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Note 7 - Loans | 6 Months Ended
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Jun. 30, 2013
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 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 condensed consolidated balance sheets as of June 30, 2013, and December 31, 2012, were as follows:
|  | June 30, 2013 |  |  | December 31, 2012 |
|  | (In thousands) |
Type of Loans: |  |  |  |  |  |  |  |
Commercial loans |  | $ | 2,210,761 |  |  | $ | 2,127,107 |
Residential mortgage loans |  |  | 1,224,692 |  |  |  | 1,146,230 |
Commercial mortgage loans |  |  | 3,909,559 |  |  |  | 3,768,452 |
Equity lines |  |  | 182,855 |  |  |  | 193,852 |
Real estate construction loans |  |  | 153,663 |  |  |  | 180,950 |
Installment and other loans |  |  | 12,843 |  |  |  | 12,556 |
Gross loans |  |  | 7,694,373 |  |  |  | 7,429,147 |
Less: |  |  |  |  |  |  |  |
Allowance for loan losses |  |  | (179,733 | ) |  |  | (183,322 | )
Unamortized deferred loan fees |  |  | (11,685 | ) |  |  | (10,238 | )
Total loans, net |  | $ | 7,502,955 |  |  | $ | 7,235,587 |
At June 30, 2013, recorded investment in impaired loans totaled $211.1 million and was comprised of non-accrual loans of $95.6 million, and accruing troubled debt restructured (“TDR”) loans of $115.5 million. At December 31, 2012, recorded investment in impaired loans totaled $248.6 million and was comprised of non-accrual loans of $103.9 million and accruing TDRs of $144.7 million. For impaired loans, the amounts previously charged off represent 23.7% at June 30, 2013, and 23.2% at December 31, 2012, 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 |
|  | For the three months ended June 30, |  |  | For the six months ended June 30, |  |  | For the three months ended June 30, |  |  | For the six months ended June 30, |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Commercial loans |  | $ | 20,196 |  |  | $ | 29,970 |  |  | $ | 21,156 |  |  | $ | 37,556 |  |  | $ | 89 |  |  | $ | 32 |  |  | $ | 200 |  |  | $ | 62 |
Real estate construction loans |  |  | 40,108 |  |  |  | 45,775 |  |  |  | 41,082 |  |  |  | 56,115 |  |  |  | 66 |  |  |  | 111 |  |  |  | 132 |  |  |  | 221 |
Commercial mortgage loans |  |  | 141,285 |  |  |  | 179,835 |  |  |  | 151,713 |  |  |  | 182,351 |  |  |  | 1,501 |  |  |  | 1,849 |  |  |  | 2,863 |  |  |  | 3,115 |
Residential mortgage and equity lines |  |  | 18,050 |  |  |  | 19,177 |  |  |  | 17,924 |  |  |  | 18,446 |  |  |  | 107 |  |  |  | 38 |  |  |  | 215 |  |  |  | 76 |
Total |  | $ | 219,639 |  |  | $ | 274,757 |  |  | $ | 231,875 |  |  | $ | 294,468 |  |  | $ | 1,763 |  |  | $ | 2,030 |  |  | $ | 3,410 |  |  | $ | 3,474 |
The following table presents impaired loans and the related allowance for credit losses as of the dates indicated:
|  | Impaired Loans |
|  | June 30, 2013 |  |  | December 31, 2012 |
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance |  |  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance |
|  | (In thousands) |
With no allocated allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  | $ | 17,027 |  |  | $ | 13,335 |  |  | $ | - |  |  | $ | 29,359 |  |  | $ | 18,963 |  |  | $ | - |
