LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2013

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 September 30, 2013, December 31, 2012 and September 30, 2012 are summarized as follows (dollars in thousands):



	September 30, 2013					December 31, 2012					September 30, 2012
	Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total
Commercial real estate:
Owner-occupied	$	508,341		15.5	%	$	489,581		15.1	%	$	477,871		14.9	%
Investment properties	613,757			18.8		583,641			18.0		604,265			18.8
Multifamily real estate	133,770			4.1		137,504			4.3		138,716			4.3
Commercial construction	18,730			0.6		30,229			0.9		28,598			0.9
Multifamily construction	33,888			1.0		22,581			0.7		14,502			0.5
One- to four-family construction	194,187			5.9		160,815			5.0		163,521			5.1
Land and land development:
Residential	75,576			2.3		77,010			2.4		79,932			2.5
Commercial	11,231			0.3		13,982			0.4		14,242			0.4
Commercial business	635,658			19.4		618,049			19.1		603,606			18.8
Agricultural business, including secured by farmland	223,187			6.8		230,031			7.1		219,084			6.8
One- to four-family residential	543,263			16.6		581,670			18.0		594,413			18.5
Consumer:
Consumer secured by one- to four-family	170,019			5.2	%	170,123			5.3	%	171,380			5.3	%
Consumer-other	113,829			3.5		120,498			3.7		103,393			3.2
Total loans outstanding	3,275,436			100.0	%	3,235,714			100.0	%	3,213,523			100.0	%
Less allowance for loan losses	(76,657		)			(77,491		)			(78,783		)
Net loans	$	3,198,779				$	3,158,223				$	3,134,740

Loan amounts are net of unearned loan fees in excess of unamortized costs of $8.8 million as of September 30, 2013, $8.9 million as of December 31, 2012 and $9.0 million as of September 30, 2012.

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



	Washington			Oregon			Idaho			Other			Total
Commercial real estate:
Owner-occupied	$	384,706		$	58,468		$	59,077		$	6,090		$	508,341
Investment properties	467,161			90,518			50,464			5,614			613,757
Multifamily real estate	107,744			15,998			9,828			200			133,770
Commercial construction	9,918			3,942			377			4,493			18,730
Multifamily construction	22,141			11,747			—			—			33,888
One- to four-family construction	108,011			84,749			1,427			—			194,187
Land and land development:
Residential	45,281			28,973			1,322			—			75,576
Commercial	5,915			3,379			1,937			—			11,231
Commercial business	392,741			76,314			62,428			104,175			635,658
Agricultural business, including secured by farmland	111,795			52,670			58,722			—			223,187
One- to four-family residential	337,369			180,047			23,846			2,001			543,263
Consumer:
Consumer secured by one- to four-family	112,130			44,049			13,195			645			170,019
Consumer—other	75,307			32,942			5,565			15			113,829
Total loans	$	2,180,219		$	683,796		$	288,188		$	123,233		$	3,275,436
Percent of total loans	66.6		%	20.9		%	8.8		%	3.7		%	100.0		%

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



	Washington			Oregon			Idaho			Total
Residential:
Acquisition and development	$	17,094		$	9,901		$	1,124		$	28,119
Improved land and lots	23,201			18,662			198			42,061
Unimproved land	4,986			410			—			5,396
Commercial:
Acquisition and development	—			—			484			484
Improved land and lots	3,213			525			507			4,245
Unimproved land	2,702			2,854			946			6,502
Total land and land development loans	$	51,196		$	32,352		$	3,259		$	86,807
Percent of land and land development loans	59.0		%	37.3		%	3.7		%	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 September 30, 2013, December 31, 2012 and September 30, 2012 were as follows (in thousands):



	September 30, 2013		December 31, 2012		September 30, 2012
Fixed-rate (term to maturity):
Maturing in one year or less	$	134,632	$	183,004	$	185,379
Maturing after one year through three years	139,878		171,724		168,307
Maturing after three years through five years	205,830		173,251		168,348
Maturing after five years through ten years	208,625		167,858		165,973
Maturing after ten years	406,715		473,927		456,758
Total fixed-rate loans	1,095,680		1,169,764		1,144,765
Adjustable-rate (term to rate adjustment):
Maturing or repricing in one year or less	1,290,793		1,260,472		1,283,783
Maturing or repricing after one year through three years	274,789		275,223		291,778
Maturing or repricing after three years through five years	527,999		467,895		441,773
Maturing or repricing after five years through ten years	84,399		60,316		45,951
Maturing or repricing after ten years	1,776		2,044		5,473
Total adjustable-rate loans	2,179,756		2,065,950		2,068,758
Total loans	$	3,275,436	$	3,235,714	$	3,213,523

