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Loans Receivable and The Allowance For Loan Losses

3 Months Ended

Sep. 30, 2011

Loans Receivable and The Allowance For Loan Losses

Loans Receivable and The Allowance For Loan Losses

Note 7: LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES

We originate residential mortgage loans for both portfolio investment and sale in the secondary market. At the time of origination, mortgage loans are designated as held for sale or held for investment. Loans held for sale are stated at the lower of cost or estimated market value determined on an aggregate basis. Net unrealized losses on loans held for sale are recognized through a valuation allowance by charges to income. The Banks also originate construction, land and land development, commercial and multifamily real estate, commercial business, agricultural and consumer loans for portfolio investment. Loans receivable not designated as held for sale are recorded at the principal amount outstanding, net of allowance for loan losses, deferred fees, discounts and premiums. Premiums, discounts and deferred loan fees are amortized to maturity using the level-yield methodology.

Interest is accrued as earned unless management doubts the collectability of the loan or the unpaid interest. Interest accruals are generally discontinued when loans become 90 days past due for scheduled interest payments. All previously accrued but uncollected interest is deducted from interest income upon transfer to nonaccrual status. Future collection of interest is included in interest income based upon an assessment of the likelihood that the loans will be repaid or recovered. A loan may be put on nonaccrual status sooner than this policy would dictate if, in management’s judgment, the loan may be uncollectable. Such interest is then recognized as income only if it is ultimately collected.

Some of the Company’s loans are reported as troubled debt restructurings (TDRs). Loans are reported as restructured when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider. Examples of such concessions include forgiveness of principal or accrued interest, extending the maturity date(s) or providing a lower interest rate than would be normally available for a transaction of similar risk. As a result of these concessions, restructured loans are impaired as the Bank will not collect all amounts due, both principal and interest, in accordance with the terms of the original loan agreement. Loans identified as TDRs are accounted for in accordance with the Banks’ impaired loan accounting policies.

Loans receivable, including loans held for sale, at September 30, 2011, December 31, 2010 and September 30, 2010 are summarized as follows (dollars in thousands):

	September 30, 2011						December 31, 2010						September 30, 2010
	Amount			Percent of Total			Amount			Percent of Total			Amount			Percent of Total

Commercial real estate
Owner-occupied	$	474,863			14.7	%	$	515,093			15.1	%	$	526,599			15.1	%
Investment properties		586,652			18.2			550,610			16.2			534,338			15.3
Multifamily real estate		134,146			4.2			134,634			4.0			150,396			4.3
Commercial construction		38,124			1.2			62,707			1.8			64,555			1.8
Multifamily construction		16,335			0.5			27,394			0.8			48,850			1.4
One- to four-family construction		145,776			4.5			153,383			4.5			174,312			5.0
Land and land development
Residential		96,875			3.0			167,764			4.9			189,948			5.4
Commercial		19,173			0.6			32,386			1.0			24,697			0.7
Commercial business		580,876			18.0			585,457			17.2			596,152			17.0
Agricultural business, including secured by farmland		211,571			6.6			204,968			6.0			210,904			6.0
One- to four-family real estate		639,909			19.8			682,924			20.1			681,138			19.5
Consumer		98,794			3.1			99,761			2.9			106,922			3.1
Consumer secured by one- to four-family		182,152			5.6			186,036			5.5			189,291			5.4

Total loans outstanding		3,225,246			100.0	%		3,403,117			100.0	%		3,498,102			100.0	%

Less allowance for loan losses		(86,128	)					(97,401	)					(96,435	)
Net loans	$	3,139,118					$	3,305,716					$	3,401,667

Loan amounts are net of unearned, unamortized loan fees (and costs) of approximately $10 million, $11 million and $11 million at September 30, 2011, December 31, 2010 and September 30, 2010, respectively.