Real estate construction loans |  |  | 28,983 |  |  |  | 16,652 |  |  |  | - |  |  |  | 9,304 |  |  |  | 7,277 |  |  |  | - |
Commercial mortgage loans |  |  | 134,815 |  |  |  | 105,193 |  |  |  | - |  |  |  | 189,871 |  |  |  | 152,957 |  |  |  | - |
Residential mortgage and equity lines |  |  | 3,624 |  |  |  | 3,615 |  |  |  | - |  |  |  | 4,303 |  |  |  | 4,229 |  |  |  | - |
Subtotal |  | $ | 184,449 |  |  | $ | 138,795 |  |  | $ | - |  |  | $ | 232,837 |  |  | $ | 183,426 |  |  | $ | - |
With allocated allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  | $ | 11,602 |  |  | $ | 6,928 |  |  | $ | 1,568 |  |  | $ | 7,804 |  |  | $ | 4,959 |  |  | $ | 1,467 |
Real estate construction loans |  |  | 27,789 |  |  |  | 18,636 |  |  |  | 4,995 |  |  |  | 54,718 |  |  |  | 34,856 |  |  |  | 8,158 |
Commercial mortgage loans |  |  | 36,808 |  |  |  | 32,777 |  |  |  | 5,342 |  |  |  | 14,163 |  |  |  | 12,928 |  |  |  | 1,336 |
Residential mortgage and equity lines |  |  | 15,948 |  |  |  | 13,941 |  |  |  | 874 |  |  |  | 14,264 |  |  |  | 12,428 |  |  |  | 1,222 |
Subtotal |  | $ | 92,147 |  |  | $ | 72,282 |  |  | $ | 12,779 |  |  | $ | 90,949 |  |  | $ | 65,171 |  |  | $ | 12,183 |
Total impaired loans |  | $ | 276,596 |  |  | $ | 211,077 |  |  | $ | 12,779 |  |  | $ | 323,786 |  |  | $ | 248,597 |  |  | $ | 12,183 |
The following table presents the aging of the loan portfolio by type as of June 30, 2013, and as of December 31, 2012:
|  | June 30, 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 |  | $ | 7,644 |  |  | $ | 9,882 |  |  | $ | - |  |  | $ | 14,029 |  |  | $ | 31,555 |  |  | $ | 2,179,206 |  |  | $ | 2,210,761 |
Real estate construction loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,454 |  |  |  | 29,454 |  |  |  | 124,209 |  |  |  | 153,663 |
Commercial mortgage loans |  |  | 24,860 |  |  |  | 4,094 |  |  |  | - |  |  |  | 41,860 |  |  |  | 70,814 |  |  |  | 3,838,745 |  |  |  | 3,909,559 |
Residential mortgage loans |  |  | 1,699 |  |  |  | 1,315 |  |  |  | - |  |  |  | 10,270 |  |  |  | 13,284 |  |  |  | 1,394,263 |  |  |  | 1,407,547 |
Installment and other loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,843 |  |  |  | 12,843 |
Total loans |  | $ | 34,203 |  |  | $ | 15,291 |  |  | $ | - |  |  | $ | 95,613 |  |  | $ | 145,107 |  |  | $ | 7,549,266 |  |  | $ | 7,694,373 |
|  | December 31, 2012 |
|  | 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 |  | $ | 16,832 |  |  | $ | 1,610 |  |  | $ | 630 |  |  | $ | 19,958 |  |  | $ | 39,030 |  |  | $ | 2,088,077 |  |  | $ | 2,127,107 |
Real estate construction loans |  |  | - |  |  |  | 1,471 |  |  |  | - |  |  |  | 36,299 |  |  |  | 37,770 |  |  |  | 143,180 |  |  |  | 180,950 |
Commercial mortgage loans |  |  | 21,570 |  |  |  | 3,627 |  |  |  | - |  |  |  | 35,704 |  |  |  | 60,901 |  |  |  | 3,707,551 |  |  |  | 3,768,452 |
Residential mortgage loans |  |  | 5,324 |  |  |  | 1,972 |  |  |  | - |  |  |  | 11,941 |  |  |  | 19,237 |  |  |  | 1,320,845 |  |  |  | 1,340,082 |
Installment and other loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,556 |  |  |  | 12,556 |
Total loans |  | $ | 43,726 |  |  | $ | 8,680 |  |  | $ | 630 |  |  | $ | 103,902 |  |  | $ | 156,938 |  |  | $ | 7,272,209 |  |  | $ | 7,429,147 |
