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Loans Receivable and Allowance for Loan Losses | 12 Months Ended
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Dec. 31, 2013
Receivables [Abstract] |
Loans Receivable and Allowance for Loan Losses | LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES The following is a summary of loans by major category at December 31, 2013 and 2012:
| December 31, 2013 |  | December 31, 2012
| (In thousands)
Loan portfolio composition |  |  |
Real estate loans: |  |  |
Residential | $ | 10,039 |  |  | $ | 9,247 |
Commercial & industrial | 3,821,163 |  |  | 3,100,466 |
Construction | 72,856 |  |  | 65,045 |
Total real estate loans | 3,904,058 |  |  | 3,174,758 |
Commercial business | 949,093 |  |  | 921,556 |
Trade finance | 124,685 |  |  | 152,070 |
Consumer and other | 98,507 |  |  | 49,954 |
Total loans outstanding | 5,076,343 |  |  | 4,298,338 |
Less: deferred loan fees | (2,168 | ) |  | (2,086 | )
Gross loans receivable | 5,074,175 |  |  | 4,296,252 |
Less: allowance for loan losses | (67,320 | ) |  | (66,941 | )
Loans receivable, net | $ | 5,006,855 |  |  | $ | 4,229,311 |
Our loan portfolio is made up of four segments: real estate loans, commercial business, trade finance and consumer and other. These segments are further segregated between loans accounted for under the amortized cost method Legacy Loans and acquired loans that were originally recorded at fair value with no carryover of the related pre-acquisition allowance for loan losses Acquired Loans. The Acquired Loans are further segregated between ACILs and APLs. The following table presents changes in the accretable discount on the ACILs for the years ended December 31, 2013 and 2012:
| Year Ended December 31,
| 2013 |  | 2012
Balance at beginning of period | $ | 18,652 |  |  | $ | 31,999 |
Additions due to mergers and acquisitions | 19,873 |  |  | — |
Accretion | (15,590 | ) |  | (14,135 | )
Changes in expected cash flows | 24,463 |  |  | 788 |
Balance at end of period | $ | 47,398 |  |  | $ | 18,652 |
On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the ACILs is the “accretable yield”. The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The accretable yield will change from period to period due to the following: 1) estimates of the remaining life of acquired loans will affect the amount of future interest income, 2) indicies for variable rates of interest on ACILs may change; and 3) estimates of the amount of the contractual principal and interest that will not be collected (nonaccretable difference) may change. The following tables detail the activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2013 and 2012:
| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period | $ | 39,040 |  |  | $ | 20,681 |  |  | $ | 1,786 |  |  | $ | 445 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 61,952 |
Provision for loan losses | 7,098 |  |  | 3,700 |  |  | 403 |  |  | 673 |  |  | 4,824 |  |  | 1,903 |  |  | 303 |  |  | 200 |  |  | 19,104 |
Loans charged off | (6,770 | ) |  | (9,406 | ) |  | — |  |  | (568 | ) |  | (411 | ) |  | (945 | ) |  | (300 | ) |  | (380 | ) |  | (18,780 | )
Recoveries of charged offs | 2,137 |  |  | 1,515 |  |  | 160 |  |  | 108 |  |  | 305 |  |  | 157 |  |  | — |  |  | 283 |  |  | 4,665 |
Balance, end of period | $ | 41,505 |  |  | $ | 16,490 |  |  | $ | 2,349 |  |  | $ | 658 |  |  | $ | 4,718 |  |  | $ | 1,115 |  |  | $ | 3 |  |  | $ | 103 |  |  | $ | 66,941 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period | 41,505 |  |  | 16,490 |  |  | 2,349 |  |  | 658 |  |  | 4,718 |  |  | 1,115 |  |  | 3 |  |  | 103 |  |  | 66,941 |
Provision (credit) for loan losses | 665 |  |  | 2,491 |  |  | 7,517 |  |  | 169 |  |  | 7,880 |  |  | 1,319 |  |  | (3 | ) |  | (38 | ) |  | 20,000 |
Loans charged off | (2,406 | ) |  | (4,022 | ) |  | (7,213 | ) |  | (524 | ) |  | (6,123 | ) |  | (1,738 | ) |  | — |  |  | (43 | ) |  | (22,069 | )
Recoveries of charged offs | 304 |  |  | 1,837 |  |  | — |  |  | 158 |  |  | 7 |  |  | 100 |  |  | — |  |  | 42 |  |  | 2,448 |
Balance, end of period | $ | 40,068 |  |  | $ | 16,796 |  |  | $ | 2,653 |  |  | $ | 461 |  |  | $ | 6,482 |  |  | $ | 796 |  |  | $ | — |  |  | $ | 64 |  |  | $ | 67,320 |
The following tables disaggregate the allowance for loan losses and the carrying value of loans receivables by impairment methodology at December 31, 2013 and December 31, 2012:
| December 31, 2013
| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
Allowance for loan losses:
Individually evaluated for impairment | $ | 5,578 |  |  | $ | 5,183 |  |  | $ | 159 |  |  | $ | 32 |  |  | $ | 1,092 |  |  | $ | 622 |  |  | $ | — |  |  | $ | — |  |  | $ | 12,666 |
Collectively evaluated for impairment | 34,490 |  |  | 11,613 |  |  | 2,494 |  |  | 429 |  |  | 612 |  |  | 174 |  |  | — |  |  | 64 |  |  | 49,876 |
Loans acquired with credit deterioration | — |  |  | — |  |  | — |  |  | — |  |  | 4,778 |  |  | — |  |  | — |  |  | — |  |  | 4,778 |
Total | $ | 40,068 |  |  | $ | 16,796 |  |  | $ | 2,653 |  |  | $ | 461 |  |  | $ | 6,482 |  |  | $ | 796 |  |  | $ | — |  |  | $ | 64 |  |  | $ | 67,320 |
Loans outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 49,177 |  |  | $ | 37,314 |  |  | $ | 5,692 |  |  | $ | 535 |  |  | $ | 19,992 |  |  | $ | 2,792 |  |  | $ | — |  |  | $ | 767 |  |  | $ | 116,269 |
Collectively evaluated for impairment | 3,076,924 |  |  | 778,350 |  |  | 117,249 |  |  | 32,421 |  |  | 613,696 |  |  | 84,325 |  |  | — |  |  | 31,802 |  |  | 4,734,767 |
Loans acquired with credit deterioration | — |  |  | — |  |  | — |  |  | — |  |  | 144,269 |  |  | 46,312 |  |  | 1,744 |  |  | 32,982 |  |  | 225,307 |
Total | $ | 3,126,101 |  |  | $ | 815,664 |  |  | $ | 122,941 |  |  | $ | 32,956 |  |  | $ | 777,957 |  |  | $ | 133,429 |  |  | $ | 1,744 |  |  | $ | 65,551 |  |  | $ | 5,076,343 |
| December 31, 2012
| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
Allowance for loan losses:
Individually evaluated for impairment | $ | 4,723 |  |  | $ | 3,084 |  |  | $ | 96 |  |  | $ | — |  |  | $ | 183 |  |  | $ | 1,074 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,160 |
Collectively evaluated for impairment | 36,782 |  |  | 13,406 |  |  | 2,253 |  |  | 658 |  |  | — |  |  | 41 |  |  | 3 |  |  | 103 |  |  | 53,246 |
