Loans Receivable, net:

12 Months Ended

Dec. 31, 2011

Loans Receivable, net: [Abstract]

Loans Receivable, net:

Note 2. Loans Receivable, net:

Loans receivable, net, consisted of the following:

		September 30,			September 30,
	December 31,
	2011			2010
	(In thousands)
Commercial mortgage loans (1)	$	134,835		$	124,065
SBIC commercial mortgage loans		32,416			31,289
SBA 7(a) loans, subject to secured borrowings		30,151			20,326
SBA 7(a) loans		23,238			18,673
Commercial mortgage loans, subject to structured notes payable (2)		15,474			40,514
Total loans receivable		236,114			234,867
Add/(deduct):
Deferred capitalized costs (commitment fees), net		125			(40	)
Loan loss reserves		(1,812	)		(1,609	)
Loans receivable, net	$	234,427		$	233,218

(1) At December 31, 2010, these loans were pledged to our revolving credit facility.

(2) We repaid the remaining 2003 Joint Venture structured notes on February 15, 2012; as a result, these loans were no longer encumbered as of that date.

Commercial mortgage loans

Represents all of the loans of PMC Commercial Trust.

SBIC commercial mortgage loans

Represents loans of our licensed Small Business Investment Company (“SBIC”) subsidiaries.

SBA 7(a) loans, subject to secured borrowings

Represents the government guaranteed portion of loans which were sold with the proceeds received from the sale reflected as secured borrowings – government guaranteed loans (a liability on our consolidated balance sheet). There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.

SBA 7(a) loans

Represents the non-government guaranteed retained portion of loans originated under the SBA 7(a) Program and the government guaranteed portion of loans that have not yet been fully funded or sold. The balance is net of Retained Loans Discounts of $1.6 million and $1.3 million at December 31, 2011 and 2010, respectively.

Commercial mortgage loans, subject to structured notes payable

Represents loans contributed to special purpose entities in exchange for a subordinated financial interest in that entity. The collateral of the structured notes payable includes these loans.

Concentration Risks

We have certain concentrations of investments. Substantially all of our revenue is generated from loans collateralized by hospitality properties. At December 31, 2011, our loans were 93.5% concentrated in the hospitality industry. Any economic factors that negatively impact the hospitality industry, including recessions, depressed commercial real estate markets, travel restrictions, bankruptcies or other political or geopolitical events, could have a material adverse effect on our financial condition and results of operations.

At December 31, 2011, 18% of our loans were collateralized by properties in Texas. No other state had a concentration of 10% or greater of our loans receivable at December 31, 2011. A decline in economic conditions in any state in which we have a concentration of investments could have a material adverse effect on our financial condition and results of operations.

We have not loaned more than 10% of our assets to any single borrower; however, we have an affiliated group of obligors representing 5% of our loans receivable at December 31, 2011. Any significant decline in the financial status of this group could have a material adverse effect on our financial condition and results of operations.

Aging

The following tables represent an aging of our Loans Receivable Subject To Credit Risk (loans receivable less SBA 7(a) loans, subject to secured borrowings, as the SBA has guaranteed payment of principal on these loans). Balances are prior to loan loss reserves and deferred capitalized costs, net.

		September 30,	September 30,			September 30,	September 30,			September 30,	September 30,
December 31, 2011
Category	Totals				Commercial Mortgage Loans				SBA 7(a) Loans
	(Dollars in thousands)
Current (1)	$	202,217	98.2	%	$	179,497	98.2	%	$	22,720	97.7	%
Between 30 and 59 days delinquent		1,224	0.6	%		1,090	0.6	%		134	0.6	%
Between 60 and 89 days delinquent		696	0.3	%		696	0.4	%		—	—
Over 89 days delinquent (2)		1,826	0.9	%		1,442	0.8	%		384	1.7	%
	$	205,963	100.0	%	$	182,725	100.0	%	$	23,238	100.0	%

(1) Includes $6.3 million of loans classified as troubled debt restructurings which are current based on revised note terms. Of these loans, $5.6 million are paying interest only.

(2) Includes a $1.4 million loan on which the borrower has filed for Chapter 11 Bankruptcy. We are classified as a secured creditor in the bankruptcy proceeding.

