
Three Months Ended March 31, 2020	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Single-family residential	$	30,700	$	—	$	192	$	(1,612)	$	29,280
Construction	32,292		—		5		1,986		34,283
Construction - custom	1,399		—		—		181		1,580
Land - acquisition & development	8,746		—		126		(139)		8,733
Land - consumer lot loans	2,090		(77)		476		(383)		2,106
Multi-family	7,404		—		—		1,163		8,567
Commercial real estate	13,035		(13)		1,020		978		15,020
Commercial & industrial	33,540		(129)		57		2,967		36,435
HELOC	1,104		—		1		177		1,282
Consumer	2,203		(230)		360		(118)		2,215
	$	132,513	$	(449)	$	2,237	$	5,200	$	139,501


Three Months Ended March 31, 2019	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Single-family residential	$	31,484	$	(150)	$	310	$	(168)	$	31,476
Construction	31,463		—		—		1,933		33,396
Construction - custom	1,926		—		—		50		1,976
Land - acquisition & development	9,156		—		1,300		(722)		9,734
Land - consumer lot loans	2,144		(48)		—		(20)		2,076
Multi-family	7,884		—		—		(490)		7,394
Commercial real estate	12,711		—		244		(507)		12,448
Commercial & industrial	30,279		(285)		24		556		30,574
HELOC	1,064		(200)		43		175		1,082
Consumer	3,054		(332)		265		(57)		2,930
	$	131,165	$	(1,015)	$	2,186	$	750	$	133,086


Six Months Ended March 31, 2020	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Single-family residential	$	30,988	$	(15)	$	453	$	(2,146)	$	29,280
Construction	32,304		—		59		1,920		34,283
Construction - custom	1,369		—		—		211		1,580
Land - acquisition & development	9,155		(11)		1,586		(1,997)		8,733
Land - consumer lot loans	2,143		(147)		486		(376)		2,106
Multi-family	7,391		—		498		678		8,567
Commercial real estate	13,170		(111)		1,388		573		15,020
Commercial & industrial	31,450		(179)		201		4,963		36,435
HELOC	1,103		—		94		85		1,282
Consumer	2,461		(604)		669		(311)		2,215
	$	131,534	$	(1,067)	$	5,434	$	3,600	$	139,501


Six Months Ended March 31, 2019	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Single-family residential	$	33,033	$	(175)	$	539	$	(1,921)	$	31,476
Construction	31,317		—		—		2,079		33,396
Construction - custom	1,842		—		—		134		1,976
Land - acquisition & development	7,978		—		3,082		(1,326)		9,734
Land - consumer lot loans	2,164		(120)		265		(233)		2,076
Multi-family	8,329		—		—		(935)		7,394
Commercial real estate	11,852		(339)		770		165		12,448
Commercial & industrial	28,702		(464)		58		2,278		30,574
HELOC	781		(1,086)		44		1,343		1,082
Consumer	3,259		(472)		477		(334)		2,930
	$	129,257	$	(2,656)	$	5,235	$	1,250	$	133,086

Primarily due to the economic distress caused by the COVID-19 pandemic, the Company recorded a $6,200,000 provision for credit losses for the three months ended March 31, 2020, compared with a $750,000 provision for the three months ended March 31, 2019. The relatively significant provision in the current year quarter primarily relates to estimated impacts to the energy, hospitality, restaurant and senior living industries. A provision for credit losses of $5,200,000 and $250,000 was recorded during the six months ended March 31, 2020 and March 31, 2019, respectively. Reserving for new loan originations has been largely offset by recoveries of previously charged-off loans. Recoveries, net of charge-offs, totaled $1,788,000 for the three months ended March 31, 2020, compared to net recoveries of $1,171,000 during the three months ended March 31, 2019. Recoveries, net of charge-offs, totaled $4,367,000 for the six months ended March 31, 2020, compared to net recoveries of $2,579,000 during the six months ended March 31, 2019.

Non-performing assets were $41,387,000, or 0.24% of total assets, at March 31, 2020, compared to $43,826,000, or 0.27% of total assets, at September 30, 2019. Non-accrual loans were $32,610,000 at March 31, 2020, compared to $33,731,000 at September 30, 2019. Delinquencies, as a percent of total loans, were 0.33% at March 31, 2020, compared to 0.29% at September 30, 2019.


