LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES |
LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES
Loans receivable, including loans held for sale, at December 31, 2012 and 2011 are summarized as follows (dollars in thousands): | | | | | | | | | | | | | | | | December 31, 2012 | | December 31, 2011 | | Amount | | Percent | | Amount | | Percent | Commercial real estate: | | | | | | | | Owner-occupied | $ | 489,581 |
| | 15.1 | % | | $ | 469,806 |
| | 14.2 | % | Investment properties | 583,641 |
| | 18.0 |
| | 621,622 |
| | 18.9 |
| Multifamily real estate | 137,504 |
| | 4.3 |
| | 139,710 |
| | 4.2 |
| Commercial construction | 30,229 |
| | 0.9 |
| | 42,391 |
| | 1.3 |
| Multifamily construction | 22,581 |
| | 0.7 |
| | 19,436 |
| | 0.6 |
| One- to four-family construction | 160,815 |
| | 5.0 |
| | 144,177 |
| | 4.4 |
| Land and land development: | | | | | | | | Residential | 77,010 |
| | 2.4 |
| | 97,491 |
| | 3.0 |
| Commercial | 13,982 |
| | 0.4 |
| | 15,197 |
| | 0.5 |
| Commercial business | 618,049 |
| | 19.1 |
| | 601,440 |
| | 18.2 |
| Agricultural business, including secured by farmland | 230,031 |
| | 7.1 |
| | 218,171 |
| | 6.6 |
| One- to four-family real estate | 581,670 |
| | 18.0 |
| | 642,501 |
| | 19.5 |
| Consumer: | | | | | | | | Consumer secured by one- to four-family | 170,123 |
| | 5.3 |
| | 181,049 |
| | 5.5 |
| Consumer—other | 120,498 |
| | 3.7 |
| | 103,347 |
| | 3.1 |
| Total loans outstanding | 3,235,714 |
| | 100.0 | % | | 3,296,338 |
| | 100.0 | % | Less allowance for loan losses | (77,491 | ) | | | | (82,912 | ) | | | Net loans | $ | 3,158,223 |
| | | | $ | 3,213,426 |
| | |
Loan amounts are net of unearned, unamortized loan fees (and costs) of approximately $9.0 million at December 31, 2012 and $10.0 million at December 31, 2011. The Company’s loans by geographic concentration at December 31, 2012 were as follows (dollars in thousands): | | | | | | | | | | | | | | | | | | | | | | Washington | | Oregon | | Idaho | | Other | | Total | Commercial real estate: | | | | | | | | | | Owner-occupied | $ | 366,422 |
| | $ | 57,903 |
| | $ | 61,379 |
| | $ | 3,877 |
| | $ | 489,581 |
| Investment properties | 450,142 |
| | 85,416 |
| | 42,774 |
| | 5,309 |
| | 583,641 |
| Multifamily real estate | 117,654 |
| | 11,309 |
| | 8,249 |
| | 292 |
| | 137,504 |
| Commercial construction | 20,839 |
| | 6,107 |
| | 934 |
| | 2,349 |
| | 30,229 |
| Multifamily construction | 12,383 |
| | 10,198 |
| | — |
| | — |
| | 22,581 |
| One- to four-family construction | 88,090 |
| | 71,663 |
| | 1,062 |
| | — |
| | 160,815 |
| Land and land development: | | | | | | | | | | Residential | 41,680 |
| | 33,478 |
| | 1,852 |
| | — |
| | 77,010 |
| Commercial | 8,979 |
| | 3,092 |
| | 1,911 |
| | — |
| | 13,982 |
| Commercial business | 396,935 |
| | 72,594 |
| | 58,416 |
| | 90,104 |
| | 618,049 |
| Agricultural business, including secured by farmland | 108,671 |
| | 51,286 |
| | 70,074 |
| | — |
| | 230,031 |
| One- to four-family real estate | 360,625 |
| | 195,364 |
| | 23,596 |
| | 2,085 |
| | 581,670 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 114,405 |
| | 42,395 |
| | 12,644 |
| | 679 |
| | 170,123 |
| Consumer—other | 80,209 |
| | 34,668 |
| | 5,621 |
| | — |
| | 120,498 |
| Total loans | $ | 2,167,034 |
| | $ | 675,473 |
| | $ | 288,512 |
| | $ | 104,695 |
| | $ | 3,235,714 |
| Percent of total loans | 67.0 | % | | 20.9 | % | | 8.9 | % | | 3.2 | % | | 100.0 | % |
