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Allowance for Loan Losses
 12 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
Allowance for Loan Losses ALLOWANCE FOR LOAN LOSSES
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."

As a result of the adoption of ASC 326 in fiscal 2020, with an effective date of October 1, 2019, there is a lack of comparability in both the allowance and provisions for credit losses for the periods presented. Results for reporting periods beginning after October 1, 2019 (as reflected in the table below) are presented using the CECL methodology, while comparative period information continues to be reported in accordance with the incurred loss methodology in effect for prior fiscal years. See Note B, "New Accounting Pronouncements," for details regarding the adoption of ASC 326.

September 30, 2019CECL Adoption ImpactOctober 1, 2019 (Post ASC 326 Adoption)September 30, 2020
(In thousands)
Allowance for credit losses:
Commercial loans
   Multi-family$7,391 $3,013 $10,404 $13,853 
   Commercial real estate13,170 (146)13,024 22,516 
   Commercial & industrial31,450 785 32,235 38,665 
   Construction32,304 (9,536)22,768 24,156 
   Land - acquisition & development9,155 1,749 10,904 10,733 
      Total commercial loans93,470 (4,135)89,335 109,923 
Consumer loans
   Single-family residential30,988 16,783 47,771 45,186 
   Construction - custom1,369 1,511 2,880 3,555 
   Land - consumer lot loans2,143 492 2,635 2,729 
   HELOC1,103 945 2,048 2,571 
   Consumer2,461 2,154 4,615 2,991 
      Total consumer loans38,064 21,885 59,949 57,032 
Total allowance for loan losses$131,534 $17,750 149,284 166,955 
Reserve for unfunded commitments$6,900 $10,750 17,650 25,000 
Total allowance for credit losses$138,434 $28,500 $166,934 $191,955 
The following tables summarize the activity in the allowance for loan losses by loan portfolio segment and class.  

Twelve Months Ended September 30, 2020Beginning
Allowance
(Before ASC 326 Adoption)		Impact of ASC 326 AdoptionCharge-offsRecoveriesProvision &
Transfers		Ending Allowance (After ASC 326 Adoption)
 (In thousands)
Commercial loans
   Multi-family$7,391 $3,013 $— $498 $2,951 $13,853 
   Commercial real estate13,170 (146)(111)2,447 7,156 22,516 
   Commercial & industrial31,450 785 (4,196)443 10,183 38,665 
   Construction - speculative32,304 (9,536)— 188 1,200 24,156 
 Land - acquisition & development9,155 1,749 (11)2,070 (2,230)10,733 
      Total commercial loans93,470 (4,135)(4,318)5,646 19,260 109,923 
Consumer loans
   Single-family residential30,988 16,783 (131)1,394 (3,848)45,186 
   Construction - custom1,369 1,511 — — 675 3,555 
   Land - consumer lot loans2,143 492 (237)639 (308)2,729 
   HELOC1,103 945 — 95 428 2,571 
   Consumer2,461 2,154 (1,069)1,252 (1,807)2,991 
      Total consumer loans38,064 21,885 (1,437)3,380 (4,860)57,032 
$131,534 $17,750 $(5,755)$9,026 $14,400 $166,955 

Twelve Months Ended September 30, 2019Beginning Allowance
(Before ASC 326 Adoption)		Charge-offsRecoveriesProvision &
Transfers		Ending Allowance (Before ASC 326 Adoption)
(In thousands)
Commercial loans
   Multi-family$8,329 $— $— $(938)$7,391 
   Commercial real estate11,852 (428)1,102 644 13,170 
   Commercial & industrial28,702 (5,782)3,443 5,087 31,450 
   Construction - speculative31,317 — 99 888 32,304 
   Land - acquisition & development7,978 (107)7,457 (6,173)9,155 
      Total commercial loans88,178 (6,317)12,101 (492)93,470 
Consumer loans
   Single-family residential33,033 (268)1,020 (2,797)30,988 
   Construction - custom1,842 (1,973)— 1,500 1,369 
   Land - consumer lot loans2,164 (804)719 64 2,143 
   HELOC781 (1,086)46 1,362 1,103 
   Consumer3,259 (1,028)1,167 (937)2,461 
      Total consumer loans41,079 (5,159)2,952 (808)38,064 
$129,257 $(11,476)$15,053 $(1,300)$131,534 

Primarily due to the continued economic distress caused by the COVID-19 pandemic, the Company recorded a provision for credit losses of $21,750,000 for the year ended September 30, 2020, as compared to a release of $1,650,000 for the year ended September 30, 2019. The relatively significant credit loss provision for 2020 is due primarily to COVID-19 related factors
including estimated impacts to the energy, hospitality, restaurant and senior living industries. The release recorded for 2019 was a result of strong net recoveries and the overall quality of the loan portfolio as a result of a strong economy. The Company had recoveries, net of charge-offs, of $3,271,000 for the year ended September 30, 2020, compared with $3,577,000 of net recoveries for the year ended September 30, 2019. A loan is charged-off when the loss is estimable and it is confirmed that the borrower is not expected to be able to meet its contractual obligations. No allowance was recorded as of September 30, 2020 for the $745,081,000 of SBA PPP loans, which are included in the commercial & industrial loan category, due to the government guarantee.

