Loans

6 Months Ended

Jun. 30, 2011

Loans

Loans

7. Loans

Most of the Company's business activity is predominately with Asian customers located in Southern and Northern California; New York City; Houston and Dallas, Texas; Seattle, Washington; Boston, Massachusetts; Chicago, Illinois; and Edison, New Jersey. The Company has no specific industry concentration, and generally its loans are collateralized with real property or other pledged collateral of the borrowers. Loans are generally expected to be paid off from the operating profits of the borrowers, refinancing by another lender, or through sale by the borrowers of the secured collateral.

The components of loans in the consolidated balance sheets as of June 30, 2011, and December 31, 2010, were as follows:

	June 30, 2011			December 31, 2010
	(In thousands)
Type of Loans:
Commercial loans	$	1,637,132		$	1,441,167
Real estate construction loans		308,939			409,986
Commercial mortgage loans		3,804,525			3,940,061
Residential mortgage loans		941,229			852,454
Equity lines		214,215			208,876
Installment and other loans		16,117			16,077
Gross loans		6,922,157			6,868,621
Less:
Allowance for loan losses		(229,900	)		(245,231	)
Unamortized deferred loan fees		(7,620	)		(7,621	)
Total loans, net	$	6,684,637		$	6,615,769
Loans held for sale	$	1,637		$	2,873

The Company transferred the only held for sale loan of $2.9 million at December 31, 2010, to other real estate owned ("OREO") in January 2011 and sold two held for sale loans of $2.4 million with a net gains of $109,000 in the second quarter of 2011. As of June 30, 2011, the Company held two loans of $1.6 million under held for sale status.

The Company identified impaired loans with a recorded investment of $374.4 million at June 30, 2011, compared to $382.0 million at December 31, 2010. We considered all non-accrual loans to be impaired. For impaired loans, the amounts previously charged off represent 21.7% at June 30, 2011, and 23.3% at December 31, 2010, of the contractual balances for impaired loans. The following table presents the average balance and interest income recognized related to impaired loans for the period indicated:

	Impaired Loans
	Average Recorded Investment								Interest Income Recognized
	For the Three Months Ended				For the Six Months Ended				For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2011		2010		2011		2010		2011		2010		2011		2010
	(In thousands)
Commercial loans	$	50,379	$	37,492	$	46,204	$	37,751	$	263	$	45	$	525	$	104
Real estate construction loans		84,787		95,540		85,402		98,321		77		—		153		—
Commercial mortgage loans		242,697		234,716		247,885		231,675		1,052		739		2,099		1,478
Residential mortgage and equity lines		17,424		10,960		16,974		10,434		57		11		100		22
Subtotal	$	395,287	$	378,708	$	396,465	$	378,181	$	1,449	$	795	$	2,877		1,604

The following table presents impaired loans and the related allowance for credit losses and charge-off as of the dates indicated:

	Impaired Loans
	June 30, 2011						December 31, 2010
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(In thousands)
With no allocated allowance
Commercial loans	$	46,245	$	28,323	$	—	$	41,233	$	27,775	$	—
Real estate construction loans		104,871		69,328		—		102,186		64,274		—
Commercial mortgage loans		225,912		183,926		—		211,717		156,305		—
Residential mortgage and equity lines		5,458		5,448		—		7,823		7,436		—
Subtotal	$	382,486	$	287,025	$	—	$	362,959	$	255,790	$	—
With allocated allowance
Commercial loans	$	25,637	$	22,117	$	2,482	$	13,930	$	7,748	$	2,925
Real estate construction loans		9,654		7,641		7,140		15,429		13,416		7,470
Commercial mortgage loans		46,692		45,117		3,481		98,593		96,449		3,812
Residential mortgage and equity lines		13,807		12,483		1,161		9,811		8,589		978
Subtotal	$	95,790	$	87,358	$	14,264	$	137,763	$	126,202	$	15,185
Total impaired loans	$	478,276	$	374,383	$	14,264	$	500,722	$	381,992	$	15,185

The following table presents the aging of the loan portfolio by type as of June 30, 2011 and as of December 31, 2010:

	As of June 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
	(In thousands)
Type of Loans:
Commercial loans	$	360	$	11,920	$	—	$	34,350	$	46,630	$	1,590,502	$	1,637,132
Real estate construction loans		1,200		1,709		—		70,449		73,358		235,581		308,939
Commercial mortgage loans		13,969		12,235		—		136,301		162,505		3,642,020		3,804,525
Residential mortgage loans		828		1,202		—		15,319		17,349		1,138,095		1,155,444
Installment and other loans		55		—		—		—		55		16,062		16,117
Total loans	$	16,412	$	27,066	$	—	$	256,419	$	299,897	$	6,622,260	$	6,922,157
	As of December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
	(In thousands)
Type of Loans:
Commercial loans	$	7,037	$	2,990	$	—	$	31,498	$	41,525	$	1,399,642	$	1,441,167
Real estate construction loans		14,634		15,425		4,175		53,937		88,171		321,815		409,986
Commercial mortgage loans		12,569		9,430		831		144,596		167,426		3,772,635		3,940,061
Residential mortgage loans		9,934		2,581		—		12,288		24,803		1,036,527		1,061,330
Installment and other loans		—		—		—		—		—		16,077		16,077
Total loans	$	44,174	$	30,426	$	5,006	$	242,319	$	321,925	$	6,546,696	$	6,868,621

A troubled debt restructuring ("TDR") is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower's financial difficulties, grants a concession to the borrower. The concessions may be granted in various forms, including change in the stated interest rate, reduction in the loan balance or accrued interest, or extension of the maturity date that causes significant delay in payment.

At June 30, 2011, accruing TDRs were $116.3 million and non-accrual TDRs were $38.2 million compared to accruing TDRs of $136.8 million and non-accrual TDRs of $28.1 million at December 31, 2010. During the first six months of 2011, accruing TDRs decreased $35.4 million primarily due to payoff of $2.5 million from four loans, a short sale of $8.7 million, charge-offs of $5.5 million from 3 loans, two loans of $16.5 million became non-accrual TDRs, and pay-downs of $1.5 million. Decreases in non-accrual TDRs were due to payoff of $1.3 million from two loans, charge-off of $589,000 from two loans, transferring a loan of $6.7 million to OREO, and one loan of $1.0 million restored to accrual status during the first six months of 2011. Offsetting the decreases were five new accruing TDRs of $14.9 million and six new non-accrual TDRs of $20.2 million during the first six months of 2011. As of June 30, 2011, the allowance for credit losses associated with TDRs was $1.7 million for accruing TDRs and $1.2 million for non-accrual TDRs.

Accruing TDRs at June 30, 2011, were comprised of ten retail shopping and commercial use buildings of $77.5 million, six office and commercial use buildings of $20.8 million, one hotel loan of $5.2 million, six single family residential loan of $11.8 million, one land loan of $817,000, and one commercial loans of $262,000. We expect that the troubled debt restructuring loans on accruing status as of June 30, 2010, which are all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans.

A summary of TDRs by type of concession, by type of loan, and related allowance for credit losses as of June 30, 2011, and as of December 31, 2010, is shown below:

	As of June 30, 2011
Accruing TDRs	Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total		Allowance
	(In thousands)
Commercial loans	$	13,387	$	1,780	$	—	$	438	$	15,605	$	65
Real estate construction loans		743		—		—		5,776		6,519		—
Commercial mortgage loans		42,019		32,063		2,459		15,050		91,591		1,502
Residential mortgage loans		1,037		595		—		980		2,612		133
Total accruing TDRs	$	57,186	$	34,438	$	2,459	$	22,244	$	116,327	$	1,700

	As of June 30, 2011
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total		Allowance
	(In thousands)
Commercial loans	$	—	$	40	$	1,256	$	2,925	$	4,221	$	1,048
Real estate construction loans		—		7,044		13,968		—		21,012		—
Commercial mortgage loans		1,239		4,585		—		3,865		9,689		69
Residential mortgage loans		329		2,655		—		324		3,308		56
Total non-accrual TDRs	$	1,568	$	14,324	$	15,224	$	7,114	$	38,230	$	1,173

	As of December 31, 2010
Accruing TDRs	Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total		Allowance
	(In thousands)
Commercial loans	$	1,131	$	1,780	$	—	$	1,114	$	4,025	$	59
Real estate construction loans		752		17,226		—		5,776		23,754		117
Commercial mortgage loans		16,586		70,185		3,459		15,055		105,285		3,363
Residential mortgage loans		2,658		599		—		479		3,736		49
Total accruing TDRs	$	21,127	$	89,790	$	3,459	$	22,424	$	136,800	$	3,588