The geographic concentrations of Banner’s land and land development loans by state at December 31, 2012 were as follows (dollars in thousands): | | | | | | | | | | | | | | | | | | Washington | | Oregon | | Idaho | | Total | Residential: | | | | | | | | Acquisition and development | $ | 10,182 |
| | $ | 13,454 |
| | $ | 1,612 |
| | $ | 25,248 |
| Improved land and lots | 23,418 |
| | 18,823 |
| | 240 |
| | 42,481 |
| Unimproved land | 8,080 |
| | 1,201 |
| | — |
| | 9,281 |
| Commercial and industrial: | | | | | | | | Acquisition and development | 1,273 |
| | — |
| | 482 |
| | 1,755 |
| Improved land and lots | 4,204 |
| | 136 |
| | 552 |
| | 4,892 |
| Unimproved land | 3,502 |
| | 2,956 |
| | 877 |
| | 7,335 |
| Total land and land development loans | $ | 50,659 |
| | $ | 36,570 |
| | $ | 3,763 |
| | $ | 90,992 |
| Percent of land and land development loans | 55.7 | % | | 40.2 | % | | 4.1 | % | | 100.0 | % |
The Company originates both adjustable- and fixed-rate loans. At December 31, 2012 and 2011, the maturity and repricing composition of all those loans, less undisbursed amounts and deferred fees, were as follows (in thousands): | | | | | | | | | | December 31 | | 2012 | | 2011 | Fixed-rate (term to maturity): | | | | Due in one year or less | $ | 183,004 |
| | $ | 216,782 |
| Due after one year through three years | 171,724 |
| | 250,715 |
| Due after three years through five years | 173,251 |
| | 182,647 |
| Due after five years through ten years | 167,858 |
| | 157,559 |
| Due after ten years | 473,927 |
| | 502,196 |
| Total fixed-rate loans | 1,169,764 |
| | 1,309,899 |
| Adjustable-rate (term to rate adjustment): | | | | Due in one year or less | 1,260,472 |
| | 1,200,182 |
| Due after one year through three years | 275,223 |
| | 425,309 |
| Due after three years through five years | 467,895 |
| | 336,382 |
| Due after five years through ten years | 60,316 |
| | 23,618 |
| Due after ten years | 2,044 |
| | 948 |
| Total adjustable-rate loans | 2,065,950 |
| | 1,986,439 |
| Total loans | $ | 3,235,714 |
| | $ | 3,296,338 |
|
The adjustable-rate loans have interest rate adjustment limitations and are generally indexed to various prime (The Wall Street Journal) or LIBOR rates, FHLB advance rates or One-to-Five-Year Constant Maturity Treasury Indices. 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.
The Company’s loans to directors, executive officers and related entities are on substantially the same terms and underwriting as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than normal risk of collectability. Such loans had the following balances and activity during the years ended December 31, 2012 and 2011 (in thousands): | | | | | | | | | | Years Ended December 31 | | 2012 | | 2011 | Balance at beginning of year | $ | 10,239 |
| | $ | 5,428 |
| New loans or advances | 31,394 |
| | 19,742 |
| Repayments and adjustments | (29,170 | ) | | (14,931 | ) | Balance at end of period | $ | 12,463 |
| | $ | 10,239 |
|
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 at the dates indicated were as follows (in thousands): | | | | | | | | | | | | | | | | | | December 31, 2012 | | December 31, 2011 | | Loan Amount | | Allocated Reserves | | Loan Amount | | Allocated Reserves | Impaired loans: | | | | | | | | Nonaccrual loans | | | | | | | | Commercial real estate: | | | | | | | | Owner-occupied | $ | 4,105 |
| | $ | 618 |
| | $ | 4,306 |
| | $ | 281 |
| Investment properties | 2,474 |
| | 56 |
| | 4,920 |
| | 626 |
