NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE
AND NINE
MONTH PERIODS ENDED
MARCH 31,
2016
AND
2015
(Dollars in thousands, except per share data)
(Unaudited)
The condensed consolidated financial statements include the accounts of BofI Holding, Inc. and its wholly owned subsidiary, BofI Federal Bank (the “Bank” and collectively with BofI Holding, Inc., the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
The accompanying interim condensed consolidated financial statements, presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), are unaudited and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of financial condition and results of operations for the interim periods. All adjustments are of a normal and recurring nature. Results for the
nine
months ended
March 31, 2016
are not necessarily indicative of results that may be expected for any other interim period or for the year as a whole. Certain information and note disclosures normally included in the audited annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”)
with respect to interim financial reporting. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended
June 30, 2015
included in our Annual Report on Form 10-K.
On November 17, 2015, the Company completed a four-for-one forward stock split in the form of a stock dividend. References made to outstanding shares or per share amounts in the condensed consolidated financial statements and accompanying notes have been retroactively adjusted to reflect this four-for-one stock split. In November, the number of authorized shares of common stock available for issuance was increased from 50,000,000 to 150,000,000 as approved by the Company’s Board of Directors and stockholders.
|
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2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
Securities
.
Debt securities are classified as held-to-maturity and carried at amortized cost when management has both the positive intent and ability to hold them to maturity. Debt securities are classified as available-for-sale when they might be sold before maturity. Trading securities refer to certain types of assets that banks hold for resale at a profit or when the Company elects to account for certain securities at fair value. Increases or decreases in the fair value of trading securities are recognized in earnings as they occur. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.
Gains and losses on securities sales are based on a comparison of sales proceeds and the amortized cost of the security sold using the specific identification method. Purchases and sales are recognized on the trade date. Interest income includes amortization of purchase premiums or discounts. Premiums and discounts on securities are amortized or accreted using the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. The Company’s portfolios of held-to-maturity and available-for-sale securities are reviewed quarterly for other-than-temporary impairment. In performing this review, management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) how to record an impairment by assessing whether the Company intends to sell or it is more likely than not that it will be required to sell a security in an unrealized loss position before the Company recovers the security’s amortized cost. If either of these criteria for (4) is met, the entire difference between amortized cost and fair value is recognized in earnings. Alternatively, if the criteria for (4) is not met, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.
Loans
. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred purchase premiums and discounts, deferred loan origination fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Premiums and discounts on loans purchased as well as loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method.
Recognition of interest income on all portfolio segments is generally discontinued at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.
All interest accrued but not received for loans placed on nonaccrual, is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Loans Held for Sale.
U.S government agency (“agency”) loans originated and intended for sale in the secondary market are carried at fair value. Net unrealized gains and losses are recognized through the income statement. The Bank sells its mortgage loans with either servicing released or servicing retained depending upon market pricing. Gains and losses on loan sales are recorded as mortgage banking income, based on the difference between sales proceeds and carrying value. Non-agency loans held for sale are carried at the lower of cost or fair value.
Loans that were originated with the intent and ability to hold for the foreseeable future (loans held in portfolio) but which have been subsequently designated as being held for sale for risk management or liquidity needs are carried at the lower of cost or fair value calculated on an individual loan by loan basis.
There may be times when loans have been classified as held for sale and for some reason cannot be sold. Loans transferred to a long-term-investment classification from held-for-sale are transferred at the lower of cost or market value on the transfer date. Any difference between the carrying amount of the loan and its outstanding principal balance is recognized as an adjustment to yield by the interest method. A loan cannot be classified as a long-term investment unless the Bank has both the ability and the intent to hold the loan for the foreseeable future or until maturity.
Allowance for Loan and Lease Losses.
The allowance for loan and lease losses is maintained at a level estimated to provide for probable incurred losses in the loan and lease portfolio. Management determines the adequacy of the allowance based on reviews of individual loans and leases and pools of loans, recent loss experience, current economic conditions, the risk characteristics of the various categories of loans and other pertinent factors. This evaluation is inherently subjective and requires estimates that are susceptible to significant revision as more information becomes available. The allowance is increased by the provision for loan and lease losses, which is charged against current period operating results and recoveries of loans previously charged-off. The allowance is decreased by the amount of charge-offs of loans deemed uncollectible. Allocations of the allowance may be made for specific loans but the entire allowance is available for any loan that, in management’s judgment, should be charged off. See Note 5 of these financial statement footnotes and the financial statement footnotes for the year ended
June 30, 2015
included in our Annual Report on Form 10-K for further information.
H&R Block Bank Deposit Acquisition and Program Management Agreement.
On August 31, 2015, the Bank completed the acquisition of approximately
$419 million
in deposits consisting of checking, individual retirement savings, and CD accounts from H&R Block Bank and its parent company, H&R Block, Inc. (“H&R Block”). Additionally, the Bank and Emerald Financial Services, LLC (“EFS”), a Delaware limited liability company and wholly-owned subsidiary of H&R Block, entered into the Program Management Agreement (“PMA”), dated August 31, 2015; the Bank and H&R Block, EFS, HRB Participant I, LLC, a Delaware limited liability company and wholly-owned subsidiary of H&R Block, entered into the Emerald Receivables Participation Agreement, dated August 31, 2015; and the Bank and H&R Block entered into the Guaranty Agreement (together, the “PMA and related Agreements”), dated August 31, 2015. Through the PMA and related Agreements the Bank will provide H&R Block-branded financial services products and services. The three products and services that represent the primary focus and the majority of transactional volume that the Bank will process are described in detail below.
The first product is Emerald Prepaid MasterCard® services, which is under Schedule A of the PMA. The Bank is responsible for the primary oversight and control of the prepaid card programs of a wholly owned subsidiary of H&R Block. Under the PMA and related Agreements, the Bank holds the prepaid card customer deposits for those cards issued under the prepaid programs in non-interest bearing accounts and earns a fixed fee paid by H&R Block’s subsidiary for each automated clearing house (“ACH”) transaction processed through the prepaid card customer accounts. A portion of H&R Block’s customers use the Emerald Card as an option to receive federal and state income tax refunds. The prepaid customer deposits are included in non-interest bearing deposit liabilities on the balance sheet of the Company and the ACH fee income is included in the income statement under the line banking service fees and other income.
The second product is Refund Transfer, which is under Schedule B of the PMA. The Bank is responsible for the primary oversight and control of the refund transfer program of a wholly owned subsidiary of H&R Block. Under the PMA and related Agreements, the Bank opens a temporary bank account for each H&R Block customer who is receiving an income tax refund and elects to defer payment of his or her tax preparations fees. After the Internal Revenue Service and any state income tax authorities
transfer the refund into the customer’s account, the net funds are transferred to the customer and the temporary deposit account is closed. The Bank earns a fixed fee paid by H&R Block for each of the H&R Block customers electing a Refund Transfer. The fees are earned primarily in the quarter ended March 31
st
and are included in the income statement under the line banking service fees and other income.
The third product is Emerald Advance, which is under Schedule C of the PMA. The Bank is responsible for the underwriting guidelines and credit policies for unsecured consumer lines of credit offered to H&R Block customers. Under the PMA and related Agreements, the Bank offers and funds unsecured lines of credit to consumers primarily through the H&R Block tax preparation offices and earns interest income and fee income. The Bank retains
10%
of the Emerald Advance and sells the remainder to H&R Block. The lines of credit are included in loans and leases on the balance sheet of the Company and the interest income and fee income are included in the income statement under the line loans and leases interest and dividend income.
The H&R Block-branded financial services products introduce seasonality into the unaudited condensed consolidated income statements through the banking and service fees category of non-interest income and the other general and administrative category of non-interest expense, with the peak income and expense in these categories typically occurring during the Company’s third fiscal quarter ended March 31. Therefore, results for the three and nine months ended March 31, 2016 are not indicative of results to be expected for the full year.
Pacific Western Equipment Finance Asset Acquisition.
On March 31, 2016, the Bank entered into an Asset Purchase Agreement with Pacific Western Bank to acquire approximately
$140 million
of equipment leases from Pacific Western Equipment Finance and assumed certain insignificant operations and related liabilities. The purchase price and consideration paid for the assets consisted of the fair market value of the assumed liabilities plus a lease purchase price premium of approximately
2.5%
.
The Bank provides equipment financing to its customers through a variety of lease arrangements. The most common arrangement is a direct financing (capital) lease. For direct financing leases, lease receivables are recorded on the balance sheet but the leased property is not, although the Bank generally retains legal title to the leased property until the end of each lease. Direct financing leases are stated at the net amount of minimum lease payments receivable, plus any unguaranteed residual value, less the amount of unearned income and net acquisition discount at the reporting date. Direct lease origination costs are amortized over the weighted average life of the lease portfolio. Leases acquired in an acquisition are initially measured and recorded at their fair value on the acquisition date. Purchase discounts or premiums on acquired leases are recognized as an adjustment to interest income over the contractual life of the leases using the effective interest method or taken into income when the related leases are paid off. Direct financing leases are subject to our allowance for loans and leases.
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Accounting Standards Codification Topic 820,
Fair Value Measurement
, also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
|
|
Level 1:
|
Quoted prices in active markets for
identical
assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 1 assets and liabilities include debt and equity securities that are actively traded in an exchange or over-the-counter market and are highly liquid, such as, among other assets and securities, certain U.S. treasury and other U.S. government debt.
|
|
|
Level 2:
|
Observable inputs other than Level 1 prices such as quoted prices for
similar
assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include securities with quoted prices that are traded less frequently than exchange-traded instruments and whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
|
|
|
Level 3:
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models such as discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
|
When available, the Company generally uses quoted market prices to determine fair value, in which case the items are classified in Level 1. In some cases where a market price is available, the Company will make use of acceptable practical expedients (such as matrix pricing) to calculate fair value, in which case the items are classified in Level 2.
The Company considers relevant and observable market prices in its valuations where possible. The frequency of transactions, the size of the bid-ask spread and the nature of the participants are some of the factors the Company uses to help determine whether a market is active and orderly or inactive and not orderly. Price quotes based upon transactions that are not orderly are not considered to be determinative of fair value and should be given little, if any, weight in measuring fair value.
If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, credit spreads, housing value forecasts, etc. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.
The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified:
Securities—trading.
Trading securities are recorded at fair value. The trading portfolio consists of
two
different issues of floating-rate debt securities collateralized by pools of bank trust preferred securities. Recent liquidity and economic uncertainty have made the market for collateralized debt obligations less active or inactive. As quoted market prices are not available, the Level 3 fair values for these securities are determined by the Company utilizing industry-standard tools to calculate the net present value of the expected cash flows available to the securities from the underlying assets. The Company’s expected cash flows are calculated for each security and include the impact of actual and forecasted bank defaults within each collateral pool as well as structural features of the security’s tranche such as lock outs, subordination and overcollateralization. The forecast of underlying bank defaults in each pool is based upon a quarterly financial update including the trend in non-performing assets, the allowance for loan and lease losses and the underlying bank’s capital ratios. Also a factor is the Company’s loan and lease loss experience in the local economy in which the bank operates. At
March 31, 2016
, the Company’s forecast of cash flows for both securities includes actual and forecasted defaults totaling
18.3%
of all banks in the collateral pools, compared to
17.3%
of the banks actually in default. The expected cash flows reflect the Company’s best estimate of all pool losses which are then applied to the overcollateralization reserve and the subordinated tranches to determine the cash flows. The Company selects a discount rate margin based upon the spread between U.S. Treasury rates and the market rates for active credit grades for financial companies. The discount margin when added to the U.S. Treasury rate determines the discount rate, reflecting primarily market liquidity and interest rate risk since expected credit loss is included in the cash flows. At
March 31, 2016
, the Company used a weighted average discount margin of
500
basis points above
U.S. Treasury
rates to calculate the net present value of the expected cash flows and the fair value of its trading securities.
The Level 3 fair values determined by the Company for its trading securities rely heavily on management’s assumptions as to the future credit performance of the collateral banks, the impact of the global and regional economic activity, the timing of forecasted defaults and the discount rate applied to cash flows. The fair value of the trading securities at
March 31, 2016
is sensitive to an increase or decrease in the discount rate. An increase in the discount margin of
100
basis points would have reduced the total fair value of the trading securities and decreased net income before income tax by
$799
. A decrease in the discount margin of
100
basis points would have increased the total fair value of the trading securities and increased net income before income tax by
$924
.
Securities—available-for-sale and held-to-maturity
.
Available-for-sale securities are recorded at fair value and consist of residential mortgage-backed securities (“RMBS”) issued by U.S. agencies, non-agencies, collateralized loan obligations, and municipals. Held-to-maturity securities are recorded at amortized cost and consist of RMBS issued by U.S. agencies, RMBS issued by non-agencies, and municipals. Fair value for U.S. agency securities is generally based on quoted market prices of similar securities used to form a dealer quote or a pricing matrix. There continues to be significant illiquidity in the market for RMBS issued by non-agencies, impacting the availability and reliability of transparent pricing. As orderly quoted market prices are not available, the Level 3 fair values for these securities are determined by the Company utilizing industry-standard tools to calculate the net present value of the expected cash flows available to the securities from the underlying mortgage assets. The Company computes Level 3 fair values for each non-agency RMBS in the same manner (as described below) whether available-for-sale or held-to-maturity.
