Noncovered Loans

Noncovered loans include loans originated through our branch network and loan departments as well as acquired loans that are not subject to FDIC loss-sharing agreements.

The following is an analysis of the noncovered loan portfolio by major types of loans (net of unearned income):



	June 30, 2012			December 31, 2011
	(in thousands)
Noncovered loans:
Commercial business	$	1,111,440		$	1,031,721
Real estate:
One-to-four family residential	55,883			64,491
Commercial and multifamily residential	1,017,736			998,165
Total real estate	1,073,619			1,062,656
Real estate construction:
One-to-four family residential	47,417			50,208
Commercial and multifamily residential	48,765			36,768
Total real estate construction	96,182			86,976
Consumer	167,387			183,235
Less: Net unearned income	(11,667		)	(16,217		)
Total noncovered loans, net of unearned income	2,436,961			2,348,371
Less: Allowance for loan and lease losses	(52,196		)	(53,041		)
Total noncovered loans, net	$	2,384,765		$	2,295,330
Loans held for sale	$	2,088		$	2,148

At June 30, 2012 and December 31, 2011, the Company had no material foreign activities. Substantially all of the Company’s loans and unfunded commitments are geographically concentrated in its service areas within the states of Washington and Oregon.

The Company and its banking subsidiary have granted loans to officers and directors of the Company and related interests. These loans are made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of these loans was $12.7 million and $9.0 million at June 30, 2012 and December 31, 2011, respectively. During the first six months of 2012, advances on related party loans were $6.0 million and repayments totaled $2.3 million.

At June 30, 2012 and December 31, 2011, $429.4 million and $462.0 million of commercial and residential real estate loans were pledged as collateral on Federal Home Loan Bank borrowings.

The following is an analysis of noncovered, nonaccrual loans as of June 30, 2012 and December 31, 2011:



	June 30, 2012				December 31, 2011
	Recorded Investment Nonaccrual Loans		Unpaid Principal Balance Nonaccrual Loans		Recorded Investment Nonaccrual Loans		Unpaid Principal Balance Nonaccrual Loans
	(in thousands)
Commercial business
Secured	$	12,839	$	22,511	$	10,124	$	16,820
Unsecured	213		213		119		719
Real estate:
One-to-four family residential	2,244		3,070		2,696		3,011
Commercial & multifamily residential
Commercial land	3,444		7,291		3,739		7,230
Income property multifamily	10,753		15,958		6,775		9,265
Owner occupied	9,105		12,507		8,971		10,932
Real estate construction:
One-to-four family residential
Land and acquisition	3,552		7,351		7,799		16,703
Residential construction	1,671		3,801		2,986		5,316
Commercial & multifamily residential
Income property multifamily	3,754		9,057		7,067		14,912
Consumer	1,890		2,268		3,207		3,960
Total	$	49,465	$	84,027	$	53,483	$	88,868

The following is an analysis of the recorded investment of the aged loan portfolio as of June 30, 2012 and December 31, 2011:



	Current Loans		30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Nonaccrual Loans		Total Loans
	(in thousands)
June 30, 2012
Commercial business
Secured	$	1,044,846	$	4,025	$	1,153	$	—	$	5,178	$	12,839	$	1,062,863
Unsecured	44,391		476		193		—		669		213		45,273
Real estate:
One-to-four family residential	52,968		796		7		—		803		2,244		56,015
Commercial & multifamily residential
Commercial land	41,263		179		—		—		179		3,444		44,886
Income property multifamily	568,724		243		309		—		552		10,753		580,029
Owner occupied	372,946		2,920		—		—		2,920		9,105		384,971
Real estate construction:
One-to-four family residential
Land and acquisition	17,004		—		—		—		—		3,552		20,556
Residential construction	24,553		—		—		—		—		1,671		26,224
Commercial & multifamily residential
Income property multifamily	22,814		—		—		—		—		3,754		26,568
Owner occupied	22,122		—		—		—		—		—		22,122
Consumer	164,426		860		278		—		1,138		1,890		167,454
Total	$	2,376,057	$	9,499	$	1,940	$	—	$	11,439	$	49,465	$	2,436,961

	Current Loans		30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Nonaccrual Loans		Total Loans
	(in thousands)
December 31, 2011
Commercial business
Secured	$	966,563	$	1,741	$	2,989	$	—	$	4,730	$	10,124	$	981,417
Unsecured	46,880		407		—		—		407		119		47,406
Real estate:
One-to-four family residential	60,764		603		—		—		603		2,696		64,063
Commercial & multifamily residential
Commercial land	46,161		781		—		—		781		3,739		50,681
Income property multifamily	524,225		2,872		121		—		2,993		6,775		533,993
Owner occupied	394,691		829		298		—		1,127		8,971		404,789
Real estate construction:
One-to-four family residential
Land and acquisition	17,249		153		—		—		153		7,799		25,201
Residential construction	19,555		1,390		—		—		1,390		2,986		23,931
Commercial & multifamily residential
Income property multifamily	13,810		—		—		—		—		7,067		20,877
Owner occupied	12,790		—		—		—		—		—		12,790
Consumer	179,753		141		122		—		263		3,207		183,223
Total	$	2,282,441	$	8,917	$	3,530	$	—	$	12,447	$	53,483	$	2,348,371

The following is an analysis of impaired loans as of June 30, 2012 and December 31, 2011:



	Recorded Investment of Loans Collectively Measured for Contingency Provision		Recorded Investment of Loans Individually Measured for Specific Impairment		Impaired Loans With Recorded Allowance						Impaired Loans Without Recorded Allowance
					Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance
	(in thousands)
June 30, 2012
Commercial business
Secured	$	1,050,734	$	12,129	$	5,681	$	7,278	$	3,528	$	6,448	$	13,770
Unsecured	45,137		136		136		136		136		—		—
Real estate:
One-to-four family residential	53,964		2,051		1,298		1,366		90		753		849
Commercial & multifamily residential
Commercial land	41,806		3,080		—		—		—		3,080		6,684
Income property multifamily	571,151		8,878		745		770		49		8,133		12,953
Owner occupied	370,798		14,173		—		—		—		14,173		17,938
Real estate construction:
One-to-four family residential
Land and acquisition	16,949		3,607		—		—		—		3,607		6,503
Residential construction	23,469		2,755		18		1,468		18		2,737		3,343
Commercial & multifamily residential
Income property multifamily	22,814		3,754		3,754		9,057		443		—		—
Owner occupied	22,122		—		—		—		—		—		—
Consumer	166,406		1,048		168		171		1		880		880
Total	$	2,385,350	$	51,611	$	11,800	$	20,246	$	4,265	$	39,811	$	62,920

	Recorded Investment of Loans Collectively Measured for Contingency Provision		Recorded Investment of Loans Individually Measured for Specific Impairment		Impaired Loans With Recorded Allowance						Impaired Loans Without Recorded Allowance
					Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance
	(in thousands)
December 31, 2011
Commercial business
Secured	$	972,531	$	8,886	$	2,926	$	2,927	$	954	$	5,960	$	12,109
Unsecured	47,309		97		97		97		97		—		—
Real estate:
One-to-four family residential	61,584		2,479		582		590		96		1,897		2,136
Commercial & multifamily residential
Commercial land	46,882		3,799		—		—		—		3,799		6,773
Income property multifamily	527,362		6,631		687		759		63		5,944		7,700
Owner occupied	390,225		14,564		274		274		185		14,290		18,524
Real estate construction:
One-to-four family residential
Land and acquisition	17,813		7,388		450		948		—		6,938		11,978
Residential construction	18,847		5,084		59		1,509		59		5,025		5,116
Commercial & multifamily residential
Income property multifamily	13,810		7,067		—		—		—		7,067		14,947
Owner occupied	12,790		—		—		—		—		—		—
Consumer	180,930		2,293		151		225		30		2,142		2,639
Total	$	2,290,083	$	58,288	$	5,226	$	7,329	$	1,484	$	53,062	$	81,922

The following table provides additional information on impaired loans for the three and six month periods indicated.



	Three Months Ended June 30,									Six Months Ended June 30,
	2012					2011				2012				2011
	Average Recorded Investment Impaired Loans		Interest Recognized on Impaired Loans			Average Recorded Investment Impaired Loans		Interest Recognized on Impaired Loans		Average Recorded Investment Impaired Loans		Interest Recognized on Impaired Loans		Average Recorded Investment Impaired Loans		Interest Recognized on Impaired Loans
	(in thousands)
Commercial business
Secured	$	11,331	$	37		$	15,807	$	52	$	10,516	$	88	$	20,471	$	197
Unsecured	138		2			101		1		124		3		102		3
Real estate:
One-to-four family residential	2,053		5			2,644		—		2,195		9		2,649		4
Commercial & multifamily residential
Commercial land	3,045		—			4,918		—		3,297		—		4,567		648
Income property multifamily	9,207		(29		)	8,802		442		8,348		9		10,330		452
Owner occupied	13,956		215			16,071		64		14,159		518		15,431		64
Real estate construction:
One-to-four family residential
Land and acquisition	4,649		16			8,749		138		5,562		16		9,681		1,083
Residential construction	3,121		7			2,987		—		3,775		16		4,158		14
Commercial & multifamily residential
Income property multifamily	4,388		—			6,526		—		5,281		—		6,878		—
Owner occupied	—		—			—		—		—		—		—		—
Consumer	1,049		10			5,040		1		1,464		22		4,871		1
Total	$	52,937	$	263		$	71,645	$	698	$	54,721	$	681	$	79,138	$	2,466

There were no Troubled Debt Restructurings ("TDR") during the three and six months ended June 30, 2012. The following is an analysis of loans classified as TDR during the three and six months ended June 30, 2011:



	Three months ended June 30, 2011
	Number of TDR Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Commercial business:
Secured	2	$	352	$	352
Real estate:
Commercial and multifamily residential:
Income property multifamily	1	623		623
Total	3	$	975	$	975



	Six months ended June 30, 2011
	Number of TDR Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Commercial business:
Secured	2	$	352	$	352
Real estate:
Commercial and multifamily residential:
Income property multifamily	1	623		623
Real estate construction:
One-to-four family residential:
Residential construction	1	36		36
Total	4	$	1,011	$	1,011

The Company's loans classified as TDR are loans that have been modified or the borrower has been granted special concessions due to financial difficulties, that if not for the challenges of the borrower, the Company would not otherwise consider. The Company had commitments to lend $1.4 million and $535 thousand of additional funds on loans classified as TDR as of June 30, 2012 and December 31, 2011, respectively. The TDR modifications or concessions are made to increase the likelihood that these borrowers with financial difficulties will be able to satisfy their debt obligations as amended. Credit losses for loans classified as TDR are measured on the same basis as impaired loans. For impaired loans, an allowance is established when the collateral value less selling costs (or discounted cash flows or observable market price) of the impaired loan is lower than the recorded investment of that loan. The Company did not have any loans modified as TDR within the past twelve months that have defaulted during the six months ended June 30, 2012.