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Covered Assets | 6 Months Ended
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Mar. 31, 2014
Covered Assets [Abstract] |
Covered Assets | Covered Assets Covered assets represent loans and real estate held for sale acquired from the FDIC that are subject to loss sharing agreements and were $252,610,000 as of March 31, 2014, versus $326,927,000 as of September 30, 2013. Changes in the net carrying amount and accretable yield for acquired impaired and non-impaired covered loans for the year to date period ended March 31, 2014 and the fiscal year ended September 30, 2013 were as follows:
March 31, 2014 | Acquired Impaired |  | Acquired Non-impaired
| Accretable Yield |  | Net Carrying Amount of Loans |  | Accretable Yield |  | Net Carrying Amount of Loans
| (In thousands)
Balance at beginning of period | $ | 78,277 |  |  | $ | 138,091 |  |  | $ | 17,263 |  |  | $ | 157,856 |
Reclassification from nonaccretable balance, net (1) | 5,885 |  |  | (2,069 | ) |  | — |  |  | — |
Accretion | (15,655 | ) |  | 15,655 |  |  | (3,475 | ) |  | 3,475 |
Transfers to REO | — |  |  | (678 | ) |  | — |  |  | — |
Payments received, net | — |  |  | (50,394 | ) |  | — |  |  | (32,331 | )
Balance at end of period | $ | 68,507 |  |  | $ | 100,605 |  |  | $ | 13,788 |  |  | $ | 129,000 |
(1) reclassification due to improvements/impairments in expected cash flows of the underlying pools. |  |
September 30, 2013 | Acquired Impaired |  | Acquired Non-impaired
| Accretable Yield |  | Net Carrying Amount of Loans |  | Accretable Yield |  | Carrying Amount of Loans
| (In thousands)
Balance at beginning of period | $ | 50,902 |  |  | $ | 74,953 |  |  | $ | 23,789 |  |  | $ | 213,423 |
Additions (1) | 43,299 |  |  | 107,946 |  |  | — |  |  | — |
Reclassification from nonaccretable balance, net (2) | 17,850 |  |  | — |  |  | — |  |  | — |
Accretion | (33,774 | ) |  | 33,774 |  |  | (6,526 | ) |  | 6,526 |
Transfers to REO | — |  |  | (11,196 | ) |  | — |  |  | — |
Payments received, net | — |  |  | (67,386 | ) |  | — |  |  | (62,093 | )
Balance at end of period | $ | 78,277 |  |  | $ | 138,091 |  |  | $ | 17,263 |  |  | $ | 157,856 |
(1) includes FDIC covered loans which were acquired as part of the South Valley Bank acquisition.
(2) reclassification due to improvements/impairments in expected cash flows of the underlying pools.
At March 31, 2014, none of the acquired impaired or non-impaired covered loans were classified as non-performing assets. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, was recognized on all acquired loans. The allowance for credit losses related to the acquired loans results from decreased expectations of future cash flows due to increased credit losses for certain acquired loan pools. The outstanding principal balance of acquired covered loans was $285,769,000 and $362,248,000 as of March 31, 2014 and September 30, 2013, respectively. The discount balance related to the acquired covered loans was $54,095,000 and $66,301,000 as of March 31, 2014 and September 30, 2013, respectively. The following table shows the year to date activity for the FDIC indemnification asset:
| March 31, 2014 |  | September 30, 2013
| (In thousands)
Balance at beginning of fiscal year 2014 and 2013 | $ | 64,615 |  |  | $ | 87,571 |
Additions (1) | 1,896 |  |  | 18,101 |
Payments made (received) | (1,629 | ) |  | (13,421 | )
Amortization | (12,007 | ) |  | (28,722 | )
Accretion | 414 |  |  | 1,086 |
Balance at end of period | $ | 53,289 |  |  | $ | 64,615 |
(1) Includes FDIC covered loans which were acquired as part of the South Valley Bank acquisition in 2013.
