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-share agreements.

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



	December 31, 2013			December 31, 2012
	(in thousands)
Noncovered loans:
Commercial business	$	1,561,782		$	1,155,158
Real estate:
One-to-four family residential	108,317			43,922
Commercial and multifamily residential	2,080,075			1,061,201
Total real estate	2,188,392			1,105,123
Real estate construction:
One-to-four family residential	54,155			50,602
Commercial and multifamily residential	126,390			65,101
Total real estate construction	180,545			115,703
Consumer	357,014			157,493
Less: Net unearned income	(68,282		)	(7,767		)
Total noncovered loans, net of unearned income	4,219,451			2,525,710
Less: Allowance for loan and lease losses	(52,280		)	(52,244		)
Total noncovered loans, net	$	4,167,171		$	2,473,466
Loans held for sale	$	735		$	2,563

At December 31, 2013 and 2012, 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 has 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 $14.2 million and $14.2 million at December 31, 2013 and 2012, respectively. During 2013, advances and repayments on related party loans totaled $2.0 million.

At December 31, 2013 and 2012, $1.08 billion and $443.4 million of commercial and residential real estate loans were pledged as collateral on Federal Home Loan Bank advances. The Company has also pledged $45.2 million and $13.8 million of commercial loans to the Federal Reserve Bank for additional borrowing capacity at December 31, 2013 and 2012, respectively.

Nonaccrual loans totaled $34.0 million and $37.4 million at December 31, 2013 and 2012, respectively. The amount of interest income foregone as a result of these loans being placed on nonaccrual status totaled $2.9 million for 2013, $3.4 million for 2012 and $5.3 million for 2011. There were no loans 90 days past due and still accruing interest as of December 31, 2013 and December 31, 2012. At December 31, 2013 and 2012, there were $28 thousand and $346 thousand, respectively, of commitments of additional funds for loans accounted for on a nonaccrual basis.

The following is an analysis of noncovered, nonaccrual loans as of December 31, 2013 and 2012:



	December 31, 2013				December 31, 2012
	Recorded Investment Nonaccrual Loans		Unpaid Principal Balance Nonaccrual Loans		Recorded Investment Nonaccrual Loans		Unpaid Principal Balance Nonaccrual Loans
Noncovered loans:	(in thousands)
Commercial business:
Secured	$	12,433	$	19,186	$	9,037	$	17,821
Unsecured	176		202		262		262
Real estate:
One-to-four family residential	2,667		4,678		2,349		2,672
Commercial and multifamily residential:
Commercial land	442		783		4,076		7,491
Income property	4,267		5,383		8,520		10,815
Owner occupied	6,334		7,486		6,608		7,741
Real estate construction:
One-to-four family residential:
Land and acquisition	3,246		6,601		3,084		6,704
Residential construction	459		1,928		1,816		2,431
Consumer	3,991		6,187		1,643		1,940
Total	$	34,015	$	52,434	$	37,395	$	57,877

The following is an aging of the recorded investment of the noncovered loan portfolio as of December 31, 2013 and 2012:



	Current Loans		30 - 59 Days Past Due		60 - 89 Days Past Due		Total Past Due		Nonaccrual Loans		Total Loans
December 31, 2013	(in thousands)
Noncovered loans:
Commercial business:
Secured	$	1,457,820	$	12,713	$	681	$	13,394	$	12,433	$	1,483,647
Unsecured	72,255		156		17		173		176		72,604
Real estate:
One-to-four family residential	100,591		1,993		641		2,634		2,667		105,892
Commercial and multifamily residential:
Commercial land	142,034		—		358		358		442		142,834
Income property	1,138,732		144		3,289		3,433		4,267		1,146,432
Owner occupied	749,561		4,714		—		4,714		6,334		760,609
Real estate construction:
One-to-four family residential:
Land and acquisition	8,225		199		—		199		3,246		11,670
Residential construction	41,533		—		—		—		459		41,992
Commercial and multifamily residential:
Income property	86,521		—		—		—		—		86,521
Owner occupied	38,916		—		—		—		—		38,916
Consumer	322,685		835		823		1,658		3,991		328,334
Total	$	4,158,873	$	20,754	$	5,809	$	26,563	$	34,015	$	4,219,451
	Current Loans		30 - 59 Days Past Due		60 - 89 Days Past Due		Total Past Due		Nonaccrual Loans		Total Loans
December 31, 2012	(in thousands)
Noncovered loans:
Commercial business:
Secured	$	1,091,770	$	4,259	$	1,485	$	5,744	$	9,037	$	1,106,551
Unsecured	44,817		252		12		264		262		45,343
Real estate:
One-to-four family residential	41,508		193		142		335		2,349		44,192
Commercial and multifamily residential:
Commercial land	42,818		311		122		433		4,076		47,327
Income property	603,339		2,726		227		2,953		8,520		614,812
Owner occupied	387,525		1,040		—		1,040		6,608		395,173
Real estate construction:
One-to-four family residential:
Land and acquisition	15,412		—		—		—		3,084		18,496
Residential construction	29,848		—		—		—		1,816		31,664
Commercial and multifamily residential:
Income property	28,342		—		—		—		—		28,342
Owner occupied	36,211		—		—		—		—		36,211
Consumer	155,207		387		362		749		1,643		157,599
Total	$	2,476,797	$	9,168	$	2,350	$	11,518	$	37,395	$	2,525,710

