LOANS RECEIVABLE

The following table is a summary of loans receivable.



	September 30, 2016				September 30, 2015
	(In thousands)				(In thousands)
Non-Acquired loans
Single-family residential	$	5,621,066	51.3	%	$	5,651,845	57.5	%
Construction	1,110,411		10.1		200,509		2.0
Construction - custom	473,069		4.3		396,307		4.0
Land - acquisition & development	116,156		1.1		94,208		1.0
Land - consumer lot loans	101,853		0.9		103,989		1.1
Multi-family	1,118,801		10.2		1,125,722		11.5
Commercial real estate	956,164		8.7		986,270		10.0
Commercial & industrial	946,648		8.6		612,836		6.2
HELOC	134,785		1.2		127,646		1.3
Consumer	137,450		1.3		194,655		2.0
Total non-acquired loans	10,716,403		97.9	%	9,493,987		96.6	%
Acquired loans	115,394		1.1		166,293		1.7
Credit impaired acquired loans	89,837		0.8		87,081		0.9
Covered loans	28,974		0.3		75,909		0.8
Total gross loans	10,950,608		100	%	9,823,270		100	%
Less:
Allowance for probable losses	113,494				106,829
Loans in process	879,484				476,796
Discount on acquired loans	11,306				30,095
Deferred net origination fees	35,404				38,916
Total loan contra accounts	1,039,688				652,636
Net Loans	$	9,910,920			$	9,170,634

The following summary breaks down the Company's fixed rate and adjustable rate loans by time to maturity or to rate adjustment.



September 30, 2016
Fixed-Rate			Adjustable-Rate
Term To Maturity	Gross Loans		Term To Rate Adjustment	Gross Loans
	(In thousands)			(In thousands)
Within 1 year	$	29,428	Less than 1 year	$	1,362,480
1 to 3 years	326,859		1 to 3 years	1,457,584
3 to 5 years	192,202		3 to 5 years	552,402
5 to 10 years	693,099		5 to 10 years	625,852
10 to 20 years	1,020,654		10 to 20 years	—
Over 20 years	4,690,048		Over 20 years	—
	$	6,952,290		$	3,998,318

The following tables provide information regarding loans receivable by loan category and geography.



September 30, 2016	Single - family residential		Multi- family		Land - A & D		Land - lot loans		Construction - custom		Construction		Commercial real estate		Commercial and industrial		Consumer		HELOC		Total
	(In thousands)
Washington	$	2,926,555	$	287,999	$	74,017	$	59,371	$	277,877	$	470,720	$	482,802	$	500,540	$	41,212	$	88,681	$	5,209,774
Oregon	664,932		332,311		10,953		12,403		52,709		122,958		171,093		203,377		3,152		13,711		1,587,599
Arizona	546,080		292,830		4,142		9,014		45,536		43,300		38,302		47,584		309		15,838		1,042,935
Other	216,902		2,448		443		11,157		11,228		110,843		277,438		94,215		91,874		1,030		817,578
Utah	474,390		47,374		958		3,448		33,036		143,246		11,499		46,497		39		7,573		768,060
Idaho	284,212		33,043		4,761		3,910		17,120		64,510		34,075		16,627		141		6,973		465,372
New Mexico	186,061		97,699		12,417		1,274		18,128		47,763		68,385		10,860		1,110		13,790		457,487
Texas	202,541		29,458		10,806		979		10,610		107,071		6,151		42,594		1,085		305		411,600
Nevada	157,154		1,127		—		3,012		6,825		—		3,894		16,295		80		1,816		190,203
	$	5,658,827	$	1,124,289	$	118,497	$	104,568	$	473,069	$	1,110,411	$	1,093,639	$	978,589	$	139,002	$	149,717	$	10,950,608



