The following is a summary of year-end loans receivable, excluding covered loans ("non-covered loans"):

	December 31,

	2011			2010
	(In thousands)
Residential:
Single-family	$	1,796,635		$	1,119,024
Multifamily		933,168			974,745

Total residential		2,729,803			2,093,769

Commercial Real Estate ("CRE"):
Income producing		3,487,866			3,392,984
Construction		171,410			278,047
Land		173,089			235,707

Total CRE		3,832,365			3,906,738

Commercial and Industrial ("C&I"):
Commercial business		2,655,917			1,674,698
Trade finance		486,555			308,657

Total C&I		3,142,472			1,983,355

Consumer:
Student loans		306,325			490,314
Other consumer		277,461			243,212

Total consumer		583,786			733,526

Total gross loans receivable, excluding covered loans		10,288,426			8,717,388

Unearned fees, premiums, and discounts, net		(16,762	)		(56,781	)
Allowance for loan losses, excluding covered loans		(209,876	)		(230,408	)

Loans receivable, excluding covered loans, net	$	10,061,788		$	8,430,199

Accrued interest on covered and non-covered loans receivable amounted to $68.5 million and $65.6 million at December 31, 2011 and 2010, respectively.

At December 31, 2011 and 2010, covered and non-covered loans receivable totaling $8.65 billion and $8.14 billion, respectively, were pledged to secure borrowings from the FHLB and the Federal Reserve Bank.

The Bank offers both fixed and adjustable rate ("ARM") first mortgage loans secured by one-to-four unit residential properties located in its primary lending areas. The Bank originated $924.3 million and $430.8 million in new residential single-family loans during 2011 and 2010, respectively.

The Bank also offers both fixed and ARM residential multifamily loan programs. For the years ended December 31, 2011 and 2010, the Bank originated $47.6 million and $26.4 million, respectively, in multifamily residential loans. The Bank primarily offers ARM multifamily loan programs that have six-month, three-year, or five-year initial fixed periods. The Bank considers all of the single-family and multifamily loans originated to be prime loans and underwriting criteria include minimum FICO scores, maximum loan-to-value ratios and minimum debt coverage ratios, as applicable. The Bank does have some single-family loans with interest-only features. Single-family loans with interest-only features totaled $5.6 million or 1% and $7.8 million or 1% of total single-family loans at December 31, 2011 and 2010, respectively. Additionally, the Bank owns residential loans that permit different repayment options that were purchased several years ago. For these loans, there is the potential for negative amortization if the borrower chooses so. These residential loans that permit different repayment options totaled $14.0 million, or 1%, and $16.9 million, or 1%, of total residential loans at December 31, 2011 and 2010, respectively. None of these loans were negatively amortizing as of December 31, 2011 and 2010.

In addition to residential lending, the Bank's lending activities also include commercial real estate, commercial and industrial, and consumer lending. Our CRE lending activities include loans to finance income-producing properties and also construction and land loans. Our C&I lending activities include commercial business financing for small and middle-market businesses in a wide spectrum of industries. Included in commercial business loans are loans for working capital, accounts receivable lines, inventory lines, small business administration loans and lease financing. We also offer a variety of international trade finance services and products, including letters of credit, revolving lines of credit, import loans, bankers' acceptances, working capital lines, domestic purchase financing and pre-export financing. Consumer loans are primarily comprised of fully guaranteed student loans, home equity lines of credit and auto loans.

All of the loans that the Bank originates are subject to its underwriting guidelines and loan origination standards. Management believes that the Bank's underwriting criteria and procedures adequately consider the unique risks which may come from these products. The Bank conducts a variety of quality control procedures and periodic audits to ensure compliance with its origination standards, including criteria for lending and legal requirements.

