Note 7 - Loans

3 Months Ended

Mar. 31, 2015

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, 2015, and December 31, 2014, were as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Type of Loans:
Commercial loans	$	2,434,550		$	2,382,493
Residential mortgage loans		1,600,269			1,570,059
Commercial mortgage loans		4,663,051			4,486,443
Equity lines		175,997			172,879
Real estate construction loans		345,560			298,654
Installment and other loans		5,370			3,552
Gross loans		9,224,797			8,914,080
Less:
Allowance for loan losses		(156,089	)		(161,420	)
Unamortized deferred loan fees		(11,116	)		(12,392	)
Total loans, net	$	9,057,592		$	8,740,268
Loans held for sale	$	-		$	973

At March 31, 2015, recorded investment in impaired loans totaled $180.7 million and was comprised of non-accrual loans of $80.3 million and accruing troubled debt restructured loans (“TDRs) of $100.4 million. At December 31, 2014, recorded investment in impaired loans totaled $174.5 million and was comprised of non-accrual loans of $70.2 million and accruing TDRs of $104.3 million. For impaired loans, the amounts previously charged off represent 17.0% at March 31, 2015, and 17.1% at December 31, 2014, 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,
	2015		2014		2015		2014
	(In thousands)
Commercial loans	$	25,426	$	30,844	$	229	$	226
Real estate construction loans		22,990		34,060		65		65
Commercial mortgage loans		110,293		111,305		917		1,134
Residential mortgage loans and equity lines		17,280		19,156		124		95
Total impaired loans	$	175,989	$	195,365	$	1,335	$	1,520

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

	Impaired Loans
	March 31, 2015						December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(In thousands)
With no allocated allowance
Commercial loans	$	14,176	$	13,148	$	-	$	19,479	$	18,452	$	-
Real estate construction loans		49,076		22,874		-		32,924		17,025		-
Commercial mortgage loans		93,468		85,142		-		77,474		75,172		-
Residential mortgage loans and equity lines		2,496		2,496		-		2,518		2,518		-
Subtotal	$	159,216	$	123,660	$	-	$	132,395	$	113,167	$	-
With allocated allowance
Commercial loans	$	15,677	$	15,660	$	3,911	$	7,003	$	5,037	$	1,263
Real estate construction loans		-		-		-		19,006		8,703		1,077
Commercial mortgage loans		27,529		26,581		6,635		38,197		34,022		8,993
Residential mortgage loans and equity lines		15,393		14,816		498		14,019		13,590		465
Subtotal	$	58,599	$	57,057	$	11,044	$	78,225	$	61,352	$	11,798
Total impaired loans	$	217,815	$	180,717	$	11,044	$	210,620	$	174,519	$	11,798

The following tables present the aging of the loan portfolio by type as of March 31, 2015, and as of December 31, 2014:

	March 31, 2015
	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	$	3,530	$	50	$	787	$	12,086	$	16,453	$	2,418,097	$	2,434,550
Real estate construction loans		-		-		-		17,126		17,126		328,434		345,560
Commercial mortgage loans		22,041		1,738		-		43,079		66,858		4,596,193		4,663,051
Residential mortgage loans and equity lines		2,175		-		-		8,033		10,208		1,766,058		1,776,266
Installment and other loans		-		-		-		-		-		5,370		5,370
Total loans	$	27,746	$	1,788	$	787	$	80,324	$	110,645	$	9,114,152	$	9,224,797

	December 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	$	11,595	$	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 and equity lines		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

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 six 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, 2015, accruing TDRs were $100.4 million and non-accrual TDRs were $44.5 million compared to accruing TDRs of $104.3 million and non-accrual TDRs of $41.6 million at December 31, 2014. The Company allocated specific reserves of $2.1 million to accruing TDRs and $6.9 million to non-accrual TDRs at March 31, 2015, and $6.5 million to accruing TDRs and $4.9 million to non-accrual TDRs at December 31, 2014. The following tables present TDRs that were modified during the first quarter of 2015 and of 2014, their specific reserves at March 31, 2015, and 2014, and charge-offs during the first quarter of 2015 and of 2014:

	Three months ended March 31, 2015								March 31, 2015
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserve
	(Dollars in thousands)
Commercial loans		1	$	850	$	850	$	-	$	-
Commercial mortgage loans		3		8,613		8,613		-		-
Residential mortgage loans and equity lines		4		1,522		1,374		148		46
Total		8	$	10,985	$	10,837	$	148	$	46

	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

Modifications of the loan terms during the first quarter of 2015 were in the form of changes in the stated interest rate, and/or extension of maturity dates, and/or reduction in monthly payment amount. 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 seven months to two years from the modification date. 

