Real Estate Owned, Net

12 Months Ended

Dec. 31, 2011

Real Estate Owned, Net

Real Estate Owned, Net

Note 7:  REAL ESTATE OWNED, NET

The following table presents the changes in real estate owned (REO), net of valuation allowance, for the years ended December 31, 2011, 2010 and 2009 (in thousands):

	Years Ended December 31
		2011			2010			2009
Balance, beginning of period	$	100,872		$	77,743		$	21,782
Additions from loan foreclosures		53,197			87,761			101,853
Additions from capitalized costs		4,404			4,006			6,064
Dispositions of REO		(99,070	)		(51,651	)		(42,709	)
Transfers to property and equipment		--			--			(7,030	)
Loss on sale of REO		(1,374	)		(1,891	)		(574	)
Valuation adjustments in the period		(15,064	)		(15,096	)		(1,643	)
Balance, end of period	$	42,965		$	100,872		$	77,743

The following table shows REO by type and geographic location by state as of December 31, 2011 (dollars in thousands):

	Washington			Oregon			Idaho			Total
Commercial real estate	$	1,852		$	--		$	1,620		$	3,472
One- to four-family construction		405			2,323			--			2,728
Land development- commercial		3,876			112			200			4,188
Land development- residential		5,333			11,881			3,316			20,530
Agricultural land		--			--			--			--
One- to four-family real estate		6,896			3,651			1,500			12,047
Total REO	$	18,362		$	17,967		$	6,636		$	42,965
Percent of total REO		42.7	%		41.8	%		15.5	%		100.0	%

REO properties are recorded at the lower of the estimated fair value of the property, less expected selling costs, or the carrying value of the defaulted loan, establishing a new cost basis.  Subsequently, REO properties are carried at the lower of the new cost basis or updated fair market values, based on updated appraisals of the underlying properties, as received.  Valuation allowances on the carrying value of REO may be recognized based on updated appraisals or on management’s authorization to reduce the selling price of a property.