Credit Risk and Concentrations—The real estate market in California, including the areas of Los Angeles, Riverside, San Bernardino and Orange counties, where a majority of the Company's loan customers are based, has been negatively impacted over the past few years. As of December 31, 2011, the Company had $3.83 billion in non-covered commercial real estate loans and $2.73 billion in non-covered residential loans, of which approximately 92% are secured by real properties located in California. Potential further deterioration in the real estate market generally and residential homes in particular could result in additional loan charge-offs and provisions for loan losses in the future, which could have a material adverse effect on the Company's financial condition, net income and capital. In addition, although most of the Company's trade finance activities are related to trade with Asian countries, the majority of our loans are made to companies domiciled in the United States. A substantial portion of this business involves California based customers engaged in import activities. We also offer export-import financing to various domestic and foreign customers; the export loans are guaranteed by the Export-Import Bank of the United States.

Purchased Loans—During 2011, the Company purchased loans with an unpaid principal balance of $782.8 million and a carrying amount of $740.8 million. 89% of these loans are student loans which are guaranteed by the U.S. Department of Education and pose limited credit risk.

Loans Held for Sale—Loans held for sale totaled $278.6 million and $220.1 million as of December 31, 2011 and 2010, respectively. Loans held for sale are recorded at the lower of cost or fair market value. Fair market value, if lower than cost is determined based on valuations obtained from market participants or the value of the underlying collateral. As of December 31, 2011, approximately 90% of these loans were student loans reclassified to loans held for sale. During 2011, in total, loans receivable of $644.9 million were reclassified to loans held for sale. Some of these loans were purchased by the Company with the intent to be held for investment; however, subsequent to their purchase, the Company's intent for these loans changed and they were consequently reclassified to loans held for sale. The remainder of loans was immediately classified as loans held for sale. Proceeds from sales of loans held for sale were $652.7 million in 2011, resulting in net gains on sale of $14.5 million. Proceeds from sales of loans held for sale were $409.5 million in 2010, resulting in net gains on sale of $18.5 million. During 2009, proceeds from sales of loans held for sale were $37.1 million with insignificant net gains on sales.

Credit Quality Indicators—Loans are risk rated based on analysis of the current state of the borrower's credit quality. The analysis of credit quality includes review of all sources of repayment, the borrower's current payment performance/delinquency, the borrower's current financial and liquidity status, and all other relevant information. For single family residential loans payment performance/delinquency is the driving indicator for the risk ratings. However, the risk ratings remain the overall credit quality indicator for the Company as well as the credit quality indicator utilized for estimating the appropriate allowance for loan losses. The Company utilizes an eight grade risk rating system, where a higher grade represents a higher level of credit risk. The eight grade risk rating system can be generally classified by the following categories: Pass or Watch, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the sources of repayment.

Pass or Watch loans are generally considered to have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. These borrowers may have some credit risk that requires monitoring, but full repayment is expected. Special Mention loans are considered to have potential weaknesses that warrant closer attention by management. Special Mention is considered a transitory grade and generally, the Company does not grade a loan as Special Mention for longer than six months. If any potential weaknesses are resolved, the loan is upgraded to a Pass or Watch grade. If negative trends in the borrower's financial status or other information is presented that indicates the repayment sources may become inadequate, the loan is downgraded to a Substandard grade. Substandard loans are considered to have well-defined weaknesses that jeopardize the full and timely repayment of the loan. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. Additionally, when management has assessed a potential for loss but a distinct possibility of loss is not recognizable, the loan is still classified as Substandard. Doubtful loans have insufficient sources of repayment and a high probability of loss. Loss loans are considered to be uncollectible and of such little value that they are no longer considered bankable assets. These internal risk ratings are reviewed continuously and adjusted due to changes in borrower status and likelihood of loan repayment. The tables below present the non-covered loan portfolio by credit quality indicator as of December 31, 2011 and 2010. As of December 31, 2011, non-covered loans graded Substandard and Doubtful have decreased by $143.0 million, or 21% from December 31, 2010. There were no Loss grade loans as of December 31, 2011 and 2010.

