BANK LOANS, NET (Tables)

6 Months Ended

Mar. 31, 2015

Held for Sale and Held for Investment Loan Portfolios

The following table presents the balances for both the held for sale and held for investment loan portfolios, as well as the associated percentage of each portfolio segment in RJ Bank’s total loan portfolio:



	March 31, 2015					September 30, 2014
	Balance			%		Balance			%
	($ in thousands)
Loans held for sale, net⁽¹⁾	$	87,974		1	%	$	45,988		—
Loans held for investment:
Domestic:
C&I loans	5,776,977			47	%	5,378,592			49	%
CRE construction loans	78,820			1	%	76,733			1	%
CRE loans	1,468,813			12	%	1,415,093			13	%
Tax-exempt loans	361,644			3	%	122,218			1	%
Residential mortgage loans	1,963,336			16	%	1,749,513			16	%
SBL	1,249,930			10	%	1,021,358			9	%
Foreign:
C&I loans	1,036,223			8	%	1,043,755			9	%
CRE construction loans	22,094			—		17,462			—
CRE loans	204,132			2	%	274,070			2	%
Residential mortgage loans	2,865			—		2,234			—
SBL	1,954			—		2,390			—
Total loans held for investment	12,166,788					11,103,418
Net unearned income and deferred expenses	(34,091		)			(37,533		)
Total loans held for investment, net⁽¹⁾	12,132,697					11,065,885

Total loans held for sale and investment	12,220,671			100	%	11,111,873			100	%
Allowance for loan losses	(160,008		)			(147,574		)
Bank loans, net	$	12,060,663				$	10,964,299


(1)	Net of unearned income and deferred expenses, which includes purchase premiums, purchase discounts, and net deferred origination fees and costs.

Loan Purchases and Sales

The following table presents purchases and sales of any loans held for investment by portfolio segment:



	Three months ended March 31,								Six months ended March 31,
	2015				2014				2015					2014
	Purchases		Sales		Purchases		Sales		Purchases			Sales		Purchases		Sales
	(in thousands)
C&I loans	$	106,197	$	25,500	$	110,406	$	70,350	$	260,281		$	32,360	$	237,736	$	131,323
Residential mortgage loans	1,337		—		140		—		213,309		⁽¹⁾	—		27,735		—
Total	$	107,534	$	25,500	$	110,546	$	70,350	$	473,590		$	32,360	$	265,471	$	131,323


(1)	Includes the purchase of a loan portfolio totaling $207.3 million in principal loan balance.

Analysis of the Payment Status of Loans Held for Investment

The following table presents an analysis of the payment status of loans held for investment:



	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual ⁽¹⁾		Current and accruing		Total loans held for investment ⁽²⁾
	(in thousands)
As of March 31, 2015:
C&I loans	$	173	$	—	$	173	$	—	$	6,813,027	$	6,813,200
CRE construction loans	—		—		—		—		100,914		100,914
CRE loans	—		—		—		17,171		1,655,774		1,672,945
Tax-exempt loans	—		—		—		—		361,644		361,644
Residential mortgage loans:
First mortgage loans	2,795		—		2,795		52,182		1,890,746		1,945,723
Home equity loans/lines	30		—		30		285		20,163		20,478
SBL	—		—		—		—		1,251,884		1,251,884
Total loans held for investment, net	$	2,998	$	—	$	2,998	$	69,638	$	12,094,152	$	12,166,788

As of September 30, 2014:
C&I loans	$	124	$	—	$	124	$	—	$	6,422,223	$	6,422,347
CRE construction loans	—		—		—		—		94,195		94,195
CRE loans	—		—		—		18,876		1,670,287		1,689,163
Tax-exempt	—		—		—		—		122,218		122,218
Residential mortgage loans:
First mortgage loans	1,648		—		1,648		61,391		1,668,724		1,731,763
Home equity loans/lines	57		—		57		398		19,529		19,984
SBL	—		—		—		—		1,023,748		1,023,748
Total loans held for investment, net	$	1,829	$	—	$	1,829	$	80,665	$	11,020,924	$	11,103,418


(1)	Includes $36.9 million and $41.4 million of nonaccrual loans at March 31, 2015 and September 30, 2014, respectively, which are performing pursuant to their contractual terms.


(2)	Excludes any net unearned income and deferred expenses.