To determine the performance of the underlying mortgage loan pools, the Company estimates prepayments, defaults, and loss severities based on a number of macroeconomic factors, including housing price changes, unemployment rates, interest rates and borrower attributes such as credit score and loan documentation at the time of origination. For each security, the Company inputs a projection of monthly default rates, loss severity rates and voluntary prepayment rates for the underlying mortgages for the remaining life of each security to determine the expected cash flows. The projections of default rates are derived by the Company
from the historic default rate observed in the pool of loans collateralizing the security, increased by and decreased by the forecasted increase or decrease in the national unemployment rate. The projections of loss severity rates are derived by the Company from the historic loss severity rate observed in the pool of loans, increased by (and decreased by) the forecasted decrease or increase in the national home price appreciation (“HPA”) index. The largest factors influencing the Company’s modeling of the monthly default rate are unemployment and HPA, as a strong correlation exists. The national unemployment rate announced prior to the end of the period covered by this report (reported for February 2016) was
4.9%
, down from the high of
10.0%
in October 2009. Consensus estimates for unemployment are that the rate will continue to decline. Going forward, the Company is projecting lower monthly default rates. The range of loss severity rates applied to each default used in the Company’s projections at
March 31, 2016
are from
40.0%
up to
68.6%
based upon individual bond historical performance. The default rates and the severities are projected for every non-agency RMBS security held by the Company and will vary monthly based upon the actual performance of the security and the macroeconomic factors discussed above.
To determine the discount rates used to compute the present value of the expected cash flows for these non-agency RMBS securities, the Company separates the securities by the borrower characteristics in the underlying pool. Specifically, “prime” securities generally have borrowers with higher FICO scores and better documentation of income. “Alt-A” securities generally have borrowers with a lower FICO and less documentation of income. “Pay-option ARMs” are Alt-A securities with borrowers that tend to pay the least amount of principal (or increase their loan balance through negative amortization). The Company calculates separate discount rates for prime, Alt-A and Pay-option ARM non-agency RMBS securities using market-participant assumptions for risk, capital and return on equity. The range of annual default rates used in the Company’s projections at
March 31, 2016
are from
1.5%
up to
15.6%
with prime securities tending toward the lower end of the range and Alt-A and Pay-option ARMs tending toward the higher end of the range. The Company applies its discount rates to the projected monthly cash flows which already reflect the full impact of all forecasted losses using the assumptions described above. When calculating present value of the expected cash flows at
March 31, 2016
, the Company computed its discount rates as a spread between
242
and
719
basis points over the interpolated swap curve with prime securities tending toward the lower end of the range and Alt-A and Pay-option ARMs tending toward the higher end of the range.
Loans Held for Sale.
Loans held for sale at fair value are primarily single-family and multifamily residential loans. The fair value of residential loans held for sale is determined by pricing for comparable assets or by existing forward sales commitment prices with investors.
Impaired Loans.
Impaired loans are loans which are inadequately protected by the current net worth and paying capacity of the borrowers or the collateral pledged. The accrual of interest income has been discontinued for impaired loans. The impaired loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. The Company assesses loans individually and identifies impairment when the loan is classified as impaired, has been restructured, or management has serious doubts about the future collectibility of principal and interest, even though the loans may currently be performing. The fair value of an impaired loan is determined based on an observable market price or current appraised value of the underlying collateral. The fair value of impaired loans with specific write-offs or allocations of the allowance for loan losses are generally based on recent real estate appraisals or internal valuation analyses consistent with the methodology used in real estate appraisals and include other third-party valuations and analysis of cash flows. These appraisals and analyses are updated at least on an annual basis. The Company primarily obtains real estate appraisals and in the rare cases where an appraisal cannot be obtained, the Company performs an internal valuation analysis. These appraisals and analyses may utilize a single valuation approach or a combination of approaches including comparable sales and income approaches. The sales comparison approach uses at least three recent similar property sales to help determine the fair value of the property being appraised. The income approach is calculated by taking the net operating income generated by the collateral property of the rent collected and dividing it by an assumed capitalization rate. Adjustments are routinely made in the process by the appraisers to account for differences between the comparable sales and income data available. When measuring the fair value of the impaired loan based upon the projected sale of the underlying collateral, the Company subtracts the costs expected to be incurred for the transfer of the underlying collateral, which includes items such as sales commissions, delinquent taxes and insurance premiums. These adjustments to the estimated fair value of non-performing loans may result in increases or decreases to the provision for loan losses recorded in current earnings. Such adjustments are typically significant and result in a Level 3 classification for the inputs for determining fair value.
Other Real Estate Owned and Repossessed Vehicles
. Non-recurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (“OREO”) are measured at the lower of carrying amount or fair value, less estimated costs to sell. Fair values are generally based on third-party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.
Mortgage Servicing Rights.
The Company initially records all mortgage servicing rights (“MSRs”) at fair value and accounts for MSRs at fair value during the life of the MSR, with changes in fair value recorded through current period earnings. Fair value adjustments encompass market-driven valuation changes as well as modeled amortization involving the run-off of value that occurs due to the passage of time as individual loans are paid by borrowers. Market expectations about loan duration, and correspondingly
the expected term of future servicing cash flows, may vary from time to time due to changes in expected prepayment activity, especially when interest rates rise or fall. Market expectations of increased loan prepayment speeds may negatively impact the fair value of the single family MSRs. Fair value is also dependent on the discount rate used in calculating present value, which is imputed from observable market activity and market participants and results in Level 3 classification. Management reviews and adjusts the discount rate on an ongoing basis. An increase in the discount rate would reduce the estimated fair value of the MSRs asset.
Mortgage Banking Derivatives.
Fair value for mortgage banking derivatives are either based upon prices in active secondary markets for identical securities or based on quoted market prices of similar assets used to form a dealer quote or a pricing matrix. If no such quoted price exists, the fair value of a commitment is determined by quoted prices for a similar commitment or commitments, adjusted for the specific attributes of each commitment. These fair values are then adjusted for items such as fallout and estimated costs to originate the loan.
The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with or, in some cases, more conservative than other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the relevant reporting date.
The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at
March 31, 2016
and
June 30, 2015
. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
ASSETS:
|
|
|
|
|
|
|
|
Securities—Trading: Collateralized Debt Obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,589
|
|
|
$
|
7,589
|
|
Securities—Available-for-Sale:
|
|
|
|
|
|
|
|
Agency RMBS
|
$
|
—
|
|
|
$
|
35,288
|
|
|
$
|
—
|
|
|
$
|
35,288
|
|
Non-Agency RMBS
|
—
|
|
|
—
|
|
|
17,037
|
|
|
17,037
|
|
Municipal
|
—
|
|
|
33,616
|
|
|
—
|
|
|
33,616
|
|
Other Debt Securities
|
—
|
|
|
192,712
|
|
|
—
|
|
|
192,712
|
|
Total—Securities—Available-for-Sale
|
$
|
—
|
|
|
$
|
261,616
|
|
|
$
|
17,037
|
|
|
$
|
278,653
|
|
Loans Held for Sale
|
$
|
—
|
|
|
$
|
42,682
|
|
|
$
|
—
|
|
|
$
|
42,682
|
|
Mortgage Servicing Rights
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,375
|
|
|
$
|
3,375
|
|
Other assets – Derivative Instruments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,394
|
|
|
$
|
2,394
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
Other liabilities – Derivative Instruments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
823
|
|
|
$
|
823
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
|
|
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
Securities—Trading: Collateralized Debt Obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,832
|
|
|
$
|
7,832
|
|
Securities—Available-for-Sale:
|
|
|
|
|
|
|
|
Agency RMBS
|
$
|
—
|
|
|
$
|
43,491
|
|
|
$
|
—
|
|
|
$
|
43,491
|
|
Non-Agency RMBS
|
—
|
|
|
—
|
|
|
26,633
|
|
|
26,633
|
|
Municipal
|
—
|
|
|
22,035
|
|
|
—
|
|
|
22,035
|
|
Other Debt Securities
|
—
|
|
|
71,202
|
|
|
—
|
|
|
71,202
|
|
Total—Securities—Available-for-Sale
|
$
|
—
|
|
|
$
|
136,728
|
|
|
$
|
26,633
|
|
|
$
|
163,361
|
|
Loans Held for Sale
|
$
|
—
|
|
|
$
|
25,430
|
|
|
$
|
—
|
|
|
$
|
25,430
|
|
Mortgage Servicing Rights
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,098
|
|
|
$
|
2,098
|
|
Other assets – Derivative Instruments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,261
|
|
|
$
|
2,261
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
Other liabilities – Derivative Instruments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The following tables present additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31, 2016
|
(Dollars in thousands)
|
Securities – Trading: Collateralized Debt Obligations
|
|
Securities – Available-for-Sale: Non-Agency RMBS
|
|
Mortgage Servicing Rights
|
|
Derivative Instruments, net
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Opening balance
|
$
|
7,706
|
|
|
$
|
21,136
|
|
|
$
|
3,475
|
|
|
$
|
1,031
|
|
|
$
|
33,348
|
|
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total gains or losses for the period:
|
|
|
|
|
|
|
|
|
|
Included in earnings—Sale of mortgage-backed securities
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Included in earnings—Fair value gain (loss) on trading securities
|
(117
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
Included in earnings—Mortgage banking income
|
—
|
|
|
—
|
|
|
(452
|
)
|
|
540
|
|
|
88
|
|
Included in other comprehensive income
|
—
|
|
|
(532
|
)
|
|
—
|
|
|
—
|
|
|
(532
|
)
|
Purchases, originations, issues, sales and settlements:
|
|
|
|
|
|
|
|
|
|
Purchases/originations
|
—
|
|
|
—
|
|
|
352
|
|
|
—
|
|
|
352
|
|
Sales
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
Settlements
|
—
|
|
|
(3,640
|
)
|
|
—
|
|
|
—
|
|
|
(3,640
|
)
|
Other-than-temporary impairment
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
Closing balance
|
$
|
7,589
|
|
|
$
|
17,037
|
|
|
$
|
3,375
|
|
|
$
|
1,571
|
|
|
$
|
29,572
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period
|
$
|
(117
|
)
|
|
$
|
14
|
|
|
$
|
(452
|
)
|
|
$
|
540
|
|
|
$
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
March 31, 2016
|
(Dollars in thousands)
|
Securities – Trading: Collateralized Debt Obligations
|
|
Securities – Available-for-Sale: Non-Agency RMBS
|
|
Mortgage Servicing Rights
|
|
Derivative Instruments, net
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Opening Balance
|
$
|
7,832
|
|
|
$
|
26,633
|
|
|
$
|
2,098
|
|
|
$
|
2,261
|
|
|
$
|
38,824
|
|
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total gains or losses for the period:
|
|
|
|
|
|
|
|
|
|
|
Included in earnings—Sale of mortgage-backed securities
|
—
|
|
|
(666
|
)
|
|
—
|
|
|
—
|
|
|
(666
|
)
|
Included in earnings—Fair value gain (loss) on trading securities
|
(243
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(243
|
)
|
Included in earnings—Mortgage banking income
|
—
|
|
|
—
|
|
|
(503
|
)
|
|
(690
|
)
|
|
(1,193
|
)
|
Included in other comprehensive income
|
—
|
|
|
(1,493
|
)
|
|
—
|
|
|
—
|
|
|
(1,493
|
)
|
Purchases, originations, issues, sales and settlements:
|
|
|
|
|
|
|
|
|
|
|
Purchases/originations
|
—
|
|
|
—
|
|
|
1,780
|
|
|
—
|
|
|
1,780
|
|
Sales
|
—
|
|
|
(2,023
|
)
|
|
—
|
|
|
—
|
|
|
(2,023
|
)
|
Settlements
|
—
|
|
|
(5,367
|
)
|
|
—
|
|
|
—
|
|
|
(5,367
|
)
|
Other-than-temporary impairment
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
Closing balance
|
$
|
7,589
|
|
