LOANS AND LEASES

6 Months Ended

Jun. 30, 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:

	June 30, 2012						December 31, 2011
Loan Segment	Amount			% of Total			Amount			% of Total
	(In thousands)
Real estate mortgage	$	1,828,777			64	%	$	1,982,464			70	%
Real estate construction		129,107			4	%		113,059			4	%
Commercial		701,044			25	%		671,939			24	%
Leases(1)		153,793			5	%		—			—
Consumer		17,151			1	%		23,711			1	%
Foreign		17,017			1	%		20,932			1	%
Total gross non-covered loans and leases		2,846,889			100	%		2,812,105			100	%
Less:
Unearned income		(2,598	)					(4,392	)
Allowance for loan and lease losses		(72,061	)					(85,313	)
Total net non-covered loans and leases	$	2,772,230					$	2,722,400

⁽¹⁾

Does not include leases in process of $12.3 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 June 30, 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	$	42,210		$	6,475		$	23,556		$	458	$	1,908		$	160		$	74,767
Charge-offs		(2,583	)		—			(1,352	)		—		(34	)		—			(3,969	)
Recoveries		43			14			190			—		16			—			263
Provision		2,566			(993	)		(415	)		40		(155	)		(43	)		1,000
Balance, end of period	$	42,236		$	5,496		$	21,979		$	498	$	1,735		$	117		$	72,061

	Six Months Ended June 30, 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		(4,773	)		—			(2,223	)		—		(233	)		—			(7,229	)
Recoveries		372			24			1,014			—		47			20			1,477
Provision		(3,568	)		(3,225	)		(120	)		498		(847	)		(238	)		(7,500	)
Balance, end of period	$	42,236		$	5,496		$	21,979		$	498	$	1,735		$	117		$	72,061
The ending balance of the allowance is composed of amounts applicable to loans and leases:
Individually evaluated for impairment	$	6,221		$	1,197		$	6,363		$	—	$	255		$	—		$	14,036
Collectively evaluated for impairment	$	36,015		$	4,299		$	15,616		$	498	$	1,480		$	117		$	58,025
Non-Covered Loan and Lease Balances:
Ending balance	$	1,828,777		$	129,107		$	701,044		$	153,793	$	17,151		$	17,017		$	2,846,889
The ending balance of the non-covered loan and lease portfolio is composed of loans and leases:
Individually evaluated for impairment	$	102,265		$	32,607		$	20,983		$	244	$	479		$	—		$	156,578
Collectively evaluated for impairment	$	1,726,512		$	96,500		$	680,061		$	153,549	$	16,672		$	17,017		$	2,690,311

	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, beginning of period	$	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, end of period	$	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, beginning of period	$	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, end of period	$	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

        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.

	June 30, 2012						December 31, 2011
	Nonclassified		Classified		Total		Nonclassified		Classified		Total
	(In thousands)
Real estate mortgage:
Hospitality	$	118,534	$	19,087	$	137,621	$	123,071	$	21,331	$	144,402
SBA 504		50,041		6,684		56,725		51,522		6,855		58,377
Other		1,577,843		56,588		1,634,431		1,690,830		88,855		1,779,685
Total real estate mortgage		1,746,418		82,359		1,828,777		1,865,423		117,041		1,982,464
Real estate construction:
Residential		28,365		2,888		31,253		14,743		2,926		17,669
Commercial		78,869		18,985		97,854		64,667		30,723		95,390
Total real estate construction		107,234		21,873		129,107		79,410		33,649		113,059
Commercial:
Collateralized		354,370		16,487		370,857		395,041		18,979		414,020
Unsecured		73,142		2,902		76,044		75,017		3,920		78,937
Asset-based		226,278		1,801		228,079		149,947		40		149,987
SBA 7(a)		16,175		9,889		26,064		18,045		10,950		28,995
Total commercial		669,965		31,079		701,044		638,050		33,889		671,939
Leases		150,124		3,669		153,793		—		—		—
Consumer		16,221		930		17,151		22,730		981		23,711
Foreign		17,017		—		17,017		20,932		—		20,932
Total non-covered loans and leases	$	2,706,979	$	139,910	$	2,846,889	$	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:

	June 30, 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	$	—	$	—	$	6,200	$	6,200	$	131,421	$	137,621
SBA 504		2,948		—		1,044		3,992		52,733		56,725
Other		2,621		1,996		4,972		9,589		1,624,842		1,634,431
Total real estate mortgage		5,569		1,996		12,216		19,781		1,808,996		1,828,777
Real estate construction:
Residential		—		—		—		—		31,253		31,253
Commercial		—		—		—		—		97,854		97,854
Total real estate construction		—		—		—		—		129,107		129,107
Commercial:
Collateralized		310		—		2,005		2,315		368,542		370,857
Unsecured		—		—		247		247		75,797		76,044
Asset-based		—		—		—		—		228,079		228,079
SBA 7(a)		933		598		2,952		4,483		21,581		26,064
Total commercial		1,243		598		5,204		7,045		693,999		701,044
Leases		148		—		—		148		153,645		153,793
Consumer		216		—		52		268		16,883		17,151
Foreign		—		—		—		—		17,017		17,017
Total non-covered loans and leases	$	7,176	$	2,594	$	17,472	$	27,242	$	2,819,647	$	2,846,889

        At June 30, 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 June 30, 2012, nonaccrual loans and leases totaled $52.8 million. Nonaccrual loans and leases include $3.3 million of loans 30 to 89 days past due and $32.0 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:

	June 30, 2012						December 31, 2011
	Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
	(In thousands)
Real estate mortgage:
Hospitality	$	13,279	$	124,342	$	137,621	$	7,251	$	137,151	$	144,402
SBA 504		1,873		54,852		56,725		2,800		55,577		58,377
Other		14,548		1,619,883		1,634,431		21,286		1,758,399		1,779,685
Total real estate mortgage		29,700		1,799,077		1,828,777		31,337		1,951,127		1,982,464
Real estate construction:
Residential		1,069		30,184		31,253		1,086		16,583		17,669
Commercial		4,453		93,401		97,854		6,194		89,196		95,390
Total real estate construction		5,522		123,585		129,107		7,280		105,779		113,059
Commercial:
Collateralized		7,258		363,599		370,857		8,186		405,834		414,020
Unsecured		2,554		73,490		76,044		3,057		75,880		78,937
Asset-based		176		227,903		228,079		14		149,973		149,987
SBA 7(a)		6,830		19,234		26,064		7,801		21,194		28,995
Total commercial		16,818		684,226		701,044		19,058		652,881		671,939
Leases		244		153,549		153,793		—		—		—
Consumer		479		16,672		17,151		585		23,126		23,711
Foreign		—		17,017		17,017		—		20,932		20,932
Total non-covered loans and leases	$	52,763	$	2,794,126	$	2,846,889	$	58,260	$	2,753,845	$	2,812,105

        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:

	June 30, 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	$	29,700	$	72,565	$	102,265	$	31,337	$	87,484	$	118,821
Real estate construction		5,522		27,085		32,607		7,280		24,512		31,792
Commercial		16,818		4,165		20,983		19,058		4,652		23,710
Leases		244		—		244		—		—		—
Consumer		479		—		479		585		143		728
Total	$	52,763	$	103,815	$	156,578	$	58,260	$	116,791	$	175,051

