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Loans | 6 Months Ended
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Jun. 30, 2012
Loans [Abstract] |
LOANS | NOTE 5 — LOANS The Board of Directors and management review and approve the Bank’s loan policy and procedures on a regular basis to reflect issues such as regulatory and organizational structure changes, strategic planning revisions, concentrations of credit, loan delinquencies and non-performing loans, problem loans, and policy adjustments. Real estate loans are subject to loans secured by liens or interest in real estate, to provide purchase, construction, and refinance on real estate properties. Commercial and industrial loans consist of commercial term loans, commercial lines of credit, and SBA loans. Consumer loans consist of auto loans, credit cards, personal loans, and home equity lines of credit. We maintain management loan review and monitoring departments that review and monitor pass graded loans as well as problem loans to prevent further deterioration. Concentrations of Credit: The majority of the Bank’s loan portfolio consists of commercial real estate loans and commercial and industrial loans. The Bank has been diversifying and monitoring commercial real estate loans based on property types, tightening underwriting standards, and portfolio liquidity and management, and has not exceeded certain specified limits set forth in the Bank’s loan policy. Most of the Bank’s lending activity occurs within Southern California. Loans Receivable Loans receivable consisted of the following as of the dates indicated:
|  | June 30, 2012 |  |  | December 31, 2011 |
|  | (In Thousands) |
Real Estate Loans: |  |  |  |  |  |  |  |
Commercial Property |  | $ | 724,129 |  |  | $ | 663,023 |
Construction |  |  | 7,930 |  |  |  | 33,976 |
Residential Property |  |  | 107,757 |  |  |  | 52,921 |
Total Real Estate Loans |  |  | 839,816 |  |  |  | 749,920 |
Commercial and Industrial Loans |  |  |  |  |  |  |  |
Commercial Term Loans (1) |  |  | 854,499 |  |  |  | 944,836 |
Commercial Lines of Credit (2) |  |  | 53,916 |  |  |  | 55,770 |
SBA Loans (3) |  |  | 129,415 |  |  |  | 116,192 |
International Loans |  |  | 32,639 |  |  |  | 28,676 |
Total Commercial and Industrial Loans |  |  | 1,070,469 |  |  |  | 1,145,474 |
Consumer Loans |  |  | 39,339 |  |  |  | 43,346 |
Total Gross Loans |  |  | 1,949,624 |  |  |  | 1,938,740 |
Allowance for Loan Losses |  |  | (71,893 | ) |  |  | (89,936 | )
Deferred Loan Costs |  |  | 636 |  |  |  | 216 |
Loans Receivable, Net |  | $ | 1,878,367 |  |  | $ | 1,849,020 |
(1) | Includes owner-occupied property loans of $722.5 million and $786.3 million as of June 30, 2012 and December 31, 2011, respectively.
(2) | Includes owner-occupied property loans of $919,000 and $936,000 as of June 30, 2012 and December 31, 2011, respectively.
(3) | Includes owner-occupied property loans of $114.5 million and $93.6 million as of June 30, 2012 and December 31, 2011, respectively.
Accrued interest on loans receivable amounted to $5.2 million and $5.7 million at June 30, 2012 and December 31, 2011, respectively. At June 30, 2012 and December 31, 2011, loans receivable totaling $682.3 million and $797.1 million, respectively, were pledged to secure advances from the FHLB and the Federal Reserve Discount Window. The following table details the information on the purchases, sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the three months ended June 30, 2012 and 2011.
|  | Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Total |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans Held for Sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 10,879 |  |  | $ | 45,114 |  |  | $ | — |  |  | $ | 55,993 |
Origination of Loans Held for Sale |  |  | — |  |  |  | 34,723 |  |  |  | — |  |  |  | 34,723 |
Reclassification from Loans Receivable to Loans Held for Sale |  |  | 15,148 |  |  |  | 11,842 |  |  |  | — |  |  |  | 26,990 |
Reclassification from Loans Held for Sale to Loan Receivables |  |  | (1,647 | ) |  |  | (132 | ) |  |  | — |  |  |  | (1,779 | )
Sales of Loans Held for Sale |  |  | (21,909 | ) |  |  | (87,552 | ) |  |  | — |  |  |  | (109,461 | )
Principal Payoffs and Amortization |  |  | (58 | ) |  |  | (146 | ) |  |  | — |  |  |  | (204 | )
Valuation Adjustments |  |  | (1,124 | ) |  |  | — |  |  |  | — |  |  |  | (1,124 | )
Ending Balance |  | $ | 1,289 |  |  | $ | 3,849 |  |  | $ | — |  |  | $ | 5,138 |
June 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans Held for Sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 3,513 |  |  | $ | 44,136 |  |  | $ | — |  |  | $ | 47,649 |
Origination of Loans Held for Sale |  |  | — |  |  |  | 1,771 |  |  |  | — |  |  |  | 1,771 |
Reclassification from Loans Receivable to Loans Held for Sale |  |  | 266 |  |  |  | 9,567 |  |  |  | — |  |  |  | 9,833 |
Sales of Loans Held for Sale |  |  | (2,664 | ) |  |  | (11,557 | ) |  |  | — |  |  |  | (14,221 | )
Principal Payoffs and Amortization |  |  | (8 | ) |  |  | (237 | ) |  |  | — |  |  |  | (245 | )
Valuation Adjustments |  |  | (133 | ) |  |  | (549 | ) |  |  | — |  |  |  | (682 | )
Ending Balance |  | $ | 974 |  |  | $ | 43,131 |  |  | $ | — |  |  | $ | 44,105 |
For the three months ended June 30, 2012, loans receivable of $27.0 million were reclassified as loans held for sale, and loans held for sale of $109.5 million were sold. For the three months ended June 30, 2011, loans receivable of $9.8 million were reclassified as loans held for sale and loans held for sale of $14.2 million were sold. For the three months ended June 30, 2012, $15.2 million of commercial real estate loans were purchased. There were no purchases of loans receivable for the three months ended June 30, 2011. The following table details the information on the purchases, sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the six months ended June 30, 2012 and 2011.