Summary of Impaired Loans

The following table provides a summary of RJ Bank’s impaired loans:



	March 31, 2015						September 30, 2014
	Gross recorded investment		Unpaid principal balance		Allowance for losses		Gross recorded investment		Unpaid principal balance		Allowance for losses
	(in thousands)
Impaired loans with allowance for loan losses:⁽¹⁾
C&I loans	$	11,418	$	12,022	$	1,220	$	11,959	$	12,563	$	1,289
Residential - first mortgage loans	39,266		54,529		4,376		43,806		61,372		5,012
Total	50,684		66,551		5,596		55,765		73,935		6,301

Impaired loans without allowance for loan losses:⁽²⁾
CRE loans	17,171		28,446		—		18,876		39,717		—
Residential - first mortgage loans	19,751		29,451		—		21,987		32,949		—
Total	36,922		57,897		—		40,863		72,666		—
Total impaired loans	$	87,606	$	124,448	$	5,596	$	96,628	$	146,601	$	6,301


(1)	Impaired loan balances have had reserves established based upon management’s analysis.


(2)	When the discounted cash flow, collateral value or market value equals or exceeds the carrying value of the loan, then the loan does not require an allowance. These are generally loans in process of foreclosure that have already been adjusted to fair value.

The average balance of the total impaired loans and the related interest income recognized in the Condensed Consolidated Statements of Income and Comprehensive Income are as follows:



	Three months ended March 31,				Six months ended March 31,
	2015		2014		2015		2014
	(in thousands)
Average impaired loan balance:
C&I loans	$	11,613	$	—	$	11,732	$	35
CRE loans	17,257		24,702		17,394		24,949
Residential mortgage loans:
First mortgage loans	59,875		71,277		61,493		71,818
Home equity loans/lines	—		36		—		36
Total	$	88,745	$	96,015	$	90,619	$	96,838

Interest income recognized:
Residential mortgage loans:
First mortgage loans	$	426	$	391	$	741	$	1,027
Total	$	426	$	391	$	741	$	1,027

Impact of TDRs

The table below presents the TDRs that occurred during the respective periods presented:



	Number of contracts	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
	($ in thousands)
Three months ended March 31, 2015
Residential – first mortgage loans	1	$	133	$	134

Three months ended March 31, 2014
Residential – first mortgage loans	4	$	654	$	702

Six months ended March 31, 2015
Residential – first mortgage loans	3	$	290	$	293

Six months ended March 31, 2014
Residential – first mortgage loans	12	$	2,539	$	2,699

Credit Quality of Held for Investment Loan Portfolio

The credit quality of RJ Bank’s held for investment loan portfolio is as follows:



									Residential mortgage
	C&I		CRE construction		CRE		Tax-exempt		First mortgage		Home equity		SBL		Total
	(in thousands)
March 31, 2015
Pass	$	6,712,843	$	100,914	$	1,640,839	$	361,644	$	1,867,841	$	20,125	$	1,251,884	$	11,956,090
Special mention ⁽¹⁾	69,647		—		14,566		—		16,336		66		—		100,615
Substandard ⁽¹⁾	30,710		—		17,540		—		61,546		287		—		110,083
Total	$	6,813,200	$	100,914	$	1,672,945	$	361,644	$	1,945,723	$	20,478	$	1,251,884	$	12,166,788

September 30, 2014
Pass	$	6,321,662	$	94,195	$	1,669,897	$	122,218	$	1,647,325	$	19,572	$	1,023,748	$	10,898,617
Special mention ⁽¹⁾	83,101		—		191		—		15,346		—		—		98,638
Substandard ⁽¹⁾	17,584		—		18,167		—		69,092		412		—		105,255
Doubtful ⁽¹⁾	—		—		908		—		—		—		—		908
Total	$	6,422,347	$	94,195	$	1,689,163	$	122,218	$	1,731,763	$	19,984	$	1,023,748	$	11,103,418


(1)	Loans classified as special mention, substandard or doubtful are all considered to be “criticized” loans.

Performing Residential First Mortgage Loan Portfolio Summarized by Loan-to-value ratios

The table below presents the most recently available update of the performing residential first mortgage loan portfolio summarized by current LTV. The amounts in the table represent the entire loan balance:



	Balance⁽¹⁾
	(in thousands)
LTV range:
LTV less than 50%	$	557,456
LTV greater than 50% but less than 80%	976,306
LTV greater than 80% but less than 100%	169,304
LTV greater than 100%, but less than 120%	23,864
LTV greater than 120%	4,011
Total	$	1,730,941


(1)	Excludes loans that have full repurchase recourse for any delinquent loans.