|
$
|
17,037
|
|
|
$
|
3,375
|
|
|
$
|
1,571
|
|
|
$
|
29,572
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period
|
$
|
(243
|
)
|
|
$
|
(666
|
)
|
|
$
|
(503
|
)
|
|
$
|
(690
|
)
|
|
$
|
(2,102
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31, 2015
|
(Dollars in thousands)
|
Securities – Trading: Collateralized Debt Obligations
|
|
Securities – Available-for-Sale: Non-Agency RMBS
|
|
Mortgage Servicing Rights
|
|
Derivative Instruments, net
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Opening balance
|
$
|
7,862
|
|
|
$
|
31,926
|
|
|
$
|
1,037
|
|
|
$
|
659
|
|
|
$
|
41,484
|
|
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total gains or losses for the period:
|
|
|
|
|
|
|
|
|
|
Included in earnings—Sale of mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Included in earnings—Fair value gain on trading securities
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
Included in earnings—Mortgage banking income
|
—
|
|
|
—
|
|
|
(194
|
)
|
|
1,402
|
|
|
1,208
|
|
Included in other comprehensive income
|
—
|
|
|
(232
|
)
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
Purchases, originations, issues, sales and settlements:
|
|
|
|
|
|
|
|
|
|
Purchases/originations
|
—
|
|
|
—
|
|
|
511
|
|
|
—
|
|
|
511
|
|
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Settlements
|
—
|
|
|
(3,013
|
)
|
|
—
|
|
|
—
|
|
|
(3,013
|
)
|
Other-than-temporary impairment
|
—
|
|
|
(704
|
)
|
|
—
|
|
|
—
|
|
|
(704
|
)
|
Closing balance
|
$
|
7,738
|
|
|
$
|
27,977
|
|
|
$
|
1,354
|
|
|
$
|
2,061
|
|
|
$
|
39,130
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period
|
$
|
(124
|
)
|
|
$
|
—
|
|
|
$
|
(194
|
)
|
|
$
|
1,402
|
|
|
$
|
1,084
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
March 31, 2015
|
(Dollars in thousands)
|
Securities – Trading: Collateralized Debt Obligations
|
|
Securities – Available-for-Sale: Non-Agency RMBS
|
|
Mortgage Servicing Rights
|
|
Derivative Instruments, net
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Opening Balance
|
$
|
8,066
|
|
|
$
|
37,409
|
|
|
$
|
562
|
|
|
$
|
875
|
|
|
$
|
46,912
|
|
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total gains or losses for the period:
|
|
|
|
|
|
|
|
|
|
Included in earnings—Sale of mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Included in earnings—Fair value gain (loss) on trading securities
|
(328
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(328
|
)
|
Included in earnings—Mortgage banking income
|
—
|
|
|
—
|
|
|
(229
|
)
|
|
1,186
|
|
|
957
|
|
Included in other comprehensive income
|
—
|
|
|
(1,351
|
)
|
|
—
|
|
|
—
|
|
|
(1,351
|
)
|
Purchases, originations, issues, sales and settlements:
|
|
|
|
|
|
|
|
|
|
Purchases/originations
|
—
|
|
|
—
|
|
|
1,021
|
|
|
—
|
|
|
1,021
|
|
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Settlements
|
—
|
|
|
(7,162
|
)
|
|
—
|
|
|
—
|
|
|
(7,162
|
)
|
Other-than-temporary impairment
|
—
|
|
|
(919
|
)
|
|
—
|
|
|
—
|
|
|
(919
|
)
|
Closing balance
|
$
|
7,738
|
|
|
$
|
27,977
|
|
|
$
|
1,354
|
|
|
$
|
2,061
|
|
|
$
|
39,130
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period
|
$
|
(328
|
)
|
|
$
|
—
|
|
|
$
|
(229
|
)
|
|
$
|
1,186
|
|
|
$
|
629
|
|
The table below summarizes the quantitative information about level 3 fair value measurements at the periods indicated:
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range (Weighted Average)
|
Securities – Trading:
Collateralized Debt Obligations
|
$
|
7,589
|
|
Discounted Cash Flow
|
Total Projected Defaults,
Discount Rate over Treasury
|
15.5 to 21.0% (18.3%)
5.0 to 5.0% (5.0%)
|
Securities – Available-for-Sale:
Non-agency RMBS
|
$
|
17,037
|
|
Discounted Cash Flow
|
Projected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
|
7.7 to 19.1% (13.1%)
2.1 to 10.0% (4.7%)
40.0 to 68.6% (52.3%)
2.4 to 3.0% (2.9%)
|
Mortgage Servicing Rights
|
$
|
3,375
|
|
Discounted Cash Flow
|
Projected Constant Prepayment Rate,
Life (in years),
Discount Rate
|
5.8 to 19.5% (10.1%)
3.6 to 7.1 (6.3)
9.5 to 10.5% (9.5%)
|
Derivative Instruments, net
|
$
|
1,571
|
|
Sales Comparison Approach
|
Projected Sales Profit of Underlying Loans
|
0.3 to 0.6% (0.4%)
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range (Weighted Average)
|
Securities – Trading:
Collateralized Debt Obligations
|
$
|
7,832
|
|
Discounted Cash Flow
|
Total Projected Defaults,
Discount Rate over Treasury
|
18.8 to 29.8% (24.6%)
4.8 to 4.8% (4.8%)
|
Securities – Available-for-Sale:
Non-agency RMBS
|
$
|
26,633
|
|
Discounted Cash Flow
|
Projected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
|
6.3 to 29.5% (13.0%)
1.5 to 19.6% (5.6%)
37.6 to 66.5% (51.1%)
2.4 to 3.0% (2.9%)
|
Mortgage Servicing Rights
|
$
|
2,098
|
|
Discounted Cash Flow
|
Projected Constant Prepayment Rate,
Life (in years),
Discount Rate
|
4.4 to 19.2% (7.7%)
4.3 to 8.3 (7.4)
9.5 to 10.5% (9.7%)
|
Derivative Instruments, net
|
$
|
2,261
|
|
Sales Comparison Approach
|
Projected Sales Profit of Underlying Loans
|
0.5 to 1.3% (0.8%)
|
The significant unobservable inputs used in the fair value measurement of the Company’s residential mortgage-backed securities are prepayment rates, probability of default, and loss severity in the event of default. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.
The table below summarizes changes in unrealized gains and losses and interest income recorded in earnings for level 3 trading assets and liabilities that are still held at the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
March 31,
|
|
March 31,
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Interest income on investments
|
$
|
60
|
|
|
$
|
56
|
|
|
$
|
178
|
|
|
$
|
166
|
|
Fair value adjustment
|
(117
|
)
|
|
(125
|
)
|
|
(243
|
)
|
|
(328
|
)
|
Total
|
$
|
(57
|
)
|
|
$
|
(69
|
)
|
|
$
|
(65
|
)
|
|
$
|
(162
|
)
|
The table below summarizes assets measured for impairment on a non-recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balance
|
Impaired Loans:
|
|
|
|
|
|
|
|
Single family real estate secured:
|
|
|
|
|
|
|
|
Mortgage
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,786
|
|
|
$
|
18,786
|
|
Home equity
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
Multifamily real estate secured
|
—
|
|
|
—
|
|
|
4,728
|
|
|
4,728
|
|
Commercial real estate secured
|
—
|
|
|
—
|
|
|
372
|
|
|
372
|
|
Auto and RV secured
|
—
|
|
|
—
|
|
|
264
|
|
|
264
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,184
|
|
|
$
|
24,184
|
|
Other real estate owned and foreclosed assets:
|
|
|
|
|
|
|
|
Multifamily real estate secured
|
—
|
|
|
—
|
|
|
207
|
|
|
207
|
|
Auto and RV secured
|
—
|
|
|
—
|
|
|
38
|
|
|
38
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
245
|
|
|
$
|
245
|
|
HTM Securities – Non-Agency RMBS
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
84,236
|
|
|
$
|
84,236
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balance
|
Impaired Loans:
|
|
|
|
|
|
|
|
Single family real estate secured:
|
|
|
|
|
|
|
|
Mortgage
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,059
|
|
|
$
|
23,059
|
|
Home equity
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
Multifamily real estate secured
|
—
|
|
|
—
|
|
|
5,399
|
|
|
5,399
|
|
Commercial real estate secured
|
—
|
|
|
—
|
|
|
2,128
|
|
|
2,128
|
|
Auto and RV secured
|
—
|
|
|
—
|
|
|
453
|
|
|
453
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,048
|
|
|
$
|
31,048
|
|
Other real estate owned and foreclosed assets:
|
|
|
|
|
|
|
|
Single family real estate secured
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
463
|
|
|
$
|
463
|
|
Multifamily real estate secured
|
—
|
|
|
—
|
|
|
762
|
|
|
762
|
|
Auto and RV secured
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,240
|
|
|
$
|
1,240
|
|
HTM Securities – Non-Agency RMBS
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
88,094
|
|
|
$
|
88,094
|
|
Impaired loans measured for impairment on a non-recurring basis using the fair value of the collateral for collateral-dependent loans have a carrying amount of
$24,184
, after charge-offs of
$135
for the
nine months ended
March 31, 2016
, and life to date charge-offs of
$4,730
. Impaired loans had a related allowance of
$233
at
March 31, 2016
.
Other real estate owned and foreclosed assets, which are measured at the lower of carrying value or fair value less costs to sell, had a net carrying amount of
$245
after charge-offs of
$114
for the three months ended
March 31, 2016
.
Held-to-maturity securities measured for impairment on a non-recurring basis had a fair value of
$84,236
and a carrying amount of
$87,474
at
March 31, 2016
, after net impairment charges to income of
$102
and an increase to other comprehensive income of
$4,351
during the
nine
months ended
March 31, 2016
. The Company recognized net impairment charges to income of
$1,285
and an increase in other comprehensive increase of
$3,855
for the
nine
months ended
March 31, 2015
. These held-to-maturity securities are valued using Level 3 inputs.
The Company has elected the fair value option for Agency loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan. None of these loans are
90 days
or more past due nor on nonaccrual as of
March 31, 2016
and
June 30, 2015
.
As of
March 31, 2016
and
June 30, 2015
, the aggregate fair value, contractual balance (including accrued interest), and unrealized gain was as follows:
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2016
|
|
June 30, 2015
|
Aggregate fair value
|
$
|
42,682
|
|
|
$
|
25,430
|
|
Contractual balance
|
41,507
|
|
|
24,886
|
|
Unrealized gain
|
$
|
1,175
|
|
|
$
|
544
|
|
The total amount of unrealized gains and losses from changes in fair value included in earnings for the period indicated below for loans held for sale were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
March 31,
|
|
March 31,
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Interest income
|
$
|
148
|
|
|
$
|
147
|
|
|
$
|
581
|
|
|
$
|
450
|
|
Change in fair value
|
1,223
|
|
|
1,583
|
|
|
(69
|
)
|
|
1,453
|
|
Total
|
$
|
1,371
|
|
|
$
|
1,730
|
|
|
$
|
512
|
|
|
$
|
1,903
|
|
The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the periods indicated:
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
Fair Value
|
Valuation Technique(s)
|
Unobservable Input
|
Range (Weighted Average)
1
|
Impaired loans:
|
|
|
|
|
Single family real estate secured:
|
|
|
|
|
Mortgage
|
$
|
18,786
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
-40.6 to 71.1% (11.9%)
|
Home equity
|
$
|
34
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
-27.2 to 0.0% (-14.3%)
|
Multifamily real estate secured
|
$
|
4,728
|
|
Sales comparison approach, income approach,
Discounted cash flows
|
Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations
|
-39.5 to 58.0% (-17.1%)
|
Commercial real estate secured
|
$
|
372
|
|
Sales comparison approach and income approach
|
Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations
|
-33.0 to 23.7% (-4.7%)
|
Auto and RV secured
|
$
|
264
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0.0 to 41.1% (10.5%)
|
Other real estate owned:
|
|
|
|
|
Multifamily real estate secured
|
$
|
207
|
|
Sales comparison approach and income approach
|
Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations, Capitalization rate
|
-36.2 to 0.0% (-20.2%)
|
Auto and RV secured
|
$
|
38
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0.0 to 20.8% (8.6%)
|
HTM Securities – Non-Agency RMBS
|
$
|
84,236
|
|
Discounted cash flow
|
Constant prepayment rate,
constant default rate,
loss severity,
discount rate over LIBOR
|
2.5 to 18.9% (10.1%)
1.5 to 15.6% (4.8%)
40.0 to 65.7% (56.5%)
3.0 to 7.2% (5.5%)
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
Fair Value
|
Valuation Technique(s)
|
Unobservable Input
|
Range (Weighted Average)
1
|
Impaired loans:
|
|
|
|
|
Single family real estate secured:
|
|
|
|
|
Mortgage
|
$
|
23,059
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
-52.5 to 53.7% (3.9%)
|
Home equity
|
$
|
9
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
-9.7 to 5.5% (-2.1%)
|
Multifamily real estate secured
|
$
|
5,399
|
|
Sales comparison approach and income approach
|
Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations
|
-73.4 to 80.6% (-8.3%)
|
Commercial real estate secured
|
$
|
2,128
|
|
Sales comparison approach and income approach
|
Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations
|
-66.5 to 81.1% (-10.3%)
|
Auto and RV secured
|
$
|
453
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0.0 to 66.2% (10.8%)
|
Other real estate owned:
|
|
|
|
|
Single family real estate secured
|
$
|
463
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
-20.3 to 12.1% (-4.1%)
|
Multifamily real estate secured
|
$
|
762
|
|
Sales comparison approach and income approach
|
Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations
|
-37.1 to 48.6% (5.7%)
|
Auto and RV secured
|
$
|
15
|
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0.0 to 20.7% (10.3%)
|
HTM Securities – Non-Agency RMBS
|
$
|
88,094
|
|
Discounted cash flow
|
Constant prepayment rate,
constant default rate,
loss severity,
discount rate over LIBOR
|
5.0 to 43.8% (10.5%)
1.5 to 14.6% (6.7%)
15.0 to 65.5% (54.4%)
3.0 to 6.9% (5.8%)
|
_____________________
1
For impaired loans and other real estate owned the ranges shown may vary positively or negatively based on the comparable sales reported in the current appraisal. In certain instances, the range can be significant due to small sample sizes and in some cases the property being valued having limited comparable sales with similar characteristics at the time the current appraisal is conducted.
