NOTE 5 – ALLOWANCE FOR LOAN AND LEASE LOSSES

Changes in the allowance for loan and lease losses were as follows:

	For the years ended December 31,
(In thousands)	2011			2010			2009
Balance at the beginning of the year	$	21,129		$	30,331		$	28,908
Charge-offs		(13,211	)		(31,714	)		(19,818	)
Recoveries		734			1,300			636
Net charge-offs		(12,477	)		(30,414	)		(19,182	)
Reduction due to Royal Asian sale		-			(928	)		-
Provision for loan losses and leases		7,728			22,140			20,605
Balance at the end of year	$	16,380		$	21,129		$	30,331

The following table presents the detail of the allowance and the loan portfolio disaggregated by loan portfolio segment as of December 31, 2011 and 2010.

Allowance for Loan and Leases Losses and Loans Held for Investment

For the year ended December 31, 2011

(In thousands)	Non- residential real estate			Construction and land development			Commercial & industrial			Multi- family			Residential			Consumer		Leasing			Tax certificates			Unallocated		Total
Allowance for Loan and Leases Losses
Beginning balance	$	9,534		$	3,976		$	3,797		$	652		$	1,106		$	12	$	1,670		$	380		$	2	$	21,129
Charge-offs		(1,685	)		(5,755	)		(2,901	)		(328	)		(635	)		-		(868	)		(1,039	)		-		(13,211	)
Recoveries		357			196			22			-			153			-		6			-			-		734
Provision		(462	)		4,106			1,413			207			564			8		503			1,084			305		7,728
Ending balance	$	7,744		$	2,523		$	2,331		$	531		$	1,188		$	20	$	1,311		$	425		$	307	$	16,380

Ending balance: related to loans individually evaluated for impairment	$	-		$	-		$	-		$	-		$	24		$	-	$	114		$	-		$	-	$	138


Ending balance: related to loans collectively evaluated for impairment	$	7,744		$	2,523		$	2,331		$	531		$	1,164		$	20	$	1,197		$	425		$	307	$	16,242

LHFI
Ending balance	$	182,579		$	54,120		$	54,136		$	11,622		$	26,637		$	949	$	36,014		$	48,809		$	-	$	414,866

Ending balance: individually evaluated for impairment	$	17,311		$	17,368		$	7,267		$	1,703		$	1,139		$	-	$	266		$	1,023		$	-	$	46,077

Ending balance: collectively evaluated for impairment	$	165,268		$	36,752		$	46,869		$	9,919		$	25,498		$	949	$	35,748		$	47,786		$	-	$	368,789

Allowance for Loan and Leases Losses and Loans Held for Investment

For the year ended December 31, 2010

(In thousands)	Non- residential real estate			Construction and land development			Commercial & industrial			Multi- family			Residential			Consumer			Leasing			Tax certificates			Unallocated			Total
Allowance for Loan and Leases Losses
Beginning balance	$	10,039		$	7,895		$	6,542		$	-		$	3,762		$	25		$	1,757		$	290		$	21		$	30,331
Charge-offs		(7,352	)		(13,413	)		(5,930	)		(787	)		(3,211	)		-			(972	)		(49	)		-			(31,714	)
Recoveries		684			116			81			18			313			37			51			-			-			1,300
Provision		6,796			9,508			3,223			1,421			285			(47	)		834			139			(19	)		22,140
Reduction due to Royal Asian sale		(633	)		(130	)		(119	)		-			(43	)		(3	)		-			-			-			(928	)
Ending balance	$	9,534		$	3,976		$	3,797		$	652		$	1,106		$	12		$	1,670		$	380		$	2		$	21,129


Ending balance: related to loans individually evaluated for impairment	$	1,363		$	-		$	-		$	245		$	74		$	-		$	194		$	31		$	-		$	1,907


Ending balance: related to loans collectively evaluated for impairment	$	8,171		$	3,976		$	3,797		$	407		$	1,032		$	12		$	1,476		$	349		$	2		$	19,222

LHFI
Ending balance	$	194,203		$	79,638		$	74,027		$	10,277		$	29,299		$	793		$	38,725		$	70,443		$	-		$	497,405

Ending balance: individually evaluated for impairment	$	10,060		$	19,758		$	5,858		$	2,453		$	2,159		$	-		$	335		$	1,802		$	-		$	42,425

Ending balance: collectively evaluated for impairment	$	184,143		$	59,880		$	68,169		$	7,824		$	27,140		$	793		$	38,390		$	68,641		$	-		$	454,980

The following table details the loans that were evaluated for impairment by loan segment.

	As of December 31, 2011
(In thousands)	Unpaid principal balance		Recorded investment		Related allowance		Average recorded investment		Interest income recognized
With no related allowance recorded:
Construction and land development	$	24,183	$	17,368	$	-	$	13,331	$	84
Non-residential real estate		19,513		17,311		-		7,732		33
Commercial & industrial		14,368		7,267		-		8,257		77
Residential real estate		3,645		337		-		950		-
Multi-family		1,888		1,703		-		1,760		-
Tax certificates		4,658		1,023		-		171		-
Total:	$	68,255	$	45,009	$	-	$	32,201	$	194
With an allowance recorded:
Construction and land development	$	-	$	-	$	-	$	4,514	$	-
Non-residential real estate		-		-		-		2,642		-
Commercial & industrial		-		-		-		1,394		-
Residential real estate		1,048		778		24		915		1
Multi-family		-		-		-		245		-
Leasing		266		152		114		348		-
Tax certificates		-		-		-		1,423		-
Total:	$	1,314	$	930	$	138	$	11,481	$	1

	As of December 31, 2010
(In thousands)	Unpaid principal balance		Recorded investment		Related allowance		Average recorded investment		Interest income recognized
With no related allowance recorded:
Construction and land development	$	25,312	$	19,758	$	-	$	28,105	$	202
Non-residential real estate		4,511		4,255		-		13,650		42
Commercial & industrial		10,217		5,858		-		5,236		2
Residential real estate		1,172		1,119		-		3,243		76
Multi-family		1,935		1,815		-		458		-
Tax certificates		-		-		-		996		-
Total:	$	43,147	$	32,805	$	-	$	51,688	$	322
With an allowance recorded:
Construction and land development	$	-	$	-	$	-	$	13,512	$	13
Non-residential real estate		5,805		4,442		1,363		5,057		-
Commercial & industrial		-		-		-		1,782		-
Residential real estate		1,239		966		74		1,153		-
Multi-family		638		393		245		3,469		-
Leasing		335		141		194		538		-
Tax certificates		4,850		1,771		31		1,026		-
Total:	$	12,867	$	7,713	$	1,907	$	26,537	$	13