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 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 t roubled 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, 2013, accruing TDRs were $115.5 million and non-accrual TDRs were $48.5 million compared to accruing TDRs of $144.7 million and non-accrual TDRs of $47.7 million at December 31, 2012. The Company allocated specific reserves of $5.2 million to accruing TDRs and $4.6 million to non-accrual TDRs at June 30, 2013, and $1.1 million to accruing TDRs and $7.8 million to non-accrual TDRs at December 31, 2012. The following table presents TDRs that were modified during the first six months of 2013 and 2012, their specific reserve at June 30, 2013, and charge-off s during the first six months of 2013 and 2012:
|  | Six months ended June 30, 2013 |  |  | June 30, 2013 |
|  | No. of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Charge-offs |  |  | Specific Reserve |
|  | (Dollars in thousands) |
Commercial loans |  |  | 4 |  |  |  | 4,006 |  |  |  | 4,006 |  |  | $ | - |  |  | $ | 55 |
Commercial mortgage loans |  |  | 2 |  |  |  | 1,175 |  |  |  | 1,175 |  |  |  | - |  |  |  | 9 |
Residential mortgage and equity lines |  |  | 10 |  |  |  | 3,459 |  |  |  | 3,381 |  |  |  | 78 |  |  |  | 155 |
Total |  |  | 16 |  |  | $ | 8,640 |  |  | $ | 8,562 |  |  | $ | 78 |  |  | $ | 219 |
|  | Six months ended June 30, 2012 |  |  | June 30, 2012 |
|  | No. of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Charge-offs |  |  | Specific Reserve |
|  | (Dollars in thousands) |
Commercial loans |  |  | 5 |  |  | $ | 1,988 |  |  | $ | 1,988 |  |  | $ | - |  |  | $ | 60 |
Commercial mortgage loans |  |  | 12 |  |  |  | 44,619 |  |  |  | 40,940 |  |  |  | 3,679 |  |  |  | - |
Residential mortgage and equity lines |  |  | 3 |  |  |  | 1,802 |  |  |  | 1,802 |  |  |  | - |  |  |  | 14 |
Total |  |  | 20 |  |  | $ | 48,409 |  |  | $ | 44,730 |  |  | $ | 3,679 |  |  | $ | 74 |
Modifications of the loan terms during the first six months of 2013 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 June 30, 2013, 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, 2013, and December 31, 2012, is shown below:
|  | June 30, 2013 |
Accruing TDRs |  | Principal Deferral |  |  | Rate Reduction |  |  | Rate Reduction and Payment Deferral |  |  | Total |
|  | (In thousands) |
Commercial loans |  | $ | 473 |  |  | $ | 2,969 |  |  | $ | 2,793 |  |  | $ | 6,235 |
Real estate construction loans |  |  | - |  |  |  | - |  |  |  | 5,834 |  |  |  | 5,834 |
Commercial mortgage loans |  |  | 12,800 |  |  |  | 16,143 |  |  |  | 67,166 |  |  |  | 96,109 |
Residential mortgage loans |  |  | 1,998 |  |  |  | 1,602 |  |  |  | 3,686 |  |  |  | 7,286 |
Total accruing TDRs |  | $ | 15,271 |  |  | $ | 20,714 |  |  | $ | 79,479 |  |  | $ | 115,464 |
|  | June 30, 2013 |
Non-accrual TDRs |  | Interest Deferral |  |  | Principal Deferral |  |  | Rate Reduction and Forgiveness of Principal |  |  | Rate Reduction and Payment Deferral |  |  | Total |
|  | (In thousands) |
Commercial loans |  | $ | - |  |  | $ | 2,330 |  |  | $ | 1,433 |  |  | $ | - |  |  | $ | 3,763 |
