Loans Receivable

The following table is a summary of loans receivable.



	December 31, 2016				September 30, 2016
	(In thousands)				(In thousands)
Gross loans by category
Single-family residential	$	5,624,263	49.6	%	$	5,658,830	51.7	%
Construction	1,265,747		11.2		1,110,411		10.1
Construction - custom	494,447		4.4		473,069		4.3
Land - acquisition & development	119,085		1.1		118,497		1.1
Land - consumer lot loans	101,104		0.9		104,567		1.0
Multi-family	1,217,594		10.7		1,124,290		10.3
Commercial real estate	1,207,573		10.7		1,093,639		10.0
Commercial & industrial	1,025,821		9.1		978,589		8.9
HELOC	148,452		1.3		149,716		1.4
Consumer	124,547		1.1		139,000		1.3
Total gross loans	11,328,633		100.0	%	10,950,608		100.0	%
Less:
Allowance for loan losses	118,456				113,494
Loans in process	1,027,168				879,484
Net deferred fees, costs and discounts	46,698				46,710
Total loan contra accounts	1,192,322				1,039,688
Net loans	$	10,136,311			$	9,910,920

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



	December 31, 2016				September 30, 2016
	(In thousands)
Non-accrual loans:
Single-family residential	$	38,568	63.5	%	$	33,148	78.2	%
Construction	—		—		—		—
Construction - custom	—		—		—		—
Land - acquisition & development	603		1.0		58		0.1
Land - consumer lot loans	969		1.6		510		1.2
Multi-family	1,160		1.9		776		1.8
Commercial real estate	9,660		15.9		7,100		16.7
Commercial & industrial	9,230		15.2		583		1.4
HELOC	480		0.8		239		0.6
Consumer	45		0.1		—		—
Total non-accrual loans	$	60,715	100	%	$	42,414	100	%

The Company recognized interest income on non-accrual loans of approximately $753,000 in the three months ended December 31, 2016. Had these loans performed according to their original contract terms, the Company would have recognized interest income of approximately $547,000 for the three months ended December 31, 2016. Interest income actually recognized during the three months ended December 31, 2016 is higher because of loans that were brought current or paid off.

For acquired loans included in the non-accrual loan table above, interest income is still recognized on such loans through accretion of the difference between the carrying amount of the loans and the expected cash flows.

The following tables provide details regarding delinquent loans.



December 31, 2016	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total		% based on $
	(In thousands)
Single-family residential	$	5,623,668	$	5,563,465	$	16,670	$	6,808	$	36,725	$	60,203	1.07	%
Construction	513,046		512,705		341		—		—		341		0.07
Construction - custom	236,668		236,511		49		108		—		157		0.07
Land - acquisition & development	103,148		101,886		728		—		534		1,262		1.22
Land - consumer lot loans	101,045		99,969		235		43		798		1,076		1.06
Multi-family	1,217,594		1,215,726		853		616		399		1,868		0.15
Commercial real estate	1,175,475		1,167,710		1,771		267		5,727		7,765		0.66
Commercial & industrial	1,057,826		1,056,718		858		250		—		1,108		0.10
HELOC	148,448		147,074		893		—		481		1,374		0.93
Consumer	124,547		123,484		662		231		170		1,063		0.85
Total Loans	$	10,301,465	$	10,225,248	$	23,060	$	8,323	$	44,834	$	76,217	0.74	%
Delinquency %			99.26%		0.22%		0.08%		0.44%		0.74%



September 30, 2016	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total		% based on $
	(In thousands)
Single-family residential	$	5,658,122	$	5,601,457	$	20,916	$	5,271	$	30,478	$	56,665	1.00	%
Construction	498,450		498,450		—		—		—		—		—
Construction - custom	229,957		229,419		538		—		—		538		0.23
Land - acquisition & development	94,928		94,928		—		—		—		—		—
Land - consumer lot loans	104,534		102,472		816		687		559		2,062		1.97
Multi-family	1,124,290		1,122,307		1,190		399		394		1,983		0.18
Commercial real estate	1,093,549		1,088,680		69		325		4,475		4,869		0.45
Commercial & industrial	978,582		978,540		—		42		—		42		—
HELOC	149,713		148,513		763		164		273		1,200		0.80
Consumer	138,999		138,078		715		126		80		921		0.66
Total Loans	$	10,071,124	$	10,002,844	$	25,007	$	7,014	$	36,259	$	68,280	0.68	%
Delinquency %			99.32%		0.25%		0.07%		0.36%		0.68%

The percentage of total delinquent loans increased from 0.68% as of September 30, 2016 to 0.74% as of December 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 December 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	12	$	2,134	$	2,134	3	$	729	$	729
Land - consumer lot loans	1	204		204		—	—		—
Commercial real estate	—	—		—		5	965		965
HELOC	1	228		228		—	—		—
	14	$	2,566	$	2,566	8	$	1,694	$	1,694

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 December 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	$	1,993	5	$	668
Land - consumer lot loans	—	—		1	148
Commercial real estate	2	267		—	—
	8	$	2,260	6	$	816

Most loans restructured in TDRs are accruing and performing loans where the borrower has proactively approached the Company about modification due to temporary financial difficulties. As of December 31, 2016, 94.2% of the Company's $249,950,000 in TDRs were classified as performing. 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, 2016, single-family residential loans comprised 87.2% 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 (including covered loans).



	Three Months Ended December 31, 2016											Twelve Months Ended September 30, 2016
	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	$	58,842		$	91,761		$	4,222		$	131,132	$	72,705		$	111,300		$	7,204		$	187,080
Additions	—			—			—			—		—			—			—			—
Net reclassification from non-accretable	—			—			—			—		4,867			—			—			—
Accretion	(3,233		)	3,233			(198		)	198		(18,730		)	18,730			(2,982		)	2,982
Transfers to REO	—			—			—			—		—			(175		)	—			—
Payments received, net	—			(16,852		)	—			5,211		—			(38,094		)	—			(58,930		)
Ending Balance	$	55,609		$	78,142		$	4,024		$	136,541	$	58,842		$	91,761		$	4,222		$	131,132

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.

The remaining outstanding balance of covered loans was $26,691,000 at December 31, 2016 compared to $28,974,000 as of September 30, 2016. The FDIC loss share coverage for single family residential loans related to the Horizon Bank and Home Valley Bank acquisitions will continue for another four years.

The following table shows activity for the FDIC indemnification asset:



	Three Months Ended December 31, 2016			Twelve Months Ended September 30, 2016
	(In thousands)
Balance at beginning of period	$	12,769		$	16,275
Payments made (received)	242			(1,730		)
Amortization	(387		)	(2,012		)
Accretion	50			236
Balance at end of period	$	12,674		$	12,769