The Company’s loans by geographic concentration at September 30, 2011 were as follows (dollars in thousands):

		Washington			Oregon			Idaho			Other			Total
Commercial real estate
Owner-occupied	$	355,741		$	66,103		$	49,755		$	3,264		$	474,863
Investment properties		444,282			94,764			42,301			5,305			586,652
Multifamily real estate		117,663			7,720			8,328			435			134,146
Commercial construction		22,185			954			14,985			--			38,124
Multifamily construction		16,335			--			--			--			16,335
One- to four-family construction		81,325			62,498			1,953			--			145,776
Land and land development
Residential		44,912			45,262			6,701			--			96,875
Commercial		16,827			897			1,449			--			19,173
Commercial business		388,047			88,986			68,617			35,226			580,876
Agricultural business, including secured by farmland		111,249			43,558			56,696			68			211,571
One- to four-family real estate		398,733			212,494			26,402			2,280			639,909
Consumer		69,686			23,932			5,176			--			98,794
Consumer secured by one- to four-Family		124,257			44,507			12,620			768			182,152
Total loans	$	2,191,242		$	691,675		$	294,983		$	47,346		$	3,225,246

Percent of total loans		67.9	%		21.4	%		9.1	%		1.6	%		100.0	%

The geographic concentrations of Banner’s land and land development loans by state at September 30, 2011 were as follows (dollars in thousands):

	Washington		Oregon		Idaho		Total
Residential:
Acquisition and development	$	14,118	$	22,738	$	4,153	$	41,009
Improved land and lots		16,837		19,470		533		36,840
Unimproved land		13,957		3,054		2,015		19,026

Total residential land and development	$	44,912	$	45,262	$	6,701	$	96,875
Commercial and industrial:
Acquisition and development	$	4,200	$	--	$	481	$	4,681
Improved land and lots		6,094		--		197		6,291
Unimproved land		6,533		897		771		8,201
Total commercial land development	$	16,827	$	897	$	1,449	$	19,173

The Company originates both adjustable- and fixed-rate loans. The maturity and repricing composition of those loans, less undisbursed amounts and deferred fees, at September 30, 2011, December 31, 2010 and September 30, 2010 were as follows (in thousands):

	September 30 2011		December 31 2010		September 30 2010
Fixed-rate (term to maturity):
Due in one year or less	$	194,153	$	214,625	$	223,338
Due after one year through three years		237,087		232,412		251,829
Due after three years through five years		170,747		173,533		160,473
Due after five years through ten years		162,461		119,108		120,320
Due after ten years		494,989		530,548		537,803

Total fixed-rate loans		1,259,437		1,270,226		1,293,763

Adjustable-rate (term to rate adjustment):
Due in one year or less		1,172,572		1,311,679		1,353,793
Due after one year through three years		431,373		428,910		458,125
Due after three years through five years		336,984		356,241		356,621
Due after five years through ten years		23,932		36,061		35,204
Due after ten years		948		--		596

Total adjustable-rate loans		1,965,809		2,132,891		2,204,339
Total loans	$	3,225,246	$	3,403,117	$	3,498,102

The adjustable-rate loans have interest rate adjustment limitations and are generally indexed to various prime (The Wall Street Journal) or LIBOR rates, One to Five Year Constant Maturity Treasury Indices or FHLB borrowing rates. Future market factors may affect the correlation of the interest rate adjustment with the rates the Banks pay on the short-term deposits that primarily have been utilized to fund these loans.

Impaired Loans and the Allowance for Loan Losses. A loan is considered impaired when, based on current information and circumstances, the Company determines it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. Impaired loans are comprised of loans on nonaccrual status, accruing TDRs and loans that are 90 days or more past due, but are still on accrual.

The amount of impaired loans and the related allocated reserve for loan losses as of September 30, 2011 and December 31, 2010 were as follows (in thousands):

		September 30, 2011				December 31, 2010
		Loan Amount		Allocated Reserves		Loan Amount		Allocated Reserves
Impaired loans:
Nonaccrual loans
Commercial real estate	$	8,908	$	689	$	24,727	$	2,151
Multifamily real estate		--		--		1,889		139
Construction and land		35,841		5,760		75,734		6,541
Commercial business		15,754		2,633		21,100		5,332
Agricultural business, including secured by farmland		1,301		34		5,853		56
One- to four-family residential		15,274		419		16,869		23
Consumer		4,232		1,436		2,332		84

Total nonaccrual loans		81,310		10,971		148,504		14,326
Past due and still accruing		1,839		144		2,985		7
TDRs		51,990		1,804		60,115		4,054
Total impaired loans	$	135,139	$	12,919	$	211,604	$	18,387

As of September 30, 2011, the Company had additional commitments to advance funds up to an amount of $286,000 related to impaired loans.