|  | Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Total |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans Held for Sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 11,068 |  |  | $ | 11,519 |  |  | $ | — |  |  | $ | 22,587 |
Origination of Loans Held for Sale |  |  | — |  |  |  | 60,589 |  |  |  | — |  |  |  | 60,589 |
Reclassification from Loans Receivable to Loans Held for Sale |  |  | 32,224 |  |  |  | 32,247 |  |  |  | — |  |  |  | 64,471 |
Reclassification from Loans Held for Sale to OREO |  |  | (360 | ) |  |  | — |  |  |  | — |  |  |  | (360 | )
Reclassification from Loans Held for Sale to Loan Receivables |  |  | (1,647 | ) |  |  | (132 | ) |  |  | — |  |  |  | (1,779 | )
Sales of Loans Held for Sale |  |  | (38,703 | ) |  |  | (99,455 | ) |  |  | — |  |  |  | (138,158 | )
Principal Payoffs and Amortization |  |  | (169 | ) |  |  | (262 | ) |  |  | — |  |  |  | (431 | )
Valuation Adjustments |  |  | (1,124 | ) |  |  | (657 | ) |  |  | — |  |  |  | (1,781 | )
Ending Balance |  | $ | 1,289 |  |  | $ | 3,849 |  |  | $ | — |  |  | $ | 5,138 |
June 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans Held for Sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 3,666 |  |  | $ | 32,954 |  |  | $ | — |  |  | $ | 36,620 |
Origination of Loans Held for Sale |  |  | — |  |  |  | 16,056 |  |  |  | — |  |  |  | 16,056 |
Reclassification from Loans Receivable to Loans Held for Sale |  |  | 18,175 |  |  |  | 19,631 |  |  |  | — |  |  |  | 37,806 |
Sales of Loans Held for Sale |  |  | (20,653 | ) |  |  | (22,140 | ) |  |  | — |  |  |  | (42,793 | )
Principal Payoffs and Amortization |  |  | (14 | ) |  |  | (667 | ) |  |  | — |  |  |  | (681 | )
Valuation Adjustments |  |  | (200 | ) |  |  | (2,703 | ) |  |  | — |  |  |  | (2,903 | )
Ending Balance |  | $ | 974 |  |  | $ | 43,131 |  |  | $ | — |  |  | $ | 44,105 |
For the six months ended June 30, 2012, loans receivable of $64.5 million were reclassified as loans held for sale, and loans held for sale of $138.2 million were sold. For the six months ended June 30, 2012, $15.2 million of commercial real estate loans and $67.4 million of residential mortgage loans were purchased. For the six months ended June 30, 2011, loans receivable of $37.8 million were reclassified as loans held for sale, and loans held for sale of $42.8 million were sold. There were no purchases of loans receivable for the six months ended June 30, 2011. Allowance for Loan Losses and Allowance for Off-Balance Sheet Items Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated:
|  | As of and for the Three Months Ended |  |  | As of and for the Six Months Ended |
|  | June 30, 2012 |  |  | March 31, 2012 |  |  | June 30, 2011 |  |  | June 30, 2012 |  |  | June 30, 2011 |
|  | (In Thousands) |
Allowance for Loan Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at Beginning of Period |  | $ | 81,052 |  |  | $ | 89,936 |  |  | $ | 125,780 |  |  | $ | 89,936 |  |  | $ | 146,059 |
Actual Charge-Offs |  |  | (14,716 | ) |  |  | (12,321 | ) |  |  | (20,652 | ) |  |  | (27,037 | ) |  |  | (45,833 | )
Recoveries on Loans Previously Charged Off |  |  | 1,324 |  |  |  | 1,037 |  |  |  | 4,151 |  |  |  | 2,361 |  |  |  | 7,777 |
Net Loan Charge-Offs |  |  | (13,392 | ) |  |  | (11,284 | ) |  |  | (16,501 | ) |  |  | (24,676 | ) |  |  | (38,056 | )
Provision Charged to Operating Expense |  |  | 4,233 |  |  |  | 2,400 |  |  |  | (250 | ) |  |  | 6,633 |  |  |  | 1,026 |
Balance at End of Period |  | $ | 71,893 |  |  | $ | 81,052 |  |  | $ | 109,029 |  |  | $ | 71,893 |  |  | $ | 109,029 |
Allowance for Off-Balance Sheet Items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at Beginning of Period |  | $ | 2,581 |  |  | $ | 2,981 |  |  | $ | 2,141 |  |  | $ | 2,981 |  |  | $ | 3,417 |
Provision Charged to (Reversal of Charged to) Operating Expense |  |  | (233 | ) |  |  | (400 | ) |  |  | 250 |  |  |  | (633 | ) |  |  | (1,026 | )
Balance at End of Period |  | $ | 2,348 |  |  | $ | 2,581 |  |  | $ | 2,391 |  |  | $ | 2,348 |  |  | $ | 2,391 |
The following table details the information on the allowance for credit losses by portfolio segment for the three months ended June 30, 2012 and 2011.
|  | Real Estate |  |  | Commercial andIndustrial |  |  | Consumer |  |  | Unallocated |  |  | Total |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for Loan Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 22,230 |  |  | $ | 54,638 |  |  | $ | 2,244 |  |  | $ | 1,940 |  |  | $ | 81,052 |
Charge-Offs |  |  | 5,243 |  |  |  | 9,393 |  |  |  | 80 |  |  |  | — |  |  |  | 14,716 |
Recoveries on Loans Previously Charged Off |  |  | 517 |  |  |  | 789 |  |  |  | 18 |  |  |  | — |  |  |  | 1,324 |
Provision |  |  | 3,902 |  |  |  | 776 |  |  |  | (425 | ) |  |  | (20 | ) |  |  | 4,233 |
Ending Balance |  | $ | 21,406 |  |  | $ | 46,810 |  |  | $ | 1,757 |  |  | $ | 1,920 |  |  | $ | 71,893 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 437 |  |  | $ | 7,224 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,661 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 20,969 |  |  | $ | 39,586 |  |  | $ | 1,757 |  |  | $ | 1,920 |  |  | $ | 64,232 |
Loans Receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending Balance |  | $ | 839,816 |  |  | $ | 1,070,469 |  |  | $ | 39,339 |  |  | $ | — |  |  | $ | 1,949,624 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 16,619 |  |  | $ | 42,087 |  |  | $ | 1,401 |  |  | $ | — |  |  | $ | 60,107 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 823,197 |  |  | $ | 1,028,382 |  |  | $ | 37,938 |  |  | $ | — |  |  | $ | 1,889,517 |
June 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for Loan Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 25,884 |  |  | $ | 93,878 |  |  | $ | 1,732 |  |  | $ | 4,286 |  |  | $ | 125,780 |
Charge-Offs |  |  | 5,591 |  |  |  | 14,741 |  |  |  | 320 |  |  |  | — |  |  |  | 20,652 |
Recoveries on Loans Previously Charged Off |  |  | 2,223 |  |  |  | 1,915 |  |  |  | 13 |  |  |  | — |  |  |  | 4,151 |
Provision |  |  | 1,599 |  |  |  | 1,793 |  |  |  | 162 |  |  |  | (3,804 | ) |  |  | (250 | )
Ending Balance |  | $ | 24,115 |  |  | $ | 82,845 |  |  | $ | 1,587 |  |  | $ | 482 |  |  | $ | 109,029 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 3,324 |  |  | $ | 26,149 |  |  | $ | 223 |  |  | $ | — |  |  | $ | 29,696 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 20,791 |  |  | $ | 56,696 |  |  | $ | 1,364 |  |  | $ | 482 |  |  | $ | 79,333 |
Loans Receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending Balance |  | $ | 787,585 |  |  | $ | 1,234,519 |  |  | $ | 46,500 |  |  | $ | — |  |  | $ | 2,068,604 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 78,065 |  |  | $ | 114,560 |  |  | $ | 870 |  |  | $ | — |  |  | $ | 193,495 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 709,520 |  |  | $ | 1,119,959 |  |  | $ | 45,630 |  |  | $ | — |  |  | $ | 1,875,109 |
The following table details the information on the allowance for credit losses by portfolio segment for the six months ended June 30, 2012 and 2011.
