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Loans Receivable and The Allowance For Loan Losses

3 Months Ended

Jun. 30, 2012

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 business 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 June 30, 2012, December 31, 2011 and June 30, 2011 are summarized as follows (dollars in thousands):

	June 30, 2012
	Amount	Percent of Total
Commercial real estate
Owner-occupied	$477,621	14.9%
Investment properties	613,965	19.1
Multifamily real estate	130,319	4.1
Commercial construction	23,808	0.7
Multifamily construction	18,132	0.6
One- to four-family construction	157,301	4.8
Land and land development
Residential	83,185	2.6
Commercial	11,451	0.4
Commercial business	600,046	18.7
Agricultural business, including secured by farmland	211,705	6.6
One- to four-family real estate	607,489	18.9
Consumer	103,504	3.2
Consumer secured by one- to four-family	173,731	5.4
Total consumer	277,235	8.6

Total loans outstanding	3,212,257	100.0%

Less allowance for loan losses	(80,221)

Net loans	$3,132,036

	June 30, 2011
	Amount	Percent of Total
Commercial real estate
Owner-occupied	$507,751	15.3%
Investment properties	582,569	17.6
Multifamily real estate	147,951	4.5
Commercial construction	35,790	1.1
Multifamily construction	20,552	0.6
One- to four-family construction	140,669	4.4
Land and land development
Residential	128,920	3.9
Commercial	29,347	0.9
Commercial business	566,243	17.1
Agricultural business, including secured by farmland	208,485	6.3
One- to four-family real estate	658,216	19.9
Consumer	97,396	2.9
Consumer secured by one- to four-family	182,778	5.5
Total consumer	280,174	8.4

Total loans outstanding	3,306,667	100.0%

Less allowance for loan losses	(92,000)

Net loans	$3,214,667

	December 31, 2011
	Amount	Percent of Total
Commercial real estate
Owner-occupied	$469,806	14.2%
Investment properties	621,622	18.9
Multifamily real estate	139,710	4.2
Commercial construction	42,391	1.3
Multifamily construction	19,436	0.6
One- to four-family construction	144,177	4.4
Land and land development
Residential	97,491	3.0
Commercial	15,197	0.5
Commercial business	601,440	18.2
Agricultural business, including secured by farmland	218,171	6.6
One- to four-family real estate	642,501	19.5
Consumer	103,347	3.1
Consumer secured by one- to four-family	181,049	5.5
Total consumer	284,396	8.6

Total loans outstanding	3,296,338	100.0%

Less allowance for loan losses	(82,912)

Net loans	$3,213,426

Loan amounts are net of unearned, unamortized loan fees (and costs) of approximately $10 million, as of June 30, 2012, December 31, 2011 and June 30, 2011.

The Company’s loans by geographic concentration at June 30, 2012 were as follows (dollars in thousands):

	Washington	Oregon	Idaho	Other	Total
Commercial real estate
Owner-occupied	$367,377	$50,164	$57,022	$3,058	$477,621
Investment properties	469,363	94,893	42,657	7,052	613,965
Multifamily real estate	110,342	12,889	6,738	350	130,319
Commercial construction	15,767	5,415	2,626	--	23,808
Multifamily construction	16,930	1,202	--	--	18,132
One- to four-family construction	86,186	69,101	2,014	--	157,301
Land and land development
Residential	40,903	40,184	2,098	--	83,185
Commercial	8,770	885	1,796	--	11,451
Commercial business	383,040	75,556	60,592	80,858	600,046
Agricultural business, including secured by farmland	110,608	38,650	62,447	--	211,705
One- to four-family real estate	371,458	208,490	25,360	2,181	607,489
Consumer	69,701	28,566	5,236	1	103,504
Consumer secured by one- to four-family	117,685	43,867	11,645	534	173,731
Total consumer	187,386	72,433	16,881	535	277,235

Total loans	$2,168,130	$669,862	$280,231	$94,034	$3,212,257

Percent of total loans	67.5%	20.9%	8.7%	2.9%	100.0%

The geographic concentrations of the Company’s land and land development loans by state at June 30, 2012 were as follows (dollars in thousands):

