LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES

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 and origination costs, discounts and premiums.  Premiums, discounts and deferred loan fees and origination costs 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.

Loans receivable, including loans held for sale, at June 30, 2013, December 31, 2012 and June 30, 2012 are summarized as follows (dollars in thousands):

	June 30, 2013					December 31, 2012					June 30, 2012
	Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total
Commercial real estate:
Owner-occupied	$	500,812		15.2	%	$	489,581		15.1	%	$	477,621		14.9	%
Investment properties	595,896			18.1		583,641			18.0		613,965			19.1
Multifamily real estate	137,027			4.2		137,504			4.3		130,319			4.1
Commercial construction	25,629			0.8		30,229			0.9		23,808			0.7
Multifamily construction	39,787			1.2		22,581			0.7		18,132			0.6
One- to four-family construction	191,003			5.8		160,815			5.0		157,301			4.9
Land and land development:
Residential	86,037			2.6		77,010			2.4		83,185			2.6
Commercial	11,228			0.3		13,982			0.4		11,451			0.4
Commercial business	639,840			19.4		618,049			19.1		600,046			18.7
Agricultural business, including secured by farmland	233,967			7.1		230,031			7.1		211,705			6.6
One- to four-family residential	552,698			16.8		581,670			18.0		607,489			18.9
Consumer:
Consumer	112,938			3.4		120,498			3.7		103,504			3.2
Consumer secured by one- to four-family	163,339			5.0		170,123			5.3		173,731			5.4
Total loans outstanding	3,290,201			100.0	%	3,235,714			100.0	%	3,212,257			100.0	%
Less allowance for loan losses	(76,853		)			(77,491		)			(80,221		)
Net loans	$	3,213,348				$	3,158,223				$	3,132,036

Loan amounts are net of unearned loan fees and unamortized costs of $8.9 million as of June 30, 2013 and December 31, 2012 and $9.7 million as of June 30, 2012.

The Company’s total loans by geographic concentration at June 30, 2013 were as follows (dollars in thousands):

	Washington			Oregon			Idaho			Other			Total
Commercial real estate:
Owner-occupied	$	381,289		$	56,671		$	56,678		$	6,174		$	500,812
Investment properties	463,804			82,395			46,497			3,200			595,896
Multifamily real estate	110,477			16,917			9,402			231			137,027
Commercial construction	17,184			3,686			589			4,170			25,629
Multifamily construction	13,868			25,919			—			—			39,787
One- to four-family construction	104,686			83,559			2,758			—			191,003
Land and land development:
Residential	57,834			26,750			1,453			—			86,037
Commercial	6,351			3,015			1,862			—			11,228
Commercial business	406,876			76,532			61,731			94,701			639,840
Agricultural business, including secured by farmland	116,785			51,205			65,977			—			233,967
One- to four-family residential	349,302			177,641			23,727			2,028			552,698
Consumer:
Consumer secured by one- to four-family	108,818			41,718			12,157			646			163,339
Consumer—other	76,106			31,482			5,335			15			112,938
Total loans	$	2,213,380		$	677,490		$	288,166		$	111,165		$	3,290,201
Percent of total loans	67.3		%	20.6		%	8.7		%	3.4		%	100.0		%

The geographic concentrations of the Company’s land and land development loans by state at June 30, 2013 were as follows (dollars in thousands):

	Washington			Oregon			Idaho			Total
Residential:
Acquisition and development	$	16,447		$	9,987		$	1,258		$	27,692
Improved land and lots	32,960			16,313			195			49,468
Unimproved land	8,427			450			—			8,877
Commercial:
Acquisition and development	—			—			481			481
Improved land and lots	3,549			135			529			4,213
Unimproved land	2,802			2,880			852			6,534
Total land and land development loans	$	64,185		$	29,765		$	3,315		$	97,265
Percent of land and land development loans	66.0		%	30.6		%	3.4		%	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 and origination costs, at June 30, 2013, December 31, 2012 and June 30, 2012 were as follows (in thousands):