Non-accrual loans decreased to $29,056,000 as of September 30, 2020, from $33,731,000 as of September 30, 2019. Non-performing assets totaled $37,695,000, or 0.20% of total assets, at September 30, 2020, compared to $43,826,000, or 0.27% of total assets, as of September 30, 2019.

As of September 30, 2020, the allowance for loan losses of $166,955,000 is for loans that are evaluated on a pooled basis, which was comprised of $115,457,000 related to the quantitative component and $51,498,000 related to management's qualitative overlays.
The following table shows loans collectively and individually evaluated for impairment and the related general and specific reserves.

September 30, 2019Loans Collectively Evaluated for ImpairmentLoans Individually Evaluated for Impairment
 General  Reserve
Allocation		Recorded Investment of LoansRatioSpecific  Reserve
Allocation		Recorded Investment of LoansRatio
 (In thousands) (In thousands)
Commercial loans
   Multi-family$7,387 $1,422,266 0.5 %$4 $385 1.0 %
   Commercial real estate12,847 1,618,406 0.8 323 12,765 2.5 
   Commercial & industrial31,358 1,266,913 2.5 92 1,805 5.1 
   Construction - speculative32,304 1,164,889 2.8 — — — 
   Land - acquisition & development9,135 160,964 5.7 20 230 8.7 
      Total commercial loans93,031 5,633,438 1.7 439 15,185 2.9 
Consumer loans
   Single-family residential30,988 5,822,200 0.5 — 17,978 — 
   Construction - custom1,369 255,505 0.5 — — — 
   Land - consumer lot loans2,143 95,574 2.2 — 375 — 
   HELOC1,103 140,378 0.8 — 837 — 
   Consumer2,461 129,527 1.9 — 50 — 
      Total consumer loans38,064 6,443,184 0.6 — 19,240 — 
$131,095 $12,076,622 1.1 %$439 $34,425 1.3 %
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 loan by loan basis to determine the relative risk inherent in specific borrowers or loans. Based on that risk rating, the loans are assigned a grade and classified as described in Note D "Loans Receivable."

The following table provides the amortized cost of loans receivable based on risk rating categories (as previously defined).
 
September 30, 2020Internally Assigned Grade
 PassSpecial mentionSubstandardDoubtfulLossTotal
 (In thousands)
Loan type
Commercial loans
   Multi-family$1,506,692 $13,721 $17,827 $— $— $1,538,240 
   Commercial real estate1,681,230 92,184 111,274 — — 1,884,688 
   Commercial & industrial1,898,709 64,695 152,109 — — 2,115,513 
   Construction - speculative1,187,786 61,178 103,450 — — 1,352,414 
   Land - acquisition & development137,998 15,573 — — — 153,571 
      Total commercial loans6,412,415 247,351 384,660 — — 7,044,426 
Consumer loans
   Single-family residential5,270,666 192 23,104 — — 5,293,962 
   Construction - custom295,953 — — — — 295,953 
   Land - consumer lot loans101,151 — 243 — — 101,394 
   HELOC139,646 — 576 — — 140,222 
   Consumer83,304 — 11 — — 83,315 
      Total consumer loans5,890,720 192 23,934 — — 5,914,846 
Total loans$12,303,135 $247,543 $408,594 $— $— $12,959,272 
Total grade as a % of total loans94.9 %1.9 %3.2 %— %— %