	Washington	Oregon	Idaho	Total
Residential:
Acquisition and development	$7,071	$15,975	$1,738	$24,784
Improved land and lots	21,980	21,542	279	43,801
Unimproved land	11,852	2,667	81	14,600

Commercial and industrial:
Acquisition and development	1,464	--	481	1,945
Improved land and lots	3,269	--	570	3,839
Unimproved land	4,037	885	745	5,667

Total land and land development loans	$49,673	$41,069	$3,894	$94,636

Percent of land and land development loans	52.5%	43.4%	4.1%	100.0%

The Company originates both adjustable- and fixed-rate loans. The maturity and repricing composition of those loans, less undisbursed amounts and deferred fees, at June 30, 2012, December 31, 2011 and June 30, 2011 were as follows (in thousands):


	June 30, 2012	December 31, 2011	June 30, 2011
Fixed-rate (term to maturity):
Due in one year or less	$233,525	$216,782	$191,252
Due after one year through three years	223,624	250,715	245,203
Due after three years through five years	161,094	182,647	189,938
Due after five years through ten years	155,490	157,559	143,647
Due after ten years	474,366	502,196	512,639
Total fixed-rate loans	1,248,099	1,309,899	1,282,679

Adjustable-rate (term to rate adjustment):
Due in one year or less	1,193,230	1,200,182	1,221,511
Due after one year through three years	322,336	425,309	435,987
Due after three years through five years	408,015	336,382	331,136
Due after five years through ten years	38,782	23,618	35,354
Due after ten years	1,795	948	--
Total adjustable-rate loans	1,964,158	1,986,439	2,023,988

Total loans	$3,212,257	$3,296,338	$3,306,667

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 advance 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, TDRs that are performing under their restructured terms, 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 June 30, 2012 and December 31, 2011 were as follows (in thousands):


	June 30, 2012		December 31, 2011
	Loan Amount	Allocated Reserves	Loan Amount	Allocated Reserves
Impaired loans:
Nonaccrual loans
Commercial real estate
Owner-occupied	$3,557	$124	$4,306	$281
Investment properties	4,023	176	4,920	626
Multifamily real estate	--	--	362	11
Commercial construction	--	--	949	--
One- to four-family construction	3,805	1,859	6,622	1,921
Land and land development
Residential	4,751	709	19,060	1,485
Commercial	383	19	1,100	45
Commercial business	8,600	640	13,460	1,871
Agricultural business/farmland	1,010	103	1,896	629
One- to four-family residential	16,170	723	17,408	243

Consumer	1,025	4	1,115	62
Consumer secured by one- to four-family	1,857	21	1,790	23

Total consumer	2,882	25	2,905	85

Total nonaccrual loans	45,181	4,378	72,988	7,197

Past due and still accruing	2,181	1	2,324	19
TDRs	58,010	5,983	54,533	3,100

Total impaired loans	$105,372	$10,362	$129,845	$10,316

As of June 30, 2012, the Company had additional commitments to advance funds up to an amount of $510,000 related to TDR loans.

The following tables provide additional information on impaired loans with and without specific allowance reserves as of June 30, 2012 and December 31, 2011 (in thousands):

	At or For the Six Months Ended June 30, 2012
	Investment	Balance	Allowance	Investment	Recognized
Without a specific allowance reserve (1)	--	--	--	--	--
Commercial real estate
Owner-occupied	$1,581	$1,922	$124	$1,581	$--
Investment properties	1,216	1,523	223	1,349	10
Multifamily real estate	2,136	2,136	482	2,139	56
One- to four-family construction	5,481	5,543	435	5,286	119
Land and land development
Residential	1,158	2,201	420	1,338	--
Commercial	89	89	19	90	--
Commercial business	6,886	7,439	1,288	7,109	110
Agricultural business/farmland	1,010	1,693	103	1,427	--
One- to four-family residential	24,136	25,310	233	24,191	590

