Real Estate Owned, Net

3 Months Ended

Jun. 30, 2012

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

	Three Months Ended June 30		Six Months Ended June 30
	2012	2011	2012	2011
Balance, beginning of the period	$27,723	$94,945	$42,965	$100,872
Additions from loan foreclosures	6,885	11,918	8,486	26,834
Additions from capitalized costs	7	1,532	134	3,147
Dispositions of REO	(7,798)	(32,437)	(23,239)	(51,331)
Gain (loss) on sale of REO	567	58	667	(479)
Valuation adjustments in the period	(1,568)	(4,811)	(3,197)	(7,838)
Balance, end of the period	$25,816	$71,205	$25,816	$71,205

The following table shows REO by type and geographic location by state as of June 30, 2012 (in thousands):

	Washington	Oregon	Idaho	Total
Commercial real estate	$340	$301	$2,089	$2,730
One- to four-family construction	405	389	--	794
Land development- commercial	3,225	37	195	3,457
Land development- residential	4,120	6,871	187	11,178
One- to four-family real estate	4,013	2,786	858	7,657
Balance, end of period	$12,103	$10,384	$3,329	$25,816

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.