|  | Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Unallocated |  |  | Total |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for Loan Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 19,637 |  |  | $ | 66,005 |  |  | $ | 2,243 |  |  | $ | 2,051 |  |  | $ | 89,936 |
Charge-Offs |  |  | 8,085 |  |  |  | 18,508 |  |  |  | 444 |  |  |  | — |  |  |  | 27,037 |
Recoveries on Loans Previously Charged Off |  |  | 517 |  |  |  | 1,802 |  |  |  | 42 |  |  |  | — |  |  |  | 2,361 |
Provision |  |  | 9,337 |  |  |  | (2,489 | ) |  |  | (84 | ) |  |  | (131 | ) |  |  | 6,633 |
Ending Balance |  | $ | 21,406 |  |  | $ | 46,810 |  |  | $ | 1,757 |  |  | $ | 1,920 |  |  | $ | 71,893 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 437 |  |  | $ | 7,224 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,661 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 20,969 |  |  | $ | 39,586 |  |  | $ | 1,757 |  |  | $ | 1,920 |  |  | $ | 64,232 |
Loans Receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending Balance |  | $ | 839,816 |  |  | $ | 1,070,469 |  |  | $ | 39,339 |  |  | $ | — |  |  | $ | 1,949,624 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 16,619 |  |  | $ | 42,087 |  |  | $ | 1,401 |  |  | $ | — |  |  | $ | 60,107 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 823,197 |  |  | $ | 1,028,382 |  |  | $ | 37,938 |  |  | $ | — |  |  | $ | 1,889,517 |
June 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for Loan Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 32,766 |  |  | $ | 108,986 |  |  | $ | 2,079 |  |  | $ | 2,228 |  |  | $ | 146,059 |
Charge-Offs |  |  | 12,644 |  |  |  | 32,693 |  |  |  | 496 |  |  |  | — |  |  |  | 45,833 |
Recoveries on Loans Previously Charged Off |  |  | 2,744 |  |  |  | 5,011 |  |  |  | 22 |  |  |  | — |  |  |  | 7,777 |
Provision |  |  | 1,249 |  |  |  | 1,541 |  |  |  | (18 | ) |  |  | (1,746 | ) |  |  | 1,026 |
Ending Balance |  | $ | 24,115 |  |  | $ | 82,845 |  |  | $ | 1,587 |  |  | $ | 482 |  |  | $ | 109,029 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 3,324 |  |  | $ | 26,149 |  |  | $ | 223 |  |  | $ | — |  |  | $ | 29,696 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 20,791 |  |  | $ | 56,696 |  |  | $ | 1,364 |  |  | $ | 482 |  |  | $ | 79,333 |
Loans Receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending Balance |  | $ | 787,585 |  |  | $ | 1,234,519 |  |  | $ | 46,500 |  |  | $ | — |  |  | $ | 2,068,604 |
Ending Balance: Individually Evaluated for Impairment |  | $ | 78,065 |  |  | $ | 114,560 |  |  | $ | 870 |  |  | $ | — |  |  | $ | 193,495 |
Ending Balance: Collectively Evaluated for Impairment |  | $ | 709,520 |  |  | $ | 1,119,959 |  |  | $ | 45,630 |  |  | $ | — |  |  | $ | 1,875,109 |
Credit Quality Indicators As part of the on-going monitoring of the credit quality of our loan portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from (0) to (8)) for each and every loan in our loan portfolio. All loans are reviewed semi-annually. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows: Pass: pass loans, grade (0) to (4), are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention” (5), “Substandard” (6) or “Doubtful” (7). This is the strongest level of the Bank’s loan grading system. It incorporates all performing loans with no credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans. Following are sub categories within the Pass grade, or (0) to (4):
Pass or (0): |  | loans secured in full by cash or cash equivalents.
Pass or (1): |  | requires a very strong, well-structured credit relationship with an established borrower. The relationship should be supported by audited financial statements indicating cash flow, well in excess of debt service requirement, excellent liquidity, and very strong capital.
| Pass or (2): |  | requires a well-structured credit that may not be as seasoned or as high quality as grade 1. Capital, liquidity, debt service capacity, and collateral coverage must all be well above average. This category includes individuals with substantial net worth centered in liquid assets and strong income.
| Pass or (3): |  | loans or commitments to borrowers exhibiting a fully acceptable credit risk. These borrowers should have sound balance sheet proportions and significant cash flow coverage, although they may be somewhat more leveraged and exhibit greater fluctuations in earning and financing but generally would be considered very attractive to the Bank as a borrower. The borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans which are designated this grade must have characteristics that place them well above the minimum underwriting requirements. Asset-based borrowers assigned this grade must exhibit extremely favorable leverage and cash flow characteristics and consistently demonstrate a high level of unused borrowing capacity.
| Pass or (4): |  | loans or commitments to borrowers exhibiting either somewhat weaker balance sheet proportions or positive, but inconsistent, cash flow coverage. These borrowers may exhibit somewhat greater credit risk, and as a result of this the Bank may have secured its exposure in an effort to mitigate the risk. If so, the collateral taken should provide an unquestionable ability to repay the indebtedness in full through liquidation, if necessary. Cash flows should be adequate to cover debt service and fixed obligations, although there may be a question about the borrower’s ability to provide alternative sources of funds in emergencies. Better quality real estate and asset-based borrowers who fully comply with all underwriting standards and are performing according to projections would be assigned this grade.
