Note 7 - Loans

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

7. Loans 

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

The components of loans in the condensed consolidated balance sheets as of March 31, 2014, and December 31, 2013, were as follows:

	March 31, 2014			December 31, 2013
	(In thousands)
Type of Loans:
Commercial loans	$	2,229,880		$	2,298,724
Residential mortgage loans		1,441,230			1,355,255
Commercial mortgage loans		4,192,987			4,023,051
Equity lines		172,395			171,277
Real estate construction loans		253,832			221,701
Installment and other loans		11,958			14,555
Gross loans		8,302,282			8,084,563
Less:
Allowance for loan losses		(169,138	)		(173,889	)
Unamortized deferred loan fees		(12,936	)		(13,487	)
Total loans, net	$	8,120,208		$	7,897,187

At March 31, 2014, recorded investment in impaired loans totaled $189.3 million and was comprised of non-accrual loans of $70.4 million and accruing troubled debt restructured (“TDR”) loans of $118.9 million. At December 31, 2013, recorded investment in impaired loans totaled $200.8 million and was comprised of non-accrual loans of $83.2 million and accruing TDRs of $117.6 million. For impaired loans, the amounts previously charged off represent 15.0% at March 31, 2014, and 23.9% at December 31, 2013, of the contractual balances for impaired loans. The following table presents the average balance and interest income recognized related to impaired loans for the periods indicated:

	Impaired Loans
	Average Recorded Investment				Interest Income Recognized
	Three months ended				Three months ended
	March 31,				March 31,
	2014		2013		2014		2013
	(In thousands)
Commercial loans	$	30,844	$	22,126	$	226	$	183
Real estate construction loans		34,060		42,068		65		66
Commercial mortgage loans		111,305		162,257		1,134		1,562
Residential mortgage and equity lines		19,156		17,797		95		84
Total	$	195,365	$	244,248	$	1,520	$	1,895

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

	Impaired Loans
	March 31, 2014						December 31, 2013
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(In thousands)
With no allocated allowance
Commercial loans	$	14,001	$	11,914	$	-	$	20,992	$	18,905	$	-
Real estate construction loans		25,157		14,854		-		25,401		15,097		-
Commercial mortgage loans		73,274		71,934		-		105,593		78,930		-
Residential mortgage loans and equity lines		4,876		4,876		-		4,892		4,892		-
Subtotal	$	117,308	$	103,578	$	-	$	156,878	$	117,824	$	-
With allocated allowance
Commercial loans	$	27,772	$	18,099	$	4,663	$	22,737	$	13,063	$	2,519
Real estate construction loans		28,158		19,005		3,129		28,475		19,323		3,460
Commercial mortgage loans		35,363		34,979		6,165		39,223		35,613		6,584
Residential mortgage loans and equity lines		14,083		13,650		538		16,535		14,957		721
Subtotal	$	105,376	$	85,733	$	14,495	$	106,970	$	82,956	$	13,284
Total impaired loans	$	222,684	$	189,311	$	14,495	$	263,848	$	200,780	$	13,284

The following table presents the aging of the loan portfolio by type as of March 31, 2014, and as of December 31, 2013:

	March 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	11,386	$	610	$	-	$	13,806	$	25,802	$	2,204,078	$	2,229,880
Real estate construction loans		3,140		-		-		28,042		31,182		222,650		253,832
Commercial mortgage loans		62,014		-		974		17,042		80,030		4,112,957		4,192,987
Residential mortgage loans and equity lines		5,881		-		-		11,498		17,379		1,596,246		1,613,625
Installment and other loans		-		-		-		-		-		11,958		11,958
Total loans	$	82,421	$	610	$	974	$	70,388	$	154,393	$	8,147,889	$	8,302,282

	December 31, 2013
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	7,170	$	16,562	$	-	$	21,232	$	44,964	$	2,253,760	$	2,298,724
Real estate construction loans		-		-		-		28,586		28,586		193,115		221,701
Commercial mortgage loans		20,043		7,862		982		19,621		48,508		3,974,543		4,023,051
Residential mortgage loans and equity lines		3,508		832		-		13,744		18,084		1,508,448		1,526,532
Installment and other loans		100		-		-		-		100		14,455		14,555
Total loans	$	30,821	$	25,256	$	982	$	83,183	$	140,242	$	7,944,321	$	8,084,563

The determination of the amount of the allowance for credit losses for impaired loans is based on management’s current judgment about the credit quality of the loan portfolio and takes into consideration known relevant internal and external factors that affect collectability when determining the appropriate level for the allowance for credit losses. The nature of the process by which the Bank determines the appropriate allowance for credit losses requires the exercise of considerable judgment. This allowance evaluation process is also applied to troubled debt restructurings since they are considered to be impaired loans.

A troubled debt restructuring 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 a change in the stated interest rate, a reduction in the loan balance or accrued interest, or an extension of the maturity date that causes significant delay in payment.

