Bank subsidiary (Tables)

9 Months Ended

Sep. 30, 2011

Bank subsidiary

Schedule of consolidated statements of income data (unaudited)

	Three months ended September 30				Nine months ended September 30
(in thousands)	2011		2010		2011		2010
Interest and dividend income
Interest and fees on loans	$	46,240	$	49,221	$	137,985	$	148,294
Interest and dividends on investment and mortgage-related securities	3,654		3,852		11,216		10,815
Total interest and dividend income	49,894		53,073		149,201		159,109
Interest expense
Interest on deposit liabilities	2,166		3,390		7,146		11,665
Interest on other borrowings	1,375		1,414		4,124		4,258
Total interest expense	3,541		4,804		11,270		15,923
Net interest income	46,353		48,269		137,931		143,186
Provision for loan losses	3,822		5,961		10,927		12,310
Net interest income after provision for loan losses	42,531		42,308		127,004		130,876
Noninterest income
Fee income on deposit liabilities	4,492		6,109		13,540		21,520
Fees from other financial services	7,219		6,781		21,405		19,844
Fee income on other financial products	1,806		1,697		5,340		4,957
Other income	2,689		3,769		8,245		8,545
Total noninterest income	16,206		18,356		48,530		54,866
Noninterest expense
Compensation and employee benefits	17,646		18,168		53,317		54,477
Occupancy	4,313		4,176		12,841		12,617
Data processing	2,451		2,019		6,479		10,921
Services	1,686		1,544		5,406		5,117
Equipment	1,712		1,600		5,141		4,949
Other expense	7,763		8,798		23,651		25,819
Total noninterest expense	35,571		36,305		106,835		113,900
Income before income taxes	23,166		24,359		68,699		71,842
Income taxes	7,709		9,066		24,196		26,682
Net income	$	15,457	$	15,293	$	44,503	$	45,160

Schedule of consolidated balance sheets data (unaudited)

(in thousands)	September 30,2011			December 31,2010
Assets
Cash and cash equivalents	$	267,961		$	204,397
Federal funds sold	—			1,721
Available-for-sale investment and mortgage-related securities	571,045			678,152
Investment in stock of Federal Home Loan Bank of Seattle	97,764			97,764
Loans receivable held for investment, net	3,622,181			3,489,880
Loans held for sale, at lower of cost or fair value	25,016			7,849
Other	234,506			234,806
Goodwill	82,190			82,190
Total assets	$	4,900,663		$	4,796,759
Liabilities and shareholder’s equity
Deposit liabilities—noninterest-bearing	$	951,978		$	865,642
Deposit liabilities—interest-bearing	3,110,823			3,109,730
Other borrowings	237,934			237,319
Other	99,067			90,683
Total liabilities	4,399,802			4,303,374
Common stock	331,678			330,562
Retained earnings	170,614			169,111
Accumulated other comprehensive loss, net of tax benefits	(1,431		)	(6,288		)
Total shareholder’s equity	500,861			493,385
Total liabilities and shareholder’s equity	$	4,900,663		$	4,796,759
Other assets
Bank-owned life insurance	$	120,482		$	117,565
Premises and equipment, net	56,736			56,495
Prepaid expenses	16,792			18,608
Accrued interest receivable	14,228			14,887
Mortgage-servicing rights	7,052			6,699
Real estate acquired in settlement of loans, net	6,080			4,292
Other	13,136			16,260
	$	234,506		$	234,806
Other liabilities
Accrued expenses	$	13,469		$	16,426
Federal and state income taxes payable	38,496			28,372
Cashier’s checks	23,741			22,396
Advance payments by borrowers	5,998			10,216
Other	17,363			13,273
	$	99,067		$	90,683

Schedule of the book value and aggregate fair value by major security type

	September 30, 2011									December 31, 2010
			Gross		Gross			Estimated				Gross		Gross			Estimated
	Amortized		unrealized		unrealized			fair		Amortized		unrealized		unrealized			fair
(in thousands)	cost		gains		losses			value		cost		gains		losses			value
Federal agency obligations	$	195,614	$	2,235	$	—		$	197,849	$	317,945	$	171	$	(2,220	)	$	315,896
Mortgage-related securities — FNMA, FHLMC and GNMA	308,901		11,957		(6		)	320,852		310,711		9,570		(311		)	319,970
Municipal bonds	50,331		2,014		(1		)	52,344		43,632		7		(1,353		)	42,286
	$	554,846	$	16,206	$	(7	)	$	571,045	$	672,288	$	9,748	$	(3,884	)	$	678,152

