Loans Receivable

The following table is a summary of loans receivable.



	June 30, 2016				September 30, 2015
	(In thousands)				(In thousands)
Non-Acquired loans
Single-family residential	$	5,593,018	52.9	%	$	5,651,845	57.6	%
Construction	1,016,305		9.6		200,509		2.0
Construction - custom	409,116		3.9		396,307		4.0
Land - acquisition & development	101,849		1.0		94,208		1.0
Land - consumer lot loans	101,731		1.0		103,989		1.1
Multi-family	1,094,736		10.3		1,125,722		11.6
Commercial real estate	886,957		8.4		986,270		10.0
Commercial & industrial	810,442		7.7		612,836		6.2
HELOC	134,735		1.3		127,646		1.3
Consumer	154,261		1.4		194,655		2.0
Total non-acquired loans	10,303,150		97.5	%	9,493,987		96.8	%
Acquired loans	140,369		1.3		166,293		1.6
Credit impaired acquired loans	96,491		0.9		87,081		0.9
Covered loans	32,191		0.3		75,909		0.7
Total gross loans	10,572,201		100.0	%	9,823,270		100.0	%
Less:
Allowance for loan losses	111,016				106,829
Loans in process	780,721				476,796
Discount on acquired loans	14,775				30,095
Deferred net origination fees	37,113				38,916
Total loan contra accounts	943,625				652,636
Net Loans	$	9,628,576			$	9,170,634

The following table sets forth information regarding non-accrual loans.



	June 30, 2016				September 30, 2015
	(In thousands)
Non-accrual loans:
Single-family residential	$	36,707	77.5	%	$	59,074	87.1	%
Construction	—		—		754		1.1
Construction - custom	506		1.1		732		1.1
Land - acquisition & development	427		0.9		—		—
Land - consumer lot loans	1,105		2.3		1,273		1.9
Multi-family	1,238		2.6		2,558		3.8
Commercial real estate	6,297		13.3		2,176		3.2
Commercial & industrial	521		1.1		—		—
HELOC	548		1.2		563		0.8
Consumer	—		—		680		1.0
Total non-accrual loans	$	47,349	100	%	$	67,810	100	%

The Company recognized interest income on nonaccrual loans of approximately $4,100,000 in the nine months ended June 30, 2016. Had these loans performed according to their original contract terms, the Company would have recognized interest income of approximately $1,865,000 for the nine months ended June 30, 2016. Interest income actually recognized during the nine months ended June 30, 2016 is higher because of loans that were brought current or paid off.

The following tables provide details regarding delinquent loans.



June 30, 2016	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total		% based on $
	(In thousands)
Non-acquired loans
Single-Family Residential	$	5,596,644	$	5,542,000	$	14,268	$	6,679	$	33,697	$	54,644	0.98	%
Construction	442,810		442,810		—		—		—		—		—
Construction - Custom	213,465		212,690		110		159		506		775		0.36
Land - Acquisition & Development	86,243		85,775		—		—		468		468		0.54
Land - Consumer Lot Loans	102,248		100,304		738		101		1,105		1,944		1.90
Multi-Family	1,095,174		1,094,284		956		—		—		956		0.09
Commercial Real Estate	886,552		884,644		217		1,443		123		1,783		0.20
Commercial & Industrial	811,502		811,486		—		75		—		75		0.01
HELOC	134,151		133,236		297		70		548		915		0.68
Consumer	153,640		152,874		385		274		107		766		0.50
	9,522,429		9,460,103		16,971		8,801		36,554		62,326		0.65
Acquired loans	140,369		137,107		265		529		2,468		3,262		2.32
Credit impaired acquired loans	96,491		91,168		—		—		5,323		5,323		5.52
Covered loans	32,191		31,465		417		2		307		726		2.26
Total Loans	$	9,791,480	$	9,719,843	$	17,653	$	9,332	$	44,652	$	71,637	0.73	%
Delinquency %			99.27%		0.18%		0.10%		0.46%		0.73%



September 30, 2015	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total		% based on $
	(In thousands)
Non-acquired loans
Single-Family Residential	$	5,655,928	$	5,590,673	$	17,305	$	7,757	$	40,193	$	65,255	1.15	%
Construction	130,121		130,121		—		—		—		—		—
Construction - Custom	205,692		204,168		791		270		463		1,524		0.74
Land - Acquisition & Development	75,661		74,737		406		—		518		924		1.22
Land - Consumer Lot Loans	104,494		102,045		689		399		1,361		2,449		2.34
Multi-Family	1,068,038		1,065,667		259		454		1,658		2,371		0.22
Commercial Real Estate	893,072		892,180		131		—		761		892		0.10
Commercial & Industrial	617,545		616,602		93		27		823		943		0.15
HELOC	127,648		127,196		174		27		251		452		0.35
Consumer	194,977		194,259		493		170		55		718		0.37
	9,073,176		8,997,648		20,341		9,104		46,083		75,528		0.83
Acquired loans	57,682		56,559		356		—		767		1,123		1.95
Credit impaired acquired loans	139,726		138,940		243		4		539		786		0.56
Covered loans	75,890		70,729		272		90		4,799		5,161		6.80
Total Loans	$	9,346,474	$	9,263,876	$	21,212	$	9,198	$	52,188	$	82,598	0.88	%
Delinquency %			99.12%		0.23%		0.10%		0.56%		0.88%

The percentage of total delinquent loans decreased from 0.88% as of September 30, 2015 to 0.73% as of June 30, 2016 and there are no loans greater than 90 days delinquent and still accruing interest as of either date.

