Real Estate Owned, Net

3 Months Ended

Jun. 30, 2011

Note 8: REAL ESTATE OWNED, NET

The following table presents the changes in real estate owned (REO), net of valuation adjustments, for the three and six months ended June 30, 2011 and 2010 (in thousands):

	Three Months Ended June 30						Six Months Ended June 30
		2011			2010			2011			2010

Balance, beginning of the period	$	94,945		$	95,074		$	100,872		$	77,743

Additions from loan foreclosures		11,918			17,885			26,834			45,212
Additions from capitalized costs		1,532			380			3,147			1,516
Dispositions of REO		(32,437	)		(10,532	)		(51,331	)		(20,411	)
Gain (loss) on sale of REO		58			(498	)		(479	)		(1,235	)
Valuation adjustments in the period		(4,811	)		(824	)		(7,838	)		(1,340	)

Balance, end of the period	$	71,205		$	101,485		$	71,205		$	101,485

The following table shows REO by type and geographic location by state as of June 30, 2011 (in thousands):

	Washington		Oregon		Idaho		Total

Commercial real estate	$	1,533	$	13	$	477	$	2,023
One- to four-family construction		472		3,646		--		4,118
Land development- commercial		3,876		4,065		200		8,141
Land development- residential		18,787		18,763		3,400		40,950
Agricultural land		--		256		850		1,106
One- to four-family real estate		6,729		6,084		2,054		14,867

Balance, end of period	$	31,397	$	32,827	$	6,981	$	71,205

REO properties are recorded at the lower of the Company’s investment or the fair market value of the property, less expected selling costs. REO properties are reviewed periodically to determine if valuation allowances are necessary. These valuation allowances are generally based on updated appraisals of the underlying properties. Further, management may direct a reduction of the selling price of a property which may result in an additional valuation allowance.