Loans Receivable

The following table is a summary of loans receivable.



	June 30, 2018				September 30, 2017
	(In thousands)				(In thousands)
Gross loans by category
Single-family residential	$	5,745,598	45.1	%	$	5,711,004	46.8	%
Construction	1,885,034		14.8		1,597,996		13.1
Construction - custom	612,688		4.8		602,631		4.9
Land - acquisition & development	150,936		1.2		124,308		1.0
Land - consumer lot loans	103,118		0.8		104,405		0.9
Multi-family	1,346,534		10.6		1,303,148		10.7
Commercial real estate	1,435,418		11.3		1,434,610		11.8
Commercial & industrial	1,133,075		8.9		1,093,360		9.0
HELOC	136,766		1.1		144,850		1.2
Consumer	188,125		1.5		85,075		0.7
Total gross loans	12,737,292		100	%	12,201,387		100	%
Less:
Allowance for loan losses	128,666				123,073
Loans in process	1,230,132				1,149,934
Net deferred fees, costs and discounts	52,523				45,758
Total loan contra accounts	1,411,321				1,318,765
Net loans	$	11,325,971			$	10,882,622

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



	June 30, 2018					September 30, 2017
	(In thousands, except ratio data)
Non-accrual loans:
Single-family residential	$	26,119		43.1	%	$	27,930		56.3	%
Construction	1,841			3.0		—			—
Construction - custom	—			—		91			0.2
Land - acquisition & development	1,757			2.9		296			0.6
Land - consumer lot loans	642			1.1		605			1.2
Multi-family	—			—		139			0.3
Commercial real estate	9,684			16.0		11,815			23.8
Commercial & industrial	19,876			32.8		8,082			16.3
HELOC	637			1.1		531			1.1
Consumer	28			—		91			0.2
Total non-accrual loans	$	60,584		100	%	$	49,580		100	%
% of total net loans	0.53		%			0.46		%

The Company recognized interest income on non-accrual loans of approximately $3,926,000 in the nine months ended June 30, 2018. Had these loans been on accrual status and performed according to their original contract terms, the Company would have recognized interest income of approximately $1,741,000 for the nine months ended June 30, 2018. Recognized interest income for the nine months ended June 30, 2018 was higher than what otherwise would have been collected in the period due to the collection of past due amounts. Interest cash flows collected on non-accrual loans vary from period to period as those loans are brought current or are paid off.

The following tables provide details regarding delinquent loans.



June 30, 2018	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, except ratio data)
Single-family residential	$	5,744,620	$	5,714,962	$	7,201	$	4,521	$	17,936	$	29,658	0.52	%
Construction	1,012,239		1,009,782		—		616		1,841		2,457		0.24
Construction - custom	285,858		285,687		171		—		—		171		0.06
Land - acquisition & development	121,508		119,593		—		270		1,645		1,915		1.58
Land - consumer lot loans	103,040		102,303		128		301		308		737		0.72
Multi-family	1,346,512		1,346,512		—		—		—		—		—
Commercial real estate	1,435,417		1,433,030		684		—		1,703		2,387		0.17
Commercial & industrial	1,133,075		1,126,480		—		—		6,595		6,595		0.58
HELOC	136,766		135,406		863		146		351		1,360		0.99
Consumer	188,125		187,773		125		127		100		352		0.19
Total Loans	$	11,507,160	$	11,461,528	$	9,172	$	5,981	$	30,479	$	45,632	0.40	%
Delinquency %			99.60%		0.08%		0.05%		0.26%		0.40%



September 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, except ratio data)
Single-family residential	$	5,709,690	$	5,671,933	$	10,925	$	4,810	$	22,022	$	37,757	0.66	%
Construction	793,959		793,959		—		—		—		—		—
Construction - custom	277,599		277,508		—		—		91		91		0.03
Land - acquisition & development	104,856		104,526		—		—		330		330		0.31
Land - consumer lot loans	104,335		103,389		112		680		154		946		0.91
Multi-family	1,303,119		1,302,720		5		255		139		399		0.03
Commercial real estate	1,434,610		1,432,052		507		—		2,051		2,558		0.18
Commercial & industrial	1,093,360		1,092,735		—		51		574		625		0.06
HELOC	144,850		143,974		221		342		313		876		0.60
Consumer	85,075		84,644		245		107		79		431		0.51
Total Loans	$	11,051,453	$	11,007,440	$	12,015	$	6,245	$	25,753	$	44,013	0.40	%
Delinquency %			99.60%		0.11%		0.06%		0.23%		0.40%

The percentage of total delinquent loans was 0.40% as of June 30, 2018 and 0.40% as of September 30, 2017. There are no loans greater than 90 days delinquent and still accruing interest as of either date.

The following table provides information related to loans restructured in a troubled debt restructuring ("TDR") during the periods presented:



	Three Months Ended June 30,
	2018					2017
		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	5	$	714	$	714	11	$	1,836	$	1,836
HELOC	1	75		75		—	—		—
	6	$	789	$	789	11	$	1,836	$	1,836



	Nine Months Ended June 30,
	2018					2017
		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	25	$	4,909	$	4,909	31	$	5,682	$	5,682
Land - consumer lot loans	—	—		—		1	204		204
Commercial & Industrial	3	7,256		7,256		—	—		—
HELOC	1	75		75		1	228		228
	29	$	12,240	$	12,240	33	$	6,114	$	6,114

The following table provides 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,
	2018			2017
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	($ in thousands)			($ in thousands)
Trouble Debt Restructurings That Subsequently Defaulted:
Single-family residential	—	$	—	3	$	401
	—	$	—	3	$	401



	Nine Months Ended June 30,
	2018			2017
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted:
Single-family residential	2	$	206	16	$	3,586
Commercial real estate	—	—		2	267
	2	$	206	18	$	3,853

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, 2018, 96.7% of the Company's $171,603,000 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, 2018, single-family residential loans comprised 89.4% 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.

In May 2018, the Bank entered into an agreement with the FDIC to early terminate its remaining FDIC loss share agreements, which relate to the Horizon Bank and Home Valley Bank acquisitions. The Bank paid $39,906,000 to settle the FDIC clawback liability and this amount is consistent with the liability on the balance sheet as of March 31, 2018 so no additional gain or loss was recorded in the three months ended June 30, 2018. Under the termination agreement, all rights and obligations of the Bank and the FDIC have been resolved and completed. As such, future recoveries, gains, losses and expenses related to the previously covered assets will now be recognized entirely by the Bank and the FDIC will no longer share in such gains or losses.