Note 4. Loans Receivable, Net

Substantially all of the Company’s loan receivables are with customers in the Company’s geographic market areas. Although the Company has a diversified loan portfolio, a substantial portion of its customers’ ability to honor their obligations is dependent upon the economic performance in the Company’s market areas. The Company is subject to regulatory limits for the amount of loans to any individual borrower and the Company is in compliance with this regulation as of December 31, 2012 and 2011. No borrower had outstanding loans or commitments exceeding 10 percent of the Company’s consolidated stockholders’ equity as of December 31, 2012.

Net deferred fees, costs, premiums, and discounts of $1,379,000 and $3,123,000 were included in the loans receivable balance at December 31, 2012 and 2011, respectively. At December 31, 2012, the Company had $2,295,167,000 in variable rate loans and $1,102,258,000 in fixed rate loans. The weighted average interest rate on loans was 5.33 percent and 5.62 percent at December 31, 2012 and 2011, respectively. At December 31, 2012, 2011, and 2010, loans sold and serviced for others were $116,439,000, $160,465,000, and $173,446,000, respectively. At December 31, 2012, the Company had loans of $1,660,469,000 pledged as collateral for FHLB advances and FRB discount window. There were no significant purchases or sales of loans designated held-to-maturity during 2012 and 2011.

The Company has entered into transactions with its executive officers and directors and their affiliates. The aggregate amount of loans outstanding to such related parties at December 31, 2012 and 2011 was $33,869,000 and $89,089,000, respectively. During 2012, new loans to such related parties were $8,386,000 and repayments were $4,736,000. The decrease in the related party loans from the prior year is a result of combining the eleven bank subsidiaries into Glacier Bank. For additional information relating to the combination of the bank subsidiaries, see Note 1. In management’s opinion, such loans were made in the ordinary course of business and were made on substantially the same terms as those prevailing at the time for comparable transaction with other persons.

The following schedules summarize the activity in the ALLL on a portfolio class basis:



	Year ended December 31, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,516		17,227		76,920		20,833		13,616		8,920
Provision for loan losses	21,525			2,879		11,012		4,690		324		2,620
Charge-offs	(34,672		)	(5,267	)	(16,339	)	(5,239	)	(4,369	)	(3,458	)
Recoveries	6,485			643		2,805		1,283		1,088		666
Balance at end of period	$	130,854		15,482		74,398		21,567		10,659		8,748



	Year ended December 31, 2011
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,107		20,957		76,147		19,932		13,334		6,737
Provision for loan losses	64,500			1,455		39,563		10,709		4,450		8,323
Charge-offs	(69,366		)	(5,671	)	(42,042	)	(10,386	)	(4,644	)	(6,623	)
Recoveries	5,275			486		3,252		578		476		483
Balance at end of period	$	137,516		17,227		76,920		20,833		13,616		8,920

The ALLL at the beginning of the period, the provision for loan losses, charge-offs and recoveries for the year ended December 31, 2010 was $142,927,000, $84,693,000, $(93,950,000) and $3,437,000, respectively.

Note 4. Loans Receivable, Net (continued)

The following schedules disclose the ALLL and loans receivable on a portfolio class basis:



	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	15,534	1,680	7,716	3,859	870	1,409
Collectively evaluated for impairment	115,320		13,802	66,682	17,708	9,789	7,339
Total allowance for loan and lease losses	$	130,854	15,482	74,398	21,567	10,659	8,748
Loans receivable
Individually evaluated for impairment	$	201,735	25,862	125,282	33,593	11,074	5,924
Collectively evaluated for impairment	3,195,690		490,605	1,530,226	589,804	392,851	192,204
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128



	December 31, 2011
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	18,828	2,659	9,756	4,233	584	1,596
Collectively evaluated for impairment	118,688		14,568	67,164	16,600	13,032	7,324
Total allowance for loan and lease losses	$	137,516	17,227	76,920	20,833	13,616	8,920
Loans receivable
Individually evaluated for impairment	$	258,659	24,453	162,959	49,962	14,750	6,535
Collectively evaluated for impairment	3,207,476		492,354	1,509,100	573,906	425,819	206,297
Total loans receivable	$	3,466,135	516,807	1,672,059	623,868	440,569	212,832

The following schedules disclose the impaired loans on a portfolio class basis:



	At or for the Year ended December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	62,759	7,334	29,595	21,205	1,354	3,271
Unpaid principal balance	70,261		7,459	36,887	21,278	1,362	3,275
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	76,656		12,797	36,164	22,665	1,390	3,640
Loans without a specific valuation allowance
Recorded balance	$	138,976	18,528	95,687	12,388	9,720	2,653
Unpaid principal balance	149,412		19,613	102,798	14,318	9,965	2,718
Average balance	162,505		16,034	111,554	19,733	11,993	3,191
Totals
Recorded balance	$	201,735	25,862	125,282	33,593	11,074	5,924
Unpaid principal balance	219,673		27,072	139,685	35,596	11,327	5,993
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	239,161		28,831	147,718	42,398	13,383	6,831