| Multifamily real estate | — |
| | — |
| | 362 |
| | 11 |
| Commercial construction | — |
| | — |
| | 949 |
| | — |
| One- to four-family construction | 1,565 |
| | 326 |
| | 6,622 |
| | 1,921 |
| Land and land development: | | | | | | | | Residential | 2,061 |
| | 323 |
| | 19,060 |
| | 1,485 |
| Commercial | 46 |
| | 12 |
| | 1,100 |
| | 45 |
| Commercial business | 4,750 |
| | 344 |
| | 13,460 |
| | 1,871 |
| Agricultural business, including secured by farmland | — |
| | — |
| | 1,896 |
| | 629 |
| One- to four-family residential | 12,964 |
| | 520 |
| | 17,408 |
| | 243 |
| Consumer: | | | | | | | | Consumer secured by one- to four-family | 2,073 |
| | 41 |
| | 1,790 |
| | 23 |
| Consumer—other | 1,323 |
| | 16 |
| | 1,115 |
| | 62 |
| Total nonaccrual loans | 31,361 |
| | 2,256 |
| | 72,988 |
| | 7,197 |
| Past due and still accruing | 3,029 |
| | 62 |
| | 2,324 |
| | 19 |
| Troubled debt restructuring on accrual status | | | | | | | | Commercial real estate: | | | | | | | | Owner-occupied | 188 |
| | 4 |
| | 189 |
| | 3 |
| Investment properties | 7,034 |
| | 664 |
| | 8,406 |
| | 1,119 |
| Multifamily real estate | 7,131 |
| | 1,665 |
| | 2,088 |
| | 6 |
| One- to four-family construction | 6,726 |
| | 1,115 |
| | 8,362 |
| | 514 |
| Land and land development-residential: | 4,842 |
| | 667 |
| | 5,334 |
| | 306 |
| Commercial business | 2,975 |
| | 610 |
| | 4,598 |
| | 468 |
| One- to four-family residential | 27,540 |
| | 1,228 |
| | 24,851 |
| | 675 |
| Consumer: | | | | | | | | Consumer secured by one- to four-family | 538 |
| | 29 |
| | 334 |
| | 6 |
| Consumer—other | 488 |
| | 38 |
| | 371 |
| | 3 |
| Total troubled debt restructurings on accrual status | 57,462 |
| | 6,020 |
| | 54,533 |
| | 3,100 |
| Total impaired loans | $ | 91,852 |
| | $ | 8,338 |
| | $ | 129,845 |
| | $ | 10,316 |
|
As of December 31, 2012, the Company had additional commitments to advance funds up to an amount of $1.8 million related to TDRs.
The following tables provide additional information on impaired loans with and without specific allowance reserves as of December 31, 2012 and December 31, 2011. Recorded investment includes the unpaid principal balance or the carrying amount of loans less charge-offs and net deferred loan fees (in thousands): | | | | | | | | | | | | | | | | | | | | | | December 31, 2012 | | Recorded Investment | | Unpaid Principal Balance | | Related Allowance | | Average Recorded Investment | | Interest Income Recognized | Without a specific allowance reserve (1) | | | | | | | | | | Commercial real estate: | | | | | | | | | | Owner-occupied | $ | 1,300 |
| | $ | 1,551 |
| | $ | 103 |
| | $ | 1,470 |
| | $ | — |
| Investment properties | 624 |
| | 861 |
| | 90 |
| | 735 |
| | 17 |
| Multifamily real estate | 2,131 |
| | 2,131 |
| | 392 |
| | 2,136 |
| | 113 |
| One- to four-family construction | 4,460 |
| | 4,460 |
| | 571 |
| | 3,335 |
| | 145 |
| Land and land development: | | | | | | | | | | Residential | 2,122 |
| | 2,587 |
| | 404 |
| | 2,948 |
| | 73 |
| Commercial | 46 |
| | 46 |
| | 12 |
| | 46 |
| | — |
| Commercial business | 4,352 |
| | 4,970 |
| | 821 |
| | 2,121 |
| | 154 |
| One- to four-family residential | 10,886 |
| | 12,004 |
| | 150 |
| | 11,458 |
| | 44 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 1,641 |
| | 2,335 |
| | 54 |
| | 1,966 |
| | 14 |
| Consumer—other | 1,167 |
| | 1,275 |
| | 16 |
| | 1,297 |
| | 5 |
| | 28,729 |
| | 32,220 |
| | 2,613 |
| | 27,512 |