Fair value of Financial Instruments
The carrying amounts and estimated fair values of financial instruments at
March 31, 2016
and
June 30, 2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
Fair Value
|
|
|
(Dollars in thousands)
|
Carrying
Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
895,554
|
|
|
$
|
895,554
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
895,554
|
|
Securities trading
|
7,589
|
|
|
—
|
|
|
—
|
|
|
7,589
|
|
|
7,589
|
|
Securities available-for-sale
|
278,653
|
|
|
—
|
|
|
261,616
|
|
|
17,037
|
|
|
278,653
|
|
Securities held-to-maturity
|
211,294
|
|
|
—
|
|
|
79,294
|
|
|
137,092
|
|
|
216,386
|
|
Loans held for sale, at fair value
|
42,682
|
|
|
—
|
|
|
42,682
|
|
|
—
|
|
|
42,682
|
|
Loans held for sale, at lower of cost or fair value
|
59,988
|
|
|
—
|
|
|
—
|
|
|
59,988
|
|
|
59,988
|
|
Loans and leases held for investment—net
|
6,034,700
|
|
|
—
|
|
|
—
|
|
|
6,266,723
|
|
|
6,266,723
|
|
Accrued interest receivable
|
23,913
|
|
|
—
|
|
|
—
|
|
|
23,913
|
|
|
23,913
|
|
Mortgage servicing rights
|
3,375
|
|
|
—
|
|
|
—
|
|
|
3,375
|
|
|
3,375
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
Time deposits and savings
|
6,048,031
|
|
|
—
|
|
|
5,872,046
|
|
|
—
|
|
|
5,872,046
|
|
Securities sold under agreements to repurchase
|
35,000
|
|
|
—
|
|
|
36,672
|
|
|
—
|
|
|
36,672
|
|
Advances from the Federal Home Loan Bank
|
858,000
|
|
|
—
|
|
|
876,794
|
|
|
—
|
|
|
876,794
|
|
Subordinated notes and debentures
|
56,155
|
|
|
—
|
|
|
56,155
|
|
|
—
|
|
|
56,155
|
|
Accrued interest payable
|
1,679
|
|
|
—
|
|
|
1,679
|
|
|
—
|
|
|
1,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Fair Value
|
(Dollars in thousands)
|
Carrying
Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
222,874
|
|
|
$
|
222,874
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
222,874
|
|
Securities trading
|
7,832
|
|
|
—
|
|
|
—
|
|
|
7,832
|
|
|
7,832
|
|
Securities available-for-sale
|
163,361
|
|
|
—
|
|
|
136,728
|
|
|
26,633
|
|
|
163,361
|
|
Securities held-to-maturity
|
225,555
|
|
|
—
|
|
|
83,441
|
|
|
144,882
|
|
|
228,323
|
|
Loans held for sale, at fair value
|
25,430
|
|
|
—
|
|
|
25,430
|
|
|
—
|
|
|
25,430
|
|
Loans held for sale, at lower of cost or fair value
|
77,891
|
|
|
—
|
|
|
—
|
|
|
77,932
|
|
|
77,932
|
|
Loans and leases held for investment—net
|
4,928,618
|
|
|
—
|
|
|
—
|
|
|
5,011,596
|
|
|
5,011,596
|
|
Accrued interest receivable
|
20,268
|
|
|
—
|
|
|
—
|
|
|
20,268
|
|
|
20,268
|
|
Mortgage servicing rights
|
2,098
|
|
|
—
|
|
|
—
|
|
|
2,098
|
|
|
2,098
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
Time deposits and savings
|
4,451,917
|
|
|
—
|
|
|
4,385,034
|
|
|
—
|
|
|
4,385,034
|
|
Securities sold under agreements to repurchase
|
35,000
|
|
|
—
|
|
|
37,489
|
|
|
—
|
|
|
37,489
|
|
Advances from the Federal Home Loan Bank
|
753,000
|
|
|
—
|
|
|
757,265
|
|
|
—
|
|
|
757,265
|
|
Subordinated notes and debentures
|
5,155
|
|
|
—
|
|
|
5,155
|
|
|
—
|
|
|
5,155
|
|
Accrued interest payable
|
1,266
|
|
|
—
|
|
|
1,266
|
|
|
—
|
|
|
1,266
|
|
The methods and assumptions, not previously presented, used to estimate fair value are described as follows:
Carrying amount is the estimated fair value for cash and cash equivalents, interest bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans, deposits, borrowings or subordinated debt and for variable rate loans, deposits, borrowings or subordinated debt with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. A discussion of the methods of valuing trading securities, available for sale securities and loans held for sale can be found earlier in this footnote. The carrying amount of stock of the Federal Home Loan Bank (“FHLB”) approximates the estimated fair value of this investment. The fair value of off-balance sheet items is not considered material.
The amortized cost, carrying amount and fair value for the major categories of securities: trading, available-for-sale, and held-to-maturity at
March 31, 2016
and
June 30, 2015
were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Trading
|
|
Available-for-sale
|
|
Held-to-maturity
|
(Dollars in thousands)
|
Fair
Value
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Unrecognized
Gains
|
|
Unrecognized
Losses
|
|
Fair
Value
|
Mortgage-backed securities (RMBS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agencies
1
|
$
|
—
|
|
|
$
|
35,132
|
|
|
$
|
349
|
|
|
$
|
(193
|
)
|
|
$
|
35,288
|
|
|
$
|
37,366
|
|
|
$
|
867
|
|
|
$
|
(2
|
)
|
|
$
|
38,231
|
|
Non-agency
2
|
—
|
|
|
15,718
|
|
|
1,321
|
|
|
(2
|
)
|
|
17,037
|
|
|
138,011
|
|
|
7,828
|
|
|
(8,747
|
)
|
|
137,092
|
|
Total mortgage-backed securities
|
—
|
|
|
50,850
|
|
|
1,670
|
|
|
(195
|
)
|
|
52,325
|
|
|
175,377
|
|
|
8,695
|
|
|
(8,749
|
)
|
|
175,323
|
|
Other debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
|
—
|
|
|
33,541
|
|
|
112
|
|
|
(37
|
)
|
|
33,616
|
|
|
35,917
|
|
|
5,146
|
|
|
—
|
|
|
41,063
|
|
Non-agency
3
|
7,589
|
|
|
193,344
|
|
|
285
|
|
|
(917
|
)
|
|
192,712
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total other debt securities
|
7,589
|
|
|
226,885
|
|
|
397
|
|
|
(954
|
)
|
|
226,328
|
|
|
35,917
|
|
|
5,146
|
|
|
—
|
|
|
41,063
|
|
Total debt securities
|
$
|
7,589
|
|
|
$
|
277,735
|
|
|
$
|
2,067
|
|
|
$
|
(1,149
|
)
|
|
$
|
278,653
|
|
|
$
|
211,294
|
|
|
$
|
13,841
|
|
|
$
|
(8,749
|
)
|
|
$
|
216,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Trading
|
|
Available-for-sale
|
|
Held-to-maturity
|
(Dollars in thousands)
|
Fair
Value
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Unrecognized
Gains
|
|
Unrecognized
Losses
|
|
Fair
Value
|
Mortgage-backed securities (RMBS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agencies
1
|
$
|
—
|
|
|
$
|
43,738
|
|
|
$
|
701
|
|
|
$
|
(948
|
)
|
|
$
|
43,491
|
|
|
$
|
41,993
|
|
|
$
|
1,398
|
|
|
$
|
—
|
|
|
$
|
43,391
|
|
Non-agency
2
|
—
|
|
|
23,799
|
|
|
2,835
|
|
|
(1
|
)
|
|
26,633
|
|
|
147,586
|
|
|
10,045
|
|
|
(12,749
|
)
|
|
144,882
|
|
Total mortgage-backed securities
|
—
|
|
|
67,537
|
|
|
3,536
|
|
|
(949
|
)
|
|
70,124
|
|
|
189,579
|
|
|
11,443
|
|
|
(12,749
|
)
|
|
188,273
|
|
Other debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
|
—
|
|
|
21,731
|
|
|
390
|
|
|
(86
|
)
|
|
22,035
|
|
|
35,976
|
|
|
4,074
|
|
|
—
|
|
|
40,050
|
|
Non-agency
3
|
7,832
|
|
|
70,216
|
|
|
1,271
|
|
|
(285
|
)
|
|
71,202
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total other debt securities
|
7,832
|
|
|
91,947
|
|
|
1,661
|
|
|
(371
|
)
|
|
93,237
|
|
|
35,976
|
|
|
4,074
|
|
|
—
|
|
|
40,050
|
|
Total debt securities
|
$
|
7,832
|
|
|
$
|
159,484
|
|
|
$
|
5,197
|
|
|
$
|
(1,320
|
)
|
|
$
|
163,361
|
|
|
$
|
225,555
|
|
|
$
|
15,517
|
|
|
$
|
(12,749
|
)
|
|
$
|
228,323
|
|
__________________________________
|
|
1.
|
U.S. government-backed or government sponsored enterprises including Fannie Mae, Freddie Mac and Ginnie Mae.
|
|
|
2.
|
Private sponsors of securities collateralized primarily by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by prime, Alt-A or pay-option ARM mortgages.
|
|
|
3.
|
Senior collateralized loan obligations and asset-backed securities.
|
The Company’s non-agency RMBS available-for-sale portfolio with a total fair value of
$17,037
at
March 31, 2016
consists of
seventeen
different issues of super senior securities with a fair value of
$11,800
;
one
senior structured whole loan security with a fair value of
$5,205
and
two
mezzanine z-tranche securities with a fair value of
$32
collateralized by seasoned prime and Alt-A first-lien mortgages.
The non-agency RMBS held-to-maturity portfolio with a carrying value of
$138,011
at
March 31, 2016
consists of
76
different issues of super senior securities totaling
$135,797
and
one
senior-support security with a carrying value of
$2,214
. Debt securities with evidence of credit quality deterioration since issuance and for which it is probable at purchase that the Company will be unable to collect all of the par value of the security are accounted for under ASC Topic 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
(“ASC Topic 310-30”). Under ASC Topic 310-30, the excess of cash flows expected at acquisition over the purchase price is referred to as the accretable yield and is recognized in interest income over the remaining life of the security. The Company has
one
senior support security that it acquired at a significant discount that evidenced credit deterioration at acquisition and is accounted for under ASC Topic 310-30. For a cost of
$17,740
the Company acquired the senior support security with a contractual par value of
$30,560
and accretable and non-accretable discounts that were projected to be
$9,015
and
$3,805
, respectively. Since acquisition, repayments from the security have been received more rapidly than projected at acquisition, but expected total payments have declined, resulting in a determination that the security was other-than-temporarily impaired; however,
no
charge was recorded for the fiscal
2015
year and
no
charge was incurred for the
nine months
ended
March 31, 2016
. At
March 31, 2016
the security had a remaining contractual par value of
zero
dollars and amortizable and non-amortizable premium are currently projected to be
zero
dollars and
$2,472
, respectively.
The current face amounts of debt securities available-for-sale and held-to-maturity that were pledged to secure borrowings at
March 31, 2016
and
June 30, 2015
were
$47,850
and
$39,014
respectively.
The securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Available-for-sale securities in loss position for
|
|
Held-to-maturity securities in loss position for
|
|
Less Than
12 Months
|
|
More Than
12 Months
|
|
Total
|
|
Less Than
12 Months
|
|
More Than
12 Months
|
|
Total
|
(Dollars in thousands)
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
RMBS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agencies
|
$
|
151
|
|
|
$
|
(1
|
)
|
|
$
|
23,585
|
|
|
$
|
(192
|
)
|
|
$
|
23,736
|
|
|
$
|
(193
|
)
|
|
$
|
146
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
146
|
|
|
$
|
(2
|
)
|
Non-agency
|
2,546
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
2,546
|
|
|
(2
|
)
|
|
6,905
|
|
|
(204
|
)
|
|
62,473
|
|
|
(8,543
|
)
|
|
69,378
|
|
|
(8,747
|
)
|
Total RMBS securities
|
2,697
|
|
|
(3
|
)
|
|
23,585
|
|
|
(192
|
)
|
|
26,282
|
|
|
(195
|
)
|
|
7,051
|
|
|
(206
|
)
|
|
62,473
|
|
|
(8,543
|
)
|
|
69,524
|
|
|
(8,749
|
)
|
Other Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Debt
|
22,815
|
|
|
(25
|
)
|
|
1,428
|
|
|
(12
|
)
|
|
24,243
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Non-agency
|
90,156
|
|
|
(536
|
)
|
|
18,003
|
|
|
(381
|
)
|
|
108,159
|
|
|
(917
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Other Debt
|
112,971
|
|
|
(561
|
)
|
|
19,431
|
|
|
(393
|
)
|
|
132,402
|
|
|
(954
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total debt securities
|
$
|
115,668
|
|
|
$
|
(564
|
)
|
|
$
|
43,016
|
|
|
$
|
(585
|
)
|
|
$
|
158,684
|
|
|
$
|
(1,149
|
)
|
|
$
|
7,051
|
|
|
$
|
(206
|
)
|
|
$
|
62,473
|
|
|
$
|
(8,543
|
)
|
|
$
|
69,524
|
|
|
$
|
(8,749
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Available-for-sale securities in loss position for
|
|
Held-to-maturity securities in loss position for
|
|
Less Than
12 Months
|
|
More Than
12 Months
|
|
Total
|
|
Less Than
12 Months
|
|
More Than
12 Months
|
|
Total
|
(Dollars in thousands)
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
RMBS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agencies
|
$
|
369
|
|
|
$
|
(2
|
)
|
|
$
|
24,974
|
|
|
$
|
(946
|
)
|
|
$
|
25,343
|
|
|
$
|
(948
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-agency
|
1,275
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1,275
|
|
|
(1
|
)
|
|
23,450
|
|
|
(1,802
|
)
|
|
67,090
|
|
|
(10,947
|
)
|
|
90,540
|
|
|
(12,749
|
)
|
Total RMBS securities
|
1,644
|
|
|
(3
|
)
|
|
24,974
|
|
|
(946
|
)
|
|
26,618
|
|
|
(949
|
)
|
|
23,450
|
|
|
(1,802
|
)
|
|
67,090
|
|
|
(10,947
|
)
|
|
90,540
|
|
|
(12,749
|
)
|
Other Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Debt
|
1,358
|
|
|
(86
|
)
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|
(86
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Non-agency
|
19,100
|
|
|
(285
|
)
|
|
—
|
|
|
—
|
|
|
19,100
|
|
|
(285
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Other Debt
|
20,458
|
|
|
(371
|
)
|
|
—
|
|
|
—
|
|
|
20,458
|
|
|
(371
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total debt securities
|
$
|
22,102
|
|
|
$
|
(374
|
)
|
|
$
|
24,974
|
|
|
$
|
(946
|
)
|
|
$
|
47,076
|
|
|
$
|
(1,320
|
)
|
|
$
|
23,450
|
|
|
$
|
(1,802
|
)
|
|
$
|
67,090
|
|
|
$
|
(10,947
|
)
|
|
$
|
90,540
|
|
|
$
|
(12,749
|
)
|
There were
37
securities that were in a continuous loss position at
March 31, 2016
for a period of more than
12 months
. There were
32
securities that were in a continuous loss position at
June 30, 2015
for a period of more than
12 months
.
The following table summarizes amounts of credit loss recognized in the income statement through other-than-temporary impairment charges which reduced non-interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
March 31,
|
|
March 31,
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Beginning balance
|
$
|
(20,528
|
)
|
|
$
|
(19,636
|
)
|
|
$
|
(20,503
|
)
|
|
$
|
(18,139
|
)
|
Additions for the amounts related to credit loss for which an other-than-temporary impairment was not previously recognized
|
—
|
|
|
(704
|
)
|
|
(106
|
)
|
|
(742
|
)
|
Increases to the amount related to the credit loss for which other-than-temporary impairment was previously recognized
|
(8
|
)
|
|
(3
|
)
|
|
(43
|
)
|
|
(1,462
|
)
|
Credit losses realized for securities sold
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
Ending balance
|
$
|
(20,536
|
)
|
|
$
|
(20,343
|
)
|
|
$
|
(20,536
|
)
|
|
$
|
(20,343
|
)
|
At
March 31, 2016
, non-agency RMBS with a total carrying amount of
$94,658
were determined to have cumulative credit losses of
$20,536
of which
$8
was recognized in earnings during the three months ended
March 31, 2016
. This quarter’s other-than-temporary impairment of
$8
is related to
two
non-agency RMBS with a total carrying amount of
$2,238
. The Company measures its non-agency RMBS in an unrecognized loss position at the end of the reporting period for other-than-temporary impairment by comparing the present value of the cash flows currently expected to be collected from the security with its amortized cost basis. If the calculated present value is lower than the amortized cost, the difference is the credit component of an other-than-temporary impairment of its debt securities. The excess of present value over the fair value of the security (if any) is the non-credit component only if the Company does not intend to sell the security and will not be required to sell the security before recovery of its amortized cost basis. The credit component of the other-than-temporary impairment is recorded as a loss in earnings and the non-credit component as a charge to other comprehensive income, net of the related income tax benefit.
To determine the cash flow expected to be collected and to calculate the present value for purposes of testing for other-than-temporary impairment, the Company utilizes the same industry-standard tool and the same cash flows as those calculated for Level 3 fair values as discussed in Note 3 – Fair Value. The discount rates used to compute the present value of the expected cash flows for purposes of testing for the credit component of the other-than-temporary impairment are either the implicit rate calculated in each of the Company’s securities at acquisition or the last accounting yield. The Company calculates the implicit rate at acquisition based on the contractual terms of the security, considering scheduled payments (and minimum payments in the case of pay-option ARMs) without prepayment assumptions. Once the discount rate (or discount margin in the case of floating rate securities) is calculated as described above, the discount is used in the industry-standard model to calculate the present value of the cash flows.
The gross gains and losses realized through earnings upon the sale of available-for-sale securities for the three and
nine
months ended
March 31, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
March 31,
|
|
March 31,
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Proceeds
1
|
$
|
(67
|
)
|
|
$
|
—
|
|
|
$
|
10,002
|
|
|
$
|
9,614
|
|
Gross realized gains
1
|
(14
|
)
|
|
—
|
|
|
919
|
|
|
587
|
|
Gross realized losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized gain on securities
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
919
|
|
|
$
|
587
|
|
__________________________________
|
|
1.
|
The proceeds of
$(67)
in the three months ended March 31, 2016 was the result of an underlying paydown receipt to the security sold by the Company during the three months ended December 31, 2015. The trustee did not apply the paydown receipt to the security until one month subsequent to the period ended December 31, 2015. This revised factor reduced the amount of par value sold and subsequently reduced the gross realized gain by
$14
. This reduction to gain on sale was recognized during the three months ended March 31, 2016. The Company did not sell any securities during the three months ended March 31, 2016.
|
The Company had recorded unrealized gains and unrealized losses in accumulated other comprehensive loss as follows:
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31,
2016
|
|
June 30,
2015
|
Available-for-sale debt securities—net unrealized gains
|
$
|
918
|
|
|
$
|
3,877
|
|
Available-for-sale debt securities—non-credit related losses
|
(248
|
)
|
|
(271
|
)
|
Held-to-maturity debt securities—non-credit related losses
|
(14,246
|
)
|
|
(18,597
|
)
|
Subtotal
|
(13,576
|
)
|
|
(14,991
|
)
|
Tax benefit
|
5,353
|
|
|
5,592
|
|
Net unrealized loss on investment securities in accumulated other comprehensive loss
|
$
|
(8,223
|
)
|
|
$
|
(9,399
|
)
|
The expected maturity distribution including repayments of the Company’s mortgage-backed securities and other debt securities classified as trading, available-for-sale and held-to-maturity at
March 31, 2016
were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Trading
|
|
Available for sale
|
|
Held-to-maturity
|
(Dollars in thousands)
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
RMBS—U.S. agencies:
|
|
|
|
|
|
|
|
|
|
Due within one year
|
$
|
—
|
|
|
$
|
3,543
|
|
|
$
|
3,538
|
|
|
$
|
1,305
|
|
|
$
|
1,367
|
|
Due one to five years
|
—
|
|
|
10,922
|
|
|
10,925
|
|
|
4,937
|
|
|
5,162
|
|
Due five to ten years
|
—
|
|
|
8,623
|
|
|
8,660
|
|
|
5,458
|
|
|
5,690
|
|
Due after ten years
|
—
|
|
|
12,044
|
|
|
12,165
|
|
|
25,666
|
|
|
26,012
|
|
Total RMBS—U.S. agencies
|
—
|
|
|
35,132
|
|
|
35,288
|
|
|
37,366
|
|
|
38,231
|
|
RMBS—Non-agency:
|
|
|
|
|
|
|
|
|
|
Due within one year
|
—
|
|
|
4,026
|
|
|
4,289
|
|
|
21,885
|
|
|
21,582
|
|
Due one to five years
|
—
|
|
|
6,872
|
|
|
7,288
|
|
|
44,020
|
|
|
43,685
|
|
Due five to ten years
|
—
|
|
|
2,030
|
|
|
2,279
|
|
|
31,981
|
|
|
32,006
|
|
Due after ten years
|
—
|
|
|
2,790
|
|
|
3,181
|
|
|
40,125
|
|
|
39,819
|
|
Total RMBS—Non-agency
|
—
|
|
|
15,718
|
|
|
17,037
|
|
|
138,011
|
|
|
137,092
|
|
Other debt:
|
|
|
|
|
|
|
|
|
|
Due within one year
|
—
|
|
|
110,350
|
|
|
110,323
|
|
|
1,037
|
|
|
1,179
|
|
Due one to five years
|
—
|
|
|
108,880
|
|
|
108,293
|
|
|
4,813
|
|
|
5,473
|
|
Due five to ten years
|
—
|
|
|
4,131
|
|
|
4,169
|
|
|
7,556
|
|
|
8,596
|
|
Due after ten years
|
7,589
|
|
|
3,524
|
|
|
3,543
|
|
|
22,511
|
|
|
25,815
|
|
Total other debt
|
7,589
|
|
|
226,885
|
|
|
226,328
|
|
|
35,917
|
|
|
41,063
|
|
Total
|
$
|
7,589
|
|
|
$
|
277,735
|
|
|
$
|
278,653
|
|
|
$
|
211,294
|
|
|
$
|
216,386
|
|
|
|
5.
|
LOANS, LEASES & ALLOWANCE FOR LOAN AND LEASE LOSSES
|
The following table sets forth the composition of the loan and lease portfolio as of the dates indicated:
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31, 2016
|
|
June 30, 2015
|
Single family real estate secured:
|
|
|
|
Mortgage
|
$
|
3,541,663
|
|
|
$
|
2,980,795
|
|
Home equity
|
3,156
|
|
|
3,604
|
|
Warehouse and other
1
|
506,031
|
|
|
385,413
|
|
Multifamily real estate secured
|
1,276,934
|
|
|
1,185,531
|
|
Commercial real estate secured
|
98,791
|
|
|
61,403
|
|
Auto and RV secured
|
45,293
|
|
|
13,140
|
|
Factoring
|
145,485
|
|
|
122,200
|
|
Commercial & Industrial
|
480,939
|
|
|
248,584
|
|
Other
|
4,374
|
|
|
601
|
|
Total gross loans and leases
|
6,102,666
|
|
|
5,001,271
|
|
Allowance for loan and lease losses
|
(36,931
|
)
|
|
(28,327
|
)
|
Unaccreted discounts and loan and lease fees
|
(31,035
|
)
|
|
(44,326
|
)
|
Total net loans and leases
|
$
|
6,034,700
|
|
|
$
|
4,928,618
|
|
|
|
1.
|
The balance of single family warehouse loans was
$168,924
at
March 31, 2016
and
$122,003
at
June 30, 2015
. The remainder of the balance is attributable to single family lender finance loans.
|
Allowance for Loan and Lease Losses.
We are committed to maintaining the allowance for loan and lease losses (sometimes referred to as the “allowance”) at a level that is considered to be commensurate with estimated probable incurred credit losses in the portfolio. Although the adequacy of the allowance is reviewed quarterly, management performs an ongoing assessment of the risks inherent in the portfolio. While the Company believes that the allowance for loan and lease losses is adequate at
March 31, 2016
, future additions to the allowance will be subject to continuing evaluation of estimated and known, as well as inherent risks in the loan and lease portfolio.
Allowance for Loan and Lease Loss Disclosures.
The assessment of the adequacy of the Company’s allowance for loan and lease losses is based upon a number of quantitative and qualitative factors, including levels and trends of past due and nonaccrual loans and leases, change in volume and mix of loans and leases, collateral values and charge-off history.
The Company provides general loan loss reserves for its automobile (“auto”) and recreational vehicle (“RV”) loans based upon the borrower credit score and the Company’s loss experience to date. The allowance for loan loss for the auto and RV loan portfolio at
March 31, 2016
was determined by classifying each outstanding loan according to semi-annually refreshed FICO score and providing loss rates. The Company had
$45,029
of auto and RV loan balances subject to general reserves as follows: FICO greater than or equal to 770:
$14,988
; 715 – 769:
$16,555
; 700 – 714:
$5,395
; 660 – 699:
$6,114
and less than 660:
$1,977
.
