UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One);

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

PMC COMMERCIAL TRUST

(Exact name of registrant as specified in its charter)

TEXAS		75-6446078
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)
17950 Preston Road, Suite 600, Dallas, TX 75252		(972) 349-3200
(Address of principal executive offices)		(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES o NO o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). YES o NO þ

As of April 30, 2009, the Registrant had outstanding 10,549,581 Common Shares of Beneficial Interest, par value $.01 per share.

 

 

PMC COMMERCIAL TRUST AND SUBSIDIARIES

INDEX

		PAGE NO.
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) — March 31, 2009 and December 31, 2008			2
Consolidated Statements of Income (Unaudited) — Three Months Ended March 31, 2009 and 2008			3
Consolidated Statements of Comprehensive Income (Unaudited) — Three Months Ended March 31, 2009 and 2008			4
Consolidated Statements of Beneficiaries’ Equity (Unaudited) — Three Months Ended March 31, 2009 and 2008			5
Consolidated Statements of Cash Flows (Unaudited) — Three Months Ended March 31, 2009 and 2008			6
Notes to Consolidated Financial Statements (Unaudited)			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosures About Market Risk			31
Item 4. Controls and Procedures			35
PART II. Other Information
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Defaults upon Senior Securities			36
Item 4. Submission of Matters to a Vote of Security Holders			36
Item 5. Other Information			36
Item 6. Exhibits			37
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PMC COMMERCIAL TRUST AND SUBSIDIARIES

		March 31,				December 31,
		2009				2008
		(Unaudited)
ASSETS
Loans receivable, net		$	193,194			$	179,807
Retained interests in transferred assets			24,742				33,248
Cash and cash equivalents			10,244				10,606
Restricted investments			1,566				—
Other assets			3,812				3,863
Total assets		$	233,558			$	227,524
LIABILITIES AND BENEFICIARIES’ EQUITY
Liabilities:
Junior subordinated notes		$	27,070			$	27,070
Revolving credit facility			27,000				22,700
Structured notes and debentures payable			13,600				8,168
Redeemable preferred stock of subsidiary			3,904				3,876
Accounts payable and accrued expenses			2,818				2,884
Dividends payable			2,444				3,967
Borrower advances			2,062				2,819
Deferred gains on property sales			1,378				1,408
Other liabilities			259				270
Total liabilities			80,535				73,162
Beneficiaries’ equity:
Common shares of beneficial interest; authorized 100,000,000 shares of $0.01 par value; 11,066,283 shares issued at March 31, 2009 and December 31, 2008, 10,586,962 and 10,694,788 shares outstanding at March 31, 2009 and December 31, 2008, respectively			111				111
Additional paid-in capital			152,480				152,460
Net unrealized appreciation of retained interests in transferred assets			707				620
Cumulative net income			162,551				160,925
Cumulative dividends			(159,211	)			(156,829	)
			156,638				157,287
Less: Treasury stock; at cost, 479,321 and 371,495 shares at March 31, 2009 and December 31, 2008, respectively			(4,515	)			(3,825	)
Total parent company beneficiaries’ equity			152,123				153,462
Noncontrolling interests — cumulative preferred stock of subsidiary			900				900
Total beneficiaries’ equity			153,023				154,362
Total liabilities and beneficiaries’ equity		$	233,558			$	227,524

The accompanying notes are an integral part of these consolidated financial statements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2009				2008
		(Unaudited)
Revenues:
Interest income		$	2,851			$	3,766
Income from retained interests in transferred assets			916				1,919
Other income			224				737
Total revenues			3,991				6,422
Expenses:
Salaries and related benefits			921				1,239
Interest			806				1,233
General and administrative			443				469
Provision for loan losses, net			147				73
Permanent impairments on retained interests in transferred assets			60				281
Total expenses			2,377				3,295
Income before income tax provision and discontinued operations			1,614				3,127
Income tax provision			(18	)			(82	)
Income from continuing operations			1,596				3,045
Discontinued operations:
Gains on sales of real estate			30				338
Net income		$	1,626			$	3,383
Weighted average shares outstanding:
Basic			10,650				10,765
Diluted			10,650				10,765
Basic and diluted earnings per share:
Income from continuing operations		$	0.15			$	0.28
Discontinued operations			—				0.03
Net income		$	0.15			$	0.31

The accompanying notes are an integral part of these consolidated financial statements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2009				2008
		(Unaudited)
Net income		$	1,626			$	3,383
Change in unrealized appreciation of retained interests in transferred assets:
Net unrealized appreciation arising during period			102				222
Net realized gains included in net income			(15	)			(60	)
			87				162
Comprehensive income		$	1,713			$	3,545

The accompanying notes are an integral part of these consolidated financial statements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES

		Three Months Ended March 31, 2008
		(Unaudited)
														Net
														Unrealized
		Common												Appreciation
		Shares of												of Retained																Cumulative
		Beneficial								Additional				Interests in				Cumulative												Preferred				Total
		Interest				Par				Paid-in				Transferred				Net				Cumulative				Treasury				Stock of				Beneficiaries’
		Outstanding				Value				Capital				Assets				Income				Dividends				Stock				Subsidiary				Equity
Balances, January 1, 2008			10,765,033			$	111			$	152,331			$	1,945			$	151,119			$	(145,921	)		$	(3,231	)		$	900			$	157,254
Net unrealized appreciation			—				—				—				162				—				—				—				—				162
Share-based compensation expense			—				—				25				—				—				—				—				—				25
Dividends ($0.20 per share)			—				—				—				—				—				(2,153	)			—				—				(2,153	)
Net income			—				—				—				—				3,383				—				—				—				3,383
Balances, March 31, 2008			10,765,033			$	111			$	152,356			$	2,107			$	154,502			$	(148,074	)		$	(3,231	)		$	900			$	158,671