	Pass/Watch		Special Mention		Substandard		Doubtful		Total

	(In thousands)
December 31, 2011
Residential:
Single-family	$	1,768,149	$	11,239	$	17,247	$	—	$	1,796,635
Multifamily		810,458		25,531		97,179		—		933,168
CRE:
Income producing		3,211,386		63,066		213,414		—		3,487,866
Construction		109,184		—		62,226		—		171,410
Land		125,534		7,954		39,601		—		173,089
C&I:
Commercial business		2,492,904		62,409		100,357		247		2,655,917
Trade finance		467,822		7,161		11,572		—		486,555
Consumer:
Student loans		305,880		188		257		—		306,325
Other consumer		273,692		—		3,769		—		277,461

Total	$	9,565,009	$	177,548	$	545,622	$	247	$	10,288,426

	Pass/Watch		Special Mention		Substandard		Doubtful		Total

	(In thousands)
December 31, 2010
Residential:
Single-family	$	1,076,281	$	12,376	$	30,367	$	—	$	1,119,024
Multifamily		789,631		42,887		142,227		—		974,745
CRE:
Income producing		3,054,197		80,714		258,073		—		3,392,984
Construction		202,385		—		75,662		—		278,047
Land		146,499		4,656		84,552		—		235,707
C&I:
Commercial business		1,553,218		34,449		81,185		5,846		1,674,698
Trade finance		296,430		4,069		8,158		—		308,657
Consumer:
Student loans		490,314		—		—		—		490,314
Other consumer		238,964		1,486		2,762		—		243,212

Total	$	7,847,919	$	180,637	$	682,986	$	5,846	$	8,717,388

Nonaccrual and Past Due Loans—Loans are tracked by the number of days borrower payments are past due. The table below presents an age analysis of nonaccrual and past due non-covered loans and loans held for sale, segregated by class of loans, as of December 31, 2011 and 2010:

	Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Nonaccrual Loans Less Than 90 Days Past Due		Nonaccrual Loans 90 or More Days Past Due		Total Nonaccrual Past Due Loans		Current Loans		Total

	(In thousands)
December 31, 2011
Residential:
Single-family	$	6,991	$	1,198	$	8,189	$	—	$	3,569	$	3,569	$	1,784,877	$	1,796,635
Multifamily		6,366		745		7,111		6,889		11,306		18,195		907,862		933,168
CRE:
Income producing		18,179		1,549		19,728		6,885		25,690		32,575		3,435,563		3,487,866
Construction		—		—		—		26,482		14,688		41,170		130,240		171,410
Land		—		573		573		1,136		9,589		10,725		161,791		173,089
C&I:
Commercial business		342		2,957		3,299		4,394		6,843		11,237		2,641,381		2,655,917
Trade finance		—		—		—		—		—		—		486,555		486,555
Consumer:
Student loans		109		188		297		—		257		257		305,771		306,325
Other consumer		1,130		—		1,130		—		2,249		2,249		274,082		277,461
Loans held for sale		—		—		—		—		25,655		25,655		252,948		278,603

Total	$	33,117	$	7,210	$	40,327	$	45,786	$	99,846	$	145,632	$	10,381,070		10,567,029

Unearned fees, premiums and discounts, net																(16,762	)

Total recorded investment in non-covered loans and loans held for sale															$	10,550,267

	Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Nonaccrual Loans Less Than 90 Days Past Due		Nonaccrual Loans 90 or More Days Past Due		Total Nonaccrual Past Due Loans		Current Loans		Total

	(In thousands)
December 31, 2010
Residential:
Single-family	$	5,449	$	5,432	$	10,881	$	355	$	7,058	$	7,413	$	1,100,730	$	1,119,024
Multifamily		18,894		4,368		23,262		7,694		9,687		17,381		934,102		974,745
CRE:
Income producing		27,002		6,034		33,036		7,962		38,454		46,416		3,313,532		3,392,984
Construction		—		1,486		1,486		25,688		9,778		35,466		241,095		278,047
Land		479		—		479		20,761		8,138		28,899		206,329		235,707
C&I:
Commercial business		3,216		1,086		4,302		14,437		8,235		22,672		1,647,724		1,674,698
Trade finance		—		—		—		—		—		—		308,657		308,657
Consumer:
Student loans		—		—		—		—		—		—		490,314		490,314
Other consumer		781		1,485		2,266		—		620		620		240,326		243,212
Loans held for sale		—		—		—		—		14,062		14,062		205,993		220,055