Consumer	736	844	10	789	6
Consumer secured by one- to four-
family	1,798	2,104	54	1,794	13
Total without a specific allowance reserve	46,227	50,804	3,391	47,093	905

With a specific allowance reserve (2)	--	--	--	--	--
Commercial real estate
Owner-occupied	$2,802	$3,060	$3	$2,894	$14
Investment properties	6,666	7,774	397	6,980	69
Multifamily real estate	5,000	5,000	1,464	5,000	130
One- to-four family construction	7,706	7,706	2,450	7,565	149
Land and land development
Residential	3,594	8,158	289	4,667	--
Commercial	294	454	--	428	--
Commercial business	10,514	11,902	1,054	12,296	115
One- to four-family residential	20,989	22,290	1,281	20,588	257

Consumer	989	1,047	33	1,034	18
Consumer secured by one- to-four
family	591	689	--	673	--
Total with a specific allowance reserve	59,145	68,080	6,971	62,125	752

Total
Commercial real estate
Owner-occupied	$4,383	$4,982	$127	$4,475	$14
Investment properties	7,882	9,298	620	8,329	79
Multifamily real estate	7,136	7,136	1,946	7,139	187
One- to four-family construction	13,187	13,249	2,885	12,851	268
Land and land development
Residential	4,752	10,359	709	6,005	--
Commercial	383	543	19	518	--
Commercial business	17,400	19,341	2,342	19,405	225
Agricultural business/farmland	1,011	1,693	103	1,427	--
One- to four-family residential	45,126	47,600	1,514	44,779	847

Consumer	1,724	1,890	43	1,823	24
Consumer secured by one- to four-
family	2,388	2,793	54	2,467	13
Total with and without a specific allowance reserve	105,372	118,884	10,362	109,218	1,657

	At or For the Year Ended December 31, 2011
	Investment	Balance	Allowance	Investment	Recognized
Without a specific allowance reserve (1)	--	--	--	--	--
Commercial real estate
Owner-occupied	$852	$853	$78	$874	$--
Investment properties	1,576	1,618	261	1,728	9
Multifamily real estate	452	452	6	456	32
One- to four-family construction	5,429	5,488	437	5,580	242
Land and land development
Residential	4,064	4,679	1,176	4,524	99
Commercial	645	645	45	616	--
Commercial business	5,173	5,535	932	5,587	81
Agricultural business/farmland	412	632	37	529	--
One- to four-family residential	27,529	28,121	277	27,933	919

Consumer	559	666	5	624	7
Consumer secured by one- to four-
family	1,707	2,162	29	2,042	22
Total consumer	2,266	2,828	34	2,666	29

Total without a specific allowance reserve	48,398	50,851	3,283	50,493	1,411

With a specific allowance reserve (2)
Commercial real estate
Owner-occupied	$3,643	$4,013	$207	$3,901	$13
Investment properties	11,750	14,200	1,485	13,471	424
Multifamily real estate	1,997	1,997	11	1,967	82
Commercial construction	949	1,493	--	1,465	--
One- to-four family construction	9,556	9,821	1,998	9,185	277
Land and land development
Residential	20,331	34,068	616	36,747	220
Commercial	454	454	--	454	--
Commercial business	12,889	13,333	1,404	13,721	144
Agricultural business/farmland	1,483	1,671	592	1,855	--
One- to four-family residential	16,877	18,301	658	17,555	469

Consumer	915	915	62	881	18
Consumer secured by one- to-four
family	603	630	--	585	--
Total consumer	1,518	1,545	62	1,466	18

Total with a specific allowance reserve	81,447	100,896	7,033	101,787	1,647

Total
Commercial real estate
Owner-occupied	$4,495	$4,866	$285	$4,775	$13
Investment properties	13,326	15,818	1,746	15,199	433
Multifamily real estate	2,449	2,449	17	2,423	114
Commercial construction	949	1,493	--	1,465	--
One- to four-family construction	14,985	15,309	2,435	14,765	519
Land and land development
Residential	24,395	38,747	1,792	41,271	319
Commercial	1,099	1,099	45	1,070	--
Commercial business	18,062	18,868	2,336	19,308	225
Agricultural business/farmland	1,895	2,303	629	2,384	--
One- to four-family residential	44,406	46,422	935	45,488	1,388