TDRs on accrual status are comprised of the loans that have, pursuant to the Bank’s policy, performed under the restructured terms and have demonstrated sustained performance under the modified terms for nine months before being returned to accrual status. The sustained performance considered by management pursuant to its policy includes the periods prior to the modification if the prior performance met or exceeded the modified terms. This would include cash paid by the borrower prior to the restructure to set up interest reserves.

At March 31, 2014, accruing TDRs were $118.9 million and non-accrual TDRs were $37.8 million compared to accruing TDRs of $117.6 million and non-accrual TDRs of $38.8 million at December 31, 2013. The Company allocated specific reserves of $7.3 million to accruing TDRs and $1.8 million to non-accrual TDRs at March 31, 2014, and $6.9 million to accruing TDRs and $2.2 million to non-accrual TDRs at December 31, 2013. The following tables present TDRs that were modified during the first quarter of 2014 and 2013, their specific reserve at March 31, 2014, and charge-offs during the first quarter of 2014 and 2013:

	Three months ended March 31, 2014								March 31, 2014
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserve
	(Dollars in thousands)
Commercial loans		2	$	8,243	$	8,243	$	-	$	1,035
Residential mortgage loans and equity lines		2		671		671		-		36
Total		4	$	8,914	$	8,914	$	-	$	1,071

	Three months ended March 31, 2013								March 31, 2013
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserve
	(Dollars in thousands)
Commercial loans		4	$	4,007	$	4,007	$	-	$	61
Commercial mortgage loans		2		1,175		1,175		-		10
Residential mortgage loans and equity lines		6		1,696		1,696		-		265
Total		12	$	6,878	$	6,878	$	-	$	336

Modifications of the loan terms during the first quarter of 2014 were in the form of changes in the stated interest rate, and in payment terms to interest only from principal and interest or reduction in monthly payment amount, multiple note structure, and waiver of late charges and collection fees.  The length of time for which modifications involving a reduction of the stated interest rate or changes in payment terms that were documented ranged from twelve months to three years from the modification date. 

We expect that the TDR loans on accruing status as of March 31, 2014, which were 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 and by type of loan, as of March 31, 2014, and December 31, 2013, is shown below:

	March 31, 2014
Accruing TDRs	Principal Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	12,047	$	1,594	$	2,566	$	16,207
Real estate construction loans		-		-		5,817		5,817
Commercial mortgage loans		11,708		8,330		69,832		89,870
Residential mortgage loans		2,513		1,021		3,494		7,028
Total accruing TDRs	$	26,268	$	10,945	$	81,709	$	118,922

	March 31, 2014
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	2,867	$	1,307	$	-	$	4,174
Real estate construction loans		-		15,692		-		9,037		24,729
Commercial mortgage loans		1,407		2,153		-		1,843		5,403
Residential mortgage loans		231		1,681		219		1,360		3,491
Total non-accrual TDRs	$	1,638	$	22,393	$	1,526	$	12,240	$	37,797

	December 31, 2013
Accruing TDRs	Principal Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	9,112	$	2,916	$	2,708	$	14,736
Real estate construction loans		-		-		5,834		5,834
Commercial mortgage loans		11,333		9,389		70,200		90,922
Residential mortgage loans		1,564		1,024		3,517		6,105
Total accruing TDRs	$	22,009	$	13,329	$	82,259	$	117,597

	December 31, 2013
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	2,866	$	1,352	$	-	$	4,218
Real estate construction loans		-		16,009		-		9,263		25,272
Commercial mortgage loans		1,443		2,168		-		1,843		5,454
Residential mortgage loans		241		2,206		-		1,378		3,825
Total non-accrual TDRs	$	1,684	$	23,249	$	1,352	$	12,484	$	38,769

The activity within our TDR loans for the periods indicated are shown below:

	Three months ended March 31,
Accruing TDRs	2014			2013
	(In thousands)
Beginning balance	$	117,597		$	144,695
New restructurings		7,375			4,816
Restructured loans restored to accrual status		962			630
Payments		(7,012	)		(17,892	)
Restructured loans placed on nonaccrual		-			(2,034	)
Ending balance	$	118,922		$	130,215

	Three months ended March 31,
Non-accrual TDRs	2014			2013
	(In thousands)
Beginning balance	$	38,769		$	47,731
New restructurings		1,539			2,062
Restructured loans placed on nonaccrual		-			2,034
Charge-offs		(4	)		(679	)
Payments		(1,545	)		(640	)
Restructured loans restored to accrual status		(962	)		(630	)
Ending balance	$	37,797		$	49,878

A loan is considered to be in payment default once it is 60 to 90 days contractually past due under the modified terms.  The Company did not have any loans that were modified as TDRs during the previous twelve months and which subsequently defaulted as of March 31, 2014. 

Under the Company’s internal underwriting policy, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification in order to determine whether a borrower is experiencing financial difficulty.

