
Three Months Ended December 31, 2019	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Single-family residential	$	30,988	$	(15)	$	261	$	(534)	$	30,700
Construction	32,304		—		54		(66)		32,292
Construction - custom	1,369		—		—		30		1,399
Land - acquisition & development	9,155		(11)		1,460		(1,858)		8,746
Land - consumer lot loans	2,143		(70)		10		7		2,090
Multi-family	7,391		—		498		(485)		7,404
Commercial real estate	13,170		(98)		368		(405)		13,035
Commercial & industrial	31,450		(50)		144		1,996		33,540
HELOC	1,103		—		93		(92)		1,104
Consumer	2,461		(374)		309		(193)		2,203
	$	131,534	$	(618)	$	3,197	$	(1,600)	$	132,513


Three Months Ended December 31, 2018	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Single-family residential	$	33,033	$	(25)	$	230	$	(1,754)	$	31,484
Construction	31,317		—		—		146		31,463
Construction - custom	1,842		—		—		84		1,926
Land - acquisition & development	7,978		—		1,782		(604)		9,156
Land - consumer lot loans	2,164		(72)		265		(213)		2,144
Multi-family	8,329		—		—		(445)		7,884
Commercial real estate	11,852		(339)		525		673		12,711
Commercial & industrial	28,702		(179)		33		1,723		30,279
HELOC	781		(886)		1		1,168		1,064
Consumer	3,259		(140)		213		(278)		3,054
	$	129,257	$	(1,641)	$	3,049	$	500	$	131,165

The Company recorded a $1,000,000 release of loan loss allowance for the three months ended December 31, 2019, compared to a $500,000 release for the three months ended December 31, 2018. Reserving for new loan originations has been largely offset by recoveries of previously charged-off loans. Recoveries, net of charge-offs, totaled $2,579,000 for the three months ended December 31, 2019, compared to net recoveries of $1,408,000 during the three months ended December 31, 2018.

Non-performing assets were $39,742,000, or 0.24% of total assets, at December 31, 2019, compared to $43,826,000, or 0.27% of total assets, at September 30, 2019. Non-accrual loans were $30,089,000 at December 31, 2019, compared to $33,731,000 at September 30, 2019. Delinquencies, as a percent of total loans, were 0.30% at December 31, 2019, compared to 0.29% at September 30, 2019.


December 31, 2019	Loans Collectively Evaluated for Impairment										Loans Individually Evaluated for Impairment
	Allowance Allocation		Recorded Investment of Loans		Ratio		Allowance Allocation		Recorded Investment of Loans		Ratio
	(In thousands, except ratio data)										(In thousands, except ratio data)
Single-family residential	$	30,700	$	5,686,482	0.5	%	$	—	$	19,993	0.0	%
Construction	32,292		1,189,457		2.7		—		—		—
Construction - custom	1,399		259,944		0.5		—		—		—
Land - acquisition & development	8,731		153,856		5.7		15		86		17.4
Land - consumer lot loans	2,090		93,272		2.2		—		295		0.0
Multi-family	7,403		1,436,313		0.5		1		380		0.3
Commercial real estate	12,861		1,632,612		0.8		174		10,487		1.7
Commercial & industrial	33,470		1,352,116		2.5		70		641		10.9
HELOC	1,104		139,963		0.8		—		483		0.0
Consumer	2,203		115,749		1.9		—		2		0.0
	$	132,253	$	12,059,764	1.1	%	$	260	$	32,367	0.8	%


September 30, 2019	Loans Collectively Evaluated for Impairment										Loans Individually Evaluated for Impairment
	Allowance Allocation		Recorded Investment of Loans		Ratio		Allowance Allocation		Recorded Investment of Loans		Ratio
	(In thousands, except ratio data)										(In thousands, except ratio data)
Single-family residential	$	30,988	$	5,822,200	0.5	%	$	—	$	17,978	0.0	%
Construction	32,304		1,164,889		2.8		—		—		—
Construction - custom	1,369		255,505		0.5		—		—		—
Land - acquisition & development	9,135		160,964		5.7		20		230		8.7
Land - consumer lot loans	2,143		95,574		2.2		—		375		0.0
Multi-family	7,387		1,422,266		0.5		4		385		1.0
Commercial real estate	12,847		1,618,406		0.8		323		12,765		2.5
Commercial & industrial	31,358		1,266,913		2.5		92		1,805		5.1
HELOC	1,103		140,378		0.8		—		837		0.0
Consumer	2,461		129,527		1.9		—		50		0.0
	$	131,095	$	12,076,622	1.1	%	$	439	$	34,425	1.3	%

