Loans Receivable, Net

6 Months Ended

Jun. 30, 2011

Loans Receivable, Net

Loans Receivable, Net

Note 5. Loans Receivable, Net

Loans receivable, net at June 30, 2011 and December 31, 2010 consisted of the following (in thousands):

	June 30, 2011			December 31, 2010
Real estate:
One-to-four family	$	917,845		$	955,063
Commercial real estate, multi family and land		461,951			435,127
Construction		9,037			13,748
Consumer		198,943			205,725
Commercial		52,913			76,692
Total loans		1,640,689			1,686,355
Loans in process		(1,839	)		(4,055	)
Deferred origination costs, net		4,729			4,862
Allowance for loan losses		(21,454	)		(19,700	)
Total loans, net		1,622,125			1,667,462
Less: Mortgage loans held for sale		4,313			6,674
Loans receivable, net	$	1,617,812		$	1,660,788

An analysis of the allowance for loan losses for the three and six months ended June 30, 2011 and 2010 is as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance at beginning of period	$	20,430		$	15,632		$	19,700		$	14,723
Provision charged to operations		2,200			2,200			3,900			4,400
Charge-offs		(1,186	)		(708	)		(2,162	)		(2,089	)
Recoveries		10			22			16			112
Balance at end of period	$	21,454		$	17,146		$	21,454		$	17,146

The following table presents an analysis of the allowance for loan losses for the three and six months ended June 30, 2011 and the balance in the allowance for loan loses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2011 and December 31, 2010 (in thousands):

	Residential Real Estate			Commercial Real Estate			Consumer			Commercial			Unallocated			Total
For the three months ended June 30, 2011
Allowance for loan losses:
Balance at beginning of period	$	5,854		$	7,482		$	3,389		$	1,099		$	2,606		$	20,430
Provision (benefit) charged to operations		787			726			916			(157	)		(72	)		2,200
Charge-offs		(179	)		(979	)		(28	)		—			—			(1,186	)
Recoveries		7			—			—			3			—			10
Balance at end of period	$	6,469		$	7,229		$	4,277		$	945		$	2,534		$	21,454
For the six months ended June 30, 2011
Allowance for loan losses:
Balance at beginning of period	$	5,977		$	6,837		$	3,264		$	962		$	2,660		$	19,700
Provision (benefit) charged to operations		936			1,909			1,062			119			(126	)		3,900
Charge-offs		(455	)		(1,517	)		(50	)		(140	)		—			(2,162	)
Recoveries		11			—			1			4			—			16
Balance at end of period	$	6,469		$	7,229		$	4,277		$	945		$	2,534		$	21,454
Allowance for loan losses:
Ending allowance balance attributed to loans:
Individually evaluated for impairment	$	—		$	925		$	—		$	—		$	—		$	925
Collectively evaluated for impairment		6,469			6,304			4,277			945			2,534			20,529
Total ending allowance balance	$	6,469		$	7,229		$	4,277		$	945		$	2,534		$	21,454
Loans:
Loans individually evaluated for impairment	$	—		$	10,152		$	—		$	302		$	—		$	10,454
Loans collectively evaluated for impairment		922,569			451,799			198,943			52,611			—			1,625,922
Total ending loan balance	$	922,569		$	461,951		$	198,943		$	52,913		$	—		$	1,636,376
	Residential Real Estate			Commercial Real Estate			Consumer			Commercial			Unallocated			Total
December 31, 2010
Allowance for loan losses:
Ending allowance balance attributed to loans:
Individually evaluated for impairment	$	—		$	1,988		$	—		$	—		$	—		$	1,988
Collectively evaluated for impairment		5,977			4,849			3,264			962			2,660			17,712
Total ending allowance balance	$	5,977		$	6,837		$	3,264		$	962		$	2,660		$	19,700
Loans:
Loans individually evaluated for impairment	$	—		$	4,673		$	—		$	—		$	—		$	4,673
Loans collectively evaluated for impairment		962,137			430,454			205,725			76,692			—			1,675,008
Total ending loan balance	$	962,137		$	435,127		$	205,725		$	76,692		$	—		$	1,679,681