Special Mention or (5): Special Mention credits are potentially weak, as the borrower is exhibiting deteriorating trends which, if not corrected, could jeopardize repayment of the debt and result in a substandard classification. Credits which have significant actual, not potential, weaknesses are considered more severely classified. Substandard or (6): A Substandard credit has a well-defined weakness that jeopardizes the liquidation of the debt. A credit graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected. Doubtful or (7): A Doubtful credit is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the credit, and therefore the amount or timing of a possible loss cannot be determined at the current time. Loss or (8): Loans classified as Loss are considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified Loss will be charged off in a timely manner.
|  | Pass (Grade 0-4) |  |  | Criticized (Grade 5) |  |  | Classified (Grade 6-7) |  |  | Total Loans |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 332,656 |  |  | $ | 3,095 |  |  | $ | 9,975 |  |  | $ | 345,726 |
Land |  |  | 6,163 |  |  |  | — |  |  |  | 12,340 |  |  |  | 18,503 |
Other |  |  | 330,499 |  |  |  | 25,141 |  |  |  | 4,260 |  |  |  | 359,900 |
Construction |  |  | — |  |  |  | — |  |  |  | 7,930 |  |  |  | 7,930 |
Residential Property |  |  | 103,901 |  |  |  | — |  |  |  | 3,856 |  |  |  | 107,757 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 102,701 |  |  |  | 1,356 |  |  |  | 27,923 |  |  |  | 131,980 |
Secured by Real Estate |  |  | 651,727 |  |  |  | 16,145 |  |  |  | 54,647 |  |  |  | 722,519 |
Commercial Lines of Credit |  |  | 50,808 |  |  |  | 885 |  |  |  | 2,223 |  |  |  | 53,916 |
SBA Loans |  |  | 113,925 |  |  |  | 1,382 |  |  |  | 14,108 |  |  |  | 129,415 |
International Loans |  |  | 31,589 |  |  |  | — |  |  |  | 1,050 |  |  |  | 32,639 |
Consumer Loans |  |  | 35,821 |  |  |  | 218 |  |  |  | 3,300 |  |  |  | 39,339 |
Total |  | $ | 1,759,790 |  |  | $ | 48,222 |  |  | $ | 141,612 |  |  | $ | 1,949,624 |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 292,914 |  |  | $ | 8,858 |  |  | $ | 10,685 |  |  | $ | 312,457 |
Land |  |  | 4,351 |  |  |  | — |  |  |  | 3,418 |  |  |  | 7,769 |
Other |  |  | 297,734 |  |  |  | 8,428 |  |  |  | 36,635 |  |  |  | 342,797 |
Construction |  |  | — |  |  |  | 14,080 |  |  |  | 19,896 |  |  |  | 33,976 |
Residential Property |  |  | 48,592 |  |  |  | — |  |  |  | 4,329 |  |  |  | 52,921 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 100,804 |  |  |  | 8,680 |  |  |  | 41,796 |  |  |  | 151,280 |
Secured by Real Estate |  |  | 634,822 |  |  |  | 36,290 |  |  |  | 122,444 |  |  |  | 793,556 |
Commercial Lines of Credit |  |  | 44,985 |  |  |  | 7,676 |  |  |  | 3,109 |  |  |  | 55,770 |
SBA Loans |  |  | 96,983 |  |  |  | 1,496 |  |  |  | 17,713 |  |  |  | 116,192 |
International Loans |  |  | 26,566 |  |  |  | — |  |  |  | 2,110 |  |  |  | 28,676 |
Consumer Loans |  |  | 40,454 |  |  |  | 676 |  |  |  | 2,216 |  |  |  | 43,346 |
Total |  | $ | 1,588,205 |  |  | $ | 86,184 |  |  | $ | 264,351 |  |  | $ | 1,938,740 |
The following is an aging analysis of past due loans, disaggregated by class of loan, as of June 30, 2012 and December 31, 2011:
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days or More Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | Accruing 90 Days or More Past Due |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 345,726 |  |  | $ | 345,726 |  |  | $ | — |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 18,503 |  |  |  | 18,503 |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | 62 |  |  |  | 62 |  |  |  | 359,838 |  |  |  | 359,900 |  |  |  | — |
Construction |  |  | — |  |  |  | — |  |  |  | 7,930 |  |  |  | 7,930 |  |  |  | — |  |  |  | 7,930 |  |  |  | — |
Residential Property |  |  | 211 |  |  |  | 235 |  |  |  | 191 |  |  |  | 637 |  |  |  | 107,120 |  |  |  | 107,757 |  |  |  | — |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 793 |  |  |  | 371 |  |  |  | 702 |  |  |  | 1,866 |  |  |  | 130,114 |  |  |  | 131,980 |  |  |  | — |
Secured by Real Estate |  |  | 293 |  |  |  | 939 |  |  |  | 1,202 |  |  |  | 2,434 |  |  |  | 720,085 |  |  |  | 722,519 |  |  |  | — |
Commercial Lines of Credit |  |  | 150 |  |  |  | — |  |  |  | 616 |  |  |  | 766 |  |  |  | 53,150 |  |  |  | 53,916 |  |  |  | — |
SBA Loans |  |  | 2,145 |  |  |  | 228 |  |  |  | 5,534 |  |  |  | 7,907 |  |  |  | 121,508 |  |  |  | 129,415 |  |  |  | — |
International Loans |  |  | — |  |  |  | 1,050 |  |  |  | — |  |  |  | 1,050 |  |  |  | 31,589 |  |  |  | 32,639 |  |  |  | — |
Consumer Loans |  |  | 330 |  |  |  | 104 |  |  |  | 1,209 |  |  |  | 1,643 |  |  |  | 37,696 |  |  |  | 39,339 |  |  |  | — |
Total |  | $ | 3,922 |  |  | $ | 2,927 |  |  | $ | 17,446 |  |  | $ | 24,295 |  |  | $ | 1,925,329 |  |  | $ | 1,949,624 |  |  | $ | — |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 485 |  |  | $ | — |  |  | $ | — |  |  | $ | 485 |  |  | $ | 311,972 |  |  | $ | 312,457 |  |  | $ | — |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,769 |  |  |  | 7,769 |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 342,797 |  |  |  | 342,797 |  |  |  | — |
Construction |  |  | — |  |  |  | — |  |  |  | 8,310 |  |  |  | 8,310 |  |  |  | 25,666 |  |  |  | 33,976 |  |  |  | — |
Residential Property |  |  | 277 |  |  |  | 1,613 |  |  |  | 2,221 |  |  |  | 4,111 |  |  |  | 48,810 |  |  |  | 52,921 |  |  |  | — |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 438 |  |  |  | 611 |  |  |  | 1,833 |  |  |  | 2,882 |  |  |  | 148,398 |  |  |  | 151,280 |  |  |  | — |
Secured by Real Estate |  |  | 3,162 |  |  |  | 6,496 |  |  |  | 1,202 |  |  |  | 10,860 |  |  |  | 782,696 |  |  |  | 793,556 |  |  |  | — |
Commercial Lines of Credit |  |  | — |  |  |  | — |  |  |  | 416 |  |  |  | 416 |  |  |  | 55,354 |  |  |  | 55,770 |  |  |  | — |