Changes in the Allowance for Loan Losses

Changes in the allowance for loan losses of RJ Bank by portfolio segment are as follows:



		Loans held for investment
		C&I			CRE construction			CRE			Tax-exempt		Residential mortgage			SBL		Total
	(in thousands)
Three months ended March 31, 2015
Balance at beginning of period		$	109,582		$	1,709		$	25,095		$	2,738	$	15,319		2,324		$	156,767
Provision (benefit) for loan losses		1,530			(8		)	900			1,171		168			176		3,937
Net (charge-offs)/recoveries:
Charge-offs		—			—			—			—		(411		)	—		(411		)
Recoveries		536			—			—			—		—			6		542
Net (charge-offs)/recoveries		536			—			—			—		(411		)	6		131
Foreign exchange translation adjustment		(523		)	(26		)	(278		)	—		—			—		(827		)
Balance at March 31, 2015		$	111,125		$	1,675		$	25,717		$	3,909	$	15,076		$	2,506	$	160,008



Six months ended March 31, 2015
Balance at beginning of period	$	103,179		$	1,594		$	25,022		1,380		14,350			2,049		$	147,574
Provision for loan losses	8,364			117			1,062			2,529		787			443		13,302
Net (charge-offs)/recoveries:
Charge-offs	(238		)	—			—			—		(638		)	—		(876		)
Recoveries	536			—			—			—		577			14		1,127
Net (charge-offs)/recoveries	298			—			—			—		(61		)	14		251
Foreign exchange translation adjustment	(716		)	(36		)	(367		)	—		—			—		(1,119		)
Balance at March 31, 2015	$	111,125		$	1,675		$	25,717		$	3,909	$	15,076		$	2,506	$	160,008



Three months ended March 31, 2014
Balance at beginning of period	$	96,629		$	1,647		$	20,210		—		18,300			1,338		$	138,124
Provision (benefit) for loan losses	1,113			169			2,133			—		(1,641		)	205		1,979
Net (charge-offs)/recoveries:
Charge-offs	(1,805		)	—			—			—		(670		)	—		(2,475		)
Recoveries	12			—			—			—		625			6		643
Net (charge-offs)/recoveries	(1,793		)	—			—			—		(45		)	6		(1,832		)
Foreign exchange translation adjustment	(247		)	(17		)	(67		)	—		—			—		(331		)
Balance at March 31, 2014	$	95,702		$	1,799		$	22,276		$	—	$	16,614		$	1,549	$	137,940



Six months ended March 31, 2014
Balance at beginning of period	$	95,994		$	1,000		$	19,266		—		19,126			1,115		$	136,501
Provision (benefit) for loan losses	2,015			824			3,062			—		(2,702		)	416		3,615
Net (charge-offs)/recoveries:
Charge-offs	(1,845		)	—			—			—		(879		)	—		(2,724		)
Recoveries	16			—			80			—		1,069			18		1,183
Net (charge-offs)/recoveries	(1,829		)	—			80			—		190			18		(1,541		)
Foreign exchange translation adjustment	(478		)	(25		)	(132		)	—		—			—		(635		)
Balance at March 31, 2014	$	95,702		$	1,799		$	22,276		$	—	$	16,614		$	1,549	$	137,940

Recorded Investment and Related Allowance for Loan Losses, by Loan Portfolio Segment

The following table presents, by loan portfolio segment, RJ Bank’s recorded investment and related allowance for loan losses:



		Loans held for investment
		C&I		CRE construction		CRE		Tax-exempt		Residential mortgage		SBL		Total
	(in thousands)
March 31, 2015
Allowance for loan losses:
Individually evaluated for impairment		$	1,220	$	—	$	—	$	—	$	4,376	$	—	$	5,596
Collectively evaluated for impairment		109,905		1,675		25,717		3,909		10,700		2,506		154,412
Total allowance for loan losses		$	111,125	$	1,675	$	25,717	$	3,909	$	15,076	$	2,506	$	160,008

Recorded investment:⁽¹⁾
Individually evaluated for impairment		$	11,418	$	—	$	17,171	$	—	$	59,017	$	—	$	87,606
Collectively evaluated for impairment		6,801,782		100,914		1,655,774		361,644		1,907,184		1,251,884		12,079,182
Total recorded investment		$	6,813,200	$	100,914	$	1,672,945	$	361,644	$	1,966,201	$	1,251,884	$	12,166,788

September 30, 2014
Allowance for loan losses:
Individually evaluated for impairment		$	1,289	$	—	$	—	$	—	$	5,012	$	—	$	6,301
Collectively evaluated for impairment		101,890		1,594		25,022		1,380		9,338		2,049		141,273
Total allowance for loan losses		$	103,179	$	1,594	$	25,022	$	1,380	$	14,350	$	2,049	$	147,574

Recorded investment:⁽¹⁾
Individually evaluated for impairment		$	11,959	$	—	$	18,876	$	—	$	65,793	$	—	$	96,628
Collectively evaluated for impairment		6,410,388		94,195		1,670,287		122,218		1,685,954		1,023,748		11,006,790
Total recorded investment		$	6,422,347	$	94,195	$	1,689,163	$	122,218	$	1,751,747	$	1,023,748	$	11,103,418


(1)	Excludes any net unearned income and deferred expenses.