| | 565 |
| With a specific allowance reserve (2) | | | | | | | | | | Commercial real estate: | | | | | | | | | | Owner-occupied | 2,993 |
| | 2,993 |
| | 518 |
| | 3,113 |
| | — |
| Investment properties | 8,884 |
| | 10,120 |
| | 630 |
| | 9,449 |
| | 229 |
| Multifamily real estate | 5,000 |
| | 5,000 |
| | 1,273 |
| | 5,000 |
| | 295 |
| One- to four-family construction | 3,831 |
| | 3,831 |
| | 870 |
| | 3,611 |
| | 194 |
| Land and land development: | | | | | | | | | | Residential | 4,782 |
| | 4,782 |
| | 586 |
| | 5,039 |
| | 185 |
| Commercial | — |
| | — |
| | — |
| | — |
| | — |
| Commercial business | 3,373 |
| | 3,734 |
| | 134 |
| | 3,931 |
| | 6 |
| One- to four-family residential | 32,494 |
| | 33,672 |
| | 1,656 |
| | 33,100 |
| | 1,259 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 1,042 |
| | 1,140 |
| | 26 |
| | 1,074 |
| | 15 |
| Consumer—other | 724 |
| | 740 |
| | 32 |
| | 754 |
| | — |
| | 63,123 |
| | 66,012 |
| | 5,725 |
| | 65,071 |
| | 2,183 |
| Total | | | | | | | | | | Commercial real estate: | | | | | | | | | | Owner occupied | 4,293 |
| | 4,544 |
| | 621 |
| | 4,583 |
| | — |
| Investment properties | 9,508 |
| | 10,981 |
| | 720 |
| | 10,184 |
| | 246 |
| Multifamily real estate | 7,131 |
| | 7,131 |
| | 1,665 |
| | 7,136 |
| | 408 |
| One- to four-family construction | 8,291 |
| | 8,291 |
| | 1,441 |
| | 6,946 |
| | 339 |
| Land and land development: | | | | | | | | | | Residential | 6,904 |
| | 7,369 |
| | 990 |
| | 7,987 |
| | 258 |
| Commercial | 46 |
| | 46 |
| | 12 |
| | 46 |
| | — |
| Commercial business | 7,725 |
| | 8,704 |
| | 955 |
| | 6,052 |
| | 160 |
| One- to four-family residential | 43,380 |
| | 45,676 |
| | 1,806 |
| | 44,558 |
| | 1,303 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 2,683 |
| | 3,475 |
| | 80 |
| | 3,040 |
| | 29 |
| Consumer—other | 1,891 |
| | 2,015 |
| | 48 |
| | 2,051 |
| | 5 |
| | $ | 91,852 |
| | $ | 98,232 |
| | $ | 8,338 |
| | $ | 92,583 |
| | $ | 2,748 |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2011 | | Recorded Investment | | Unpaid Principal Balance | | Related Allowance | | Average Recorded Investment | | Interest Income 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, including secured by farmland | 412 |
| | 632 |
| | 37 |
| | 529 |
| | — |
| One- to four-family residential | 27,529 |
| | 28,121 |
| | 277 |
| | 27,933 |
| | 919 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 1,707 |
| | 2,162 |
| | 29 |
| | 2,042 |
| | 22 |
| Consumer—other | 559 |
| | 666 |
| | 5 |
| | 624 |
| | 7 |
| | 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, including secured by farmland | 1,483 |
| | 1,671 |
| | 592 |
| | 1,855 |
| | — |
| One- to four-family residential | 16,877 |
| | 18,301 |
| | 658 |
| | 17,555 |
| | 469 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 603 |
| | 630 |
| | — |
| | 585 |
| | — |
| Consumer—other | 915 |
| | 915 |
| | 62 |
| | 881 |
| | 18 |
| | 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, including secured by farmland | 1,895 |
| | 2,303 |
| | 629 |
| | 2,384 |
| | — |
| One- to four-family residential | 44,406 |
| | 46,422 |
| | 935 |
| | 45,488 |
| | 1,388 |
| Consumer: | | | | | | | | | | Consumer secured by one- to four-family | 2,310 |
| | 2,792 |
| | 29 |
| | 2,627 |
| | 22 |
| Consumer—other | 1,474 |
| | 1,581 |
| | 67 |
| | 1,505 |
| | 25 |
