Real Estate Owned, Net

3 Months Ended

Sep. 30, 2011

Real Estate Owned, Net

Real Estate Owned, Net

Note 8:  REAL ESTATE OWNED, NET

The following table presents the changes in real estate owned (REO), net of valuation adjustments, for the three and nine months ended September 30, 2011 and 2010 (in thousands):

	Three Months Ended September 30						Nine Months Ended September 30
		2011			2010			2011			2010
Balance, beginning of the period	$	71,205		$	101,485		$	100,872		$	77,743
Additions from loan foreclosures		18,881			25,694			45,715			70,906
Additions from capitalized costs		1,107			841			4,254			2,357
Dispositions of REO		(19,440	)		(12,145	)		(70,771	)		(32,556	)
Loss on sale of REO		(725	)		(133	)		(1,204	)		(1,368	)
Valuation adjustments in the period		(4,569	)		(8,583	)		(12,407	)		(9,923	)
Balance, end of the period	$	66,459		$	107,159		$	66,459		$	107,159

The following table shows REO by type and geographic location by state as of September 30, 2011 (in thousands):

	Washington		Oregon		Idaho		Total
Commercial real estate	$	1,901	$	--	$	2,494	$	4,395
One- to four-family construction		472		3,039		--		3,511
Land development- commercial		3,876		2,836		200		6,912
Land development- residential		21,913		13,532		2,322		37,767
Agricultural land		--		--		100		100
One- to four-family real estate		6,876		4,820		2,078		13,774
Balance, end of period	$	35,038	$	24,227	$	7,194	$	66,459

REO properties are recorded at the lower of the Company’s investment or the fair market value of the property, less expected selling costs.  REO properties are reviewed periodically to determine if valuation allowances are necessary.  These valuation allowances are generally based on updated appraisals of the underlying properties.  Further, management may direct a reduction of the selling price of a property which may result in an additional valuation allowance.