A summary of impaired loans at June 30, 2011 and December 31, 2010 is as follows (in thousands):

	June 30,		December 31,
	2011		2010
Impaired loans with no allocated allowance for loan losses	$	4,004	$	—
Impaired loans with allocated allowance for loan losses		6,450		4,673
	$	10,454	$	4,673
Amount of the allowance for loan losses allocated	$	925	$	1,988

The summary of loans individually evaluated for impairment by class of loans for the three and six months ended June 30, 2011 and as of June 30, 2011 and December 31, 2010 follows (in thousands):

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
Three months ended June 30, 2011
With no related allowance recorded:
Commercial real estate:
Commercial	$	3,702	$	3,702	$	—	$	2,368	$	—
Construction and land		—		—		—		—		—
Commercial		302		302		—		101		—
	$	4,004	$	4,004	$	—	$	2,469	$	—
With an allowance recorded:
Commercial real estate:
Commercial	$	6,450	$	6,450	$	925	$	3,336	$	—
Construction and land		—		—		—		856		—
Commercial		—		—		—		—		—
	$	6,450	$	6,450	$	925	$	4,192	$	—
Six months ended June 30, 2011
With no related allowance recorded:
Commercial real estate:
Commercial	$	3,702	$	3,702	$	—	$	1,184	$	—
Construction and land		—		—		—		—		—
Commercial		302		302		—		50		—
	$	4,004	$	4,004	$	—	$	1,234	$	—
With an allowance recorded:
Commercial real estate:
Commercial	$	6,450	$	6,450	$	925	$	2,493	$	—
Construction and land		—		—		—		1,712		—
Commercial		—		—		—		—		—
	$	6,450	$	6,450	$	925	$	4,205	$	—
December 31, 2010
With no related allowance recorded:
Commercial real estate:
Commercial	$	—	$	—	$	—
Construction and land		—		—		—
Commercial		—		—		—
	$	—	$	—	$	—
With an allowance recorded:
Commercial real estate:
Commercial	$	2,104	$	2,104	$	988
Construction and land		2,569		2,569		1,000
Commercial		—		—		—
	$	4,673	$	4,673	$	1,988

The following table presents the recorded investment in non-accrual loans by class of loans as of June 30, 2011 and December 31, 2010 (in thousands):

	Recorded Investment in Non-accrual Loans
	June 30, 2011		December 31, 2010
Residential real estate:
Originated by Bank	$	26,657	$	22,707
Originated by Columbia		4,364		3,870
Residential construction		68		368
Commercial real estate:
Commercial		10,436		3,280
Construction and land		—		2,569
Consumer		4,769		4,626
Commercial		420		117
	$	46,714	$	37,537

As used in these footnotes, the residential real estate originated by the Bank includes purchased loans which were originated under the Bank's underwriting guidelines.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2011 and December 31, 2010 by class of loans (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
June 30, 2011
Residential real estate:
Originated by Bank	$	11,057	$	2,150	$	25,223	$	38,430	$	869,045	$	907,475
Originated by Columbia		343		78		4,052		4,473		1,584		6,057
Residential construction		—		—		68		68		8,969		9,037
Commercial real estate:
Commercial		1,395		—		10,436		11,831		434,669		446,500
Construction and land		—		—		—		—		15,451		15,451
Consumer		963		458		4,273		5,694		193,249		198,943
Commercial		—		—		420		420		52,493		52,913
	$	13,758	$	2,686	$	44,472	$	60,916	$	1,575,460	$	1,636,376
December 31, 2010
Residential real estate:
Originated by Bank	$	9,232	$	1,958	$	20,971	$	32,161	$	909,436	$	941,597
Originated by Columbia		953		1,532		3,240		5,725		1,067		6,792
Residential construction		—		—		368		368		13,380		13,748
Commercial real estate:
Commercial		870		—		2,611		3,481		406,549		410,030
Construction and land		—		—		2,569		2,569		22,528		25,097
Consumer		2,036		241		4,093		6,370		199,355		205,725
Commercial		—		—		117		117		76,575		76,692
	$	13,091	$	3,731	$	33,969	$	50,791	$	1,628,890	$	1,679,681