SBA Loans |  |  | 260 |  |  |  | 472 |  |  |  | 7,108 |  |  |  | 7,840 |  |  |  | 108,352 |  |  |  | 116,192 |  |  |  | — |
International Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 28,676 |  |  |  | 28,676 |  |  |  | — |
Consumer Loans |  |  | 126 |  |  |  | 7 |  |  |  | 154 |  |  |  | 287 |  |  |  | 43,059 |  |  |  | 43,346 |  |  |  | — |
Total |  | $ | 4,748 |  |  | $ | 9,199 |  |  | $ | 21,244 |  |  | $ | 35,191 |  |  | $ | 1,903,549 |  |  | $ | 1,938,740 |  |  | $ | — |
Impaired Loans Loans are considered impaired when, non-accrual and principal or interest payments have been contractually past due for 90 days or more, unless the loan is both well-collateralized and in the process of collection; or they are classified as Troubled Debt Restructuring (“TDR”) loans to offer terms not typically granted by the Bank or when current information or events make it unlikely to collect in full according to the contractual terms of the loan agreements; or there is a deterioration in the borrower’s financial condition that raises uncertainty as to timely collection of either principal or interest; or full payment of both interest and principal is in doubt according to the original contractual terms. We evaluate loan impairment in accordance with applicable GAAP. Loans are considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent, less costs to sell. If the measure of the impaired loan is less than the recorded investment in the loan, the deficiency will be charged off against the allowance for loan losses or, alternatively, a specific allocation will be established. Additionally, loans that are considered impaired are specifically excluded from the quarterly migration analysis when determining the amount of the allowance for loan losses required for the period. The allowance for collateral-dependent loans is determined by calculating the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. We continue to monitor the collateral coverage, based on recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly. The following table provides information on impaired loans, disaggregated by class of loans, as of the dates indicated:
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | With No Related Allowance Recorded |  |  | With an Allowance Recorded |  |  | Related Allowance |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,538 |  |  | $ | 2,584 |  |  | $ | 2,406 |  |  | $ | 132 |  |  | $ | 122 |
Land |  |  | 2,112 |  |  |  | 2,235 |  |  |  | 2,112 |  |  |  | — |  |  |  | — |
Other |  |  | 874 |  |  |  | 936 |  |  |  | 874 |  |  |  | — |  |  |  | — |
Construction |  |  | 7,930 |  |  |  | 8,108 |  |  |  | 7,930 |  |  |  | — |  |  |  | — |
Residential Property |  |  | 3,166 |  |  |  | 3,206 |  |  |  | 1,299 |  |  |  | 1,867 |  |  |  | 315 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 13,442 |  |  |  | 14,279 |  |  |  | 457 |  |  |  | 12,985 |  |  |  | 5,153 |
Secured by Real Estate |  |  | 18,927 |  |  |  | 19,930 |  |  |  | 16,235 |  |  |  | 2,692 |  |  |  | 573 |
Commercial Lines of Credit |  |  | 1,777 |  |  |  | 1,929 |  |  |  | 882 |  |  |  | 895 |  |  |  | 475 |
SBA Loans |  |  | 7,941 |  |  |  | 12,231 |  |  |  | 6,073 |  |  |  | 1,868 |  |  |  | 1,023 |
Consumer Loans |  |  | 1,401 |  |  |  | 1,433 |  |  |  | 1,401 |  |  |  | — |  |  |  | — |
Total |  | $ | 60,108 |  |  | $ | 66,871 |  |  | $ | 39,669 |  |  | $ | 20,439 |  |  | $ | 7,661 |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 1,260 |  |  | $ | 1,260 |  |  | $ | 1,100 |  |  | $ | 160 |  |  | $ | 126 |
Land |  |  | 3,178 |  |  |  | 3,210 |  |  |  | — |  |  |  | 3,178 |  |  |  | 360 |
Other |  |  | 14,773 |  |  |  | 14,823 |  |  |  | 1,131 |  |  |  | 13,642 |  |  |  | 3,004 |
Construction |  |  | 14,120 |  |  |  | 14,120 |  |  |  | 14,120 |  |  |  | — |  |  |  | — |
Residential Property |  |  | 5,368 |  |  |  | 5,408 |  |  |  | 3,208 |  |  |  | 2,160 |  |  |  | 128 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 16,035 |  |  |  | 16,559 |  |  |  | 244 |  |  |  | 15,791 |  |  |  | 10,793 |
Secured by Real Estate |  |  | 53,159 |  |  |  | 54,156 |  |  |  | 14,990 |  |  |  | 38,169 |  |  |  | 7,062 |
Commercial Lines of Credit |  |  | 1,431 |  |  |  | 1,554 |  |  |  | 715 |  |  |  | 716 |  |  |  | 716 |
SBA Loans |  |  | 11,619 |  |  |  | 12,971 |  |  |  | 9,445 |  |  |  | 2,174 |  |  |  | 1,167 |
International Loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer Loans |  |  | 746 |  |  |  | 788 |  |  |  | 511 |  |  |  | 235 |  |  |  | 26 |
Total |  | $ | 121,689 |  |  | $ | 124,849 |  |  | $ | 45,464 |  |  | $ | 76,225 |  |  | $ | 23,382 |
Impaired Loans The following table provides information on impaired loans, disaggregated by class of loans for the periods indicated:
|  | Average Recorded Investment for the Three Months Ended |  |  | Interest Income Recognized for the Three Months Ended |  |  | Average Recorded Investment for the Six Months Ended |  |  | Interest Income Recognized for the Six Months Ended |
|  | (In Thousands) |
June 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,546 |  |  | $ | 19 |  |  | $ | 1,945 |  |  | $ | 48 |
Land |  |  | 2,137 |  |  |  | 45 |  |  |  | 2,175 |  |  |  | 91 |
Other |  |  | 878 |  |  |  | 11 |  |  |  | 1,138 |  |  |  | 33 |
Construction |  |  | 7,983 |  |  |  | 89 |  |  |  | 8,090 |  |  |  | 178 |
Residential Property |  |  | 3,177 |  |  |  | 48 |  |  |  | 3,259 |  |  |  | 84 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 13,474 |  |  |  | 192 |  |  |  | 14,257 |  |  |  | 430 |
Secured by Real Estate |  |  | 19,021 |  |  |  | 525 |  |  |  | 22,756 |  |  |  | 958 |
Commercial Lines of Credit |  |  | 1,788 |  |  |  | 22 |  |  |  | 1,835 |  |  |  | 30 |
SBA Loans |  |  | 8,336 |  |  |  | 286 |  |  |  | 8,150 |  |  |  | 483 |
Consumer Loans |  |  | 1,402 |  |  |  | 2 |  |  |  | 903 |  |  |  | 10 |
Total |  | $ | 60,742 |  |  | $ | 1,239 |  |  | $ | 64,508 |  |  | $ | 2,345 |
June 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 17,260 |  |  | $ | 26 |  |  | $ | 17,633 |  |  | $ | 51 |