March 31, 2020	Loans Collectively Evaluated for Impairment										Loans Individually Evaluated for Impairment
	Allowance Allocation		Recorded Investment of Loans		Ratio		Allowance Allocation		Recorded Investment of Loans		Ratio
	(In thousands, except ratio data)										(In thousands, except ratio data)
Single-family residential	$	29,280	$	5,566,786	0.5	%	$	—	$	19,606	0.0	%
Construction	34,283		1,232,378		2.8		—		3,353		—
Construction - custom	1,580		270,880		0.6		—		—		—
Land - acquisition & development	8,732		152,541		5.7		1		82		1.2
Land - consumer lot loans	2,106		92,881		2.3		—		372		0.0
Multi-family	8,566		1,466,892		0.6		1		316		0.3
Commercial real estate	15,016		1,708,240		0.9		4		9,295		—
Commercial & industrial	36,432		1,370,838		2.7		3		855		0.4
HELOC	1,282		144,119		0.9		—		876		0.0
Consumer	2,215		104,527		2.1		—		—		0.0
	$	139,492	$	12,110,082	1.2	%	$	9	$	34,755	—	%


September 30, 2019	Loans Collectively Evaluated for Impairment										Loans Individually Evaluated for Impairment
	Allowance Allocation		Recorded Investment of Loans		Ratio		Allowance Allocation		Recorded Investment of Loans		Ratio
	(In thousands, except ratio data)										(In thousands, except ratio data)
Single-family residential	$	30,988	$	5,822,200	0.5	%	$	—	$	17,978	0.0	%
Construction	32,304		1,164,889		2.8		—		—		—
Construction - custom	1,369		255,505		0.5		—		—		—
Land - acquisition & development	9,135		160,964		5.7		20		230		8.7
Land - consumer lot loans	2,143		95,574		2.2		—		375		0.0
Multi-family	7,387		1,422,266		0.5		4		385		1.0
Commercial real estate	12,847		1,618,406		0.8		323		12,765		2.5
Commercial & industrial	31,358		1,266,913		2.5		92		1,805		5.1
HELOC	1,103		140,378		0.8		—		837		0.0
Consumer	2,461		129,527		1.9		—		50		0.0
	$	131,095	$	12,076,622	1.1	%	$	439	$	34,425	1.3	%

As of March 31, 2020, $139,492,000 of the allowance was calculated under the Company's general allowance methodology and the remaining $9,000 was specific reserves on loans deemed to be individually impaired. As of September 30, 2019, $131,095,000 of the allowance was calculated under the Company's general allowance methodology and the remaining $439,000 was specific reserves on loans deemed to be individually impaired.

The Company has an asset quality review function that analyzes its loan portfolio and reports the results of the review to its Board of Directors on a quarterly basis. The single-family residential, HELOC and consumer portfolios are evaluated based on their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. The construction, land, multi-family, commercial real estate and commercial and industrial loans are risk rated on a

•Special mention – A special mention credit is considered to be currently protected from loss but is potentially weak. No loss of principal or interest is foreseen; however, proper supervision and management attention is required to deter further deterioration in the credit. Assets in this category constitute some undue and unwarranted credit risk but not to the point of justifying a risk rating of substandard. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

•Substandard – A substandard credit is an unacceptable credit. Additionally, repayment in the normal course is in jeopardy due to the existence of one or more well defined weaknesses. In these situations, loss of principal is likely if the weakness is not corrected. A substandard asset is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified will have a well-defined weakness or weaknesses that jeopardize the collection or liquidation of the debt. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets risk rated substandard.

•Doubtful – A credit classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weakness makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The probability of loss is high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.

•Loss – Credits classified loss are considered uncollectible and of such little value that their continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be affected in the future. Losses should be taken in the period in which they are identified as uncollectible. Partial charge-off versus full charge-off may be taken if the collateral offers some identifiable protection.


March 31, 2020	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Single-family residential	$	5,557,959		$	—		$	24,285		$	—		$	—		$	5,582,244
Construction	2,200,930			—			3,353			—			—			2,204,283
Construction - custom	547,731			—			—			—			—			547,731
Land - acquisition & development	194,587			—			2,423			—			—			197,010
Land - consumer lot loans	95,901			—			678			—			—			96,579
Multi-family	1,462,588			4,643			—			—			—			1,467,231
Commercial real estate	1,694,801			2,718			20,016			—			—			1,717,535
Commercial & industrial	1,302,665			1,621			66,828			14			—			1,371,128
HELOC	144,697			—			1,064			—			—			145,761
Consumer	105,147			—			—			—			—			105,147
Total gross loans	$	13,307,006		$	8,982		$	118,647		$	14		$	—		$	13,434,649

Total grade as a % of total gross loans	99.05		%	0.07		%	0.88		%	0.00		%	—		%


September 30, 2019	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Single-family residential	$	5,808,444		$	—		$	26,750		$	—		$	—		$	5,835,194
Construction	2,038,052			—			—			—			—			2,038,052
Construction - custom	540,741			—			—			—			—			540,741
Land - acquisition & development	200,283			—			3,824			—			—			204,107
Land - consumer lot loans	98,828			—			866			—			—			99,694
Multi-family	1,418,837			—			3,837			—			—			1,422,674
Commercial real estate	1,602,634			2,754			25,782			—			—			1,631,170
Commercial & industrial	1,229,891			18,125			20,679			—			—			1,268,695
HELOC	141,271			—			907			—			—			142,178
Consumer	129,872			—			11			—			—			129,883
Total gross loans	$	13,208,853		$	20,879		$	82,656		$	—		$	—		$	13,312,388