Percentage by geographic area
September 30, 2016	Single - family residential		Multi- family		Land - A & D		Land - lot loans		Construction - custom		Construction		Commercial real estate		Commercial and industrial		Consumer		HELOC		Total
	As % of total gross loans
Washington	26.8	%	2.6	%	0.7	%	0.5	%	2.5	%	4.3	%	4.4	%	4.6	%	0.4	%	0.8	%	47.6	%
Oregon	6.1		3.0		0.1		0.1		0.5		1.1		1.6		1.9		—		0.1		14.5
Arizona	5.0		2.7		—		0.1		0.4		0.4		0.3		0.4		—		0.2		9.5
Other	2.0		—		—		0.2		0.1		1.0		2.5		0.9		0.8		—		7.5
Utah	4.3		0.5		—		—		0.3		1.3		0.1		0.4		—		0.1		7.0
Idaho	2.5		0.3		—		—		0.2		0.6		0.3		0.2		—		0.1		4.2
New Mexico	1.8		0.9		0.1		—		0.2		0.4		0.6		0.1		—		0.1		4.2
Texas	1.8		0.3		0.1		—		0.1		1.0		0.1		0.4		—		—		3.8
Nevada	1.4		—		0.1		—		0.1		—		—		0.1		—		—		1.7
	51.7	%	10.3	%	1.1	%	0.9	%	4.4	%	10.1	%	9.9	%	9.0	%	1.2	%	1.4	%	100	%



Percentage by geographic area as a % of each loan type
September 30, 2016	Single - family residential		Multi- family		Land - A & D		Land - lot loans		Construction - custom		Construction		Commercial real estate		Commercial and industrial		Consumer		HELOC
	As % of total gross loans
Washington	51.6	%	25.7	%	62.5	%	56.8	%	58.9	%	42.4	%	44.0	%	51.0	%	29.6	%	59.1	%
Oregon	11.8		29.6		9.2		11.9		11.1		11.1		15.6		20.8		2.3		9.2
Arizona	9.7		26.0		3.5		8.6		9.6		3.9		3.5		4.9		0.2		10.6
Other	3.8		0.2		0.4		10.7		2.4		10.0		25.4		9.6		66.1		0.7
Utah	8.4		4.2		0.8		3.3		7.0		12.9		1.1		4.8		—		5.1
Idaho	5.0		2.9		4.0		3.7		3.6		5.8		3.1		1.7		0.1		4.7
New Mexico	3.3		8.7		10.5		1.2		3.8		4.3		6.3		1.1		0.8		9.2
Texas	3.6		2.6		9.1		0.9		2.2		9.6		0.6		4.4		0.8		0.2
Nevada	2.8		0.1		—		2.9		1.4		—		0.4		1.7		0.1		1.2
	100.0	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%

The Company has granted loans to officers and directors of the Company and related interests. These loans are made on the same terms,

including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of these loans, including unfunded commitments to lend, was $57,153,000 and $55,965,000 at September 30, 2016 and 2015, respectively.

The following table provides additional information on impaired loans, loan commitments and loans serviced for others.



	September 30, 2016		September 30, 2015
	(In thousands)
Recorded investment in impaired loans	$	285,243	$	341,579
TDRs included in impaired loans	261,531		302,713
Allocated reserves on impaired loans	1,980		2,323
Specific reserves on impaired loans	366		275
Average balance of impaired loans for year ended	265,771		333,815
Interest income from impaired loans for year ended	11,314		14,855
Outstanding fixed-rate origination commitments	331,947		230,869
Gross loans serviced for others	80,896		72,083

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



	September 30, 2016				September 30, 2015
	(In thousands)				(In thousands)
Non-accrual loans:
Single-family residential	$	33,148	78.2	%	$	59,074	87.1	%
Construction	—		—		754		1.1
Construction - custom	—		—		732		1.1
Land - acquisition & development	58		0.1		—		—
Land - consumer lot loans	510		1.2		1,273		1.9
Multi-family	776		1.8		2,558		3.8
Commercial real estate	7,100		16.7		2,176		3.2
Commercial & industrial	583		1.4		—		—
HELOC	239		0.6		563		0.8
Consumer	—		—		680		1.0
Total non-accrual loans	$	42,414	100	%	$	67,810	100	%

The following table breaks down delinquent loans by loan category and delinquency bucket.



September 30, 2016	Amount of Loans		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	$	5,624,783	$	5,574,384	$	20,917	$	5,173	$	24,309	$	50,399	0.90	%
Construction	497,393		497,393		—		—		—		—		—
Construction - custom	229,957		229,419		538		—		—		538		0.23
Land - acquisition & development	88,662		88,662		—		—		—		—		—
Land - consumer lot loans	102,386		100,373		816		687		510		2,013		1.97
Multi-family	1,119,042		1,117,453		1,190		399		—		1,589		0.14
Commercial real estate	955,944		955,604		—		183		157		340		0.04
Commercial & industrial	947,703		947,661		—		42		—		42		—
HELOC	134,214		133,683		490		—		41		531		0.40
Consumer	136,835		135,926		705		124		80		909		0.66
	9,836,919		9,780,558		24,656		6,608		25,097		56,361		0.57
Acquired loans	115,394		114,770		124		2		498		624		0.54
Credit impaired acquired loans	89,837		84,625		227		142		4,843		5,212		5.80
Covered loans	28,974		22,891		—		262		5,821		6,083		20.99
Total Loans	$	10,071,124	$	10,002,844	$	25,007	$	7,014	$	36,259	$	68,280	0.68	%
Delinquency %			99.32%		0.25%		0.07%		0.36%		0.68%

The percentage of total delinquent loans was 0.68% as of September 30, 2016, as compared to 0.88% as of September 30, 2015.

