| Noncovered Loans |
Noncovered Loans Noncovered loans include loans originated through our branch network and loan departments as well as acquired loans that are not subject to Federal Deposit Insurance Corporation (“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,
2014 | | December 31,
2013 | Noncovered loans: | | (in thousands) | Commercial business | | $ | 1,735,588 |
| | $ | 1,561,782 |
| Real estate: | | | | | One-to-four family residential | | 102,632 |
| | 108,317 |
| Commercial and multifamily residential | | 2,127,520 |
| | 2,080,075 |
| Total real estate | | 2,230,152 |
| | 2,188,392 |
| Real estate construction: | | | | | One-to-four family residential | | 61,481 |
| | 54,155 |
| Commercial and multifamily residential | | 134,140 |
| | 126,390 |
| Total real estate construction | | 195,621 |
| | 180,545 |
| Consumer | | 348,439 |
| | 357,014 |
| Less: Net unearned income | | (57,126 | ) | | (68,282 | ) | Total noncovered loans, net of unearned income | | 4,452,674 |
| | 4,219,451 |
| Less: Allowance for loan and lease losses | | (49,494 | ) | | (52,280 | ) | Total noncovered loans, net | | $ | 4,403,180 |
| | $ | 4,167,171 |
| Loans held for sale | | $ | 750 |
| | $ | 735 |
|
At June 30, 2014 and December 31, 2013, 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 executive 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 $11.6 million at June 30, 2014 and $14.2 million at December 31, 2013. During the first six months of 2014, advances on related party loans totaled $1.1 million and repayments totaled $3.7 million. At June 30, 2014 and December 31, 2013, $1.07 billion and $1.08 billion of commercial and residential real estate loans were pledged as collateral on Federal Home Loan Bank borrowings and additional borrowing capacity. The Company has also pledged $43.9 million and $45.2 million of commercial loans to the Federal Reserve Bank for additional borrowing capacity at June 30, 2014 and December 31, 2013, respectively. The following is an analysis of noncovered, nonaccrual loans as of June 30, 2014 and December 31, 2013: | | | | | | | | | | | | | | | | | | | | June 30, 2014 | | December 31, 2013 | | | 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 | | $ | 11,190 |
| | $ | 15,739 |
| | $ | 12,433 |
| | $ | 19,186 |
| Unsecured | | 294 |
| | 326 |
| | 176 |
| | 202 |
| Real estate: | | | | | | | | | One-to-four family residential | | 3,024 |
| | 5,125 |
| | 2,667 |
| | 4,678 |
| Commercial & multifamily residential: | | | | | | | | | Commercial land | | 658 |
| | 998 |
| | 442 |
| | 783 |
| Income property | | 5,062 |
| | 7,648 |
| | 4,267 |
| | 5,383 |
| Owner occupied | | 5,319 |
| | 7,388 |
| | 6,334 |
| | 7,486 |
| Real estate construction: | | | | | | | | | One-to-four family residential: | | | | | | | | | Land and acquisition | | 581 |
| | 1,761 |
| | 3,246 |
| | 6,601 |
| Residential construction | | 459 |
| | 1,928 |
| | 459 |
| | 1,928 |
| Consumer | | 4,026 |
| | 5,758 |
| | 3,991 |
| | 6,187 |
| Total | | $ | 30,613 |
| | $ | 46,671 |
| | $ | 34,015 |
| | $ | 52,434 |
|
The following is an aging of the recorded investment of the noncovered loan portfolio as of June 30, 2014 and December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | June 30, 2014 | | (in thousands) | Noncovered loans: | | | | | | | | | | | | | | | Commercial business: | | | | | | | | | | | | | | | Secured | | $ | 1,640,938 |
| | $ | 3,046 |
| | $ | 2,602 |
| | $ | — |
| | $ | 5,648 |
| | $ | 11,190 |
| | $ | 1,657,776 |
| Unsecured | | 72,749 |
| | 142 |
| | 67 |
| | — |
| | 209 |
| | 294 |
| | 73,252 |
| Real estate: | | | | | | | | | | | | | | | One-to-four family residential | | 95,653 |
| | 1,415 |
| | 570 |