Real estate construction loans |  |  | - |  |  |  | 16,388 |  |  |  | - |  |  |  | 9,375 |  |  |  | 25,763 |
Commercial mortgage loans |  |  | 1,514 |  |  |  | 1,840 |  |  |  | - |  |  |  | 11,869 |  |  |  | 15,223 |
Residential mortgage loans |  |  | 258 |  |  |  | 2,483 |  |  |  | - |  |  |  | 1,034 |  |  |  | 3,775 |
Total non-accrual TDRs |  | $ | 1,772 |  |  | $ | 23,041 |  |  | $ | 1,433 |  |  | $ | 22,278 |  |  | $ | 48,524 |
|  | December 31, 2012 |
Accruing TDRs |  | Principal Deferral |  |  | Rate Reduction |  |  | Rate Reduction and Forgiveness of Principal |  |  | Rate Reduction and Payment Deferral |  |  | Total |
|  | (In thousands) |
Commercial loans |  | $ | 531 |  |  | $ | 3,020 |  |  | $ | - |  |  | $ | 413 |  |  | $ | 3,964 |
Real estate construction loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,834 |  |  |  | 5,834 |
Commercial mortgage loans |  |  | 27,003 |  |  |  | 16,656 |  |  |  | 739 |  |  |  | 85,783 |  |  |  | 130,181 |
Residential mortgage loans |  |  | 1,461 |  |  |  | 1,024 |  |  |  | - |  |  |  | 2,231 |  |  |  | 4,716 |
Total accruing TDRs |  | $ | 28,995 |  |  | $ | 20,700 |  |  | $ | 739 |  |  | $ | 94,261 |  |  | $ | 144,695 |
|  | December 31, 2012 |
Non-accrual TDRs |  | Interest Deferral |  |  | Principal Deferral |  |  | Rate Reduction |  |  | Rate Reduction and Forgiveness of Principal |  |  | Rate Reduction and Payment Deferral |  |  | Total |
|  | (In thousands) |
Commercial loans |  | $ | - |  |  | $ | 912 |  |  | $ | - |  |  | $ | 1,518 |  |  | $ | - |  |  | $ | 2,430 |
Real estate construction loans |  |  | - |  |  |  | 16,767 |  |  |  | 9,579 |  |  |  | - |  |  |  | - |  |  |  | 26,346 |
Commercial mortgage loans |  |  | 1,685 |  |  |  | 2,817 |  |  |  | 5,746 |  |  |  | - |  |  |  | 5,076 |  |  |  | 15,324 |
Residential mortgage loans |  |  | 275 |  |  |  | 2,010 |  |  |  | 586 |  |  |  | - |  |  |  | 760 |  |  |  | 3,631 |
Total non-accrual TDRs |  | $ | 1,960 |  |  | $ | 22,506 |  |  | $ | 15,911 |  |  | $ | 1,518 |  |  | $ | 5,836 |  |  | $ | 47,731 |
The activity within our TDR loans for the periods indicated are shown below:
|  | Three months ended June 30, |  |  | Six months ended June 30, |
Accruing TDRs |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Beginning balance |  | $ | 130,215 |  |  | $ | 143,233 |  |  | $ | 144,695 |  |  | $ | 120,016 |
New restructurings |  |  | - |  |  |  | 17,047 |  |  |  | 4,816 |  |  |  | 38,759 |
Restructured loans restored to accrual status |  |  | 824 |  |  |  | - |  |  |  | 1,454 |  |  |  | 2,853 |
Charge-offs |  |  | (78 | ) |  |  | - |  |  |  | (78 | ) |  |  | - |
Payments |  |  | (15,497 | ) |  |  | (1,207 | ) |  |  | (33,389 | ) |  |  | (2,555 | )
Restructured loans placed on nonaccrual |  |  | - |  |  |  | (5,824 | ) |  |  | (2,034 | ) |  |  | (5,824 | )
Ending balance |  | $ | 115,464 |  |  | $ | 153,249 |  |  | $ | 115,464 |  |  | $ | 153,249 |
|  | Three months ended June 30, |  |  | Six months ended June 30, |
Non-accrual TDRs |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Beginning balance |  | $ | 49,878 |  |  | $ | 21,543 |  |  | $ | 47,731 |  |  | $ | 50,870 |
New restructurings |  |  | 1,686 |  |  |  | 733 |  |  |  | 3,748 |  |  |  | 5,971 |