Most loans restructured in troubled debt restructurings ("TDRs") are accruing and performing loans where the borrower has proactively approached the Company about modifications due to temporary financial difficulties. Each request is individually evaluated for merit and likelihood of success. The concession for these loans is typically a payment reduction through a rate reduction of 100 to 200 bps for a specific term, usually six to twelve months. Interest-only payments may also be approved during the modification period. Principal forgiveness is not an available option for restructured loans. As of September 30, 2016, the outstanding balance of TDR's was $261,531,000 as compared to $302,713,000 as of September 30, 2015. As of September 30, 2016, 96.2% of the restructured loans were performing. Single-family residential loans comprised 87.2% of TDR loans as of September 30, 2016. 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 provides information related to loans that were modified in a TDR during the periods presented.



	Twelve Months Ended September 30, 2016					Twelve Months Ended September 30, 2015
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
Troubled Debt Restructurings:	Contracts	Investment		Investment		Contracts	Investment		Investment
		(In thousands)					(In thousands)
Single-family residential	120	$	23,541	$	23,541	62	$	13,378	$	13,378
Construction	—	—		—		2	701		701
Land - consumer lot loans	10	970		970		9	1,546		1,546
Commercial real estate	7	2,523		2,523		3	3,175		3,175
HELOC	1	126		126		1	50		50
Consumer	1	24		24		1	80		80
	139	$	27,184	$	27,184	78	$	18,930	$	18,930

The following table provides 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.



	Twelve Months Ended September 30, 2016			Twelve Months Ended September 30, 2015
	Number of	Recorded		Number of	Recorded
TDRs That Subsequently Defaulted:	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
Single-family residential	17	$	4,875	18	$	2,917
Construction	1	279		—	—
Land - consumer lot loans	5	606		2	301
Commercial real estate	2	326		—	—
	25	$	6,086	20	$	3,218

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 yield 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 indices for acquired loans with variable interest rates.

The following table shows the changes in accretable yield for acquired impaired loans and acquired non-impaired loans including covered loans for the years ended September 30, 2016 and 2015.



	Twelve Months Ended September 30, 2016												Twelve Months 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
Net reclassification from non-accretable	4,867			—			—			—			6,307			—			346			—
Accretion	(18,730		)	18,730			(2,982		)	2,982			(30,727		)	30,727			(7,655		)	7,655
Transfers to REO	—			(175		)	—			—			—			(2,975		)	—			(150		)
Payments received, net	—			(38,094		)	—			(58,930		)	—			(52,278		)	—			(96,287		)
Ending Balance	$	58,842		$	91,761		$	4,222		$	131,132		$	72,705		$	111,300		$	7,204		$	187,080

At September 30, 2016 and September 30, 2015, none of the acquired impaired or non-impaired 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 FDIC loss share coverage for the acquired commercial loans from the former Horizon Bank expired after March 31, 2015. These loans were transferred to loans receivable. The FDIC loss share coverage for the acquired commercial loans from the former Home Valley Bank expired after of September 30, 2015 with final reporting as of October 31, 2015. Recoveries to the extent that claims were made will continue to be shared for three years. The FDIC loss share coverage for single family residential loans will continue for another four years.

The outstanding principal balance of covered loans was $28,974,000 as of September 30, 2016, as compared to $75,909,000 as of September 30, 2015. The discount balance related to the covered loans was $2,738,000 as of September 30, 2016.

The following table shows the year to date activity for the FDIC indemnification asset.



	Twelve Months Ended September 30, 2016			Twelve Months Ended September 30, 2015
	(In thousands)
Balance at beginning of year	$	16,275		$	36,860
Additions and impairment	—			(1,795		)
Payments received	(1,730		)	(720		)
Amortization	(2,012		)	(18,588		)
Accretion	236			518
Balance at end of year	$	12,769		$	16,275