(in thousands)	At December 31, 2012			At December 31, 2011
Commercial mortgage	$	447,689		$	393,376
Multifamily		217,158			187,333
Commercial loans and lines		168,325			180,421
Home mortgages		149,954			106,350
Construction and land loans		36,772			35,082
Home equity loans and lines of credit		36,709			28,645
Installment and credit card		4,586			4,896
Total non-covered loans		1,061,193			936,103
Allowance for loan losses		(18,172	)		(17,747	)
Non-covered loans, net	$	1,043,021		$	918,356

Most of the Company’s lending activity is with customers located in Los Angeles, Orange, Ventura, Riverside, San Bernardino, San Diego and San Luis Obispo Counties and most loans are secured by or dependent on real estate. Although the Company has no significant exposure to any individual customer, economic conditions, particularly the recent sustained decline in real estate values in Southern California, could adversely affect customers and their ability to satisfy their obligations under their loan agreements.

	Twelve months ended December 31,
(in thousands)	2012			2011			2010
Beginning balance	$	17,747		$	17,033		$	16,505
Provision for loan losses		1,500			5,346			8,337
Loans charged-off		(1,485	)		(5,177	)		(8,535	)
Recoveries on loans previously charged-off		410			545			726
Balance, end of period	$	18,172		$	17,747		$	17,033


(in thousands)	Commercial Mortgage			Commercial			Multifamily			Construction and Land			Home Mortgage			Home Equity		Installment			Total
Allowance for credit losses:

Beginning balance	$	6,091		$	6,221		$	2,886		$	814		$	1,274		$	390	$	71		$	17,747

Charge-offs		(26	)		(792	)		(161	)		—			(330	)		—		(176	)		(1,485	)

Recoveries		3			400			—			—			—			—		7			410

Provision		(319	)		559			126			(316	)		1,279			22		149			1,500

Ending balance	$	5,749		$	6,388		$	2,851		$	498		$	2,223		$	412	$	51		$	18,172

Ending balance; individually evaluated for impairment	$	64		$	4,589		$	140		$	10		$	200		$	—	$	—		$	5,003

Ending balance; collectively evaluated for impairment		5,685			1,799			2,711			488			2,023			412		51			13,169

Non-covered loan balances:

Ending balance	$	447,689		$	168,325		$	217,158		$	36,772		$	149,954		$	36,709	$	4,586		$	1,061,193

Ending balance; individually evaluated for impairment	$	1,593		$	15,564		$	1,988		$	1,761		$	2,066		$	—	$	25		$	22,997

Ending balance; collectively evaluated for impairment	$	446,096		$	152,761		$	215,170		$	35,011		$	147,888		$	36,709	$	4,561		$	1,038,196

(in thousands)	Commercial Mortgage			Commercial			Multifamily			Construction and Land			Home Mortgage			Home Equity			Installment			Total

Allowance for credit losses:

Beginning balance	$	6,134		$	4,934		$	2,273		$	1,698		$	1,496		$	416		$	82		$	17,033

Charge-offs		(312	)		(3,988	)		(71	)		(191	)		(475	)		(39	)		(101	)		(5,177	)

Recoveries		—			508			17			15			—			—			5			545

Provision		269			4,767			667			(708	)		253			13			85			5,346

Ending balance	$	6,091		$	6,221		$	2,886		$	814		$	1,274		$	390		$	71		$	17,747

Ending balance; individually evaluated for impairment	$	—		$	3,057		$	—		$	—		$	—		$	—		$	—		$	3,057

Ending balance; collectively evaluated for impairment		6,091			3,164			2,886			814			1,274			390			71			14,690

Non-covered loan balances:

Ending balance	$	393,376		$	180,421		$	187,333		$	35,082		$	106,350		$	28,645		$	4,896		$	936,103

Ending balance; individually evaluated for impairment	$	—		$	11,594		$	837		$	—		$	1,387		$	—		$	42		$	13,860

Ending balance; collectively evaluated for impairment	$	393,376		$	168,827		$	186,496		$	35,082		$	104,963		$	28,645		$	4,854		$	922,243

Nonaccrual loans are those loans for which management has discontinued accrual of interest because reasonable doubt exists as to the full and timely collection of either principal or interest. Nonaccrual loans are also considered impaired loans. Total non-covered nonaccrual loans totaled $14.6 million at December 31, 2012 as compared to $13.9 million at December 31, 2011. The allowance for loan losses maintained for non-covered nonaccrual loans was $4.0 million and $3.1 million at December 31, 2012 and December 31, 2011, respectively. Had these loans performed according to their original terms, additional interest income of $0.7 million and $0.8 million would have been recognized in the twelve months ended December 31, 2012 and 2011, respectively.

	At December 31, 2012		At December 31, 2011
Nonaccrual loans
Aggregate loan amounts
Construction and land	$	—	$	—
Commercial mortgage		923		—
Multifamily		1,271		837
Commercial loans		10,793		11,594
Home mortgage		1,601		1,387
Installment		22		42
Total non-covered nonaccrual loans	$	14,610	$	13,860

Included in non-covered nonaccrual loans at December 31, 2012 were seventeen restructured loans totaling $5.3 million. The seventeen loans consist of three home mortgage loans, one multifamily loan and thirteen commercial loans. Interest income recognized on these loans was $119,000 for the twelve months ended December 31, 2012. We have no commitments to lend additional funds to these borrowers.

