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BANK LOANS, NET (Tables)
 6 Months Ended
Mar. 31, 2016
Receivables [Abstract]  
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, 2016
 
September 30, 2015
 
Balance
 
%
 
Balance
 
%
 
($ in thousands)
Loans held for sale, net(1)
$
172,222

 
1
%
 
$
119,519

 
1
%
Loans held for investment:
 

 
 

 
 

 
 

Domestic:
 
 
 
 
 
 
 
C&I loans
6,236,413

 
43
%
 
5,893,631

 
44
%
CRE construction loans
143,437

 
1
%
 
126,402

 
1
%
CRE loans
2,035,699

 
14
%
 
1,679,332

 
13
%
Tax-exempt loans
610,274

 
4
%
 
484,537

 
4
%
Residential mortgage loans
2,215,264

 
15
%
 
1,959,786

 
15
%
SBL
1,702,766

 
12
%
 
1,479,562

 
11
%
Foreign:
 
 
 
 
 
 
 
C&I loans
1,046,801

 
7
%
 
1,034,387

 
8
%
CRE construction loans
2,468

 
—

 
35,954

 
—

CRE loans
412,569

 
3
%
 
374,822

 
3
%
Residential mortgage loans
2,320

 
—

 
2,828

 
—

SBL
1,909

 
—

 
1,942

 
—

Total loans held for investment
14,409,920

 
 

 
13,073,183

 
 

Net unearned income and deferred expenses
(39,441
)
 
 

 
(32,424
)
 
 

Total loans held for investment, net(1)
14,370,479

 
 

 
13,040,759

 
 

 
 
 
 
 
 
 
 
Total loans held for sale and investment
14,542,701

 
100
%
 
13,160,278

 
100
%
Allowance for loan losses
(194,220
)
 
 

 
(172,257
)
 
 

Bank loans, net
$
14,348,481

 
 

 
$
12,988,021

 
 


(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:
 
C&I
 
CRE
 
Residential mortgage
 
Total
 
(in thousands)
Three months ended March 31, 2016
 
 
 
 
 
 
Purchases
$
91,256

 
$
7,040

 
$
131,788

(2) 
$
230,084

Sales (1)
$
36,569

 
$
—

 
$
—

 
$
36,569

 
 
 
 
 
 
 
 
Six months ended March 31, 2016
 
 
 
 
 
 
Purchases
$
149,107

 
$
7,040

 
210,823

(3) 
$
366,970

Sales (1)
$
71,815

 
$
—

 
—

 
$
71,815

 
 
 
 
 
 
 
 
Three months ended March 31, 2015
 
 
 
 
 
 
 
Purchases
$
106,197

 
$
—

 
$
1,337

 
$
107,534

Sales (1)
$
25,500

 
$
—

 
$
—

 
$
25,500

 
 
 
 
 
 
 
 
Six months ended March 31, 2015
 
 
 
 
 
 
 
Purchases
$
260,281

 
$
—

 
$
213,309

(4) 
$
473,590

Sales (1)
$
32,360

 
$
—

 
$
—

 
$
32,360


(1)
Represents the recorded investment of loans held for investment that were transferred to loans held for sale during the respective period and subsequently sold to a third party during the same period. Corporate loan sales generally occur as part of a loan workout situation.

(2)
Includes the purchase from another financial institution of residential mortgage loans totaling $107.1 million in principal loan balance.

(3)
Includes purchases from another financial institution of residential mortgage loans totaling $179.6 million in principal loan balance.

(4)
Includes the purchase from another financial institution of residential mortgage loans 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, 2016:
 
 
 
 
 
 
 
 
 
 
 
C&I loans
$
152

 
$
—

 
$
152

 
$
11,391

 
$
7,271,671

 
$
7,283,214

CRE construction loans
—

 
—

 
—

 
—

 
145,905

 
145,905

CRE loans
—

 
—

 
—

 
4,497

 
2,443,771

 
2,448,268

Tax-exempt loans
—

 
—

 
—

 
—

 
610,274

 
610,274

Residential mortgage loans:
 
 
 
 


 
 
 
 
 


First mortgage loans
1,504

 
—

 
1,504

 
43,365

 
2,153,501

 
2,198,370

Home equity loans/lines
—

 
—

 
—

 
172

 
19,042

 
19,214

SBL
—

 
—

 
—

 
—

 
1,704,675

 
1,704,675

Total loans held for investment, net
$
1,656

 
$
—

 
$
1,656

 
$
59,425

 
$
14,348,839

 
$
14,409,920

 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2015:
 
 
 
 
 
 
 
 
 
 
 