		Three Months Ended March 31, 2009
		(Unaudited)
														Net
														Unrealized
		Common												Appreciation
		Shares of												of Retained																Cumulative
		Beneficial								Additional				Interests in				Cumulative												Preferred				Total
		Interest				Par				Paid-in				Transferred				Net				Cumulative				Treasury				Stock of				Beneficiaries’
		Outstanding				Value				Capital				Assets				Income				Dividends				Stock				Subsidiary				Equity
Balances, January 1, 2009			10,694,788			$	111			$	152,460			$	620			$	160,925			$	(156,829	)		$	(3,825	)		$	900			$	154,362
Net unrealized appreciation			—				—				—				87				—				—				—				—				87
Share-based compensation expense			—				—				20				—				—				—				—				—				20
Treasury shares, net			(107,826	)			—				—				—				—				—				(690	)			—				(690	)
Dividends ($0.225 per share)			—				—				—				—				—				(2,382	)			—				—				(2,382	)
Net income			—				—				—				—				1,626				—				—				—				1,626
Balances, March 31, 2009			10,586,962			$	111			$	152,480			$	707			$	162,551			$	(159,211	)		$	(4,515	)		$	900			$	153,023

The accompanying notes are an integral part of these consolidated financial statements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2009				2008
		(Unaudited)
Cash flows from operating activities:
Net income		$	1,626			$	3,383
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation			7				7
Permanent impairments on retained interests in transferred assets			60				281
Gains on sales of real estate			(30	)			(338	)
Deferred income taxes			(8	)			(18	)
Provision for loan losses, net			147				73
Premium income adjustment			33				(12	)
Amortization and accretion, net			11				(33	)
Share-based compensation			20				25
Capitalized loan origination costs			(57	)			(46	)
Loans funded, held for sale			(2,713	)			(1,338	)
Proceeds from sale of guaranteed loans			783				1,016
Loan fees collected (remitted), net			(14	)			91
Change in operating assets and liabilities:
Due to/from affiliates, net			38				(63	)
Other assets			99				83
Borrower advances			(757	)			(146	)
Accounts payable and accrued expenses			(47	)			(449	)
Other liabilities			(8	)			(41	)
Net cash provided by (used in) operating activities			(810	)			2,475
Cash flows from investing activities:
Loans funded			(823	)			(15,798	)
Principal collected on loans			1,829				9,684
Principal collected on retained interests in transferred assets			103				660
Principal collected on mortgage-backed security of affiliate			11				40
Investment in retained interests in transferred assets			(135	)			—
Investment in restricted investments, net			(156	)			(1,184	)
Net cash provided by (used in) investing activities			829				(6,598	)
Cash flows from financing activities:
Purchase of treasury shares			(690	)			—
Proceeds from revolving credit facility, net			4,300				1,500
Payment of principal on structured notes			(86	)			—
Payment of dividends			(3,905	)			(3,231	)
Net cash used in financing activities			(381	)			(1,731	)
Net decrease in cash and cash equivalents			(362	)			(5,854	)
Cash and cash equivalents, beginning of year			10,606				11,485
Cash and cash equivalents, end of period		$	10,244			$	5,631

The accompanying notes are an integral part of these consolidated financial statements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES

Note 1. Basis of Presentation:

The accompanying interim financial statements of PMC Commercial Trust (“PMC Commercial” or together with its wholly-owned subsidiaries, “we,” “us” or “our”) have not been audited by independent accountants. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation. In the opinion of management, the financial statements reflect all adjustments necessary to present a fair statement of our financial position at March 31, 2009 and results of operations for the three months ended March 31, 2009 and 2008. These adjustments are of a normal recurring nature. All material intercompany balances and transactions have been eliminated. The results for the three months ended March 31, 2009 are not necessarily indicative of future financial results. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008.

Certain prior period amounts have been reclassified to conform to the current year presentation. Upon adoption of Financial Accounting Standards Board (“FASB”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“FAS 160”), cumulative preferred stock of subsidiary was reclassified from the mezzanine section of the balance sheet to beneficiaries’ equity and minority interest as presented in the income statement was reclassified to interest expense. These reclassifications had no effect on previously reported consolidated net income or cash flows, but the adoption of FAS 160 and resulting prior period reclassification does increase our overall consolidated beneficiaries’ equity.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (2) the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Each of our qualified special purpose entities (“QSPEs”) contains a “clean-up” call provision which gives PMC Commercial the option to repay the outstanding structured notes of the QSPE. PMC Joint Venture, L.P. 2002 (the “2002 Joint Venture”) reached this option during January 2009 becoming a non-qualifying SPE; however, based on our current liquidity needs, the option was not exercised. The subsidiary was determined to be a variable interest entity. Since we expect to absorb the majority of the entity’s future expected losses and receive the entity’s expected residual returns, PMC Commercial Trust is considered to be the primary beneficiary. As a result, effective in January 2009, this subsidiary was consolidated in our financial statements. The operations of the 2002 Joint Venture were previously accounted for as retained interests in transferred assets. The following table summarizes the assets and liabilities of the 2002 Joint Venture (which represents a noncash transaction with the exception of the restricted investments):