| | $ | 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 December 31, 2012 and 2011 (in thousands): | | | | | | | | | | | | | | December 31, 2012 | | Accrual Status | | Nonaccrual Status | | Total Modifications | Commercial real estate: | | | | | | Owner-occupied | $ | 188 |
| | $ | 1,551 |
| | $ | 1,739 |
| Investment properties | 7,034 |
| | 1,514 |
| | 8,548 |
| Multifamily real estate | 7,131 |
| | — |
| | 7,131 |
| One- to four-family construction | 6,726 |
| | 1,044 |
| | 7,770 |
| Land and land development: | | | | | | Residential | 4,842 |
| | 15 |
| | 4,857 |
| Commercial business | 2,975 |
| | 247 |
| | 3,222 |
| One- to four-family residential | 27,540 |
| | 2,703 |
| | 30,243 |
| Consumer: | | | | | | Consumer secured by one- to four-family | 538 |
| | 496 |
| | 1,034 |
| Consumer—other | 488 |
| | 396 |
| | 884 |
| | $ | 57,462 |
| | $ | 7,966 |
| | $ | 65,428 |
|
| | | | | | | | | | | | | | 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: | | | | | | Consumer secured by one- to four-family | 371 |
| | 549 |
| | 920 |
| Consumer—other | 2,935 |
| | 3,974 |
| | 6,909 |
| | $ | 54,533 |
| | $ | 11,350 |
| | $ | 65,883 |
|
The following tables present new TDRs that occurred during the twelve months ended December 31, 2012 and 2011 (dollars in thousands): | | | | | | | | | | | | | Twelve Months Ended December 31, 2012 | | Number of Loans | | Pre-modification Outstanding Recorded Investment | | Post-modification Outstanding Recorded Investment | Recorded Investment (1) (2) | | | | | | Commercial real estate: | | | | | | Owner-occupied | 1 |
| | $ | 943 |
| | $ | 943 |
| Investment properties | 6 |
| | 3,891 |
| | 3,891 |
| Multifamily real estate | 2 |
| | 5,054 |
| | 5,054 |
| One- to four-family construction | 23 |
| | 5,454 |
| | 5,454 |
| Residential land and land development | 6 |
| | 3,341 |
| | 3,341 |
| Commercial business | 9 |
| | 1,886 |
| | 1,886 |
| One- to four-family residential | 29 |
| | 10,914 |
| | 10,914 |
| Consumer: | | | | | | Consumer secured by one- to four-family | 3 |
| | 206 |
| | 206 |
| Consumer—other | 2 |
| | 368 |
| | 368 |
| | 81 |
| | $ | 32,057 |
| | $ | 32,057 |
|
| | | | | | | | | | | | | Twelve Months Ended December 31, 2011 | | Number of Loans | | Pre-modification Outstanding Recorded Investment | | Post-modification Outstanding Recorded Investment | Recorded Investment (1) (2) | | | | | | Commercial real estate: | | | | | | Owner-occupied | 1 |
| | 142 |
| | 142 |
| Investment properties | 4 |
| | 6,753 |
| | 6,753 |
| Multifamily real estate | 3 |
| | 2,450 |
| | 2,450 |
| One- to four-family construction | 6 |
| | 3,134 |
| | 3,064 |
| Residential land and land development | 6 |
| | 1,908 |
| | 1,908 |
| Commercial business | 8 |
| | 3,767 |
| | 3,767 |
| One- to four-family residential | 5 |
| | 1,379 |
| | 1,284 |
| Consumer | 21 |
| | 3,150 |
| | 3,150 |
| | 54 |
| | $ | 22,683 |
| | $ | 22,518 |
|
| | (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. |
| | (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 twelve-month periods ended December 31, 2012 and 2011, for which the payment default occurred within twelve months of the restructure date. A default on a restructured loan results in a transfer to nonaccrual status, a charge-off or a combination of both (in thousands): | | | | | | | | | | | | | | | | Twelve Months Ended December 31 | | 2012 | | 2011 | | Number of Loans | | Amount | | Number of Loans | | Amount | Commercial real estate | 2 |
| | $ | 2,346 |
| | 2 |
| | $ | 1,964 |
| Construction and land | 6 |
| | 1,044 |
| | 2 |
| | 578 |
