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Loans Receivable
 3 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Loans Receivable Loans Receivable
For a detailed discussion of loans and credit quality, including accounting policies and the CECL methodology used to estimate the allowance for credit losses, see Note A "Summary of Significant Accounting Policies" above.

The Company's loans held for investment are divided into two portfolio segments, commercial loans and consumer loans, with each of those segments further split into loan classes for purposes of estimating the allowance for credit losses.

The following table is a summary of loans receivable by loan portfolio segment and class.

 December 31, 2020September 30, 2020
(In thousands)(In thousands)
Commercial loans
Multi-family$1,610,796 10.9 %$1,538,762 10.6 %
Commercial real estate1,954,154 13.2 1,895,086 13.1 
Commercial & industrial (1)2,256,627 15.3 2,132,160 14.7 
Construction2,687,708 18.2 2,403,276 16.6 
Land - acquisition & development193,239 1.3 193,745 1.3 
Total commercial loans8,702,524 58.9 8,163,029 56.3 
Consumer loans
Single-family residential5,063,053 34.2 5,304,689 36.7 
Construction - custom659,364 4.5 674,879 4.7 
   Land - consumer lot loans110,841 0.7 102,263 0.7 
   HELOC139,752 0.9 139,703 1.0 
   Consumer111,292 0.8 83,159 0.6 
Total consumer loans6,084,302 41.1 6,304,693 43.7 
Total gross loans14,786,826 100 %14,467,722 100 %
   Less:
      Allowance for credit losses on loans170,189 166,955 
      Loans in process1,679,972 1,456,072 
      Net deferred fees, costs and discounts55,655 52,378 
Total loan contra accounts1,905,816 1,675,405 
Net loans$12,881,010 $12,792,317 

(1) Includes $646,887,000 and $762,004,000 of SBA Payroll Protection Program loans as of December 31, 2020 and September 30, 2020, respectively.

The Company elected to exclude accrued interest receivable ("AIR") from the amortized cost basis of loans for disclosure purposes and from the calculations of estimated credit losses. As of December 31, 2020, and September 30, 2020, AIR for loans totaled $47,168,000 and $48,704,000, respectively, and is included in the “accrued interest receivable” line item on the Company’s consolidated statements of financial condition.
Loans in the amount of $5,153,478,000 and $5,361,504,000 at December 31, 2020 and September 30, 2020, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") as part of our liquidity management strategy. The FHLB does not have the right to sell or re-pledge these loans.
The following table sets forth the amortized cost basis of non accrual loans and loans 90 days or more past due and accruing.
 
 December 31, 2020September 30, 2020
 (In thousands, except ratio data)
Non-accrualNon-accrual with no ACL90 days or more past due and accruingNon-accrualNon-accrual with no ACL90 days or more past due and accruing
Commercial loans
Multi-family$— $— $— $— $— $— 
Commercial real estate31,397 — — 3,771 — — 
Commercial & industrial594 — 280 329 — — 
Construction1,237 — — 1,669 — — 
Land - acquisition & development— — — — — — 
   Total commercial loans33,228 — 280 5,769 — — 
Consumer loans
Single-family residential24,349 03,908 22,431 — 933 
Construction - custom— 0— — — — 
Land - consumer lot loans443 0168 243 — — 
HELOC334 0— 553 — — 
Consumer52 06 60 — 17 
   Total consumer loans25,178 — 4,082 23,287 — 950 
Total non-accrual loans$58,406 $— $4,362 $29,056 $— $950 
% of total loans0.45 %0.22 %

The Company recognized interest income on non-accrual loans of approximately $3,489,000 in the three months ended December 31, 2020. Had these loans been on accrual status and performed according to their original contract terms, the Company would have recognized interest income of approximately $402,000 for the three months ended December 31, 2020. Recognized interest income for the three months ended December 31, 2020 was higher than what otherwise would have been recognized in the period due to the collection of past due amounts. Interest cash flows collected on non-accrual loans vary from period to period as those loans are brought current or are paid off.
The following tables provide details regarding loan delinquencies by loan portfolio and class.
 
