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Loans | 9 Months Ended
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Sep. 30, 2013
Receivables [Abstract] |
Loans | Note 3 — 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 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 Small Business Administration (“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 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:
|  | September 30, |  |  | December 31, |
|  | 2013 |  |  | 2012 |
|  | (In thousands) |
Real estate loans: |  |  |  |  |  |  |  |
Commercial property |  | $ | 887,576 |  |  | $ | 787,094 |
Residential property |  |  | 82,519 |  |  |  | 101,778 |
Total real estate loans |  |  | 970,095 |  |  |  | 888,872 |
Commercial and industrial loans: |  |  |  |  |  |  |  |
Commercial term (1) |  |  | 913,021 |  |  |  | 884,364 |
Commercial lines of credit (2) |  |  | 54,374 |  |  |  | 56,121 |
SBA loans (3) |  |  | 153,990 |  |  |  | 148,306 |
International loans |  |  | 33,726 |  |  |  | 34,221 |
Total commercial and industrial loans |  |  | 1,155,111 |  |  |  | 1,123,012 |
Consumer loans |  |  | 34,065 |  |  |  | 36,676 |
Total gross loans |  |  | 2,159,271 |  |  |  | 2,048,560 |
Allowance for loans losses |  |  | (57,639 | ) |  |  | (63,305 | )
Deferred loan fees |  |  | 989 |  |  |  | 796 |
Loans receivable, net |  | $ | 2,102,621 |  |  | $ | 1,986,051 |
(1) | Includes owner-occupied property loans of $816.0 million and $774.2 million as of September 30, 2013 and December 31, 2012, respectively.
(2) | Includes owner-occupied property loans of $540,000 and $1.4 million as of September 30, 2013 and December 31, 2012, respectively.
(3) | Includes owner-occupied property loans of $145.0 million and $128.4 million as of September 30, 2013 and December 31, 2012, respectively.
Accrued interest on loans receivable was $5.1 million and $5.4 million at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, loans receivable totaling $629.7 million and $524.0 million, respectively, were pledged to secure advances from the FHLB and the FRB’s federal discount window. The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the three months ended September 30, 2013 and 2012:
|  |  |  |  | Commercial |  |  |  |  |  |  |
|  | Real Estate |  |  | and Industrial |  |  | Consumer |  |  | Total |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 780 |  |  | $ | 1,773 |  |  | $ | — |  |  | $ | 2,553 |
Origination of loans held for sale |  |  | — |  |  |  | 17,135 |  |  |  | — |  |  |  | 17,135 |
Reclassification from loans held for sale to loans receivable |  |  | (774 | ) |  |  | (1,760 | ) |  |  | — |  |  |  | (2,534 | )
Sales of loans held for sale |  |  | — |  |  |  | (11,906 | ) |  |  | — |  |  |  | (11,906 | )
Principal payoffs and amortization |  |  | (6 | ) |  |  | (14 | ) |  |  | — |  |  |  | (20 | )
Balance at end of period |  | $ | — |  |  | $ | 5,228 |  |  | $ | — |  |  | $ | 5,228 |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 1,289 |  |  | $ | 3,849 |  |  | $ | — |  |  | $ | 5,138 |
Origination of loans held for sale |  |  | — |  |  |  | 25,722 |  |  |  | — |  |  |  | 25,722 |
Reclassification from loans receivable to loans held for sale |  |  | 8,917 |  |  |  | 16,404 |  |  |  | — |  |  |  | 25,321 |
Sales of loans held for sale |  |  | (8,828 | ) |  |  | (36,050 | ) |  |  | — |  |  |  | (44,878 | )
Principal payoffs and amortization |  |  | (21 | ) |  |  | (27 | ) |  |  | — |  |  |  | (48 | )
Valuation adjustments |  |  | — |  |  |  | (519 | ) |  |  | — |  |  |  | (519 | )
Balance at end of period |  | $ | 1,357 |  |  | $ | 9,379 |  |  | $ | — |  |  | $ | 10,736 |
For the three months ended September 30, 2013, there was no reclassification of loans receivable as loans held for sale, and loans held for sale of $11.9 million were sold. For the three months ended September 30, 2012, loans receivable of $25.3 million were reclassified as loans held for sale, and loans held for sale of $44.9 million were sold. The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the nine months ended September 30, 2013 and 2012:
|  |  |  |  | Commercial |  |  |  |  |  |  |
|  | Real Estate |  |  | and Industrial |  |  | Consumer |  |  | Total |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | — |  |  | $ | 8,306 |  |  | $ | — |  |  | $ | 8,306 |
Origination of loans held for sale |  |  | — |  |  |  | 63,113 |  |  |  | — |  |  |  | 63,113 |
Reclassification from loans receivable to loans held for sale |  |  | 780 |  |  |  | 7,230 |  |  |  | — |  |  |  | 8,010 |
Reclassification from Loans held for sale to loan receivables |  |  | (774 | ) |  |  | (1,760 | ) |  |  | — |  |  |  | (2,534 | )
Sales of loans held for sale |  |  | — |  |  |  | (71,627 | ) |  |  | — |  |  |  | (71,627 | )
Principal payoffs and amortization |  |  | (6 | ) |  |  | (34 | ) |  |  | — |  |  |  | (40 | )
Balance at end of period |  | $ | — |  |  | $ | 5,228 |  |  | $ | — |  |  | $ | 5,228 |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 11,068 |  |  | $ | 11,519 |  |  | $ | — |  |  | $ | 22,587 |