Schedule of contractual maturities of available-for-sale securities

September 30, 2011	Amortized Cost		Fair value
(in thousands)
Due in one year or less	$	10,800	$	10,814
Due after one year through five years	175,614		177,287
Due after five years through ten years	50,465		52,616
Due after ten years	9,066		9,475
	245,945		250,192
Mortgage-related securities-FNMA,FHLMC and GNMA	308,901		320,853
Total available-for-sale securities	$	554,846	$	571,045

Schedule of gross unrealized losses and fair value

	Less than 12 months					12 months or more				Total
	Gross unrealized			Fair		Gross unrealized		Fair		Gross unrealized			Fair
(in thousands)	losses			value		losses		value		losses			value
September 30, 2011
Federal agency obligations	$	—		$	—	$	—	$	—	$	—		$	—
Mortgage-related securities — FNMA, FHLMC and GNMA	(6		)	9,151		—		—		(6		)	9,151
Municipal bonds	(1		)	4,735		—		—		(1		)	4,735
	$	(7	)	$	13,886	$	—	$	—	$	(7	)	$	13,886
December 31, 2010
Federal agency obligations	$	(2,220	)	$	205,316	$	—	$	—	$	(2,220	)	$	205,316
Mortgage-related securities — FNMA, FHLMC and GNMA	(311		)	30,986		—		—		(311		)	30,986
Municipal bonds	(1,353		)	41,479		—		—		(1,353		)	41,479
	$	(3,884	)	$	277,781	$	—	$	—	$	(3,884	)	$	277,781

Schedule of allowance for loan losses

(in thousands)	Residential 1-4 family			Commercial real estate			Home equity line of credit			Residential land			Commercial  construction			Residential construction			Commercial loans			Consumer loans			Unallocated			Total
Three months ended September 30, 2011
Allowance for loan losses:
Beginning balance	$	7,529		$	1,642		$	3,216		$	5,025		$	1,729		$	5		$	14,869		$	3,471		$	1,797		$	39,283
Charge-offs	(997		)	—			(871		)	(522		)	—			—			(2,481		)	(785		)	—			(5,656		)
Recoveries	57			—			13			114			—			—			432			148			—			764
Provision	211			(14		)	1,731			90			170			(1		)	1,512			628			(505		)	3,822
Ending balance	$	6,800		$	1,628		$	4,089		$	4,707		$	1,899		$	4		$	14,332		$	3,462		$	1,292		$	38,213
Nine months ended September 30, 2011
Allowance for loan losses:
Beginning balance	$	6,497		$	1,474		$	4,269		$	6,411		$	1,714		$	7		$	16,015		$	3,325		$	934		$	40,646
Charge-offs	(3,692		)	—			(1,233		)	(3,312		)	—			—			(4,254		)	(2,303		)	—			(14,794		)
Recoveries	90			—			17			133			—			—			732			462			—			1,434
Provision	3,905			154			1,036			1,475			185			(3		)	1,839			1,978			358			10,927
Ending balance	$	6,800		$	1,628		$	4,089		$	4,707		$	1,899		$	4		$	14,332		$	3,462		$	1,292		$	38,213
As of September 30, 2011
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	203		$	—		$	—		$	3,247		$	—		$	—		$	1,359		$	—		$	—		$	4,809
Ending balance: collectively evaluated for impairment	$	6,597		$	1,628		$	4,089		$	1,460		$	1,899		$	4		$	12,973		$	3,462		$	1,292		$	33,404
Financing Receivables:
Ending balance	$	1,997,485		$	320,874		$	503,205		$	47,571		$	42,194		$	3,191		$	676,640		$	83,580		$	—		$	3,674,740
Ending balance: individually evaluated for impairment	$	28,326		$	13,468		$	1,255		$	40,072		$	—		$	—		$	51,561		$	25		$	—		$	134,707
Ending balance: collectively evaluated for impairment	$	1,969,159		$	307,406		$	501,950		$	7,499		$	42,194		$	3,191		$	625,079		$	83,555		$	—		$	3,540,033
December 31, 2010
Allowance for loan losses:
Beginning balance	$	5,522		$	861		$	4,679		$	4,252		$	3,068		$	19		$	19,498		$	2,590		$	1,190		$	41,679
Charge-offs	(6,142		)	—			(2,517		)	(6,487		)	—			—			(6,261		)	(3,408		)	—			(24,815		)
Recoveries	744			—			63			63			—			—			1,537			481			—			2,888
Provision	6,373			613			2,044			8,583			(1,354		)	(12		)	1,241			3,662			(256		)	20,894
Ending balance	$	6,497		$	1,474		$	4,269		$	6,411		$	1,714		$	7		$	16,015		$	3,325		$	934		$	40,646
Ending balance: individually evaluated for impairment	$	230		$	—		$	—		$	1,642		$	—		$	—		$	1,588		$	—		$	—		$	3,460
Ending balance: collectively evaluated for impairment	$	6,267		$	1,474		$	4,269		$	4,769		$	1,714		$	7		$	14,427		$	3,325		$	934		$	37,186
Financing Receivables:
Ending balance	$	2,087,813		$	300,689		$	416,453		$	65,599		$	38,079		$	5,602		$	551,683		$	80,138		$	—		$	3,546,056
Ending balance: individually evaluated for impairment	$	34,615		$	12,156		$	827		$	39,631		$	—		$	—		$	28,886		$	76		$	—		$	116,191
Ending balance: collectively evaluated for impairment	$	2,053,198		$	288,533		$	415,626		$	25,968		$	38,079		$	5,602		$	522,797		$	80,062		$	—		$	3,429,865