	As of December 31, 2010
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total		Allowance
	(In thousands)
Commercial loans	$	—	$	—	$	2,310	$	—	$	2,310	$	1,159
Real estate construction loans		—		7,044		—		—		7,044		—
Commercial mortgage loans		1,239		14,112		—		1,113		16,464		75
Residential mortgage loans		340		1,037		—		951		2,328		69
Total non-accrual TDRs	$	1,579	$	22,193	$	2,310	$	2,064	$	28,146	$	1,303

As of June 30, 2011, there were no commitments to lend additional funds to those borrowers whose loans have been restructured, were considered impaired, or were on non-accrual status.

As part of the on-going monitoring of the credit quality of our loan portfolio, the Company utilizes a risk grading matrix to assign a risk grade to each loan. The risk rating categories can be generally described by the following grouping for non-homogeneous loans:

• Pass/Watch – These loans range from minimal credit risk to lower than average, but still acceptable, credit risk.

• Special Mention – Borrower is fundamentally sound and loan is currently protected but adverse trends are apparent that, if not corrected, may affect ability to repay. Primary source of loan repayment remains viable but there is increasing reliance on collateral or guarantor support.

• Substandard – These loans are inadequately protected by current sound net worth, paying capacity or pledged collateral. Well-defined weaknesses exist that could jeopardize repayment of debt. Loss may not be imminent, but if weaknesses are not corrected, there is a good possibility of some loss.

• Doubtful – The possibility of loss is extremely high, but due to identifiable and important pending events (which may strengthen the loan) a loss classification is deferred until the situation is better defined.

• Loss – These loans are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

The following table presents loan portfolio by risk rating as of June 30, 2011, and as of December 31, 2010:

	As of June 30, 2011
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
Commercial loans	$	1,488,713	$	37,959	$	103,507	$	6,953	$	1,637,132
Real estate construction loans		160,603		8,876		122,968		16,492		308,939
Commercial mortgage loans		3,317,542		85,695		401,288		—		3,804,525
Residential mortgage and equity lines		1,117,371		2,418		35,499		156		1,155,444
Installment and other loans		15,978		139		—				16,117
Total gross loans	$	6,100,207	$	135,087	$	663,262	$	23,601	$	6,922,157
Loans held for sale	$	—	$	—	$	1,637	$	—	$	1,637

	As of December 31, 2010
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
Commercial loans	$	1,258,537	$	58,189	$	118,670	$	5,771	$	1,441,167
Real estate construction loans		191,455		53,172		153,857		11,502		409,986
Commercial mortgage loans		3,365,040		143,974		431,047		—		3,940,061
Residential mortgage and equity lines		1,026,216		6,109		28,846		159		1,061,330
Installment and other loans		15,535		542		—		—		16,077
Total gross loans	$	5,856,783	$	261,986	$	732,420	$	17,432	$	6,868,621
Loans held for sale	$	—	$	—	$	2,873	$	—	$	2,873

The allowance for loan losses and the reserve for off-balance sheet credit commitments are significant estimates that can and do change based on management's process in analyzing the loan portfolio and on management's assumptions about specific borrowers, underlying collateral, and applicable economic and environmental conditions, among other factors.

The following table presents the balance in the allowance for loan losses by portfolio segment and based on impairment method as of June 30, 2011, and as of December 31, 2010.

	Commercial Loans		Real Estate Construction Loans		Commercial Mortgage Loans		Residential mortgage loans and equity lines		Consumer and other loans		Total
	(In thousands)
June 30, 2011
Loans individually evaluated for impairment
Allowance	$	2,482	$	7,140	$	3,481	$	1,161	$	—	$	14,264
Balance	$	50,440	$	76,969	$	229,043	$	17,931	$	—	$	374,383
Loans collectively evaluated for impairment
Allowance	$	63,378	$	30,543	$	113,533	$	8,146	$	36	$	215,636
Balance	$	1,586,692	$	231,970	$	3,575,482	$	1,137,513	$	16,117	$	6,547,774
Total allowance	$	65,860	$	37,683	$	117,014	$	9,307	$	36	$	229,900
Total balance	$	1,637,132	$	308,939	$	3,804,525	$	1,155,444	$	16,117	$	6,922,157
December 31, 2010
Loans individually evaluated for impairment
Allowance	$	2,540	$	7,470	$	3,106	$	—	$	—	$	13,116
Balance	$	33,555	$	77,691	$	248,059	$	7,435	$	—	$	366,740
Loans collectively evaluated for impairment
Allowance	$	61,379	$	35,791	$	125,241	$	9,668	$	36	$	232,115
Balance	$	1,407,612	$	332,295	$	3,692,002	$	1,053,895	$	16,077	$	6,501,881
Total allowance	$	63,919	$	43,261	$	128,347	$	9,668	$	36	$	245,231
Total balance	$	1,441,167	$	409,986	$	3,940,061	$	1,061,330	$	16,077	$	6,868,621