		January
		2009
		(In thousands)
Loans receivable		$	12,570
Restricted investments			1,410
Other assets			102
Total assets		$	14,082
Structured notes payable		$	5,517
Total liabilities		$	5,517

In addition, during the second quarter of 2009, we anticipate that PMC Joint Venture, L.P. 2003 (“the 2003 Joint Venture”) will reach its “clean-up” call option becoming a non-qualifying SPE. Based on our current liquidity needs, the option will not be exercised. Since we expect to absorb the majority of the entity’s future expected losses and receive the entity’s expected residual returns, PMC Commercial Trust would be considered the primary beneficiary. As a result, this subsidiary would be consolidated in our second quarter 2009 financial statements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 2. Recently Issued Accounting Pronouncements:

During April 2009, the FASB issued FASB Staff Position (“FSP”) FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” The FSP requires disclosures about fair values of financial instruments for interim reporting periods of publicly traded companies and is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We do not expect the adoption of FSP FAS 107-1 and APB 28-1 to have a material impact on our consolidated financial statements.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” was issued in April 2009. FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with FAS 157, when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. The FSP is effective for interim and annual reporting periods ending after June 15, 2009 and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. We do not expect the adoption of FSP FAS 157-4 to have a material impact on our consolidated financial statements.

FSP FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” was issued in April 2009. This FSP amends and clarifies FAS 141 to address application issues on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. FSP FAS 141(R)-1 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We do not expect the adoption of FSP FAS 141(R)-1 to have a material impact on our consolidated financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”. This FSP provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities and is effective for interim and annual reporting periods ending after June 15, 2009, applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. We do not expect the adoption of FSP FAS 115-2 and FAS 124-2 to have a material impact on our consolidated financial statements.

Note 3. Loans Receivable, net:

Loans receivable, net, consisted of the following:

		March 31,				December 31,
		2009				2008
		(In thousands)
Commercial mortgage loans (1)		$	150,185			$	138,858
SBIC commercial mortgage loans (2)			27,054				27,311
SBA 7(a) Program loans			12,465				11,444
SBA 7(a) Program loans held for sale			4,368				2,992
Total loans receivable			194,072				180,605
Less:
Deferred commitment fees, net			(262	)			(318	)
Loan loss reserves			(616	)			(480	)
Loans receivable, net		$	193,194			$	179,807

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The activity in our loan loss reserves was as follows:

		Three Months Ended
		March 31,
		2009				2008
		(In thousands)
Balance, beginning of year		$	480			$	42
Provision for loan losses			147				73
Principal balances written-off, net			(11	)			—
Balance, end of period		$	616			$	115

Impaired loans are defined by generally accepted accounting principles as loans for which it is probable that the lender will be unable to collect all amounts due according to the original contractual terms of the loan. Information on those loans considered to be impaired loans was as follows:

		March 31,				December 31,
		2009				2008
		(In thousands)
Impaired loans requiring reserves		$	2,541			$	2,492
Impaired loans expected to be fully recoverable			4,510				2,374
Total impaired loans		$	7,051			$	4,866

		Three Months Ended
		March 31,
		2009				2008
		(In thousands)
Average impaired loans		$	6,852			$	692
Interest income on impaired loans		$	8			$	32

Our recorded investment in non-accrual loans at March 31, 2009 and December 31, 2008 was approximately $7.2 million and $5.1 million, respectively. We did not have any loans past due 90 days or more which were accruing interest at March 31, 2009 or December 31, 2008.

Note 4. Retained Interests:

We own subordinated financial interests in several non-consolidated QSPEs (i.e., retained interests in transferred assets (“Retained Interests”)). The QSPEs are PMC Capital, L.P. 1998-1 (the “1998 Partnership”), PMC Joint Venture, L.P. 2000 (the “2000 Joint Venture”) and the 2003 Joint Venture created in connection with structured loan sale transactions. In our structured loan sale transactions, we contributed loans receivable to a QSPE in exchange for cash and beneficial interests in that entity. The QSPE issued notes payable (the “Structured Notes”) to unaffiliated parties (“Structured Noteholders”).

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Information pertaining to our structured loan sale transactions as of March 31, 2009 was as follows:

						2000				2003
		1998				Joint				Joint
		Partnership				Venture				Venture
		(Dollars in thousands)
Principal outstanding on sold loans		$	7,990			$	25,046			$	20,926
Structured Notes balance outstanding		$	7,663			$	16,870			$	10,654
Cash in the collection account		$	150			$	359			$	178
Cash in the reserve account		$	1,330			$	1,675			$	2,207
Structured Notes outstanding for “clean-up” call (1)		$	4,186			$	7,451			$	9,289
Weighted average interest rate of loans (2)			P+1.55	%			9.46	%			L+4.02	%
Interest rate on Structured Notes			P-1.00	%			7.28	%			L+1.25	%
Discount rate assumptions (3)		6.0% to 15.4%				9.1% to 15.4%				6.0% to 15.6%
Constant prepayment rate assumption (4)			12.00	%			12.00	%			12.00	%
Weighted average remaining life of Retained Interests (5)		2.43 years				1.71 years				0.20 years
Aggregate principal losses assumed (6)			1.45	%			1.46	%			—
Aggregate principal losses to date (7)			—				1.65	%			—