The following tables provide additional information on impaired loans, with and without specific allowance reserves, at their recorded investment amount as of September 30, 2011 and December 31, 2010. Recorded investment includes the unpaid principal balance or the carrying amount of loans less charge-offs and net deferred loan fees (in thousands):

	September 30, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance

Without a specific allowance reserve (1)
Commercial real estate	$	3,533	$	3,575	$	412
Multifamily real estate		455		455		8
Construction and land		10,016		10,602		2,076
Commercial business		5,601		5,999		1,139
Agricultural business, including secured by farmland		504		929		34
One- to four-family residential		26,782		27,109		237
Consumer		1,886		2,193		28
		48,777		50,862		3,934

With a specific allowance reserve (2)
Commercial real estate		10,936		10,936		609
Multifamily real estate		1,997		1,997		14
Construction and land		39,884		58,459		4,619
Commercial business		12,321		17,971		1,891
Agricultural business, including Secured by farmland		797		1,017		--
One- to four-family residential		17,338		18,153		436
Consumer		3,089		3,469		1,416
		86,362		112,002		8,985

Total impaired loans
Commercial real estate	$	14,469	$	14,511	$	1,021
Multifamily real estate		2,452		2,452		22
Construction and land		49,900		69,061		6,695
Commercial business		17,922		23,970		3,030
Agricultural business, including secured by farmland		1,301		1,946		34
One- to four-family residential		44,120		45,262		673
Consumer		4,975		5,662		1,444
Total	$	135,139	$	162,864	$	12,919

	December 31, 2010
	Recorded Investment		Unpaid Principal Balance		Related Allowance

Without a specific allowance reserve (1)
Commercial real estate	$	4,870	$	5,295	$	594
Multifamily real estate		339		339		68
Construction and land		9,758		10,237		1,955
Commercial business		7,558		7,576		1,044
Agricultural business, including Secured by farmland		475		900		19
One- to four-family residential		31,094		31,121		122
Consumer		252		252		4

		54,346		55,720		3,806

With a specific allowance reserve (2)
Commercial real estate		26,384		28,048		2,320
Multifamily real estate		1,471		1,471		55
Construction and land		88,065		117,152		7,275
Commercial business		14,134		19,224		4,358
Agricultural business, including Secured by farmland		5,457		8,934		37
One- to four-family residential		20,736		21,791		536
Consumer		1,011		1,011		--

		157,258		197,631		14,581

Total impaired loans
Commercial real estate	$	31,254	$	33,343	$	2,914
Multifamily real estate		1,810		1,810		123
Construction and land		97,823		127,389		9,230
Commercial business		21,692		26,800		5,402
Agricultural business, including Secured by farmland		5,932		9,834		56
One- to four-family residential		51,830		52,912		658
Consumer		1,263		1,263		4
Total	$	211,604	$	253,351	$	18,387

(1)	Loans without a specific allowance reserve have not been individually evaluated for impairment, but have been included in pools of homogeneous loans for evaluation of related allowance reserves.

(2)

Loans with a specific allowance reserve have been individually evaluated for impairment using either a discounted cash flow analysis or, for collateral dependent loans, current appraisals to establish realizable value. These analyses may identify a specific impairment amount needed or may conclude that no reserve is needed. Any specific impairment that is identified is included in the category’s Related Allowance column.