We expect that the TDRs on accruing status as of March 31, 2015, 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, 2015, and December 31, 2014, is shown below:

	March 31, 2015
Accruing TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	13,108	$	1,520	$	2,094	$	16,722
Commercial mortgage loans		17,430		6,101		50,861		74,392
Residential mortgage loans		5,233		1,008		3,038		9,279
Total accruing TDRs	$	35,771	$	8,629	$	55,993	$	100,393

	March 31, 2015
Non-accrual TDRs	Payment Deferral		Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	2,323	$	1,144	$	-	$	3,467
Commercial mortgage loans		12,344		-		26,834		39,178
Residential mortgage loans		622		-		1,274		1,896
Total non-accrual TDRs	$	15,289	$	1,144	$	28,108	$	44,541

	December 31, 2014
Accruing TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
Commercial loans	$	11,572	$	-	$	-	$	4,934	$	16,506
Real estate construction loans		5,765		-		-		-		5,765
Commercial mortgage loans		20,543		26,694		-		26,351		73,588
Residential mortgage loans		3,316		-		410		4,771		8,497
Total accruing TDRs	$	41,196	$	26,694	$	410	$	36,056	$	104,356

	December 31, 2014
Non-accrual TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	1,423	$	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	$	18,366	$	860	$	22,392	$	41,618

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

	Three months ended March 31,
Accruing TDRs	2015			2014
	(In thousands)
Beginning balance	$	104,356		$	117,597
New restructurings		10,628			7,375
Restructured loans restored to accrual status		-			962
Charge-offs		(148	)		-
Payments		(4,254	)		(7,012	)
Restructured loans placed on nonaccrual		(10,189	)		-
Ending balance	$	100,393		$	118,922

	Three months ended March 31,
Non-accrual TDRs	2015			2014
	(In thousands)
Beginning balance	$	41,618		$	38,769
New restructurings		209			1,539
Restructured loans placed on nonaccrual		10,189			-
Charge-offs		(2,754	)		(4	)
Payments		(4,721	)		(1,545	)
Restructured loans restored to accrual status		-			(962	)
Ending balance	$	44,541		$	37,797

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, 2015.  However, the Company took a charge off in the amount of $598,000 on a $10.2 million commercial mortgage loan, which was modified as a TDR during the previous twelve months.  As a result, the Company placed that loan on non-accrual status and the charge off taken was due to a decrease in collateral value based on an updated appraisal report.

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, 2015, there were no commitments to lend additional funds to those borrowers whose loans had 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 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 Company had no loans held for sale as of March 31, 2015. The following tables present the loan portfolio by risk rating as of March 31, 2015, and as of December 31, 2014:

	March 31, 2015
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	2,314,983	$	50,083	$	67,662	$	1,822	$	2,434,550
Real estate construction loans		328,434		-		16,626		500		345,560
Commercial mortgage loans		4,375,229		123,384		154,848		9,590		4,663,051
Residential mortgage loans and equity lines		1,765,727		304		10,235		-		1,776,266
Installment and other loans		5,370		-		-		-		5,370
Total gross loans	$	8,789,743	$	173,771	$	249,371	$	11,912	$	9,224,797

	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 loans 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

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, 2015, and as of December 31, 2014:

			Real Estate		Commercial		Residential
	Commercial		Construction		Mortgage		Mortgage Loans		Installment and
	Loans		Loans		Loans		and Equity Lines		Other Loans		Total
	(In thousands)
March 31, 2015
Loans individually evaluated for impairment
Allowance	$	3,911	$	-	$	6,635	$	498	$	-	$	11,044
Balance	$	28,808	$	22,873	$	111,724	$	17,312	$	-	$	180,717
Loans collectively evaluated for impairment
Allowance	$	45,794	$	23,270	$	64,683	$	11,279	$	19	$	145,045
Balance	$	2,405,742	$	322,687	$	4,551,327	$	1,758,954	$	5,370	$	9,044,080
Total allowance	$	49,705	$	23,270	$	71,318	$	11,777	$	19	$	156,089
Total balance	$	2,434,550	$	345,560	$	4,663,051	$	1,776,266	$	5,370	$	9,224,797
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

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2015, and March 31, 2014. 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)
2015 Beginning Balance	$	47,501		$	27,652		$	74,673		$	11,578		$	16		$	161,420
Provision/(credit) for possible credit losses		793			(4,427	)		(1,697	)		328			3			(5,000	)
Charge-offs		(864	)		-			(3,452	)		(148	)		-			(4,464	)
Recoveries		2,275			45			1,794			19			-			4,133
Net (charge-offs)/recoveries		1,411			45			(1,658	)		(129	)		-			(331	)
March 31, 2015 Ending Balance	$	49,705		$	23,270		$	71,318		$	11,777		$	19		$	156,089
Reserve for impaired loans	$	3,911		$	-		$	6,635		$	498		$	-		$	11,044
Reserve for non-impaired loans	$	45,794		$	23,270		$	64,683		$	11,279		$	19		$	145,045
Reserve for off-balance sheet credit commitments	$	903		$	527		$	181		$	40		$	1		$	1,652
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