First Western SBLC, Inc. (“First Western”) has Retained Interests related to the sale of loans originated pursuant to the Small Business Administration’s (“SBA”) 7(a) Program. We expect the SBA guaranteed portions of First Western’s loans to be sold to either dealers in government guaranteed loans or institutional investors (“Secondary Market Loan Sales”) as the loans are fully funded. On Secondary Market Loan Sales, we may retain an excess spread between the interest rate paid to us from our borrowers and the rate we pay to the purchaser of the guaranteed portion of the note and servicing costs. At March 31, 2009, the aggregate principal balance of First Western’s serviced loans on which we had an excess spread was approximately $26.5 million and the weighted average excess spread was approximately 0.5%. In determining the fair value of our Retained Interests related to Secondary Market Loan Sales, our assumptions at March 31, 2009 included a prepayment speed of 15% per annum and a discount rate of 15.4%.

The components of our Retained Interests are the (1) required overcollateralization (the “OC piece”), (2) “reserve fund” and the interest earned thereon and (3) interest-only strip receivable (the “IO Receivable”).

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Our Retained Interests consisted of the following:

		March 31, 2009
		Estimated Fair Value
		OC Piece				Reserve Fund				IO Receivable				Total				Cost
		(In thousands)
First Western		$	—			$	—			$	386			$	386			$	293
1998 Partnership			431				910				242				1,583				1,484
2000 Joint Venture			8,434				1,367				292				10,093				9,774
2003 Joint Venture			10,378				2,168				134				12,680				12,484
		$	19,243			$	4,445			$	1,054			$	24,742			$	24,035

		December 31, 2008
		Estimated Fair Value
		OC Piece				Reserve Fund				IO Receivable				Total				Cost
		(In thousands)
First Western		$	—			$	—			$	315			$	315			$	315
1998 Partnership			443				916				249				1,608				1,514
2000 Joint Venture			8,372				1,381				315				10,068				9,834
2002 Joint Venture			7,223				1,392				141				8,756				8,671
2003 Joint Venture			10,397				1,971				133				12,501				12,294
		$	26,435			$	5,660			$	1,153			$	33,248			$	32,628

The difference between the estimated fair value and cost of our Retained Interests is reflected in our consolidated balance sheets as unrealized appreciation of Retained Interests.

The following sensitivity analysis of our Retained Interests as of March 31, 2009 highlights the volatility that results when losses and discount rates are different than our assumptions:

		Estimated				Asset
Changed Assumption		Fair Value				Change (1)
		(In thousands)
Losses increase by 50 basis points per annum (2)		$	24,491				($251	)
Losses increase by 100 basis points per annum (2)		$	24,264				($478	)
Discount rates increase by 300 basis points		$	23,944				($798	)
Discount rates increase by 500 basis points		$	23,444				($1,298	)

Due to the short-term weighted average remaining life of our Retained Interests and the diminishing value of our interest-only strip receivables, there is no material asset change for increases in prepayment rates.

These sensitivities are hypothetical and should be used with caution. Values based on changes in these assumptions generally cannot be extrapolated since the relationship of the change in an assumption to the change in fair value is not linear. The effect of a variation in a particular assumption on the fair value of our Retained Interests is calculated without changing any other assumption. In reality, changes in one factor are not isolated from changes in another which might magnify or counteract the sensitivities.

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Our consolidated financial statements do not include the assets, liabilities, partners’ capital, revenues or expenses of the QSPEs. As a result, at March 31, 2009 and December 31, 2008 our consolidated balance sheets do not include $60.1 million and $77.6 million of assets, respectively, and $35.3 million and $44.0 million of liabilities, respectively, related to our structured loan sale transactions recorded by the QSPEs. At March 31, 2009, the partners’ capital of the QSPEs was approximately $24.8 million and the estimated fair value of the associated Retained Interests was approximately $24.4 million.

The annualized yield on our Retained Interests, which is comprised of the income earned less permanent impairments, was 10.6% and 11.4% during the three months ended March 31, 2009 and 2008, respectively.

Note 5. Debt:

Information on our consolidated debt was as follows:

																						Weighted Average
		March 31, 2009								December 31, 2008												Coupon Rate at
		Face				Carrying				Face				Carrying				Range of				March 31,				December 31,
		Amount				Value				Amount				Value				Maturities				2009				2008
		(Dollars in thousands)
Structured notes and debentures payable:
Debentures		$	8,190			$	8,169			$	8,190			$	8,168				2013 to 2015				5.90	%			5.90	%
Structured notes (1)			5,431				5,431				—				—				(1	)			6.67	%			N/A
			13,621				13,600				8,190				8,168
Junior subordinated notes			27,070				27,070				27,070				27,070				2035				4.72	%			7.01	%
Revolving credit facility			27,000				27,000				22,700				22,700				2009				2.50	%			2.50	%
Redeemable preferred stock of subsidiary			4,000				3,904				4,000				3,876				2009 to 2010				4.00	%			4.00	%
Debt		$	71,691			$	71,574			$	61,960			$	61,814

Note 6. Earnings Per Share:

The computations of basic earnings per common share are based on our weighted average shares outstanding. The weighted average number of common shares outstanding was 10,650,000 and 10,765,000 for the three months ended March 31, 2009 and 2008, respectively. During the three months ended March 31, 2009 and 2008, no shares were added to the weighted average shares outstanding for purposes of calculating diluted earnings per share as options were anti-dilutive. Not included in the computation of diluted earnings per share were outstanding options to purchase approximately 59,000 and 99,000 common shares during the three months ended March 31, 2009 and 2008, respectively, because the options’ exercise prices were greater than the average market price of the shares.