The following table provides additional information on the average recorded investment and interest income recognized on impaired loans with and without specific allowance reserves for the three and nine-month periods ended September 30, 2011 and 2010 (in thousands):

		Three Months Ended September 30 2011				Three Months Ended September 30 2010				Nine Months Ended September 30 2011				Nine Months Ended September 30 2010
		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	Without a specific allowance reserve:
	Commercial real estate	$	3,574	$	36	$	4,920	$	51	$	3,728	$	132	$	4,959	$	146
	Multifamily real estate		451		16		382		4		457		25		374		24
	Construction and land		10,057		115		18,705		162		10,555		366		21,696		469
	Commercial and industrial		5,839		77		7,733		75		6,203		231		8,330		248
	Agricultural business, Including secured by farmland		505		3		411		6		515		9		466		18
	One- to four-family residential		26,937		279		25,516		304		27,155		900		24,915		932
	Consumer		1,952		17		1,998		16		2,086		72		1,904		53
			49,315		543		59,665		618		50,699		1,735		62,644		1,890

	With a specific allowance reserve:
	Commercial real estate		10,944		78		17,226		103		10,765		323		16,573		313
	Multifamily real estate		1,991		25		1,329		--		1,955		76		1,329		--
	Construction and land		41,543		165		106,188		210		59,130		610		120,746		824
	Commercial and industrial		12,436		19		20,115		140		13,382		107		21,171		351
	Agricultural business, Including secured by farmland		794		--		6,353		82		819		--		7,307		245
	One- to four-family residential		17,531		173		18,203		145		17,192		598		18,569		448
	Consumer		3,369		22		1,124		8		3,303		112		1,178		27
			88,608		482		170,538		688		106,546		1,826		186,873		2,208

	Total impaired loans:
	Commercial real estate	$	14,518	$	114	$	22,146	$	154	$	14,493	$	455	$	21,532	$	459
	Multifamily real estate		2,442		41		1,711		4		2,412		101		1,703		24
	Construction and land		51,600		280		124,893		372		69,685		976		142,442		1,293
	Commercial and industrial		18,275		96		27,848		215		19,585		338		29,501		599
	Agricultural business, Including secured by farmland		1,299		3		6,764		88		1,334		9		7,773		263
	One- to four-family residential		44,468		452		43,719		449		44,347		1,498		43,484		1,380
	Consumer		5,321		39		3,122		24		5,389		184		3,082		80
	Total	$	137,923	$	1,025	$	230,203	$	1,306	$	157,245	$	3,561	$	249,517	$	4,098

The following tables present troubled debt restructurings at September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	Accrual Status		Nonaccrual Status		Total Modifications

Commercial real estate	$	5,561	$	649	$	6,210
Multifamily real estate		2,452		--		2,452
Construction and land		14,058		4,504		18,562
Commercial business		1,482		85		1,567
Agricultural business, including secured by farmland		--		--		--
One- to four-family residential		27,734		3,589		31,323
Consumer		703		989		1,692
	$	51,990	$	9,816	$	61,806

	December 31, 2010
	Accrual Status		Nonaccrual Status		Total Modifications

Commercial real estate	$	4,505	$	370	$	4,875
Multifamily real estate		--		--		--
Construction and land		21,873		6,944		28,817
Commercial business		3,746		27		3,773
Agricultural business, including secured by farmland		--		--		--
One- to four-family residential		29,340		2,415		31,755
Consumer		651		583		1,234
	$	60,115	$	10,339	$	70,454

The following tables present newly restructured loans that occurred during the three and nine months ended September 30, 2011 and 2010 (in thousands except for number of contracts):

	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	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

Recorded Investment (1)
Commercial real estate		--	$	--	$	--		4	$	2,165	$	2,165
Multifamily real estate		1		455		455		3		2,452		2,452
Construction and land		8		2,247		2,247		11		4,529		4,529
Commercial business		2		855		645		3		905		695
Agricultural business, including secured by farmland		--		--		--		--		--		--
One- to four-family residential		--		--		--		4		1,097		1,097
Consumer		--		--		--		3		136		136
		11	$	3,557	$	3,347		28	$	11,284	$	11,074

		Three Months Ended September 30, 2010					Nine Months Ended September 30, 2010
	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