The Company categorizes all commercial and commercial real estate loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation and current economic trends, among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass related loans. Loans not rated are included in groups of homogeneous loans. As of June 30, 2011 and December 31, 2010, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
June 30, 2011
Commercial real estate:
Commercial	$	412,728	$	8,926	$	24,846	$	—	$	446,500
Construction and land		15,451		—		—		—		15,451
Commercial		50,091		2,497		325		—		52,913
	$	478,270	$	11,423	$	25,171	$	—	$	514,864
December 31, 2010
Commercial real estate:
Commercial	$	376,902	$	10,856	$	22,272	$	—	$	410,030
Construction and land		22,528		—		1,100		1,469		25,097
Commercial		71,797		1,974		2,921		—		76,692
	$	471,227	$	12,830	$	26,293	$	1,469	$	511,819

For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of June 30, 2011 and December 31, 2010 (in thousands):

	Residential Real Estate
	Originated by Bank		Originated by Columbia		Residential Construction		Consumer
June 30, 2011
Performing	$	880,818	$	1,693	$	8,969	$	194,174
Non-performing		26,657		4,364		68		4,769
	$	907,475	$	6,057	$	9,037	$	198,943
December 31, 2010
Performing	$	918,890	$	2,922	$	13,380	$	201,099
Non-performing		22,707		3,870		368		4,626
	$	941,597	$	6,792	$	13,748	$	205,725

The Company classifies certain loans as troubled debt restructurings ("TDR") when credit terms to a borrower in financial difficulty are modified. The modifications typically include a reduction in rate, an extension in term and/or the capitalization of past due amounts. Included in the non-accrual loan total at June 30, 2011 and December 31, 2010 were $6,049,000 and $3,318,000, respectively, of troubled debt restructurings. At June 30, 2011 and December 31, 2010 the Company has allocated $993,000 and $569,000, respectively, of specific reserves to loans which are classified as troubled debt restructurings. Non-accrual loans which become troubled debt restructurings are returned to accrual status after six months of performance. Loans classified as a troubled debt restructuring and still accruing at June 30, 2011 and December 31, 2010 were $15,053,000 and $12,529,000, respectively. Troubled debt restructurings with six months of performance are considered in the allowance for loan losses similar to other performing loans. Troubled debt restructurings which are non-accrual or classified are considered in the allowance for loan losses similar to other non-accrual or classified loans.

The following table presents information about troubled debt restructurings which occurred during the three and six months ended June 30, 2011 and troubled debt restructurings modified within the previous year and which defaulted during the three and six months ended June 30, 2011 (in thousands):

	Number of Loans		Pre-modification Recorded  Investment		Post-modification Recorded  Investment
Three months ended June 30, 2011
Troubled Debt Restructurings:
Residential real estate:
Originated by Bank		5	$	956	$	956
Originated by Columbia		2		289		289
Residential construction		—		—		—
Commercial real estate:
Commercial		—		—		—
Construction and land		—		—		—
Consumer		2		276		276
Commercial		—		—		—
	Number of Loans		Recorded Investment
Troubled Debt Restructurings
Which Subsequently Defaulted:
Residential real estate:
Originated by Bank		—	$	—
Originated by Columbia		3		1,534
Residential Construction		—		—
Commercial real estate:
Commercial		1		49
Construction and land		—		—
Consumer		—		—
Commercial		—		—
	Number of Loans		Pre-modification Recorded Investment		Post-modification Recorded Investment
Six months ended June 30, 2011
Troubled Debt Restructurings:
Residential real estate:
Originated by Bank		8	$	1,838	$	1,838
Originated by Columbia		6		1,755		1,755
Residential construction		—		—		—
Commercial real estate:
Commercial		2		1,540		1,540
Construction and land		—		—		—
Consumer		2		276		276
Commercial		—		—		—
	Number of Loans		Recorded Investment
Troubled Debt Restructurings
Which Subsequently Defaulted:
Residential real estate:
Originated by Bank		—	$	—
Originated by Columbia		4		1,719
Residential Construction		—		—
Commercial real estate:
Commercial		1		49
Construction and land		—		—
Consumer		—		—
Commercial		—		—