| One- to four-family residential | 4 |
| | 492 |
| | 1 |
| | 598 |
| Consumer | — |
| | — |
| | 11 |
| | 1,732 |
| Balance, end of period | 12 |
| | $ | 3,882 |
| | 16 |
| | $ | 4,872 |
|
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 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 but one which requires 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 indeterminate. 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 are 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 Banner’s portfolio of risk-rated loans and non-risk-rated loans by grade or other characteristic as of December 31, 2012 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2012 | | Commercial Real Estate | | Multifamily | | Construction and Land | | Commercial Business | | Agricultural Business | | One- to Four-Family Residential | | Consumer (1) | | Total Loans | Risk-rated loans: | | | | | | | | | | | | | | | | Pass (Risk Ratings 1-5) | $ | 1,016,964 |
| | $ | 130,815 |
| | $ | 274,407 |
| | $ | 581,846 |
| | $ | 228,304 |
| | $ | 560,781 |
| | $ | 284,816 |
| | $ | 3,077,933 |
| Special mention | 14,332 |
| | — |
| | 3,146 |
| | 7,905 |
| | 713 |
| | 438 |
| | 148 |
| | 26,682 |
| Substandard | 41,382 |
| | 6,689 |
| | 27,064 |
| | 28,287 |
| | 1,014 |
| | 20,451 |
| | 5,657 |
| | 130,544 |
| Doubtful | 544 |
| | — |
| | — |
| | 11 |
| | — |
| | — |
| | — |
| | 555 |
| Total loans | $ | 1,073,222 |
| | $ | 137,504 |
| | $ | 304,617 |
| | $ | 618,049 |
| | $ | 230,031 |
| | $ | 581,670 |
| | $ | 290,621 |
| | $ | 3,235,714 |
| Performing loans | $ | 1,066,643 |
| | $ | 137,504 |
| | $ | 300,945 |
| | $ | 613,299 |
| | $ | 230,031 |
| | $ | 565,829 |
| | $ | 287,073 |
| | $ | 3,201,324 |
| Non-performing loans (2) | 6,579 |
| | — |
| | 3,672 |
| | 4,750 |
| | — |
| | 15,841 |
| | 3,548 |
| | 34,390 |
| Total loans | $ | 1,073,222 |
| | $ | 137,504 |
| | $ | 304,617 |
| | $ | 618,049 |
| | $ | 230,031 |
| | $ | 581,670 |
| | $ | 290,621 |
| | $ | 3,235,714 |
|
| | (1) | Most consumer loans are not individually risk-rated. For consumer loans that are not risk-rated, those that are performing consumer loans are reflected above as “Pass,” while non-performing consumer loans are reflected above as “Substandard.” |
| | (2) | Non-performing loans include loans on non-accrual status and loans more than 90 days delinquent, but still accruing interest. |
The following table shows Banner’s portfolio of risk-rated loans and non-risk-rated loans by grade or other characteristic as of December 31, 2011 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2011 | | Commercial Real Estate | | Multifamily | | Construction and Land | | Commercial Business | | Agricultural Business | | One- to Four-Family Residential | | Consumer (1) | | Total Loans | Risk-rated loans: | | | | | | | | | | | | | | | | Pass (Risk Ratings 1-5) | $ | 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 |
| Total 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 (2) | 9,226 |
| | 362 |
| | 27,731 |
| | 13,464 |
| | 1,896 |
| | 19,555 |
| | 3,078 |
| | 75,312 |
| Total loans | $ | 1,091,428 |
| | $ | 139,710 |
| | $ | 318,692 |
| | $ | 601,440 |
| | $ | 218,171 |
| | $ | 642,501 |
| | $ | 284,396 |
| | $ | 3,296,338 |
|
| | (1) | Most consumer loans are not individually risk-rated. For consumer loans that are not risk-rated, those that are performing consumer loans are reflected above as “Pass,” while non-performing consumer loans are reflected above as “Substandard.” |