As of March 31, 2014, 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 tables present loan portfolio by risk rating as of March 31, 2014, and as of December 31, 2013:

	March 31, 2014
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial loans	$	2,022,525	$	111,451	$	89,713	$	6,191	$	2,229,880
Real estate construction loans		213,529		4,062		32,928		3,313		253,832
Commercial mortgage loans		3,858,117		128,977		205,893		-		4,192,987
Residential mortgage loans and equity lines		1,599,979		244		13,402		-		1,613,625
Installment and other loans		11,958		-		-		-		11,958
Total gross loans	$	7,706,108	$	244,734	$	341,936	$	9,504	$	8,302,282

	December 31, 2013
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial loans	$	2,108,191	$	84,786	$	102,088	$	3,659	$	2,298,724
Real estate construction loans		184,449		-		33,939		3,313		221,701
Commercial mortgage loans		3,686,788		127,436		208,827		-		4,023,051
Residential mortgage loans and equity lines		1,510,647		-		15,885		-		1,526,532
Installment and other loans		14,555		-		-		-		14,555
Total gross loans	$	7,504,630	$	212,222	$	360,739	$	6,972	$	8,084,563

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 March 31, 2014, and as of December 31, 2013:

			Real Estate		Commercial		Residential
	Commercial		Construction		Mortgage		Mortgage Loans		Installment and
	Loans		Loans		Loans		and Equity Lines		Other Loans		Total
	(In thousands)
March 31, 2014
Loans individually evaluated for impairment
Allowance	$	4,663	$	3,129	$	6,165	$	538	$	-	$	14,495
Balance	$	30,013	$	33,859	$	106,913	$	18,526	$	-	$	189,311
Loans collectively evaluated for impairment
Allowance	$	60,119	$	7,497	$	75,161	$	11,839	$	27	$	154,643
Balance	$	2,199,867	$	219,973	$	4,086,074	$	1,595,099	$	11,958	$	8,112,971
Total allowance	$	64,782	$	10,626	$	81,326	$	12,377	$	27	$	169,138
Total balance	$	2,229,880	$	253,832	$	4,192,987	$	1,613,625	$	11,958	$	8,302,282
December 31, 2013
Loans individually evaluated for impairment
Allowance	$	2,519	$	3,460	$	6,584	$	721	$	-	$	13,284
Balance	$	31,968	$	34,420	$	114,544	$	19,848	$	-	$	200,780
Loans collectively evaluated for impairment
Allowance	$	62,584	$	8,539	$	78,169	$	11,284	$	29	$	160,605
Balance	$	2,266,756	$	187,281	$	3,908,507	$	1,506,684	$	14,555	$	7,883,783
Total allowance	$	65,103	$	11,999	$	84,753	$	12,005	$	29	$	173,889
Total balance	$	2,298,724	$	221,701	$	4,023,051	$	1,526,532	$	14,555	$	8,084,563

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2014, and March 31, 2013. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

				Real Estate			Commercial			Residential			Installment
	Commercial			Construction			Mortgage			Mortgage Loans			and Other
	Loans			Loans			Loans			and Equity Lines			Loans			Total
	(In thousands)
2014 Beginning Balance	$	65,103		$	11,999		$	84,753		$	12,005		$	29		$	173,889
Provision/(credit) for possible credit losses		4,888			(1,398	)		(4,306	)		447			(2	)		(371	)
Charge-offs		(7,226	)		-			(1,698	)		(78	)		-			(9,002	)
Recoveries		2,017			25			2,577			3			-			4,622
Net (charge-offs)/recoveries		(5,209	)		25			879			(75	)		-			(4,380	)
March 31, 2014 Ending Balance	$	64,782		$	10,626		$	81,326		$	12,377		$	27		$	169,138
Reserve for impaired loans	$	4,663		$	3,129		$	6,165		$	538		$	-		$	14,495
Reserve for non-impaired loans	$	60,119		$	7,497		$	75,161		$	11,839		$	27		$	154,643
Reserve for off-balance sheet credit commitments	$	929		$	326		$	445		$	33		$	1		$	1,734
2013 Beginning Balance	$	66,101		$	23,017		$	82,473		$	11,703		$	28		$	183,322
Provision/(credit) for possible credit losses		(3,310	)		(2,399	)		2,968			795			4			(1,942	)
Charge-offs		(2,690	)		-			(990	)		(410	)		-			(4,090	)
Recoveries		955			79			365			3			-			1,402
Net (charge-offs)/recoveries		(1,735	)		79			(625	)		(407	)		-			(2,688	)
March 31, 2013 Ending Balance	$	61,056		$	20,697		$	84,816		$	12,091		$	32		$	178,692
Reserve for impaired loans	$	1,717		$	8,080		$	6,242		$	1,318		$	-		$	17,357
Reserve for non-impaired loans	$	59,339		$	12,617		$	78,574		$	10,773		$	32		$	161,335
Reserve for off-balance sheet credit commitments	$	837		$	311		$	2,122		$	33		$	2		$	3,305