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Loans Receivable
 9 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Loans Receivable Loans Receivable
For a detailed discussion of loans and credit quality, including accounting policies and the CECL methodology used to estimate the allowance for credit losses, see Note A "Summary of Significant Accounting Policies" and Note B "New Accounting Pronouncements" above.

The Company's loans held for investment is divided into two portfolio segments, commercial loans and consumer loans, with each of those segments further split into loan classes for purposes of estimating the allowance for credit losses.

The following table is a summary of loans receivable by loan portfolio segment and class.

 June 30, 2020September 30, 2019
(In thousands)(In thousands)
Commercial loans
Multi-family$1,510,099  10.6 %$1,422,674  10.7 %
Commercial real estate1,707,893  11.9  1,631,170  12.3  
Commercial & industrial (1)2,158,000  15.1  1,268,695  9.5  
Construction2,328,987  16.3  2,038,052  15.3  
Land - acquisition & development195,212  1.4  204,107  1.5  
Total commercial loans7,900,191  55.2  6,564,698  49.3  
Consumer loans
Single-family residential5,461,605  38.2  5,835,194  43.8  
Construction - custom607,329  4.2  540,741  4.1  
   Land - consumer lot loans100,102  0.7  99,694  0.7  
   HELOC140,636  1.0  142,178  1.1  
   Consumer91,495  0.6  129,883  1.0  
Total consumer loans6,401,167  44.8  6,747,690  50.7  
Total gross loans14,301,358  100 %13,312,388  100 %
   Less:
      Allowance for credit losses on loans165,349  131,534  
      Loans in process1,353,774  1,201,341  
      Net deferred fees, costs and discounts48,809  48,938  
Total loan contra accounts1,567,932  1,381,813  
Net loans$12,733,426  $11,930,575  

(1) Includes $758,955,000 of SBA Payroll Protection Program loans as of June 30, 2020.
The Company elected to exclude accrued interest receivable ("AIR") from the amortized cost basis of loans for disclosure purposes and from the calculations of estimated credit losses. As of June 30, 2020, and September 30, 2019, AIR for loans totaled $43,712,000 and $41,429,000, respectively, and is included in the “accrued interest receivable” line item on the Company’s consolidated statements of financial condition.
Loans in the amount of $5,592,355,000 and $5,874,704,000 at June 30, 2020 and September 30, 2019, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") as part of our liquidity management strategy. The FHLB does not have the right to sell or re-pledge these loans.
The following table sets forth the amortized cost basis of loans receivable for specific disclosures required by ASC 326.
 
 June 30, 2020September 30, 2019
 (In thousands, except ratio data)
Non-accrualNon-accrual with no ACL90 days or more past due and accruingNon-accrualNon-accrual with no ACL90 days or more past due and accruing
Commercial loans
Multi-family$224  $—  $—  $—  $—  $—  
Commercial real estate3,416  —  —  5,835  —  —  
Commercial & industrial1,847  —  —  1,292  —  —  
Construction3,353  —  —  —  —  —  
Land - acquisition & development78  —  —  169  —  —  
   Total commercial loans8,918  —  —  7,296  —  —  
Consumer loans
Single-family residential24,876  —  —  25,271  —  —  
Construction - custom—  —  —  —  —  —  
Land - consumer lot loans277  —  —  246  —  —  
HELOC866  —  —  907  —  —  
Consumer64  —  —  11  —  —  
   Total consumer loans26,083  —  —  26,435  —  —  
Total non-accrual loans$35,001  $—  $—  $33,731  $—  $—  
% of total loans0.27 %0.28 %

The Company recognized interest income on non-accrual loans of approximately $2,513,000 in the nine months ended June 30, 2020. Had these loans been on accrual status and performed according to their original contract terms, the Company would have recognized interest income of approximately $1,047,000 for the nine months ended June 30, 2020. Recognized interest income for the nine months ended June 30, 2020 was higher than what otherwise would have been recognized 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, 2020Days Delinquent Based on $ Amount of Loans% based
on $
Type of LoanLoans Receivable (Amortized Cost)Current306090Total Delinquent
(In thousands, except ratio data)
Commercial Loans
Multi-family$1,509,837  $1,509,613  $—  $—  $224  $224  0.01 %
Commercial real estate1,700,568  1,697,302  177  1,938  1,151  3,266  0.19  
Commercial & industrial2,138,462  2,134,726  —  3,258  478  3,736  0.17  
Construction1,334,948  1,331,595  —  —  3,353  3,353  0.25  
Land - acquisition & development152,234  152,234  —  —  —  —  —  
   Total commercial loans6,836,049  6,825,470  177  5,196  5,206  10,579  0.15  
Consumer Loans
Single-family residential5,452,424  5,423,302  3,971  5,418  19,733  29,122  0.53  
Construction - custom278,182  278,182  —  —  —  —  —  
Land - consumer lot loans99,255  98,773  136  103  243  482  0.49  
HELOC141,165  140,445  14  17  689  720  0.51  
Consumer91,700  90,998  475  42  185  702  0.77  
   Total consumer loans6,062,726  6,031,700  4,596  5,580  20,850  31,026  0.51  
Total Loans$12,898,775  $12,857,170  $4,773  $10,776  $26,056  $41,605  0.32 %
Delinquency %99.68%0.04%0.08%0.20%0.32%