Origination of loans held for sale |  |  | — |  |  |  | 86,311 |  |  |  | — |  |  |  | 86,311 |
Reclassification from loans receivable to loans held for sale |  |  | 41,141 |  |  |  | 48,651 |  |  |  | — |  |  |  | 89,792 |
Reclassification from loans held for sale to other real estate owned |  |  | (360 | ) |  |  | — |  |  |  | — |  |  |  | (360 | )
Reclassification from loans held for sale to loans receivable |  |  | (1,647 | ) |  |  | (132 | ) |  |  | — |  |  |  | (1,779 | )
Sales of loans held for sale |  |  | (47,531 | ) |  |  | (135,505 | ) |  |  | — |  |  |  | (183,036 | )
Principal payoffs and amortization |  |  | (190 | ) |  |  | (289 | ) |  |  | — |  |  |  | (479 | )
Valuation adjustments |  |  | (1,124 | ) |  |  | (1,176 | ) |  |  | — |  |  |  | (2,300 | )
Balance at end of period |  | $ | 1,357 |  |  | $ | 9,379 |  |  | $ | — |  |  | $ | 10,736 |
For the nine months ended September 30, 2013, loans receivable of $8.0 million were reclassified as loans held for sale, and loans held for sale of $71.6 million were sold. For the nine months ended September 30, 2012, loans receivable of $89.8 million were reclassified as loans held for sale, and loans held for sale of $183.0 million were sold. Allowance for Loan Losses and Allowance for Off-Balance Sheet Items In the first quarter of 2010, the look-back period was reduced from twelve quarters to eight quarters, with 60 percent weighting given to the most recent four quarters and 40 percent to the oldest four quarters, to place greater emphasis on losses taken by the Bank during the economic downturn. In the second quarter of 2013, management reevaluated the look-back period and restored the twelve quarter look-back period in order to capture a period of higher losses that would have otherwise been excluded. Risk factor calculations are weighted at 50 percent for the most recent four quarters, 33 percent for the next four quarters, and 17 percent for the oldest four quarters. As homogenous loans are bulk graded, the risk grade is not factored into the historical loss analysis. The change in methodology maintained the Bank’s allowance at a level consistent with the prior quarter. Under the previous methodology, the Bank would have recognized a negative provision of $5.9 million in the second quarter of 2013, which the Bank did not consider to be prudent, given the uncertainty in the economy. 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 |  |  | As of and for the |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | June 30, |  |  | September 30, |  |  | September 30, |  |  | September 30, |
|  | 2013 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 59,876 |  |  | $ | 61,191 |  |  | $ | 71,893 |  |  | $ | 63,305 |  |  | $ | 89,936 |
Actual charge-offs |  |  | (4,610 | ) |  |  | (3,490 | ) |  |  | (7,223 | ) |  |  | (11,124 | ) |  |  | (34,260 | )
Recoveries on loans previously charged off |  |  | 2,383 |  |  |  | 1,867 |  |  |  | 1,320 |  |  |  | 4,964 |  |  |  | 3,681 |
Net loan charge-offs |  |  | (2,227 | ) |  |  | (1,623 | ) |  |  | (5,903 | ) |  |  | (6,160 | ) |  |  | (30,579 | )
Provision charged to operating expense |  |  | (10 | ) |  |  | 308 |  |  |  | 117 |  |  |  | 494 |  |  |  | 6,750 |
Balance at end of period |  | $ | 57,639 |  |  | $ | 59,876 |  |  | $ | 66,107 |  |  | $ | 57,639 |  |  | $ | 66,107 |
Allowance for off-balance sheet items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 1,320 |  |  | $ | 1,628 |  |  | $ | 2,348 |  |  | $ | 1,824 |  |  | $ | 2,981 |
Provision charged to operating expense |  |  | 10 |  |  |  | (308 | ) |  |  | (117 | ) |  |  | (494 | ) |  |  | (750 | )
Balance at end of period |  | $ | 1,330 |  |  | $ | 1,320 |  |  | $ | 2,231 |  |  | $ | 1,330 |  |  | $ | 2,231 |
The following table details the information on the allowance for loan losses by portfolio segment for the three months ended September 30, 2013 and 2012:
|  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |
|  | Real Estate |  |  | and Industrial |  |  | Consumer |  |  | Unallocated |  |  | Total |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 18,480 |  |  | $ | 39,034 |  |  | $ | 1,884 |  |  | $ | 478 |  |  | $ | 59,876 |
Charge-offs |  |  | — |  |  |  | (4,592 | ) |  |  | (18 | ) |  |  | — |  |  |  | (4,610 | )
Recoveries on loans previously charged off |  |  | 726 |  |  |  | 1,652 |  |  |  | 5 |  |  |  | — |  |  |  | 2,383 |
Provision |  |  | (118 | ) |  |  | (1,289 | ) |  |  | (232 | ) |  |  | 1,629 |  |  |  | (10 | )
Ending balance |  | $ | 19,088 |  |  | $ | 34,805 |  |  | $ | 1,639 |  |  | $ | 2,107 |  |  | $ | 57,639 |
Ending balance: individually evaluated for impairment |  | $ | 25 |  |  | $ | 2,014 |  |  | $ | 330 |  |  | $ | — |  |  | $ | 2,369 |
Ending balance: collectively evaluated for impairment |  | $ | 19,063 |  |  | $ | 32,791 |  |  | $ | 1,309 |  |  | $ | 2,107 |  |  | $ | 55,270 |