The following table provides the gross loans receivable based on risk rating categories (as previously defined).
September 30, 2019Internally Assigned Grade
 PassSpecial mentionSubstandardDoubtfulLossTotal Gross Loans
 (In thousands)
Loan type
Commercial loans
   Multi-family$1,418,837 $— $3,837 $— $— $1,422,674 
   Commercial real estate1,602,634 2,754 25,782 — — 1,631,170 
   Commercial & industrial1,229,891 18,125 20,679 — — 1,268,695 
   Construction - speculative2,038,052 — — — — 2,038,052 
   Land - acquisition & development200,283 — 3,824 — — 204,107 
      Total commercial loans6,489,697 20,879 54,122 — — 6,564,698 
Consumer loans
   Single-family residential5,808,444 — 26,750 — — 5,835,194 
   Construction - custom540,741 — — — — 540,741 
   Land - consumer lot loans98,828 — 866 — — 99,694 
   HELOC141,271 — 907 — — 142,178 
   Consumer129,872 — 11 — — 129,883 
      Total consumer loans6,719,156 — 28,534 — — 6,747,690 
Total gross loans$13,208,853 $20,879 $82,656 $— $— $13,312,388 
Total grade as a % of total gross loans99.2 %0.2 %0.6 %— %— %
The following table provides information on amortized cost of loans receivable based on borrower payment activity.
 
September 30, 2020Performing LoansNon-Performing Loans
 Amount% of Total LoansAmount% of Total Loans
 (In thousands)(In thousands)
Commercial loans
   Multi-family$1,538,240 100.0 %$— — %
   Commercial real estate1,880,917 99.8 3,771 0.2 
   Commercial & industrial2,115,184 100.0 329 — 
   Construction - speculative1,350,745 99.9 1,669 0.1 
   Land - acquisition & development153,571 100.0 — — 
      Total commercial loans7,038,657 99.9 5,769 0.1 
Consumer loans
   Single-family residential5,271,531 99.6 22,431 0.4 
   Construction - custom295,953 100.0 — — 
   Land - consumer lot loans101,151 99.8 243 0.2 
   HELOC139,669 99.6 553 0.4 
   Consumer83,255 99.9 60 0.1 
      Total consumer loans5,891,559 99.6 23,287 0.4 
Total$12,930,216 99.8 %$29,056 0.2 %

The following table provides information on gross loans based on borrower payment activity.
September 30, 2019Performing LoansNon-Performing Loans
 Amount% of Total
Gross  Loans		Amount% of Total
Gross  Loans
 (In thousands)(In thousands)
Commercial loans
   Multi-family$1,422,674 100.0 %$— — %
   Commercial real estate1,625,335 99.6 5,835 0.4 
   Commercial & industrial1,267,403 99.9 1,292 0.1 
   Construction - speculative2,038,052 100.0 — — 
   Land - acquisition & development203,938 99.9 169 0.1 
      Total commercial loans6,557,402 99.9 7,296 0.1 
Consumer loans
   Single-family residential5,809,923 99.6 25,271 0.4 
   Construction - custom540,741 100.0 — — 
   Land - consumer lot loans99,448 99.8 246 0.2 
   HELOC141,271 99.4 907 0.6 
   Consumer129,872 100.0 11 — 
      Total consumer loans6,721,255 99.6 26,435 0.4 
Total gross loans$13,278,657 99.7 %$33,731 0.3 %
The following table provides information on impaired loan balances and the related allowances by loan types.
 
September 30, 2019Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance		Average
Recorded
Investment
 (In thousands)
Impaired loans with no related allowance recorded:
Multi-family$— $— $— $286 
Commercial real estate7,467 11,881 — 8,890 
Commercial & industrial1,114 5,312 — 7,168 
Construction— — — 1,172 
Land - acquisition & development78 143 — 290 
Single-family residential17,979 19,252 — 16,685 
Construction - custom— — — 251 
Land - consumer lot loans344 848 — 287 
HELOC837 931 — 597 
Consumer50 119 — 23 
27,869 38,486 — 35,649 
Impaired loans with an allowance recorded:
Multi-family385 385 4 418 
Commercial real estate4,168 5,298 323 5,160 
Commercial & industrial426 691 92 2,535 
Construction— — — — 
Land - acquisition & development91 152 — 99 
Single-family residential112,042 114,609 2,208 125,976 
Construction - custom— — — — 
Land - consumer lot loans3,556 3,695 20 4,324 
HELOC949 963 — 961 
Consumer60 282 — 65 
121,677 126,075 2,647 (1)139,538 
Total:
Multi-family385 385 4 704 
Commercial real estate11,635 17,179 323 14,050 
Commercial & industrial1,540 6,003 92 9,703 
Construction— — — 1,172 
Land - acquisition & development169 295 — 389 
Single-family residential130,021 133,861 2,208 142,661 
Construction - custom— — — 251 
Land - consumer lot loans3,900 4,543 20 4,611 
HELOC1,786 1,894 — 1,558 
Consumer110 401 — 88 
$149,546 $164,561 $2,647 (1)$175,187 

____________________ 
(1)Includes $439,000 of specific reserves and $2,208,000 included in the general reserves.