Loans Receivable

9 Months Ended

Sep. 30, 2013

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

Loans Receivable

Loans Receivable

Loans receivable are as follows:

(In thousands)	September 30, 2013		December 31, 2012
Loans receivable	$	411,851	$	401,961
Valuation allowance:
Specific	$	—	$	3,000
General	1,916		2,620
Total	$	1,916	$	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 nine months ended September 30:	2013		2012
Increase (decrease) in valuation allowance	$	137	$	(14,053	)
Loans receivable charged off	—		139
For the three months ended September 30:
Increase (decrease) in valuation allowance	72		(7,280		)
Loans receivable charged off	—		54

The Company monitors the performance of its loans receivable and assesses the ability of each 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 a discounted cash flow analysis and comparable cost and sales methodologies, if appropriate.

The Company's eight largest loans receivable, which have an aggregate amortized cost of $304 million and an aggregate fair value of $308 million at September 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 September 30, 2013. After considering the amount of loss in the event of a default and whether a loss is probable, the Company determined that a specific valuation allowance was not required.