Total	$	55,821	$	19,891	$	75,712	$	76,897	$	96,032	$	172,929	$	8,688,802		8,937,443

Unearned fees, premiums and discounts, net																(56,781	)

Total recorded investment in non-covered loans and loans held for sale															$	8,880,662

Generally, loans 90 or more days past due are placed on nonaccrual status, at which point interest accrual is discontinued and all unpaid accrued interest is reversed against interest income. Additionally, loans that are not 90 or more days past due but have identified deficiencies, including delinquent TDR loans, are also put on nonaccrual status. Nonaccrual loans totaled $145.6 million and $172.9 million at December 31, 2011 and 2010, respectively. Loans not 90 or more days past due totaled $45.8 million and $76.9 million as of December 31, 2011 and 2010, respectively, were included in non-covered nonaccrual loans.

	For the Year Ended December 31,

	2011			2010			2009
	(In thousands)
Interest income that would have been recognized had nonaccrual loans performed in accordance with their original terms	$	9,384		$	12,689		$	13,743
Less: Interest income recognized on nonaccrual loans on a cash basis		(3,519	)		(7,880	)		(10,231	)

Interest income foregone on nonaccrual loans	$	5,865		$	4,809		$	3,512

Troubled debt restructurings—A troubled debt restructuring ("TDR") is a modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower's financial difficulties, grants a concession to the borrower. The concessions may be granted in various forms, including a below-market change in the stated interest rate, reduction in the loan balance or accrued interest, extension of the maturity date with a stated interest rate lower than the current market rate or note splits referred to as A/B notes. In A/B note restructurings, the original note is bifurcated into two notes where the A note represents the portion of the original loan which allows for acceptable loan-to-value and debt coverage on the collateral and is expected to be collected in full and the B note represents the portion of the original loan where there is a shortfall in value and is fully charged-off. The A/B note balance is comprised of the A note balances only. A notes are not disclosed as TDRs in years after the restructuring if the restructuring agreement specifies an interest rate equal to or greater than the rate that the Bank was willing to accept at the time of the restructuring for a new loan with comparable risk and the loan is not impaired based on the terms specified by the restructuring agreement.

TDRs may be designated as performing or nonperforming. A TDR may be designated as performing if the loan has demonstrated sustained performance under the modified terms. The period of sustained performance may include the periods prior to modification if prior performance met or exceeded the modified terms. For nonperforming restructured loans, the loan will remain on nonaccrual status until the borrower demonstrates a sustained period of performance, generally six consecutive months of payments. The Company had $99.6 million and $122.1 million in total performing restructured loans as of December 31, 2011 and December 31, 2010, respectively. Nonperforming restructured loans were $38.9 million and $42.1 million at December 31, 2011 and December 31, 2010, respectively. Included as TDRs were $22.8 million and $57.3 million of performing A/B notes as of December 31, 2011 and December 31, 2010, respectively. All TDRs are included in the balance of impaired loans.

The following table provides information on loans modified as of December 31, 2011 that were modified as TDRs during the year ended December 31, 2011:

	Loans Modified as TDRs During the Year Ended December 31, 2011

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment⁽¹⁾		Financial Impact⁽²⁾
	(Dollars in thousands)
Residential:
Single-family		13	$	3,102	$	2,972	$	665
Multifamily		15	$	6,442	$	4,903	$	1,279
CRE:
Income producing		11	$	32,404	$	29,933	$	4,983
Construction		3	$	3,740	$	4,221	$	220
Land		11	$	35,554	$	34,381	$	4,279
C&I:
Commercial business		24	$	18,247	$	16,706	$	4,443
Trade finance		1	$	4,127	$	4,127	$	—
Consumer:
Student loans		—	$	—	$	—	$	—
Other consumer		—	$	—	$	—	$	—

