Loans Receivable

The following table is a summary of loans receivable (including loans in process, net of charge offs.)



	March 31, 2016				September 30, 2015
	(In thousands)				(In thousands)
Non-Acquired loans
Single-family residential	$	5,618,954	54.5	%	$	5,651,845	57.6	%
Construction	785,846		7.6		200,509		2.0
Construction - custom	398,797		3.9		396,307		4.0
Land - acquisition & development	101,605		1.0		94,208		1.0
Land - consumer lot loans	100,856		1.0		103,989		1.1
Multi-family	1,073,222		10.4		1,125,722		11.6
Commercial real estate	833,570		8.1		986,270		10.0
Commercial & industrial	805,272		7.8		612,836		6.2
HELOC	130,459		1.3		127,646		1.3
Consumer	164,672		1.6		194,655		2.0
Total non-acquired loans	10,013,253		97.2	%	9,493,987		96.8	%
Acquired loans	152,572		1.5		166,293		1.6
Credit impaired acquired loans	106,637		1.0		87,081		0.9
Covered loans	34,211		0.3		75,909		0.7
Total gross loans	10,306,673		100.0	%	9,823,270		100.0	%
Less:
Allowance for loan losses	109,919				106,829
Loans in process	591,667				476,796
Discount on acquired loans	21,120				30,095
Deferred net origination fees	38,645				38,916
Total loan contra accounts	761,351				652,636
Net Loans	$	9,545,322			$	9,170,634

The following table sets forth information regarding non-accrual loans.



	March 31, 2016				September 30, 2015
	(In thousands)
Non-accrual loans:
Single-family residential	$	42,395	77.7	%	$	59,074	87.1	%
Construction	—		—		754		1.1
Construction - custom	67		0.1		732		1.1
Land - acquisition & development	477		0.9		—		—
Land - consumer lot loans	940		1.7		1,273		1.9
Multi-family	1,520		2.8		2,558		3.8
Commercial real estate	7,701		14.1		2,176		3.2
Commercial & industrial	596		1.1		—		—
HELOC	554		1.0		563		0.8
Consumer	309		0.6		680		1.0
Total non-accrual loans	$	54,559	100	%	$	67,810	100	%

The Company recognized interest income on nonaccrual loans of approximately $3,219,000 in the six months ended March 31, 2016. Had these loans performed according to their original contract terms, the Company would have recognized interest income of approximately $1,315,000 for the six months ended March 31, 2016. The recognized interest income includes more than six months of interest for some of the loans that were brought current.

The following tables provide details regarding delinquent loans.



March 31, 2016	Amount of Loans		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of LIP & Chg.-Offs		Current		30		60		90		Total		% based on $
	(In thousands)
Non-acquired loans
Single-Family Residential	$	5,624,134	$	5,558,731	$	18,000	$	7,785	$	39,618	$	65,403	1.16	%
Construction	396,322		396,181		—		—		141		141		0.04
Construction - Custom	212,067		209,153		1,047		1,800		67		2,914		1.37
Land - Acquisition & Development	92,467		90,541		1,445		—		481		1,926		2.08
Land - Consumer Lot Loans	101,372		99,379		563		490		940		1,993		1.97
Multi-Family	1,077,248		1,075,662		970		—		616		1,586		0.15
Commercial Real Estate	889,342		881,896		1,766		53		5,627		7,446		0.84
Commercial & Industrial	810,452		808,825		862		—		765		1,627		0.20
HELOC	130,446		129,456		378		63		549		990		0.76
Consumer	164,942		163,620		757		207		358		1,322		0.80
	9,498,792		9,413,444		25,788		10,398		49,162		85,348		0.90
Acquired loans	131,079		130,030		376		2		671		1,049		0.80
Credit impaired acquired loans	50,924		50,604		—		44		276		320		0.63
Covered loans	34,211		33,575		38		2		596		636		1.86
Total Loans	$	9,715,006	$	9,627,653	$	26,202	$	10,446	$	50,705	$	87,353	0.90	%
Delinquency %			99.10%		0.27%		0.11%		0.52%		0.90%



September 30, 2015	Amount of Loans		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of LIP & Chg.-Offs		Current		30		60		90		Total		% based on $
	(In thousands)
Non-acquired loans
Single-Family Residential	$	5,655,928	$	5,590,673	$	17,305	$	7,757	$	40,193	$	65,255	1.15	%
Construction	130,121		130,121		—		—		—		—		—
Construction - Custom	205,692		204,168		791		270		463		1,524		0.74
Land - Acquisition & Development	75,661		74,737		406		—		518		924		1.22
Land - Consumer Lot Loans	104,494		102,045		689		399		1,361		2,449		2.34
Multi-Family	1,068,038		1,065,667		259		454		1,658		2,371		0.22
Commercial Real Estate	893,072		892,180		131		—		761		892		0.10
Commercial & Industrial	617,545		616,602		93		27		823		943		0.15
HELOC	127,648		127,196		174		27		251		452		0.35
Consumer	194,977		194,259		493		170		55		718		0.37
	9,073,176		8,997,648		20,341		9,104		46,083		75,528		0.83
Acquired loans	57,682		56,559		356		—		767		1,123		1.95
Credit impaired acquired loans	139,726		138,940		243		4		539		786		0.56
Covered loans	75,890		70,729		272		90		4,799		5,161		6.80
Total Loans	$	9,346,474	$	9,263,876	$	21,212	$	9,198	$	52,188	$	82,598	0.88	%
Delinquency %			99.12%		0.23%		0.10%		0.56%		0.88%

The percentage of total delinquent loans increased from 0.88% as of September 30, 2015 to 0.90% as of March 31, 2016 and there are no loans greater than 90 days delinquent and still accruing interest as of either date.