December 31, 2020Days Delinquent Based on $ Amount of Loans% based
on $
Type of LoanLoans Receivable (Amortized Cost)Current306090Total Delinquent
(In thousands, except ratio data)
Commercial Loans
Multi-family$1,609,800 $1,609,325 $475 $— $— $475 0.03 %
Commercial real estate1,942,854 1,914,254 85 3,958 24,557 28,600 1.47 
Commercial & industrial2,243,465 2,242,422 216 — 827 1,043 0.05 
Construction1,393,107 1,389,404 2,550 — 1,153 3,703 0.27 
Land - acquisition & development152,621 152,369 252 — — 252 0.17 
   Total commercial loans7,341,847 7,307,774 3,578 3,958 26,537 34,073 0.46 
Consumer Loans
Single-family residential5,048,435 5,016,530 7,477 5,872 18,556 31,905 0.63 
Construction - custom299,351 299,351 — — — — — 
Land - consumer lot loans109,845 109,248 95 168 334 597 0.54 
HELOC140,272 138,933 916 116 307 1,339 0.95 
Consumer111,449 111,201 67 27 154 248 0.22 
   Total consumer loans5,709,352 5,675,263 8,555 6,183 19,351 34,089 0.60 
Total Loans$13,051,199 $12,983,037 $12,133 $10,141 $45,888 $68,162 0.52 %
Delinquency %99.48%0.09%0.08%0.35%0.52%


September 30, 2020Days Delinquent Based on $ Amount of Loans% based
on $
Type of LoanLoans Receivable (Amortized Cost)Current306090Total Delinquent
(In thousands, except ratio data)
Commercial Loans
Multi-family$1,538,240 $1,538,240 $— $— $— $— — %
Commercial real estate1,884,688 1,884,210 — 195 283 478 0.03 
Commercial & industrial2,115,513 2,114,650 — 583 280 863 0.04 
Construction1,352,414 1,350,752 — — 1,662 1,662 0.12 
Land - acquisition & development153,571 153,571 — — — — — 
  Total commercial loans7,044,426 7,041,423 — 778 2,225 3,003 0.04 
Consumer Loans
Single-family residential5,293,962 5,267,608 3,922 3,108 19,324 26,354 0.50 
Construction - custom295,953 295,953 — — — — — 
Land - consumer lot loans101,394 101,029 152 — 213 365 0.36 
HELOC140,222 139,491 275 76 380 731 0.52 
Consumer83,315 82,959 121 11 224 356 0.43 
  Total consumer loans5,914,846 5,887,040 4,470 3,195 20,141 27,806 0.47 
Total Loans$12,959,272 $12,928,463 $4,470 $3,973 $22,366 $30,809 0.24 %
Delinquency %99.76%0.03%0.03%0.17%0.24%
The Company participated in the Small Business Administration’s Paycheck Protection Program ("PPP"). This program came about through the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed by Congress to help small businesses keep their employees employed through the COVID-19 shelter in place orders. In 2020, the Company assisted over 6,500 businesses with more than $780,000,000 in PPP loans.
The Company is actively working with its borrowers to modify consumer mortgage and commercial loans to provide payment deferrals as a result of the COVID-19 pandemic. The terms of the payment deferrals are generally 90 days for consumer mortgage loans and up to 180 days for commercial loans and borrowers may be eligible for multiple deferrals. Pursuant to the CARES Act, these loan modifications are not accounted for as TDRs. As of December 31, 2020, 183 mortgage loans totaling $46,000,000 and 10 commercial loans totaling $32,000,000 that had been modified remain in deferral. These loans are not considered past due until after the deferral period is over and scheduled payments have resumed.

Most TDRs are accruing and performing loans where the borrower has proactively approached the Company about modification due to temporary financial difficulties. 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, 2020, 97.9% of the Company's $86,314,000 in TDRs were classified as performing. As of December 31, 2020, single-family residential loans comprised 92.9% of TDRs. The Company's ACL methodology takes into account the following performance indicators for restructured loans: 1) time since modification, 2) current payment status and 3) geographic area.

We evaluate the credit quality of our loans based on regulatory risk ratings and also consider other factors. Based on this evaluation, the loans are assigned a grade and classified as follows:

•Pass – the credit does not meet one of the definitions below.

•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.