Schedule of credit risk profile by internally assigned grade for loans

	September 30, 2011						December 31, 2010
(in thousands)	Commercial real estate		Commercial construction		Commercial		Commercial real estate		Commercial construction		Commercial
Grade:
Pass	$	305,085	$	42,194	$	603,367	$	285,624	$	38,079	$	462,078
Special mention	1,217		—		18,392		526		—		44,759
Substandard	11,124		—		50,561		14,539		—		44,259
Doubtful	3,448		—		4,320		—		—		556
Loss	—		—		—		—		—		31
Total	$	320,874	$	42,194	$	676,640	$	300,689	$	38,079	$	551,683

Schedule of credit risk profile based on payment activity for loans

(in thousands)	30-59 days past due		60-89 days past due		Greater than 90 days		Total past due		Current		Total financing receivables		Recorded investment > 90 days and accruing
September 30, 2011
Real estate loans:
Residential 1-4 family	$	7,933	$	1,756	$	33,008	$	42,697	$	1,954,788	$	1,997,485	$	—
Commercial real estate	—		—		—		—		320,874		320,874		—
Home equity line of credit	1,129		510		1,560		3,199		500,006		503,205		—
Residential land	720		458		13,468		14,646		32,925		47,571		—
Commercial construction	—		—		—		—		42,194		42,194		—
Residential construction	—		—		—		—		3,191		3,191		—
Commercial loans	325		961		2,171		3,457		673,183		676,640		109
Consumer loans	498		338		495		1,331		82,249		83,580		336
Total loans	$	10,605	$	4,023	$	50,702	$	65,330	$	3,609,410	$	3,674,740	$	445
December 31, 2010
Real estate loans:
Residential 1-4 family	$	8,245	$	3,719	$	36,419	$	48,383	$	2,039,430	$	2,087,813	$	—
Commercial real estate	—		4		—		4		300,685		300,689		—
Home equity line of credit	1,103		227		1,659		2,989		413,464		416,453		—
Residential land	1,543		1,218		16,060		18,821		46,778		65,599		581
Commercial construction	—		—		—		—		38,079		38,079		—
Residential construction	—		—		—		—		5,602		5,602		—
Commercial loans	892		1,317		3,191		5,400		546,283		551,683		64
Consumer loans	629		410		617		1,656		78,482		80,138		320
Total loans	$	12,412	$	6,895	$	57,946	$	77,253	$	3,468,803	$	3,546,056	$	965

Schedule of credit risk profile based on nonaccrual loans and accruing loans 90 days or more past due

	September 30, 2011				December 31, 2010
(in thousands)	Nonaccrual loans		Accruing loans 90 days or more past due		Nonaccrual loans		Accruing loans 90 days or more past due
Real estate loans:
Residential 1-4 family	$	33,580	$	—	$	36,420	$	—
Commercial real estate	3,448		—		—		—
Home equity line of credit	2,205		—		1,659		—
Residential land	15,644		—		15,479		581
Commercial construction	—		—		—		—
Residential construction	—		—		—		—
Commercial loans	11,541		109		4,956		64
Consumer loans	219		336		341		320
Total	$	66,637	$	445	$	58,855	$	965

Schedule of the carrying amount and the total unpaid principal balance of impaired loans