As of December 31, 2019, $132,253,000 of the allowance was calculated under the Company's general allowance methodology and the remaining $260,000 was specific reserves on loans deemed to be individually impaired. As of September 30, 2019, $131,095,000 of the allowance was calculated under the Company's general allowance methodology and the remaining $439,000 was specific reserves on loans deemed to be individually impaired.

The Company has an asset quality review function that analyzes its loan portfolio and reports the results of the review to its Board of Directors on a quarterly basis. The single-family residential, HELOC and consumer portfolios are evaluated based on their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. The construction, land, multi-family, commercial real estate and commercial and industrial loans are risk rated on a

•Special mention – A special mention credit is considered to be currently protected from loss but is potentially weak. No loss of principal or interest is foreseen; however, proper supervision and management attention is required to deter further deterioration in the credit. Assets in this category constitute some undue and unwarranted credit risk but not to the point of justifying a risk rating of substandard. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

•Substandard – A substandard credit is an unacceptable credit. Additionally, repayment in the normal course is in jeopardy due to the existence of one or more well defined weaknesses. In these situations, loss of principal is likely if the weakness is not corrected. A substandard asset is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified will have a well-defined weakness or weaknesses that jeopardize the collection or liquidation of the debt. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets risk rated substandard.

•Doubtful – A credit classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weakness makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The probability of loss is high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.

•Loss – Credits classified loss are considered uncollectible and of such little value that their continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be affected in the future. Losses should be taken in the period in which they are identified as uncollectible. Partial charge-off versus full charge-off may be taken if the collateral offers some identifiable protection.


December 31, 2019	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Single-family residential	$	5,676,712		$	—		$	25,359		$	—		$	—		$	5,702,071
Construction	2,174,313			—			—			—			—			2,174,313
Construction - custom	538,234			—			—			—			—			538,234
Land - acquisition & development	200,533			—			2,510			—			—			203,043
Land - consumer lot loans	96,627			—			470			—			—			97,097
Multi-family	1,432,895			—			3,820			—			—			1,436,715
Commercial real estate	1,619,197			3,426			20,476			—			—			1,643,099
Commercial & industrial	1,313,816			714			38,194			14			—			1,352,738
HELOC	140,644			—			630			—			—			141,274
Consumer	115,828			—			1			—			—			115,829
Total gross loans	$	13,308,799		$	4,140		$	91,460		$	14		$	—		$	13,404,413

Total grade as a % of total gross loans	99.29		%	0.03		%	0.68		%	0.00		%	—		%


September 30, 2019	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Single-family residential	$	5,808,444		$	—		$	26,750		$	—		$	—		$	5,835,194
Construction	2,038,052			—			—			—			—			2,038,052
Construction - custom	540,741			—			—			—			—			540,741
Land - acquisition & development	200,283			—			3,824			—			—			204,107
Land - consumer lot loans	98,828			—			866			—			—			99,694
Multi-family	1,418,837			—			3,837			—			—			1,422,674
Commercial real estate	1,602,634			2,754			25,782			—			—			1,631,170
Commercial & industrial	1,229,891			18,125			20,679			—			—			1,268,695
HELOC	141,271			—			907			—			—			142,178
Consumer	129,872			—			11			—			—			129,883
Total gross loans	$	13,208,853		$	20,879		$	82,656		$	—		$	—		$	13,312,388

Total grade as a % of total gross loans	99.22		%	0.16		%	0.62		%	—		%	—		%


December 31, 2019	Performing Loans						Non-Performing Loans
	Amount		% of Total Gross Loans		Amount		% of Total Gross Loans
	(In thousands, except ratio data)
Single-family residential	$	5,679,057	99.6	%	$	23,014	0.4	%
Construction	2,174,313		100.0		—		—
Construction - custom	538,234		100.0		—		—
Land - acquisition & development	202,957		100.0		86		0.0
Land - consumer lot loans	96,763		99.7		334		0.3
Multi-family	1,436,715		100.0		—		—
Commercial real estate	1,637,542		99.7		5,557		0.3
Commercial & industrial	1,352,271		100.0		467		0.0
HELOC	140,644		99.6		630		0.4
Consumer	115,828		100.0		1		0.0
	$	13,374,324	99.8	%	$	30,089	0.2	%