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 7. Dividends Declared:

The Board of Trust Managers declared a $0.225 per common share quarterly dividend to common shareholders of record on March 31, 2009, which was paid on April 13, 2009.

We have certain covenants within our revolving credit facility which limit our ability to pay out returns of capital as part of our dividends. These restrictions have not historically limited the amount of dividends we have paid and management does not believe that they will restrict future dividend payments.

Note 8. Share Repurchase Program:

Our Board of Trust Managers authorized a share repurchase program for up to $10.0 million for the purchase of outstanding common shares which expires September 26, 2010. The common shares may be purchased from time to time in the open market or pursuant to negotiated transactions. As of April 30, 2009, we had repurchased 230,352 shares under the share repurchase program for an aggregate purchase price of approximately $1,529,000, including commissions.

Note 9. Income Taxes:

PMC Commercial has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT, PMC Commercial must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our shareholders. As a REIT, PMC Commercial generally will not be subject to corporate level Federal income tax on net income that is currently distributed to shareholders. In order to meet our 2008 taxable income distribution requirements, we will make an election under the Code to treat a portion of the distributions declared in 2009 as distributions of 2008’s REIT taxable income.

PMC Commercial has wholly-owned taxable REIT subsidiaries (“TRS’s”) which are subject to Federal income taxes. The income generated from the TRS’s is taxed at normal corporate rates.

Note 10. Restructuring Costs:

In October 2008, due to economic and market conditions, we announced a number of cost reduction initiatives. These initiatives included streamlining our sales, credit and servicing, as well as outsourcing some functions. These changes resulted in one-time severance related charges of approximately $1.8 million during 2008. We paid approximately $1.4 million of this severance during April 2009.

The table below summarizes the balance of accrued severance and related benefits, which is included in the balance of accounts payable and accrued expenses in the consolidated balance sheets, and the changes in the accrued amounts as of and for the three months ended March 31, 2009 (in thousands):

Accrued balance at December 31, 2008		$	1,596
Payments			(23	)
Accrued balance at March 31, 2009		$	1,573

Note 11. Fair Value Measurements:

At March 31, 2009, Retained Interests was our only asset that is required to be measured at fair value on a recurring basis. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In general, quoted market prices from active markets for the identical asset (“Level 1” inputs), if available, should be used to value an asset. If quoted prices are not available for the identical asset, then a determination should be made if “Level 2” inputs are available. “Level 2” inputs include quoted prices for similar assets in active markets or for identical or similar assets in markets that are not active (i.e., markets in which there are few transactions for the asset, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is little or no market information for our Retained Interests, thus there are no “Level 1” or “Level 2” determinations available. “Level 3” inputs are unobservable inputs for the asset. Unobservable inputs are used to measure fair value when observable inputs are not available. These inputs include our expectations about the assumptions that market participants would use in pricing the asset in a current transaction.

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

We use “Level 3” inputs to determine the estimated fair value of our Retained Interests. The following is activity for our Retained Interests:

		Three Months Ended
		March 31,
		2009				2008
		(In thousands)
Value, beginning of period		$	33,248			$	48,616
Principal collections			(103	)			(660	)
Realized gains included in net income (1)			(15	)			(60	)
Investments			135				25
Permanent impairments			(60	)			(281	)
Consolidation (2)			(8,565	)			—
Unrealized appreciation			102				222
Value, end of period		$	24,742			$	47,862
Cost, end of period		$	24,035			$	45,755

We may be required, from time to time, to measure certain other assets at fair value on a nonrecurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from loan loss reserves on individual loans. For financial and nonfinancial assets measured at fair value on a nonrecurring basis during the three months ended March 31, 2009 and 2008, the following table provides the carrying value of the related individual assets at quarter end. We use “Level 3” inputs to determine the estimated fair value of our impaired loans.

										Provision for
										Loan Losses
		Carrying value at								Three Months Ended
		March 31,								March 31,
		2009				2008				2009				2008
		(In thousands)
Impaired loans (1)		$	6,868			$	2,051			$	53			$	17

Note 12. Commitments and Contingencies:

Loan Commitments

Commitments to extend credit are agreements to lend to a customer provided the terms established in the contract are met. Our outstanding loan commitments and approvals to fund loans were approximately $6.7 million at March 31, 2009, all of which were for prime-based loans to be originated by First Western, the government guaranteed portion of which may be sold pursuant to Secondary Market Loan Sales. Commitments generally have fixed expiration dates. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Operating Lease

We lease office space in Dallas, Texas under a lease which expires in October 2011. Future minimum lease payments under this lease are as follows:

Twelve Months Ending
March 31,		Total
		(In thousands)
2010		$	206
2011			217
2012			131
		$	554

Employment Agreements

We have employment agreements with our executive officers for three-year terms expiring June 30, 2011. In the event of a change in responsibilities, as defined, during the employment period, the agreements provide for severance compensation to the executive officer in a lump sum payment in an amount equal to 2.99 times the average of the last three years annual compensation paid to the executive officer.