Consumer	1,474	1,581	67	1,505	25
Consumer secured by one- to four-
family	2,310	2,792	29	2,627	22
Total consumer	3,784	4,373	96	4,132	47

Total with and without specific allowance reserve	$129,845	$151,747	$10,316	$152,280	$3,058

(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 tables present TDRs at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	Accrual Status	Nonaccrual Status	Total Modifications
Commercial real estate
Owner-occupied	$827	$28	$855
Investment properties	3,859	2,246	6,105
Multifamily real estate	7,136	--	7,136
One-to-four family construction	9,383	268	9,651
Land and land development
Residential	--	326	326
Commercial	--	43	43
Commercial business	8,800	352	9,152
One- to four-family residential	26,814	3,126	29,940

Consumer	660	253	913
Consumer secured by one-to-four family	531	626	1,157
Total consumer	1,191	879	2,070

Total Troubled Debt Restructurings	$58,010	$7,268	$65,278

	December 31, 2011
	Accrual Status	Nonaccrual Status	Total Modifications
Commercial real estate
Owner-occupied	$--	$142	$142
Investment properties	7,751	1,822	9,573
Multifamily real estate	2,088	--	2,088
One-to-four family construction	8,362	271	8,633
Land and land development
Residential	5,334	557	5,891
Commercial	--	949	949
Commercial business	4,401	--	4,401
One- to four-family residential	23,291	3,086	26,377

Consumer	2,935	3,974	6,909
Consumer secured by one-to-four family	371	549	920
Total consumer	3,306	4,523	7,829

Total Troubled Debt Restructurings	$54,533	$11,350	$65,883

Loans may be restructured or modified for multiple reasons and the types of restructures that occur can include modifications of: interest rates, payment amount, maturity date, or provide for periods of reduced payments or foregiveness of portions of interest or principal due. Our restructures have generally not involved foregiveness of amounts due, but almost always include a modification of multiple factors; the most common combination including interest rate, payment amount and maturity date.

The following tables present newly restructured loans that occurred during the three and six months ended June 30, 2012 and 2011 (dollars in thousands):

	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012
	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) (2)
Commercial real estate
Investment properties	1	99	99	3	974	974
Multifamily real estate	2	5,054	5,054	2	5,054	5,054
One-to-four family construction	10	2,664	2,664	11	3,146	3,146
Commercial business	5	1,289	1,289	10	2,195	2,195
One- to four-family residential	2	621	621	17	9,073	9,073
Consumer	1	132	132	2	284	284

Total newly restructured loans	21	$9,859	$9,859	45	$20,726	$20,726

	Three Months Ended June 30, 2011			Six Months Ended June 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) (2)
Commercial real estate
Owner-occupied	--	$--	$--	1	$189	$189
Investment properties	2	155	155	3	1,977	1,977
Multifamily real estate	1	1,635	1,635	2	1,997	1,997
One-to-four family construction	3	3,043	3,043	3	3,042	3,042
Commercial business	2	180	180	2	180	180
One- to four-family residential	2	502	502	3	769	769
Consumer	2	32	32	3	32	32

Total newly restructured loans	12	$5,547	$5,547	17	$8,186	$8,186

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

(2)	The majority of these modifications do not fit into one separate type, such as rate, term, amount, interest-only or payment, but instead are a combination of multiple types of modifications; therefore, they are disclosed in aggregate.

