		5,132		67		2,452		6
Unsecured		654		8		181		1
Asset-based		63		—		15		—
SBA 7(a)		4,927		116		4,814		4
Leases		156		—		—		—
Consumer		215		7		604		—
Foreign		—		—		—		—
Total other		11,147		198		8,066		11
Total:
Real estate mortgage	$	100,649	$	1,502	$	73,258	$	391
Real estate construction		30,026		339		24,138		79
Commercial		22,024		320		22,422		36
Leases		156		—		—		—
Consumer		498		11		1,727		—
Foreign		—		—		—		—
Total non-covered loans and leases	$	153,353	$	2,172	$	121,545	$	506

⁽¹⁾

For the loans and leases reported as impaired as of March 31, 2012 and March 31, 2011, amounts were calculated based on the period of time such loans and leases were impaired during the reporting period.

        The following tables present non-covered new troubled debt restructurings and defaulted troubled debt restructurings for the periods indicated:

	Three Months Ended March 31, 2012
	Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings:
Real estate mortgage:
Hospitality		1	$	2,083	$	2,083
SBA 504		1		563		563
Other		3		16,993		16,993
Real estate construction:
Residential		1		467		467
Commercial		2		6,117		6,117
Commercial:
Collateralized		2		606		606
Unsecured		1		14		14
SBA 7(a)		5		1,603		1,603
Total		16	$	28,446	$	28,446

	Three Months Ended March 31, 2012
	Number of Loans		Recorded Investment(1)
	(Dollars in thousands)
Troubled Debt Restructurings That Subsequently Defaulted(2):
Real estate mortgage:
Other		1	$	1,725
Commercial:
SBA 7(a)		1		34
Total		2	$	1,759

⁽¹⁾

Represents the balance at March 31, 2012 and is net of charge-offs of $324,000 for the three months ended March 31, 2012.

⁽²⁾

The population of defaulted restructured loans for the period indicated includes only those loans restructured during the preceeding 12-month period. The table excludes defaulted troubled debt restructurings in those classes for which the recorded investment was zero at March 31, 2012.

• Covered Loans

        We refer to the loans acquired in the Los Padres Bank, or Los Padres, acquisition and Affinity acquisition that are 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:

	March 31, 2012						December 31, 2011
	Amount			% of Total			Amount			% of Total
	(Dollars in thousands)
Real estate mortgage:
Hospitality	$	—			—		$	2,944			0	%
Other		699,653			92	%		733,414			91	%
Total real estate mortgage		699,653			92	%		736,358			91	%
Real estate construction:
Residential		15,913			2	%		21,521			3	%
Commercial		25,278			3	%		25,397			3	%
Total real estate construction		41,191			5	%		46,918			6	%
Commercial:
Collateralized		20,149			3	%		24,808			3	%
Unsecured		741			0	%		802			0	%
Total commercial		20,890			3	%		25,610			3	%
Consumer		685			0	%		735			0	%
Total gross covered loans		762,419			100	%		809,621			100	%
Discount		(66,312	)					(75,323	)
Allowance for loan losses		(35,810	)					(31,275	)
Covered loans, net	$	660,297					$	703,023

        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, December 31, 2011	$	677,014		$	(259,265	)
Accretion		13,398			13,398
Payments received		(51,164	)		—
Decrease in expected cash flows, net		—			5,233
Provision for credit losses		(3,926	)		—
Balance, March 31, 2012	$	635,322		$	(240,634	)

        The table above excludes the covered loans from the Los Padres acquisition which are accounted for as non-impaired loans and totaled $25.0 million and $26.0 million at March 31, 2012 and December 31, 2011, 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 all of these loans are covered by loss sharing agreements with the FDIC.

	March 31, 2012						December 31, 2011
	Nonclassified		Classified		Total		Nonclassified		Classified		Total
	(In thousands)
Real estate mortgage	$	452,276	$	154,441	$	606,717	$	478,119	$	163,768	$	641,887
Real estate construction		5,763		30,799		36,562		5,762		35,337		41,099
Commercial		8,393		7,945		16,338		11,076		8,221		19,297
Consumer		139		541		680		178		562		740
Total covered loans, net	$	466,571	$	193,726	$	660,297	$	495,135	$	207,888	$	703,023

        In addition to our internal risk rating process, 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.