Restructured loans placed on nonaccrual |  |  | - |  |  |  | 5,824 |  |  |  | 2,034 |  |  |  | 5,824 |
Charge-offs |  |  | (254 | ) |  |  | (267 | ) |  |  | (933 | ) |  |  | (4,285 | )
Payments |  |  | (1,962 | ) |  |  | (4,548 | ) |  |  | (2,602 | ) |  |  | (32,242 | )
Restructured loans restored to accrual status |  |  | (824 | ) |  |  | - |  |  |  | (1,454 | ) |  |  | (2,853 | )
Ending balance |  | $ | 48,524 |  |  | $ | 23,285 |  |  | $ | 48,524 |  |  | $ | 23,285 |
A loan is considered to be in payment default once it is 60 to 90 days contractually past due under the modified terms. One land loan of $1.8 million and two commercial loans of $111,000 were modified as TDRs during the previous twelve months and subsequently defaulted as of June 30, 2013, within the three months and six months ended June 30, 2013. One of these three TDRs incurred a charge-off amounting to $254,000 within the twelve month period. 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, 2013, 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, t he 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 table presents loan portfolio by risk rating as of June 30, 2013, and as of December 31, 2012:
|  | June 30, 2013 |
|  | Pass/Watch |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
|  | (In thousands) |
Commercial loans |  | $ | 2,015,694 |  |  | $ | 100,317 |  |  | $ | 90,936 |  |  | $ | 3,814 |  |  | $ | 2,210,761 |
Real estate construction loans |  |  | 115,033 |  |  |  | - |  |  |  | 36,382 |  |  |  | 2,248 |  |  |  | 153,663 |
Commercial mortgage loans |  |  | 3,495,985 |  |  |  | 150,281 |  |  |  | 263,052 |  |  |  | 241 |  |  |  | 3,909,559 |
Residential mortgage and equity lines |  |  | 1,392,746 |  |  |  | 708 |  |  |  | 13,976 |  |  |  | 117 |  |  |  | 1,407,547 |
Installment and other loans |  |  | 12,843 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,843 |
Total gross loans |  | $ | 7,032,301 |  |  | $ | 251,306 |  |  | $ | 404,346 |  |  | $ | 6,420 |  |  | $ | 7,694,373 |
|  | December 31, 2012 |
|  | Pass/Watch |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
|  | (In thousands) |
Commercial loans |  | $ | 1,944,989 |  |  | $ | 76,776 |  |  | $ | 94,077 |  |  | $ | 11,265 |  |  | $ | 2,127,107 |
Real estate construction loans |  |  | 109,269 |  |  |  | 18,000 |  |  |  | 45,171 |  |  |  | 8,510 |  |  |  | 180,950 |
Commercial mortgage loans |  |  | 3,344,783 |  |  |  | 162,455 |  |  |  | 261,214 |  |  |  | - |  |  |  | 3,768,452 |
Residential mortgage and equity lines |  |  | 1,322,768 |  |  |  | 816 |  |  |  | 16,084 |  |  |  | 414 |  |  |  | 1,340,082 |
Installment and other loans |  |  | 12,556 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,556 |
Total gross loans |  | $ | 6,734,365 |  |  | $ | 258,047 |  |  | $ | 416,546 |  |  | $ | 20,189 |  |  | $ | 7,429,147 |
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, 2013, and as of December 31, 2012.
|  |  |  |  |  | Real Estate |  |  | Commercial |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Commercial |  |  | Construction |  |  | Mortgage |  |  | Mortgage Loans |  |  | Installment and |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Loans |  |  | and Equity Lines |  |  | Other Loans |  |  | Total |