The following table presents TDRs which incurred a payment default within the three and six-month periods ended June 30, 2012 and 2011, 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):

	Three Months Ended June 30,		Six Months Ended June 30,
	2012	2011	2012	2011
Commercial real estate – owner occupied	$--	$1,126	$1,378	$1,126
One- to four-family residential	--	1,244	562	1,244

Balance, end of period	$--	$2,370	$1,940	$2,370

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. A description of the general characteristics of these categories is shown below:

Overall Risk Rating Definitions: Risk-ratings contain both qualitative and quantitative measurements and take into account the financial strength of a borrower and the structure of the loan or lease. Consequently, the definitions are to be applied in the context of each lending transaction and judgment must also be used to determine the appropriate risk rating, as it is not unusual for a loan or lease to exhibit characteristics of more than one risk-rating category. Consideration for the final rating is centered in the borrower’s ability to repay, in a timely fashion, both principal and interest. There were no material changes in the risk-rating or loan grading system in 2011 or during the six months ended June 30, 2012.

Risk Rating 1: Exceptional

A credit supported by exceptional financial strength, stability, and liquidity. The risk rating of 1 is reserved for the Company’s top quality loans, generally reserved for investment grade credits underwritten to the standards of institutional credit providers.

Risk Rating 2: Excellent

A credit supported by excellent financial strength, stability and liquidity. The risk rating of 2 is reserved for very strong and highly stable customers with ready access to alternative financing sources.

Risk Rating 3: Strong

A credit supported by good overall financial strength and stability. Collateral margins are strong; cash flow is stable although susceptible to cyclical market changes.

Risk Rating 4: Acceptable

A credit supported by the borrower’s adequate financial strength and stability. Assets and cash flow are reasonably sound and provide for orderly debt reduction. Access to alternative financing sources will be more difficult to obtain.

Risk Rating 5: Watch

A credit with the characteristics of an acceptable credit which requires, however, more than the normal level of supervision and warrants formal quarterly management reporting. Credits in this category are not yet criticized or classified, but due to adverse events or aspects of underwriting require closer than normal supervision. Generally, credits should be watch credits in most cases for six months or less as the impact of stress factors are analyzed.

Risk Rating 6: Special Mention

A credit with potential weaknesses that deserves management’s close attention is risk rated a 6. If left uncorrected, these potential weaknesses will result in deterioration in the capacity to repay debt. A key distinction between Special Mention and Substandard is that in a Special Mention credit, there are identified weaknesses that pose potential risk(s) to the repayment sources, versus well defined weaknesses that pose risk(s) to the repayment sources. Assets in this category are expected to be in this category no more than 9-12 months as the potential weaknesses in the credit are resolved.

Risk Rating 7: Substandard

A credit with well defined weaknesses that jeopardize the ability to repay in full is risk rated a 7. These credits are inadequately protected by either the sound net worth and payment capacity of the borrower or the value of pledged collateral. These are credits with a distinct possibility of loss. Loans headed for foreclosure and/or legal action due to deterioration are rated 7 or worse.

Risk Rating 8: Doubtful

A credit with an extremely high probability of loss is risk rated 8. These credits have all the same critical weaknesses that are found in a substandard loan; however, the weaknesses are elevated to the point that based upon current information, collection or liquidation in full is improbable. While some loss on doubtful credits is expected, pending events may strengthen a credit making the amount and timing of any loss undeterminable. In these situations taking the loss is inappropriate until it is clear that the pending event has failed to strengthen the credit and improve the capacity to repay debt.

Risk Rating 9: Loss

A credit that is considered to be currently uncollectible or of such little value that it is no longer a viable Bank asset is risk rated 9. Losses should be taken in the accounting period in which the credit is determined to be uncollectible. Taking a loss does not mean that a credit has absolutely no recovery or salvage value but, rather, it is not practical or desirable to defer writing off the credit, even though partial recovery may occur in the future.