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 one or more concessions 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 September 30, 2013 and December 31, 2012 were as follows (in thousands):



	September 30, 2013				December 31, 2012
	Loan Amount		Allocated Reserves		Loan Amount		Allocated Reserves
Impaired loans:
Nonaccrual loans
Commercial real estate:
Owner-occupied	$	2,798	$	38	$	4,105	$	618
Investment properties	1,965		97		2,474		56
Multifamily real estate	333		59		—		—
One- to four-family construction	910		81		1,565		326
Land and land development:
Residential	750		—		2,061		323
Commercial	—		—		46		12
Commercial business	963		151		4,750		344
One- to four-family residential	10,717		307		12,964		520
Consumer:
Consumer secured by one- to four-family	940		16		2,073		41
Consumer—other	693		3		1,323		16
Total nonaccrual loans	20,069		752		31,361		2,256
Past due and still accruing	4,793		409		3,029		62
Troubled debt restructuring on accrual status:
Commercial real estate:
Owner-occupied	186		4		188		4
Investment properties	5,456		455		7,034		664
Multifamily real estate	5,810		1,256		7,131		1,665
One- to four-family construction	7,285		1,070		6,726		1,115
Land and land development:
Residential	5,230		1,112		4,842		667
Commercial business	1,115		203		2,975		610
One- to four-family residential	24,469		1,374		27,540		1,228
Consumer:
Consumer secured by one- to four-family	411		29		538		29
Consumer—other	468		56		488		38
Total troubled debt restructurings on accrual status	50,430		5,559		57,462		6,020
Total impaired loans	$	75,292	$	6,720	$	91,852	$	8,338

As of September 30, 2013 and December 31, 2012, the Company had commitments to advance funds up to an additional amount of $1.7 million and $1.6 million, respectively, related to TDRs.

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



	At or For the Nine Months Ended September 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	$	803	$	1,003	$	38	$	879	$	—
Investment properties	466		1,011		97		684		—
Multifamily real estate	2,034		2,034		359		2,053		58
One- to four-family construction	561		737		81		578		—
Land and land development:
Residential	242		243		87		246		13
Commercial business	2,697		3,238		165		3,083		1
One- to four-family residential	7,538		8,024		49		7,681		37
Consumer:
Consumer secured by one- to four-family	917		1,062		17		940		—
Consumer—other	508		658		3		532		1
	15,766		18,010		896		16,676		110
With a specific allowance reserve ⁽²⁾
Commercial real estate:
Owner-occupied	$	2,182	$	2,182	$	4	$	2,203	$	9
Investment properties	6,955		7,941		455		7,598		242
Multifamily real estate	5,810		5,810		1,256		5,689		218
One- to-four family construction	7,634		7,634		1,070		6,326		180
Land and land development:
Residential	5,980		6,316		1,112		6,326		198
Commercial business	1,115		1,115		203		1,147		39
One- to four-family residential	28,711		29,778		1,639		29,893		786
Consumer:
Consumer secured by one- to four-family	457		457		29		530		19
Consumer—other	682		698		56		698		27
	59,526		61,931		5,824		60,410		1,718
Total
Commercial real estate:
Owner-occupied	$	2,985	$	3,185	$	42	$	3,082	$	9
Investment properties	7,421		8,952		552		8,282		242
Multifamily real estate	7,844		7,844		1,615		7,742		276
One- to four-family construction	8,195		8,371		1,151		6,904		180
Land and land development:
Residential	6,222		6,559		1,199		6,572		211
Commercial business	3,812		4,353		368		4,230		40
One- to four-family residential	36,249		37,802		1,688		37,574		823
Consumer:
Consumer secured by one- to four-family	1,374		1,519		46		1,470		19
Consumer—other	1,190		1,356		59		1,230		28
	$	75,292	$	79,941	$	6,720	$	77,086	$	1,828