The Company provides general loan loss reserves for mortgage loans based upon the size and class of the mortgage loan and the loan-to-value ratio (“LTV”) at date of origination. The Company divides the LTV analysis into
two
classes, separating the purchased loans from the loans underwritten directly by the Company. Based on historical performance, the Company concluded that originated loans require lower estimated loss rates than purchased loans. The allowance for each class is determined by dividing the outstanding unpaid balance for each loan by the loan-to-value and applying a loss rate. The LTV groupings for each significant mortgage class are as follows:
The Company had
$3,522,877
of single family mortgage portfolio loan balances subject to general reserves as follows: LTV less than or equal to 60%:
$1,885,192
; 61% – 70%:
$1,317,437
; 71% – 80%:
$320,045
; and greater than 80%:
$203
.
The Company had
$1,272,206
of multifamily mortgage portfolio loan balances subject to general reserves as follows: LTV less than or equal to 55%:
$557,270
; 56% – 65%:
$418,087
; 66% – 75%:
$282,475
; 76% – 80%:
$14,374
and greater than 80%:
$0
.
The Company had
$98,419
of commercial real estate loan balances subject to general reserves as follows: LTV less than or equal to 50%:
$33,126
; 51% – 60%:
$24,237
; 61% – 70%:
$36,770
; and 71% – 80%:
$4,286
.
The Company’s lender finance portfolio consists of business loans well-collateralized by residential real estate. The Company’s commercial & industrial portfolio consists of business loans and leases well-collateralized by business assets, including the equipment leases from Pacific Western Equipment Finance purchased on March 31, 2016. The Company’s other portfolio consists of other consumer loans. The Company allocates its allowance for loan and lease losses for these asset types based on qualitative factors which consider the value of the collateral and the financial position of the issuer of the receivables.
The following tables summarize activity in the allowance for loan and lease losses by portfolio classes for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home Equity
|
|
Warehouse & Other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other/Consumer
|
|
Total
|
Balance at January 1, 2016
|
$
|
17,167
|
|
|
$
|
45
|
|
|
$
|
2,643
|
|
|
$
|
3,293
|
|
|
$
|
736
|
|
|
$
|
1,840
|
|
|
$
|
359
|
|
|
$
|
6,602
|
|
|
$
|
2,386
|
|
|
$
|
35,071
|
|
Provision for loan and lease loss
|
947
|
|
|
(20
|
)
|
|
(170
|
)
|
|
637
|
|
|
20
|
|
|
(611
|
)
|
|
3
|
|
|
1,055
|
|
|
139
|
|
|
2,000
|
|
Charge-offs
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
|
(29
|
)
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(187
|
)
|
Recoveries
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
Balance at March 31, 2016
|
$
|
18,086
|
|
|
$
|
32
|
|
|
$
|
2,473
|
|
|
$
|
3,816
|
|
|
$
|
727
|
|
|
$
|
1,253
|
|
|
$
|
362
|
|
|
$
|
7,657
|
|
|
$
|
2,525
|
|
|
$
|
36,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home Equity
|
|
Warehouse & Other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other/Consumer
|
|
Total
|
Balance at January 1, 2015
|
$
|
11,792
|
|
|
$
|
97
|
|
|
$
|
1,585
|
|
|
$
|
4,234
|
|
|
$
|
985
|
|
|
$
|
1,053
|
|
|
$
|
270
|
|
|
$
|
3,153
|
|
|
$
|
18
|
|
|
$
|
23,187
|
|
Provision for loan and lease loss
|
1,400
|
|
|
53
|
|
|
484
|
|
|
203
|
|
|
(36
|
)
|
|
(73
|
)
|
|
24
|
|
|
758
|
|
|
87
|
|
|
2,900
|
|
Charge-offs
|
(694
|
)
|
|
(30
|
)
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(823
|
)
|
Recoveries
|
137
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
191
|
|
Balance at March 31, 2015
|
$
|
12,635
|
|
|
$
|
123
|
|
|
$
|
2,069
|
|
|
$
|
4,393
|
|
|
$
|
949
|
|
|
$
|
970
|
|
|
$
|
294
|
|
|
$
|
3,911
|
|
|
$
|
111
|
|
|
$
|
25,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home Equity
|
|
Warehouse & Other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other/Consumer
|
|
Total
|
Balance at July 1, 2015
|
$
|
13,664
|
|
|
$
|
122
|
|
|
$
|
1,879
|
|
|
$
|
4,363
|
|
|
$
|
1,103
|
|
|
$
|
953
|
|
|
$
|
292
|
|
|
$
|
5,882
|
|
|
$
|
69
|
|
|
$
|
28,327
|
|
Provision for loan and lease loss
|
4,365
|
|
|
(116
|
)
|
|
594
|
|
|
(433
|
)
|
|
(1,329
|
)
|
|
418
|
|
|
70
|
|
|
1,775
|
|
|
2,456
|
|
|
7,800
|
|
Charge-offs
|
(106
|
)
|
|
(2
|
)
|
|
—
|
|
|
(114
|
)
|
|
(29
|
)
|
|
(221
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(472
|
)
|
Recoveries
|
163
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
982
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,276
|
|
Balance at March 31, 2016
|
$
|
18,086
|
|
|
$
|
32
|
|
|
$
|
2,473
|
|
|
$
|
3,816
|
|
|
$
|
727
|
|
|
$
|
1,253
|
|
|
$
|
362
|
|
|
$
|
7,657
|
|
|
$
|
2,525
|
|
|
$
|
36,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended March 31, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home Equity
|
|
Warehouse & Other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other/Consumer
|
|
Total
|
Balance at July 1, 2014
|
$
|
7,959
|
|
|
$
|
134
|
|
|
$
|
1,259
|
|
|
$
|
3,785
|
|
|
$
|
1,035
|
|
|
$
|
812
|
|
|
$
|
279
|
|
|
$
|
3,048
|
|
|
$
|
62
|
|
|
$
|
18,373
|
|
Provision for loan and lease loss
|
5,265
|
|
|
10
|
|
|
810
|
|
|
952
|
|
|
70
|
|
|
278
|
|
|
15
|
|
|
863
|
|
|
37
|
|
|
8,300
|
|
Charge-offs
|
(734
|
)
|
|
(30
|
)
|
|
—
|
|
|
(344
|
)
|
|
(156
|
)
|
|
(201
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,465
|
)
|
Recoveries
|
145
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
247
|
|
Balance at March 31, 2015
|
$
|
12,635
|
|
|
$
|
123
|
|
|
$
|
2,069
|
|
|
$
|
4,393
|
|
|
$
|
949
|
|
|
$
|
970
|
|
|
$
|
294
|
|
|
$
|
3,911
|
|
|
$
|
111
|
|
|
$
|
25,455
|
|
The following tables present our loans and leases evaluated individually for impairment by class:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
Unpaid
Principal Balance
|
|
Principal Balance Adjustment
|
|
Unpaid Book Balance
|
|
Accrued Interest /
Origination Fees
|
|
Recorded Investment
|
|
Related Allowance
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
Single Family Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
$
|
8,989
|
|
|
$
|
717
|
|
|
$
|
8,272
|
|
|
$
|
519
|
|
|
$
|
8,791
|
|
|
$
|
—
|
|
Purchased
|
5,890
|
|
|
2,005
|
|
|
3,885
|
|
|
97
|
|
|
3,982
|
|
|
—
|
|
Multifamily Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Purchased
|
2,532
|
|
|
1,050
|
|
|
1,482
|
|
|
—
|
|
|
1,482
|
|
|
—
|
|
Commercial Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Purchased
|
629
|
|
|
257
|
|
|
372
|
|
|
41
|
|
|
413
|
|
|
—
|
|
Auto and RV Secured:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
930
|
|
|
701
|
|
|
229
|
|
|
14
|
|
|
243
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
Single Family Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
4,493
|
|
|
—
|
|
|
4,493
|
|
|
62
|
|
|
4,555
|
|
|
179
|
|
Purchased
|
2,136
|
|
|
—
|
|
|
2,136
|
|
|
5
|
|
|
2,141
|
|
|
50
|
|
Home Equity:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|
1
|
|
Multifamily Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
3,246
|
|
|
—
|
|
|
3,246
|
|
|
61
|
|
|
3,307
|
|
|
2
|
|
Auto and RV Secured:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
35
|
|
|
—
|
|
|
35
|
|
|
2
|
|
|
37
|
|
|
1
|
|
Total
|
$
|
28,914
|
|
|
$
|
4,730
|
|
|
$
|
24,184
|
|
|
$
|
801
|
|
|
$
|
24,985
|
|
|
$
|
233
|
|
As a % of total gross loans and leases
|
0.48
|
%
|
|
0.08
|
%
|
|
0.40
|
%
|
|
0.01
|
%
|
|
0.41
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
Unpaid Principal Balance
|
|
Principal Balance Adjustment
|
|
Unpaid Book Balance
|
|
Accrued Interest /
Origination Fees
|
|
Recorded Investment
|
|
Related Allowance
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
Single Family Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
$
|
7,000
|
|
|
$
|
657
|
|
|
$
|
6,343
|
|
|
$
|
129
|
|
|
$
|
6,472
|
|
|
$
|
—
|
|
Purchased
|
6,318
|
|
|
2,083
|
|
|
4,235
|
|
|
157
|
|
|
4,392
|
|
|
—
|
|
Multifamily Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Purchased
|
2,569
|
|
|
921
|
|
|
1,648
|
|
|
—
|
|
|
1,648
|
|
|
—
|
|
Commercial Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Purchased
|
3,662
|
|
|
1,534
|
|
|
2,128
|
|
|
254
|
|
|
2,382
|
|
|
—
|
|
Auto and RV Secured:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
1,097
|
|
|
815
|
|
|
282
|
|
|
13
|
|
|
295
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
Single Family Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
10,142
|
|
|
—
|
|
|
10,142
|
|
|
—
|
|
|
10,142
|
|
|
214
|
|
Purchased
|
2,339
|
|
|
—
|
|
|
2,339
|
|
|
9
|
|
|
2,348
|
|
|
45
|
|
Home Equity:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
1
|
|
Multifamily Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
3,430
|
|
|
—
|
|
|
3,430
|
|
|
43
|
|
|
3,473
|
|
|
2
|
|
Purchased
|
321
|
|
|
—
|
|
|
321
|
|
|
20
|
|
|
341
|
|
|
3
|
|
Auto and RV Secured:
|
|
|
|
|
|
|
|
|
|
|
|
In-house originated
|
171
|
|
|
—
|
|
|
171
|
|
|
4
|
|
|
175
|
|
|
8
|
|
Total
|
$
|
37,058
|
|
|
$
|
6,010
|
|
|
$
|
31,048
|
|
|
$
|
629
|
|
|
$
|
31,677
|
|
|
$
|
273
|
|
As a % of total gross loans and leases
|
0.74
|
%
|
|
0.12
|
%
|
|
0.62
|
%
|
|
0.01
|
%
|
|
0.63
|
%
|
|
0.01
|
%
|
The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases by portfolio segment and based on impairment evaluation method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse and other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Allowance for loan and lease losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance balance attributable to loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
$
|
229
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
233
|
|
Collectively evaluated for impairment
|
17,857
|
|
|
31
|
|
|
2,473
|
|
|
3,814
|
|
|
727
|
|
|
1,252
|
|
|
362
|
|
|
7,657
|
|
|
2,525
|
|
|
36,698
|
|
Total ending allowance balance
|
$
|
18,086
|
|
|
$
|
32
|
|
|
$
|
2,473
|
|
|
$
|
3,816
|
|
|
$
|
727
|
|
|
$
|
1,253
|
|
|
$
|
362
|
|
|
$
|
7,657
|
|
|
$
|
2,525
|
|
|
$
|
36,931
|
|
Loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases individually evaluated for impairment
1
|
$
|
18,786
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
4,728
|
|
|
$
|
372
|
|
|
$
|
264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,184
|
|
Loans and leases collectively evaluated for impairment
|
3,522,877
|
|
|
3,122
|
|
|
506,031
|
|
|
1,272,206
|
|
|
98,419
|
|
|
45,029
|
|
|
145,485
|
|
|
480,939
|
|
|
4,374
|
|
|
6,078,482
|
|
Principal loan and lease balance
|
3,541,663
|
|
|
3,156
|
|
|
506,031
|
|
|
1,276,934
|
|
|
98,791
|
|
|
45,293
|
|
|
145,485
|
|
|
480,939
|
|
|
4,374
|
|
|
6,102,666
|
|
Unaccreted discounts and loan and lease fees
|
13,390
|
|
|
20
|
|
|
(2,467
|
)
|
|
4,096
|
|
|
425
|
|
|
615
|
|
|
(48,838
|
)
|
|
1,777
|
|
|
(53
|
)
|
|
(31,035
|
)
|
Accrued interest receivable
|
12,609
|
|
|
5
|
|
|
1,787
|
|
|
5,136
|
|
|
345
|
|
|
127
|
|
|
341
|
|
|
675
|
|
|
78
|
|
|
21,103
|
|
Total recorded investment in loans and leases
|
$
|
3,567,662
|
|
|
$
|
3,181
|
|
|
$
|
505,351
|
|
|
$
|
1,286,166
|
|
|
$
|
99,561
|
|
|
$
|
46,035
|
|
|
$
|
96,988
|
|
|
$
|
483,391
|
|
|
$
|
4,399
|
|
|
$
|
6,092,734
|
|
________________
1.