Loans receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 970,095 |  |  | $ | 1,155,111 |  |  | $ | 34,065 |  |  | $ | — |  |  | $ | 2,159,271 |
Ending balance: individually evaluated for impairment |  | $ | 6,385 |  |  | $ | 35,507 |  |  | $ | 1,574 |  |  | $ | — |  |  | $ | 43,466 |
Ending balance: collectively evaluated for impairment |  | $ | 963,710 |  |  | $ | 1,119,604 |  |  | $ | 32,491 |  |  | $ | — |  |  | $ | 2,115,805 |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 21,406 |  |  | $ | 46,810 |  |  | $ | 1,757 |  |  | $ | 1,920 |  |  | $ | 71,893 |
Charge-offs |  |  | (1,321 | ) |  |  | (5,571 | ) |  |  | (331 | ) |  |  | — |  |  |  | (7,223 | )
Recoveries on loans previously charged off |  |  | 58 |  |  |  | 1,251 |  |  |  | 11 |  |  |  | — |  |  |  | 1,320 |
Provision |  |  | 1,080 |  |  |  | 174 |  |  |  | 783 |  |  |  | (1,920 | ) |  |  | 117 |
Ending balance |  | $ | 21,223 |  |  | $ | 42,664 |  |  | $ | 2,220 |  |  | $ | — |  |  | $ | 66,107 |
Ending balance: individually evaluated for impairment |  | $ | 768 |  |  | $ | 5,148 |  |  | $ | 398 |  |  | $ | — |  |  | $ | 6,314 |
Ending balance: collectively evaluated for impairment |  | $ | 20,455 |  |  | $ | 37,516 |  |  | $ | 1,822 |  |  | $ | — |  |  | $ | 59,793 |
Loans receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 840,061 |  |  | $ | 1,079,814 |  |  | $ | 38,415 |  |  | $ | — |  |  | $ | 1,958,290 |
Ending balance: individually evaluated for impairment |  | $ | 16,315 |  |  | $ | 41,084 |  |  | $ | 1,238 |  |  | $ | — |  |  | $ | 58,637 |
Ending balance: collectively evaluated for impairment |  | $ | 823,746 |  |  | $ | 1,038,730 |  |  | $ | 37,177 |  |  | $ | — |  |  | $ | 1,899,653 |
The following table details the information on the allowance for loan losses by portfolio segment for the nine months ended September 30, 2013 and 2012:
|  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |
|  | Real Estate |  |  | and Industrial |  |  | Consumer |  |  | Unallocated |  |  | Total |
|  |  |  |  |  |  |  | (In thousands) |  |  |  |  |  |  |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 18,180 |  |  | $ | 41,928 |  |  | $ | 2,280 |  |  | $ | 917 |  |  | $ | 63,305 |
Charge-offs |  |  | (359 | ) |  |  | (10,547 | ) |  |  | (218 | ) |  |  | — |  |  |  | (11,124 | )
Recoveries on loans previously charged off |  |  | 1,776 |  |  |  | 3,128 |  |  |  | 60 |  |  |  | — |  |  |  | 4,964 |
Provision |  |  | (509 | ) |  |  | 296 |  |  |  | (483 | ) |  |  | 1,190 |  |  |  | 494 |
Ending balance |  | $ | 19,088 |  |  | $ | 34,805 |  |  | $ | 1,639 |  |  | $ | 2,107 |  |  | $ | 57,639 |
Ending balance: individually evaluated for impairment |  | $ | 25 |  |  | $ | 2,014 |  |  | $ | 330 |  |  | $ | — |  |  | $ | 2,369 |
Ending balance: collectively evaluated for impairment |  | $ | 19,063 |  |  | $ | 32,791 |  |  | $ | 1,309 |  |  | $ | 2,107 |  |  | $ | 55,270 |
Loans receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 970,095 |  |  | $ | 1,155,111 |  |  | $ | 34,065 |  |  | $ | — |  |  | $ | 2,159,271 |
Ending balance: individually evaluated for impairment |  | $ | 6,385 |  |  | $ | 35,507 |  |  | $ | 1,574 |  |  | $ | — |  |  | $ | 43,466 |
Ending balance: collectively evaluated for impairment |  | $ | 963,710 |  |  | $ | 1,119,604 |  |  | $ | 32,491 |  |  | $ | — |  |  | $ | 2,115,805 |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 19,637 |  |  | $ | 66,005 |  |  | $ | 2,243 |  |  | $ | 2,051 |  |  | $ | 89,936 |
Charge-offs |  |  | (9,406 | ) |  |  | (24,079 | ) |  |  | (775 | ) |  |  | — |  |  |  | (34,260 | )
Recoveries on loans previously charged off |  |  | 575 |  |  |  | 3,053 |  |  |  | 53 |  |  |  | — |  |  |  | 3,681 |
Provision |  |  | 10,419 |  |  |  | (2,317 | ) |  |  | 699 |  |  |  | (2,051 | ) |  |  | 6,750 |
Ending balance |  | $ | 21,225 |  |  | $ | 42,662 |  |  | $ | 2,220 |  |  | $ | — |  |  |  | 66,107 |
Ending balance: individually evaluated for impairment |  | $ | 768 |  |  | $ | 5,148 |  |  | $ | 398 |  |  | $ | — |  |  |  | 6,314 |
Ending balance: collectively evaluated for impairment |  | $ | 20,457 |  |  | $ | 37,514 |  |  | $ | 1,822 |  |  | $ | — |  |  |  | 59,793 |
Loans receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 840,061 |  |  | $ | 1,079,814 |  |  | $ | 38,415 |  |  | $ | — |  |  |  | 1,958,290 |
Ending balance: individually evaluated for impairment |  | $ | 16,315 |  |  | $ | 41,084 |  |  | $ | 1,238 |  |  | $ | — |  |  |  | 58,637 |
Ending balance: collectively evaluated for impairment |  | $ | 823,746 |  |  | $ | 1,038,730 |  |  | $ | 37,177 |  |  | $ | — |  |  |  | 1,899,653 |
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 by a third-party loan reviewer on a semi-annual basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows: Pass: Pass loans, grades (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 category 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. The following are sub categories within the Pass category, or grades (0) to (4):
|  | Pass (0): |  | Loans or commitments secured in full by cash or cash equivalents.