	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 September 30, 2013 and December 31, 2012 (in thousands):



	September 30, 2013
	Accrual Status		Nonaccrual Status		Total Modifications
Commercial real estate:
Owner-occupied	$	186	$	620	$	806
Investment properties	5,456		1,563		7,019
Multifamily real estate	5,810		—		5,810
One- to four-family construction	7,285		712		7,997
Land and land development:
Residential	5,230		—		5,230
Commercial business	1,115		322		1,437
One- to four-family residential	24,469		2,146		26,615
Consumer:
Consumer secured by one- to four-family	411		254		665
Consumer—other	468		129		597
	$	50,430	$	5,746	$	56,176



	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 nine months ended September 30, 2013 and 2012 (dollars in thousands):



	Three Months Ended September 30, 2013					Nine Months Ended September 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)}
Multifamily real estate	—	$	—	$	—	1	$	376	$	376
One- to four-family construction	3	773		773		11	3,008		3,008
Land and land development—residential	2	1,029		1,029		2	1,029		1,029
	5	$	1,802	$	1,802	24	$	7,336	$	7,336

	Three Months Ended September 30, 2012					Nine Months Ended September 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
Owner-occupied	1	$	946	$	946	1	$	946	$	946
Investment properties	3	2,784		2,784		6	3,708		3,708
Multifamily real estate	—	—		—		2	5,054		5,054
One- to four-family construction	11	1,711		1,711		19	4,504		4,504
Land and land development—residential	—	—		—		6	2,059		2,059
Commercial business	3	94		94		9	1,309		1,309
One- to four-family residential	1	153		153		18	9,182		9,182
Consumer secured by one- to four-family	—	—		—		1	151		151
Consumer-other	—	—		—		3	220		220
	19	$	5,688	$	5,688	65	$	27,133	$	27,133


⁽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 nine-month periods ended September 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 September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	1,358
Commercial business	137		—		137		—
One- to four-family residential	—		—		—		559
Total	$	137	$	—	$	137	$	1,917

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 nine months ended September 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 September 30, 2013 and December 31, 2012 (in thousands):



	September 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⁾	$	1,084,540	$	126,360	$	313,108	$	611,668	$	212,012	$	527,655	$	279,908	$	3,155,251
Special mention	6,033		—		481		5,802		621		—		139		13,076
Substandard	30,981		7,410		20,023		18,179		10,554		15,608		3,801		106,556
Doubtful	544		—		—		9		—		—		—		553
Loss	—		—		—		—		—		—		—		—
Total loans	$	1,122,098	$	133,770	$	333,612	$	635,658	$	223,187	$	543,263	$	283,848	$	3,275,436
Performing loans	$	1,117,336	$	131,736	$	331,710	$	634,671	$	223,187	$	529,772	$	282,162	$	3,250,574
Non-performing loans ⁽²⁾	4,762		2,034		1,902		987		—		13,491		1,686		24,862
Total loans	$	1,122,098	$	133,770	$	333,612	$	635,658	$	223,187	$	543,263	$	283,848	$	3,275,436

	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 September 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 September 30, 2013 and December 31, 2012 (in thousands):



	September 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	$	2,374	$	1,675	$	1,386	$	5,435	$	502,906	$	508,341	$	—
Investment properties	92		—		1,499		1,591		612,166		613,757		—
Multifamily real estate	—		—		1,701		1,701		132,069		133,770		1,701
Commercial construction	—		—		—		—		18,730		18,730		—
Multifamily construction	—		—		—		—		33,888		33,888		—
One-to-four-family construction	—		—		910		910		193,277		194,187		—
Land and land development:
Residential	—		—		993		993		74,583		75,576		242
Commercial	—		—		—		—		11,231		11,231		—
Commercial business	421		57		516		994		634,664		635,658		24
Agricultural business, including secured by farmland	—		108		—		108		223,079		223,187		—
One- to four-family residential	1,042		5,129		7,558		13,729		529,534		543,263		2,774
Consumer:
Consumer secured by one- to four-family	459		749		283		1,491		168,528		170,019		23
Consumer—other	319		58		475		852		112,977		113,829		29
Total	$	4,707	$	7,776	$	15,321	$	27,804	$	3,247,632	$	3,275,436	$	4,793