Loans acquired with credit deterioration | — |  |  | — |  |  | — |  |  | — |  |  | 4,535 |  |  | — |  |  | — |  |  | — |  |  | 4,535 |
Total | $ | 41,505 |  |  | $ | 16,490 |  |  | $ | 2,349 |  |  | $ | 658 |  |  | $ | 4,718 |  |  | $ | 1,115 |  |  | $ | 3 |  |  | $ | 103 |  |  | $ | 66,941 |
Loans outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 37,394 |  |  | $ | 23,951 |  |  | $ | 6,199 |  |  | $ | 536 |  |  | $ | 17,951 |  |  | $ | 3,323 |  |  | $ | — |  |  | $ | 802 |  |  | $ | 90,156 |
Collectively evaluated for impairment | 2,387,080 |  |  | 729,904 |  |  | 144,173 |  |  | 27,284 |  |  | 628,449 |  |  | 114,621 |  |  | 242 |  |  | 18,257 |  |  | 4,050,010 |
Loans acquired with credit deterioration | — |  |  | — |  |  | — |  |  | — |  |  | 103,884 |  |  | 49,757 |  |  | 1,456 |  |  | 3,075 |  |  | 158,172 |
Total | $ | 2,424,474 |  |  | $ | 753,855 |  |  | $ | 150,372 |  |  | $ | 27,820 |  |  | $ | 750,284 |  |  | $ | 167,701 |  |  | $ | 1,698 |  |  | $ | 22,134 |  |  | $ | 4,298,338 |
As of December 31, 2013 and December 31, 2012, the liability for unfunded commitments was $885 thousand and $802 thousand, respectively. For the year ended December 31, 2013 and 2012, the recognized provision for credit losses related to unfunded commitments was $83 thousand and $116 thousand. The recorded investment in individually impaired loans was as follows:
| December 31, 2013 |  | December 31, 2012
| (In thousands)
With Allocated Allowance |  |  |
Without charge-off | $ | 85,920 |  |  | $ | 65,526 |
With charge-off | 851 |  |  | 2,599 |
With No Allocated Allowance |  |  |
Without charge-off | 23,160 |  |  | 17,536 |
With charge-off | 6,338 |  |  | 4,495 |
Allowance on Impaired Loans | (12,666 | ) |  | (9,160 | )
Impaired Loans, net of allowance | $ | 103,603 |  |  | $ | 80,996 |
The following tables detail impaired loans (Legacy and Acquired) by portfolio segment as of December 31, 2013 and December 31, 2012 and for the years ended December 31, 2013 and 2012. Loans with no related allowance for loan losses are believed by management to have adequate collateral securing their carrying value.
|  | As of December 31, 2013 |  | For the year ended December 31, 2013
Total Impaired Loans |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With Related Allowance: |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 7,318 |  |  | 7,451 |  |  | 827 |  |  | 7,783 |  |  | 181 |
Hotel & Motel |  | 11,920 |  |  | 12,744 |  |  | 2,841 |  |  | 11,432 |  |  | 550 |
Gas Station & Car Wash |  | 3,145 |  |  | 3,236 |  |  | 519 |  |  | 2,090 |  |  | 117 |
Mixed Use |  | 930 |  |  | 953 |  |  | 212 |  |  | 1,108 |  |  | 43 |
Industrial & Warehouse |  | 12,398 |  |  | 12,470 |  |  | 810 |  |  | 9,496 |  |  | 323 |
Other |  | 10,262 |  |  | 10,351 |  |  | 1,461 |  |  | 9,826 |  |  | 405 |
Real Estate—Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial Business |  | 34,663 |  |  | 36,472 |  |  | 5,805 |  |  | 27,010 |  |  | 1,572 |
Trade Finance |  | 5,600 |  |  | 5,628 |  |  | 159 |  |  | 5,313 |  |  | 41 |
Consumer and Other |  | 535 |  |  | 535 |  |  | 32 |  |  | 348 |  |  | 23 |
|  | $ | 86,771 |  |  | $ | 89,840 |  |  | $ | 12,666 |  |  | $ | 74,406 |  |  | $ | 3,255 |
With No Related Allowance |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 4,025 |  |  | 6,591 |  |  | — |  |  | 3,428 |  |  | 45 |
Hotel & Motel |  | 6,502 |  |  | 10,498 |  |  | — |  |  | 6,304 |  |  | — |
Gas Station & Car Wash |  | 4,845 |  |  | 8,273 |  |  | — |  |  | 3,803 |  |  | 139 |
Mixed Use |  | 845 |  |  | 912 |  |  | — |  |  | 697 |  |  | — |
Industrial & Warehouse |  | 3,806 |  |  | 7,204 |  |  | — |  |  | 3,958 |  |  | 10 |
Other |  | 1,548 |  |  | 3,647 |  |  | — |  |  | 3,043 |  |  | — |
Real Estate—Construction |  | 1,625 |  |  | 1,625 |  |  | — |  |  | 1,670 |  |  | 89 |
Commercial Business |  | 5,443 |  |  | 8,437 |  |  | — |  |  | 2,770 |  |  | 25 |
Trade Finance |  | 92 |  |  | 7,279 |  |  | — |  |  | 18 |  |  | — |
Consumer and Other |  | 767 |  |  | 831 |  |  | — |  |  | 1,067 |  |  | — |
|  | $ | 29,498 |  |  | $ | 55,297 |  |  | $ | — |  |  | $ | 26,758 |  |  | $ | 308 |
Total |  | $ | 116,269 |  |  | $ | 145,137 |  |  | $ | 12,666 |  |  | $ | 101,164 |  |  | $ | 3,563 |
* | Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.
|  | As of December 31, 2013 |  | For the year ended December 31, 2013
Impaired APLs(1) |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With Related Allowance: |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 391 |  |  | 397 |  |  | 15 |  |  | 1,084 |  |  | 14 |
Hotel & Motel |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Gas Station & Car Wash |  | 794 |  |  | 885 |  |  | 341 |  |  | 485 |  |  | — |
Mixed Use |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Industrial & Warehouse |  | 5,128 |  |  | 5,200 |  |  | 612 |  |  | 6,323 |  |  | — |
Other |  | 1,362 |  |  | 1,412 |  |  | 124 |  |  | 1,819 |  |  | 43 |
Real Estate—Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial Business |  | 1,984 |  |  | 3,354 |  |  | 622 |  |  | 2,827 |  |  | 5 |
Trade Finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and Other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | $ | 9,659 |  |  | $ | 11,248 |  |  | $ | 1,714 |  |  | $ | 12,538 |  |  | $ | 62 |
With No Related Allowance |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 1,244 |  |  | 2,216 |  |  | — |  |  | 953 |  |  | 14 |
Hotel & Motel |  | 6,441 |  |  | 8,676 |  |  | — |  |  | 6,169 |  |  | — |
Gas Station & Car Wash |  | 1,614 |  |  | 2,109 |  |  | — |  |  | 1,366 |  |  | 62 |
Mixed Use |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Industrial & Warehouse |  | 1,883 |  |  | 3,446 |  |  | — |  |  | 2,482 |  |  | 10 |
Other |  | 1,135 |  |  | 1,547 |  |  | — |  |  | 1,600 |  |  | — |
Real Estate—Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial Business |  | 808 |  |  | 948 |  |  | — |  |  | 291 |  |  | — |
Trade Finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and Other |  | 767 |  |  | 831 |  |  | — |  |  | 779 |  |  | — |
|  | $ | 13,892 |  |  | $ | 19,773 |  |  | $ | — |  |  | $ | 13,640 |  |  | $ | 86 |
Total |  | $ | 23,551 |  |  | $ | 31,021 |  |  | $ | 1,714 |  |  | $ | 26,178 |  |  | $ | 148 |
* | Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.