Potential TDRs are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower's financial difficulty in order to maximize the bank's recovery. As of December 31, 2011, modifications of residential TDRs, including single and multi-family loans, primarily included non-market interest rate reductions, maturity extensions and A/B note splits. A/B note splits result in a partial chargeoff or loss for the bank at the modification date. For the year ended December 31, 2011 residential TDRs modified using non-market interest rate reductions, maturity extensions and/or A/B note splits totaled $7.9 million, as of December 31, 2011. Commercial real estate TDRs, including income producing, construction and land loans, were primarily modified through A/B note splits, maturity extensions, forbearance payments and/or non-market interest rate changes with an impact of a partial chargeoff or loss for the bank and reduction of interest collected over the life of the loan. Commercial real estate TDRs modified through A/B note splits and/or maturity extensions totaled $40.6 million as of December 31, 2011. Commercial real estate TDRs modified through forbearance payments and/or non-market interest changes totaled $27.9 million as of December 31, 2011. Commercial and industrial TDRs, including commercial business and trade finance loans, were restructured in various ways, including A/B note splits, non-market interest rate changes and/or maturity extensions with an impact of both a reduction of interest collected over the life of the loan and/or an extended time period for collection of principal and interest, for a total of $20.8 million as of December 31, 2011. Performing TDRs at December 31, 2011 were comprised of $19.1 million in residential loans, $60.2 million in commercial real estate loans and $20.3 million in commercial and industrial loans. Nonperforming TDRs at December 31, 2011 were comprised of $2.7 million in residential loans, $34.6 million in commercial real estate loans and $1.6 million in commercial and industrial loans.

Subsequent to restructuring, a TDR that becomes delinquent, generally beyond 30 days for commercial and industrial, and commercial real estate and consumer loans, and beyond 90 days for residential loans, becomes nonaccrual and is considered to have defaulted. The following table provides information on TDRs that subsequently defaulted as of December 31, 2011 for the year ended December 31, 2011.

	Loans Modified as TDRs that Subsequently Defaulted During the Year Ended December 31, 2011

	Number of Contracts		Recorded Investment
	(Dollars in thousands)
Residential:
Single-family		—	$	—
Multifamily		—	$	—
CRE:
Income producing		—	$	—
Construction		1	$	890
Land		1	$	11,695
C&I:
Commercial business		2	$	307
Trade finance		—	$	—
Consumer:
Student loans		—	$	—
Other consumer		—	$	—

All TDRs are included in the impaired loan quarterly valuation allowance process. See the sections below Impaired Loans and Allowance for Loan Losses for the complete discussion. All portfolio segments of TDRs are reviewed for necessary specific reserves in the same manner as impaired loans of the same portfolio segment which have not been identified as TDRs. The modification of the terms of each TDR is considered in the current impairment analysis of the respective TDR. For all portfolio segments of delinquent TDRs and when the restructured loan is less than the recorded investment in the loan, the deficiency is charged-off against the allowance for loan losses. If the loan is a performing TDR the deficiency is included in the specific allowance, as appropriate. As of December 31, 2011, the allowance for loan losses associated with TDRs was $10.5 million for performing TDRs and $139 thousand for nonperforming TDRs.

As a result of adopting the amendments in ASU 2011-02, the Company reassessed all restructurings that occurred on or after the beginning of the current fiscal year (January 1, 2011) for identification as TDRs. The Company identified as TDRs certain loan receivables for which the allowance for credit losses had previously been measured under the general allowance for credit losses methodology. Upon identifying those loan receivables as TDRs, the Company identified them as impaired under the guidance in Section 310-10-35. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in Section 310-10-35 for those receivables newly identified as impaired. At the end of the first interim period of adoption (September 30, 2011), the recorded investment in receivables for which the allowance for credit losses was previously measured under the general allowance for credit losses methodology and are now impaired under Section 310-10-35 was $17.8 million, and the allowance for credit losses associated with those loan receivables, on the basis of a current evaluation of loss, was $2.2 million.

Impaired Loans—A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all scheduled payments of principal or interest due according to the original contractual terms of the loan agreement. Impaired loans include noncovered loans held for investment on nonaccrual status, regardless of the collateral coverage, and loans modified in a TDR.