	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 nine months ended September 30, 2013 and 2012 (in thousands):



	For the Three Months Ended September 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	$	14,898		$	4,973	$	16,625		$	10,806		$	3,805		$	14,974		$	1,011		$	9,761		$	76,853
Provision for loan losses	1,239			310		(464		)	(223		)	(411		)	(1,599		)	43			1,105			—
Recoveries	331			—		507			339			265			19			68			—			1,529
Charge-offs	(850		)	—		—			(246		)	(248		)	(207		)	(174		)	—			(1,725		)
Ending balance	$	15,618		$	5,283	$	16,668		$	10,676		$	3,411		$	13,187		$	948		$	10,866		$	76,657

	For the Nine Months Ended September 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	(383		)	777		1,586			901			752			(2,166		)	264			(1,731		)	—
Recoveries	2,295			—		945			1,391			612			138			287			—			5,668
Charge-offs	(1,616		)	—		(854		)	(1,573		)	(248		)	(1,260		)	(951		)	—			(6,502		)
Ending balance	$	15,618		$	5,283	$	16,668		$	10,676		$	3,411		$	13,187		$	948		$	10,866		$	76,657



	At September 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	$	459	$	1,256	$	2,182	$	202	$	—	$	1,639	$	85	$	—	$	5,823
Allowance collectively evaluated for impairment	15,159		4,027		14,486		10,474		3,411		11,548		863		10,866		70,834
Total allowance for loan losses	$	15,618	$	5,283	$	16,668	$	10,676	$	3,411	$	13,187	$	948	$	10,866	$	76,657



	At September 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	$	9,137	$	5,810	$	13,613	$	1,115	$	—	$	28,711	$	1,139	$	—	$	59,525
Loans collectively evaluated for impairment	1,112,961		127,960		319,999		634,543		223,187		514,552		282,709		—		3,215,911
Total loans	$	1,122,098	$	133,770	$	333,612	$	635,658	$	223,187	$	543,263	$	283,848	$	—	$	3,275,436



	For the Three Months Ended September 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	$	16,834		$	5,108		$	16,974		$	12,352		$	1,294		$	14,213		$	1,365		$	12,081		$	80,221
Provision for loan losses	(263		)	(367		)	(628		)	(118		)	1,044			2,614			814			(96		)	3,000
Recoveries	130			—			35			154			30			34			91			—			474
Charge-offs	(924		)	—			(617		)	(1,687		)	(26		)	(709		)	(949		)	—			(4,912		)
Ending balance	$	15,777		$	4,741		$	15,764		$	10,701		$	2,342		$	16,152		$	1,321		$	11,985		$	78,783

	At For the Nine Months Ended September 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	2,065			789			1,369			(97		)	1,050			7,021			1,878			(2,075		)	12,000
Recoveries	762			—			1,455			1,030			45			412			422			—			4,126
Charge-offs	(3,507		)	—			(5,244		)	(5,391		)	(301		)	(3,580		)	(2,232		)	—			(20,255		)
Ending balance	$	15,777		$	4,741		$	15,764		$	10,701		$	2,342		$	16,152		$	1,321		$	11,985		$	78,783



	At September 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	$	955	$	1,414	$	1,439	$	383	$	—	$	1,139	$	33	$	—	$	5,363
Allowance collectively evaluated for impairment	14,822		3,327		14,325		10,318		2,342		15,013		1,288		11,985		73,420
Total allowance for loan losses	$	15,777	$	4,741	$	15,764	$	10,701	$	2,342	$	16,152	$	1,321	$	11,985	$	78,783



	At September 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	$	11,867	$	5,000	$	14,020	$	6,115	$	—	$	20,719	$	1,026	$	—	$	58,747
Loans collectively evaluated for impairment	1,070,269		133,716		286,775		597,491		219,084		573,694		273,747		—		3,154,776
Total loans	$	1,082,136	$	138,716	$	300,795	$	603,606	$	219,084	$	594,413	$	274,773	$	—	$	3,213,523

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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