(1) | APLs that became impaired subsequent to being acquired.
|  | As of December 31, 2012 |  | For the year ended December 31, 2012
Total Impaired Loans |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With Related Allowance: |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 5,477 |  |  | 5,610 |  |  | 1,167 |  |  | 3,512 |  |  | 255 |
Hotel & Motel |  | 8,990 |  |  | 8,995 |  |  | 1,860 |  |  | 17,536 |  |  | 426 |
Gas Station & Car Wash |  | 1,892 |  |  | 2,440 |  |  | 73 |  |  | 2,908 |  |  | — |
Mixed Use |  | 900 |  |  | 976 |  |  | 250 |  |  | 3,182 |  |  | — |
Industrial & Warehouse |  | 2,074 |  |  | 2,153 |  |  | 567 |  |  | 3,052 |  |  | 66 |
Other |  | 16,184 |  |  | 16,389 |  |  | 989 |  |  | 14,322 |  |  | 805 |
Real Estate—Construction |  | — |  |  | — |  |  | — |  |  | 26 |  |  | — |
Commercial Business |  | 26,354 |  |  | 29,073 |  |  | 4,158 |  |  | 25,227 |  |  | 1,252 |
Trade Finance |  | 6,199 |  |  | 7,173 |  |  | 96 |  |  | 3,510 |  |  | 248 |
Consumer and Other |  | 55 |  |  | 56 |  |  | — |  |  | 119 |  |  | 4 |
|  | $ | 68,125 |  |  | $ | 72,865 |  |  | $ | 9,160 |  |  | $ | 73,394 |  |  | $ | 3,056 |
With No Related Allowance |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 2,516 |  |  | 5,404 |  |  | — |  |  | 1,602 |  |  | 48 |
Hotel & Motel |  | 6,212 |  |  | 8,202 |  |  | — |  |  | 1,365 |  |  | — |
Gas Station & Car Wash |  | 1,731 |  |  | 4,359 |  |  | — |  |  | 1,775 |  |  | — |
Mixed Use |  | 899 |  |  | 923 |  |  | — |  |  | 180 |  |  | — |
Industrial & Warehouse |  | 4,392 |  |  | 6,450 |  |  | — |  |  | 4,408 |  |  | 160 |
Other |  | 2,371 |  |  | 6,283 |  |  | — |  |  | 2,598 |  |  | — |
Real Estate—Construction |  | 1,710 |  |  | 1,710 |  |  | — |  |  | 1,710 |  |  | 111 |
Commercial Business |  | 920 |  |  | 1,368 |  |  | — |  |  | 8,028 |  |  | 18 |
Trade Finance |  | — |  |  | — |  |  | — |  |  | 946 |  |  | — |
Consumer and Other |  | 1,280 |  |  | 1,316 |  |  | — |  |  | 357 |  |  | 20 |
|  | $ | 22,031 |  |  | $ | 36,015 |  |  | $ | — |  |  | $ | 22,969 |  |  | $ | 357 |
Total |  | $ | 90,156 |  |  | $ | 108,880 |  |  | $ | 9,160 |  |  | $ | 96,363 |  |  | $ | 3,413 |
* | Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.
|  | As of December 31, 2012 |  | For the year ended December 31, 2012
Impaired APLs(1) |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With Related Allowance: |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 1,286 |  |  | 1,286 |  |  | 9 |  |  | 920 |  |  | 64 |
Hotel & Motel |  | — |  |  | — |  |  | — |  |  | 3,676 |  |  | — |
Gas Station & Car Wash |  | — |  |  | — |  |  | — |  |  | 57 |  |  | — |
Mixed Use |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Industrial & Warehouse |  | 832 |  |  | 887 |  |  | 2 |  |  | 331 |  |  | 36 |
Other |  | 4,272 |  |  | 4,461 |  |  | 172 |  |  | 1,711 |  |  | 288 |
Real Estate—Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial Business |  | 2,974 |  |  | 3,072 |  |  | 1,074 |  |  | 1,625 |  |  | 26 |
Trade Finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and Other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | $ | 9,364 |  |  | $ | 9,706 |  |  | $ | 1,257 |  |  | $ | 8,320 |  |  | $ | 414 |
With No Related Allowance |  |  |  |  |  |  |  |  |  |
Real Estate—Residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 800 |  |  | 840 |  |  | — |  |  | 161 |  |  | 48 |
Hotel & Motel |  | 5,990 |  |  | 7,375 |  |  | — |  |  | 1,198 |  |  | — |
Gas Station & Car Wash |  | 774 |  |  | 1,865 |  |  | — |  |  | 608 |  |  | — |
Mixed Use |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Industrial & Warehouse |  | 3,190 |  |  | 3,302 |  |  | — |  |  | 2,005 |  |  | 160 |
Other |  | 807 |  |  | 3,156 |  |  | — |  |  | 993 |  |  | — |
Real Estate—Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial Business |  | 349 |  |  | 681 |  |  | — |  |  | 680 |  |  | 15 |
Trade Finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and Other |  | 802 |  |  | 836 |  |  | — |  |  | 160 |  |  | — |
|  | $ | 12,712 |  |  | $ | 18,055 |  |  | $ | — |  |  | $ | 5,805 |  |  | $ | 223 |
Total |  | $ | 22,076 |  |  | $ | 27,761 |  |  | $ | 1,257 |  |  | $ | 14,125 |  |  | $ | 637 |
* | Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.
(1) | APLs that became impaired subsequent to being acquired.
| For the year ended December 31, 2011
Total Impaired Loans | Average Recorded Investment* |  | Interest Income Recognized during Impairment
With Related Allowance: |  |  |
Real Estate—Residential | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |
Retail | 3,476 |  |  | 34 |
Hotel & Motel | 14,581 |  |  | 1,013 |
Gas Station & Car Wash | 2,825 |  |  | 95 |
Mixed Use | 1,561 |  |  | 158 |
Industrial & Warehouse | 4,819 |  |  | 310 |
Other | 6,195 |  |  | 298 |
Real Estate—Construction | 2,504 |  |  | — |
Commercial Business | 23,133 |  |  | 538 |
Trade Finance | 899 |  |  | 71 |
Consumer and Other | — |  |  | — |
| $ | 59,993 |  |  | $ | 2,517 |
With No Related Allowance |  |  |
Real Estate—Residential | $ | — |  |  | $ | — |
Real Estate—Commercial |  |  |
Retail | 6,199 |  |  | — |
Hotel & Motel | 4,722 |  |  | — |
Gas Station & Car Wash | 2,584 |  |  | — |
Mixed Use | 2,157 |  |  | — |
Industrial & Warehouse | 3,150 |  |  | — |
Other | 10,596 |  |  | — |
Real Estate—Construction | 3,280 |  |  | 113 |
Commercial Business | 12,432 |  |  | 203 |
Trade Finance | 758 |  |  | 30 |
Consumer and Other | 145 |  |  | — |
| $ | 46,023 |  |  | $ | 346 |
Total | $ | 106,016 |  |  | $ | 2,863 |
* | Unpaid contractual principal balance less charge-offs, interest applied to principal and purchase discounts.
Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due and/or management deems the collectibility of the principal and/or interest to be in question, as well as when required by regulatory requirements. Loans to a customer whose financial condition has deteriorated are considered for nonaccrual status whether or not the loan is 90 days or more past due. Generally, payments received on nonaccrual loans are recorded as principal reductions. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The following tables present the aging of past due loans as of December 31, 2013 and December 31, 2012 by class of loans:
| As of December 31, 2013
| Past Due and Accruing |  |  |  |
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | 90 or More Days Past Due |  | Total |  | Nonaccrual Loans |  | Total Delinquent loans
| (In thousands)
Legacy Loans |
Real estate—Residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—Commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 122 |  |  | — |  |  | — |  |  | 122 |  |  | 4,363 |  |  | 4,485 |
Hotel & Motel | — |  |  | — |  |  | — |  |  | — |  |  | 121 |  |  | 121 |
Gas Station & Car Wash | 1,038 |  |  | — |  |  | — |  |  | 1,038 |  |  | 2,228 |  |  | 3,266 |
Mixed Use | — |  |  | — |  |  | — |  |  | — |  |  | 974 |  |  | 974 |
Industrial & Warehouse | 215 |  |  | — |  |  | — |  |  | 215 |  |  | 1,923 |  |  | 2,138 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 1,398 |  |  | 1,398 |
Real estate—Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 780 |  |  | 244 |  |  | — |  |  | 1,024 |  |  | 6,402 |  |  | 7,426 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | 1,031 |  |  | 1,031 |
Consumer and other | 54 |  |  | 22 |  |  | — |  |  | 76 |  |  | — |  |  | 76 |
Subtotal | $ | 2,209 |  |  | $ | 266 |  |  | $ | — |  |  | $ | 2,475 |  |  | $ | 18,440 |  |  | $ | 20,915 |
Acquired Loans (1) |  |  |  |  |  |  |  |  |  |  |
Real estate—Residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—Commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 2,024 |  |  | — |  |  | — |  |  | 2,024 |  |  | 1,030 |  |  | 3,054 |
Hotel & Motel | — |  |  | — |  |  | — |  |  | — |  |  | 6,441 |  |  | 6,441 |
Gas Station & Car Wash | 1,068 |  |  | — |  |  | — |  |  | 1,068 |  |  | 1,339 |  |  | 2,407 |
Mixed Use | 576 |  |  | — |  |  | — |  |  | 576 |  |  | — |  |  | 576 |
Industrial & Warehouse | 121 |  |  | — |  |  | — |  |  | 121 |  |  | 6,890 |  |  | 7,011 |
Other | 516 |  |  | 1,729 |  |  | — |  |  | 2,245 |  |  | 1,376 |  |  | 3,621 |
Real estate—Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 524 |  |  | 703 |  |  | 5 |  |  | 1,232 |  |  | 2,708 |  |  | 3,940 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other | 284 |  |  | 74 |  |  | — |  |  | 358 |  |  | 930 |  |  | 1,288 |
Subtotal | $ | 5,113 |  |  | $ | 2,506 |  |  | $ | 5 |  |  | $ | 7,624 |  |  | $ | 20,714 |  |  | $ | 28,338 |
TOTAL | $ | 7,322 |  |  | $ | 2,772 |  |  | $ | 5 |  |  | $ | 10,099 |  |  | $ | 39,154 |  |  | $ | 49,253 |
(1) | The Acquired Loan balances exclude ACILs of $9.7 million, $2.5 million and $43.8 million that were 30-59 days, 60-89 days and 90 or more days past due, respectively.
| As of December 31, 2012
| Past Due and Accruing |  |  |  |
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | 90 or More Days Past Due |  | Total |  | Nonaccrual Loans |  | Total Delinquent loans
| (In Thousands)
Legacy Loans |
Real estate—Residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—Commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 87 |  |  | — |  |  | — |  |  | 87 |  |  | 3,316 |  |  | 3,403 |
Hotel & Motel | — |  |  | — |  |  | — |  |  | — |  |  | 437 |  |  | 437 |
Gas Station & Car Wash | 359 |  |  | — |  |  | — |  |  | 359 |  |  | 2,848 |  |  | 3,207 |
Mixed Use | 34 |  |  | — |  |  | — |  |  | 34 |  |  | 1,799 |  |  | 1,833 |
Industrial & Warehouse | — |  |  | — |  |  | — |  |  | — |  |  | 1,950 |  |  | 1,950 |
Other | — |  |  | 115 |  |  | — |  |  | 115 |  |  | 2,379 |  |  | 2,494 |
Real estate—Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 298 |  |  | 234 |  |  | — |  |  | 532 |  |  | 4,942 |  |  | 5,474 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | 869 |  |  | 869 |
Consumer and other | 190 |  |  | — |  |  | — |  |  | 190 |  |  | — |  |  | 190 |
Subtotal | 968 |  |  | 349 |  |  | — |  |  | 1,317 |  |  | 18,540 |  |  | 19,857 |
Acquired Loans (1) |  |  |  |  |  |  |  |  |  |  |
Real estate—Residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—Commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 75 |  |  | — |  |  | — |  |  | 75 |  |  | — |  |  | 75 |
Hotel & Motel | — |  |  | — |  |  | — |  |  | — |  |  | 5,990 |  |  | 5,990 |
Gas Station & Car Wash | — |  |  | 1,109 |  |  | — |  |  | 1,109 |  |  | 774 |  |  | 1,883 |
Mixed Use | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Industrial & Warehouse | — |  |  | 3,278 |  |  | — |  |  | 3,278 |  |  | — |  |  | 3,278 |
Other | 15 |  |  | — |  |  | — |  |  | 15 |  |  | 937 |  |  | 952 |
Real estate—Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 220 |  |  | 285 |  |  | — |  |  | 505 |  |  | 2,442 |  |  | 2,947 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other | 98 |  |  | 17 |  |  | — |  |  | 115 |  |  | 970 |  |  | 1,085 |
Subtotal | $ | 408 |  |  | $ | 4,689 |  |  | $ | — |  |  | $ | 5,097 |  |  | $ | 11,113 |  |  | $ | 16,210 |
TOTAL | $ | 1,376 |  |  | $ | 5,038 |  |  | $ | — |  |  | $ | 6,414 |  |  | $ | 29,653 |  |  | $ | 36,067 |
(1) | The Acquired Loan balances exclude ACILs of $7.0 million, $12.1 million and $17.7 million that were 30-59 days, 60-89 days and 90 or more days past due, respectively.
Loans accounted for under ASC 310-30 are generally considered accruing and performing loans and the accretable discount is accreted to interest income over the estimate life of the loan when cash flows are reasonably estimable. Accordingly, ACILs that are contractually past due are still considered to be accruing and performing loans. The loans may be classified as nonaccrual if the timing and amount of future cash flows is not reasonably estimable. Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans. This analysis is performed at least on a quarterly basis. The Company uses the following definitions for risk ratings:
• | Pass: Loans that meet a preponderance or more of the Company's underwriting criteria and evidence an acceptable level of risk.
• | Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
• | Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
• | Doubtful/Loss: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The following tables present the risk rating for Legacy Loans and Acquired Loans as of December 31, 2013 and December 31, 2012 by class of loans:
| As of December 31, 2013
| Pass |  | Special Mention |  | Substandard |  | Doubtful/Loss |  | Total
| (In thousands)
Legacy Loans: |  |  |
Real estate—Residential | $ | 8,070 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 8,070 |
Real estate—Commercial |  |  |  |  |  |  |  |  |
Retail | 842,815 |  |  | 858 |  |  | 14,365 |  |  | — |  |  | 858,038 |
Hotel & Motel | 568,263 |  |  | 1,841 |  |  | 13,661 |  |  | — |  |  | 583,765 |
Gas Station & Car Wash | 455,205 |  |  | — |  |  | 10,854 |  |  | — |  |  | 466,059 |
Mixed Use | 259,788 |  |  | 360 |  |  | 3,324 |  |  | — |  |  | 263,472 |
Industrial & Warehouse | 251,993 |  |  | 4,116 |  |  | 12,056 |  |  | — |  |  | 268,165 |
Other | 589,895 |  |  | 3,928 |  |  | 11,493 |  |  | 359 |  |  | 605,675 |
Real estate—Construction | 71,231 |  |  | — |  |  | 1,626 |  |  | — |  |  | 72,857 |
Commercial business | 759,956 |  |  | 12,756 |  |  | 42,952 |  |  | — |  |  | 815,664 |
Trade finance | 91,055 |  |  | 22,589 |  |  | 9,297 |  |  | — |  |  | 122,941 |
Consumer and other | 32,389 |  |  | 32 |  |  | 535 |  |  | — |  |  | 32,956 |
Subtotal | $ | 3,930,660 |  |  | $ | 46,480 |  |  | $ | 120,163 |  |  | $ | 359 |  |  | $ | 4,097,662 |
Acquired Loans: |  |  |  |  |  |  |  |  |
Real estate—Residential | $ | 1,066 |  |  | $ | 284 |  |  | $ | 619 |  |  | $ | — |  |  | $ | 1,969 |
Real estate—Commercial |  |  |  |  |  |  |  |  |
Retail | 237,325 |  |  | 9,319 |  |  | 28,128 |  |  | 94 |  |  | 274,866 |
Hotel & Motel | 109,138 |  |  | 7,134 |  |  | 14,836 |  |  | 179 |  |  | 131,287 |
Gas Station & Car Wash | 35,356 |  |  | 1,621 |  |  | 14,440 |  |  | 245 |  |  | 51,662 |
Mixed Use | 32,992 |  |  | 1,467 |  |  | 5,316 |  |  | — |  |  | 39,775 |
Industrial & Warehouse | 92,570 |  |  | 3,525 |  |  | 19,720 |  |  | — |  |  | 115,815 |
Other | 133,752 |  |  | 6,698 |  |  | 21,573 |  |  | 560 |  |  | 162,583 |
Real estate—Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 94,854 |  |  | 10,266 |  |  | 26,245 |  |  | 2,064 |  |  | 133,429 |
Trade finance | 1,744 |  |  | — |  |  | — |  |  | — |  |  | 1,744 |
Consumer and other | 51,036 |  |  | 2,695 |  |  | 7,460 |  |  | 4,360 |  |  | 65,551 |
Subtotal | $ | 789,833 |  |  | $ | 43,009 |  |  | $ | 138,337 |  |  | $ | 7,502 |  |  | $ | 978,681 |
Total | $ | 4,720,493 |  |  | $ | 89,489 |  |  | $ | 258,500 |  |  | $ | 7,861 |  |  | $ | 5,076,343 |
| As of December 31, 2012
| Pass |  | Special Mention |  | Substandard |  | Doubtful/Loss |  | Total
|  |  | (In thousands)
Legacy Loans: |  |  |
Real estate—Residential | $ | 9,223 |  |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 9,247 |
Real estate—Commercial |  |  |  |  |  |  |  |  |
Retail | 589,720 |  |  | 3,584 |  |  | 12,303 |  |  | — |  |  | 605,607 |
Hotel & Motel | 453,908 |  |  | 1,894 |  |  | 16,795 |  |  | — |  |  | 472,597 |
Gas Station & Car Wash | 370,803 |  |  | 1,288 |  |  | 9,982 |  |  | — |  |  | 382,073 |
Mixed Use | 233,687 |  |  | 2,131 |  |  | 3,423 |  |  | — |  |  | 239,241 |
Industrial & Warehouse | 202,066 |  |  | 1,010 |  |  | 4,295 |  |  | 370 |  |  | 207,741 |
Other | 431,686 |  |  | 1,219 |  |  | 17,084 |  |  | — |  |  | 449,989 |
Real estate—Construction | 56,270 |  |  | — |  |  | 1,710 |  |  | — |  |  | 57,980 |
Commercial business | 726,073 |  |  | 6,164 |  |  | 21,514 |  |  | 104 |  |  | 753,855 |
Trade finance | 136,197 |  |  | 7,976 |  |  | 6,199 |  |  | — |  |  | 150,372 |
Consumer and other | 26,801 |  |  | 13 |  |  | 1,006 |  |  | — |  |  | 27,820 |
Subtotal | $ | 3,236,434 |  |  | $ | 25,279 |  |  | $ | 94,335 |  |  | $ | 474 |  |  | $ | 3,356,522 |
Acquired Loans: |  |  |
Real estate—Residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—Commercial |  |  |  |  |  |  |  |  |
Retail | 225,982 |  |  | 6,469 |  |  | 17,331 |  |  | — |  |  | 249,782 |
Hotel & Motel | 105,032 |  |  | 16,150 |  |  | 13,215 |  |  | — |  |  | 134,397 |
Gas Station & Car Wash | 33,360 |  |  | 7,192 |  |  | 4,119 |  |  | — |  |  | 44,671 |
Mixed Use | 34,927 |  |  | 3,826 |  |  | 6,526 |  |  | — |  |  | 45,279 |
Industrial & Warehouse | 114,616 |  |  | 1,385 |  |  | 9,470 |  |  | — |  |  | 125,471 |
Other | 121,666 |  |  | 4,473 |  |  | 17,479 |  |  | — |  |  | 143,618 |
Real estate—Construction | 1,093 |  |  | — |  |  | 5,972 |  |  | — |  |  | 7,065 |
Commercial business | 119,026 |  |  | 14,057 |  |  | 34,047 |  |  | 571 |  |  | 167,701 |
Trade finance | 242 |  |  | 334 |  |  | 1,122 |  |  | — |  |  | 1,698 |
Consumer and other | 17,292 |  |  | 424 |  |  | 4,329 |  |  | 89 |  |  | 22,134 |
Subtotal | $ | 773,236 |  |  | $ | 54,310 |  |  | $ | 113,610 |  |  | $ | 660 |  |  | $ | 941,816 |
Total | $ | 4,009,670 |  |  | $ | 79,589 |  |  | $ | 207,945 |  |  | $ | 1,134 |  |  | $ | 4,298,338 |
The following table presents loans sold from loans held for investment or transferred from held for investment to held for sale during the year ended December 31, 2013 and 2012 by portfolio segment:
| Year Ended December 31,
| 2013 |  | 2012
Sales or reclassification to held for sale |
Real estate - Commercial | $ | 6,900 |  |  | $ | 3,061 |
Total | $ | 6,900 |  |  | $ | 3,061 |
The adequacy of the allowance for loan losses is determined by management based upon an evaluation and review of the credit quality of the loan portfolio, consideration of historical loan loss experience, relevant internal and external factors that affect the collection of a loan, and other pertinent factors. The Migration Analysis is a formula methodology based on the Bank's actual historical net charge off experience for each loan class (type) pool and risk grade. The migration analysis is centered on the Bank's internal credit risk rating system. Our internal loan review and external contracted credit review examinations are used to determine and validate loan risk grades. This credit review system takes into consideration factors such as: borrower's background and experience; historical and current financial condition; credit history and payment performance; economic conditions and their impact on various industries; type, fair value and volatility of the fair value of collateral; lien position; and the financial strength of any guarantors. A general loan loss allowance is provided on loans not specifically identified as impaired (“non-impaired loans”). The Bank's general loan loss allowance has two components: quantitative and qualitative risk factors. The quantitative risk factors are based on a historical loss migration methodology. The loans are classified by class and risk grade and the historical loss migration is tracked for the various classes. Loss experience is quantified for a specified period and then weighted to place more significance to the most recent loss history. That loss experience is then applied to the stratified portfolio at each quarter end. For the APLs, a general loan loss allowance is provided to the extent that there has been credit deterioration since the acquisition date. Additionally, in order to systematically quantify the credit risk impact of other trends and changes within the loan portfolio, the Bank utilizes qualitative adjustments to the Migration Analysis within established parameters. The parameters for making adjustments are established under a Credit Risk Matrix that provides seven possible scenarios for each of the factors below. The matrix allows for up to three positive (major, moderate, and minor), three negative (major, moderate, and minor), and one neutral credit risk scenarios within each factor for each loan type pool. Generally, the factors are considered to have no significant impact (neutral) to our historical migration ratios. However, if information exists to warrant adjustment to the Migration Analysis, changes are made in accordance with the established parameters supported by narrative and/or statistical analysis. The Credit Risk Matrix and the nine possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratio by as much as 50 basis points in either direction (positive or negative) for each loan type pool. This matrix considers the following nine factors, which are patterned after the guidelines provided under the FFIEC Interagency Policy Statement on the Allowance for Loan and Lease Losses:
• | Changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.
