Note 7 - Loans

6 Months Ended

Jun. 30, 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 June 30, 2015, and December 31, 2014, were as follows:

	June 30, 2015			December 31, 2014
	(In thousands)
Type of Loans:
Commercial loans	$	2,387,450		$	2,382,493
Residential mortgage loans		1,713,312			1,570,059
Commercial mortgage loans		4,849,381			4,486,443
Equity lines		176,067			172,879
Real estate construction loans		370,828			298,654
Installment and other loans		4,970			3,552
Gross loans	$	9,502,008		$	8,914,080
Less:
Allowance for loan losses		(153,437	)		(161,420	)
Unamortized deferred loan fees		(10,207	)		(12,392	)
Total loans, net	$	9,338,364		$	8,740,268
Loans held for sale	$	-		$	973

At June 30, 2015, recorded investment in impaired loans totaled $166.1 million and was comprised of non-accrual loans of $66.1 million and accruing troubled debt restructured loans (“TDRs) of $100.0 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 18.6% at June 30, 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				Six months ended				Three months ended				Six months ended
	June 30,				June 30,				June 30,				June 30,
	2015		2014		2015		2014		2015		2014		2015		2014
	(In thousands)
Commercial loans	$	25,620	$	27,773	$	25,523	$	29,300	$	201	$	194	$	412	$	420
Real estate construction loans		20,790		33,049		21,884		33,552		65		66		130		132
Commercial mortgage loans		105,815		112,982		108,042		112,148		793		995		1,574		2,014
Residential mortgage loans and equity lines		17,025		18,392		17,152		18,772		120		93		240		192
Total impaired loans	$	169,250	$	192,196	$	172,601	$	193,772	$	1,179	$	1,348	$	2,356	$	2,758

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

	Impaired Loans
	June 30, 2015						December 31, 2014
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(In thousands)
With no allocated allowance
Commercial loans	$	17,657	$	14,055	$	-	$	19,479	$	18,452	$	-
Real estate construction loans		48,790		22,586		-		32,924		17,025		-
Commercial mortgage loans		81,845		76,053		-		77,474		75,172		-
Residential mortgage loans and equity lines		2,473		2,473		-		2,518		2,518		-
Subtotal	$	150,765	$	115,167	$	-	$	132,395	$	113,167	$	-
With allocated allowance
Commercial loans	$	9,910	$	9,661	$	966	$	7,003	$	5,037	$	1,263
Real estate construction loans		-		-		-		19,006		8,703		1,077
Commercial mortgage loans		28,332		26,822		6,554		38,197		34,022		8,993
Residential mortgage loans and equity lines		14,958		14,414		464		14,019		13,590		465
Subtotal	$	53,200	$	50,897	$	7,984	$	78,225	$	61,352	$	11,798
Total impaired loans	$	203,965	$	166,064	$	7,984	$	210,620	$	174,519	$	11,798

The following tables present the aging of the loan portfolio by type as of June 30, 2015, and as of December 31, 2014:

	June 30, 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
	(In thousands)
Type of Loans:
Commercial loans	$	17,641	$	2,138	$	-	$	7,878	$	27,657	$	2,359,793	$	2,387,450
Real estate construction loans		-		-		-		16,856		16,856		353,972		370,828
Commercial mortgage loans		4,132		3,151		-		33,271		40,554		4,808,827		4,849,381
Residential mortgage loans and equity lines		-		234		-		8,047		8,281		1,881,098		1,889,379
Installment and other loans		-		-		-		-		-		4,970		4,970
Total loans	$	21,773	$	5,523	$	-	$	66,052	$	93,348	$	9,408,660	$	9,502,008

	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
	(In thousands)
Type of Loans:
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 June 30, 2015, accruing TDRs were $100.0 million and non-accrual TDRs were $42.6 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 $1.4 million to accruing TDRs and $5.8 million to non-accrual TDRs at June 30, 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 six months of 2015 and of 2014, their specific reserves at June 30, 2015, and 2014, and charge-offs during the first six months of 2015 and of 2014:

	Six months ended June 30, 2015								June 30, 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		4		14,411		14,411		-		40
Residential mortgage loans and equity lines		4		1,522		1,374		148		43
Total		9	$	16,783	$	16,635	$	148	$	83

	Six months ended June 30, 2014								June 30, 2014
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserve
	(Dollars in thousands)
Commercial loans		3		8,490		8,490	$	-	$	20
Residential mortgage loans and equity lines		3		1,393		1,393		-		32
Total		6	$	9,883	$	9,883	$	-	$	52

Modifications of the loan terms during the first six months 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 six months to three years from the modification date. 

We expect that the TDRs on accruing status as of June 30, 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 June 30, 2015, and December 31, 2014, is shown below:

	June 30, 2015
Accruing TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	12,386	$	1,496	$	1,957	$	15,839
Real estate construction loans		-		-		5,730		5,730
Commercial mortgage loans		29,465		6,082		34,055		69,602
Residential mortgage loans		5,088		1,005		2,747		8,840
Total accruing TDRs	$	46,939	$	8,583	$	44,489	$	100,011

	June 30, 2015
Non-accrual TDRs	Payment Deferral		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	2,272	$	-	$	2,272
Real estate construction loans		10,366		5,990		16,356
Commercial mortgage loans		1,566		20,540		22,106
Residential mortgage loans		611		1,250		1,861
Total non-accrual TDRs	$	14,815	$	27,780	$	42,595

	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 June 30,						Six months ended June 30,
Accruing TDRs	2015			2014			2015			2014
	(In thousands)
Beginning balance	$	100,393		$	118,922		$	104,356		$	117,597
New restructurings		5,798			722			16,426			8,097
Restructured loans restored to accrual status		-			-			-			962
Charge-offs		-			-			(148	)		-
Payments		(6,180	)		(1,278	)		(10,434	)		(8,290	)
Restructured loans placed on nonaccrual		-			(7,230	)		(10,189	)		(7,230	)
Ending balance	$	100,011		$	111,136		$	100,011		$	111,136

	Three months ended June 30,						Six months ended June 30,
Non-accrual TDRs	2015			2014			2015			2014
	(In thousands)
Beginning balance	$	44,541		$	37,797		$	41,618		$	38,769
New restructurings		-			247			209			1,786
Restructured loans placed on nonaccrual		-			7,230			10,189			7,230
Charge-offs		(489	)		(595	)		(3,243	)		(599	)
Payments		(1,457	)		(1,074	)		(6,178	)		(2,619	)
Restructured loans restored to accrual status		-			-			-			(962	)
Ending balance	$	42,595		$	43,605		$	42,595		$	43,605

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 had one commercial mortgage loan in the amount of $9.6 million that was modified as a TDR during the previous twelve months and which subsequently defaulted as of June 30, 2015.  The Company had previously taken a charge off in the amount of $598,000 on this same commercial mortgage loan during the previous twelve months. 

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 June 30, 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 June 30, 2015. The following tables present the loan portfolio by risk rating as of June 30, 2015, and as of December 31, 2014:

	June 30, 2015
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
Commercial loans	$	2,251,083	$	64,655	$	70,240	$	1,472	$	2,387,450
Real estate construction loans		348,242		-		22,086		500		370,828
Commercial mortgage loans		4,580,231		114,663		144,897		9,590		4,849,381
Residential mortgage loans and equity lines		1,879,108		-		10,271		-		1,889,379
Installment and other loans		4,970		-		-		-		4,970
Total gross loans	$	9,063,634	$	179,318	$	247,494	$	11,562	$	9,502,008

	December 31, 2014
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
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 June 30, 2015, and as of December 31, 2014:

							Residential
			Real Estate		Commercial		Mortgage Loans
	Commercial		Construction		Mortgage		and Equity		Installment and
	Loans		Loans		Loans		Lines		Other Loans		Total
	(In thousands)
June 30, 2015
Loans individually evaluated for impairment
Allowance	$	966	$	-	$	6,554	$	464	$	-	$	7,984
Balance	$	23,717	$	22,586	$	102,874	$	16,887	$	-	$	166,064
Loans collectively evaluated for impairment
Allowance	$	46,574	$	26,304	$	60,691	$	11,859	$	25	$	145,453
Balance	$	2,363,733	$	348,242	$	4,746,507	$	1,872,492	$	4,970	$	9,335,944
Total allowance	$	47,540	$	26,304	$	67,245	$	12,323	$	25	$	153,437
Total balance	$	2,387,450	$	370,828	$	4,849,381	$	1,889,379	$	4,970	$	9,502,008
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 tables detail activity in the allowance for loan losses by portfolio segment for the three months and six months ended June 30, 2015, and June 30, 2014. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Three months ended June 30, 2015 and 2014
				Real Estate			Commercial			Residential			Installment
	Commercial			Construction			Mortgage			Mortgage Loans			and Other
	Loans			Loans			Loans			and Equity Lines			Loans			Total
	(In thousands)
March 31, 2015 Ending Balance	$	49,705		$	23,270		$	71,318		$	11,777		$	19			156,089
Provision/(credit) for possible credit losses		184			2,982			(5,880	)		559			5			(2,150	)
Charge-offs		(2,580	)		-			(65	)		(13	)		-			(2,658	)
Recoveries		231			52			1,872			-			1			2,156
Net (charge-offs)/recoveries		(2,349	)		52			1,807			(13	)		1			(502	)
June 30, 2015 Ending Balance	$	47,540		$	26,304		$	67,245		$	12,323		$	25		$	153,437
March 31, 2014 Ending Balance	$	64,782		$	10,626		$	81,326		$	12,377		$	27		$	169,138
Provision/(credit) for possible credit losses		(6,111	)		742			1,185			493			(9	)		(3,700	)
Charge-offs		(114	)		(1,813	)		(648	)		-			-			(2,575	)
Recoveries		4,682			-			1,532			-			-			6,214
Net (charge-offs)/recoveries		4,568			(1,813	)		884			-			-			3,639
June 30, 2014 Ending Balance	$	63,239		$	9,555		$	83,395		$	12,870		$	18		$	169,077

Six months ended June 30, 2015 and 2014
				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		1,005			(1,470	)		(7,580	)		886			9			(7,150	)
Charge-offs		(3,444	)		-			(3,516	)		(161	)		-			(7,121	)
Recoveries		2,478			122			3,668			20			-			6,288
Net (charge-offs)/recoveries		(966	)		122			152			(141	)		-			(833	)
June 30, 2015 Ending Balance	$	47,540		$	26,304		$	67,245		$	12,323		$	25		$	153,437
Reserve for impaired loans	$	966		$	-		$	6,554		$	464		$	-		$	7,984
Reserve for non-impaired loans	$	46,574		$	26,304		$	60,691		$	11,859		$	25		$	145,453
Reserve for off-balance sheet credit commitments	$	-		$	-		$	-		$	-		$	-		$	-
2014 Beginning Balance	$	65,103		$	11,999		$	84,753		$	12,005		$	29		$	173,889
Provision/(credit) for possible credit losses		(1,228	)		(656	)		(3,041	)		865			(11	)		(4,071	)
Charge-offs		(7,340	)		(1,813	)		(2,424	)		-			-			(11,577	)
Recoveries		6,704			25			4,107			-			-			10,836
Net (charge-offs)/recoveries		(636	)		(1,788	)		1,683			-			-			(741	)
June 30, 2014 Ending Balance	$	63,239		$	9,555		$	83,395		$	12,870		$	18		$	169,077
Reserve for impaired loans	$	2,717		$	143		$	6,230		$	519		$	-		$	9,609
Reserve for non-impaired loans	$	60,522		$	9,412		$	77,165		$	12,351		$	18		$	159,468
Reserve for off-balance sheet credit commitments	$	1,014		$	391		$	401		$	36		$	2		$	1,844