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

	June 30, 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	$	9,144	$	9,658	$	2,788	$	17,548	$	17,890	$	4,369
SBA 504		563		563		193		1,147		1,245		206
Other		55,115		55,483		3,240		78,349		81,921		6,919
Real estate construction:
Residential		1,289		1,311		222		2,766		2,776		409
Commercial		13,528		13,636		975		12,477		12,520		1,664
Commercial:
Collateralized		4,243		4,534		3,809		5,515		5,741		3,901
Unsecured		2,352		3,019		2,110		2,864		3,061		2,513
SBA 7(a)		2,666		2,764		444		3,397		3,428		379
Consumer		276		309		255		433		459		413
With No Related Allowance Recorded:
Real estate mortgage:
Hospitality	$	6,200	$	7,245	$	—	$	—	$	—	$	—
SBA 504		1,873		2,700		—		2,262		3,007		—
Other		29,370		34,753		—		19,515		22,999		—
Real estate construction:
Residential		778		778		—		611		611		—
Commercial		17,012		20,118		—		15,938		19,536		—
Commercial:
Collateralized		5,131		5,380		—		4,759		4,927		—
Unsecured		636		731		—		643		716		—
Asset-based		176		176		—		14		14		—
SBA 7(a)		5,779		8,096		—		6,518		8,181		—
Leases		244		244		—		—		—		—
Consumer		203		271		—		295		351		—
Total Non-Covered Loans and Leases With and Without An Allowance Recorded:
Real estate mortgage	$	102,265	$	110,402	$	6,221	$	118,821	$	127,062	$	11,494
Real estate construction		32,607		35,843		1,197		31,792		35,443		2,073
Commercial		20,983		24,700		6,363		23,710		26,068		6,793
Leases		244		244		—		—		—		—
Consumer		479		580		255		728		810		413
Total	$	156,578	$	171,769	$	14,036	$	175,051	$	189,383	$	20,773

	Three Months Ended June 30,
	2012					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	$	9,144	$	107		$	17,749	$	127
SBA 504		563		7			206		1
Other		54,310		545			38,411		161
Real estate construction:
Residential		1,289		6			2,076		13
Commercial		13,528		131			14,555		38
Commercial:
Collateralized		4,101		29			4,295		3
Unsecured		2,348		39			6,312		4
SBA 7(a)		2,666		49			2,083		6
Consumer		276		4			34		—
With No Related Allowance Recorded:
Real estate mortgage:
Hospitality	$	6,200	$	(70	)	$	—	$	—
SBA 504		1,873		29			3,304		—
Other		29,371		163			21,650		244
Real estate construction:
Residential		778		17			617		—
Commercial		16,187		166			8,821		45
Commercial:
Collateralized		5,075		73			1,973		(1	)
Unsecured		636		10			670		—
Asset-based		174		—			15		—
SBA 7(a)		5,686		272			5,062		6
Leases		244		—			—		—
Consumer		203		5			688		—
Total Non-Covered Loans and Leases With and Without An Allowance Recorded:
Real estate mortgage	$	101,461	$	781		$	81,320	$	533
Real estate construction		31,782		320			26,069		96
Commercial		20,686		472			20,410		18
Leases		244		—			—		—
Consumer		479		9			722		—
Total	$	154,652	$	1,582		$	128,521	$	647

⁽¹⁾

For the loans and leases reported as impaired during the periods presented, amounts were calculated based on the period of time such loans and leases were impaired during the reporting period.

	Six Months Ended June 30,
	2012				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	$	9,144	$	208	$	17,448	$	176
SBA 504		352		5		103		2
Other		52,640		1,068		29,382		249
Real estate construction:
Residential		1,289		16		2,076		18
Commercial		13,528		270		10,260		56
Commercial:
Collateralized		3,803		70		3,816		11
Unsecured		2,341		80		6,283		6
SBA 7(a)		2,652		74		1,994		8
Consumer		276		8		34		—
With No Related Allowance Recorded:
Real estate mortgage:
Hospitality	$	6,200	$	47	$	—	$	—
SBA 504		1,873		79		3,304		—
Other		28,874		854		20,501		251
Real estate construction:
Residential		778		33		617		—
Commercial		15,878		331		8,821		60
Commercial:
Collateralized		4,974		135		1,855		—
Unsecured		636		18		668		—
Asset-based		87		2		15		—
SBA 7(a)		5,670		403		4,944		8
Leases		203		—		—		—
Consumer		203		12		652		—
Total Non-Covered Loans and Leases With and Without An Allowance Recorded:
Real estate mortgage	$	99,083	$	2,261	$	70,738	$	678
Real estate construction		31,473		650		21,774		134
Commercial		20,163		782		19,575		33
Leases		203		—		—		—
Consumer		479		20		686		—
Total	$	151,401	$	3,713	$	112,773	$	845