	June 30, 2013		December 31, 2012		June 30, 2012
Fixed-rate (term to maturity):
Due in one year or less	$	145,221	$	183,004	$	233,525
Due after one year through three years	167,187		171,724		223,624
Due after three years through five years	201,672		173,251		161,094
Due after five years through ten years	192,594		167,858		155,490
Due after ten years	425,603		473,927		474,366
Total fixed-rate loans	1,132,277		1,169,764		1,248,099
Adjustable-rate (term to rate adjustment):
Due in one year or less	1,292,387		1,260,472		1,193,230
Due after one year through three years	266,841		275,223		322,336
Due after three years through five years	526,563		467,895		408,015
Due after five years through ten years	69,797		60,316		38,782
Due after ten years	2,336		2,044		1,795
Total adjustable-rate loans	2,157,924		2,065,950		1,964,158
Total loans	$	3,290,201	$	3,235,714	$	3,212,257

The adjustable-rate loans have interest rate adjustment limitations and are generally indexed to various prime (The Wall Street Journal) or London Inter-bank Offering Rate (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 were primarily 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, troubled debt restructurings (TDRs) that are performing under their restructured terms, and loans that are 90 days or more past due, but are still on accrual.

Troubled Debt Restructures. Some of the Company’s loans are reported as TDRs.  Loans are reported as TDRs 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.  Our TDRs have generally not involved forgiveness of amounts due, but almost always include a modification of multiple factors; the most common combination includes interest rate, payment amount and maturity date. 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 Company's impaired loan accounting policies.

The amount of impaired loans and the related allocated reserve for loan losses as of June 30, 2013 and December 31, 2012 were as follows (in thousands):

	June 30, 2013				December 31, 2012
	Loan Amount		Allocated Reserves		Loan Amount		Allocated Reserves
Impaired loans:
Nonaccrual loans
Commercial real estate:
Owner-occupied	$	2,898	$	45	$	4,105	$	618
Investment properties	1,912		87		2,474		56
Multifamily real estate	335		70		—		—
One- to four-family construction	1,764		265		1,565		326
Land and land development:
Residential	1,011		88		2,061		323
Commercial	—		—		46		12
Commercial business	2,819		207		4,750		344
One- to four-family residential	11,465		336		12,964		520
Consumer:
Consumer secured by one- to four-family	1,120		19		2,073		41
Consumer—other	818		6		1,323		16
Total nonaccrual loans	$	24,142	$	1,123	$	31,361	$	2,256
Past due and still accruing	$	1,959	$	16	$	3,029	$	62
Troubled debt restructuring on accrual status:
Commercial real estate:
Owner-occupied	$	187	$	4	$	188	$	4
Investment properties	7,047		746		7,034		664
Multifamily real estate	5,815		1,326		7,131		1,665
One- to four-family construction	6,964		1,042		6,726		1,115
Land and land development:
Residential	4,352		762		4,842		667
Commercial business	1,179		216		2,975		610
One- to four-family residential	25,301		1,654		27,540		1,228
Consumer:
Consumer secured by one- to four-family	410		26		538		29
Consumer—other	478		58		488		38
Total troubled debt restructurings on accrual status	51,733		5,834		57,462		6,020
Total impaired loans	$	77,834	$	6,973	$	91,852	$	8,338

As of June 30, 2013 and December 31, 2012, the Company had commitments to advance funds up to an additional amount of $1.6 million related to TDRs.

The following tables provide additional information on impaired loans with and without specific allowance reserves at or for the six months ended June 30, 2013 and at or for the year ended December 31, 2012 (in thousands):

