Loans Receivable

6 Months Ended

Jun. 30, 2013

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Loans Receivable

Loans Receivable

Loans receivable are as follows:

(In thousands)	June 30, 2013			December 31, 2012
Loans receivable	$	359,177		$	401,961
Valuation allowance:
Specific	$	—		$	3,000
General	1,844			2,620
Total	$	1,844		$	5,620
Impaired loans:
With a specific valuation allowance	$	—		$	1,775
Without a valuation allowance	30,000			31,023
Unpaid principal balance	30,000			35,872
For the six months ended June 30:	2013			2012
Increase in valuation allowance	$	65		$	6,773
Loans receivable charged off	—			85
For the three months ended June 30:
Increase (decrease) in valuation allowance	(30		)	123
Loans receivable charged off	—			—

The Company monitors the performance of its loans receivable and assesses the ability of the borrower to pay principal and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance of the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash flow analysis and comparable cost and sales methodologies, if appropriate.

The Company's six largest loans receivable, which have an aggregate amortized cost of $244 million and an aggregate fair value of $247 million at June 30, 2013, are secured by commercial real estate located primarily in New York City, California, Hawaii and Chicago. These loans earn interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025.

The Company utilizes an internal risk rating system to assign a risk to each of its commercial loans. The loan rating system takes into consideration credit quality indicators including loan to value ratios, which compare the outstanding loan amount to the estimated value of the property, the borrower's financial condition and performance with respect to loan terms, the Company's position in the capital structure, and the overall leverage in the capital structure. Based on this rating system, one loan with an aggregate cost basis of $30 million was considered to be impaired at June 30, 2013. A determination was made as to the amount of loss in the event of a default and whether the loss is probable. The results of the determination were considered in connection with the valuation allowance noted above.