Loans Receivable and Allowance for Loan Losses

Loans receivable at March 31, 2018 and September 30, 2017 are summarized as follows:



	March 31,			September 30,
	2018			2017
	(In thousands)
Real estate loans:
One-to-four family	$	1,689,375		$	1,578,835
Multifamily and commercial	1,888,745			1,821,982
Construction	241,699			218,408
Commercial business loans	273,325			267,664
Consumer loans:
Home equity loans and advances	433,108			464,962
Other consumer loans	1,339			1,270
Total loans	4,527,591			4,353,121
Net deferred loan costs	12,280			9,135
Allowance for loan losses	(59,952		)	(54,633		)
Loans receivable, net	$	4,479,919		$	4,307,623

The Company had no loans held for sale at March 31, 2018 and September 30, 2017.

The Company purchased $2.7 million of residential loans and $2.1 million of commercial real estate loans from third parties during the three months ended March 31, 2018. The Company purchased $7.4 million of residential loans from third parties during the three months ended March 31, 2017. During the six months ended March 30, 2018, the Company purchased $8.9 million of residential loans and $51.9 million of commercial real estate loans. During the six months ended March 31, 2017, the total residential loans purchased were $16.8 million.

At March 31, 2018 and September 30, 2017, the carrying value of real estate loans serviced by the Company for investors was $464.3 million and $493.2 million, respectively.

The following tables summarize the aging of loans receivable by portfolio segment at March 31, 2018 and September 30, 2017:



	March 31, 2018
	30-59 days		60-89 days	Greater than 90 days	Total past due	Current	Total
	(In Thousands)
Real estate loans:
One to four family	$	5,201	1,706	2,565	9,472	1,679,903	$	1,689,375
Multifamily and commercial	504		—	118	622	1,888,123	1,888,745
Construction	—		—	—	—	241,699	241,699
Commercial business loans	355		—	407	762	272,563	273,325
Consumer loans:
Home equity loans advances	797		321	636	1,754	431,354	433,108
Other consumer loans	—		7	—	7	1,332	1,339
Total loans	$	6,857	2,034	3,726	12,617	4,514,974	$	4,527,591



	September 30, 2017
	30-59 days		60-89 days	Greater than 90 days	Total past due	Current	Total
	(In thousands)
Real estate loans:
One to four family	$	3,924	932	3,496	8,352	1,570,483	$	1,578,835
Multifamily and commercial	—		123	1,510	1,633	1,820,349	1,821,982
Construction	—		—	—	—	218,408	218,408
Commercial business loans	—		388	1,038	1,426	266,238	267,664
Consumer loans:
Home equity loans advances	1,437		187	351	1,975	462,987	464,962
Other consumer loans	1		—	—	1	1,269	1,270
Total loans	$	5,362	1,630	6,395	13,387	4,339,734	$	4,353,121

The Company considers a loan to be delinquent when we have not received a payment within 30 days of its contractual due date. A loan is designated as a non-accrual loan when the payment of interest is more than three months in arrears of its contractual due date. The accrual of income on a non-accrual loan is reversed and discontinued until the outstanding payments in arrears have been collected. The Company identifies loans that may need to be charged-off as a loss by reviewing all delinquent loans, classified loans and other loans that management may have concerns about collectability.

At March 31, 2018 and September 30, 2017, there were no loans past due 90 days or more and still accruing interest.

The following table summarizes loans receivable and allowance for loan losses by portfolio segment and impairment method:



	March 31, 2018
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Unallocated	Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	510	—	—	369	12	—	—	$	891
Collectively evaluated for impairment	18,318		19,097	6,574	10,431	3,912	7	722	59,061
Total	$	18,828	19,097	6,574	10,800	3,924	7	722	$	59,952

Total loans:
Individually evaluated for impairment	$	10,825	2,579	—	3,409	3,083	—	—	$	19,896
Collectively evaluated for impairment	1,678,550		1,886,166	241,699	269,916	430,025	1,339	—	4,507,695
Total	$	1,689,375	1,888,745	241,699	273,325	433,108	1,339	—	$	4,527,591



	September 30, 2017
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Unallocated	Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	407	35	—	84	14	—	—	$	540
Collectively evaluated for impairment	18,126		17,994	5,299	8,396	4,176	8	94	54,093
Total	$	18,533	18,029	5,299	8,480	4,190	8	94	$	54,633