	At or For the Six Months Ended June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Without a specific allowance reserve (1)
Commercial real estate:
Owner-occupied	$	877	$	1,027	$	45	$	898	$	—
Investment properties	521		1,067		87		787		—
Multifamily real estate	335		335		71		338		—
One- to four-family construction	1,106		1,283		114		1,158		—
Land and land development:
Residential	261		475		88		537		—
Commercial business	1,184		1,599		208		1,356		—
One- to four-family residential	9,244		9,919		80		9,286		—
Consumer:
Consumer secured by one- to four-family	1,074		1,593		19		1,087		—
Consumer—other	744		898		7		784		1
	15,346		18,196		719		16,231		1
With a specific allowance reserve (2)
Commercial real estate:
Owner-occupied	$	2,208	$	2,208	$	4	$	2,213	$	6
Investment properties	8,439		9,544		746		7,940		161
Multifamily real estate	5,815		5,815		1,326		5,628		100
One- to-four family construction	7,621		7,621		1,194		6,331		127
Land and land development:
Residential	5,102		5,438		761		5,567		108
Commercial business	2,818		2,818		216		2,909		27
One- to four-family residential	29,419		30,316		1,923		29,332		448
Consumer:
Consumer secured by one- to four-family	456		456		26		566		14
Consumer—other	610		627		58		624		18
	62,488		64,843		6,254		61,110		1,009
Total
Commercial real estate:
Owner-occupied	$	3,085	$	3,235	$	49	$	3,111	$	6
Investment properties	8,960		10,611		833		8,727		161
Multifamily real estate	6,150		6,150		1,397		5,966		100
One- to four-family construction	8,727		8,904		1,308		7,489		127
Land and land development:
Residential	5,363		5,913		849		6,104		108
Commercial business	4,002		4,417		424		4,265		27
One- to four-family residential	38,663		40,235		2,003		38,618		448
Consumer:
Consumer secured by one- to four-family	1,530		2,049		45		1,653		14
Consumer—other	1,354		1,525		65		1,408		19
	$	77,834	$	83,039	$	6,973	$	77,341	$	1,010

	At or For the Year Ended 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

⁽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, 2013 and December 31, 2012 (in thousands):

	June 30, 2013
	Accrual Status		Nonaccrual Status		Total Modifications
Commercial real estate:
Owner-occupied	$	187	$	627	$	814
Investment properties	7,047		1,462		8,509
Multifamily real estate	5,815		—		5,815
One- to four-family construction	6,964		1,022		7,986
Land and land development:
Residential	4,352		—		4,352
Commercial business	1,179		548		1,727
One- to four-family residential	25,301		2,813		28,114
Consumer:
Consumer secured by one- to four-family	410		258		668
Consumer—other	478		132		610
	$	51,733	$	6,862	$	58,595

	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

The following tables present new TDRs that occurred during the three and six months ended June 30, 2013 and 2012 (dollars in thousands):

	Three Months Ended June 30, 2013					Six Months Ended June 30, 2013
	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	$	900	$	781	1	$	900	$	781
Multifamily real estate	1	378		378		1	378		378
Land and land development—residential	5	521		521		9	1,597		1,597
One- to four-family residential	—	—		—		9	3,115		3,115
	7	$	1,799	$	1,680	20	$	5,990	$	5,871
	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
	21	$	9,859	$	9,859	45	$	20,726	$	20,726

⁽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 twelve months of the restructure date during the three-month and six-month periods ended June 30, 2013 and 2012 (in thousands).  A default on a TDR results in either a transfer to nonaccrual status or a partial charge-off:

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	1,378
Commercial business	—		—		343		—
One- to four-family residential	—		—		—		562
Total	$	—	$	—	$	343	$	1,940

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 the six months ended June 30, 2013.

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 indeterminable.  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, 2013 and December 31, 2012 (in thousands):

	June 30, 2013
	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)	$	1,047,077	$	131,314	$	329,004	$	607,626	$	217,097	$	535,884	$	271,564	$	3,139,566
Special mention	12,631		—		481		8,600		653		—		142		22,507
Substandard	36,456		5,713		24,199		23,604		16,217		16,814		4,571		127,574
Doubtful	544		—		—		10		—		—		—		554
Loss	—		—		—		—		—		—		—		—
Total loans	$	1,096,708	$	137,027	$	353,684	$	639,840	$	233,967	$	552,698	$	276,277	$	3,290,201
Performing loans	$	1,091,898	$	136,692	$	350,909	$	637,017	$	233,967	$	539,336	$	274,281	$	3,264,100
Non-performing loans (2)	4,810		335		2,775		2,823		—		13,362		1,996		26,101
Total loans	$	1,096,708	$	137,027	$	353,684	$	639,840	$	233,967	$	552,698	$	276,277	$	3,290,201
	December 31, 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)	$	1,016,964	$	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
Loss	—		—		—		—		—		—		—		—
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⁾  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, 2013 and December 31, 2012, in the commercial business category, $81 million and $77 million, respectively, of credit-scored small business loans.  As loans in these pools become non-performing, they are individually risk-rated.