Recorded Investment (1)
Commercial real estate		3	$	3,158	$	3,158		5	$	3,956	$	3,956
Multifamily real estate		2		7,612		7,612		--		--		--
Construction and land		--		--		--		5		10,681		10,681
Commercial business		2		151		151		6		837		837
Agricultural business, including secured by farmland		--		--		--		--		--		--
One- to four-family residential		4		2,334		2,334		18		6,042		6,042
Consumer		1		358		358		4		764		764
		12	$	13,613	$	13,613		38	$	22,280	$	22,280

(1)	Since most loans were already considered classified and/or on non-accrual status prior to restructuring, the modifications did not have a material effect on the Company’s determination of the allowance for loan losses.

The following table presents restructured loans which incurred a payment default within the three or nine-month periods ended September 30, 2011 and 2010, for which the payment default occurred within twelve months of the restructure date. A default on a restructured loan is either a transfer to nonaccrual status or a charge-off (in thousands):

		Quarters Ended September 30,				Nine Months Ended September 30,
		2011		2010		2011		2010
Commercial real estate	$	--	$	1,126	$	--	$	--
Multifamily real estate		--		--		--		--
Construction and land		2,227		2,227		--		747
Commercial business		--		66		--		--
Agricultural business, including secured by farmland		--		--		--		--
One- to four-family residential		--		934		--		--
Consumer		--		--		--		53
Balance, end of period	$	2,227	$	4,353	$	--	$	800

(1)	Since most loans were already considered classified and/or on nonaccrual status prior to restructuring, the defaults did not have a material effect on the Company’s determination of the allowance for loan losses.

The following table presents troubled debt restructurings at September 30, 2011 and December 31, 2010, which were performing according to agreement (in thousands):

	September 30, 2011		December 30, 2010
	Number of Contracts	Total Modifications	Number of Contracts	Total Modifications
Commercial real estate	9	5,561	6	4,505
Multifamily real estate	3	2,452	--	--
Construction and land	32	14,058	31	21,873
Commercial business	9	1,482	13	3,746
Agricultural business, including secured by farmland	--	--	--	--
One- to four-family residential	86	27,734	90	29,340
Consumer	7	703	2	651
	146	51,990	142	60,115

Credit Quality Indicators: To appropriately and effectively manage the ongoing credit quality of the Company’s loan portfolio, management has implemented a risk-rating or loan grading system for its loans. The system is a tool to evaluate portfolio asset quality throughout each applicable loan’s life as an asset of the Company. Generally, loans and leases are risk rated on an aggregate borrower/relationship basis with individual loans sharing similar ratings. There are some instances when specific situations relating to individual loans will provide the basis for different risk ratings within the aggregate relationship. Loans are graded on a scale of 1 to 9. For a description of the general characteristics of these categories, please refer to Note 6 of the Notes to the Consolidated Financial Statements in our 2010 Form 10-K.

The following table shows Banner’s portfolio of risk-rated loans and non-risk-rated loans by grade or other characteristics as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Total Loans

Risk-rated loans:
Pass (Risk Ratings 1-5) (1)	$	969,614	$	126,884	$	238,425	$	501,489	$	205,569	$	602,793	$	273,829	$	2,918,603
Special mention		26,660		5,000		3,453		31,483		1,291		1,082		235		69,204
Substandard		65,241		2,262		74,405		47,395		4,711		36,034		6,882		236,930
Doubtful		--		--		--		509		--		--		--		509
Loss		--		--		--		--		--		--		--		--
Total loans	$	1,061,515	$	134,146	$	316,283	$	580,876	$	211,571	$	639,909	$	280,946	$	3,225,246

Performing loans	$	1,052,607	$	134,146	$	280,442	$	564,435	$	210,270	$	623,524	$	276,673	$	3,142,097
Non-performing loans		8,908		--		35,841		16,441		1,301		16,385		4,273		83,149
Total loans	$	1,061,515	$	134,146	$	316,283	$	580,876	$	211,571	$	639,909	$	280,946	$	3,225,246

		December 31, 2010
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Total Loans

