REAL ESTATE OWNED, NET

3 Months Ended

Mar. 31, 2013

Real Estate [Abstract]

REAL ESTATE OWNED, NET

REAL ESTATE OWNED, NET

The following table presents the changes in REO, net of valuation adjustments, for the three months ended March 31, 2013 and 2012 (in thousands):

	Three Months Ended March 31
	2013			2012
Balance, beginning of the period	$	15,778		$	42,965
Additions from loan foreclosures	1,086			1,601
Additions from capitalized costs	46			127
Dispositions of REO	(6,481		)	(15,441		)
Gain on sale of REO	804			100
Valuation adjustments in the period	(73		)	(1,629		)
Balance, end of the period	$	11,160		$	27,723

The following table shows REO by type and geographic location by state as of March 31, 2013 (in thousands):

	Washington		Oregon		Idaho		Total
Commercial real estate	$	—	$	—	$	198	$	198
One- to four-family construction	401		—		—		401
Land development—residential	1,610		6,321		70		8,001
One- to four-family real estate	1,077		1,483		—		2,560
Balance, end of period	$	3,088	$	7,804	$	268	$	11,160

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.