Note 5 - Loans

12 Months Ended

Dec. 31, 2014

Receivables [Abstract]

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

5.     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; Edison, New Jersey; Nevada; and Hong Kong. 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 December 31, 2014, and December 31, 2013, were as follows:

	As of December 31,
	2014			2013
	(In thousands)
Type of Loans:
Commercial loans	$	2,382,493		$	2,298,724
Real estate construction loans		298,654			221,701
Commercial mortgage loans		4,486,443			4,023,051
Residential mortgage loans		1,570,059			1,355,255
Equity lines		172,879			171,277
Installment and other loans		3,552			14,555
Gross loans		8,914,080			8,084,563
Less:
Allowance for loan losses		(161,420	)		(173,889	)
Unamortized deferred loan fees		(12,392	)		(13,487	)
Total loans and leases, net	$	8,740,268		$	7,897,187
Loans held for sale	$	973		$	-

The Company pledged real estate loans of $3.8 billion at December 31, 2014, and $1.6 billion at December 31, 2013, to the Federal Home Loan Bank of San Francisco under its specific pledge program. In addition, the Bank pledged $127.2 million at December 31, 2014, and $119.1 million at December 31, 2013, of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

Loans serviced for others as of December 31, 2014, totaled $240.1 million and were comprised of $125.8 million of residential mortgages, $52.5 million of commercial loans, $31.2 million of commercial real estate loans, and $30.6 million of construction loans.

      The Company has entered into transactions with its directors, executive officers, or principal holders of its equity securities, or the associates of such persons (“Related Parties”). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with customers who are not related parties. In management’s opinion, these transactions did not involve more than normal credit risk or present other unfavorable features. All loans to Related Parties were current as of December 31, 2014. An analysis of the activity with respect to loans to Related Parties for the years indicated is as follows:

	December 31,
	2014			2013
	(In thousands)
Balance at beginning of year	$	126,985		$	172,584
Additional loans made		50,657			64,063
Payment received		(119,783	)		(109,662	)
Balance at end of year	$	57,859		$	126,985

At December 31, 2014, recorded investment in impaired loans totaled $174.5 million and was comprised of nonaccrual loans, excluding loans held for sale, of $70.2 million and accruing TDR’s of $104.3 million. At December 31, 2013, recorded investment in impaired loans totaled $200.8 million and was comprised of nonaccrual loans of $83.2 million and accruing TDR’s of $117.6 million. The average balance of impaired loans was $190.2 million in 2014 and $221.2 million in 2013. We considered all non-accrual loans and troubled debt restructurings ("TDR") to be impaired. Interest recognized on impaired loans totaled $5.3 million in 2014 and $5.6 million in 2013. The Bank recognizes interest income on impaired loans based on its existing method of recognizing interest income on non-accrual loans except accruing TDRs. For impaired loans, the amounts previously charged off represent 17.1% at December 31, 2014, and 23.9% at December 31, 2013, of the contractual balances for impaired loans. The following table presents impaired loans and the related allowance as of the dates indicated:

	Impaired Loans
	As of December 31, 2014						As of December 31, 2013
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(Dollars in thousands)
With no allocated allowance
Commercial loans	$	19,479	$	18,452	$	-	$	20,992	$	18,905	$	-
Real estate construction loans		32,924		17,025		-		25,401		15,097		-
Commercial mortgage loans		77,474		75,172		-		105,593		78,930		-
Residential mortgage and equity lines		2,518		2,518		-		4,892		4,892		-
Subtotal	$	132,395	$	113,167	$	-	$	156,878	$	117,824	$	-
With allocated allowance
Commercial loans	$	7,003	$	5,037	$	1,263	$	22,737	$	13,063	$	2,519
Real estate construction loans		19,006		8,703		1,077		28,475		19,323		3,460
Commercial mortgage loans		38,197		34,022		8,993		39,223		35,613		6,584
Residential mortgage and equity lines		14,019		13,590		465		16,535		14,957		721
Subtotal	$	78,225	$	61,352	$	11,798	$	106,970	$	82,956	$	13,284
Total impaired loans	$	210,620	$	174,519	$	11,798	$	263,848	$	200,780	$	13,284