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended and for the six months ended June 30, 2011, and June 30, 2010. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

For the Three Months Ended June 30, 2010 and 2011

	Commercial Loans			Real Estate Construction Loans			Commercial Mortgage Loans			Residential mortgage and equity line			Installment and Other Loans			Total
	(In thousands)
March 31, 2010 Ending Balance	$	57,445		$	46,747		$	121,633		$	7,250		$	45		$	233,120
Provision for possible credit losses		3,769			(3,334	)		43,479			1,180			(5	)		45,089
Charge-offs		(2,267	)		(3,736	)		(21,844	)		—			—			(27,847	)
Recoveries		1,791			2,765			732			—			—			5,288
Net Charge-offs		(476	)		(971	)		(21,112	)		—			—			(22,559	)
June 30, 2010 Ending Balance	$	60,738		$	42,442		$	144,000		$	8,430		$	40		$	255,650
March 31, 2011 Ending Balance	$	63,194		$	42,554		$	125,295		$	9,949		$	38		$	241,030
Provision for possible credit losses		11,004			(3,265	)		3,532			(642	)		(2	)		10,627
Charge-offs		(8,618	)		(4,607	)		(13,696	)		—			—			(26,921	)
Recoveries		280			3,001			1,883			—						5,164
Net Charge-offs		(8,338	)		(1,606	)		(11,813	)		—			—			(21,757	)
June 30, 2011 Ending Balance	$	65,860		$	37,683		$	117,014		$	9,307		$	36		$	229,900

For the Six Months Ended June 30, 2010 and 2011

	Commercial Loans			Real Estate Construction Loans			Commercial Mortgage Loans			Residential mortgage and equity line			Installment and Other Loans		Total
	(In thousands)
2010 Beginning Balance	$	57,815		$	45,086		$	100,494		$	8,480		$	14	$	211,889
Provision for possible credit losses		12,467			23,642			93,294			(50	)		24		129,377
Charge-offs		(11,913	)		(29,199	)		(50,752	)		—			—		(91,864	)
Recoveries		2,369			2,913			964			—			2		6,248
Net Charge-offs		(9,544	)		(26,286	)		(49,788	)		—			2		(85,616	)
June 30, 2010 Ending Balance	$	60,738		$	42,442		$	144,000		$	8,430		$	40	$	255,650
Reserve for impaired loans	$	4,685		$	5,059		$	14,697		$	854				$	25,295
Reserve for non-impaired loans	$	56,053		$	37,383		$	129,303		$	7,576		$	40	$	230,355
Reserve for off-balance sheet credit commitments	$	1,427		$	3,243		$	120		$	37		$	3	$	4,830
2011 Beginning Balance	$	63,919		$	43,261		$	128,347		$	9,668		$	36	$	245,231
Provision for possible credit losses		10,882			1,389			4,880			(361	)		—		16,790
Charge-offs		(9,996	)		(10,855	)		(19,045	)		—			—		(39,896	)
Recoveries		1,055			3,888			2,832			—					7,775
Net Charge-offs		(8,941	)		(6,967	)		(16,213	)		—			—		(32,121	)
June 30, 2011 Ending Balance	$	65,860		$	37,683		$	117,014		$	9,307		$	36	$	229,900
Reserve for impaired loans	$	2,482		$	7,140		$	3,481		$	1,161		$	—	$	14,264
Reserve for non-impaired loans	$	63,378		$	30,543		$	113,533		$	8,146		$	36	$	215,636
Reserve for off-balance sheet credit commitments	$	564		$	863		$	82		$	35		$	3	$	1,547