The following table shows the Company’s portfolio of risk-rated loans and non-risk-rated loans by grade or other characteristics as of June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	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)	$1,021,881	$122,319	$269,176	$536,074	$208,309	$578,942	$269,978	$3,006,679
Special mention	19,828	1,065	1,436	14,332	1,112	303	155	38,231
Substandard	49,877	6,935	23,265	49,326	2,284	28,244	7,102	167,033
Doubtful	--	--	--	314	--	--	--	314
Loss	--	--	--	--	--	--	--	--

Total risk-rated loans	1,091,586	130,319	293,877	600,046	211,705	607,489	277,235	3,212,257

Performing loans	1,084,006	130,319	284,938	591,446	210,695	589,177	274,314	3,164,895
Non-performing loans	7,580	--	8,939	8,600	1,010	18,312	2,921	47,362

Total risk-rated and non-risk-rated loans	1,091,586	130,319	293,877	600,046	211,705	607,489	277,235	3,212,257

	December 31, 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)	$1,003,990	$132,108	$257,685	$542,625	$213,512	$607,793	$276,642	$3,034,355
Special mention	29,751	5,000	3,359	13,447	923	772	402	53,654
Substandard	57,687	2,602	57,648	45,032	3,736	33,936	7,352	207,993
Doubtful	--	--	--	336	--	--	--	336
Loss	--	--	--	--	--	--	--	--

Total risk-rated loans	1,091,428	139,710	318,692	601,440	218,171	642,501	284,396	3,296,338

Performing loans	1,082,202	139,348	290,961	587,976	216,275	622,946	281,318	3,221,026
Non-performing loans	9,226	362	27,731	13,464	1,896	19,555	3,078	75,312

Total risk-rated and non-risk-rated loans	$1,091,428	$139,710	$318,692	$601,440	$218,171	$642,501	$284,396	$3,296,338

(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, as of June 30, 2012, in the commercial business category, $67 million of small credit-scored business loans. As loans in these pools become non-performing, they are individually risk-rated.

The following tables provide additional detail on the age analysis of the Company’s past due loans as of June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	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
Owner-occupied	$2,139	$--	$3,101	$5,240	$472,381	$477,621	$--
Investment properties	--	99	2,644	2,743	611,222	613,965	--
Multifamily real estate	--	--	--	--	130,319	130,319	--
Commercial construction	--	--	--	--	23,808	23,808	--
Multifamily construction	--	--	--	--	18,132	18,132	--
One-to-four-family construction	238	--	634	872	156,429	157,301
Land and land development
Residential	--	--	3,300	3,300	79,885	83,185	--
Commercial	--	--	337	337	11,114	11,451	--
Commercial business	609	345	3,320	4,274	595,772	600,046	--
Agricultural business	--	--	991	991	210,714	211,705	--
One-to four-family residential	505	415	11,683	12,603	594,886	607,489	2,142

Consumer	312	582	744	1,638	101,866	103,504	39
Consumer secured by one- to four-family	903	638	962	2,503	171,228	173,731

Total	$4,706	$2,079	$27,716	$34,501	$3,177,756	$3,212,257	$2,181

	December 31, 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
Owner-occupied	$1,251	$2,703	$3,462	$7,416	$462,390	$469,806	$--
Investment properties	--	--	3,087	3,087	618,535	621,622	--
Multifamily real estate	--	--	--	--	139,710	139,710	--
Commercial construction	--	--	949	949	41,442	42,391	--
Multifamily construction	--	--	--	--	19,436	19,436	--
One-to-four-family construction	643	--	3,819	4,462	139,715	144,177	--
Land and land development
Residential	638	--	15,919	16,557	80,934	97,491	--
Commercial	308	--	791	1,099	14,098	15,197	--
Commercial business	2,411	4,170	5,612	12,193	589,247	601,440	4
Agricultural business	99	--	1,849	1,948	216,223	218,171	--
One-to four-family residential	794	585	15,770	17,149	625,352	642,501	2,147

Consumer	670	363	769	1,802	101,545	103,347	25
Consumer secured by one- to four-family	1,072	109	1,374	2,555	178,494	181,049	148

Total	$7,886	$7,930	$53,401	$69,217	$3,227,121	$3,296,338	$2,324

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 six months ended June 30, 2012 and 2011 (in thousands):