The following table presents the average balance and interest income recognized related to impaired loans for the periods indicated:

	For the year ended December 31,
	2014		2013		2012		2014		2013		2012
	Average Recorded Investment						Interest Income Recognized
	(In thousands)
Commercial loans	$	26,128	$	27,123	$	31,798	$	878	$	770	$	580
Real estate construction loans		32,439		37,875		49,094		264		284		265
Commercial mortgage loans		114,248		138,121		178,822		3,735		4,256		8,221
Residential mortgage and equity lines		17,411		18,033		18,062		462		289		239
Subtotal	$	190,226	$	221,152	$	277,776	$	5,339	$	5,599	$	9,305

The following is a summary of non-accrual loans as of December 31, 2014, 2013, and 2012 and the related net interest foregone for the years then ended:

	2014		2013		2012
	(In thousands)
Non-accrual portfolio loans	$	70,163	$	83,183	$	103,902
Non-accrual loans held-for-sale		973		-		-
Total non-accrual loans	$	71,136	$	83,183	$	103,902
Contractual interest due	$	6,663	$	5,851	$	6,621
Interest recognized		217		22		1,006
Net interest foregone	$	6,446	$	5,829	$	5,615

The following tables present the aging of the loan portfolio by type as of December 31, 2014, and December 31, 2013:

	As of December 31, 2014
	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
Type of Loans:	(In thousands)
Commercial loans	$	11,595	$	1,238	$	-	$	6,983	$	19,816	$	2,362,677	$	2,382,493
Real estate construction loans		1,416		-		-		19,963		21,379		277,275		298,654
Commercial mortgage loans		17,654		3,909		-		35,606		57,169		4,429,274		4,486,443
Residential mortgage loans		5,634		732		-		7,611		13,977		1,728,961		1,742,938
Installment and other loans		60		-		-		-		60		3,492		3,552
Total loans	$	36,359	$	5,879	$	-	$	70,163	$	112,401	$	8,801,679	$	8,914,080

	As of December 31, 2013
	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
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		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 problem 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 collectibility 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 TDRs since TDRs are considered to be impaired loans.

At December 31, 2014, accruing TDRs were $104.3 million and non-accrual TDRs were $41.6 million compared to accruing TDRs of $117.6 million and non-accrual TDRs of $38.8 million at December 31, 2013. The Company has allocated specific reserves of $6.5 million to accruing TDRs and $4.9 million to non-accrual TDRs at December 31, 2014, and $6.9 million to accruing TDRs and $2.2 million to non-accrual TDRs at December 31, 2013. The following table presents TDRs that were modified during 2014, their specific reserve at December 31, 2014, and charge-offs during 2014:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-offs
	(Dollars in thousands)
Commercial loans		4	$	10,539	$	10,539	$	21	$	-
Commercial mortgage loans		3		11,817		11,817		5,550		-
Residential mortgage and equity lines		7		2,715		2,715		29		-
Total		14	$	25,071	$	25,071	$	5,600	$	-

The following table presents TDRs that were modified during 2013, their specific reserve at December 31, 2013, and charge-offs during 2013:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-offs
	(Dollars in thousands)
Commercial loans		9	$	12,026	$	10,860	$	550	$	1,166
Commercial mortgage loans		5		13,090		13,090		329		-
Residential mortgage and equity lines		11		3,736		3,658		103		78
Total		25	$	28,852	$	27,608	$	982	$	1,244

The following table presents TDRs that were modified during 2012, their specific reserve at December 31, 2012, and charge-offs during 2012:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		9	$	3,646	$	3,646	$	1,213	$	-
Commercial mortgage loans		20		62,118		58,393		27		3,725
Residential mortgage and equity lines		14		4,305		4,223		162		82
Total		43	$	70,069	$	66,262	$	1,402	$	3,807

A summary of TDRs by type of concession and by type of loans as of December 31, 2014, and December 31, 2013, are shown below:

			December 31, 2014
Accruing TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	11,572	$	-	$	-	$	4,934	$	16,506
Real estate construction loans		-		5,765		-		-		-		5,765
Commercial mortgage loans		436		20,107		26,694		-		26,351		73,588
Residential mortgage loans		-		3,316		-		410		4,771		8,497
Total accruing TDRs	$	436	$	40,760	$	26,694	$	410	$	36,056	$	104,356

	December 31, 2014
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	1,184	$	239	$	860	$	1,269	$	3,552
Real estate construction loans		-		-		-		19,462		19,462
Commercial mortgage loans		-		15,917		-		973		16,890
Residential mortgage loans		-		1,026		-		688		1,714
Total non-accrual TDRs	$	1,184	$	17,182	$	860	$	22,392	$	41,618

	As of December 31, 2013
Accruing TDRs	Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		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

	As of 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

Troubled debt restructurings on accrual status totaled $104.3 million at December 31, 2014, and were comprised of 60 loans, a decrease of $13.3 million, compared to 64 loans totaling $117.6 million at December 31, 2013. TDRs at December 31, 2014, were comprised of nine commercial loans of $16.5 million, three hotel loans of $15.7 million, 31 single family residential loans of $13.6 million, two industrial and manufactural use building loans of $12.2 million, two land loans for residential purpose of $10.2 million, four commercial condos loans of $10.1 million, three retail shopping and commercial use building loans of $9.0 million, one multi-family residential loan of $6.1 million, one shopping center construction loan of $5.8 million, three office buildings loans of $3.5 million, and one warehouse loan of $1.6 million. We expect that the troubled debt restructuring loans on accruing status as of December 31, 2014, 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. The comparable TDRs at December 31, 2013, were comprised of 13 retail shopping and commercial use building loans of $44.2 million, ten office and commercial use building loans of $28.6 million, four hotel loans of $17.2 million, 25 single family residential loans of $20.0 million, two warehouses of $1.6 million, five commercial loans of $5.3 million, and five multi-family residential loans of $748,000. The activity within our TDR loans for 2014, 2013, and 2012 are shown below:

Accruing TDRs	2014			2013			2012
	(In thousands)
Beginning balance	$	117,597		$	144,695		$	120,016
New restructurings		23,740			21,382			53,958
Restructured loans restored to accrual status		962			6,851			8,356
Charge-offs		-			(78	)		(251	)
Payments		(13,256	)		(52,362	)		(5,159	)
Restructured loans placed on non-accrual		(24,687	)		(2,891	)		(32,225	)
Ending balance	$	104,356		$	117,597		$	144,695

Non-accrual TDRs	2014			2013			2012
	(In thousands)
Beginning balance	$	38,769		$	47,731		$	50,870
New restructurings		1,331			6,226			12,304
Restructured loans placed on non-accrual		24,687			2,891			32,225
Charge-offs		(8,937	)		(2,124	)		(4,182	)
Payments		(11,710	)		(4,295	)		(33,931	)
Foreclosures		(1,560	)		(4,809	)		(1,199	)
Restructured loans restored to accrual status		(962	)		(6,851	)		(8,356	)
Ending balance	$	41,618		$	38,769		$	47,731

A loan is considered to be in payment default once it is 60 to 90 days contractually past due under the modified terms.  There were no loans modified as TDRs during the previous twelve months that subsequently defaulted as of December 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 December 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. Loans are risk rated based on analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of all sources of repayment, the borrower’s current financial and liquidity status and all other relevant information. 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 the 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 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 loans as an active asset is no longer warranted.

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

	As of December 31, 2014
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	2,260,474	$	47,619	$	72,561	$	1,839	$	2,382,493
Real estate construction loans		272,927		-		25,227		500		298,654
Commercial mortgage loans		4,213,453		105,970		167,020		-		4,486,443
Residential mortgage and equity lines		1,733,248		-		9,690		-		1,742,938
Installment and other loans		3,552		-		-		-		3,552
Total gross loans	$	8,483,654	$	153,589	$	274,498	$	2,339	$	8,914,080
Loans held for sale	$	-	$	-	$	973	$	-	$	973

	As of December 31, 2013
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
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 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 December 31, 2014, and as of December 31, 2013.