| | (2) | Non-performing loans include loans on non-accrual status and loans more than 90 days delinquent, but still accruing interest. |
The following tables provide additional detail on the age analysis of Banner’s past due loans as of December 31, 2012 and 2011 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 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 | $ | 1,693 |
| | $ | — |
| | $ | 1,371 |
| | $ | 3,064 |
| | $ | 486,517 |
| | $ | 489,581 |
| | $ | — |
| Investment properties | 743 |
| | — |
| | 1,431 |
| | 2,174 |
| | 581,467 |
| | 583,641 |
| | — |
| Multifamily real estate | — |
| | — |
| | — |
| | — |
| | 137,504 |
| | 137,504 |
| | — |
| Commercial construction | — |
| | — |
| | — |
| | — |
| | 30,229 |
| | 30,229 |
| | — |
| Multifamily construction | — |
| | — |
| | — |
| | — |
| | 22,581 |
| | 22,581 |
| | — |
| One- to four-family construction | 611 |
| | — |
| | — |
| | 611 |
| | 160,204 |
| | 160,815 |
| | — |
| Land and land development: | | | | | | | | | | | | | | Residential | — |
| | — |
| | 2,047 |
| | 2,047 |
| | 74,963 |
| | 77,010 |
| | — |
| Commercial | 2,083 |
| | — |
| | 45 |
| | 2,128 |
| | 11,854 |
| | 13,982 |
| | — |
| Commercial business | 1,849 |
| | 49 |
| | 842 |
| | 2,740 |
| | 615,309 |
| | 618,049 |
| | — |
| Agricultural business, including secured by farmland | — |
| | — |
| | — |
| | — |
| | 230,031 |
| | 230,031 |
| | — |
| One- to four-family residential | 1,376 |
| | 3,468 |
| | 11,488 |
| | 16,332 |
| | 565,338 |
| | 581,670 |
| | 2,877 |
| Consumer: | | | | | | | | | | | | | | Consumer secured by one- to four-family | 699 |
| | 74 |
| | 1,204 |
| | 1,977 |
| | 168,146 |
| | 170,123 |
| | — |
| Consumer—other | 816 |
| | 673 |
| | 839 |
| | 2,328 |
| | 118,170 |
| | 120,498 |
| | 152 |
| Total | $ | 9,870 |
| | $ | 4,264 |
| | $ | 19,267 |
| | $ | 33,401 |
| | $ | 3,202,313 |
| | $ | 3,235,714 |
| | $ | 3,029 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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, including secured by farmland | 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: | | | | | | | | | | | | | | Consumer secured by one- to four-family | 1,072 |
| | 109 |
| | 1,374 |
| | 2,555 |
| | 178,494 |
| | 181,049 |
| | 148 |
| Consumer—other | 670 |
| | 363 |
| | 769 |
| | 1,802 |
| | 101,545 |
| | 103,347 |
| | 25 |
| 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 as of December 31, 2012 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2012 | | Commercial Real Estate | | Multifamily | | Construction and Land | | Commercial Business | | Agricultural Business | | One- to Four-Family | | Consumer | | Commitments and Unallocated | | Total | 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 | 2,009 |
| | 554 |
| | 399 |
| | (1,142 | ) | | 1,154 |
| | 8,918 |
| | 2,571 |
| | (1,463 | ) | | 13,000 |
| Recoveries | 921 |
| | — |
| | 2,954 |
| | 2,425 |
| | 49 |
| | 586 |
| | 531 |
| | — |
| | 7,466 |
| Charge-offs | (4,065 | ) | | — |
| | (6,546 | ) | | (6,485 | ) | | (456 | ) | | (5,328 | ) | | (3,007 | ) | | — |
| | (25,887 | ) | Ending balance | $ | 15,322 |
| | $ | 4,506 |
| | $ | 14,991 |
| | $ | 9,957 |
| | $ | 2,295 |
| | $ | 16,475 |
| | $ | 1,348 |
| | $ | 12,597 |
| | $ | 77,491 |
| Allowance individually evaluated for impairment | $ | 1,149 |
| | $ | 1,273 |
| | $ | 1,456 |
| | $ | 133 |
| | $ | — |
| | $ | 1,656 |
| | $ | 58 |
| | $ | — |
| | $ | 5,725 |
| Allowance collectively evaluated for impairment | 14,173 |