Risk-rated loans:
Pass (Risk Ratings 1-5) (1)	$	950,889	$	116,078	$	281,871	$	514,204	$	195,123	$	645,452	$	280,511	$	2,984,128
Special mention		31,799		16,302		16,168		17,674		1,327		1,154		248		84,672
Substandard		83,015		2,254		145,595		52,713		8,352		36,318		5,038		333,285
Doubtful		--		--		--		866		166		--		--		1,032
Loss		--		--		--		--		--		--		--		--
Total loans	$	1,065,703	$	134,634	$	443,634	$	585,457	$	204,968	$	682,924	$	285,797	$	3,403,117

Performing loans	$	1,040,976	$	132,745	$	367,900	$	564,357	$	199,115	$	663,100	$	283,435	$	3,251,628
Non-performing loans		24,727		1,889		75,734		21,100		5,853		19,824		2,362		151,489
Total loans	$	1,065,703	$	134,634	$	443,634	$	585,457	$	204,968	$	682,924	$	285,797	$	3,403,117

(1)

The Pass category includes some performing loans that are part of homogenous pools which are not individually risk-rated. This includes all consumer loans, all one- to four-family residential loans and, in the commercial business category, $54 million of small credit-scored business loans. As loans in these pools become non-performing, they are individually risk-rated.

The following table provides additional detail on delinquency aging of Banner’s loans, including delinquent loans on accrual and on non-accrual status as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Loans 90 Days or More Past Due and Accruing

Commercial real estate	$	175	$	737	$	7,632	$	8,544	$	1,052,971	$	1,061,515	$	--
Multifamily real estate		--		--		--		--		134,146		134,146		--
Construction and land		--		527		27,228		27,755		288,528		316,283		--
Commercial business		1,433		338		8,327		10,098		570,778		580,876		--
Agricultural business, including secured by farmland		--		1,074		998		2,072		209,499		211,571		--
One-to four-family residential		1,095		4,846		11,668		17,609		622,300		639,909		--
Consumer		896		517		2,697		4,110		276,836		280,946		--
Total	$	3,599	$	8,039	$	58,550	$	70,188	$	3,155,058	$	3,225,246	$	--

	December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Loans 90 Days or More Past Due and Accruing

Commercial real estate	$	7,847	$	8,753	$	20,584	$	37,184	$	1,028,519	$	1,065,703	$	--
Multifamily real estate		--		--		1,329		1,329		133,305		134,634		--
Construction and land		6,148		1,846		54,460		62,454		381,180		443,634		--
Commercial business		3,939		824		14,159		18,922		566,535		585,457		--
Agricultural business, including secured by farmland		514		3,684		3,499		7,697		197,271		204,968		--
One-to four-family residential		951		6,119		17,106		24,176		658,748		682,924		2,955
Consumer		1,535		1,006		1,554		4,095		281,702		285,797		30
Total	$	20,934	$	22,232	$	112,691	$	155,857	$	3,247,260	$	3,403,117	$	2,985

The following tables provide additional information on the allowance for loan losses and loan balances individually and collectively evaluated for impairment at or for the three and nine months ended September 30, 2011 and 2010 (in thousands):

	For the Three Months Ended September 30, 2011
	Commercial Real Estate and Multifamily			Construction and Land			Commercial/ Agricultural Business			One- to Four-Family Residential			Consumer			Commitments and Unallocated(1)			Total
Allowance for loan losses:
Beginning balance	$	18,491		$	25,976		$	21,321		$	8,254		$	1,445		$	16,513		$	92,000
Provision for loan losses		327			3,063			(2,731	)		5,444			(183	)		(920	)		5,000
Recoveries		1			89			424			34			69			--			617
Charge-offs		(1,644	)		(6,445	)		(863	)		(2,483	)		(54	)		--			(11,489	)
Ending balance	$	17,175		$	22,683		$	18,151		$	11,249		$	1,277		$	15,593		$	86,128