Loans and leases evaluated for impairment include Troubled Debt Restructurings (“TDRs”) that have been performing for more than
six months
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse and other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate
Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Allowance for loan and lease losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance balance attributable to loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
$
|
259
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
273
|
|
Collectively evaluated for impairment
|
13,405
|
|
|
121
|
|
|
1,879
|
|
|
4,358
|
|
|
1,103
|
|
|
945
|
|
|
292
|
|
|
5,882
|
|
|
69
|
|
|
28,054
|
|
Total ending allowance balance
|
$
|
13,664
|
|
|
$
|
122
|
|
|
$
|
1,879
|
|
|
$
|
4,363
|
|
|
$
|
1,103
|
|
|
$
|
953
|
|
|
$
|
292
|
|
|
$
|
5,882
|
|
|
$
|
69
|
|
|
$
|
28,327
|
|
Loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases individually evaluated for impairment
1
|
$
|
23,059
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
5,399
|
|
|
$
|
2,128
|
|
|
$
|
453
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,048
|
|
Loans and leases collectively evaluated for impairment
|
2,957,736
|
|
|
3,595
|
|
|
385,413
|
|
|
1,180,132
|
|
|
59,275
|
|
|
12,687
|
|
|
122,200
|
|
|
248,584
|
|
|
601
|
|
|
4,970,223
|
|
Principal loan and lease balance
|
2,980,795
|
|
|
3,604
|
|
|
385,413
|
|
|
1,185,531
|
|
|
61,403
|
|
|
13,140
|
|
|
122,200
|
|
|
248,584
|
|
|
601
|
|
|
5,001,271
|
|
Unaccreted discounts and loan and lease fees
|
10,438
|
|
|
11
|
|
|
(83
|
)
|
|
3,348
|
|
|
96
|
|
|
149
|
|
|
(57,223
|
)
|
|
(1,062
|
)
|
|
—
|
|
|
(44,326
|
)
|
Accrued interest receivable
|
10,530
|
|
|
5
|
|
|
306
|
|
|
4,862
|
|
|
145
|
|
|
73
|
|
|
477
|
|
|
1,159
|
|
|
—
|
|
|
17,557
|
|
Total recorded investment in loans and leases
|
$
|
3,001,763
|
|
|
$
|
3,620
|
|
|
$
|
385,636
|
|
|
$
|
1,193,741
|
|
|
$
|
61,644
|
|
|
$
|
13,362
|
|
|
$
|
65,454
|
|
|
$
|
248,681
|
|
|
$
|
601
|
|
|
$
|
4,974,502
|
|
________________
1.
Loans and leases evaluated for impairment include TDRs that have been performing for more than
six months
.
Credit Quality Disclosures.
Non-performing loans and leases consisted of the following as of the dates indicated:
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
March 31,
2016
|
|
June 30,
2015
|
Single Family Real Estate Secured:
|
|
|
|
Mortgage:
|
|
|
|
In-house originated
|
$
|
12,765
|
|
|
$
|
16,485
|
|
Purchased
|
5,809
|
|
|
6,357
|
|
Home Equity:
|
|
|
|
In-house originated
|
34
|
|
|
9
|
|
Multifamily Real Estate Secured:
|
|
|
|
In-house originated
|
3,246
|
|
|
3,430
|
|
Purchased
|
1,482
|
|
|
1,969
|
|
Commercial Real Estate Secured:
|
|
|
|
Purchased
|
372
|
|
|
2,128
|
|
Total non-performing loans secured by real estate
|
23,708
|
|
|
30,378
|
|
Auto and RV Secured
|
264
|
|
|
453
|
|
Total non-performing loans and leases
|
$
|
23,972
|
|
|
$
|
30,831
|
|
Non-performing loans and leases to total loans and leases
|
0.39
|
%
|
|
0.62
|
%
|
The Company has
no
loans and leases over
90 days
delinquent that are still accruing interest at
March 31, 2016
. Approximately
77.48%
of the Company’s non-performing loans and leases are single family first mortgages already written down to
65.37%
in aggregate, of the original appraisal value of the underlying properties.
The following tables present the outstanding unpaid balance of loans and leases that are performing and non-performing by portfolio class:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Performing
|
$
|
3,523,089
|
|
|
$
|
3,122
|
|
|
$
|
506,031
|
|
|
$
|
1,272,206
|
|
|
$
|
98,419
|
|
|
$
|
45,029
|
|
|
$
|
145,485
|
|
|
$
|
480,939
|
|
|
$
|
4,374
|
|
|
$
|
6,078,694
|
|
Non-performing
|
18,574
|
|
|
34
|
|
|
—
|
|
|
4,728
|
|
|
372
|
|
|
264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,972
|
|
Total
|
$
|
3,541,663
|
|
|
$
|
3,156
|
|
|
$
|
506,031
|
|
|
$
|
1,276,934
|
|
|
$
|
98,791
|
|
|
$
|
45,293
|
|
|
$
|
145,485
|
|
|
$
|
480,939
|
|
|
$
|
4,374
|
|
|
$
|
6,102,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Performing
|
$
|
2,957,953
|
|
|
$
|
3,595
|
|
|
$
|
385,413
|
|
|
$
|
1,180,132
|
|
|
$
|
59,275
|
|
|
$
|
12,687
|
|
|
$
|
122,200
|
|
|
$
|
248,584
|
|
|
$
|
601
|
|
|
$
|
4,970,440
|
|
Non-performing
|
22,842
|
|
|
9
|
|
|
—
|
|
|
5,399
|
|
|
2,128
|
|
|
453
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,831
|
|
Total
|
$
|
2,980,795
|
|
|
$
|
3,604
|
|
|
$
|
385,413
|
|
|
$
|
1,185,531
|
|
|
$
|
61,403
|
|
|
$
|
13,140
|
|
|
$
|
122,200
|
|
|
$
|
248,584
|
|
|
$
|
601
|
|
|
$
|
5,001,271
|
|
The Company divides loan balances when determining general loan loss reserves between purchases and originations as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Single Family Real Estate Secured: Mortgage
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
(Dollars in thousands)
|
Origination
|
|
Purchase
|
|
Total
|
|
Origination
|
|
Purchase
|
|
Total
|
|
Origination
|
|
Purchase
|
|
Total
|
Performing
|
$
|
3,448,448
|
|
|
$
|
74,641
|
|
|
$
|
3,523,089
|
|
|
$
|
1,163,275
|
|
|
$
|
108,931
|
|
|
$
|
1,272,206
|
|
|
$
|
86,227
|
|
|
$
|
12,192
|
|
|
$
|
98,419
|
|
Non-performing
|
12,765
|
|
|
5,809
|
|
|
18,574
|
|
|
3,246
|
|
|
1,482
|
|
|
4,728
|
|
|
—
|
|
|
372
|
|
|
372
|
|
Total
|
$
|
3,461,213
|
|
|
$
|
80,450
|
|
|
$
|
3,541,663
|
|
|
$
|
1,166,521
|
|
|
$
|
110,413
|
|
|
$
|
1,276,934
|
|
|
$
|
86,227
|
|
|
$
|
12,564
|
|
|
$
|
98,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Single Family Real Estate Secured: Mortgage
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
(Dollars in thousands)
|
Origination
|
|
Purchase
|
|
Total
|
|
Origination
|
|
Purchase
|
|
Total
|
|
Origination
|
|
Purchase
|
|
Total
|
Performing
|
$
|
2,869,119
|
|
|
$
|
88,834
|
|
|
$
|
2,957,953
|
|
|
$
|
1,048,266
|
|
|
$
|
131,866
|
|
|
$
|
1,180,132
|
|
|
$
|
46,577
|
|
|
$
|
12,698
|
|
|
$
|
59,275
|
|
Non-performing
|
16,485
|
|
|
6,357
|
|
|
22,842
|
|
|
3,430
|
|
|
1,969
|
|
|
5,399
|
|
|
—
|
|
|
2,128
|
|
|
2,128
|
|
Total
|
$
|
2,885,604
|
|
|
$
|
95,191
|
|
|
$
|
2,980,795
|
|
|
$
|
1,051,696
|
|
|
$
|
133,835
|
|
|
$
|
1,185,531
|
|
|
$
|
46,577
|
|
|
$
|
14,826
|
|
|
$
|
61,403
|
|
From time to time the Company modifies loan terms temporarily for borrowers who are experiencing financial stress. These loans are performing and accruing and will generally return to the original loan terms after the modification term expires.
Approximately
13.61%
of our non-performing loans and leases at
March 31, 2016
were considered TDRs, compared to
16.08%
at
June 30, 2015
. Borrowers that make timely payments after TDRs are considered non-performing for at least
six months
. Generally, after
six months
of timely payments, those TDRs are reclassified from the non-performing loan and lease category to the performing loan and lease category and any previously deferred interest income is recognized.
The Company classifies these loans as performing loans temporarily modified as TDR and are included in impaired loans and leases as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Performing loans temporarily modified as TDR
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
212
|
|
Non-performing loans and leases
|
18,574
|
|
|
34
|
|
|
—
|
|
|
4,728
|
|
|
372
|
|
|
264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,972
|
|
Total impaired loans and leases
|
$
|
18,786
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
4,728
|
|
|
$
|
372
|
|
|
$
|
264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Performing loans temporarily modified as TDR
|
$
|
217
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
217
|
|
Non-performing loans and leases
|
22,842
|
|
|
9
|
|
|
—
|
|
|
5,399
|
|
|
2,128
|
|
|
453
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,831
|
|
Total impaired loans and leases
|
$
|
23,059
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
5,399
|
|
|
$
|
2,128
|
|
|
$
|
453
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,048
|
|
The Company recognizes interest on performing loans temporarily modified as TDR, which is shown in conjunction with average balances as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Interest income recognized on performing TDRs
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Average balances of performing TDRs
|
$
|
213
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
213
|
|
Average balances of impaired loans
|
$
|
19,977
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
4,787
|
|
|
$
|
372
|
|
|
$
|
282
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Interest income recognized on performing TDRs
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Average balances of performing TDRs
|
$
|
377
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
377
|
|
Average balances of impaired loans
|
$
|
27,097
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
5,327
|
|
|
$
|
2,164
|
|
|
$
|
430
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended March 31, 2016
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Interest income recognized on performing TDRs
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Average balances of performing TDRs
|
$
|
215
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
215
|
|
Average balances of impaired loans
|
$
|
21,559
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
5,064
|
|
|
$
|
1,147
|
|
|
$
|
340
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended March 31, 2015
|
|
Single Family Real Estate Secured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Mortgage
|
|
Home
Equity
|
|
Warehouse & other
|
|
Multifamily Real Estate Secured
|
|
Commercial Real Estate Secured
|
|
Auto and RV Secured
|
|
Factoring
|
|
Commercial & Industrial
|
|
Other
|
|
Total
|
Interest income recognized on performing TDRs
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34
|
|
Average balances of performing TDRs
|
$
|
570
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
348
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
918
|
|
Average balances of impaired loans
|
$
|
20,618
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
5,300
|
|
|
$
|
3,253
|
|
|
$
|
464
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,697
|
|
The Company’s loan modifications primarily included single family, multifamily and commercial loans of which included one or a combination of the following: a reduction of the stated interest rate or delinquent property taxes that were paid by the Bank and either repaid by the borrower over a
one year
period or capitalized and amortized over the remaining life of the loan. The Company’s loan modifications also included RV loans in which borrowers were able to make interest-only payments for a period of
six months
to
one year
which then reverted back to fully amortizing.
Credit Quality Indicators
The Company categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans and leases based on credit risk. The Company uses the following definitions for risk ratings.
Pass.
Loans and leases classified as pass are well protected by the current net worth and paying capacity of the obligor or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.
Special Mention
. Loans and leases classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or of the institution’s credit position at some future date.
Substandard
. Loans and leases classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful
. Loans and leases classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The Company reviews and grades loans and leases following a continuous review process, featuring coverage of all loan and lease types and business lines at least quarterly. Continuous reviewing provides more effective risk monitoring because it immediately tests for potential impacts caused by changes in personnel, policy, products or underwriting standards.