Structured Loan Sale Transactions

The documents of the structured loan sale transactions contain provisions (the “Credit Enhancement Provisions”) that govern the assets and the inflow and outflow of funds of the entities originally formed as part of the structured loan sale transactions. The Credit Enhancement Provisions include specified limits on the delinquency rates on the loans included in each structured loan sale transaction. If, at any measurement date, the delinquency rate with respect to any structured loan sale transaction were to exceed the specified limits, the Credit Enhancement Provisions would automatically increase the level of credit enhancement requirements for that structured loan sale transaction. During the period in which the specified delinquency rate was exceeded, excess cash flow from the entity, if any, which would otherwise be distributable to us, would be used to fund the increased credit enhancement levels up to the principal amount of such loans and would delay or reduce our distribution. In general, there can be no assurance that amounts deferred under Credit Enhancement Provisions would be received in future periods or that future deferrals or losses will not occur. As a result of delinquent and impaired loans in the 2002 Joint Venture and the 2003 Joint Venture, Credit Enhancement Provisions were triggered during the first quarter of 2009. As a consequence, cash flows related to these transactions were deferred and utilized to fund the increased reserve requirements. Based on current cash flow assumptions, management anticipates that the funds from the 2002 Joint Venture will be received in future periods. For the 2003 Joint Venture, management anticipates that the funds will be received in future periods or used to repay the structured notes based on timing of attainment of the “clean-up” call option.

Litigation

We had significant outstanding claims against Arlington Hospitality, Inc.’s and its subsidiary, Arlington Inns, Inc.’s (together “Arlington”) bankruptcy estates. Arlington objected to our claims and initiated a complaint in the bankruptcy seeking, among other things, the return of payments Arlington made pursuant to the property leases and the master lease agreement.

PMC COMMERCIAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

While confident that a substantial portion of our claims would have been allowed and the claims against us would have been disallowed, due to the exorbitant cost of defense coupled with the likelihood of reduced available assets in the debtors’ estates to pay claims, we executed an agreement with Arlington to settle our claims against Arlington and Arlington’s claims against us. The settlement provides that Arlington will dismiss its claims seeking the return of certain payments made pursuant to the property leases and master lease agreement and substantially reduces our claims against the Arlington estates. The settlement further provides for mutual releases among the parties. The Bankruptcy Court approved the settlement. Accordingly, there are no remaining assets or liabilities recorded in the accompanying consolidated financial statements related to this matter. However, the settlement will only become final upon the Bankruptcy Court’s approval of Arlington’s liquidation plan which was filed during the third quarter of 2007. Due to the complexity of the bankruptcy, we cannot estimate when, or if, the liquidation plan will be approved.

In the normal course of business we are periodically party to certain legal actions and proceedings involving matters that are generally incidental to our business (i.e., collection of loans receivable). In management’s opinion, the resolution of these legal actions and proceedings will not have a material adverse effect on our consolidated financial statements.

Other

If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by First Western, the SBA may seek recovery of funds from us. With respect to the guaranteed portion of SBA loans that have been sold, the SBA will first honor its guarantee and then seek compensation from us in the event that a loss is deemed to be attributable to technical deficiencies.

ITEM 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “believe,” “anticipate,” “estimate,” or “continue,” or the negative thereof or other variations or similar words or phrases. These statements include the plans and objectives of management for future operations, including, but not limited to, plans and objectives relating to future growth of the loan portfolio and availability of funds. The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attained. For a description of certain factors that could cause our future results to differ materially from those expressed in any such forward-looking statement, see “Recent Developments and Trends That May Affect our Business.” Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not undertake to update them to reflect changes that occur after the date they are made.

The following discussion of our financial condition at March 31, 2009 and results of operations for the three months ended March 31, 2009 and 2008 should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2008. For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.

RECENT DEVELOPMENTS AND TRENDS THAT MAY AFFECT OUR BUSINESS

The following provides an update of our recent developments and trends that may affect our business included in our Annual Report on Form 10-K for the year ended December 31, 2008 that may have an impact on our financial condition and results of operations. The factors described below could impact the volume of loan originations, the income we earn on our assets, our liquidity and growth potential, the performance of our loans and/or the performance of the QSPEs.

Economic Environment

In response to market disruptions, legislators and financial regulators implemented a number of mechanisms designed to add stability and/or liquidity to the financial markets. The overall effects of these and other legislative and regulatory efforts on the financial markets is uncertain. Should these initiatives fail, our business, financial condition, results of operations and prospects could be materially adversely affected.

Impact on us

In the short-term, we believe the current economic environment will provide increasing challenges to our industry, us and the general economy. We continue to believe our commercial lending business has strong long-term fundamentals. However, due to the economic uncertainties, we continue to experience the following:

	•		Loan origination limitations;
	•		Reduced operating margins due to lack of economies of scale;
	•		Limited access to capital, and if such capital is available, at increased costs that may be significant;
	•		An increase in non-performing loans and watch list assets;
	•		An increase in loan loss reserves;
	•		An inability to engage in structured loan transactions; and
	•		Reduced cash available for distribution to shareholders, particularly as our portfolio yield is reduced by lower variable interest rates, scheduled maturities, prepayments and non-performing loans.