September 30, 2019	Performing Loans						Non-Performing Loans
	Amount		% of Total Gross Loans		Amount		% of Total Gross Loans
	(In thousands, except ratio data)
Single-family residential	$	5,809,923	99.6	%	$	25,271	0.4	%
Construction	2,038,052		100.0		—		—
Construction - custom	540,741		100.0		—		—
Land - acquisition & development	203,938		99.9		169		0.1
Land - consumer lot loans	99,448		99.8		246		0.2
Multi-family	1,422,674		100.0		—		—
Commercial real estate	1,625,335		99.6		5,835		0.4
Commercial & industrial	1,267,403		99.9		1,292		0.1
HELOC	141,271		99.4		907		0.6
Consumer	129,872		100.0		11		0.0
	$	13,278,657	99.7	%	$	33,731	0.3	%


December 31, 2019	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment (Year-To-Date)
	(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential	$	16,505	$	17,474	$	—		$	17,242


Land - acquisition & development	—		—		—			39
Land - consumer lot loans	269		845		—			307

Commercial real estate	7,249		11,585		—			7,358
Commercial & industrial	437		4,508		—			776
HELOC	369		369		—			603
Consumer	2		84		—			26
	24,831		34,865		—			26,351
Impaired loans with an allowance recorded:
Single-family residential	102,164		104,506		1,110			107,103


Land - acquisition & development	86		150		15			89
Land - consumer lot loans	3,556		3,650		—			3,556
Multi-family	380		380		1			383
Commercial real estate	3,238		3,462		174			3,703
Commercial & industrial	411		519		70			419
HELOC	942		957		—			946
Consumer	58		58		—			59
	110,835		113,682		1,370		(1)	116,258
Total impaired loans:
Single-family residential	118,669		121,980		1,110			124,345


Land - acquisition & development	86		150		15			128
Land - consumer lot loans	3,825		4,495		—			3,863
Multi-family	380		380		1			383
Commercial real estate	10,487		15,047		174			11,061
Commercial & industrial	848		5,027		70			1,195
HELOC	1,311		1,326		—			1,549
Consumer	60		142		—			85
	$	135,666	$	148,547	$	1,370	(1)	$	142,609


September 30, 2019	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment (Year-To-Date)
	(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential	$	17,979	$	19,252	$	—		$	16,685
Construction	—		—		—			1,172
Construction - custom	—		—		—			251
Land - acquisition & development	78		143		—			290
Land - consumer lot loans	344		848		—			287
Multi-family	—		—		—			286
Commercial real estate	7,467		11,881		—			8,890
Commercial & industrial	1,114		5,312		—			7,168
HELOC	837		931		—			597
Consumer	50		119		—			23
	27,869		38,486		—			35,649
Impaired loans with an allowance recorded:
Single-family residential	112,042		114,609		2,208			125,976


Land - acquisition & development	91		152		—			99
Land - consumer lot loans	3,556		3,695		20			4,324
Multi-family	385		385		4			418
Commercial real estate	4,168		5,298		323			5,160
Commercial & industrial	426		691		92			2,535
HELOC	949		963		—			961
Consumer	60		282		—			65
	121,677		126,075		2,647		(1)	139,538
Total impaired loans:
Single-family residential	130,021		133,861		2,208			142,661
Construction	—		—		—			1,172
Construction - custom	—		—		—			251
Land - acquisition & development	169		295		—			389
Land - consumer lot loans	3,900		4,543		20			4,611
Multi-family	385		385		4			704
Commercial real estate	11,635		17,179		323			14,050
Commercial & industrial	1,540		6,003		92			9,703
HELOC	1,786		1,894		—			1,558
Consumer	110		401		—			88
	$	149,546	$	164,561	$	2,647	(1)	$	175,187