Total grade as a % of total gross loans	99.22		%	0.16		%	0.62		%	—		%	—		%


March 31, 2020	Performing Loans						Non-Performing Loans
	Amount		% of Total Gross Loans		Amount		% of Total Gross Loans
	(In thousands, except ratio data)
Single-family residential	$	5,559,385	99.6	%	$	22,859	0.4	%
Construction	2,200,930		99.8		3,353		0.2
Construction - custom	547,731		100.0		—		—
Land - acquisition & development	196,928		100.0		82		0.0
Land - consumer lot loans	96,171		99.6		408		0.4
Multi-family	1,467,231		100.0		—		—
Commercial real estate	1,713,161		99.7		4,374		0.3
Commercial & industrial	1,370,658		100.0		470		0.0
HELOC	144,697		99.3		1,064		0.7
Consumer	105,147		100.0		—		0.0
	$	13,402,039	99.8	%	$	32,610	0.2	%


September 30, 2019	Performing Loans						Non-Performing Loans
	Amount		% of Total Gross Loans		Amount		% of Total Gross Loans
	(In thousands, except ratio data)
Single-family residential	$	5,809,923	99.6	%	$	25,271	0.4	%
Construction	2,038,052		100.0		—		—
Construction - custom	540,741		100.0		—		—
Land - acquisition & development	203,938		99.9		169		0.1
Land - consumer lot loans	99,448		99.8		246		0.2
Multi-family	1,422,674		100.0		—		—
Commercial real estate	1,625,335		99.6		5,835		0.4
Commercial & industrial	1,267,403		99.9		1,292		0.1
HELOC	141,271		99.4		907		0.6
Consumer	129,872		100.0		11		0.0
	$	13,278,657	99.7	%	$	33,731	0.3	%


March 31, 2020	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment (Year-To-Date)
	(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential	$	16,523	$	17,440	$	—		$	17,002
Construction	3,434		3,434		—			1,145

Land - acquisition & development	—		—		—			26
Land - consumer lot loans	280		350		—			298

Commercial real estate	7,412		11,753		—			7,376
Commercial & industrial	458		464		—			670
HELOC	799		799		—			668
Consumer	—		—		—			17
	28,906		34,240		—			27,202
Impaired loans with an allowance recorded:
Single-family residential	97,024		99,317		1,097			103,743


Land - acquisition & development	82		149		1			86
Land - consumer lot loans	3,418		3,583		—			3,510
Multi-family	316		316		1			360
Commercial real estate	1,883		1,883		4			3,096
Commercial & industrial	397		514		3			411
HELOC	843		859		—			911
Consumer	56		56		—			58
	104,019		106,677		1,106		(1)	112,175
Total impaired loans:
Single-family residential	113,547		116,757		1,097			120,745
Construction	3,434		3,434		—			1,145

Land - acquisition & development	82		149		1			112
Land - consumer lot loans	3,698		3,933		—			3,808
Multi-family	316		316		1			360
Commercial real estate	9,295		13,636		4			10,472
Commercial & industrial	855		978		3			1,081
HELOC	1,642		1,658		—			1,579
Consumer	56		56		—			75
	$	132,925	$	140,917	$	1,106	(1)	$	139,377


September 30, 2019	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment (Year-To-Date)
	(In thousands)
Impaired loans with no related allowance recorded:
Single-family residential	$	17,979	$	19,252	$	—		$	16,685
Construction	—		—		—			1,172
Construction - custom	—		—		—			251
Land - acquisition & development	78		143		—			290
Land - consumer lot loans	344		848		—			287
Multi-family	—		—		—			286
Commercial real estate	7,467		11,881		—			8,890
Commercial & industrial	1,114		5,312		—			7,168
HELOC	837		931		—			597
Consumer	50		119		—			23
	27,869		38,486		—			35,649
Impaired loans with an allowance recorded:
Single-family residential	112,042		114,609		2,208			125,976


Land - acquisition & development	91		152		—			99
Land - consumer lot loans	3,556		3,695		20			4,324
Multi-family	385		385		4			418
Commercial real estate	4,168		5,298		323			5,160
Commercial & industrial	426		691		92			2,535
HELOC	949		963		—			961
Consumer	60		282		—			65
	121,677		126,075		2,647		(1)	139,538
Total impaired loans:
Single-family residential	130,021		133,861		2,208			142,661
Construction	—		—		—			1,172
Construction - custom	—		—		—			251
Land - acquisition & development	169		295		—			389
Land - consumer lot loans	3,900		4,543		20			4,611
Multi-family	385		385		4			704
Commercial real estate	11,635		17,179		323			14,050
Commercial & industrial	1,540		6,003		92			9,703
HELOC	1,786		1,894		—			1,558
Consumer	110		401		—			88
	$	149,546	$	164,561	$	2,647	(1)	$	175,187