|  | Pass (1): |  | Loans or commitments requiring 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 requirements, excellent liquidity, and very strong capital.
|  | Pass (2): |  | Loans or commitments requiring 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 grade includes individuals with substantial net worth supported by liquid assets and strong income.
|  | Pass (3): |  | Loans or commitments to borrowers exhibiting a fully acceptable credit risk. These borrowers should have sound balance sheets 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 with 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 (4): |  | Loans or commitments to borrowers exhibiting either somewhat weaker balance sheets or positive, but inconsistent, cash flow coverage. These borrowers may exhibit somewhat greater credit risk, and as a result, the Bank may have secured its exposure 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: A Special Mention credit, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified. Substandard: A Substandard credit, grade (6), 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: A Doubtful credit, grade (7), 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: A loan classified as Loss, grade (8), is 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. As of September 30, 2013 and December 31, 2012, pass (grade 0-4), criticized (grade 5) and classified (grade 6-7) loans, disaggregated by loan class, were as follows:
|  | Pass (Grade 0-4) |  |  | Criticized (Grade 5) |  |  | Classified (Grade 6-7) |  |  | Total Loans |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 448,429 |  |  | $ | 11,435 |  |  | $ | 4,778 |  |  | $ | 464,642 |
Land |  |  | 5,430 |  |  |  | — |  |  |  | 164 |  |  |  | 5,594 |
Other |  |  | 396,021 |  |  |  | 8,750 |  |  |  | 12,569 |  |  |  | 417,340 |
Residential property |  |  | 80,568 |  |  |  | — |  |  |  | 1,951 |  |  |  | 82,519 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 82,806 |  |  |  | 1,797 |  |  |  | 12,391 |  |  |  | 96,994 |
Secured by real estate |  |  | 764,787 |  |  |  | 13,568 |  |  |  | 37,672 |  |  |  | 816,027 |
Commercial lines of credit |  |  | 52,630 |  |  |  | 198 |  |  |  | 1,546 |  |  |  | 54,374 |
SBA loans |  |  | 142,346 |  |  |  | 664 |  |  |  | 10,980 |  |  |  | 153,990 |
International loans |  |  | 32,046 |  |  |  | 500 |  |  |  | 1,180 |  |  |  | 33,726 |
Consumer loans |  |  | 31,342 |  |  |  | 175 |  |  |  | 2,548 |  |  |  | 34,065 |
Total gross loans |  | $ | 2,036,405 |  |  | $ | 37,087 |  |  | $ | 85,779 |  |  | $ | 2,159,271 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 386,650 |  |  | $ | 3,971 |  |  | $ | 2,324 |  |  | $ | 392,945 |
Land |  |  | 5,491 |  |  |  | — |  |  |  | 8,516 |  |  |  | 14,007 |
Other |  |  | 366,518 |  |  |  | 12,132 |  |  |  | 1,492 |  |  |  | 380,142 |
Residential property |  |  | 99,250 |  |  |  | — |  |  |  | 2,528 |  |  |  | 101,778 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 87,370 |  |  |  | 663 |  |  |  | 22,139 |  |  |  | 110,172 |
Secured by real estate |  |  | 710,723 |  |  |  | 13,038 |  |  |  | 50,431 |  |  |  | 774,192 |
Commercial lines of credit |  |  | 53,391 |  |  |  | 863 |  |  |  | 1,867 |  |  |  | 56,121 |
SBA loans |  |  | 136,058 |  |  |  | 1,119 |  |  |  | 11,129 |  |  |  | 148,306 |
International loans |  |  | 34,221 |  |  |  | — |  |  |  | — |  |  |  | 34,221 |
Consumer loans |  |  | 33,707 |  |  |  | 201 |  |  |  | 2,768 |  |  |  | 36,676 |
Total gross loans |  | $ | 1,913,379 |  |  | $ | 31,987 |  |  | $ | 103,194 |  |  | $ | 2,048,560 |
The following is an aging analysis of past due loans, disaggregated by loan class, as of September 30, 2013 and December 31, 2012:
|  | 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) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,270 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,270 |  |  | $ | 462,372 |  |  | $ | 464,642 |  |  | $ | — |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,594 |  |  |  | 5,594 |  |  |  | — |
Other |  |  | — |  |  |  | 1,768 |  |  |  | — |  |  |  | 1,768 |  |  |  | 415,572 |  |  |  | 417,340 |  |  |  | — |
Residential property |  |  | — |  |  |  | — |  |  |  | 561 |  |  |  | 561 |  |  |  | 81,958 |  |  |  | 82,519 |  |  |  | — |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 1,309 |  |  |  | 389 |  |  |  | 692 |  |  |  | 2,390 |  |  |  | 94,604 |  |  |  | 96,994 |  |  |  | — |
Secured by real estate |  |  | 285 |  |  |  | 300 |  |  |  | 415 |  |  |  | 1,000 |  |  |  | 815,027 |  |  |  | 816,027 |  |  |  | — |
Commercial lines of credit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 54,374 |  |  |  | 54,374 |  |  |  | — |
SBA loans |  |  | 1,743 |  |  |  | 1,086 |  |  |  | 4,542 |  |  |  | 7,371 |  |  |  | 146,619 |  |  |  | 153,990 |  |  |  | — |
International loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 33,726 |  |  |  | 33,726 |  |  |  | — |
Consumer loans |  |  | 316 |  |  |  | 27 |  |  |  | 295 |  |  |  | 638 |  |  |  | 33,427 |  |  |  | 34,065 |  |  |  | — |
Total gross loans |  | $ | 5,923 |  |  | $ | 3,570 |  |  | $ | 6,505 |  |  | $ | 15,998 |  |  | $ | 2,143,273 |  |  | $ | 2,159,271 |  |  | $ | — |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | — |  |  | $ | 111 |  |  | $ | — |  |  | $ | 111 |  |  | $ | 392,834 |  |  | $ | 392,945 |  |  | $ | — |
Land |  |  | — |  |  |  | — |  |  |  | 335 |  |  |  | 335 |  |  |  | 13,672 |  |  |  | 14,007 |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 380,142 |  |  |  | 380,142 |  |  |  | — |
Residential property |  |  | — |  |  |  | 588 |  |  |  | 311 |  |  |  | 899 |  |  |  | 100,879 |  |  |  | 101,778 |  |  |  | — |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 918 |  |  |  | 1,103 |  |  |  | 1,279 |  |  |  | 3,300 |  |  |  | 106,872 |  |  |  | 110,172 |  |  |  | — |
Secured by real estate |  |  | 1,949 |  |  |  | — |  |  |  | 926 |  |  |  | 2,875 |  |  |  | 771,317 |  |  |  | 774,192 |  |  |  | — |
Commercial lines of credit |  |  | — |  |  |  | 188 |  |  |  | 416 |  |  |  | 604 |  |  |  | 55,517 |  |  |  | 56,121 |  |  |  | — |
SBA loans |  |  | 3,759 |  |  |  | 1,039 |  |  |  | 2,800 |  |  |  | 7,598 |  |  |  | 140,708 |  |  |  | 148,306 |  |  |  | — |
International loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 34,221 |  |  |  | 34,221 |  |  |  | — |
Consumer loans |  |  | 61 |  |  |  | 146 |  |  |  | 538 |  |  |  | 745 |  |  |  | 35,931 |  |  |  | 36,676 |  |  |  | — |
Total gross loans |  | $ | 6,687 |  |  | $ | 3,175 |  |  | $ | 6,605 |  |  | $ | 16,467 |  |  | $ | 2,032,093 |  |  | $ | 2,048,560 |  |  | $ | — |
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. 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, using recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly. The following table provides information on impaired loans, disaggregated by loan class, as of the dates indicated:
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | With No Related Allowance Recorded |  |  | With an Allowance Recorded |  |  | Related Allowance |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,234 |  |  | $ | 2,309 |  |  | $ | 2,234 |  |  | $ | — |  |  | $ | — |
Land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 1,169 |  |  |  | 1,169 |  |  |  | 649 |  |  |  | 520 |  |  |  | 25 |
Residential property |  |  | 2,982 |  |  |  | 3,072 |  |  |  | 2,982 |  |  |  | — |  |  |  | — |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 10,072 |  |  |  | 10,361 |  |  |  | 1,743 |  |  |  | 8,329 |  |  |  | 1,371 |
Secured by real estate |  |  | 17,948 |  |  |  | 19,181 |  |  |  | 17,193 |  |  |  | 755 |  |  |  | 163 |
Commercial lines of credit |  |  | 830 |  |  |  | 1,055 |  |  |  | 830 |  |  |  | — |  |  |  | 471 |
SBA loans |  |  | 5,477 |  |  |  | 8,785 |  |  |  | 4,112 |  |  |  | 1,365 |  |  |  | 9 |
International loans |  |  | 1,180 |  |  |  | 1,180 |  |  |  | 608 |  |  |  | 572 |  |  |  | 330 |
Consumer loans |  |  | 1,574 |  |  |  | 1,662 |  |  |  | 399 |  |  |  | 1,175 |  |  |  | — |
Total gross loans |  | $ | 43,466 |  |  | $ | 48,774 |  |  | $ | 30,750 |  |  | $ | 12,716 |  |  | $ | 2,369 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,930 |  |  | $ | 3,024 |  |  | $ | 2,930 |  |  | $ | — |  |  | $ | — |
Land |  |  | 2,097 |  |  |  | 2,307 |  |  |  | 2,097 |  |  |  | — |  |  |  | — |
Other |  |  | 527 |  |  |  | 527 |  |  |  | — |  |  |  | 527 |  |  |  | 67 |
Residential property |  |  | 3,265 |  |  |  | 3,308 |  |  |  | 1,866 |  |  |  | 1,399 |  |  |  | 94 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 14,532 |  |  |  | 15,515 |  |  |  | 6,826 |  |  |  | 7,706 |  |  |  | 2,144 |
Secured by real estate |  |  | 22,050 |  |  |  | 23,221 |  |  |  | 9,520 |  |  |  | 12,530 |  |  |  | 2,319 |
Commercial lines of credit |  |  | 1,521 |  |  |  | 1,704 |  |  |  | 848 |  |  |  | 673 |  |  |  | 230 |
SBA loans |  |  | 6,170 |  |  |  | 10,244 |  |  |  | 4,294 |  |  |  | 1,876 |  |  |  | 762 |
International loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer loans |  |  | 1,652 |  |  |  | 1,711 |  |  |  | 449 |  |  |  | 1,203 |  |  |  | 615 |
Total gross loans |  | $ | 54,744 |  |  | $ | 61,561 |  |  | $ | 28,830 |  |  | $ | 25,914 |  |  | $ | 6,231 |
The following table provides information on impaired loans, disaggregated by loan class, as of dates indicated:
|  | Average Recorded Investment for the Three Months Ended |  |  | Interest Income Recognized for the Three Months Ended |  |  | Average Recorded Investment for the Nine Months Ended |  |  | Interest Income Recognized for the Nine Months Ended |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,243 |  |  | $ | 21 |  |  | $ | 2,287 |  |  | $ | 65 |