• | Changes in national and local economic and business conditions and developments, including the condition of various market segments.
• | Changes in the nature and volume of the loan portfolio.
• | Changes in the experience, ability and depth of lending management and staff.
• | Changes in the trends of the volume and severity of past due loans, Classified Loans, nonaccrual loans, troubled debt restructurings and other loan modifications.
• | Changes in the quality of our loan review system and the degree of oversight by the Directors.
• | Changes in the value of underlying collateral for collateral-dependent loans.
• | The existence and effect of any concentrations of credit and changes in the level of such concentrations.
• | The effect of external factors, such as competition and legal and regulatory requirements, on the level of estimated losses in our loan portfolio.
The Company also establishes specific loss allowances for loans where we have identified potential credit risk conditions or circumstances related to a specific individual credit. The specific allowance amounts are determined by a method prescribed by FASB ASC 310-10-35-22, Measurement of Impairment. The loans identified as impaired will be accounted for in accordance with one of the three acceptable valuation methods: 1) the present value of future cash flows discounted at the loan's effective interest rate; 2) the loan's observable market price; or 3) the fair value of the collateral, if the loan is collateral dependent. For the collateral dependent impaired loans, we obtain a new appraisal to determine the amount of impairment as of the date that the loan became impaired. The appraisals are based on an “as is” valuation. To ensure that appraised values remain current, the Company either obtains updated appraisals every twelve months from a qualified independent appraiser or an internal re-valuation of the collateral is performed by qualified personnel. If the fair value of the collateral, less cost to sell, is less than the recorded amount of the loan, we then recognize impairment by creating or adjusting an existing valuation allowance with a corresponding charge to the provision for loan losses. If an impaired loan is expected to be collected through liquidation of the underlying collateral, the loan is deemed to be collateral dependent and the amount of impairment is charged off against the allowance for loan losses. The Bank considers a loan to be impaired when it is probable that not all amounts due (principal and interest) will be collectible in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis by taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. For commercial business loans, real estate loans and certain consumer loans, the Company bases the measurement of loan impairment on the present value of the expected future cash flows, discounted at the loan's effective interest rate or on the fair value of the loan's collateral, less estimated costs to sell, if the loan is collateral dependent. Management evaluates most consumer loans for impairment on a collective basis because these loans generally have smaller balances and are homogeneous in the underwriting of terms and conditions and in the type of collateral. The allowance for loan losses for ACILs is based upon expected cash flows for these loans. To the extent that a deterioration in borrower credit quality results in a decrease in expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses would be established based on management's estimate of future credit losses over the remaining life of the loans. The following table presents loans by portfolio segment and impairment method at December 31, 2013 and December 31, 2012:
| As of December 31, 2013
| Real estate - Residential |  | Real estate - Commercial |  | Real estate - Construction |  | Commercial business |  | Trade finance |  | Consumer and other |  | Total
| (Dollars in thousands)
Impaired loans (Gross carrying value) | $ | — |  |  | $ | 67,544 |  |  | $ | 1,625 |  |  | $ | 40,106 |  |  | $ | 5,692 |  |  | $ | 1,302 |  |  | $ | 116,269 |
Specific allowance | $ | — |  |  | $ | 6,670 |  |  | $ | — |  |  | $ | 5,805 |  |  | $ | 159 |  |  | $ | 32 |  |  | $ | 12,666 |
Loss coverage ratio | N/A |  |  | 9.9 | % |  | 0.0 | % |  | 14.5 | % |  | 2.8 | % |  | 2.5 | % |  | 10.9 | %
Non-impaired loans | $ | 10,039 |  |  | $ | 3,753,619 |  |  | $ | 71,231 |  |  | $ | 908,987 |  |  | $ | 118,993 |  |  | $ | 97,205 |  |  | $ | 4,960,074 |
General allowance | $ | 25 |  |  | $ | 39,227 |  |  | $ | 628 |  |  | $ | 11,787 |  |  | $ | 2,494 |  |  | $ | 493 |  |  | $ | 54,654 |
Loss coverage ratio | 0.2 | % |  | 1.0 | % |  | 0.9 | % |  | 1.3 | % |  | 2.1 | % |  | 0.5 | % |  | 1.1 | %
Total loans | $ | 10,039 |  |  | $ | 3,821,163 |  |  | $ | 72,856 |  |  | $ | 949,093 |  |  | $ | 124,685 |  |  | $ | 98,507 |  |  | $ | 5,076,343 |
Total allowance for loan losses | $ | 25 |  |  | $ | 45,897 |  |  | $ | 628 |  |  | $ | 17,592 |  |  | $ | 2,653 |  |  | $ | 525 |  |  | $ | 67,320 |
Loss coverage ratio | 0.2 | % |  | 1.2 | % |  | 0.9 | % |  | 1.9 | % |  | 2.1 | % |  | 0.5 | % |  | 1.3 | %
| As of December 31, 2012
| Real estate - Residential |  | Real estate - Commercial |  | Real estate - Construction |  | Commercial business |  | Trade finance |  | Consumer and other |  | Total
| (Dollars in thousands)
Impaired loans (Gross carrying value) | $ | — |  |  | $ | 53,634 |  |  | $ | 1,710 |  |  | $ | 27,274 |  |  | $ | 6,199 |  |  | $ | 1,338 |  |  | $ | 90,155 |
Specific allowance | $ | — |  |  | $ | 4,906 |  |  | $ | — |  |  | $ | 4,158 |  |  | $ | 96 |  |  | $ | — |  |  | $ | 9,160 |
Loss coverage ratio | N/A |  |  | 9.1 | % |  | 0.0 | % |  | 15.2 | % |  | 1.5 | % |  | 0.0 | % |  | 10.2 | %
Non-impaired loans | $ | 9,247 |  |  | $ | 3,046,832 |  |  | $ | 63,335 |  |  | $ | 894,282 |  |  | $ | 145,871 |  |  | $ | 48,616 |  |  | $ | 4,208,183 |
General allowance | $ | 74 |  |  | $ | 40,256 |  |  | $ | 986 |  |  | $ | 13,448 |  |  | $ | 2,256 |  |  | $ | 761 |  |  | $ | 57,781 |
Loss coverage ratio | 0.8 | % |  | 1.3 | % |  | 1.6 | % |  | 1.5 | % |  | 1.5 | % |  | 1.6 | % |  | 1.4 | %
Total loans | $ | 9,247 |  |  | $ | 3,100,466 |  |  | $ | 65,045 |  |  | $ | 921,556 |  |  | $ | 152,070 |  |  | $ | 49,954 |  |  | $ | 4,298,338 |
Total allowance for loan losses | $ | 74 |  |  | $ | 45,162 |  |  | $ | 986 |  |  | $ | 17,606 |  |  | $ | 2,352 |  |  | $ | 761 |  |  | $ | 66,941 |
Loss coverage ratio | 0.8 | % |  | 1.5 | % |  | 1.5 | % |  | 1.9 | % |  | 1.5 | % |  | 1.5 | % |  | 1.6 | %