Liquidity Overview

Our revolving credit facility matures December 31, 2009. We are currently negotiating to extend the maturity date of our revolving credit facility; however, the credit markets remain extremely illiquid which may make it difficult and possibly cost prohibitive to extend our revolving credit facility. We believe that our revolving credit facility will be extended until at least December 31, 2010. However, the aggregate amount available under our revolving credit facility may decrease and/or the cost of the revolving credit facility, including any up-front costs and ongoing interest expense and/or unused fees, could increase. We believe our current capital needs can be met by our $45 million revolving credit facility. To the extent we need additional capital, there can be no assurance that we would be able to increase the amount available under our revolving credit facility or identify other sources of funds with acceptable terms. We have availability under our revolving credit facility; however, the limited amount of capital available to originate new loans has caused us to significantly restrict non-SBA 7(a) Program loan origination activity. As a result, all of our outstanding loan commitments are for SBA 7(a) Program loans.

Strategic Alternatives

The credit and capital market environment remains unstable so we continue to review and analyze potential strategic and liquidity alternatives. While we continue to explore and evaluate future opportunities as they present themselves, our primary focus is presently on maximizing the value of our current investment portfolio and business strategy. Alternatives that we continue to evaluate include the potential benefits that we could achieve through investment in, acquisition of, or conversion to, a bank. There are significant obstacles in becoming a bank including legal, regulatory and shareholder approvals. However, given current market conditions and valuations for commercial mortgage REITs, we will continue to evaluate whether the benefits outweigh the risks.

Current Reliance on the SBA 7(a) Program

We are focusing on origination of SBA 7(a) Program loans which require less capital due to the ability to sell the government guaranteed portion of such loans. We utilize the SBA 7(a) Program to originate small business loans and then sell the government guaranteed portion to investors who then bundle and sell those loans using the asset-backed securities market. During April 2009, we sold approximately $4.5 million (guaranteed portion) of SBA 7(a) Program loans.

The American Recovery and Reinvestment Act (the “Stimulus Bill”) was passed in February 2009. The Stimulus Bill contains provisions that benefit the SBA which may have a positive impact on our lending operations. The Stimulus Bill provided the SBA with funding to eliminate fees on SBA 7(a) Program loans and provided increased SBA guarantee percentages on SBA 7(a) Program loans of up to 90% for certain loans. These program changes are expected to be in effect for the remainder of 2009. In addition, the Stimulus Bill established a “Secondary Market Lending Authority” which may make direct loans to broker-dealers that participate in the secondary market for SBA 7(a) Program loans and provides for the ability to establish a secondary market for pools of “first lien” loans under the 504 program. The Stimulus Bill authorized the SBA to deploy federal guarantees for pools of these “first lien” loans so that they could be sold to investors in a secondary market.

We believe these initiatives will increase the volume and profitability of our SBA 7(a) Program in the short-term. In addition, we believe our liquidity has been, and will continue to be, benefitted through a more active secondary market.

Cost Reduction Initiatives

In October 2008, due to economic and market conditions, we announced cost reduction initiatives. These initiatives included streamlining our sales, credit and servicing, as well as outsourcing some functions. Management estimates annual savings for these initiatives to be approximately $1.0 million to $1.2 million which will primarily be a reduction of salaries and related benefits on our consolidated income statement.

Loan Portfolio Performance

Our aggregate portfolio continues to have minimal loan losses; however, we believe that worsening economic conditions have subjected our borrowers to financial stress. We have seen an increase in payment delinquencies, slow pays, insufficient funds payments, late fees, non-payment of real estate taxes and borrower requests for deferments of payment of principal and interest. Our recorded investment in non-accrual loans increased from $5,062,000 (2.8% of our retained loans) at December 31, 2008 to $7,229,000 (3.7% of our retained loans) at March 31, 2009. Additional changes to the facts and circumstances of the individual borrowers, the limited service hospitality industry and the economy may require the establishment of significant additional loan loss reserves and the effect on our results of operations and financial condition may be material.

We are currently in the process of foreclosure proceedings on several properties, primarily limited service hospitality properties, collateralizing our serviced loans. Historically, many borrowers have brought their loans current; thus, we stopped the foreclosure process. It is difficult to determine what impact the current market disruptions will have on our borrowers whose collateral is in the process of foreclosure and the borrowers’ ability to become current on their loans. We estimate that the foreclosure processes will be completed within six to eighteen months; however, foreclosure is a complex and generally time consuming process that is subject to state laws and regulations.

Loan Activity

During the first three months of 2009 we funded approximately $3.5 million of loans. We anticipate that our fundings during 2009 will be between $20 million and $30 million. We have been concentrating on longer-term loan originations with real estate for collateral and are now targeting loans between $500,000 and $2,000,000. However, there remains significant competition for SBA 7(a) Program loans from banks that are willing and able to provide lower interest rate terms than us primarily due to fees generated from other bank products.

We had a significant amount of prepayments of our serviced loans during the past three years. The result has been a reduction in our total serviced portfolio outstanding from its peak of approximately $498 million during 2004 to approximately $275 million at March 31, 2009. Our prepayment activity slowed during the last half of 2008 and the first quarter of 2009 and we expect that the amount of prepayments will continue at this level during 2009 or be further reduced. There were no prepayments of our retained loans during the first quarter of 2009.

In addition to our retained portfolio of $194 million, at March 31, 2009, we service approximately $81 million of aggregate principal balance remaining on loans that were sold in structured loan sale transactions and Secondary Market Loan Sales. Since we retain a residual interest in the cash flows from these sold loans, the performance of these loans impacts our profitability and our cash available for dividend distributions. Therefore, we provide information on both our loans retained (the “Retained Portfolio”) and combined with sold loans that we service (the “Serviced Portfolio”).