September 30, 2019Days Delinquent Based on $ Amount of Loans% based
on $
Type of LoanLoans Receivable (Net of Loans In Process)Current306090Total Delinquent
(In thousands, except ratio data)
Commercial Loans
Multi-family$1,422,652  $1,422,652  $—  $—  $—  $—  — %
Commercial real estate1,631,171  1,625,509  1,614  285  3,763  5,662  0.35  
Commercial & industrial1,268,695  1,267,828  —  —  867  867  0.07  
Construction1,164,889  1,164,889  —  —  —  —  —  
Land - acquisition & development161,194  161,194  —  —  —  —  —  
  Total commercial loans5,648,601  5,642,072  1,614  285  4,630  6,529  0.12  
Consumer Loans
Single-family residential5,835,186  5,809,239  3,672  3,211  19,064  25,947  0.44  
Construction - custom255,505  255,505  —  —  —  —  —  
Land - consumer lot loans99,694  98,916  112  619  47  778  0.78  
HELOC142,178  140,718  580  183  697  1,460  1.03  
Consumer129,883  129,227  295  117  244  656  0.51  
  Total consumer loans6,462,446  6,433,605  4,659  4,130  20,052  28,841  0.45  
Total Loans$12,111,047  $12,075,677  $6,273  $4,415  $24,682  $35,370  0.29 %
Delinquency %99.71%0.05%0.04%0.20%0.29%
The Company is actively working with its borrowers to modify consumer mortgage and commercial loans to provide payment deferrals as a result of the COVID-19 pandemic. The terms of the payment deferrals are generally 90 days for consumer mortgage loans and up to 180 days for commercial loans. As of June 30, 2020, 1,192 mortgage loans totaling $346,000,000 and 196 commercial loans totaling $416,000,000 had been modified. These loans are not considered past due until after the deferral period is over and scheduled payments have resumed. In addition, the Company participated in the Small Business Administration’s Paycheck Protection Program ("PPP"). This program came about through the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed by Congress to help small businesses keep their employees employed through the COVID-19 shelter in place orders. The Company assisted over 6,500 businesses with more than $780,000,000 in PPP loans.

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, 2020, 97.0% of the Company's $98,056,000 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, 2020, single-family residential loans comprised 93.1% of TDRs.

The Company's ACL methodology takes into account the following performance indicators for restructured loans: 1) time since modification, 2) current payment status and 3) geographic area.

We evaluate the credit quality of our commercial loans based on regulatory risk ratings and also consider other factors. Based on this evaluation, the loans are assigned a grade and classified as follows:

•Pass – the credit does not meet one of the definitions below.

•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.

