Loans Receivable

The following table is a summary of loans receivable.



	December 31, 2017				September 30, 2017
	(In thousands)				(In thousands)
Gross loans by category
Single-family residential	$	5,693,318	45.7	%	$	5,711,004	46.8	%
Construction	1,710,418		13.7		1,597,996		13.1
Construction - custom	583,580		4.7		602,631		4.9
Land - acquisition & development	136,938		1.1		124,308		1.0
Land - consumer lot loans	105,086		0.8		104,405		0.9
Multi-family	1,312,695		10.5		1,303,148		10.7
Commercial real estate	1,436,508		11.5		1,434,610		11.8
Commercial & industrial	1,120,707		9.0		1,093,360		9.0
HELOC	136,995		1.1		144,850		1.2
Consumer	219,971		1.8		85,075		0.7
Total gross loans	12,456,216		100	%	12,201,387		100	%
Less:
Allowance for loan losses	127,155				123,073
Loans in process	1,175,642				1,149,934
Net deferred fees, costs and discounts	46,377				45,758
Total loan contra accounts	1,349,174				1,318,765
Net loans	$	11,107,042			$	10,882,622

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



	December 31, 2017					September 30, 2017
	(In thousands)
Non-accrual loans:
Single-family residential	$	26,219		57.7	%	$	27,930		56.3	%
Construction	364			0.8		—			—
Construction - custom	—			—		91			0.2
Land - acquisition & development	1,326			2.9		296			0.6
Land - consumer lot loans	976			2.1		605			1.2
Multi-family	250			0.5		139			0.3
Commercial real estate	8,241			18.1		11,815			23.8
Commercial & industrial	7,596			16.7		8,082			16.3
HELOC	476			1.0		531			1.1
Consumer	72			0.2		91			0.2
Total non-accrual loans	$	45,520		100	%	$	49,580		100	%
% of total net loans	0.41		%			0.46		%

The Company recognized interest income on non-accrual loans of approximately $2,551,000 in the three months ended December 31, 2017. Had these loans been on accrual status and performed according to their original contract terms, the Company would have recognized interest income of approximately $489,000 for the three months ended December 31, 2017. Interest cash flows collected on non-accrual loans varies from period to period as those loans are brought current or are paid off.

The following tables provide details regarding delinquent loans.



December 31, 2017	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total Delinquent		% based on $
	(In thousands)
Single-family residential	$	5,692,045	$	5,655,873	$	9,801	$	6,073	$	20,298	$	36,172	0.64	%
Construction	852,164		847,793		1,500		2,507		364		4,371		0.51
Construction - custom	292,255		292,255		—		—		—		—		—
Land - acquisition & development	112,260		111,018		—		—		1,242		1,242		1.11
Land - consumer lot loans	104,996		104,246		107		153		490		750		0.71
Multi-family	1,312,673		1,312,423		—		—		250		250		0.02
Commercial real estate	1,436,508		1,436,064		129		—		315		444		0.03
Commercial & industrial	1,120,707		1,117,240		2,894		—		573		3,467		0.31
HELOC	136,995		136,004		439		147		405		991		0.72
Consumer	219,971		219,404		352		154		61		567		0.26
Total Loans	$	11,280,574	$	11,232,320	$	15,222	$	9,034	$	23,998	$	48,254	0.43	%
Delinquency %			99.57%		0.13%		0.08%		0.21%		0.43%



September 30, 2017	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total Delinquent		% based on $
	(In thousands)
Single-family residential	$	5,709,690	$	5,671,933	$	10,925	$	4,810	$	22,022	$	37,757	0.66	%
Construction	793,959		793,959		—		—		—		—		—
Construction - custom	277,599		277,508		—		—		91		91		0.03
Land - acquisition & development	104,856		104,526		—		—		330		330		0.31
Land - consumer lot loans	104,335		103,389		112		680		154		946		0.91
Multi-family	1,303,119		1,302,720		5		255		139		399		0.03
Commercial real estate	1,434,610		1,432,052		507		—		2,051		2,558		0.18
Commercial & industrial	1,093,360		1,092,735		—		51		574		625		0.06
HELOC	144,850		143,974		221		342		313		876		0.60
Consumer	85,075		84,644		245		107		79		431		0.51
Total Loans	$	11,051,453	$	11,007,440	$	12,015	$	6,245	$	25,753	$	44,013	0.40	%
Delinquency %			99.60%		0.11%		0.06%		0.23%		0.40%

The percentage of total delinquent loans increased from 0.40% as of September 30, 2017 to 0.43% as of December 31, 2017 and there are no loans greater than 90 days delinquent and still accruing interest as of either date.

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



	Three Months Ended December 31,
	2017					2016
		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	8	$	2,012	$	2,012	12	$	2,134	$	2,134
Land - consumer lot loans	—	—		—		1	204		204
Commercial & Industrial	3	7,256		7,256		—	—		—
HELOC	—	—		—		1	228		228
	11	$	9,268	$	9,268	14	$	2,566	$	2,566

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.



	Three Months Ended December 31,
	2017			2016
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	1	$	44	6	$	1,993
Commercial real estate	—	—		2	267
	1	$	44	8	$	2,260

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 December 31, 2017, 97.6% of the Company's $199,175,000 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 December 31, 2017, single-family residential loans comprised 85.7% 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 Company's remaining outstanding balance of assets subject to FDIC loss share agreements was $58,699,000 (including $54,865,000 of loans receivable) at December 31, 2017 compared to $67,914,000 (including $61,810,114 of loans receivable) as of September 30, 2017. As of December 31, 2017, the associated FDIC indemnification asset was $0 compared to a balance of $8,967,000 as of September 30, 2017. The FDIC clawback liability was $39,906,000 as of December 31, 2017 and $37,143,000 as of September 30, 2017. The Company has made a proposal to the FDIC to early terminate its remaining FDIC loss share agreements, which relate to the Horizon Bank and Home Valley Bank acquisitions. During the three months ended December 31, 2017, the Company recorded an $8,550,000 charge resulting from valuation adjustments related to the FDIC indemnification asset and FDIC clawback liability. The valuation adjustments were based on management's estimate of the amount that would be due to the FDIC to early terminate the loss share agreements.