Information on our Serviced Portfolio, including prepayment trends, was as follows:

		March 31,				December 31,
		2009				2008				2007				2006				2005				2004
		(Dollars in thousands)
Serviced Portfolio (1)		$	275,014			$	275,530			$	326,368			$	397,567			$	447,220			$	468,158
Loans funded		$	3,536			$	34,587			$	33,756			$	51,686			$	49,942			$	49,733
Prepayments (2)		$	787			$	68,556			$	84,137			$	91,710			$	41,049			$	15,931
% Prepayments (3) (4)			0.3	%			21.0	%			21.2	%			20.5	%			8.8	%			3.2	%

LOAN PORTFOLIO INFORMATION AND STATISTICS

General

Loans funded during the first three months of 2009 were approximately $3.5 million, which is significantly less than the $17.1 million of loans we funded during the comparable period of 2008. We currently anticipate loan fundings to be between $20 million and $30 million during 2009. At March 31, 2009, December 31, 2008 and March 31, 2008, our outstanding commitments to fund loans were approximately $6.7 million, $10.0 million and $23.1 million, respectively. All of our current commitments are for variable-rate SBA 7(a) Program loans based on the prime rate which provide an interest rate match with our present sources of funds and these loans also provide an SBA guarantee for a portion of the loan amount. Due to our enhanced marketing efforts and the Stimulus Bill which eliminated fees on SBA 7(a) Program loans, we have seen an increase in our outstanding commitments to funds loans. As of April 30, 2009, our outstanding commitments to funds loans were approximately $12.0 million.

Loan Portfolio Rollforward

Loans originated and principal repayments on our Retained Portfolio were as follows:

		Three Months Ended
		March 31,
		2009				2008
		(In thousands)
Loans Originated:
Loans Funded:
SBA 7(a) Program loans		$	3,536			$	1,751
Commercial mortgage loans			—				13,440
SBA 504 program loans			—				1,945
Total loans funded			3,536				17,136
Other Loan Transactions:
2002 Joint Venture (1)			12,570				—
Total loans originated		$	16,106			$	17,136
Principal Repayments:
Scheduled principal payments		$	1,829			$	728
Proceeds from the sale of SBA 7(a) guaranteed loans			783				1,016
Prepayments			—				8,956
Total principal repayments		$	2,612			$	10,700

Interest Rate and Yield Information

Interest rate and yield information on our Retained Portfolio was as follows:

		March 31,				December 31,				March 31,
		2009				2008				2008
Weighted average contractual interest rate			6.2	%			7.7	%			8.3	%
Annualized average yield (1) (2)			5.9	%			8.4	%			8.8	%

The LIBOR and the prime rate used in determining interest rates to be charged to our borrowers during the second quarter of 2009 (set on April 1, 2009) is 1.21% and 3.25%, respectively, while the LIBOR and prime rate charged during the first quarter of 2009 (set on January 1, 2009) was 1.44% and 3.25%, respectively. To the extent LIBOR or the prime rate changes, we will have changes in interest income from our variable-rate loans.

The weighted average contractual interest rate on our Serviced Portfolio was 6.3%, 7.9% and 8.7% at March 31, 2009, December 31, 2008 and March 31, 2008, respectively.

Retained Portfolio Breakdown

Our Retained Portfolio was comprised of the following:

		March 31, 2009												December 31, 2008
										Weighted												Weighted
										Average												Average
		Retained Portfolio								Interest				Retained Portfolio								Interest
		Amount				%				Rate				Amount				%				Rate
		(Dollars in thousands)
Variable-rate — LIBOR		$	121,839				63.1	%			5.0	%		$	123,081				68.4	%			7.5	%
Fixed-rate (1)			50,885				26.3	%			9.1	%			39,297				21.9	%			9.0	%
Variable-rate — prime			20,470				10.6	%			5.3	%			17,429				9.7	%			6.9	%
		$	193,194				100.0	%			6.2	%		$	179,807				100.0	%			7.7	%

Impaired Loan Data

Senior management closely monitors our impaired loans which are classified into two categories: Problem Loans and Special Mention Loans (together, “Impaired Loans”). Our Problem Loans are loans which are not complying with their contractual terms, the collection of the balance of the principal is considered unlikely and on which the fair value of the collateral is less than the remaining unamortized principal balance. Our Special Mention Loans are those loans that are either not complying or had previously not complied with their contractual terms but, in general, we expect a full recovery of the principal balance through either collection efforts or liquidation of collateral.

Our Impaired Loans were as follows (balances represent our investment in the loans prior to loan loss reserves and deferred commitment fees):

		March 31,				December 31,
		2009				2008
		(Dollars in thousands)
Problem Loans:
Loans receivable		$	2,553			$	2,501
Sold loans of QSPEs (1)			—				—
		$	2,553			$	2,501
Special Mention Loans:
Loans receivable		$	9,073			$	9,294
Sold loans of QSPEs (1)			1,551				1,544
		$	10,624			$	10,838
Percentage Problem Loans:
Loans receivable			1.3	%			1.4	%
Sold loans of QSPEs (1)			—				—
Percentage Special Mention Loans:
Loans receivable			4.7	%			5.2	%
Sold loans of QSPEs (1)			2.9	%			2.3	%