		September 30,	September 30,			September 30,	September 30,			September 30,	September 30,
December 31, 2010
Category	Totals				Commercial Mortgage Loans				SBA 7(a) Loans
	(Dollars in thousands)
Current (1)	$	196,539	91.6	%	$	178,592	91.1	%	$	17,947	96.2	%
Between 30 and 59 days delinquent		4,877	2.3	%		4,664	2.4	%		213	1.1	%
Between 60 and 89 days delinquent		5,576	2.6	%		5,253	2.7	%		323	1.7	%
Over 89 days delinquent (2)		7,549	3.5	%		7,359	3.8	%		190	1.0	%
	$	214,541	100.0	%	$	195,868	100.0	%	$	18,673	100.0	%

(1) Includes $9.0 million of loans which are current under agreements which provide for interest only payments during a short period of time (not more than six months remaining) in exchange for additional collateral. Of this, $7.2 million relates to an affiliated group of obligors described above.

(2) Includes $6.3 million of loans on which the borrowers have filed for Chapter 11 Bankruptcy. We are classified as a secured creditor in the bankruptcy proceedings. In addition, the collateral underlying $1.1 million of loans included in the over 89 days delinquent category were in the foreclosure process.

Loan Loss Reserves

Management closely monitors our loans which require evaluation for loan loss reserves based on specific identification metrics which are classified into three categories: Doubtful, Substandard and Other Assets Especially Mentioned (“OAEM”) (together “Specific Identification Loans”). Loans classified as Doubtful are generally loans which are not complying with their contractual terms, the collection of the balance of the principal is considered impaired and on which the fair value of the collateral is less than the remaining unamortized principal balance. These loans are typically placed on non-accrual status and are generally in the foreclosure process. Loans classified as Substandard are generally those loans that are either not complying or had previously not complied with their contractual terms and have other credit weaknesses which may make payment default or principal exposure likely but not yet certain. Loans classified as OAEM are generally loans for which the credit quality of the borrowers has temporarily deteriorated. Typically the borrowers are current on their payments; however, they may be delinquent on their property taxes, insurance, or franchise fees.

Management has classified our Loans Receivable Subject To Credit Risk as follows (balances represent our investment in the loans prior to loan loss reserves and deferred commitment fees):

		September 30,		September 30,			September 30,		September 30,			September 30,		September 30,
	December 31, 2011
	Totals		%			Commercial Mortgage Loans		%			SBA 7(a) Loans		%
	(Dollars in thousands)
Satisfactory	$	189,836		92.2	%	$	167,397		91.6	%	$	22,439		96.5	%
OAEM		3,354		1.6	%		3,317		1.8	%		37		0.2	%
Substandard		10,790		5.2	%		10,569		5.8	%		221		1.0	%
Doubtful		1,983		1.0	%		1,442		0.8	%		541		2.3	%
	$	205,963		100.0	%	$	182,725		100.0	%	$	23,238		100.0	%

		September 30,		September 30,			September 30,		September 30,			September 30,		September 30,
	December 31, 2010
	Totals		%			Commercial Mortgage Loans		%			SBA 7(a) Loans		%
	(Dollars in thousands)
Satisfactory	$	187,630		87.5	%	$	169,880		86.7	%	$	17,750		95.1	%
OAEM		16,886		7.9	%		16,872		8.6	%		14		0.1	%
Substandard		9,113		4.2	%		8,469		4.3	%		644		3.4	%
Doubtful		912		0.4	%		647		0.3	%		265		1.4	%
	$	214,541		100.0	%	$	195,868		100.0	%	$	18,673		100.0	%

The decrease in our loans classified as OAEM from 2010 to 2011 is due primarily to improvement in the affiliated group of obligors discussed above due to a modification of certain of their loan terms and loans previously included in OAEM for which the borrowers had filed for Chapter 11 Bankruptcy and we were classified as a secured creditor in the bankruptcy proceedings which are paying according to their modified terms.

Our provision for loan losses (excluding reductions of loan losses) as a percentage of our weighted average Loans Receivable Subject To Credit Risk was 0.40% and 0.46% during 2011 and 2010, respectively. Whenever our borrowers experience significant operating difficulties and we are forced to liquidate the collateral underlying the loan, losses may be substantial.

During the five-year period ended December 31, 2011, our aggregate provision for loan losses, net, was approximately $2.6 million or 27 basis points per year based on the five-year average of our loans receivable. Our total loan loss reserves as a percentage of our Loans Receivable Subject To Credit Risk were 88 basis points at December 31, 2011.

