Loans Receivable

The following table is a summary of loans receivable (including LIP, net of charge offs.)



	December 31, 2015				September 30, 2015
	(In thousands)				(In thousands)
Non-Acquired loans
Single-family residential	$	5,629,715	55.7	%	$	5,651,845	57.5	%
Construction	660,238		6.5		200,509		2.0
Construction - custom	404,849		4.0		396,307		4.0
Land - acquisition & development	97,025		1.0		94,208		1.0
Land - consumer lot loans	102,376		1.0		103,989		1.1
Multi-family	997,696		9.9		1,125,722		11.5
Commercial real estate	839,157		8.3		986,270		10.0
Commercial & industrial	751,073		7.4		612,836		6.2
HELOC	127,919		1.3		127,646		1.3
Consumer	181,142		1.8		194,655		2.0
Total non-acquired loans	9,791,190		96.9	%	9,493,987		96.6	%
Acquired loans	164,380		1.6		166,293		1.7
Credit impaired acquired loans	116,030		1.1		87,081		0.9
Covered loans	38,584		0.4		75,909		0.8
Total gross loans	10,110,184		100.0	%	9,823,270		100.0	%
Less:
Allowance for probable losses	107,901				106,829
Loans in process	535,850				476,796
Discount on acquired loans	25,040				30,095
Deferred net origination fees	38,663				38,916
Total loan contra accounts	707,454				652,636
Net Loans	$	9,402,730			$	9,170,634

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



	December 31, 2015				September 30, 2015
	(In thousands)
Non-accrual loans:
Single-family residential	$	43,856	77.3	%	$	59,074	87.1	%
Construction	—		—		754		1.1	%
Construction - custom	2,518		4.4		732		1.1	%
Land - acquisition & development	509		0.9		—		—	%
Land - consumer lot loans	939		1.7		1,273		1.9	%
Multi-family	1,538		2.7		2,558		3.8	%
Commercial real estate	6,681		11.8		2,176		3.2	%
Commercial & industrial	115		0.2		—		—	%
HELOC	473		0.8		563		0.8	%
Consumer	119		0.2		680		1.0	%
Total non-accrual loans	$	56,748	100	%	$	67,810	100	%

The Company recognized interest income on nonaccrual loans of approximately $1,257,000 in the three months ended December 31, 2015. Had these loans performed according to their original contract terms, the Company would have recognized interest income of approximately $687,000 for the three months ended December 31, 2015. The recognized interest income includes more than three months of interest for some of the loans that were brought current.

The following tables provide details regarding delinquent loans.



December 31, 2015	Amount of Loans		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of LIP & Chg.-Offs		Current		30		60		90		Total		% based on $
	(In thousands)
Non-acquired loans
Single-Family Residential	$	5,644,009	$	5,576,774	$	17,285	$	9,939	$	40,010	$	67,234	1.19	%
Construction	325,485		324,619		560		306		—		866		0.27
Construction - Custom	221,327		218,773		28		9		2,518		2,554		1.15
Land - Acquisition & Development	85,830		84,805		387		—		638		1,025		1.19
Land - Consumer Lot Loans	102,887		100,224		828		897		938		2,663		2.59
Multi-Family	966,921		965,110		1,196		—		615		1,811		0.19
Commercial Real Estate	929,495		920,582		841		1,933		6,139		8,913		0.96
Commercial & Industrial	756,831		754,611		2,219		1		—		2,220		0.29
HELOC	125,479		124,883		19		19		558		595		0.47
Consumer	181,431		179,977		882		352		221		1,454		0.80
	9,339,695		9,250,358		24,245		13,456		51,637		89,335		0.96
Acquired loans	140,995		140,137		193		16		649		858		0.61
Credit impaired acquired loans	55,060		52,806		854		—		1,400		2,254		4.09
Covered loans	38,584		37,062		501		295		726		1,522		3.94
Total Loans	$	9,574,334	$	9,480,363	$	25,793	$	13,767	$	54,412	$	93,969	0.98	%
Delinquency %			99.02%		0.27%		0.14%		0.57%		0.98%



September 30, 2015	Amount of Loans		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of LIP & Chg.-Offs		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 increased from 0.88% as of September 30, 2015 to 0.98% as of December 31, 2015.

The following table provides information related to loans that were restructured in at TDR during the periods presented:



	Quarter Ended December 31,
	2015					2014
		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	3	$	729	$	729	35	$	9,600	$	9,600
Construction	—	—		—		2	718		718
Land - consumer lot loans	—	—		—		2	532		532
Commercial real estate	5	965		965		—	—		—
Consumer	—	—		—		1	85		85
	8	$	1,694	$	1,694	40	$	10,935	$	10,935

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.



	Quarter Ended December 31,
	2015			2014
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	5	$	668	8	$	1,431
Land - consumer lot loans	1	148		3	389
	6	$	816	11	$	1,820

Most loans restructured in troubled debt restructurings ("TDRs") are accruing and performing loans where the borrower has proactively approached the Company about modification due to temporary financial difficulties. As of December 31, 2015, 96.6% of the Bank's $282,723,000 in TDRs were classified as performing. 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 between 100 to 200 basis points 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 December 31, 2015, single-family residential loans comprised 86.1% 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).



	Quarter Ended December 31, 2015												Fiscal 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 nonaccretable	—			—			—			—			6,307			—			346			—
Accretion	(5,526		)	5,526			(857		)	857			(30,727		)	30,727			(7,655		)	7,655
Transfers to REO	—			—			—			—			—			(2,975		)	—			(150		)
Payments received, net	—			(7,680		)	—			(3,790		)	—			(52,278		)	—			(96,287		)
Ending Balance	$	67,179		$	109,146		$	6,347		$	184,147		$	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.

Additionally, as of December 31, 2015 the Company has $1,700,000 remaining in loans it acquired during fiscal 2013 as part of the South Valley Bank acquisition for which it was probable at acquisition that all contractually required payments would not be collected. The timing and amount of future cash flows cannot not be reasonably estimated; therefore, these loan are accounted for on a cash basis.

At December 31, 2015 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.

Covered loans were $38,584,000 at December 31, 2015 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:



	Three Months Ended December 31, 2015			Fiscal Year Ended September 30, 2015
	(In thousands)
Balance at beginning of period	$	16,275		$	36,860
Additions	—			(1,795		)
Payments received	(1,974		)	(720		)
Amortization	(287		)	(18,588		)
Accretion	62			518
Balance at end of period	$	14,076		$	16,275