| | — |
| | 1,985 |
| | 3,024 |
| | 100,662 |
| Commercial & multifamily residential: | | | | | | | | | | | | | | | Commercial land | | 148,163 |
| | — |
| | — |
| | — |
| | — |
| | 658 |
| | 148,821 |
| Income property | | 1,191,882 |
| | 1,336 |
| | 9 |
| | — |
| | 1,345 |
| | 5,062 |
| | 1,198,289 |
| Owner occupied | | 746,217 |
| | 410 |
| | 2,575 |
| | — |
| | 2,985 |
| | 5,319 |
| | 754,521 |
| Real estate construction: | | | | | | | | | | | | | | | One-to-four family residential: | | | | | | | | | | | | | | | Land and acquisition | | 10,899 |
| | — |
| | — |
| | — |
| | — |
| | 581 |
| | 11,480 |
| Residential construction | | 48,699 |
| | 393 |
| | — |
| | — |
| | 393 |
| | 459 |
| | 49,551 |
| Commercial & multifamily residential: | | | | | | | | | | | | | | | Income property | | 87,603 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 87,603 |
| Owner occupied | | 45,951 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 45,951 |
| Consumer | | 319,958 |
| | 717 |
| | 67 |
| | — |
| | 784 |
| | 4,026 |
| | 324,768 |
| Total | | $ | 4,408,712 |
| | $ | 7,459 |
| | $ | 5,890 |
| | $ | — |
| | $ | 13,349 |
| | $ | 30,613 |
| | $ | 4,452,674 |
| | | | | | | | | | | | | | | | | | 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 | 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 & 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 & 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 |
|
The following is an analysis of impaired loans as of June 30, 2014 and December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | June 30, 2014 | | (in thousands) | Noncovered loans: | | | | | | | | | | | | | | | Commercial business: | | | | | | | | | | | | | | | Secured | | $ | 1,651,286 |
| | $ | 6,490 |
| | $ | 1,332 |
| | $ | 2,450 |
| | $ | 128 |
| | $ | 5,158 |
| | $ | 5,929 |
| Unsecured | | 73,233 |
| | 19 |
| | 19 |
| | 19 |
| | 19 |
| | — |
| | — |
| Real estate: | | | | | | | | | | | | | | | One-to-four family residential | | 98,616 |
| | 2,046 |
| | 432 |
| | 472 |
| | 128 |
| | 1,614 |
| | 2,794 |
| Commercial & multifamily residential: | | | | | | | | | | | | | | | Commercial land | | 148,722 |
| | 99 |
| | — |
| | — |
| | — |
| | 99 |
| | 398 |
| Income property | | 1,190,323 |
| | 7,966 |
| | — |
| | — |
| | — |
| | 7,966 |
| | 12,518 |
| Owner occupied | | 745,351 |
| | 9,170 |
| | 588 |
| | 588 |
| | 35 |
| | 8,582 |
| | 13,020 |
| Real estate construction: | | | | | | | | | | | | | | | One-to-four family residential: | | | | | | | | | | | | | | | Land and acquisition | | 11,368 |
| | 112 |
| | 112 |
| | 111 |
| | 69 |
| | — |
| | — |
| Residential construction | | 49,551 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Commercial & multifamily residential: | | | | | | | | | | | | | | | Income property | | 87,603 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Owner occupied | | 45,951 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Consumer | | 324,616 |
| | 152 |
| | 20 |
| | 26 |
| | 1 |
| | 132 |
| | 199 |
| Total | | $ | 4,426,620 |
| | $ | 26,054 |
| | $ | 2,503 |
| | $ | 3,666 |
| | $ | 380 |
| | $ | 23,551 |
| | $ | 34,858 |
| | | | | | | | | | | | | | | | | | 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 & 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 & 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 |
|
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, | | | 2014 | | 2013 | | 2014 | | 2013 | | | 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 | Noncovered loans: | | (in thousands) | Commercial business: | | | | | | | | | | | | | | | | | Secured | | $ | 6,933 |
| | $ | 17 |
| | $ | 6,481 |
| | $ | 4 |
| | $ | 6,318 |
| | $ | 33 |
| | $ | 5,941 |
| | $ | 8 |