Land |  |  | — |  |  |  | — |  |  |  | 1,116 |  |  |  | 80 |
Other |  |  | 1,170 |  |  |  | 13 |  |  |  | 740 |  |  |  | 23 |
Residential property |  |  | 2,992 |  |  |  | 33 |  |  |  | 3,026 |  |  |  | 92 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 10,179 |  |  |  | 148 |  |  |  | 12,122 |  |  |  | 555 |
Secured by real estate |  |  | 18,023 |  |  |  | 336 |  |  |  | 17,358 |  |  |  | 954 |
Commercial lines of credit |  |  | 840 |  |  |  | 23 |  |  |  | 1,137 |  |  |  | 48 |
SBA loans |  |  | 5,542 |  |  |  | 299 |  |  |  | 5,870 |  |  |  | 851 |
International loans |  |  | 1,197 |  |  |  | — |  |  |  | 1,342 |  |  |  | — |
Consumer loans |  |  | 1,581 |  |  |  | 27 |  |  |  | 1,624 |  |  |  | 54 |
Total gross loans |  | $ | 43,767 |  |  | $ | 900 |  |  | $ | 46,622 |  |  | $ | 2,722 |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | 2,597 |  |  | $ | 47 |  |  | $ | 2,162 |  |  | $ | 95 |
Land |  |  | 2,054 |  |  |  | 45 |  |  |  | 2,134 |  |  |  | 136 |
Other |  |  | 534 |  |  |  | 5 |  |  |  | 937 |  |  |  | 38 |
Construction |  |  | 7,868 |  |  |  | 29 |  |  |  | 8,016 |  |  |  | 207 |
Residential property |  |  | 3,279 |  |  |  | 34 |  |  |  | 3,265 |  |  |  | 118 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | 13,723 |  |  |  | 214 |  |  |  | 14,079 |  |  |  | 644 |
Secured by real estate |  |  | 19,990 |  |  |  | 342 |  |  |  | 21,834 |  |  |  | 1,300 |
Commercial lines of credit |  |  | 1,555 |  |  |  | 16 |  |  |  | 1,742 |  |  |  | 46 |
SBA loans |  |  | 6,168 |  |  |  | 330 |  |  |  | 7,489 |  |  |  | 813 |
Consumer loans |  |  | 1,257 |  |  |  | 49 |  |  |  | 1,021 |  |  |  | 59 |
Total gross loans |  | $ | 59,025 |  |  | $ | 1,111 |  |  | $ | 62,679 |  |  | $ | 3,456 |
The following is a summary of interest foregone on impaired loans for the periods indicated:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |  |  | September 30, |  |  | September 30, |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (In thousands) |
Interest income that would have been recognized had impaired loans performed in accordance with their original terms |  | $ | 1,058 |  |  | $ | 1,382 |  |  | $ | 3,183 |  |  | $ | 4,315 |
Less: Interest income recognized on impaired loans |  |  | (900 | ) |  |  | (1,111 | ) |  |  | (2,722 | ) |  |  | (3,456 | )
Interest foregone on impaired loans |  | $ | 158 |  |  | $ | 271 |  |  | $ | 461 |  |  | $ | 859 |
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 collectability 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 loan class, as of the dates indicated:
|  | September 30, |  |  | December 31, |
|  | 2013 |  |  | 2012 |
|  | (In thousands) |
Real estate loans: |  |  |  |
Commercial property |  |  |  |  |  |  |  |
Retail |  | $ | 768 |  |  | $ | 1,079 |
Land |  |  | — |  |  |  | 2,097 |
Residential property |  |  | 1,659 |  |  |  | 1,270 |
Commercial and industrial loans: |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |
Unsecured |  |  | 2,490 |  |  |  | 8,311 |
Secured by real estate |  |  | 5,591 |  |  |  | 8,679 |
Commercial lines of credit |  |  | 830 |  |  |  | 1,521 |
SBA loans |  |  | 9,959 |  |  |  | 12,563 |
Consumer loans |  |  | 1,479 |  |  |  | 1,759 |
Total non-accrual loans |  | $ | 22,776 |  |  | $ | 37,279 |
The following table details non-performing assets as of the dates indicated:
|  | September 30, |  |  | December 31, |
|  | 2013 |  |  | 2012 |
|  | (In thousands) |
Non-accrual loans |  | $ | 22,776 |  |  | $ | 37,279 |
Loans 90 days or more past due and still accruing |  |  | — |  |  |  | — |
Total non-performing loans |  |  | 22,776 |  |  |  | 37,279 |
Other real estate owned |  |  | 290 |  |  |  | 774 |
Total non-performing assets |  | $ | 23,066 |  |  | $ | 38,053 |
Loans on non-accrual status totaled $22.8 million as of September 30, 2013, compared to $37.3 million as of December 31, 2012, representing a 38.9 percent decrease. Delinquent loans (defined as 30 days or more past due) were $16.0 million as of September 30, 2013, compared to $16.5 million as of December 31, 2012, representing a 2.8 percent decrease. As of September 30, 2013, there was one other real estate owned (“OREO”) located in Washington with a carrying value of $290,000 and no valuation adjustment. As of December 31, 2012, there were two OREOs located in Illinois and Virginia with a combined carrying value of $774,000 and no valuation adjustment. Troubled Debt Restructuring In April 2011, the FASB issued ASU 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 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. The following table details troubled debt restructurings, disaggregated by concession type and by loan type, as of September 30, 2013 and December 31, 2012:
|  | Non-Accrual TDRs |  |  | Accrual TDRs |