| | 3,233 |
| | 13,535 |
| | 9,824 |
| | 2,295 |
| | 14,819 |
| | 1,290 |
| | 12,597 |
| | 71,766 |
| Total allowance for loan losses | $ | 15,322 |
| | $ | 4,506 |
| | $ | 14,991 |
| | $ | 9,957 |
| | $ | 2,295 |
| | $ | 16,475 |
| | $ | 1,348 |
| | $ | 12,597 |
| | $ | 77,491 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial Real Estate | | Multifamily | | Construction and Land | | Commercial Business | | Agricultural Business | | One- to Four-Family | | Consumer | | Commitments and Unallocated | | Total | Loan balances: | | | | | | | | | | | | | | | | | | Loans individually evaluated for impairment | $ | 11,877 |
| | $ | 5,000 |
| | $ | 8,613 |
| | $ | 3,373 |
| | $ | — |
| | $ | 32,494 |
| | $ | 1,766 |
| | $ | — |
| | $ | 63,123 |
| Loans collectively evaluated for impairment | 1,061,345 |
| | 132,504 |
| | 296,004 |
| | 614,676 |
| | 230,031 |
| | 549,176 |
| | 288,855 |
| | — |
| | 3,172,591 |
| Total loans | $ | 1,073,222 |
| | $ | 137,504 |
| | $ | 304,617 |
| | $ | 618,049 |
| | $ | 230,031 |
| | $ | 581,670 |
| | $ | 290,621 |
| | $ | — |
| | $ | 3,235,714 |
|
The following tables provide additional information on the allowance for loan losses and loan balances individually and collectively evaluated for impairment as of December 31, 2011 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2011 | | Commercial Real Estate | | Multifamily | | Construction and Land | | Commercial Business | | Agricultural Business | | One- to Four-Family | | Consumer | | Commitments and Unallocated | | Total | 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 | 10,704 |
| | 671 |
| | 9,789 |
| | (2,072 | ) | | 159 |
| | 16,024 |
| | 189 |
| | (464 | ) | | 35,000 |
| Recoveries | 53 |
| | — |
| | 1,602 |
| | 1,082 |
| | 20 |
| | 356 |
| | 304 |
| | — |
| | 3,417 |
| Charge-offs | (6,079 | ) | | (682 | ) | | (26,328 | ) | | (8,396 | ) | | (477 | ) | | (9,910 | ) | | (1,034 | ) | | — |
| | (52,906 | ) | Ending balance | $ | 16,457 |
| | $ | 3,952 |
| | $ | 18,184 |
| | $ | 15,159 |
| | $ | 1,548 |
| | $ | 12,299 |
| | $ | 1,253 |
| | $ | 14,060 |
| | $ | 82,912 |
| Allowance individually evaluated for impairment | $ | 1,693 |
| | $ | 11 |
| | $ | 2,614 |
| | $ | 1,404 |
| | $ | 592 |
| | $ | 658 |
| | $ | 62 |
| | $ | — |
| | $ | 7,034 |
| Allowance collectively evaluated for impairment | 14,764 |
| | 3,941 |
| | 15,570 |
| | 13,755 |
| | 956 |
| | 11,641 |
| | 1,191 |
| | 14,060 |
| | 75,878 |
| Total allowance for loan losses | $ | 16,457 |
| | $ | 3,952 |
| | $ | 18,184 |
| | $ | 15,159 |
| | $ | 1,548 |
| | $ | 12,299 |
| | $ | 1,253 |
| | $ | 14,060 |
| | $ | 82,912 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Commercial Real Estate | | Multifamily | | Construction and Land | | Commercial Business | | Agricultural Business | | One- to Four-Family | | Consumer | | Commitments and Unallocated | | Total | Loan balances: | | | | | | | | | | | | | | | | | | Loans individually evaluated for impairment | $ | 15,393 |
| | $ | 1,997 |
| | $ | 31,290 |
| | $ | 12,889 |
| | $ | 1,483 |
| | $ | 16,877 |
| | $ | 1,518 |
| | $ | — |
| | $ | 81,447 |
| Loans collectively evaluated for impairment | 1,076,035 |
| | 137,713 |
| | 287,402 |
| | 588,551 |
| | 216,688 |
| | 625,624 |
| | 282,878 |
| | — |
| | 3,214,891 |
| Total loans | $ | 1,091,428 |
| | $ | 139,710 |
| | $ | 318,692 |
| | $ | 601,440 |
| | $ | 218,171 |
| | $ | 642,501 |
| | $ | 284,396 |
| | $ | — |
| | $ | 3,296,338 |
|
|