The Bank's loans are grouped into heterogeneous and homogeneous (mostly consumer loans) categories. The Bank considers loans to be impaired if, based on current information and events, it is probable the Bank will not be able to collect all amounts due according to the original contractual terms of the loan agreement. Nonaccrual loans and performing troubled debt restructurings in the heterogeneous category are selected and evaluated for impairment on an individual basis. For loans determined to be impaired, the bank utilizes the most applicable asset valuation method for the loan from the following valuation methods: fair value of collateral less costs to sell, present value of expected future cash flows, or the loan's observable market price. When the value of an impaired loan is less than the recorded investment in the loan and the loan is 90 or more days delinquent, the deficiency between the current value and the recorded investment is charged-off against the allowance for loan losses. Generally, if the loan is less than 90 days past due or in process of modification, the deficiency will be recorded as a specific reserve.

At December 31, 2011 and December 31, 2010, impaired loans totaled $219.6 million and $281.0 million, respectively. Impaired non-covered loans as of December 31, 2011 and December 31, 2010 are set forth in the following tables. The interest income recognized on impaired loans, excluding performing TDRs, is recognized on a cash basis when received.

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized⁽¹⁾

	(In thousands)
As of and for the year ended December 31, 2011
Residential:
Single-family	$	10,248		6,578		2,535		9,113		1,131		9,408		65
Multifamily		37,450		28,272		3,520		31,792		1,124		35,855		473
CRE:
Income producing		69,664		55,701		7,941		63,642		1,187		68,087		1,030
Construction		75,714		45,413		1,067		46,480		815		64,398		1,099
Land		40,615		25,806		8,692		34,498		3,949		36,002		341
C&I:
Commercial business		38,857		20,772		6,650		27,422		4,835		32,033		484
Trade finance		4,127		4,127		—		4,127		—		4,127		—
Consumer:
Student loans		257		257		—		257		—		257		—
Other consumer		2,249		2,249		—		2,249		—		2,251		27

Total	$	279,181	$	189,175	$	30,405	$	219,580	$	13,041	$	252,418	$	3,519

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized⁽¹⁾

	(In thousands)
As of and for the year ended December 31, 2010⁽²⁾
Residential:
Single-family	$	19,769	$	18,521	$	355	$	18,876	$	219	$	21,212	$	209
Multifamily		34,708		32,012		631		32,643		90		39,350		540
CRE:
Income producing		95,899		82,345		6,354		88,699		1,557		100,004		2,174
Construction		88,586		81,789		2,436		84,225		1,366		95,324		1,728
Land		39,937		22,082		6,920		29,002		4,324		32,820		1,326
C&I:
Commercial business		37,668		23,044		3,897		26,941		2,468		27,378		1,199
Trade finance		—				—		—		—		—		—
Consumer:				—
Student loans		—				—		—		—		—		—
Other consumer		1,261		620		—		620		—		1,072		28

Total	$	317,828	$	260,413	$	20,593	$	281,006	$	10,024	$	317,160	$	7,204

The allowance consists of specific reserves and a general reserve. The Bank segregates loans into heterogeneous and homogeneous (mostly consumer loans) categories. Impaired loans in the heterogeneous category are subject to specific reserves. Loans in the homogeneous category, as well as non-impaired loans in the heterogeneous category, are evaluated as part of the general reserve. The general reserve is calculated by utilizing both quantitative and qualitative factors. There are different qualitative risks for the loans in each portfolio segment. As of December 31, 2011, the Residential and CRE segments' predominant risk characteristic is the collateral and the geographic location of the property collateralizing the loan. The risk is qualitatively assessed based on the change in the real estate market in those geographic areas. The C&I segment's predominant risk characteristics are global cash flows of the guarantors and businesses we lend to and economic and market conditions. Consumer loans, excluding the student loan portfolio guaranteed by the U.S. Department of Education, are largely comprised of home equity lines of credit, for which the predominant risk characteristic is the real estate collateral securing the loan.