|  | Deferral of Principal |  |  | Deferral of Principal and Interest |  |  | Reduction of Principal and Interest |  |  | Extension of Maturity |  |  | Total |  |  | Deferral of Principal |  |  | Deferral of Principal and Interest |  |  | Reduction of Principal and Interest |  |  | Extension of Maturity |  |  | Total |
|  | (In thousands) |
September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 768 |  |  | $ | 768 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 520 |  |  |  | — |  |  |  | — |  |  |  | 649 |  |  |  | 1,169 |
Residential property |  |  | 803 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 803 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | — |  |  |  | 205 |  |  |  | 651 |  |  |  | 644 |  |  |  | 1,500 |  |  |  | 1,271 |  |  |  | — |  |  |  | 1,983 |  |  |  | 3,002 |  |  |  | 6,256 |
Secured by real estate |  |  | 2,167 |  |  |  | 993 |  |  |  | 263 |  |  |  | — |  |  |  | 3,423 |  |  |  | 3,458 |  |  |  | — |  |  |  | 598 |  |  |  | 4,487 |  |  |  | 8,543 |
Commercial lines of credit |  |  | 641 |  |  |  | — |  |  |  | — |  |  |  | 188 |  |  |  | 829 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SBA loans |  |  | 915 |  |  |  | 1,140 |  |  |  | 773 |  |  |  | — |  |  |  | 2,828 |  |  |  | 445 |  |  |  | — |  |  |  | 70 |  |  |  | — |  |  |  | 515 |
International loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,180 |  |  |  | — |  |  |  | 1,180 |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 149 |  |  |  | — |  |  |  | 149 |
Total |  | $ | 4,526 |  |  | $ | 2,338 |  |  | $ | 1,687 |  |  | $ | 1,600 |  |  | $ | 10,151 |  |  | $ | 5,694 |  |  | $ | — |  |  | $ | 3,980 |  |  | $ | 8,138 |  |  | $ | 17,812 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,080 |  |  | $ | 1,080 |  |  | $ | 357 |  |  | $ | — |  |  | $ | — |  |  | $ | 175 |  |  | $ | 532 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 527 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 527 |
Residential property |  |  | 827 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 827 |  |  |  | — |  |  |  | 572 |  |  |  | — |  |  |  | — |  |  |  | 572 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | — |  |  |  | 658 |  |  |  | 4,558 |  |  |  | 1,413 |  |  |  | 6,629 |  |  |  | 976 |  |  |  | — |  |  |  | 1,090 |  |  |  | 3,260 |  |  |  | 5,326 |
Secured by real estate |  |  | 2,317 |  |  |  | 1,343 |  |  |  | 318 |  |  |  | — |  |  |  | 3,978 |  |  |  | 4,444 |  |  |  | — |  |  |  | 448 |  |  |  | 4,547 |  |  |  | 9,439 |
Commercial lines of credit |  |  | 673 |  |  |  | — |  |  |  | 188 |  |  |  | 244 |  |  |  | 1,105 |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |
SBA loans |  |  | 2,831 |  |  |  | 1,287 |  |  |  | 1,032 |  |  |  | — |  |  |  | 5,150 |  |  |  | 484 |  |  |  | — |  |  |  | 100 |  |  |  | — |  |  |  | 584 |
Total |  | $ | 6,648 |  |  | $ | 3,288 |  |  | $ | 6,096 |  |  | $ | 2,737 |  |  | $ | 18,769 |  |  | $ | 6,788 |  |  | $ | 572 |  |  | $ | 1,638 |  |  | $ | 7,982 |  |  | $ | 16,980 |
As of September 30, 2013 and December 31, 2012, total TDRs were $28.0 million and $35.7 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 TDRs 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 September 30, 2013 and December 31, 2012, TDRs were subjected to specific impairment analysis, and $944,000 and $3.6 million, respectively, of reserves relating to these loans were included in the allowance for loan losses. The following table details troubled debt restructuring, disaggregated by loan class, for the three months ended September 30, 2013 and 2012:
|  | September 30, 2013 |  |  | September 30, 2012 |
|  | 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 |
|  | (In thousands, except number of loans) |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail (1) |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 1 |  |  | $ | 131 |  |  | $ | 177 |
Other (2) |  |  | 1 |  |  |  | 646 |  |  |  | 649 |  |  |  | 1 |  |  |  | 538 |  |  |  | 532 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured (3) |  |  | 8 |  |  |  | 1,015 |  |  |  | 1,002 |  |  |  | 5 |  |  |  | 777 |  |  |  | 759 |
Secured by real estate (4) |  |  | 2 |  |  |  | 1,365 |  |  |  | 1,365 |  |  |  | 3 |  |  |  | 4,525 |  |  |  | 4,475 |
SBA loans (5) |  |  | 1 |  |  |  | 107 |  |  |  | 91 |  |  |  | 3 |  |  |  | 78 |  |  |  | 89 |
Total |  |  | 12 |  |  | $ | 3,133 |  |  | $ | 3,107 |  |  |  | 13 |  |  | $ | 6,049 |  |  | $ | 6,032 |
(1) | Includes a modification of $177,000 through an extension of maturity for the three months ended September 30, 2012.
(2) | Includes a modification of $649,000 through an extension of maturity for the three months ended September 30, 2013, and a modification of $532,000 through a payment deferral for the three months ended September 30, 2012.