	For the Nine Months Ended September 30, 2011
	Commercial Real Estate and Multifamily			Construction and Land			Commercial/ Agricultural Business			One- to Four-Family Residential			Consumer			Commitments and Unallocated(1)		Total
Allowance for loan losses:
Beginning balance	$	15,742		$	33,121		$	26,391		$	5,829		$	1,794		$	14,524	$	97,401
Provision for loan losses		6,592			11,781			(1,313	)		11,891			(20	)		1,069		30,000
Recoveries		16			840			586			115			231			--		1,788
Charge-offs		(5,175	)		(23,059	)		(7,513	)		(6,586	)		(728	)		--		(43,061	)
Ending balance	$	17,175		$	22,683		$	18,151		$	11,249		$	1,277		$	15,593	$	86,128

	At September 30, 2011

Allowance individually evaluated for impairment	$	623	$	4,619	$	1,891	$	436	$	1,416		$	--	$	8,985
Allowance collectively evaluated for impairment		16,552		18,064		16,260		10,813		(139	)		15,593		77,143
Total allowance for loan losses	$	17,175	$	22,683	$	18,151	$	11,249	$	1,277		$	15,593	$	86,128

(1)The portion of the allowance allocated to commitments was $508,000 and the portion that is unallocated was $15.2 million.

	At September 30, 2011

Loan balances:
Loans individually evaluated for impairment	$	12,933	$	39,884	$	13,118	$	17,338	$	3,089	n/a	$	86,362
Loans collectively evaluated for impairment		1,182,728		276,399		779,329		622,571		277,857	n/a		3,138,884
Total loans	$	1,195,661	$	316,283	$	792,447	$	639,909	$	280,946	n/a	$	3,225,246

	For the Three Months Ended September 30, 2010
	Commercial Real Estate and Multifamily			Construction and Land			Commercial/ Agricultural Business			One- to Four-Family Residential			Consumer			Commitments and Unallocated(1)		Total
Allowance for loan losses:
Beginning balance	$	9,406		$	45,601		$	24,584		$	3,530		$	1,890		$	10,497	$	95,508
Provision for loan losses		1,453			4,704			7,097			1,105			281			5,360		20,000
Recoveries		--			163			213			54			77			--		507
Charge-offs		(1	)		(11,802	)		(6,294	)		(1,134	)		(349	)		--		(19,580	)
Ending balance	$	10,858		$	38,666		$	25,600		$	3,555		$	1,899		$	15,857	$	96,435

	For the Nine Months Ended September 30, 2010
	Commercial Real Estate and Multifamily			Construction and Land			Commercial/ Agricultural Business			One- to Four-Family Residential			Consumer			Commitments and Unallocated(1)		Total
Allowance for loan losses:
Beginning balance	$	8,368		$	45,209		$	22,973		$	2,912		$	1,809		$	13,998	$	95,269
Provision for loan losses		2,583			24,453			14,042			5,895			1,168			1,859		50,000
Recoveries		--			785			2,098			125			205			--		3,213
Charge-offs		(93	)		(31,781	)		(13,513	)		(5,377	)		(1,283	)		--		(52,047	)
Ending balance	$	10,858		$	38,666		$	25,600		$	3,555		$	1,899		$	15,857	$	96,435

	At September 30, 2010

Allowance individually evaluated for impairment	$	1,653	$	7,648	$	5,447	$	967	$	--	$	--	$	15,715
Allowance collectively evaluated for impairment		9,205		31,018		20,153		2,588		1,899		15,857		80,720
Total allowance for loan losses	$	10,858	$	38,666	$	25,600	$	3,555	$	1,899	$	15,857	$	96,435

(1)The portion of the allowance allocated to commitments was $1.5 million and the portion that is unallocated was $14.3 million.

	At September 30, 2010

Loan balances:
Loans individually evaluated for impairment	$	29,400	$	88,487	$	25,323	$	20,921	$	--	n/a	$	164,131
Loans collectively evaluated for impairment		1,181,933		413,875		781,733		660,217		296,213	n/a		3,333,971
Total loans	$	1,211,333	$	502,362	$	807,056	$	681,138	$	296,213	n/a	$	3,498,102