⁽¹⁾

For the loans and leases reported as impaired during the periods presented, 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 June 30, 2012						Six Months Ended June 30, 2012
	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
	(Dollars in thousands)
Troubled Debt Restructurings:
Real estate mortgage:
SBA 504		—	$	—	$	—		1	$	563	$	563
Real estate construction:
Commercial		1		1,446		1,446		1		1,446		1,446
Commercial:
Collateralized		3		568		568		5		1,174		1,174
Unsecured		2		23		23		3		38		38
SBA 7(a)		1		120		120		2		229		229
Total		7	$	2,157	$	2,157		12	$	3,450	$	3,450

	Three Months Ended June 30, 2012				Six Months Ended June 30, 2012
	Number of Loans		Recorded Investment(1)		Number of Loans		Recorded Investment(1)
	(Dollars in thousands)
Troubled Debt Restructurings That Subsequently Defaulted(2):
Real estate mortgage:
Hospitality		1	$	6,200		1	$	6,200
Other		—		—		1		1,725
Commercial:
Collateralized		7		828		7		828
Unsecured		2		99		2		99
SBA 7(a)		3		1,987		4		2,021
Total		13	$	9,114		15	$	10,873

⁽¹⁾

Represents the balance at June 30, 2012 and is net of charge-offs of $531,000 and $855,000 for the three months and six months ended June 30, 2012.

⁽²⁾

The population of defaulted restructured loans for the period indicated includes only those loans restructured during the preceding 12-month period. The table excludes defaulted troubled debt restructurings in those classes for which the recorded investment was zero at June 30, 2012.

• Covered Loans

        We refer to the loans acquired in the Los Padres and Affinity acquisitions 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:

	June 30, 2012						December 31, 2011
	Amount			% of Total			Amount			% of Total
	(Dollars in thousands)
Real estate mortgage:
Hospitality	$	2,916			—		$	2,944			—
Other		648,081			93	%		733,414			91	%
Total real estate mortgage		650,997			93	%		736,358			91	%
Real estate construction:
Residential		7,658			1	%		21,521			3	%
Commercial		24,467			3	%		25,397			3	%
Total real estate construction		32,125			4	%		46,918			6	%
Commercial:
Collateralized		18,229			3	%		24,808			3	%
Unsecured		725			—			802			—
Total commercial		18,954			3	%		25,610			3	%
Consumer		659			—			735			—
Total gross covered loans		702,735			100	%		809,621			100	%
Discount		(62,323	)					(75,323	)
Allowance for loan losses		(31,463	)					(31,275	)
Covered loans, net	$	608,949					$	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		26,246			26,246
Payments received		(116,376	)		—
Decrease in expected cash flows, net		—			13,148
Provision for credit losses		(3,656	)		—
Balance, June 30, 2012	$	583,228		$	(219,871	)

        The table above excludes the covered loans from the Los Padres acquisition which are accounted for as non-impaired loans and totaled $25.7 million and $26.0 million at June 30, 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.

	June 30, 2012						December 31, 2011
	Nonclassified		Classified		Total		Nonclassified		Classified		Total
	(In thousands)
Real estate mortgage	$	389,585	$	175,801	$	565,386	$	478,119	$	163,768	$	641,887
Real estate construction		5,626		22,032		27,658		5,762		35,337		41,099
Commercial		7,969		7,279		15,248		11,076		8,221		19,297
Consumer		132		525		657		178		562		740
Total covered loans, net	$	403,312	$	205,637	$	608,949	$	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.