Our methodology to determine the overall appropriateness of the allowance is based on a classification migration model and qualitative considerations. The migration analysis examines pools of loans having similar characteristics and analyzes their loss rates over a historical period. We utilize historical loss factors derived from trends and losses associated with each pool over a specified period of time. Based on this process, we assign loss factors to each loan grade within each pool of loans. Loss rates derived by the migration model are based predominantly on historical loss trends that may not be indicative of the actual or inherent loss potential. As such, we utilize qualitative and environmental factors as adjusting mechanisms to supplement the historical results of the classification migration model. Qualitative considerations include, but are not limited to, prevailing economic or market conditions, relative risk profiles of various loan segments, volume concentrations, growth trends, delinquency and nonaccrual status, problem loan trends, and geographic concentrations. Qualitative and environmental factors are reflected as percentage adjustments and are added to the historical loss rates derived from the classified asset migration model to determine the appropriate allowance amount for each loan pool.

Covered Loans—As of the respective acquisition dates, WFIB's and UCB's loan portfolios included unfunded commitments for commercial lines of credit, construction draws and other lending activity. The total commitment outstanding as of the respective acquisition dates is covered under the shared-loss agreements. However, any additional advances on these loans subsequent to acquisition date are not accounted for under ASC 310-30. As additional advances on these commitments have occurred, the Bank has considered these amounts in the allowance for loan losses calculation. As of December 31, 2011 and 2010, $6.6 million, or 3.1% and $4.2 million, or 1.8%, of the total allowance is allocated to the allowance for loan losses on covered loans. The covered loans acquired are and will continue to be subject to the Bank's internal and external credit review and monitoring. Credit deterioration, if any, beyond the respective acquisition date fair value amounts of the covered loans under ASC 310-30 will be separately measured and accounted for under ASC 310-30. If required, the establishment of an allowance for covered loans accounted for under ASC 310-30 will result in a charge to earnings with a partially offsetting noninterest income item reflected in the increase to the FDIC indemnification asset or receivable. As of December 31, 2011 and 2010, there is no allowance for the covered loans accounted for under ASC 310-30 due to deterioration of credit quality.

The Company recorded $95.0 million in loan loss provisions during 2011, as compared to $200.2 million during 2010. It is the Company's policy to promptly charge-off the amount of impairment on a loan which represents the difference between the outstanding loan balance and the fair value of the collateral or discounted cash flow. Recoveries are recorded when payment is received on loans that were previously charged-off through the allowance for loan losses. During 2011, the Company recorded $112.1 million in net charge-offs in comparison to $202.5 million during 2010. The following table details activity in the allowance for loan losses, for both non-covered and covered loans, by portfolio segment for the year ended December 31, 2011 and 2010. Allocation of a portion of the allowance to one segment of the loan portfolio does not preclude its availability to absorb losses in other segments.

	Residential			CRE			C&I			Consumer			Covered Loans Subject to Allowance for Loan Losses⁽¹⁾		Unallocated			Total

	(In thousands)
Year ended December 31, 2011
Beginning balance	$	49,491		$	117,752		$	59,737		$	3,428		$	4,225	$	—		$	234,633
Provision for loan losses		15,416			22,817			50,848			2,455			2,422		1,048			95,006
Allowance for unfunded loan commitments and letters of credit		—			—			—			—			—		(1,048	)		(1,048	)
Charge-offs		(13,323	)		(78,803	)		(30,606	)		(1,959	)		—		—			(124,691	)
Recoveries		596			4,691			7,041			295			—		—			12,623

Net charge-offs		(12,727	)		(74,112	)		(23,565	)		(1,664	)		—		—			(112,068	)

Ending balance	$	52,180		$	66,457		$	87,020		$	4,219		$	6,647	$	—		$	216,523

Ending balance allocated to:
Loans individually evaluated for impairment	$	2,255		$	5,951		$	4,835		$	—		$	—	$	—		$	13,041
Loans collectively evaluated for impairment		49,925			60,506			82,185			4,219			6,647		—			203,482
Loans acquired with deteriorated credit quality⁽²⁾		—			—			—			—			—		—			—