	September 30, 2011						Three months ended September 30,2011				Nine months ended September 30,2011
(in thousands)	Recorded investment		Unpaid principal balance		Related Allowance		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded
Real estate loans:
Residential 1-4 family	$	20,256	$	27,762	$	—	$	20,325	$	81	$	20,007	$	209
Commercial real estate	13,468		13,468		—		13,500		244		12,017		575
Home equity line of credit	644		1,360		—		621		2		617		3
Residential land	30,634		38,601		—		31,312		427		32,555		1,366
Commercial construction	—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—
Commercial loans	39,683		40,663		—		38,523		876		37,668		2,237
Consumer loans	—		—		—		—		—		—		—
	$	104,685	$	121,854	$	—	$	104,281	$	1,630	$	102,864	$	4,390
With an allowance recorded
Real estate loans:
Residential 1-4 family	$	3,539	$	3,539	$	203	$	3,764	$	45	$	3,853	$	154
Commercial real estate	—		—		—		—		—		—		—
Home equity line of credit	—		—		—		—		—		—		—
Residential land	9,106		9,361		3,247		8,866		171		7,864		487
Commercial construction	—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—
Commercial loans	11,878		12,700		1,359		11,045		428		8,498		658
Consumer loans	—		—		—		—		—		—		—
	$	24,523	$	25,600	$	4,809	$	23,675	$	644	$	20,215	$	1,299
Total
Real estate loans:
Residential 1-4 family	$	23,795	$	31,301	$	203	$	24,089	$	126	$	23,860	$	363
Commercial real estate	13,468		13,468		—		13,500		244		12,017		575
Home equity line of credit	644		1,360		—		621		2		617		3
Residential land	39,740		47,962		3,247		40,178		598		40,419		1,853
Commercial construction	—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—
Commercial loans	51,561		53,363		1,359		49,568		1,304		46,166		2,895
Consumer loans	—		—		—		—		—		—		—
	$	129,208	$	147,454	$	4,809	$	127,956	$	2,274	$	123,079	$	5,689

	December 31, 2010						2010
(in thousands)	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
With no related allowance recorded
Real estate loans:
Residential 1-4 family	$	18,205	$	24,692	$	—	$	14,609	$	278
Commercial real estate	12,156		12,156		—		14,276		979
Home equity line of credit	—		—		—		—		—
Residential land	33,777		40,802		—		29,914		1,499
Commercial construction	—		—		—		—		—
Residential construction	—		—		—		—		—
Commercial loans	22,041		22,041		—		29,636		1,846
Consumer loans	—		—		—		—		—
	86,179		99,691		—		88,435		4,602
With an allowance recorded
Real estate loans:
Residential 1-4 family	3,917		3,917		230		2,807		175
Commercial real estate	—		—		—		—		—
Home equity line of credit	—		—		—		—		—
Residential land	5,041		5,090		1,642		3,753		327
Commercial construction	—		—		—		—		—
Residential construction	—		—		—		—		—
Commercial loans	6,845		6,845		1,588		2,796		182
Consumer loans	—		—		—		—		—
	15,803		15,852		3,460		9,356		684
Total
Real estate loans:
Residential 1-4 family	22,122		28,609		230		17,416		453
Commercial real estate	12,156		12,156		—		14,276		979
Home equity line of credit	—		—		—		—		—
Residential land	38,818		45,892		1,642		33,667		1,826
Commercial construction	—		—		—		—		—
Residential construction	—		—		—		—		—
Commercial loans	28,886		28,886		1,588		32,432		2,028
Consumer loans	—		—		—		—		—
	$	101,982	$	115,543	$	3,460	$	97,791	$	5,286

Schedule of loan modifications and loans modified in TDRS that experienced a payment default of 90 days or more

	Three months ended September 30, 2011						Nine months ended September 30, 2011
(in thousands)		Number of contracts	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment			Number of contracts	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Troubled debt restructurings
Real estate loans:
Residential 1-4 family		12	$	3,255	$	2,922		27	$	7,186	$	6,371
Commercial real estate		—	—		—			—	—		—
Home equity line of credit		—	—		—			—	—		—
Residential land		7	2,366		2,358			41	8,782		8,772
Commercial loans		11	5,433		5,433			46	32,810		32,810
Consumer loans		—	—		—			—	—		—
Total		30	$	11,054	$	10,713		114	$	48,778	$	47,953

	Three months ended September 30, 2011			Nine months ended September 30, 2011
	Number of contracts	Recorded investment		Number of contracts	Recorded investment
Troubled debt restructurings that subsequently defaulted
Real estate loans:
Residential 1-4 family	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Home equity line of credit	—	—		—	—
Residential land	—	—		1	528
Commercial loans	2	631		3	797
Consumer loans	—	—		—	—
Total	2	$	631	4	$	1,325