|  | (In thousands) |
June 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance |  | $ | 1,568 |  |  | $ | 4,995 |  |  | $ | 5,342 |  |  | $ | 874 |  |  | $ | - |  |  | $ | 12,779 |
Balance |  | $ | 20,263 |  |  | $ | 35,288 |  |  | $ | 137,970 |  |  | $ | 17,556 |  |  | $ | - |  |  | $ | 211,077 |
Loans collectively evaluated for impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance |  | $ | 62,811 |  |  | $ | 8,760 |  |  | $ | 84,336 |  |  | $ | 11,018 |  |  | $ | 29 |  |  | $ | 166,954 |
Balance |  | $ | 2,190,498 |  |  | $ | 118,375 |  |  | $ | 3,771,589 |  |  | $ | 1,389,991 |  |  | $ | 12,843 |  |  | $ | 7,483,296 |
Total allowance |  | $ | 64,379 |  |  | $ | 13,755 |  |  | $ | 89,678 |  |  | $ | 11,892 |  |  | $ | 29 |  |  | $ | 179,733 |
Total balance |  | $ | 2,210,761 |  |  | $ | 153,663 |  |  | $ | 3,909,559 |  |  | $ | 1,407,547 |  |  | $ | 12,843 |  |  | $ | 7,694,373 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance |  | $ | 1,467 |  |  | $ | 8,158 |  |  | $ | 1,336 |  |  | $ | 1,222 |  |  | $ | - |  |  | $ | 12,183 |
Balance |  | $ | 23,922 |  |  | $ | 42,133 |  |  | $ | 165,885 |  |  | $ | 16,657 |  |  | $ | - |  |  | $ | 248,597 |
Loans collectively evaluated for impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance |  | $ | 64,634 |  |  | $ | 14,859 |  |  | $ | 81,137 |  |  | $ | 10,481 |  |  | $ | 28 |  |  | $ | 171,139 |
Balance |  | $ | 2,103,185 |  |  | $ | 138,817 |  |  | $ | 3,602,567 |  |  | $ | 1,323,425 |  |  | $ | 12,556 |  |  | $ | 7,180,550 |
Total allowance |  | $ | 66,101 |  |  | $ | 23,017 |  |  | $ | 82,473 |  |  | $ | 11,703 |  |  | $ | 28 |  |  | $ | 183,322 |
Total balance |  | $ | 2,127,107 |  |  | $ | 180,950 |  |  | $ | 3,768,452 |  |  | $ | 1,340,082 |  |  | $ | 12,556 |  |  | $ | 7,429,147 |
The following table details activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2013, and June 30, 2012. 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, 2013 and 2012 |
|  | Commercial Loans |  |  | Real Estate Construction Loans |  |  | Commercial Mortgage Loans |  |  | Residential Mortgage and Equity Line |  |  | Installment and Other Loans |  |  | Total |
|  | (In thousands) |
March 31, 2012 Ending Balance |  |  | 60,404 |  |  |  | 17,992 |  |  |  | 106,175 |  |  |  | 10,122 |  |  |  | 50 |  |  |  | 194,743 |
Provision/(credit) for possible credit losses |  |  | 8,171 |  |  |  | (2,972 | ) |  |  | (10,906 | ) |  |  | 671 |  |  |  | 6 |  |  |  | (5,030 | )
Charge-offs |  |  | (2,133 | ) |  |  | (251 | ) |  |  | (1,458 | ) |  |  | (550 | ) |  |  | - |  |  |  | (4,392 | )
Recoveries |  |  | 153 |  |  |  | 1,591 |  |  |  | 5,198 |  |  |  | 11 |  |  |  | - |  |  |  | 6,953 |
Net (charge-offs)/recoveries |  |  | (1,980 | ) |  |  | 1,340 |  |  |  | 3,740 |  |  |  | (539 | ) |  |  | - |  |  |  | 2,561 |
June 30, 2012 Ending Balance |  | $ | 66,595 |  |  | $ | 16,360 |  |  | $ | 99,009 |  |  | $ | 10,254 |  |  | $ | 56 |  |  | $ | 192,274 |
March 31, 2013 Ending Balance |  | $ | 61,056 |  |  | $ | 20,697 |  |  | $ | 84,816 |  |  | $ | 12,091 |  |  | $ | 32 |  |  | $ | 178,692 |
Provision/(credit) for possible credit losses |  |  | 4,389 |  |  |  | (7,883 | ) |  |  | 3,677 |  |  |  | (67 | ) |  |  | (14 | ) |  |  | 102 |