Under certain circumstances, the Company provides borrowers relief through loan modifications. These modifications are either temporary in nature (“temporary modifications”) or are more substantive. At December 31, 2013, total modified loans were $58.9 million, compared to $51.5 million at December 31, 2012. The temporary modifications generally consist of interest only payments for a three to six month period, whereby principal payments are deferred. At the end of the modification period, the remaining principal balance is re-amortized based on the original maturity date. Loans subject to temporary modifications are generally downgraded to Substandard or Special Mention. At the end of the modification period, the loan either 1) returns to the original contractual terms; 2) is further modified and accounted for as a troubled debt restructuring in accordance with ASC 310-10-35; or 3) is disposed of through foreclosure or liquidation. Troubled Debt Restructurings (“TDRs”) of loans are defined by ASC 310-40, Troubled Debt Restructurings by Creditors, and ASC 470-60, Troubled Debt Restructurings by Debtors, and evaluated for impairment in accordance with ASC 310-10-35. The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date. In order to determine whether a borrower is experiencing financial difficulty, 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. This evaluation is performed under our internal underwriting policy. A summary of TDRs on accrual and nonaccrual by type of concession as of December 31, 2013 and December 31, 2012 is presented below:
| As of December 31, 2013
| TDRs on accrual |  | TDRs on nonaccrual |  | TOTAL
| Real estate - Commercial |  | Commercial Business |  | Other |  | Total |  | Real estate - Commercial |  | Commercial Business |  | Other |  | Total |
| (In thousands)
Payment concession | $ | 7,437 |  |  | $ | 1,057 |  |  | $ | — |  |  | $ | 8,494 |  |  | $ | 9,489 |  |  | $ | 1,279 |  |  | $ | 767 |  |  | $ | 11,535 |  |  | $ | 20,029 |
Maturity / Amortization concession | 765 |  |  | 6,565 |  |  | 535 |  |  | 7,865 |  |  | 1,653 |  |  | 3,656 |  |  | — |  |  | 5,309 |  |  | 13,174 |
Rate concession | 13,055 |  |  | 4,490 |  |  | — |  |  | 17,545 |  |  | 8,107 |  |  | — |  |  | — |  |  | 8,107 |  |  | 25,652 |
Principal forgiveness | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 49 |  |  | — |  |  | 49 |  |  | 49 |
| $ | 21,257 |  |  | $ | 12,112 |  |  | $ | 535 |  |  | $ | 33,904 |  |  | $ | 19,249 |  |  | $ | 4,984 |  |  | $ | 767 |  |  | $ | 25,000 |  |  | $ | 58,904 |
| As of December 31, 2012
| TDRs on accrual |  | TDRs on nonaccrual |  | TOTAL
| Real estate - Commercial |  | Commercial Business |  | Other |  | Total |  | Real estate - Commercial |  | Commercial Business |  | Other |  | Total |
| (In thousands)
Payment concession | $ | 9,608 |  |  | $ | 687 |  |  | $ | — |  |  | $ | 10,295 |  |  | $ | 4,735 |  |  | $ | 4,618 |  |  | $ | 802 |  |  | $ | 10,155 |  |  | $ | 20,450 |
Maturity / Amortization concession | 348 |  |  | 3,847 |  |  | 536 |  |  | 4,731 |  |  | 652 |  |  | 1,941 |  |  | 869 |  |  | 3,462 |  |  | 8,193 |
Rate concession | 13,594 |  |  | 1,229 |  |  | — |  |  | 14,823 |  |  | 7,923 |  |  | — |  |  | — |  |  | 7,923 |  |  | 22,746 |
Principal forgiveness | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 62 |  |  | — |  |  | 62 |  |  | 62 |
| $ | 23,550 |  |  | $ | 5,763 |  |  | $ | 536 |  |  | $ | 29,849 |  |  | $ | 13,310 |  |  | $ | 6,621 |  |  | $ | 1,671 |  |  | $ | 21,602 |  |  | $ | 51,451 |
TDRs on accrual status are comprised of loans that were accruing at the time of restructuring and for which the Bank anticipates full repayment of both principal and interest under the restructured terms. TDRs that are on nonaccrual can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified. Sustained performance includes the periods prior to the modification if the prior performance met or exceeded the modified terms. TDRs on accrual status at December 31, 2013 were comprised of 15 commercial real estate loans totaling $21.3 million, 28 commercial business loans totaling $12.1 million and 2 consumer loans totaling $535 thousand. TDRs on accrual status at December 31, 2012 were comprised of 12 commercial real estate loans totaling $23.6 million and 20 commercial business loans totaling $5.8 million. Management expects that the TDRs on accrual status as of December 31, 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. TDRs that were restructured at market interest rates and had sustained performance as agreed under the modified loan terms may be reclassified as non-TDRs after each year end but are still monitored for potential impairment. The Company has allocated $6.6 million and $6.3 million of specific reserves to TDRs as of December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, the Company did not have any outstanding commitments to extend additional funds to these borrowers. The following table presents loans by class modified as TDRs that occurred during the year ended December 31, 2013 and 2012:
| For the year ended |  | For the year ended
| December 31, 2013 |  | December 31, 2012
| Number of Loans | Pre-Modification | Post-Modification |  | Number of Loans | Pre-Modification | Post-Modification
Legacy Loans: |  |  |  |  |  |  |
Real estate - Residential | — | $ | — |  | $ | — |  |  | — | $ | — |  | $ | — |
Real estate - Commercial |  |  |  |  |  |  |
Retail | 6 | 6,195 |  | 6,214 |  |  | 5 | 2,456 |  | 2,321 |
Hotel & Motel | — | — |  | — |  |  | 1 | 1,479 |  | 1,444 |
Gas Station & Car Wash | 1 | 1,371 |  | 880 |  |  | 1 | 216 |  | 50 |
Mixed Use | — | — |  | — |  |  | — | — |  | — |
Industrial & Warehouse | 1 | 370 |  | 338 |  |  | 1 | 502 |  | 494 |
Other | — | — |  | — |  |  | 4 | 12,391 |  | 9,234 |
Real estate - Construction | — | — |  | — |  |  | — | — |  | — |
Commercial business | 15 | 8,687 |  | 7,552 |  |  | 14 | 4,075 |  | 4,838 |
Trade Finance | — | — |  | — |  |  | 1 | 1,493 |  | 401 |
Consumer and Other | 2 | 970 |  | 490 |  |  | 1 | 480 |  | 480 |
Subtotal | 25 | $ | 17,593 |  | $ | 15,474 |  |  | 28 | $ | 23,092 |  | $ | 19,262 |
Acquired Loans: |  |  |  |  |  |  |
Real estate - Residential | — | $ | — |  | $ | — |  |  | — | $ | — |  | $ | — |
Real estate - Commercial |  |  |  |  |  |  |
Retail | 3 | 336 |  | 321 |  |  | 2 | 1,458 |  | 1,286 |
Hotel & Motel | — | — |  | — |  |  | 1 | 6,165 |  | 5,990 |
Gas Station & Car Wash | 1 | 165 |  | — |  |  | — | — |  | — |
Mixed Use | — | — |  | — |  |  | — | — |  | — |