The following tables present by primary credit quality indicator, loan class, and year of origination, the amortized cost basis of loans receivable as of December 31, 2020.
Term Loans Amortized Cost Basis by Origination Year
YTD 20212020201920182017Prior to 2017Revolving LoansRevolving to Term LoansTotal Loans
Commercial loans
Multi-family
Pass$120,709 $384,701 $114,454 $276,390 $232,338 $392,183 $8,195 $— $1,528,970 
Special Mention— 2,418 2,816 4,054 5,092 4,464 — — 18,844 
Substandard— — 7,544 3,974 3,769 46,699 — — 61,986 
Total$120,709 $387,119 $124,814 $284,418 $241,199 $443,346 $8,195 $— $1,609,800 
Commercial real estate
Pass$158,763 $424,621 $219,629 $243,656 $233,589 $443,025 $2,217 $— $1,725,500 
Special Mention— 197 9,496 414 1,725 26,103 — — 37,935 
Substandard— 9,067 29,699 22,688 47,315 70,650 — — 179,419 
Total$158,763 $433,885 $258,824 $266,758 $282,629 $539,778 $2,217 $— $1,942,854 
Commercial & industrial
Pass$157,872 $801,134 $60,562 $83,496 $75,301 $165,692 $616,063 $12,097 $1,972,217 
Special Mention— 8,931 6,937 1,163 4,286 — 5,111 — 26,428 
Substandard12,751 45,891 7,296 6,310 104 49,331 123,137 — 244,820 
Doubtful— — — — — — — — — 
Total$170,623 $855,956 $74,795 $90,969 $79,691 $215,023 $744,311 $12,097 $2,243,465 
Construction
Pass$119,251 $407,194 $446,042 $190,227 $42,695 $16 $77,463 $— $1,282,888 
Special Mention— — — 32,992 — — — — 32,992 
Substandard— 3,256 36,940 — 37,031 — — — 77,227 
Total$119,251 $410,450 $482,982 $223,219 $79,726 $16 $77,463 $— $1,393,107 
Land - acquisition & development
Pass$10,965 $43,159 $34,967 $19,309 $17,706 $4,513 $5,307 $— $135,926 
Special Mention— — — — — 15,573 — — 15,573 
Substandard— — 1,122 — — — — — 1,122 
Total$10,965 $43,159 $36,089 $19,309 $17,706 $20,086 $5,307 $— $152,621 
Total commercial loans
Pass$567,560 $2,060,809 $875,654 $813,078 $601,629 $1,005,429 $709,245 $12,097 $6,645,501 
Special Mention— 11,546 19,249 38,623 11,103 46,140 5,111 — 131,772 
Substandard12,751 58,214 82,601 32,972 88,219 166,680 123,137 — 564,574 
Doubtful— — — — — — — — — 
Total$580,311 $2,130,569 $977,504 $884,673 $700,951 $1,218,249 $837,493 $12,097 $7,341,847 
Term Loans Amortized Cost Basis by Origination Year
YTD 20212020201920182017Prior to 2017Revolving LoansRevolving to Term LoansTotal Loans
Consumer loans
Single-family residential
Current$250,276 $824,978 $578,704 $525,644 $607,513 $2,229,415 $— $— $5,016,530 
30 days past due— — 356 60 1,523 5,538 — — 7,477 
60 days past due— 473 — — 357 5,042 — — 5,872 
90+ days past due— — 680 — 439 17,437 — — 18,556 
Total$250,276 $825,451 $579,740 $525,704 $609,832 $2,257,432 $— $— $5,048,435 
Construction - custom
Current$11,469 $250,459 $35,802 $1,621 $— $— $— $— $299,351 
Total$11,469 $250,459 $35,802 $1,621 $— $— $— $— $299,351 
Land - consumer lot loans
Current$20,268 $38,986 $16,288 $5,991 $6,994 $20,721 $— $— $109,248 
30 days past due— — 72 — — 23 — — 95 
60 days past due— — — — — 168 — — 168 
90+ days past due— — — 152 122 60 — — 334 
Total$20,268 $38,986 $16,360 $6,143 $7,116 $20,972 $— $— $109,845 
HELOC
Current$— $— $— $— $— $6,750 $131,482 $701 $138,933 
30 days past due— — — — — 167 749 — 916 
60 days past due— — — — — 5 111 — 116 
90+ days past due— — — — — 30 277 — 307 
Total$— $— $— $— $— $6,952 $132,619 $701 $140,272 
Consumer
Current$11,231 $8,421 $1,237 $51,616 $180 $16,175 $22,341 $— $111,201 
30 days past due— — 9 — 47 11 — — 67 
60 days past due— — 6 — 14 7 — — 27 
90+ days past due— — 36 — 112 6 — — 154 
Total$11,231 $8,421 $1,288 $51,616 $353 $16,199 $22,341 $— $111,449 
Total consumer loans
Current$293,244 $1,122,844 $632,031 $584,872 $614,687 $2,273,061 $153,823 $701 $5,675,263 
30 days past due— — 437 60 1,570 5,739 749 — 8,555 
60 days past due— 473 6 — 371 5,222 111 — 6,183 
90+ days past due— — 716 152 673 17,533 277 — 19,351 
Total$293,244 $1,123,317 $633,190 $585,084 $617,301 $2,301,555 $154,960 $701 $5,709,352