Included in non-covered nonaccrual loans at December 31, 2011 were nine restructured loans totaling $2.8 million. The nine loans consist of one home mortgage loan and eight commercial loans. Interest income recognized on these loans was $34,000 for the twelve months ended December 31, 2011. We had no commitments to lend additional funds to these borrowers.

All loans are risk rated based on analysis of the current state of the borrower’s credit quality. This analysis of credit quality includes a review of all sources of repayment, the borrower’s current financial and liquidity status and all other relevant information. The Company utilizes a ten grade risk rating system, where a higher grade represents a higher level of credit risk. The ten grade risk rating system can be generally classified by the following categories: Pass, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the sources of repayment.

Pass 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 close attention by management. Special Mention is considered a transitory grade and generally, the Company does not have a loan stay graded Special Mention for longer than six months. If any potential weaknesses are resolved, the loan is upgraded to a Pass 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.

	Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(in thousands)
Home mortgage	$	140,778	$	961	$	8,215	$	—	$	—	$	149,954
Commercial mortgage		398,915		43,026		5,748		—		—		447,689
Construction and land		35,015		—		1,757		—		—		36,772
Multifamily		204,131		5,135		7,892		—		—		217,158
Commercial loans and lines		142,184		7,908		17,155		1,078		—		168,325
Home equity loans and lines		36,205		—		504		—		—		36,709
Installment		4,253		271		62		—		—		4,586
Total	$	961,481	$	57,301	$	41,333	$	1,078	$	—	$	1,061,193


	Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(in thousands)
Home mortgage	$	103,239	$	1,326	$	1,785	$	—	$	—	$	106,350
Commercial mortgage		366,078		17,798		9,500		—		—		393,376
Construction and land		31,623		196		3,263		—		—		35,082
Multifamily		178,064		2,972		6,297		—		—		187,333
Commercial loans and lines		155,850		4,030		11,937		8,604		—		180,421
Home equity loans and lines		28,139		—		506		—		—		28,645
Installment		4,516		268		112		—		—		4,896
Total	$	867,509	$	26,590	$	33,400	$	8,604	$	—	$	936,103

	At December 31, 2012
	Accruing loans 30-59 days past due		Accruing loans 60-89 days past due		Accruing loans 90+ days past due		Total Accruing past due loans		Nonaccrual past due loans		Current loans		Total
	(in thousands)
Commercial loans and lines	$	426	$	—	$	—	$	426	$	10,793	$	157,106	$	168,325
Commercial mortgage		1,866		—		—		1,866		923		444,900		447,689
Multifamily		334		1,884		—		2,218		1,271		213,669		217,158
Construction and land		—		—		—		—		—		36,772		36,772
Home mortgage		6,551		—		—		6,551		1,601		141,802		149,954
Home equity loans and lines		—		—		—		—		—		36,709		36,709
Installment		1		—		—		1		22		4,563		4,586
Total	$	9,178	$	1,884	$	—	$	11,062	$	14,610	$	1,035,521	$	1,061,193

	At December 31, 2011
	Accruing loans 30-59 days past due		Accruing loans 60-89 days past due		Accruing loans 90+ days past due		Total Accruing past due loans		Nonaccrual past due loans		Current loans		Total
	(in thousands)
Commercial loans and lines	$	41	$	1,071	$	—	$	1,112	$	11,594	$	167,715	$	180,421
Commercial mortgage		648		—		—		648		—		392,728		393,376
Multifamily		1,010		—		—		1,010		837		185,486		187,333
Construction and land		—		—		—		—		—		35,082		35,082
Home mortgage		—		—		—		—		1,387		104,963		106,350
Home equity loans and lines		406		100		—		506		—		28,139		28,645
Installment		172		1		—		173		42		4,681		4,896
Total	$	2,277	$	1,172	$	—	$	3,449	$	13,860	$	918,794	$	936,103

The Company considers a loan to be impaired when, based on current information and events, the Company does not expect to be able to collect all amounts due according to the loan contract, including scheduled interest payments. Impaired loans are determined by periodic evaluation on an individual loan basis. The average investment in non-covered impaired loans was $19.5 million and $17.6 million for the year ended December 31, 2012 and 2011, respectively. There was $360,000 of interest income recognized on non-covered impaired loans in the twelve months ended December 31, 2012 and no interest income was recognized in the twelve months ended December 31, 2011. Recorded investments in non-covered impaired loans were $23.0 million and $13.9 million at December 31, 2012 and December 31, 2011, respectively. Of the $23.0 million of non-covered impaired loans at December 31, 2012, $18.5 million had specific reserves totaling $5.0 million. Of the $13.9 million of non-covered impaired loans at December 31, 2011, $11.1 million had specific reserves totaling $3.1 million.