Note 4. Loans Receivable, Net (continued)



	At or for the Year ended December 31, 2011
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	77,717	11,111	39,971	22,087	1,219	3,329
Unpaid principal balance	85,514		11,177	47,569	22,196	1,238	3,334
Specific valuation allowance	18,828		2,659	9,756	4,233	584	1,596
Average balance	66,871		10,330	38,805	13,395	1,284	3,057
Loans without a specific valuation allowance
Recorded balance	$	180,942	13,342	122,988	27,875	13,531	3,206
Unpaid principal balance	208,828		14,741	139,962	35,174	15,097	3,854
Average balance	168,983		14,730	123,231	19,963	8,975	2,084
Totals
Recorded balance	$	258,659	24,453	162,959	49,962	14,750	6,535
Unpaid principal balance	294,342		25,918	187,531	57,370	16,335	7,188
Specific valuation allowance	18,828		2,659	9,756	4,233	584	1,596
Average balance	235,854		25,060	162,036	33,358	10,259	5,141

Interest income recognized on impaired loans for the years ended December 31, 2012, 2011, and 2010 was not significant.

The following is a loans receivable aging analysis on a portfolio class basis:



	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	17,454	3,897	7,424	2,020	2,872	1,241
Accruing loans 60-89 days past due	9,643		1,870	3,745	645	2,980	403
Accruing loans 90 days or more past due	1,479		451	594	197	188	49
Non-accrual loans	96,933		14,237	55,687	13,200	11,241	2,568
Total past due and non-accrual loans	125,509		20,455	67,450	16,062	17,281	4,261
Current loans receivable	3,271,916		496,012	1,588,058	607,335	386,644	193,867
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128



	December 31, 2011
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	31,386	9,038	12,683	3,279	4,092	2,294
Accruing loans 60-89 days past due	17,700		2,678	11,660	1,034	1,276	1,052
Accruing loans 90 days or more past due	1,413		59	108	1,060	156	30
Non-accrual loans	133,689		11,881	87,956	21,685	10,272	1,895
Total past due and non-accrual loans	184,188		23,656	112,407	27,058	15,796	5,271
Current loans receivable	3,281,947		493,151	1,559,652	596,810	424,773	207,561
Total loans receivable	$	3,466,135	516,807	1,672,059	623,868	440,569	212,832

Note 4. Loans Receivable, Net (continued)

Interest income that would have been recorded on non-accrual loans if such loans had been current for the entire period would have been approximately $5,161,000, $7,441,000, and $10,987,000 for the years ended December 31, 2012, 2011, and 2010, respectively.

The following is a summary of the TDRs that occurred during the periods presented and the TDRs that occurred within the previous twelve months that subsequently defaulted during the periods presented on a portfolio class basis:



	Year ended December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	198		11	85	75	10	17
Pre-modification recorded balance	$	90,747	2,280	57,382	28,639	1,358	1,088
Post-modification recorded balance	$	89,558	2,281	56,120	28,711	1,358	1,088
Troubled debt restructurings that subsequently defaulted
Number of loans	14		—	4	6	3	1
Recorded balance	$	8,304	—	6,192	1,753	301	58



	Year ended December 31, 2011
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	338		20	120	149	22	27
Pre-modification recorded balance	$	158,295	13,500	109,593	20,446	9,198	5,558
Post-modification recorded balance	$	155,827	13,452	107,778	20,434	9,200	4,963
Troubled debt restructurings that subsequently defaulted
Number of loans	66		4	29	22	7	4
Recorded balance	$	41,236	2,291	32,615	2,718	3,202	410

For the years ended December 31, 2012 and 2011 the majority of TDRs occurring in most loan classes was a result of an extension of the maturity date which aggregated 49 percent and 58 percent, respectively, of total TDRs. For commercial real estate, the class with the largest dollar amount of TDRs, approximately 36 percent and 56 percent, respectively, was a result of an extension of the maturity date and 30 percent and 31 percent, respectively, was due to a combination of an interest rate reduction, extension of the maturity date, or reduction in the face amount.

In addition to the TDRs that occurred during the period provided in the preceding table, the Company had TDRs with pre-modification loan balances of $39,769,000 and $96,528,000 for the years ended December 31, 2012 and 2011, respectively, for which OREO was received in full or partial satisfaction of the loans. The majority of such TDRs for both years was in commercial real estate.

There were $4,534,000 and $3,158,000 of additional outstanding commitments on TDRs outstanding at December 31, 2012 and 2011, respectively. The amount of charge-offs on TDRs during 2012 and 2011 was $6,271,000 and $8,792,000, respectively.