Total loans:
Individually evaluated for impairment	$	12,247	6,343	—	4,327	2,998	—	—	$	25,915
Collectively evaluated for impairment	1,566,588		1,815,639	218,408	263,337	461,964	1,270	—	4,327,206
Total	$	1,578,835	1,821,982	218,408	267,664	464,962	1,270	—	$	4,353,121

Loan modifications to borrowers experiencing financial difficulties that are considered Troubled Debt Restructurings ("TDRs") primarily involve the lowering of the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following tables present the number of loans modified as TDRs during the three and six months ended March 31, 2018 and 2017, along with their balances immediately prior to the modification date and post-modification. Post-modification recorded investment represents the net book balance immediately following modification.



	For the Three Months Ended
	March 31, 2018					March 31, 2017
	No. of Loans	Pre-modification recorded investment		Post-modification recorded investment		No. of Loans	Pre-modification recorded investment		Post-modification recorded investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings
Real estate loans:
One to four family	1	$	588	$	588	1	$	83	$	83
Consumer loans:
Home equity loans and advances	1	84		84		—	—		—
Total loans	2	$	672	$	672	1	$	83	$	83



	For the Six Months Ended
	March 31, 2018					March 31, 2017
	No. of Loans	Pre-modification recorded investment		Post-modification recorded investment		No. of Loans	Pre-modification recorded investment		Post-modification recorded investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings
Real estate loans:
One to four family	1	$	588	$	588	3	$	340	$	340
Home equity loans and advances	1	84		84		1	108		108
Total loans	2	$	672	$	672	4	$	448	$	448

The activity in the allowance for loan losses by portfolio segment for the three and six months ended March 31, 2018 and 2017 was as follows:



	For the Three Months Ended March 31,
	One to four family			Multifamily and commercial		Construction		Commercial Business		Home equity loans and advances		Other consumer		Unallocated		Total
	(In Thousands)
2018
Balance at beginning of period	$	19,991		19,933		5,217		8,275		4,576		8		178		$	58,178
Provision charged (credited)	(1,229		)	(707	)	1,354		2,697		(657	)	(2	)	544		2,000
Recoveries	120			—		3		52		5		1		—		181
Charge-offs	(54		)	(129	)	—		(224	)	—		—		—		(407		)
Balance at end of period	$	18,828		19,097		6,574		10,800		3,924		7		722		$	59,952

2017
Balance at beginning of period	$	18,599		17,616		4,598		6,358		4,231		11		436		$	51,849
Provision charged (credited)	380			189		(345	)	579		(39	)	1		(390	)	375
Recoveries	22			—		—		77		7		—		—		106
Charge-offs	(183		)	(167	)	—		—		(70	)	(2	)	—		(422		)
Balance at end of period	$	18,818		17,638		4,253		7,014		4,129		10		46		$	51,908



	For the Six Months Ended March 31,
	One to four family			Multifamily and commercial		Construction		Commercial Business		Home equity loans and advances		Other consumer		Unallocated		Total
2018
Balance at beginning of period	$	18,533		18,029		5,299		8,480		4,190		8		94		$	54,633
Provision charged (credited)	245			1,199		1,272		2,322		(267	)	1		628		5,400
Recoveries	130			—		3		225		10		3		—		371
Charge-offs	(80		)	(131	)	—		(227	)	(9	)	(5	)	—		(452		)
Balance at end of period	$	18,828		19,097		6,574		10,800		3,924		7		722		$	59,952

2017
Balance at beginning of period	$	18,638		17,390		5,960		4,052		5,721		11		95		$	51,867
Provision charged (credited)	353			415		(1,707	)	2,889		(1,531	)	5		(49	)	375
Recoveries	26			—		—		96		13		—		—		135
Charge-offs	(199		)	(167	)	—		(23	)	(74	)	(6	)	—		(469		)
Balance at end of period	$	18,818		17,638		4,253		7,014		4,129		10		46		$	51,908

The following table presents loans individually evaluated for impairment by loan segment:



	March 31, 2018
	Recorded investment		Unpaid principal balance		Specific allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One to four family	$	7,955	$	9,143	$	—
Multifamily and commercial	2,579		3,454		—
Commercial business loans	426		119		—
Consumer loans:
Home equity loans and advances	2,733		3,088		—
	13,693		15,804		—
With a specific allowance recorded:
Real estate loans:
One to four family	2,870		2,913		510
Commercial business loans	2,983		2,774		369
Consumer loans:
Home equity loans and advances	350		350		12
	6,203		6,037		891
Total:
Real estate loans:
One to four family	10,825		12,056		510
Multifamily and commercial	2,579		3,454		—
Commercial business loans	3,409		2,893		369
Consumer loans:
Home equity loans and advances	3,083		3,438		12
Total loans	$	19,896	$	21,841	$	891



	September 30, 2017
	Recorded investment		Unpaid principal balance		Specific allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One to four family	$	9,272	$	10,156	$	—
Multifamily and commercial	4,701		5,577		—
Commercial business loans	1,545		2,038		—
Consumer loans:
Home equity loans and advances	2,745		3,214		—
	18,263		20,985		—
With a specific allowance recorded:
Real estate loans:
One to four family	2,975		2,989		407
Multifamily and commercial	1,642		2,215		35
Commercial business loans	2,782		2,782		84
Consumer loans:
Home equity loans and advances
	253		253		14
Total:	7,652		8,239		540
Real estate loans:
One to four family	12,247		13,145		407
Multifamily and commercial	6,343		7,792		35
Commercial business loans	4,327		4,820		84
Consumer loans:
Home equity loans and advances	2,998		3,467		14
Total loans	$	25,915	$	29,224	$	540

Specific allocations of the allowance for loan losses attributable to impaired loans totaled $891 thousand and $540 thousand at March 31, 2018 and September 30, 2017, respectively. At March 31, 2018 and September 30, 2017, impaired loans for which there was no related allowance for loan losses totaled $13.7 million and $18.3 million, respectively.

The following table presents interest income recognized for loans individually evaluated for impairment by loan segment for the three and six months ended March 31, 2018 and 2017:



	For the Three Months Ended
	March 31, 2018				March 31, 2017
	Average recorded Investment		Interest Income Recognized		Average recorded Investment		Interest Income Recognized
	(In thousands)				(In thousands)
Real estate loans:
One to four family	$	11,235	$	102	$	16,061	$	142
Multifamily and commercial	3,136		26		3,825		14
Commercial business loans	3,836		26		3,797		26
Consumer loans:
Home equity loans and advances	2,837		36		4,122		35
Total loans	$	21,044	$	190	$	27,805	$	217



	For the Six Months Ended
	March 31, 2018				March 31, 2017
	Average recorded Investment		Interest Income Recognized		Average recorded Investment		Interest Income Recognized
	(In thousands)				(In thousands)
Real estate loans:
One to four family	$	11,572	$	212	$	16,747	$	260
Multifamily and commercial	4,205		65		5,665		84
Construction	—		—		168		—
Commercial business loans	4,000		72		4,036		75
Consumer loans:
Home equity loans and advances	2,891		71		3,897		69
Total loans	$	22,668	$	420	$	30,513	$	488

The Company utilizes an internal eight-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (Special Mention) or 6 (Substandard). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss). The risk ratings are also confirmed through periodic loan review examinations which are currently performed by both an independent third-party and the Company's internal loan review department. Results from examinations are presented to the Audit Committee of the Board of Directors.

The following table presents loans receivable by credit quality risk indicator and by loan segment:



	March 31, 2018
	Real Estate
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Total
	(In thousands)
Pass	$	1,680,034	1,871,631	241,699	265,153	431,096	1,339	$	4,490,952
Special mention	—		3,764	—	3,619	—	—	7,383
Substandard	9,341		13,350	—	4,553	2,012	—	29,256
Doubtful	—		—	—	—	—	—	—
Total	$	1,689,375	1,888,745	241,699	273,325	433,108	1,339	$	4,527,591



	September 30, 2017
	Real Estate
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Total
	(In thousands)

Pass	$	1,569,064	1,796,786	218,408	258,454	463,257	1,270	$	4,307,239
Special mention	—		11,600	—	3,347	—	—	14,947
Substandard	9,771		13,596	—	5,863	1,705	—	30,935
Doubtful	—		—	—	—	—	—	—
Total	$	1,578,835	1,821,982	218,408	267,664	464,962	1,270	$	4,353,121