Loans Receivable

The following table is a summary of loans receivable.



	June 30, 2017				September 30, 2016
	(In thousands)				(In thousands)
Gross loans by category
Single-family residential	$	5,687,850	47.9	%	$	5,658,830	51.7	%
Construction	1,436,874		12.1		1,110,411		10.1
Construction - custom	561,260		4.7		473,069		4.3
Land - acquisition & development	119,524		1.0		118,497		1.1
Land - consumer lot loans	101,626		0.9		104,567		1.0
Multi-family	1,263,187		10.6		1,124,290		10.3
Commercial real estate	1,346,006		11.3		1,093,639		10.0
Commercial & industrial	1,116,860		9.4		978,589		8.9
HELOC	148,584		1.3		149,716		1.4
Consumer	95,775		0.8		139,000		1.3
Total gross loans	11,877,546		100	%	10,950,608		100	%
Less:
Allowance for loan losses	122,229				113,494
Loans in process	1,054,513				879,484
Net deferred fees, costs and discounts	46,379				46,710
Total loan contra accounts	1,223,121				1,039,688
Net loans	$	10,654,425			$	9,910,920

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



	June 30, 2017				September 30, 2016
	(In thousands)
Non-accrual loans:
Single-family residential	$	32,613	57.9	%	$	33,148	78.2	%
Construction - custom	536		1.0		—		—
Land - acquisition & development	71		0.1		58		0.1
Land - consumer lot loans	1,066		1.9		510		1.2
Multi-family	682		1.2		776		1.8
Commercial real estate	12,983		23.0		7,100		16.7
Commercial & industrial	8,254		14.6		583		1.4
HELOC	181		0.3		239		0.6
Consumer	22		—		—		—
Total non-accrual loans	$	56,408	100	%	$	42,414	100	%

The Company recognized interest income on non-accrual loans of approximately $4,721,000 in the nine months ended June 30, 2017. Had these loans been on accrual status and performed according to their original contract terms, the Company would have recognized interest income of approximately $1,727,000 for the nine months ended June 30, 2017. Interest cash flows collected on non-accrual loans varies from period to period as those loans are brought current or are 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.



June 30, 2017	Loans Receivable		Days Delinquent Based on $ Amount of Loans										% based on $
Type of Loan	Net of Loans In Process		Current		30		60		90		Total Delinquent		% based on $
	(In thousands)
Single-family residential	$	5,687,169	$	5,642,516	$	9,307	$	7,004	$	28,342	$	44,653	0.79	%
Construction	683,273		682,587		—		686		—		686		0.10
Construction - custom	269,612		269,076		—		—		536		536		0.20
Land - acquisition & development	111,057		110,934		—		—		123		123		0.11
Land - consumer lot loans	101,584		100,969		36		300		279		615		0.61
Multi-family	1,263,143		1,262,814		139		190		—		329		0.03
Commercial real estate	1,345,986		1,343,075		325		1,728		858		2,911		0.22
Commercial & industrial	1,116,854		1,114,182		1,599		500		574		2,673		0.24
HELOC	148,581		147,090		808		647		36		1,491		1.00
Consumer	95,774		95,390		267		95		22		384		0.40
Total Loans	$	10,823,033	$	10,768,633	$	12,481	$	11,150	$	30,770	$	54,401	0.50	%
Delinquency %			99.50%		0.12%		0.10%		0.28%		0.50%



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 Delinquent		% 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 decreased from 0.68% as of September 30, 2016 to 0.50% as of June 30, 2017 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 June 30,
	2017					2016
		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	11	$	1,836	$	1,836	7	$	1,492	$	1,492
Commercial real estate	—	—		—		2	1,558		1,558
	11	$	1,836	$	1,836	9	$	3,050	$	3,050



	Nine Months Ended June 30,
	2017					2016
		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	31	$	5,682	$	5,682	17	$	3,322	$	3,322
Land - consumer lot loans	1	204		204		—	—		—
Commercial real estate	—	—		—		7	2,523		2,523
HELOC	1	228		228		—	—		—
	33	$	6,114	$	6,114	24	$	5,845	$	5,845

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 June 30,
	2017			2016
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	3	$	401	3	$	1,570
Construction	—	—		1	279
Land - consumer lot loans	—	—		2	204
Commercial real estate	—	—		1	174
	3	$	401	7	$	2,227



	Nine Months Ended June 30,
	2017			2016
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(In thousands)			(In thousands)
TDRs That Subsequently Defaulted:
Single-family residential	16	$	3,586	14	$	3,108
Construction	—	—		1	279
Land - consumer lot loans	—	—		4	498
Commercial real estate	2	267		2	326
	18	$	3,853	21	$	4,211

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 June 30, 2017, 96.3% of the Company's $223,558,000 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 June 30, 2017, single-family residential loans comprised 88.0% 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 remaining outstanding balance of covered loans was $23,094,000 at June 30, 2017 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 three years.

The following table shows activity for the FDIC indemnification asset:



	Nine Months Ended June 30, 2017			Twelve Months Ended September 30, 2016
	(In thousands)
Balance at beginning of period	$	12,769		$	16,275
Payments made (received)	(813		)	(1,730		)
Amortization	(2,979		)	(2,012		)
Accretion	183			236
Balance at end of period	$	9,160		$	12,769