Land |  |  | 27,561 |  |  |  | — |  |  |  | 29,023 |  |  |  | — |
Other |  |  | 21,849 |  |  |  | 60 |  |  |  | 21,864 |  |  |  | 121 |
Construction |  |  | 12,535 |  |  |  | — |  |  |  | 12,578 |  |  |  | — |
Residential Property |  |  | 2,371 |  |  |  | — |  |  |  | 2,386 |  |  |  | — |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 15,365 |  |  |  | 53 |  |  |  | 15,571 |  |  |  | 105 |
Secured by Real Estate |  |  | 84,898 |  |  |  | 456 |  |  |  | 85,504 |  |  |  | 821 |
Commercial Lines of Credit |  |  | 3,076 |  |  |  | 2 |  |  |  | 3,090 |  |  |  | 4 |
SBA Loans |  |  | 18,900 |  |  |  | 31 |  |  |  | 19,107 |  |  |  | 57 |
International Loans |  |  | 3,243 |  |  |  | — |  |  |  | 2,255 |  |  |  | — |
Consumer Loans |  |  | 889 |  |  |  | 1 |  |  |  | 893 |  |  |  | 1 |
Total |  | $ | 207,947 |  |  | $ | 629 |  |  | $ | 209,904 |  |  | $ | 1,160 |
The following is a summary of interest foregone on impaired loans for the periods indicated:
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
|  | (In Thousands) |
Interest Income That Would Have Been Recognized Had Impaired |  | $ | 1,505 |  |  | $ | 2,001 |  |  | $ | 2,933 |  |  | $ | 4,475 |
Loans Performed in Accordance With Their Original Terms |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Less: Interest Income Recognized on Impaired Loans |  |  | (1,239 | ) |  |  | (629 | ) |  |  | (2,345 | ) |  |  | (1,160 | )
Interest Foregone on Impaired Loans |  | $ | 266 |  |  | $ | 1,372 |  |  | $ | 588 |  |  | $ | 3,315 |
There were no commitments to lend additional funds to borrowers whose loans are included above. Non-Accrual Loans Loans are placed on non-accrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on non-accrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on non-accrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectibility of principal is probable, in which case interest payments are credited to income. Non-accrual loans may be restored to accrual status when principal and interest payments become current and full repayment is expected. The following table details non-accrual loans, disaggregated by class of loan, for the periods indicated:
|  | June 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
|  | (In Thousands) |
Real Estate Loans: |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |
Retail |  | $ | 1,203 |  |  | $ | 1,260 |
Land |  |  | 2,112 |  |  |  | 2,362 |
Other |  |  | 936 |  |  |  | 1,199 |
Construction |  |  | 7,930 |  |  |  | 8,310 |
Residential Property |  |  | 1,298 |  |  |  | 2,097 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |
Commercial Term Loans |  |  |  |  |  |  |  |
Unsecured |  |  | 6,953 |  |  |  | 7,706 |
Secured by Real Estate |  |  | 5,826 |  |  |  | 11,725 |
Commercial Lines of Credit |  |  | 1,585 |  |  |  | 1,431 |
SBA Loans |  |  | 15,720 |  |  |  | 15,479 |
Consumer Loans |  |  | 1,580 |  |  |  | 809 |
Total |  | $ | 45,143 |  |  | $ | 52,378 |
The following table details non-performing assets as of the dates indicated:
|  | June 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
|  | (In Thousands) |
Non-Accrual Loans |  | $ | 45,143 |  |  | $ | 52,378 |
Loans 90 Days or More Past Due and Still Accruing |  |  | — |  |  |  | — |
Total Non-Performing Loans |  |  | 45,143 |  |  |  | 52,378 |
Other Real Estate Owned |  |  | 1,071 |  |  |  | 180 |
Total Non-Performing Assets |  | $ | 46,214 |  |  | $ | 52,558 |
Loans on non-accrual status, excluding loans held for sale, totaled $45.1 million as of June 30, 2012, compared to $52.4 million as of December 31, 2011, representing a 13.8 percent decrease. Delinquent loans (defined as 30 days or more past due), excluding loans held for sale, were $24.3 million as of June 30, 2012, compared to $35.2 million as of December 31, 2011, representing a 31.0 percent decrease. Non-Accrual Loans (Continued) As of December 31, 2011, there was one real estate owned property, located in Colorado, with a net carrying value of $180,000. During the six months ended June 30, 2012, two properties, located in California, were transferred from loans receivable to other real estate owned at fair value less selling costs of $1.1 million. As of June 30, 2012, other real estate owned consisted of three properties with a combined carrying value of $1.1 million. The carrying value as of June 30, 2012 is net of a valuation adjustment of $57,000 that was recorded on the three properties during the six months ended June 30, 2012. Troubled Debt Restructuring In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring,” which clarifies the guidance for evaluating whether a restructuring constitutes a TDR. This guidance is effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For the purposes of measuring impairment of loans that are newly considered impaired, the guidance should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011. As a result of the amendments in ASU No. 2011-02, we reassessed all restructurings that occurred on or after the beginning of the annual period and identified certain receivables as TDRs. Upon identifying those receivables as TDRs, we considered them impaired and applied the impairment measurement guidance prospectively for those receivables newly identified as impaired. During the six months ended June 30, 2012, we restructured monthly payments on 40 loans, with a net carrying value of $7.7 million as of June 30, 2012, through temporary payment structure modifications or re-amortization. For the restructured loans on accrual status, we determined that, based on the financial capabilities of the borrowers at the time of the loan restructuring and the borrowers’ past performance in the payment of debt service under the previous loan terms, performance and collection under the revised terms are probable. The following table details troubled debt restructuring, disaggregated by type of concession and by type of loans as of June 30, 2012 and December 31, 2011.