The following is an analysis of impaired loans (see Note 1) as of December 31, 2013 and 2012:



	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
December 31, 2013	(in thousands)
Noncovered loans:
Commercial business:
Secured	$	1,478,560	$	5,087	$	2,866	$	2,885	$	343	$	2,221	$	2,560
Unsecured	72,569		35		35		35		35		—		—
Real estate:
One-to-four family residential	104,272		1,620		442		479		138		1,178		2,119
Commercial and multifamily residential:
Commercial land	142,719		115		—		—		—		115		398
Income property	1,140,019		6,413		918		933		26		5,495		7,885
Owner occupied	749,601		11,008		3,802		3,817		1,073		7,206		10,464
Real estate construction:
One-to-four family residential:
Land and acquisition	9,726		1,944		113		113		71		1,831		2,587
Residential construction	41,992		—		—		—		—		—		—
Commercial and multifamily residential:
Income property	86,521		—		—		—		—		—		—
Owner occupied	38,916		—		—		—		—		—		—
Consumer	328,167		167		23		27		4		144		210
Total	$	4,193,062	$	26,389	$	8,199	$	8,289	$	1,690	$	18,190	$	26,223



	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
December 31, 2012	(in thousands)
Noncovered loans:
Commercial business:
Secured	$	1,101,689	$	4,862	$	690	$	1,994	$	113	$	4,172	$	6,769
Unsecured	45,251		92		92		92		92		—		—
Real estate:
One-to-four family residential	42,103		2,089		345		364		112		1,744		1,902
Commercial and multifamily residential:
Commercial land	44,672		2,655		—		—		—		2,655		5,727
Income property	606,656		8,156		2,670		2,727		1,040		5,486		7,860
Owner occupied	383,269		11,904		608		610		38		11,296		14,642
Real estate construction:
One-to-four family residential
Land and acquisition	15,677		2,819		—		—		—		2,819		4,813
Residential construction	29,707		1,957		—		—		—		1,957		2,570
Commercial and multifamily residential:
Income property	28,342		—		—		—		—		—		—
Owner occupied	36,211		—		—		—		—		—		—
Consumer	157,472		127		—		—		—		127		127
Total	$	2,491,049	$	34,661	$	4,405	$	5,787	$	1,395	$	30,256	$	44,410

The following table provides additional information on impaired loans for the years ended December 31, 2013, 2012 and 2011:



	Year ended December 31, 2013				Year Ended December 31, 2012				Year ended December 31, 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
Noncovered loans:	(in thousands)
Commercial business
Secured	$	5,636	$	19	$	8,978	$	9	$	15,578	$	511
Unsecured	61		3		113		6		138		—
Real estate:
One-to-four family residential	1,665		63		2,130		—		2,494		—
Commercial & multifamily residential
Commercial land	1,691		—		3,124		—		4,263		—
Income property	8,910		238		7,895		77		8,881		59
Owner occupied	10,779		971		13,315		1,004		15,254		18
Real estate construction:
One-to-four family residential
Land and acquisition	2,624		6		4,465		—		8,972		116
Residential construction	420		—		3,223		11		4,535		—
Commercial & multifamily residential
Income property	—		—		3,169		—		7,065		—
Consumer	253		6		1,112		7		3,880		15
Total	$	32,039	$	1,306	$	47,524	$	1,114	$	71,060	$	719

The following is an analysis of loans classified as Troubled Debt Restructurings ("TDR") for the years ended December 31, 2013, 2012 and 2011:



	Year ended December 31, 2013					Year Ended December 31, 2012					Year ended December 31, 2011
	Number of TDR Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of TDR Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of TDR Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Noncovered loans:	(dollars in thousands)
Commercial business:
Secured	2	$	190	$	190	1	$	195	$	194	6	$	659	$	659
Real estate:
One-to-four family residential	1	113		113		—	—		—		1	369		369
Commercial and multifamily residential:
Commercial land	1	137		137		—	—		—		—	—		—
Income property	4	1,186		1,186		1	4,279		2,650		2	1,280		1,280
Owner occupied	1	172		172		—	—		—		—	—		—
Real estate construction:
One-to-four family residential:
Land and acquisition	1	117		117		—	—		—		—	—		—
Residential construction	—	—		—		—	—		—		1	36		36
Consumer	2	53		53		—	—		—		—	—		—
Total	12	$	1,968	$	1,968	2	$	4,474	$	2,844	10	$	2,344	$	2,344

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 $0 and $236 thousand of additional funds on loans classified as TDR as of December 31, 2013 and 2012, 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 that defaulted within 12 months of being modified as TDR during the years ended December 31,
2013, 2012, and 2011.