Ending balance	$	52,180		$	66,457		$	87,020		$	4,219		$	6,647	$	—		$	216,523

	Residential			CRE			C&I			Consumer			Covered Loans Subject to Allowance for Loan Losses⁽¹⁾		Unallocated			Total

	(In thousands)
Year ended December 31, 2010
Beginning balance	$	38,025		$	147,591		$	50,487		$	2,730		$	—	$	—		$	238,833
Provision for loan losses		59,525			97,548			34,613			2,415			4,225		1,833			200,159
Allowance for unfunded loan commitments and letters of credit		—			—			—			—			—		(1,833	)		(1,833	)
Charge-offs		(49,685	)		(137,460	)		(35,479	)		(2,579	)		—		—			(225,203	)
Recoveries		1,626			10,073			10,116			862			—		—			22,677

Net charge-offs		(48,059	)		(127,387	)		(25,363	)		(1,717	)		—		—			(202,526	)

Ending balance	$	49,491		$	117,752		$	59,737		$	3,428		$	4,225	$	—		$	234,633

Ending balance allocated to:
Loans individually evaluated for impairment	$	309		$	7,247		$	2,468		$	—		$	—	$	—		$	10,024
Loans collectively evaluated for impairment		49,182			110,505			57,269			3,428			4,225		—			224,609
Loans acquired with deteriorated credit quality⁽²⁾		—			—			—			—			—		—			—

Ending balance	$	49,491		$	117,752		$	59,737		$	3,428		$	4,225	$	—		$	234,633

The Company's recorded investment in total loans receivable as of December 31, 2011and 2010 related to each balance in the allowance for loan losses by portfolio segment and disaggregated on the basis of the Company's impairment methodology is as follows:

	Residential		CRE		C&I		Consumer		Covered Loans Subject to Allowance for Loan Losses		Total

	(In thousands)
December 31, 2011
Loans individually evaluated for impairment	$	43,395	$	143,631	$	31,338	$	2,249	$	—	$	220,613
Loans collectively evaluated for impairment		2,686,408		3,688,734		3,111,135		581,536		583,804		10,651,617
Loans acquired with deteriorated credit quality⁽¹⁾		1,331,615		2,322,062		413,479		67,124		—		4,134,280

Ending balance	$	4,061,418	$	6,154,427	$	3,555,952	$	650,909	$	583,804	$	15,006,510

	Residential		CRE		C&I		Consumer		Covered Loans Subject to Allowance for Loan Losses		Total

	(In thousands)
December 31, 2010
Loans individually evaluated for impairment	$	51,519	$	201,926	$	26,941	$	620	$	—	$	281,006
Loans collectively evaluated for impairment		2,042,250		3,704,812		1,956,415		732,905		561,725		8,998,107
Loans acquired with deteriorated credit quality⁽¹⁾		1,614,732		3,059,133		634,560		85,623		—		5,394,048

Ending balance	$	3,708,501	$	6,965,871	$	2,617,916	$	819,148	$	561,725	$	14,673,161

Allowance for Unfunded Loan Commitments, Off-Balance Sheet Credit Exposures and Recourse Provisions—The allowance for unfunded loan commitments, off-balance sheet credit exposures and recourse provisions is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to these unfunded credit facilities. The determination of the adequacy of the allowance is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. As of December 31, 2011 and 2010, the allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions amounted to $11.0 million and $10.0 million, respectively. Net adjustments to the allowance for unfunded loan commitments, off-balance sheet credit exposures, and recourse provisions are included in the provision for loan losses.

Loans serviced for others amounted to $2.10 billion and $1.81 billion at December 31, 2011 and 2010, respectively. These represent loans that have either been sold or securitized for which the Bank continues to provide servicing and has limited recourse. The majority of these loans are residential and CRE at December 31, 2011. Of the total allowance for unfunded loan commitments, off-balance sheet credit exposures and recourse provisions, $4.4 million and $4.7 million pertain to these loans as of December 31, 2011 and 2010, respectively. These loans are maintained off-balance sheet and are not included in the loans receivable balance.