The following tables provide information related to loans that were restructured in a troubled debt restructuring ("TDR") during the periods presented:



	Three Months Ended March 31,
	2016					2015
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings:
Single-family residential	7	$	1,101	$	1,101	14	$	2,664	$	2,664
Land - consumer lot loans	—	—		—		4	720		720
Commercial real estate						3	3,175		3,175
	7	$	1,101	$	1,101	21	$	6,559	$	6,559

	Six Months Ended March 31,
	2016					2015
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
		(In thousands)					(In thousands)
Troubled Debt Restructurings:
Single-family residential	10	$	1,830	$	1,830	49	$	12,264	$	12,264
Construction	—	—		—		2	718		718
Land - consumer lot loans	—	—		—		6	1,252		1,252
Commercial real estate	5	965		965		3	3,175		3,175
Consumer	—	—		—		1	85		85
	15	$	2,795	$	2,795	61	$	17,494	$	17,494

The following tables provide information on payment defaults occurring during the periods presented where the loan had been modified in a TDR within 12 months of the payment default.



	Three Months Ended March 31,
	2016			2015
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	6	$	871	2	$	304
Land - consumer lot loans	1	146		2	301
Commercial real estate	1	152		—	—
	8	$	1,169	4	$	605

	Six Months Ended March 31,
	2016			2015
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	8	$	1,095	7	$	1,237
Land - consumer lot loans	1	146		3	389
Commercial real estate	1	152		—	—
	10	$	1,393	10	$	1,626

Most loans restructured in TDR are accruing and performing loans where the borrower has proactively approached the Company about modification due to temporary financial difficulties. As of March 31, 2016, 95.3% of the Company's $270,308,000 in TDRs were classified as performing. Each request is individually evaluated for merit and likelihood of success. The concession for these loans 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 March 31, 2016, single-family residential loans comprised 86.4% of TDRs.

The Company reserves for restructured loans within its allowance for loan loss methodology by taking into account the following performance indicators: 1) time since modification, 2) current payment status and 3) geographic area.

The following table shows the changes in accretable yield for acquired impaired loans and acquired non-impaired loans (including covered loans).



	Six Months Ended March 31, 2016												Year Ended September 30, 2015
	Acquired Impaired						Acquired Non-impaired						Acquired Impaired						Acquired Non-impaired
	Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans
	(In thousands)												(In thousands)
Beginning balance	$	72,705		$	111,300		$	7,204		$	187,080		$	97,125		$	135,826		$	14,513		$	275,862
Additions	—			—			—			—			—			—			—			—
Net reclassification from nonaccretable	—			—			—			—			6,307			—			346			—
Accretion	(11,010		)	11,010			(1,485		)	1,485			(30,727		)	30,727			(7,655		)	7,655
Transfers to REO	—			(123		)	—			—			—			(2,975		)	—			(150		)
Payments received, net	—			(21,039		)	—			(17,419		)	—			(52,278		)	—			(96,287		)
Ending Balance	$	61,695		$	101,148		$	5,719		$	171,146		$	72,705		$	111,300		$	7,204		$	187,080

The excess of cash flows expected to be collected over the initial fair value of acquired impaired loans is referred to as the accretable yield and this amount is accreted into interest income over the estimated life of the acquired loans using the effective interest method. Other adjustments to the accretable yield include changes in the estimated remaining life of the acquired loans, changes in expected cash flows and changes in the respective indices for acquired loans with variable interest rates. Acquired loans are included in non-performing assets and subject to the general loss reserving methodology if the purchase discount is no longer sufficient to cover expected losses.

Additionally, as of March 31, 2016 the Company has $1,455,000 remaining in loans it acquired during fiscal 2013 as part of the South Valley Bank acquisition for which it was probable at acquisition that all contractually required payments would not be collected. The timing and amount of future cash flows cannot not be reasonably estimated; therefore, these loans are accounted for on a cash basis.

Covered loans were $34,211,000 at March 31, 2016 compared to $75,909,000 as of September 30, 2015, the decrease being attributable to FDIC loss share coverage on commercial loans from the former Home Valley Bank that expired after September 30, 2015. The FDIC loss share coverage for single family residential loans will continue for another five years. The remaining portfolio of covered loans is expected to continue to decline over time, absent another FDIC assisted transaction.

The following table shows activity for the FDIC indemnification asset:



	Six Months Ended March 31, 2016			Year Ended September 30, 2015
	(In thousands)
Balance at beginning of period	$	16,275		$	36,860
Additions/Adjustments	—			(1,795		)
Payments received	(2,153		)	(720		)
Amortization	(773		)	(18,588		)
Accretion	131			518
Balance at end of period	$	13,480		$	16,275