Industrial & Warehouse | 2 | 10,336 |  | 5,208 |  |  | — | — |  | — |
Other | 2 | 1,137 |  | 1,122 |  |  | 1 | 670 |  | 631 |
Real estate - Construction | — | — |  | — |  |  | — | — |  | — |
Commercial business | 8 | 1,182 |  | 441 |  |  | 6 | 2,476 |  | 2,384 |
Trade Finance | — | — |  | — |  |  | — | — |  | — |
Consumer and Other | — | — |  | — |  |  | 4 | 808 |  | 802 |
Subtotal | 16 | $ | 13,156 |  | $ | 7,092 |  |  | 14 | $ | 11,577 |  | $ | 11,093 |
Total | 41 | $ | 30,749 |  | $ | 22,566 |  |  | 42 | $ | 34,669 |  | $ | 30,355 |
The specific reserves for the TDRs described above as of December 31, 2013 and 2012 were $2.0 million and $2.5 million, respectively, and the charge offs for the years ended December 31, 2013 and 2012 were $2.6 million and $158 thousand, respectively. The following table presents loans by class for TDRs that have been modified within the previous twelve months and have subsequently had a payment default during the years ended December 31, 2013 and 2012:
| December 31, 2013 |  | December 31, 2012 |  | December 31, 2011
| Number of Loans | Balance |  | Number of Loans | Balance |  | Number of Loans | Balance
| (Dollars In thousands)
Legacy Loans: |  |  |  |  |  |  |  |
Real estate - Commercial |  |  |  |  |  |  |  |
Retail | 1 | $ | 508 |  |  | 1 | $ | 268 |  |  | 1 | $ | 771 |
Hotel & Motel | — | — |  |  | — | — |  |  | 2 | — |
Gas Station & Car Wash | — | — |  |  | 1 | 50 |  |  | — | — |
Industrial & Warehouse | — | — |  |  | — | — |  |  | 3 | 961 |
Other | — | — |  |  | 1 | 562 |  |  | 1 | 294 |
Commercial Business | 5 | 540 |  |  | 3 | 76 |  |  | 8 | 422 |
Subtotal | 6 | $ | 1,048 |  |  | 6 | $ | 956 |  |  | 15 | $ | 2,448 |
Acquired Loans: |  |  |  |  |  |  |  |
Real estate - Commercial |  |  |  |  |  |  |  |
Retail | 1 | $ | 56 |  |  | — | $ | — |  |  | — | $ | — |
Hotel & Motel | — | — |  |  | 1 | 5,990 |  |  | — | — |
Gas Station & Car Wash | 1 | — |  |  | — | — |  |  | — | — |
Industrial & Warehouse | 1 | 5,128 |  |  | — | — |  |  | — | — |
Other | — | — |  |  | — | — |  |  | — | — |
Commercial Business | 3 | 47 |  |  | 2 | 143 |  |  | — | — |
Subtotal | 6 | $ | 5,231 |  |  | 3 | $ | 6,133 |  |  | — | $ | — |
| 12 | $ | 6,279 |  |  | 9 | $ | 7,089 |  |  | 15 | $ | 2,448 |
A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. The specific reserves for the TDRs described above as of December 31, 2013 and 2012 were $661 thousand and $89 thousand, respectively, and the charge offs for the years ended December 31, 2013 and 2012 were $7.0 million and $158 thousand, respectively. The six Legacy Loans that subsequently defaulted in 2013 were modified through payment concessions, maturity/amortization concessions, or rate concessions. The payment concessions were comprised of two Commercial Business loans totaling $540 thousand. The maturity / amortization concessions were comprised of two Commercial Business loans that were fully charged off during the year. The rate concessions were comprised of one Real Estate Commercial - Retail loan totaling $508 thousand, and one Commercial Business loan that was fully charged off during the year. The six Acquired Loans that subsequently defaulted in 2013 were modified through payment concessions and are comprised of: three Commercial Business loans totaling $47 thousand, one Real Estate Commercial - Industrial loan totaling $5.1 million, one Real Estate Commercial - Retail loan totaling $56 thousand, and one Real Estate Commercial - Gas Station loan that was fully charged off during the year. The six Legacy Loans that subsequently defaulted in 2012 were modified through payment concession, maturity / amortization concession, or rate concession. The payment concessions were comprised of one Real Estate Commercial - Gas Station & Car Wash loan totaling $50 thousand and one Commercial Business loan. The maturity / amortization concessions were comprised of one Real Estate Commercial - Retail loan totaling $268 thousand and two Commercial Business loans totaling $76 thousand. The rate concession was comprised of one Real Estate Commercial - Other loan totaling $562 thousand. The three Acquired Loans that subsequently defaulted in 2012 were modified as follows: one Real Estate Commercial - Hotel & Motel loan totaling $6.0 million was modified through a rate concession and two Commercial Business loans totaling $143 thousand were modified through a payment concession and rate concession, respectively. The fifteen Legacy Loans that subsequently defaulted during 2011 were modified through payment concessions and maturity date / amortization concessions. The payment concessions were comprised of: three Real Estate Commercial - Industrial & Warehouse loans totaling $961 thousand, five Commercial Business loans totaling $397 thousand, one Real Estate Commercial - Other loan totaling $294 thousand, and two Real Estate Commercial - Hotel & Motel loans. The maturity date / amortization concessions were comprised of one Real Estate Commercial - Retail loan totaling $771 thousand and three Commercial Business loan totaling $25 thousand. Covered Assets On April 16, 2010, the Department of Financial Institutions closed Innovative Bank, California, and appointed the FDIC as its receiver. On the same date, Center Bank assumed the banking operations of Innovative Bank from the FDIC under a purchase and assumption agreement and two related loss sharing agreements with the FDIC. Covered nonperforming assets totaled $826 thousand and $882 thousand at December 31, 2013 and December 31, 2012, respectively. These covered nonperforming assets are subject to the loss sharing agreements with the FDIC. The covered nonperforming assets at December 31, 2013 and December 31, 2012 were as follows:
| December 31, 2013 |  | December 31, 2012
| (In thousands)
Covered loans on nonaccrual status | $ | 236 |  |  | $ | 489 |
Covered other real estate owned | 590 |  |  | 393 |
Total covered nonperforming assets | $ | 826 |  |  | $ | 882 |
Acquired covered loans | $ | 55,088 |  |  | $ | 72,528 |
Related Party Loans In the ordinary course of business, the Company entered into loan transactions with certain of its directors or associates of such directors (“Related Parties”). The loans to Related Parties are on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with unrelated 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, 2013 and December 31, 2012, and the outstanding principal balance as of December 31, 2013 and December 31, 2012 was $3.9 million and $11.1 million, respectively.

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