The following tables provide information on covered loans based on credit quality indicators (defined in Note E ) as of March 31, 2014 and September 30, 2013:
March 31, 2014 | Internally Assigned Grade |  | Total Net Loans
| Pass |  | Special mention |  | Substandard |  | Doubtful |  | Loss |
| (In thousands)
Acquired non-impaired loans: |  |  |  |  |  |  |  |  |  |  |
Single-family residential | $ | 23,060 |  |  | $ | — |  |  | $ | 2,462 |  |  | $ | — |  |  | $ | — |  |  | $ | 25,522 |
Construction - speculative | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction - custom | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Land - acquisition & development | 2,267 |  |  | — |  |  | 716 |  |  | — |  |  | — |  |  | 2,983 |
Land - consumer lot loans | 74 |  |  | — |  |  | 34 |  |  | — |  |  | — |  |  | 108 |
Multi-family | 16,814 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,814 |
Commercial real estate | 40,675 |  |  | 157 |  |  | 26,854 |  |  | — |  |  | — |  |  | 67,686 |
Commercial & industrial | 4,041 |  |  | — |  |  | 3,226 |  |  | — |  |  | — |  |  | 7,267 |
HELOC | 13,294 |  |  | — |  |  | 39 |  |  | — |  |  | — |  |  | 13,333 |
Consumer | 534 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 534 |
| 100,759 |  |  | 157 |  |  | 33,331 |  |  | — |  |  | — |  |  | 134,247 |
Total grade as a % of total net loans | 75.1 | % |  | 0.1 | % |  | 24.8 | % |  | — | % |  | — | % |  |
Acquired credit-impaired loans: |  |  |  |  |  |  |  |
Pool 1 - Construction and land A&D | 14,266 |  |  | — |  |  | 24,493 |  |  | — |  |  | — |  |  | 38,759 |
Pool 2 - Single-family residential | 19,010 |  |  | — |  |  | 982 |  |  | — |  |  | — |  |  | 19,992 |
Pool 3 - Multi-family | 55 |  |  | — |  |  | 1,026 |  |  | — |  |  | — |  |  | 1,081 |
Pool 4 - HELOC & other consumer | 3,338 |  |  | — |  |  | 2,289 |  |  | — |  |  | — |  |  | 5,627 |
Pool 5 - Commercial real estate | 36,352 |  |  | 3,992 |  |  | 36,528 |  |  | — |  |  | — |  |  | 76,872 |
Pool 6 - Commercial & industrial | 4,977 |  |  | 437 |  |  | 3,235 |  |  | 542 |  |  | — |  |  | 9,191 |
| $ | 77,998 |  |  | $ | 4,429 |  |  | $ | 68,553 |  |  | $ | 542 |  |  | $ | — |  |  | 151,522 |
|  |  |  |  |  |  | Total covered loans |  | 285,769 |
|  |  |  |  |  |  |  |  | Discount |  | (54,095 | )
|  |  |  |  |  |  |  |  | Allowance |  | (2,069 | )
|  |  |  |  |  |  |  |  | Covered loans, net |  | $ | 229,605 |
September 30, 2013 | Internally Assigned Grade |  | Total Net Loans
| Pass |  | Special mention |  | Substandard |  | Doubtful |  | Loss |
| (In thousands)
Acquired non-impaired loans: |  |  |  |  |  |  |  |  |  |  |
Single-family residential | $ | 26,426 |  |  | $ | — |  |  | $ | 2,034 |  |  | $ | — |  |  | $ | — |  |  | $ | 28,460 |
Construction - speculative | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction - custom | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Land - acquisition & development | 3,069 |  |  | 1,019 |  |  | 722 |  |  | — |  |  | — |  |  | 4,810 |
Land - consumer lot loans | 245 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 245 |
Multi-family | 17,217 |  |  | — |  |  | 1,635 |  |  | — |  |  | — |  |  | 18,852 |
Commercial real estate | 56,120 |  |  | 9,235 |  |  | 24,144 |  |  | — |  |  | — |  |  | 89,499 |
Commercial & industrial | 5,175 |  |  | 500 |  |  | 3,741 |  |  | — |  |  | — |  |  | 9,416 |
HELOC | 14,750 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14,750 |
Consumer | 604 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 604 |
| 123,606 |  |  | 10,754 |  |  | 32,276 |  |  | — |  |  | — |  |  | 166,636 |
Total grade as a % of total net loans | 74.2 | % |  | 6.4 | % |  | 19.4 | % |  | — | % |  | — | % |  |
Acquired credit-impaired loans: |  |  |  |  |  |  |  |