C&I loans
163

 
$
—

 
$
163

 
$
—

 
6,927,855

 
$
6,928,018

CRE construction loans
—

 
—

 
—

 
—

 
162,356

 
162,356

CRE loans
—

 
—

 
—

 
4,796

 
2,049,358

 
2,054,154

Tax-exempt
—

 
—

 
—

 
—

 
484,537

 
484,537

Residential mortgage loans:
 
 
 
 
 
 
 
 
 
 

        First mortgage loans
2,906

 
—

 
2,906

 
47,504

 
1,891,384

 
1,941,794

        Home equity loans/lines
30

 
—

 
30

 
319

 
20,471

 
20,820

SBL
—

 
—

 
—

 
—

 
1,481,504

 
1,481,504

Total loans held for investment, net
$
3,099

 
$
—

 
$
3,099

 
$
52,619

 
$
13,017,465

 
$
13,073,183


(1)
Includes $31.2 million and $22.4 million of nonaccrual loans at March 31, 2016 and September 30, 2015, 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, 2016
 
September 30, 2015
 
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
$
11,391

 
$
11,535

 
$
3,105

 
$
10,599

 
$
11,204

 
$
1,132

Residential - first mortgage loans
33,437

 
45,090

 
2,804

 
35,442

 
48,828

 
4,014

Total
44,828

 
56,625

 
5,909

 
46,041

 
60,032

 
5,146

 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans without allowance for loan losses:(2)
 
 

 
 

 
 

 
 

 
 

CRE loans
4,497

 
11,611

 
—

 
4,796

 
11,611

 
—

Residential - first mortgage loans
18,532

 
27,189

 
—

 
20,221

 
29,598

 
—

Total
23,029

 
38,800

 
—

 
25,017

 
41,209

 
—

Total impaired loans
$
67,857

 
$
95,425

 
$
5,909

 
$
71,058

 
$
101,241

 
$
5,146


(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,
 
2016
 
2015
 
2016
 
2015
 
(in thousands)
Average impaired loan balance:
 
 
 
 
 
 
 
C&I loans
$
7,258

 
$
11,613

 
$
8,882

 
$
11,732

CRE loans
4,540

 
17,257

 
4,606

 
17,394

Residential mortgage loans:
 
 
 
 
 
 
 
First mortgage loans
52,713

 
59,875

 
53,223

 
61,493

Total
$
64,511

 
$
88,745

 
$
66,711

 
$
90,619

 
 
 
 
 
 
 
 
Interest income recognized:
 
 
 
 
 
 
 
Residential mortgage loans:
 
 
 
 
 
 
 
First mortgage loans
$
334

 
$
426

 
$
707

 
$
741

Total
$
334

 
$
426

 
$
707

 
$
741
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, 2016
 

 
 

 
 

Residential – first mortgage loans
1

 
$
236

 
$
236

 
 
 
 
 
 
Six months ended March 31, 2016
 

 
 

 
 

Residential – first mortgage loans
1

 
$
236

 
$
236

 
 
 
 
 
 
Three months ended March 31, 2015
 
 
 
 
 
Residential – first mortgage loans
1

 
$
133

 
$
134

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

 
$
290

 
$
293
Credit Quality of Held for Investment Loan Portfolio
The credit quality of RJ Bank’s held for investment loan portfolio is as follows:
 
 
Pass
 
Special mention(1)
 
Substandard(1)
 
Doubtful(1)
 
Total
 
 
(in thousands)
March 31, 2016
 
 
 
 
 
 
 
 
 
 
C&I
 
$
7,046,244

 
$
95,379

 
$
141,591

 
$
—

 
$
7,283,214

CRE construction
 
145,905

 
—

 
—

 
—

 
145,905

CRE
 
2,443,599

 
—

 
4,669

 
—

 
2,448,268

Tax-exempt
 
610,274

 
—

 
—

 
—

 
610,274

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
First mortgage
 
2,130,729

 
13,073

 
54,568

 
—

 
2,198,370

Home equity
 
18,827

 
215

 
172

 
—

 
19,214

SBL
 
1,704,675

 
—

 
—

 
—

 
1,704,675

Total
 
$
14,100,253

 
$
108,667

 
$
201,000

 
$
—

 
$
14,409,920

 
 
 
 
 
 
 
 
 
 
 
September 30, 2015
 
 
 
 
 
 
 
 
 