The activity in our loan loss reserves was as follows:

		September 30,			September 30,			September 30,
	Year Ended December 31, 2011
	Total			Commercial Mortgage Loans			SBA 7(a) Loans
	(In thousands)
Balance, beginning of year	$	1,609		$	1,303		$	306
Provision for loan losses		826			429			397
Reduction of loan losses		(366	)		(342	)		(24	)
Principal balances written-off		(257	)		(61	)		(196	)
Balance, end of year	$	1,812		$	1,329		$	483

		September 30,			September 30,			September 30,			September 30,
	Years Ended December 31,
	2010
	Total			Commercial Mortgage Loans			SBA 7(a) Loans			Total 2009
	(In thousands)
Balance, beginning of year	$	1,257		$	1,055		$	202		$	480
Provision for loan losses		1,019			607			412			1,076
Reduction of loan losses		(378	)		(309	)		(69	)		(87	)
Consolidation of the 2000 Joint Venture and the 1998 Partnership reserves		184			184			—			—
Principal balances written-off		(473	)		(234	)		(239	)		(212	)
Balance, end of year	$	1,609		$	1,303		$	306		$	1,257

Impaired Loan Data

Information on those loans considered to be impaired was as follows:

		September 30,		September 30,		September 30,
	At December 31, 2011
	Total		Commercial Mortgage Loans		SBA 7(a) Loans
	(In thousands)
Impaired loans requiring reserves (1)	$	7,411	$	7,027	$	384
Impaired loans expected to be fully recoverable (1)		846		689		157
Total impaired loans (2)	$	8,257	$	7,716	$	541
Loan loss reserves	$	563	$	372	$	191

		September 30,		September 30,		September 30,		September 30,
	At December 31,
	2010
	Total		Commercial Mortgage Loans		SBA 7(a) Loans		2009
	(In thousands)
Impaired loans requiring reserves	$	687	$	419	$	268	$	3,132
Impaired loans expected to be fully recoverable		228		228		—		228
Total impaired loans (3)	$	915	$	647	$	268	$	3,360
Loan loss reserves	$	219	$	25	$	194	$	364

(1) Includes loans classified as troubled debt restructurings.

(2) The unpaid principal balance of our impaired commercial mortgage loans was $7,940,000 at December 31, 2011. The unpaid principal balance of our impaired SBA 7(a) loans (excluding the government guaranteed portion) was $593,000 at December 31, 2011.

(3) The unpaid principal balance of our impaired commercial mortgage loans was $678,000 at December 31, 2010. The unpaid principal balance of our impaired SBA 7(a) loans (excluding the government guaranteed portion) was $288,000 at December 31, 2010.

		September 30,		September 30,		September 30,
	Year Ended December 31, 2011
	Total		Commercial Mortgage Loans		SBA 7(a) Loans
	(In thousands)
Average impaired loans	$	8,176	$	7,610	$	566
Interest income on impaired loans	$	290	$	271	$	19

		September 30,		September 30,		September 30,		September 30,
	Years Ended December 31,
	2010
	Total		Commercial Mortgage Loans		SBA 7(a) Loans		2009
	(In thousands)
Average impaired loans	$	4,317	$	3,558	$	759	$	5,661
Interest income on impaired loans	$	114	$	89	$	25	$	83

Our recorded investment in Non-Accrual Loans at December 31, 2011 of $1,820,000 was comprised of $384,000 of SBA 7(a) Program loans and $1,436,000 of commercial mortgage loans. Our recorded investment in Non-Accrual Loans at December 31, 2010 of $12,275,000 was comprised of $519,000 of SBA 7(a) Program loans and $11,756,000 of commercial mortgage loans. We did not have any loans receivable past due 90 days or more which were accruing interest at December 31, 2011 or 2010. Our Non-Accrual Loans at December 31, 2010 consist of loans delinquent 60 days or more including loans for which the borrowers filed for Chapter 11 Bankruptcy whose bankruptcy plans were confirmed and are now paying according to modified terms and a loan classified as a troubled debt restructuring that is now current under agreed upon modified terms.

Information on our troubled debt restructurings which consisted of four commercial mortgage loans was as follows at December 31, 2011:

		September 30,		September 30,
			Unpaid
	Recorded		Principal
	Investment		Balance
	(In thousands)
Troubled debt restructurings requiring reserves	$	5,591	$	5,730
Troubled debt restructurings without reserves		689		749
Total troubled debt restructurings	$	6,280	$	6,479
Loan loss reserves	$	236

The modifications were primarily extended interest only periods; however, for one loan the borrower filed Chapter 11 Bankruptcy and the plan was confirmed with modified terms including an extended interest only period and re-amortization. In addition, the interest rate was reduced on one of the commercial mortgage loans with an extended interest only period.