Pool 1 - Construction and land A&D | 14,361 |  |  | 4,296 |  |  | 25,363 |  |  | — |  |  | — |  |  | 44,020 |
Pool 2 - Single-family residential | 21,541 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 21,541 |
Pool 3 - Multi-family | 4,131 |  |  | — |  |  | 1,100 |  |  | — |  |  | — |  |  | 5,231 |
Pool 4 - HELOC & other consumer | 4,111 |  |  | — |  |  | 1,880 |  |  | — |  |  | — |  |  | 5,991 |
Pool 5 - Commercial real estate | 36,494 |  |  | 15,113 |  |  | 53,946 |  |  | — |  |  | — |  |  | 105,553 |
Pool 6 - Commercial & industrial | 4,265 |  |  | 204 |  |  | 8,807 |  |  | — |  |  | — |  |  | 13,276 |
| $ | 84,903 |  |  | $ | 19,613 |  |  | $ | 91,096 |  |  | $ | — |  |  | $ | — |  |  | 195,612 |
|  |  |  |  |  |  | Total covered loans |  | 362,248 |
|  |  |  |  |  |  |  |  | Discount |  | (66,301 | )
|  |  |  |  |  |  |  |  | Allowance |  | — |
|  |  |  |  |  |  |  |  | Covered loans, net |  | $ | 295,947 |
The following tables provide an analysis of the age of acquired non credit-impaired covered loans in past due status as of March 31, 2014 and September 30, 2013:
March 31, 2014 | Amount of Loans Net of LIP & Chg.-Offs |  | Days Delinquent Based on $ Amount of Loans |  | % based on $
Type of Loans | Current |  | 30 |  | 60 |  | 90 |  | Total |
Single-Family Residential | $ | 25,522 |  |  | $ | 23,543 |  |  | $ | 281 |  |  | $ | 63 |  |  | $ | 1,635 |  |  | $ | 1,979 |  |  | 7.75 | %
Construction - Speculative | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | NM |
Construction - Custom | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | NM |
Land - Acquisition & Development | 2,983 |  |  | 2,947 |  |  | — |  |  | — |  |  | 36 |  |  | 36 |  |  | 1.21 |
Land - Consumer Lot Loans | 108 |  |  | 74 |  |  | — |  |  | — |  |  | 34 |  |  | 34 |  |  | 31.48 |
Multi-Family | 16,814 |  |  | 16,814 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial Real Estate | 67,686 |  |  | 66,136 |  |  | — |  |  | — |  |  | 1,550 |  |  | 1,550 |  |  | 2.29 |
Commercial & Industrial | 7,267 |  |  | 7,173 |  |  | — |  |  | — |  |  | 94 |  |  | 94 |  |  | 1.29 |
HELOC | 13,333 |  |  | 13,294 |  |  | — |  |  | — |  |  | 39 |  |  | 39 |  |  | 0.29 |
Consumer | 534 |  |  | 534 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| $ | 134,247 |  |  | $ | 130,515 |  |  | $ | 281 |  |  | $ | 63 |  |  | $ | 3,388 |  |  | $ | 3,732 |  |  | 2.78 | %
September 30, 2013 | Amount of Loans Net of LIP & Chg.-Offs |  | Days Delinquent Based on $ Amount of Loans |  | % based on $
Type of Loans | Current |  | 30 |  | 60 |  | 90 |  | Total |
Single-Family Residential | $ | 28,460 |  |  | $ | 27,411 |  |  | $ | 78 |  |  | $ | — |  |  | $ | 971 |  |  | $ | 1,049 |  |  | 3.69 | %
Construction - Speculative | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | NM |
Construction - Custom | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | NM |
Land - Acquisition & Development | 4,810 |  |  | 4,774 |  |  | — |  |  | — |  |  | 36 |  |  | 36 |  |  | 0.75 |
Land - Consumer Lot Loans | 245 |  |  | 199 |  |  | — |  |  | — |  |  | 46 |  |  | 46 |  |  | 18.78 |
Multi-Family | 18,852 |  |  | 17,511 |  |  | — |  |  | — |  |  | 1,341 |  |  | 1,341 |  |  | 7.11 |
Commercial Real Estate | 89,499 |  |  | 84,949 |  |  | 2,779 |  |  | 455 |  |  | 1,316 |  |  | 4,550 |  |  | 5.08 |
Commercial & Industrial | 9,416 |  |  | 9,416 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
HELOC | 14,750 |  |  | 14,334 |  |  | 103 |  |  | 74 |  |  | 239 |  |  | 416 |  |  | 2.82 |
Consumer | 604 |  |  | 601 |  |  | 3 |  |  | — |  |  | — |  |  | 3 |  |  | 0.50 |
| $ | 166,636 |  |  | $ | 159,195 |  |  | $ | 2,963 |  |  | $ | 529 |  |  | $ | 3,949 |  |  | $ | 7,441 |  |  | 4.47 | %
NM - not meaningful

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