C&I
 
$
6,739,179

 
$
97,623

 
$
91,216

 
$
—

 
$
6,928,018

CRE construction
 
162,356

 
—

 
—

 
—

 
162,356

CRE
 
2,034,692

 
39

 
19,423

 
—

 
2,054,154

Tax-exempt
 
484,537

 
—

 
—

 
—

 
484,537

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
First mortgage
 
1,868,044

 
14,890

 
58,860

 
—

 
1,941,794

Home equity
 
20,372

 
128

 
320

 
—

 
20,820

SBL
 
1,481,504

 
—

 
—

 
—

 
1,481,504

Total
 
$
12,790,684

 
$
112,680

 
$
169,819

 
$
—

 
$
13,073,183


(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%
$
658,860

LTV greater than 50% but less than 80%
1,085,978

LTV greater than 80% but less than 100%
88,862

LTV greater than 100%, but less than 120%
13,466

LTV greater than 120%
1,681

Total
$
1,848,847


(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, 2016
 
 

 
 

 
 
 
 

 
 

 
 

Balance at beginning of period
 
$
128,721

 
$
2,635

 
$
31,304

 
$
7,119

 
$
12,265

 
$
3,415

 
$
185,459

Provision (benefit) for loan losses
 
9,590

 
(100
)
 
1,149

 
(85
)
 
(902
)
 
(23
)
 
9,629

Net (charge-offs)/recoveries:
 
 

 
 

 
 

 
 
 
 

 
 
 
 

Charge-offs
 
(1,427
)
 
—

 
—

 
—

 
(369
)
 
—

 
(1,796
)
Recoveries
 
—

 
—

 
—

 
—

 
260

 
20

 
280

Net (charge-offs)/recoveries
 
(1,427
)
 
—

 
—

 
—

 
(109
)
 
20

 
(1,516
)
Foreign exchange translation adjustment
 
415

 
18

 
215

 
—

 
—

 
—

 
648

Balance at March 31, 2016
 
$
137,299

 
$
2,553

 
$
32,668

 
$
7,034

 
$
11,254

 
$
3,412

 
$
194,220

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
117,623

 
$
2,707

 
$
30,486

 
$
5,949

 
$
12,526

 
$
2,966

 
$
172,257

Provision (benefit) for loan losses
 
21,175

 
(152
)
 
2,112

 
1,085

 
(1,106
)
 
425

 
23,539

Net (charge-offs)/recoveries:
 
 

 
 

 
 

 
 
 
 

 
 

 
 
Charge-offs
 
(1,694
)
 
—

 
—

 
—

 
(916
)
 
—

 
(2,610
)
Recoveries
 
—

 
—

 
—

 
—

 
750

 
21

 
771

Net (charge-offs)/recoveries
 
(1,694
)
 
—

 
—

 
—

 
(166
)
 
21

 
(1,839
)
Foreign exchange translation adjustment
 
195

 
(2
)
 
70

 
—

 
—

 
—

 
263

Balance at March 31, 2016
 
$
137,299

 
$
2,553

 
$
32,668

 
$
7,034

 
$
11,254

 
$
3,412

 
$
194,220

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 recoveries/(charge-offs)
 
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
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
 
 
Allowance for loan losses
 
Recorded investment(1)
 
 
Individually evaluated for impairment
 
Collectively evaluated for impairment
 
Total
 
Individually evaluated for impairment
 
Collectively evaluated for impairment
 
Total
 
 
(in thousands)
March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
C&I
 
$
3,105

 
$
134,194

 
$
137,299

 
$
11,391

 
$
7,271,823

 
$
7,283,214

CRE construction
 
—

 
2,553

 
2,553

 
—

 
145,905

 
145,905

CRE
 
—

 
32,668

 
32,668

 
4,497

 
2,443,771

 
2,448,268

Tax-exempt
 
—

 
7,034

 
7,034

 
—

 
610,274

 
610,274

Residential mortgage
 
2,814

 
8,440

 
11,254

 
58,403

 
2,159,181

 
2,217,584

SBL
 
—

 
3,412

 
3,412

 
—

 
1,704,675

 
1,704,675

Total
 
$
5,919

 
$
188,301

 
$
194,220

 
$
74,291

 
$
14,335,629

 
$
14,409,920

 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
C&I
 
$
1,132

 
116,491

 
$
117,623

 
$
10,599

 
$
6,917,419

 
$
6,928,018

CRE construction
 
—

 
2,707

 
2,707

 
—

 
162,356

 
162,356

CRE
 
—

 
30,486

 
30,486

 
4,796

 
2,049,358

 
2,054,154

Tax-exempt
 
—

 
5,949

 
5,949

 
—

 
484,537

 
484,537

Residential mortgage
 
4,046

 
8,480

 
12,526

 
62,706

 
1,899,908

 
1,962,614

SBL
 
—

 
2,966

 
2,966

 
—

 
1,481,504

 
1,481,504

Total
 
$
5,178

 
$
167,079

 
$
172,257

 
$
78,101

 
$
12,995,082

 
$
13,073,183


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