(in thousands)	Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial loans and lines	$	19,365	$	341	$	15,223	$	15,564	$	4,589	$	14,657	$	244
Multifamily		2,139		513		1,474		1,988		140		1,739		45
Commercial mortgage		1,593		923		670		1,593		64		751		40
Construction		1,761		1,570		191		1,761		9		555		15
Home mortgage		2,822		1,152		914		2,066		200		1,480		15
Installment		80		23		3		25		1		32		1
Total	$	27,760	$	4,522	$	18,475	$	22,997	$	5,003	$	19,214	$	360

(in thousands)	Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial loans and lines	$	13,776	$	471	$	11,123	$	11,594	$	3,057	$	9,374	$	—
Multifamily		837		837		—		837		—		140		—
Home mortgage		1,887		1,387		—		1,387		—		1,035		—
Installment		42		42		—		42		—		4		—
Total	$	16,542	$	2,737	$	11,123	$	13,860	$	3,057	$	10,553	$	—

	December 31, 2012
(in thousands)	Accrual Status			Nonaccrual Status			Total Modifications
	#	$		#	$		#	$
Commercial mortgage	2	$	670	—	$	—	2	$	670
Commercial loans & lines	16		5,051	13		4,784	29		9,835
Multifamily	1		716	1		203	2		919
Construction	2		1,761	—		—	2		1,761
Home mortgage	1		465	3		350	4		815
Installment	2		3	—		—	2		3
Total	24	$	8,666	17	$	5,337	41	$	14,003

	December 31, 2011
(in thousands)	Accrual Status			Nonaccrual Status			Total Modifications
	#	$		#	$		#	$
Commercial mortgage	6	$	878	—	$	—	6	$	878
Commercial loans & lines	—		—	8		2,665	8		2,665
Multifamily	1		725	—		—	1		725
Home mortgage	—		—	1		158	1		158
Total	7	$	1,603	9	$	2,823	16	$	4,426

The Bank’s policy is that loans placed on nonaccrual status will typically remain on nonaccrual status until all principal and interest payments are brought current and the prospect for future payment performance in accordance with the loan agreement appear relatively certain. The Bank’s policy generally refers to six months of payment performance as sufficient to warrant a return to accrual status.

	Twelve months ended December 31, 2012
	Term Modifications				Interest Only Modifications				Rate Modifications				Combo Modifications				Total Modifications
		#	$			#	$			#	$			#	$			#	$
Pre-modification outstanding recorded investment:											(in thousands)
Commercial loans & lines		4	$	2,037		1	$	—		5	$	6,242		7	$	2,462		17	$	10,741
Multifamily		—		—		—		—		—		—		1		237		1		237
Commercial mortgage		—		—		—		—		—		—		1		26		1		26
Construction		2		1,783		—		—		—		—		—		—		2		1,783
Home mortgage		—		—		—		—		—		—		3		746		3		746
Installment		—		—		—		—		—		—		1		4		1		4
Total		6	$	3,820		1	$	—		5	$	6,242		13	$	3,475		25	$	13,537

	Twelve months ended December 31, 2012
	Term Modifications			Interest Only Modifications			Payment Modifications			Combo Modifications			Total Modifications
	#	$		#	$		#	$		#	$		#	$
Post-modification outstanding recorded investment:									(in thousands)
Commercial loans & lines	4	$	2,037	1	$	500	5	$	6,288	7	$	1,926	17	$	10,751
Multifamily	—		—	—		—	—		—	1		237	1		237
Commercial mortgage	—		—	—		—	—		—	1		26	1		26
Construction	2		1,783	—		—	—		—	—		—	2		1,783
Home mortgage	—		—	—		—	—		—	3		686	3		686
Installment	—		—	—		—	—		—	1		4	1		4
Total	6	$	3,820	1	$	500	5	$	6,288	13	$	2,879	25	$	13,487

	Twelve months ended December 31, 2011
	Term Modifications			Payment Modifications			Combo Modifications			Total Modifications
	#	$		#	$		#	$		#	$
Pre-modification outstanding recorded investment:						(in thousands)
Commercial loans & lines	—	$	—	2	$	83	3	$	1,280	5	$	1,363
Multifamily	—		—	—		—	1		626	1		626
Installment	—		—	—		—	1		5	1		5
Total	—	$	—	2	$	83	5	$	1,911	7	$	1,994

	Twelve months ended December 31, 2011
	Term Modifications			Payment Modifications			Combo Modifications			Total Modifications
	#	$		#	$		#	$		#	$
Post-modification outstanding recorded investment:					(in thousands)
Commercial loans & lines	—	$	—	2	$	83	3	$	1,280	5	$	1,363
Multifamily	—		—	—		—	1		614	1		614
Installment	—		—	—		—	1		5	1		5
Total	—	$	—	2	$	83	5	$	1,899	7	$	1,982

There were no non-covered loans modified as a troubled debt restructuring and had a payment default occurring within 12 months of the restructure date during the twelve months ended December 31, 2012. During the twelve months ended December 31, 2011, one non-covered loan for $4,000 modified as a troubled debt restructuring had a payment default occurring within 12 months of the restructure date. There were no non-covered loans modified as a troubled debt restructuring and had a payment default occurring within 12 months of the restructure date during the twelve months ended December 31, 2010.