|  | As of June 30, 2012 |
|  | Non-Accrual TDRs |  |  | Accrual TDRs |
|  | (In Thousands) |
|  | Deferral of Principal |  |  | Deferral of Principal and Interest |  |  | Reduction of Principal or Interest |  |  | Extension of Maturity |  |  | Total |  |  | Deferral of Principal |  |  | Deferral of Principal and Interest |  |  | Reduction of Principal or Interest |  |  | Extension of Maturity |  |  | Total |
Trouble Debt Restructuring: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,202 |  |  | $ | 1,202 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other |  |  | 874 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 874 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential Property |  |  | 843 |  |  |  | — |  |  |  | 127 |  |  |  | — |  |  |  | 970 |  |  |  | 1,295 |  |  |  | 572 |  |  |  | — |  |  |  | — |  |  |  | 1,867 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | — |  |  |  | 622 |  |  |  | 4,686 |  |  |  | 664 |  |  |  | 5,972 |  |  |  | 1,029 |  |  |  | — |  |  |  | 2,639 |  |  |  | 2,211 |  |  |  | 5,879 |
Secured by Real Estate |  |  | 1,202 |  |  |  | 1,436 |  |  |  | 358 |  |  |  | — |  |  |  | 2,996 |  |  |  | 441 |  |  |  | — |  |  |  | 1,619 |  |  |  | 6,521 |  |  |  | 8,581 |
Commercial Line of Credit |  |  | 695 |  |  |  | — |  |  |  | — |  |  |  | 273 |  |  |  | 968 |  |  |  | — |  |  |  | — |  |  |  | 192 |  |  |  | — |  |  |  | 192 |
SBA |  |  | 3,131 |  |  |  | 1,385 |  |  |  | 1,064 |  |  |  | — |  |  |  | 5,580 |  |  |  | 459 |  |  |  | 34 |  |  |  | 192 |  |  |  | — |  |  |  | 685 |
Total |  |  | $6,745 |  |  | $ | 3,443 |  |  | $ | 6,235 |  |  | $ | 2,139 |  |  | $ | 18,562 |  |  | $ | 3,224 |  |  | $ | 606 |  |  | $ | 4,642 |  |  | $ | 8,732 |  |  | $ | 17,204 |
|  | As of December 31, 2011 |
|  | Non-Accrual TDRs |  |  | Accrual TDRs |
|  | (In Thousands) |
|  | Deferral of Principal |  |  | Deferral of Principal and Interest |  |  | Reduction of Principal or Interest |  |  | Extension of Maturity |  |  | Total |  |  | Deferral of Principal |  |  | Deferral of Principal and Interest |  |  | Reduction of Principal or Interest |  |  | Extension of Maturity |  |  | Total |
Trouble Debt Restructuring: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,260 |  |  | $ | 1,260 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other |  |  | 900 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 900 |  |  |  | 1,480 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,480 |
Residential Property |  |  | — |  |  |  | — |  |  |  | 138 |  |  |  | — |  |  |  | 138 |  |  |  | 2,167 |  |  |  | 572 |  |  |  | — |  |  |  | — |  |  |  | 2,739 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 765 |  |  |  | 669 |  |  |  | 4,650 |  |  |  | 484 |  |  |  | 6,568 |  |  |  | 185 |  |  |  | — |  |  |  | 7,069 |  |  |  | 1,584 |  |  |  | 8,838 |
Secured by Real Estate |  |  | 1,202 |  |  |  | 1,523 |  |  |  | 2,403 |  |  |  | 3,243 |  |  |  | 8,371 |  |  |  | 2,005 |  |  |  | — |  |  |  | 8,628 |  |  |  | 2,699 |  |  |  | 13,332 |
Commercial Line of Credit |  |  | 715 |  |  |  | — |  |  |  | — |  |  |  | 198 |  |  |  | 913 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SBA |  |  | 2,758 |  |  |  | 1,524 |  |  |  | 794 |  |  |  | — |  |  |  | 5,076 |  |  |  | 1,354 |  |  |  | 468 |  |  |  | — |  |  |  | — |  |  |  | 1,986 |
Total |  | $ | 6,340 |  |  | $ | 3,716 |  |  | $ | 7,985 |  |  | $ | 5,185 |  |  | $ | 23,226 |  |  | $ | 7,191 |  |  | $ | 1,040 |  |  | $ | 15,697 |  |  | $ | 4,283 |  |  | $ | 28,375 |
Troubled Debt Restructuring (Continued) The following table details troubled debt restructurings, disaggregated by class of loans, for the three months ended June 30, 2012 and 2011.
|  | For the Three Months Ended |
|  | June 30, 2012 |  |  | June 30, 2011 |
|  | (In Thousands, Except for Number of Loans) |
|  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
Troubled Debt Restructuring: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  | $ | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 941 |  |  |  | 941 |
Residential Property |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 867 |  |  |  | 866 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured (1) |  |  | 10 |  |  |  | 1,640 |  |  |  | 1,588 |  |  |  | 13 |  |  |  | 5,653 |  |  |  | 5,454 |
Secured by Real Estate (2) |  |  | 1 |  |  |  | 378 |  |  |  | 358 |  |  |  | 8 |  |  |  | 10,190 |  |  |  | 8,864 |
Commercial Line of Credit (3) |  |  | 1 |  |  |  | 196 |  |  |  | 192 |  |  |  | — |  |  |  | — |  |  |  | — |
SBA (4) |  |  | 4 |  |  |  | 681 |  |  |  | 653 |  |  |  | 6 |  |  |  | 4,909 |  |  |  | 4,607 |
Total |  |  | 16 |  |  | $ | 2,895 |  |  | $ | 2,791 |  |  |  | 29 |  |  | $ | 22,560 |  |  | $ | 20,732 |
(1) | Includes $893,000 of loan modifications made through deferred principal payments, $300,000 through deferred principal and accrued interest payments, and $394,000 through extensions of maturity.