Charge-off |  |  | (1,690 | ) |  |  | - |  |  |  | (2,041 | ) |  |  | (196 | ) |  |  | - |  |  |  | (3,927 | )
Recoveries |  |  | 624 |  |  |  | 941 |  |  |  | 3,226 |  |  |  | 64 |  |  |  | 11 |  |  |  | 4,866 |
Net (charge-offs)/recoveries |  |  | (1,066 | ) |  |  | 941 |  |  |  | 1,185 |  |  |  | (132 | ) |  |  | 11 |  |  |  | 939 |
June 30, 2013 Ending Balance |  | $ | 64,379 |  |  | $ | 13,755 |  |  | $ | 89,678 |  |  | $ | 11,892 |  |  | $ | 29 |  |  | $ | 179,733 |
Six months ended June 30, 2013 and 2012 |
|  | Commercial Loans |  |  | Real Estate Construction Loans |  |  | Commercial Mortgage Loans |  |  | Residential Mortgage and Equity Line |  |  | Installment and Other Loans |  |  | Total |
|  | (In thousands) |
2012 Beginning Balance |  | $ | 65,658 |  |  | $ | 21,749 |  |  | $ | 108,021 |  |  | $ | 10,795 |  |  | $ | 57 |  |  | $ | 206,280 |
Provision/(credit) for possible credit losses |  |  | 7,130 |  |  |  | (9,411 | ) |  |  | (6,587 | ) |  |  | 410 |  |  |  | 21 |  |  |  | (8,437 | )
Charge-offs |  |  | (7,092 | ) |  |  | (1,126 | ) |  |  | (9,681 | ) |  |  | (1,328 | ) |  |  | (25 | ) |  |  | (19,252 | )
Recoveries |  |  | 899 |  |  |  | 5,148 |  |  |  | 7,256 |  |  |  | 377 |  |  |  | 3 |  |  |  | 13,683 |
Net (charge-offs)/recoveries |  |  | (6,193 | ) |  |  | 4,022 |  |  |  | (2,425 | ) |  |  | (951 | ) |  |  | (22 | ) |  |  | (5,569 | )
June 30, 2012 Ending Balance |  | $ | 66,595 |  |  | $ | 16,360 |  |  | $ | 99,009 |  |  | $ | 10,254 |  |  | $ | 56 |  |  | $ | 192,274 |
Reserve for impaired loans |  | $ | 3,687 |  |  | $ | - |  |  | $ | 1,896 |  |  | $ | 1,659 |  |  | $ | - |  |  | $ | 7,242 |
Reserve for non-impaired loans |  | $ | 62,908 |  |  | $ | 16,360 |  |  | $ | 97,113 |  |  | $ | 8,595 |  |  | $ | 56 |  |  | $ | 185,032 |
Reserve for off-balance sheet credit commitments |  | $ | 747 |  |  | $ | 617 |  |  | $ | 104 |  |  | $ | 35 |  |  | $ | 2 |  |  | $ | 1,505 |
2013 Beginning Balance |  | $ | 66,101 |  |  | $ | 23,017 |  |  | $ | 82,473 |  |  | $ | 11,703 |  |  | $ | 28 |  |  | $ | 183,322 |
Provision/(credit) for possible credit losses |  |  | 1,079 |  |  |  | (10,282 | ) |  |  | 6,645 |  |  |  | 728 |  |  |  | (10 | ) |  |  | (1,840 | )
Charge-offs |  |  | (4,380 | ) |  |  | - |  |  |  | (3,031 | ) |  |  | (606 | ) |  |  | - |  |  |  | (8,017 | )
Recoveries |  |  | 1,579 |  |  |  | 1,020 |  |  |  | 3,591 |  |  |  | 67 |  |  |  | 11 |  |  |  | 6,268 |
Net (charge-offs)/recoveries |  |  | (2,801 | ) |  |  | 1,020 |  |  |  | 560 |  |  |  | (539 | ) |  |  | 11 |  |  |  | (1,749 | )
June 30, 2013 Ending Balance |  | $ | 64,379 |  |  | $ | 13,755 |  |  | $ | 89,678 |  |  | $ | 11,892 |  |  | $ | 29 |  |  | $ | 179,733 |
Reserve for impaired loans |  | $ | 1,568 |  |  | $ | 4,995 |  |  | $ | 5,342 |  |  | $ | 874 |  |  | $ | - |  |  | $ | 12,779 |
Reserve for non-impaired loans |  | $ | 62,811 |  |  | $ | 8,760 |  |  | $ | 84,336 |  |  | $ | 11,018 |  |  | $ | 29 |  |  | $ | 166,954 |
Reserve for off-balance sheet credit commitments |  | $ | 924 |  |  | $ | 273 |  |  | $ | 1,972 |  |  | $ | 33 |  |  | $ | 1 |  |  | $ | 3,203 |

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