⁽²⁾  Non-performing loans include non-accrual loans and loans past due greater than 90 days and on accrual status.

The following tables provide additional detail on the age analysis of the Company’s past due loans as of June 30, 2013 and December 31, 2012 (in thousands):

	June 30, 2013
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	59	$	400	$	1,391	$	1,850	$	498,962	$	500,812	$	—
Investment properties	2,249		—		1,405		3,654		592,242		595,896		—
Multifamily real estate	—		—		—		—		137,027		137,027		—
Commercial construction	—		—		—		—		25,629		25,629		—
Multifamily construction	—		—		—		—		39,787		39,787		—
One-to-four-family construction	208		—		538		746		190,257		191,003		—
Land and land development:
Residential	—		—		1,011		1,011		85,026		86,037		—
Commercial	—		—		—		—		11,228		11,228		—
Commercial business	706		263		551		1,520		638,320		639,840		4
Agricultural business, including secured by farmland	233		125		—		358		233,609		233,967		—
One- to four-family residential	404		2,432		6,609		9,445		543,253		552,698		1,897
Consumer:
Consumer secured by one- to four-family	225		598		597		1,420		161,919		163,339		—
Consumer—other	427		240		650		1,317		111,621		112,938		58
Total	$	4,511	$	4,058	$	12,752	$	21,321	$	3,268,880	$	3,290,201	$	1,959

	December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More 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

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 months and six months ended June 30, 2013 and 2012 (in thousands):

	For the Three Months Ended June 30, 2013
	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	$	14,776		$	5,075		$	15,214		$	10,011		$	2,282	$	15,930		$	1,238		$	12,602		$	77,128
Provision for loan losses	162			(102		)	1,493			527			1,213		(557		)	105			(2,841		)	—
Recoveries	378			—			337			666			310		3			117			—			1,811
Charge-offs	(418		)	—			(419		)	(398		)	—		(402		)	(449		)	—			(2,086		)
Ending balance	$	14,898		$	4,973		$	16,625		$	10,806		$	3,805	$	14,974		$	1,011		$	9,761		$	76,853
	For the Six Months Ended June 30, 2013
	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	$	15,322		$	4,506		$	14,991		$	9,957		$	2,295	$	16,475		$	1,348		$	12,597		$	77,491
Provision for loan losses	(1,622		)	467			2,050			1,124			1,163		(567		)	221			(2,836		)	—
Recoveries	1,964			—			438			1,052			347		119			219			—			4,139
Charge-offs	(766		)	—			(854		)	(1,327		)	—		(1,053		)	(777		)	—			(4,777		)
Ending balance	$	14,898		$	4,973		$	16,625		$	10,806		$	3,805	$	14,974		$	1,011		$	9,761		$	76,853

	At June 30, 2013
	Commercial  Real Estate		Multifamily		Construction and Land		Commercial  Business		Agricultural business		One- to Four- Family		Consumer		Commitments and Unallocated		Total
Allowance individually evaluated for impairment	$	750	$	1,326	$	1,955	$	216	$	—	$	1,923	$	84	$	—	$	6,254
Allowance collectively evaluated for impairment	14,148		3,647		14,670		10,590		3,805		13,051		927		9,761		70,599
Total allowance for loan losses	$	14,898	$	4,973	$	16,625	$	10,806	$	3,805	$	14,974	$	1,011	$	9,761	$	76,853

	At June 30, 2013
	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	$	10,647	$	5,815	$	12,723	$	2,818	$	—	$	29,419	$	1,066	$	—	$	62,488
Loans collectively evaluated for impairment	1,086,061		131,212		340,961		637,022		233,967		523,279		275,211		—		3,227,713
Total loans	$	1,096,708	$	137,027	$	353,684	$	639,840	$	233,967	$	552,698	$	276,277	$	—	$	3,290,201

	For the Three Months Ended June 30, 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	$	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
	At For the Six Months Ended June 30, 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	2,327			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

	At June 30, 2012
	Commercial Real Estate		Multifamily		Construction and Land		Commercial Business		Agricultural business		One- to Four- Family		Consumer		Commitments and Unallocated		Total
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

	At June 30, 2012
	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	$	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