Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Derivatives

The Bank may use derivatives to hedge the risk of changes in the fair values of interest rate lock commitments, residential mortgage loans held for sale, and mortgage servicing rights. None of the Company’s derivatives are designated as hedging instruments.  Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily utilizes forward interest rate contracts in its derivative risk management strategy. 

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as the Oregon and California state jurisdictions.  Additionally, as a result of the FinPac acquisition, the Company will now be subject to filings in the majority of states and in Canada. The Company is no longer subject to U.S. federal or other state tax authority examinations for years before 2009, except in California for years before 2005 and for Canadian tax authority examinations for years before 2012.  During 2010, the Internal Revenue Service concluded an examination of the Company’s U.S. income tax returns through 2008.  The results of these examinations had no significant impact on the Company’s financial statements. 

Income Tax Uncertainties

The Company had gross unrecognized tax benefits relating to California tax incentives of $602,000 recorded as of September 30, 2013.  If recognized, the unrecognized tax benefit would reduce the 2013 annual effective tax rate by 0.3%.  During the nine months ended September 30, 2013, the Company recognized an expense of $18,000 in interest relating to its liability for unrecognized tax benefits.  Interest expense is reported by the Company as a component of tax expense.  As of September 30, 2013, the accrued interest related to unrecognized tax benefits is $187,000.