| Unsecured | | 23 |
| | — |
| | 68 |
| | 1 |
| | 27 |
| | 1 |
| | 76 |
| | 1 |
| Real estate: | | | | | | | | | | | | | | | | | One-to-four family residential | | 2,069 |
| | 11 |
| | 1,538 |
| | 27 |
| | 1,920 |
| | 23 |
| | 1,722 |
| | 31 |
| Commercial & multifamily residential: | | | | | | | | | | | | | | | | | Commercial land | | 103 |
| | — |
| | 2,559 |
| | — |
| | 107 |
| | — |
| | 2,591 |
| | — |
| Income property | | 7,213 |
| | 74 |
| | 10,478 |
| | 133 |
| | 6,946 |
| | 136 |
| | 9,704 |
| | 161 |
| Owner occupied | | 9,222 |
| | 235 |
| | 10,437 |
| | 230 |
| | 9,817 |
| | 476 |
| | 10,926 |
| | 510 |
| Real estate construction: | | | | | | | | | | | | | | | | | One-to-four family residential: | | | | | | | | | | | | | | | | | Land and acquisition | | 653 |
| | 1 |
| | 2,931 |
| | 1 |
| | 1,083 |
| | 3 |
| | 2,894 |
| | 3 |
| Residential construction | | — |
| | — |
| | 72 |
| | — |
| | — |
| | — |
| | 701 |
| | — |
| Consumer | | 155 |
| | 3 |
| | 425 |
| | 2 |
| | 159 |
| | 5 |
| | 326 |
| | 3 |
| Total | | $ | 26,371 |
| | $ | 341 |
| | $ | 34,989 |
| | $ | 398 |
| | $ | 26,377 |
| | $ | 677 |
| | $ | 34,881 |
| | $ | 717 |
|
The following is an analysis of loans classified as troubled debt restructurings (“TDR”) during the three and six months ended June 30, 2014 and 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | Three months ended June 30, 2014 | | Three months ended June 30, 2013 | | | 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 |
| | $ | 546 |
| | $ | 546 |
| | 1 |
| | $ | 343 |
| | $ | 343 |
| Commercial and multifamily residential: | | | | | | | | | | | | | Commercial land | | — |
| | — |
| | — |
| | 1 |
| | 137 |
| | 137 |
| Income property | | — |
| | — |
| | — |
| | 3 |
| | 943 |
| | 943 |
| Owner occupied | | — |
| | — |
| | — |
| | 1 |
| | 172 |
| | 172 |
| Total | | 2 |
| | $ | 546 |
| | $ | 546 |
| | 6 |
| | $ | 1,595 |
| | $ | 1,595 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Six months ended June 30, 2014 | | Six months ended June 30, 2013 | | | 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 | | 4 |
| | $ | 759 |
| | $ | 759 |
| | 1 |
| | $ | 343 |
| | $ | 343 |
| Real estate: | | | | | | | | | | | | | One-to-four family residential | | 2 |
| | 494 |
| | 494 |
| | — |
| | — |
| | — |
| Commercial and multifamily residential: | | | | | | | | | | | | | Commercial land | | — |
| | — |
| | — |
| | 1 |
| | 137 |
| | 137 |
| Income property | | 1 |
| | 143 |
| | 126 |
| | 3 |
| | 943 |
| | 943 |
| Owner occupied | | — |
| | — |
| | — |
| | 1 |
| | 172 |
| | 172 |
| Real estate construction: | | | | | | | | | | | | | One-to-four family residential: | | | | | | | | | | | | | Land and acquisition | | — |
| | — |
| | — |
| | 1 |
| | 117 |
| | 117 |
| Total | | 7 |
| | $ | 1,396 |
| | $ | 1,379 |
| | 7 |
| | $ | 1,712 |
| | $ | 1,712 |
|
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 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. The concessions granted in the restructurings completed in the six month periods ending June 30, 2014 and 2013 largely consisted of maturity extensions, interest rate modifications or a combination of both. In limited circumstances, a reduction in the principal balance of the loan could also be made as a concession. 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 had commitments to lend $269 thousand of additional funds on loans classified as TDR as of June 30, 2014, but had no commitments to lend additional funds on loans classified as TDR as of December 31, 2013. The Company did not have any loans modified as TDR that defaulted within twelve months of being modified as TDR during the six month periods ended June 30, 2014 and 2013. |