The following tables provide information related to loans that were restructured in a troubled debt restructuring ("TDR") during the periods presented:



	Three Months Ended June 30,
	2016					2015
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings:
Single-family residential	7	$	1,492	$	1,492	8	$	1,611	$	1,611
Land - consumer lot loans	—	—		—		2	203		203
Commercial real estate	2	1,558		1,558		—	—		—
	9	$	3,050	$	3,050	10	$	1,814	$	1,814

	Nine Months Ended June 30,
	2016					2015
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings:
Single-family residential	17	$	3,322	$	3,322	57	$	13,875	$	13,875
Construction	—	—		—		2	718		718
Construction - custom	—	—		—		2	532		532
Land - consumer lot loans	—	—		—		6	923		923
Commercial real estate	7	2,523		2,523		3	3,175		3,175
Consumer	—	—		—		1	85		85
	24	$	5,845	$	5,845	71	$	19,308	$	19,308

The following tables provide information on payment defaults occurring during the periods presented where the loan had been modified in a TDR within 12 months of the payment default.



	Three Months Ended June 30,
	2016			2015
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	3	$	1,570	9	$	1,594
Construction	1	279		—	—
Land - consumer lot loans	2	204		2	301
Commercial real estate	1	174		—	—
	7	$	2,227	11	$	1,895

	Nine Months Ended June 30,
	2016			2015
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	14	$	3,108	19	$	3,329
Construction	1	279		—	—
Land - consumer lot loans	4	498		7	991
Commercial real estate	2	326		—	—
	21	$	4,211	26	$	4,320

Most loans restructured in TDRs are accruing and performing loans where the borrower has proactively approached the Company about modification due to temporary financial difficulties. As of June 30, 2016, 96.0% of the Company's $258,135,000 in TDRs were classified as performing. Each request for modification is individually evaluated for merit and likelihood of success. The concession granted in a loan modification is typically a payment reduction through a rate reduction of between 100 to 200 basis points for a specific term, usually six to twenty four months. Interest-only payments may also be approved during the modification period. Principal forgiveness is not an available option for restructured loans. As of June 30, 2016, single-family residential loans comprised 86.7% of TDRs.

The Company reserves for restructured loans within its allowance for loan loss methodology by taking into account the following performance indicators: 1) time since modification, 2) current payment status and 3) geographic area.

The following table shows the changes in accretable yield for acquired impaired loans and acquired non-impaired loans (including covered loans).



	Nine Months Ended June 30, 2016												Year Ended September 30, 2015
	Acquired Impaired						Acquired Non-impaired						Acquired Impaired						Acquired Non-impaired
	Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans
	(In thousands)												(In thousands)
Beginning balance	$	72,705		$	111,300		$	7,204		$	187,080		$	97,125		$	135,826		$	14,513		$	275,862
Additions	—			—			—			—			—			—			—			—
Net reclassification from non-accretable	4,867			—			—			—			6,307			—			346			—
Accretion	(17,119		)	17,119			(2,210		)	2,210			(30,727		)	30,727			(7,655		)	7,655
Transfers to REO	—			(175		)	—			—			—			(2,975		)	—			(150		)
Payments received, net	—			(31,823		)	—			(31,439		)	—			(52,278		)	—			(96,287		)
Ending Balance	$	60,453		$	96,421		$	4,994		$	157,851		$	72,705		$	111,300		$	7,204		$	187,080

The excess of cash flows expected to be collected over the initial fair value of acquired impaired loans is referred to as the accretable yield and this amount is accreted into interest income over the estimated life of the acquired loans using the effective interest method. Other adjustments to the accretable yield include changes in the estimated remaining life of the acquired loans, changes in expected cash flows and changes in the respective indices for acquired loans with variable interest rates. Acquired loans are included in non-performing assets and subject to the general loss reserving methodology if the purchase discount is no longer sufficient to cover expected losses.

Covered loans were $32,191,000 at June 30, 2016 compared to $75,909,000 as of September 30, 2015, the decrease being attributable to FDIC loss share coverage on commercial loans from the former Home Valley Bank that expired after September 30, 2015. The FDIC loss share coverage for single family residential loans will continue for another five years. The remaining portfolio of covered loans is expected to continue to decline over time, absent another FDIC assisted transaction.

The following table shows activity for the FDIC indemnification asset:



	Nine Months Ended June 30, 2016			Year Ended September 30, 2015
	(In thousands)
Balance at beginning of period	$	16,275		$	36,860
Additions/Adjustments	—			(1,795		)
Payments received	(1,827		)	(720		)
Amortization	(1,385		)	(18,588		)
Accretion	187			518
Balance at end of period	$	13,250		$	16,275