(3) | Includes modifications of $381,000 through payment deferrals and $621,000 through extensions of maturity for the three months ended September 30, 2013, and modifications of $750,000 through extensions of maturity and $9,000 through payment deferrals for the three months ended September 30, 2012.
(4) | Includes modifications of $1.4 million through payment deferrals for the three months ended September 30, 2013, and modifications of $3.1 million through payment deferrals and $1.4 million through an extension of maturity for the three months ended September 30, 2012.
(5) | Includes a modification of $91,000 through a payment deferral for the three months ended September 30, 2013, and modifications of $48,000 through payment deferrals and $41,000 through a reduction of principal or accrued interest for the three months ended September 30, 2012.
During the three months ended September 30, 2013, we restructured monthly payments on 12 loans, with a net carrying value of $3.1 million as of September 30, 2013, 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 loan class, for the nine months ended September 30, 2013 and 2012:
|  | September 30, 2013 |  |  | September 30, 2012 |
|  | 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 |
|  | (In thousands, except number of loans) |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial property |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail (1) |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 1 |  |  | $ | 184 |  |  | $ | 177 |
Land (2) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 547 |  |  |  | 532 |
Other (3) |  |  | 1 |  |  |  | 658 |  |  |  | 649 |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured (4) |  |  | 14 |  |  |  | 1,780 |  |  |  | 1,618 |  |  |  | 31 |  |  |  | 5,362 |  |  |  | 4,940 |
Secured by real estate (5) |  |  | 2 |  |  |  | 1,365 |  |  |  | 1,365 |  |  |  | 5 |  |  |  | 5,584 |  |  |  | 5,307 |
Commercial lines of credit (6) |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 202 |  |  |  | 188 |
SBA loans (7) |  |  | 3 |  |  |  | 273 |  |  |  | 228 |  |  |  | 11 |  |  |  | 1,060 |  |  |  | 1,000 |
International loans (8) |  |  | 2 |  |  |  | 1,584 |  |  |  | 1,180 |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer loans (9) |  |  | 1 |  |  |  | 149 |  |  |  | 149 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 24 |  |  | $ | 5,809 |  |  | $ | 5,189 |  |  |  | 50 |  |  | $ | 12,939 |  |  | $ | 12,144 |
(1) | Includes a modification of $177,000 through an extension of maturity for the nine months ended September 30, 2012.
(2) | Includes a modification of $532,000 through a payment deferral for the nine months ended September 30, 2012.
(3) | Includes a modification of $649,000 through an extension of maturity for the nine months ended September 30, 2013.
(4) | Includes modifications of $381,000 through payment deferrals and $1.2 million through extensions of maturity for the nine months ended September 30, 2013, and modifications of $2.2 million through extensions of maturity, $1.9 million through reductions of principal or accrued interest and $884,000 through payment deferrals for the nine months ended September 30, 2012.
(5) | Includes modifications of $1.4 million through payment deferrals for the nine months ended September 30, 2013, and modifications of $3.1 million through payment deferrals, $1.9 million through extensions of maturity and $338,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2012.
(6) | Includes a modification of zero through a reduction of principal or accrued interest for the three months ended September 30, 2013, and a modification of $188,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2012.
(7) | Includes modifications of $98,000 through payments deferrals and $130,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2013, and modifications of $551,000 through payment deferrals and $449,000 through reductions of principal or accrued interest for the nine months ended September 30, 2012.
(8) | Includes modifications of $1.2 million through reductions of principal or accrued interest for the nine months ended September 30, 2013.
(9) | Includes a modification of $149,000 through a reduction of principal or accrued interest for the nine months ended September 30, 2013.
During the nine months ended September 30, 2013, we restructured monthly payments on 24 loans, with a net carrying value of $5.2 million as of September 30, 2013, 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 restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by loan class, for the three and nine months ended September 30, 2013 and 2012, respectively:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2013 |  |  | September 30, 2012 |  |  | September 30, 2013 |  |  | September 30, 2012 |
|  | Number of Loans |  |  | Recorded Investment |  |  | Number of Loans |  |  | Recorded Investment |  |  | Number of Loans |  |  | Recorded Investment |  |  | Number of Loans |  |  | Recorded Investment |
|  | (In thousands, except number of loans) |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured |  |  | — |  |  | $ | — |  |  |  | 3 |  |  | $ | 171 |  |  |  | 1 |  |  | $ | 29 |  |  |  | 6 |  |  | $ | 431 |
Secured by real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial lines of credit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 258 |
SBA loans |  |  | 1 |  |  |  | 130 |  |  |  | 6 |  |  |  | 272 |  |  |  | 1 |  |  |  | 130 |  |  |  | 6 |  |  |  | 272 |
Total |  |  | 1 |  |  | $ | 130 |  |  |  | 9 |  |  | $ | 443 |  |  |  | 2 |  |  | $ | 159 |  |  |  | 13 |  |  | $ | 961 |
Servicing Assets The changes in servicing assets for the nine months ended September 30, 2013 and 2012 were as follows:
|  | Nine Months Ended September 30, |
|  | 2013 |  |  | 2012 |
|  | (In thousands) |
Balance at beginning of period |  | $ | 5,542 |  |  | $ | 3,720 |
Additions |  |  | 1,996 |  |  |  | 2,148 |
Amortization |  |  | (1,152 | ) |  |  | (720 | )
Balance at end of period |  | $ | 6,386 |  |  | $ | 5,148 |
At September 30, 2013 and 2012, we serviced loans sold to unaffiliated parties in the amounts of $332.9 million and $277.7 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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