(2) | Includes $358,000 of loan modifications made through reductions of principal or accrued interest payments.
(3) | Includes $192,000 of loan modifications made through reductions of principal or accrued interest payments.
(4) | Includes $373,000 of loan modifications made through deferred principal payments, and $291,000 through reductions of principal or accrued interest payments.
The following table details troubled debt restructurings, disaggregated by class of loans, for the six months ended June 30, 2012 and 2011.
|  | For the Six Months Ended |
|  | June 30, 2012 |  |  | June 30, 2011 |
|  | (In Thousands, Except for Number of Loans) |
|  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
Troubled Debt Restructuring: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 3 |  |  | $ | 8,542 |  |  | $ | 8,409 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 1,824 |  |  |  | 1,824 |
Residential Property |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 867 |  |  |  | 866 |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured (1) |  |  | 27 |  |  |  | 4,696 |  |  |  | 4,426 |  |  |  | 17 |  |  |  | 6,039 |  |  |  | 5,831 |
Secured by Real Estate (2) |  |  | 3 |  |  |  | 2,211 |  |  |  | 2,144 |  |  |  | 11 |  |  |  | 15,904 |  |  |  | 14,578 |
Commercial Line of Credit (3) |  |  | 1 |  |  |  | 202 |  |  |  | 192 |  |  |  | — |  |  |  | — |  |  |  | — |
SBA (4) |  |  | 9 |  |  |  | 975 |  |  |  | 934 |  |  |  | 7 |  |  |  | 5,008 |  |  |  | 4,706 |
Total |  |  | 40 |  |  | $ | 8,084 |  |  | $ | 7,696 |  |  |  | 41 |  |  | $ | 38,184 |  |  | $ | 36,214 |
(1) | Includes $893,000 of loan modifications made through deferred principal payments, $1.9 million through reductions of principal or accrued interest payment, and $1.6 million through extensions of maturity.
(2) | Includes $1.6 million of loan modifications made through reductions of principal or accrued interest payments, and $497,000 through extensions of maturity.
(3) | Includes $192,000 of loan modifications made through reductions of principal or accrued interest payments.
(4) | Includes $503,000 of loan modifications made through deferred principal payments, and $442,000 through reductions of principal or accrued interest payments.
Troubled Debt Restructuring (Continued) As of June 30, 2012 and December 31, 2011, total TDR loans receivable, excluding loans held for sale, was $35.8 million and $51.6 million, respectively. A debt restructuring is considered a TDR if we grant a concession that we would not have otherwise considered to the borrower, for economic or legal reasons related to the borrower’s financial difficulties. Loans are considered to be TDRs if they were restructured through payment structure modifications such as reducing the amount of principal and interest due monthly and/or allowing for interest only monthly payments for six months or less. All TDR loans are impaired, and are individually evaluated for specific impairment using one of these three criteria: (1) the present value of expected 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. At June 30, 2012, TDR loans, excluding loans held for sale, were subjected to specific impairment analysis and a $6.3 million reserve relating to these loans was included in the allowance for loan losses. At December 31, 2011, TDR loans, excluding loans held for sale, were subjected to specific impairment analysis and the related allowance for loan losses was $14.2 million. The following table details troubled debt restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by class of loans, during the three months and six months ended June 30, 2012 and 2011.
|  | For the Three Months Ended |  |  | For the Six Months Ended |
|  | June 30, 2012 |  |  | June 30, 2011 |  |  | June 30, 2012 |  |  | June 30, 2011 |
|  | (In Thousands, Except for Number of Loans) |  |  | (In Thousands, Except for Number of Loans) |
|  | Number of Loans |  |  | Recorded Investment |  |  | Number of Loans |  |  | Recorded Investment |  |  | Number of Loans |  |  | Recorded Investment |  |  | Number of Loans |  |  | Recorded Investment |
Troubled Debt Restructuring: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential Property |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and Industrial Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 6 |  |  |  | 636 |  |  |  | 5 |  |  |  | 1,571 |  |  |  | 7 |  |  |  | 677 |  |  |  | 7 |  |  |  | 1,828 |
Secured by Real Estate |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 1,345 |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 5,012 |
Commercial Line of Credit |  |  | 1 |  |  |  | 273 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 273 |  |  |  | — |  |  |  | — |
SBA |  |  | 12 |  |  |  | 1,042 |  |  |  | 4 |  |  |  | 2,658 |  |  |  | 12 |  |  |  | 1,042 |  |  |  | 4 |  |  |  | 2,658 |
Total |  |  | 19 |  |  | $ | 1,951 |  |  |  | 12 |  |  | $ | 5,574 |  |  |  | 20 |  |  | $ | 1,992 |  |  |  | 15 |  |  | $ | 9,498 |
Servicing Assets The changes in servicing assets were as follows for the periods indicated:
|  | June 30, 2012 |  |  | June 30, 2011 |
|  | (In Thousands) |
Balance at Beginning of Period |  | $ | 3,720 |  |  | $ | 2,890 |
Additions |  |  | 1,702 |  |  |  | — |
Amortization |  |  | (419 | ) |  |  | (345 | )
Balance at End of Period |  | $ | 5,003 |  |  | $ | 2,545 |
At June 30, 2012 and 2011, we serviced loans sold to unaffiliated parties in the amounts of $268.8 million and $175.6 million, respectively. These represented loans that have been sold for which the Bank continues to provide servicing. These loans are maintained off balance sheet and are not included in the loans receivable balance. All of the loans being serviced were SBA loans.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 3, 4 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5074-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5162-111524 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 01-6 -Paragraph 13 -Subparagraph d -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5066-111524 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 + Details
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