			Real Estate		Commercial		Residential
	Commercial		Construction		Mortgage		Mortgage		Consumer
	Loans		Loans		Loans		and Equity Lines		and Other		Total
	(In thousands)
December 31, 2014
Loans individually evaluated for impairment
Allowance	$	1,263	$	1,077	$	8,993	$	465	$	-	$	11,798
Balance	$	23,489	$	25,728	$	109,194	$	16,108	$	-	$	174,519
Loans collectively evaluated for impairment
Allowance	$	46,238	$	26,575	$	65,680	$	11,113	$	16	$	149,622
Balance	$	2,359,004	$	272,926	$	4,377,249	$	1,726,830	$	3,552	$	8,739,561
Total allowance	$	47,501	$	27,652	$	74,673	$	11,578	$	16	$	161,420
Total balance	$	2,382,493	$	298,654	$	4,486,443	$	1,742,938	$	3,552	$	8,914,080
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 years ended December 31, 2014 and 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			and Other
	Loans			Loans			Loans			and Equity Lines			Loans			Total
	(In thousands)
2013 Beginning Balance	$	66,101		$	23,017		$	82,473		$	11,703		$	28		$	183,322
Provision/(reversal) for possible loan losses		11,888			(13,302	)		(2,500	)		924			(10	)		(3,000	)
Charge-offs		(15,625	)		-			(3,945	)		(872	)		-			(20,442	)
Recoveries		2,739			2,284			8,725			250			11			14,009
Net Charge-offs		(12,886	)		2,284			4,780			(622	)		11			(6,433	)
2013 Ending Balance	$	65,103		$	11,999		$	84,753		$	12,005		$	29		$	173,889
Reserve to impaired loans	$	2,519		$	3,460		$	6,584		$	721		$	-		$	13,284
Reserve to non-impaired loans	$	62,584		$	8,539		$	78,169		$	11,284		$	29		$	160,605
Reserve for off-balance sheet credit commitments	$	909		$	304		$	111		$	38		$	1		$	1,363
2014 Beginning Balance	$	65,103		$	11,999		$	84,753		$	12,005		$	29		$	173,889
Provision/(reversal) for possible loan losses		(22,244	)		19,853			(8,197	)		(558	)		(26	)		(11,172	)
Charge-offs		(7,875	)		(6,747	)		(7,458	)		(155	)		-			(22,235	)
Recoveries		12,517			2,547			5,575			286			13			20,938
Net Charge-offs		4,642			(4,200	)		(1,883	)		131			13			(1,297	)
2014 Ending Balance	$	47,501		$	27,652		$	74,673		$	11,578		$	16		$	161,420
Reserve to impaired loans	$	1,263		$	1,077		$	8,993		$	465		$	-		$	11,798
Reserve to non-impaired loans	$	46,238		$	26,575		$	65,680		$	11,113		$	16		$	149,622
Reserve for off-balance sheet credit commitments	$	923		$	728		$	259		$	39		$	-		$	1,949

An analysis of the activity in the allowance for credit losses for the years ended December 31, 2014, 2013, and 2012 is as follows:

	December 31,
	2014			2013			2012
Allowance for Loan Losses	(In thousands)
Balance at beginning of year	$	173,889		$	183,322		$	206,280
(Reversal)/provision for credit losses		(10,800	)		(3,000	)		(9,000	)
Transfers (to)/from reserve for off-balance sheet credit commitments		(372	)		-			706
Loans charged off		(22,235	)		(20,442	)		(32,791	)
Recoveries of charged off loans		20,938			14,009			18,127
Balance at end of year	$	161,420		$	173,889		$	183,322
Reserve for Off-balance Sheet Credit Commitments
Balance at beginning of year	$	1,363		$	1,363		$	2,069
Provision for credit losses/transfers		586			-			(706	)
Balance at end of year	$	1,949		$	1,363		$	1,363

Residential mortgage loans in process of formal foreclosure proceedings were $2.3 million at December 31, 2014, compared to $4.0 million at December 31, 2013.