	Commercial Real Estate	Multifamily	Construction and Land	Commercial Business	Agricultural business	One- to Four-Family	Consumer	Commitments and Unallocated	Total
For the Three Months Ended June 30, 2012
Allowance for loan losses:
Beginning balance	$17,083	$3,261	$15,871	$13,123	$1,887	$12,869	$1,274	$16,176	$81,544
Provision for loan losses	992	1,847	1,756	887	(608)	2,876	345	(4,095)	4,000
Recoveries	18	--	1,050	639	15	374	195	--	2,291
Charge-offs	(1,259)	--	(1,703)	(2,297)	--	(1,906)	(449)	--	(7,614)

Ending balance	$16,834	$5,108	$16,974	$12,352	$1,294	$14,213	$1,365	$12,081	$80,221

For the Six Months Ended June 30, 2012
Allowance for loan losses:
Beginning balance	$16,457	$3,952	$18,184	$15,159	$1,548	$12,299	$1,253	$14,060	$82,912
Provision for loan losses	2,327	1,156	1,997	22	6	4,407	1,064	(1,979)	9,000
Recoveries	632	--	1,420	875	15	379	331	--	3,652
Charge-offs	(2,582)	--	(4,627)	(3,704)	(275)	(2,872)	(1,283)	--	(15,343)
Ending balance	$16,834	$5,108	$16,974	$12,352	$1,294	$14,213	$1,365	$12,081	$80,221

For the Three Months Ended June 30, 2011
Allowance for loan losses:
Beginning balance	$11,871	$6,055	$30,346	$22,054	$1,441	$8,149	$1,452	$16,264	$97,632
Provision for loan losses	3,072	(407)	991	1,770	134	1,970	221	249	8,000
Recoveries	15	--	716	81	--	29	84	--	925
Charge-offs	(1,871)	(244)	(6,077)	(3,993)	(166)	(1,894)	(312)	--	(14,557)
Ending balance	$13,087	$5,404	$25,976	$19,912	$1,409	$8,254	$1,445	$16,513	$92,000

For the Six Months Ended June 30, 2011
Allowance for loan losses:
Beginning balance	$11,779	$3,963	$33,121	$24,545	$1,846	$5,829	$1,794	$14,524	$97,401
Provision for loan losses	4,153	2,112	8,718	1,566	(148)	6,447	163	1,989	25,000
Recoveries	15	--	751	162	--	81	162	--	1,171
Charge-offs	(2,860)	(671)	(16,614)	(6,361)	(289)	(4,103)	(674)	--	(31,572)
Ending balance	$13,087	$5,404	$25,976	$19,912	$1,409	$8,254	$1,445	$16,513	$92,000

At June 30, 2012
Allowance individually evaluated for impairment	$400	$1,464	$2,739	$1,054	$--	$1,281	$33	$--	$6,971
Allowance collectively evaluated for impairment	16,434	3,644	14,235	11,298	1,294	12,932	1,332	12,081	73,250
Total allowance for loan losses	$16,834	$5,108	$16,974	$12,352	$1,294	$14,213	$1,365	$12,081	$80,221
Loan balances:
Loans individually evaluated for impairment	$9,468	$5,000	$11,594	$10,514	$--	$20,989	$1,580	$--	$59,145
Loans collectively evaluated for impairment	1,082,118	125,319	282,283	589,532	211,705	586,500	275,655	--	3,153,112
Total loans	$1,091,586	$130,319	$293,877	$600,046	$211,705	$607,489	$277,235	$--	$3,212,257

At June 30, 2011
Allowance individually evaluated for impairment	$702	$648	$5,769	$1,016	$--	$413	$1,784	$--	$10,332
Allowance collectively evaluated for impairment	12,385	4,756	20,207	18,896	1,409	7,841	(339)	16,513	81,668
Total allowance for loan losses	$13,087	$5,404	$25,976	$19,912	$1,409	$8,254	$1,445	$16,513	$92,000

Loan balances:
Loans individually evaluated for impairment	$24,141	$648	$61,315	$11,786	$--	$16,126	$3,250	$--	$117,266
Loans collectively evaluated for impairment	1,051,936	161,546	293,963	761,533	1,409	642,090	276,924	--	3,189,401
Total loans	$1,076,077	$162,194	$355,278	$773,319	$1,409	$658,216	$280,174	$--	$3,306,667