The following tables present by credit quality indicator, loan class, and year of origination, the amortized cost basis of loans receivable as of June 30, 2020.
Term Loans Amortized Cost Basis by Origination Year
YTD 
June 30, 2020		2019201820172016Prior to 2016Revolving LoansRevolving to Term LoansTotal Loans
Commercial loans
Multi-family
Pass$327,371  $162,686  $247,680  $249,863  $194,498  $282,212  $14,241  $—  $1,478,551  
Special Mention649  2,815  907  4,526  2,662  2,190  —  —  13,749  
Substandard—  7,575  3,627  3,813  2,298  224  —  —  17,537  
Total$328,020  $173,076  $252,214  $258,202  $199,458  $284,626  $14,241  $—  $1,509,837  
Commercial real estate
Pass$210,996  $249,584  $276,743  $259,663  $182,134  $331,689  $2,576  $9  $1,513,394  
Special Mention8,366  19,503  3,723  36,905  4,551  44,705  —  —  117,753  
Substandard746  17,809  2,717  11,958  6,408  29,783  —  —  69,421  
Total$220,108  $286,896  $283,183  $308,526  $193,093  $406,177  $2,576  $9  $1,700,568  
Commercial & industrial
Pass$851,652  $50,997  $110,901  $90,081  $127,232  $78,217  $618,287  $14,022  $1,941,389  
Special Mention25,104  6,660  5,559  4,262  69  —  11,626  6,467  59,747  
Substandard25,281  10,183  7,469  901  22,584  4,971  64,617  338  136,344  
Doubtful—  —  —  —  —  —  982  —  982  
Total$902,037  $67,840  $123,929  $95,244  $149,885  $83,188  $695,512  $20,827  $2,138,462  
Construction
Pass$236,202  $448,569  $292,349  $152,785  $12,011  $—  $75,712  $—  $1,217,628  
Special Mention—  —  49,173  —  42,346  —  —  —  91,519  
Substandard—  1,948  1,938  21,915  —  —  —  —  25,801  
Total$236,202  $450,517  $343,460  $174,700  $54,357  $—  $75,712  $—  $1,334,948  
Land - acquisition & development
Pass$37,348  $49,670  $19,098  $16,443  $4,240  $2,131  $5,313  $—  $134,243  
Special Mention—  —  —  —  —  15,573  —  —  15,573  
Substandard—  —  —  2,340  —  78  —  —  2,418  
Total$37,348  $49,670  $19,098  $18,783  $4,240  $17,782  $5,313  $—  $152,234  
Total commercial loans
Pass$1,663,569  $961,506  $946,771  $768,835  $520,115  $694,249  $716,129  $14,031  $6,285,205  
Special Mention34,119  28,978  59,362  45,693  49,628  62,468  11,626  6,467  298,341  
Substandard26,027  37,515  15,751  40,927  31,290  35,056  64,617  338  251,521  
Doubtful—  —  —  —  —  —  982  —  982  
Total$1,723,715  $1,027,999  $1,021,884  $855,455  $601,033  $791,773  $793,354  $20,836  $6,836,049  
Term Loans Amortized Cost Basis by Origination Year
YTD 
June 30, 2020		2019201820172016Prior to 2016Revolving LoansRevolving to Term LoansTotal Loans
Consumer loans
Single-family residential
Current$574,443  $560,153  $660,961  $802,722  $581,978  $2,243,045  $—  $—  $5,423,302  
30 days past due—  —  464  —  —  3,507  —  —  3,971  
60 days past due—  —  —  159  —  5,259  —  —  5,418  
90+ days past due—  680  —  392  640  18,021  —  —  19,733  
Total$574,443  $560,833  $661,425  $803,273  $582,618  $2,269,832  $—  $—  $5,452,424  
Construction - custom
Current$113,100  $154,502  $9,830  $750  $—  $—  $—  $—  $278,182  
Total$113,100  $154,502  $9,830  $750  $—  $—  $—  $—  $278,182  
Land - consumer lot loans
Current$31,654  $22,303  $9,916  $9,184  $3,064  $22,652  $—  $—  $98,773  
30 days past due—  —  —  102  —  34  —  —  136  
60 days past due—  —  41  —  —  62  —  —  103  
90+ days past due—  —  —  122  —  121  —  —  243  
Total$31,654  $22,303  $9,957  $9,408  $3,064  $22,869  $—  $—  $99,255  
HELOC
Current$—  $—  $—  $—  $—  $6,966  $132,156  $1,323  $140,445  
30 days past due—  —  —  —  —  —  14  —  14  
60 days past due—  —  —  —  —  —  17  —  17  
90+ days past due—  —  —  —  —  39  650  —  689  
Total$—  $—  $—  $—  $—  $7,005  $132,837  $1,323  $141,165  
Consumer
Current$1,121  $246  $66,175  $78  $340  $20,593  $807  $1,638  $90,998  
30 days past due—  —  —  175  —  263  —  37  475  
60 days past due—  —  —  —  —  20  —  22  42  
90+ days past due—  18  —  125  —  6  —  36  185  
Total$1,121  $264  $66,175  $378  $340  $20,882  $807  $1,733  $91,700  
Total consumer loans
Current$720,318  $737,204  $746,882  $812,734  $585,382  $2,293,256  $132,963  $2,961  $6,031,700  
30 days past due—  —  464  277  —  3,804  14  37  4,596  
60 days past due—  —  41  159  —  5,341  17  22  5,580  
90+ days past due—  698  —  639  640  18,187  650  36  20,850  
Total$720,318  $737,902  $747,387  $813,809  $586,022  $2,320,588  $133,644  $3,056  $6,062,726