The following table presents the composition of the Company’s loan and lease portfolio by credit quality indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
Pass
|
|
Special
Mention
|
|
Substandard
|
|
Doubtful
|
|
Total
|
Single Family Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
$
|
3,423,247
|
|
|
$
|
19,713
|
|
|
$
|
18,253
|
|
|
$
|
—
|
|
|
$
|
3,461,213
|
|
Purchased
|
73,891
|
|
|
64
|
|
|
6,495
|
|
|
—
|
|
|
80,450
|
|
Home Equity:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
3,104
|
|
|
17
|
|
|
35
|
|
|
—
|
|
|
3,156
|
|
Warehouse and other:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
501,500
|
|
|
4,531
|
|
|
—
|
|
|
—
|
|
|
506,031
|
|
Multifamily Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
1,158,436
|
|
|
4,839
|
|
|
3,246
|
|
|
—
|
|
|
1,166,521
|
|
Purchased
|
105,084
|
|
|
2,781
|
|
|
2,548
|
|
|
—
|
|
|
110,413
|
|
Commercial Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
86,227
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,227
|
|
Purchased
|
10,169
|
|
|
2,023
|
|
|
372
|
|
|
—
|
|
|
12,564
|
|
Auto and RV Secured:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
44,969
|
|
|
17
|
|
|
307
|
|
|
—
|
|
|
45,293
|
|
Factoring:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
145,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145,485
|
|
Commercial & Industrial:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
342,911
|
|
|
—
|
|
|
1,190
|
|
|
—
|
|
|
344,101
|
|
Purchased
|
136,838
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
136,838
|
|
Other
|
1,140
|
|
|
3,234
|
|
|
—
|
|
|
—
|
|
|
4,374
|
|
Total
|
$
|
6,033,001
|
|
|
$
|
37,219
|
|
|
$
|
32,446
|
|
|
$
|
—
|
|
|
$
|
6,102,666
|
|
As a % of total gross loans and leases
|
98.9
|
%
|
|
0.6
|
%
|
|
0.5
|
%
|
|
—
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
Pass
|
|
Special
Mention
|
|
Substandard
|
|
Doubtful
|
|
Total
|
Single Family Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
$
|
2,855,637
|
|
|
$
|
11,256
|
|
|
$
|
18,711
|
|
|
$
|
—
|
|
|
$
|
2,885,604
|
|
Purchased
|
87,256
|
|
|
216
|
|
|
7,719
|
|
|
—
|
|
|
95,191
|
|
Home Equity:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
3,473
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
3,604
|
|
Warehouse and other:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
375,588
|
|
|
9,825
|
|
|
—
|
|
|
—
|
|
|
385,413
|
|
Multifamily Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
1,036,718
|
|
|
10,926
|
|
|
4,052
|
|
|
—
|
|
|
1,051,696
|
|
Purchased
|
127,839
|
|
|
3,470
|
|
|
2,526
|
|
|
—
|
|
|
133,835
|
|
Commercial Real Estate Secured:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
46,577
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,577
|
|
Purchased
|
9,947
|
|
|
2,444
|
|
|
2,435
|
|
|
—
|
|
|
14,826
|
|
Auto and RV Secured:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
12,630
|
|
|
19
|
|
|
491
|
|
|
—
|
|
|
13,140
|
|
Factoring:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
122,200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122,200
|
|
Commercial & Industrial:
|
|
|
|
|
|
|
|
|
|
In-house originated
|
239,415
|
|
|
9,169
|
|
|
—
|
|
|
—
|
|
|
248,584
|
|
Other
|
601
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
601
|
|
Total
|
$
|
4,917,881
|
|
|
$
|
47,325
|
|
|
$
|
36,065
|
|
|
$
|
—
|
|
|
$
|
5,001,271
|
|
As a % of total gross loans and leases
|
98.3
|
%
|
|
1.0
|
%
|
|
0.7
|
%
|
|
—
|
%
|
|
100.0
|
%
|
The Company considers the performance of the loan and lease portfolio and its impact on the allowance for loan and lease losses. The Company also evaluates credit quality based on the aging status of its loans and leases. The following table provides the outstanding unpaid balance of loans and leases that are past due
30 days
or more by portfolio class as of the period indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
(Dollars in thousands)
|
30-59 Days Past Due
|
|
60-89 Days Past Due
|
|
90+ Days Past Due
|
|
Total
|
Single family real estate secured:
|
|
|
|
|
|
|
|
Mortgage:
|
|
|
|
|
|
|
|
In-house originated
|
$
|
2,956
|
|
|
$
|
4,634
|
|
|
$
|
12,734
|
|
|
$
|
20,324
|
|
Purchased
|
386
|
|
|
437
|
|
|
2,475
|
|
|
3,298
|
|
Home equity:
|
|
|
|
|
|
|
|
In-house originated
|
—
|
|
|
17
|
|
|
29
|
|
|
46
|
|
Multifamily real estate secured:
|
|
|
|
|
|
|
|
In-house originated
|
—
|
|
|
—
|
|
|
791
|
|
|
791
|
|
Commercial real estate secured:
|
|
|
|
|
|
|
|
Purchased
|
—
|
|
|
—
|
|
|
372
|
|
|
372
|
|
Auto and RV secured
|
348
|
|
|
17
|
|
|
58
|
|
|
423
|
|
Other
|
1,059
|
|
|
3,234
|
|
|
—
|
|
|
4,293
|
|
Total
|
$
|
4,749
|
|
|
$
|
8,339
|
|
|
$
|
16,459
|
|
|
$
|
29,547
|
|
As a % of total gross loans and leases
|
0.07
|
%
|
|
0.14
|
%
|
|
0.27
|
%
|
|
0.48
|
%
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
(Dollars in thousands)
|
30-59 Days Past Due
|
|
60-89 Days Past Due
|
|
90+ Days Past Due
|
|
Total
|
Single family real estate secured:
|
|
|
|
|
|
|
|
Mortgage
|
|
|
|
|
|
|
|
In-house originated
|
$
|
1,275
|
|
|
$
|
2,876
|
|
|
$
|
11,450
|
|
|
$
|
15,601
|
|
Purchased
|
472
|
|
|
—
|
|
|
3,371
|
|
|
3,843
|
|
Home equity
|
|
|
|
|
|
|
|
In-house originated
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
Multifamily real estate secured
|
|
|
|
|
|
|
|
In-house originated
|
244
|
|
|
—
|
|
|
791
|
|
|
1,035
|
|
Purchased
|
—
|
|
|
—
|
|
|
321
|
|
|
321
|
|
Commercial real estate secured
|
|
|
|
|
|
|
|
Purchased
|
782
|
|
|
—
|
|
|
382
|
|
|
1,164
|
|
Auto and RV secured
|
|
|
|
|
|
|
|
In-house originated
|
271
|
|
|
125
|
|
|
67
|
|
|
463
|
|
Total
|
$
|
3,174
|
|
|
$
|
3,001
|
|
|
$
|
16,382
|
|
|
$
|
22,557
|
|
As a % of total gross loans and leases
|
0.06
|
%
|
|
0.06
|
%
|
|
0.33
|
%
|
|
0.45
|
%
|
|
|
6.
|
SUBORDINATED NOTES AND DEBENTURES
|
Subordinated Notes
. In March 2016, the Company completed the sale of
$51,000
aggregate principal amount of its
6.25%
Subordinated Notes due
February 28, 2026
(the “Notes”). The Company received
$51,000
in gross proceeds as a part of this transaction, before the
3.15%
underwriting discount and other offering expenses. The Notes mature on
February 28, 2026
and accrue interest at a rate of
6.25%
per annum, with interest payable quarterly. The Notes may be redeemed on or after
March 31, 2021
, which date may be extended at the Company’s discretion, at a redemption price equal to principal plus accrued and unpaid interest, subject to certain conditions.
Subordinated Debentures.
In
December 2004
, the Company entered into an agreement to form an unconsolidated trust which issued
$5,000
of trust preferred securities. The net proceeds from the offering were used to purchase
$5,155
of subordinated debentures (the “Debentures”) of the Company with a stated maturity date of
February 23, 2035
. The Debentures are the sole assets of the trust. The trust preferred securities are mandatorily redeemable upon maturity, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the Debentures in whole, but not in part, on or after specific dates, at a redemption price specified in the indenture plus any accrued but unpaid interest through the redemption date. Interest accrues at the rate of
3 months
LIBOR plus
2.4%
(with LIBOR at
1.59%
as of
March 31, 2016
), with interest paid
quarterly
starting
February 16, 2005
.
7. EQUITY AND STOCK-BASED COMPENSATION
On October 22, 2015, the stockholders of the Company approved and in November 2015 the Company’s Board of Directors adopted an amendment to the Company’s certificate of incorporation (the “Amendment”) to increase the number of authorized shares of common stock available for issuance from
50,000,000
to
150,000,000
shares. The purpose for the Amendment was to accommodate a forward stock split through a stock dividend whereby each share of common stock would effectively be split into four shares of common stock (the “Stock Split”). On October 26, 2015, the Board of Directors approved the Stock Split. The Company issued a dividend of three shares of common stock for every one share issued and outstanding as of November 6, 2015. The dividend was paid on November 17, 2015, and BOFI common stock began trading on a split-adjusted basis on November 18, 2015. Common stock share, per-share, option and restricted stock unit amounts for all comparative periods provided have been retroactively adjusted to reflect the effects of the Stock Split.
On March 17, 2016, the Board of Directors of the Company, authorized a program to repurchase up to
$100 million
of common stock. The new share repurchase authorization replaces the previous share repurchase plan approved on July 5, 2005. The Company may repurchase shares on the open market or through privately negotiated transactions at times and prices considered appropriate, at the discretion of the Company, and subject to its assessment of alternative uses of capital, stock trading price, general market conditions and regulatory factors. The repurchase program does not obligate the Company to acquire any specific number of shares. The share repurchase program will continue in effect until terminated by the Board of Directors of the Company.
The Company has
two
equity incentive plans, the 2014 Stock Incentive Plan (“2014 Plan”) and the 2004 Stock Incentive Plan (“2004 Plan” and collectively, the “Plans”), which provide for the granting of non-qualified and incentive stock options, restricted stock and restricted stock units, stock appreciation rights and other awards to employees, directors and consultants. The Plans are designed to encourage selected employees and directors to improve operations and increase profits, and to accept or continue employment or association with the Company through participation in the growth in the value of the common stock. The Plans require that option exercise prices be not less than fair market value per share of common stock on the option grant date for incentive and non-qualified options. The options issued under the Plans generally vest in between
three
and
five
years. Option expiration dates are established by the Plans’ administrator but may not be later than
10
years after the date of the grant.
2004 Stock Incentive Plan
. In October 2004, the Company’s Board of Directors and the stockholders approved the 2004 Plan. In November 2007, the 2004 Plan was amended and approved by the Company’s stockholders. The maximum number of shares of common stock available for issuance under the 2004 Plan is
14.8%
of the Company’s outstanding common stock measured from time to time. In addition, the number of shares of the Company’s common stock reserved for issuance will also automatically increase by an additional
1.5%
on the first day of each of
four
fiscal years starting July 1, 2007. With the stockholders approving the 2014 Plan in October 2014, no further awards will be made under the 2004 Plan and the 2004 Plan will remain in effect only so long as awards made thereunder remain outstanding.
2014 Stock Incentive Plan
. In September and October 2014, the Company’s Board of Directors and stockholders approved the 2014 Plan, respectively. The maximum number of shares of common stock available for issuance under the 2014 Plan is
3,680,000
.
Stock Options
. At
March 31, 2016
and at
June 30, 2015
, all expense related to stock option grants has been fully recognized.
A summary of stock option activity under the Plans during the periods indicated is presented below:
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted-Average
Exercise Price
Per Share
|
Outstanding—June 30, 2014
|
427,800
|
|
|
$
|
2.18
|
|
Granted
|
—
|
|
|
—
|
|
Exercised
|
(345,400
|
)
|
|
2.26
|
|
Canceled
|
—
|
|
|
—
|
|
Outstanding—June 30, 2015
|
82,400
|
|
|
$
|
1.84
|
|
Granted
|
—
|
|
|
—
|
|
Exercised
|
(80,800
|
)
|
|
1.84
|
|
Canceled
|
—
|
|
|
—
|
|
Outstanding—March 31, 2016
|
1,600
|
|
|
$
|
1.84
|
|
Options exercisable—June 30, 2014
|
427,800
|
|
|
$
|
2.18
|
|
Options exercisable—June 30, 2015
|
82,400
|
|
|
$
|
1.84
|
|
Options exercisable—March 31, 2016
|
1,600
|
|
|
$
|
1.84
|
|
The following table summarizes information on currently outstanding and exercisable options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2016
|
Options Outstanding
|
|
Options Exercisable
|
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted-Average
Remaining
Contractual Life (Years)
|
|
Number
Exercisable
|
|
Weighted-
Average
Exercise Price
|
$
|
1.84
|
|
|
1,600
|
|
|
0.32
|
|
1,600
|
|
|
$
|
1.84
|
|
The aggregate intrinsic value of options outstanding and options exercisable under the Plans at
March 31, 2016
was
$31
and
$31
, respectively.
Restricted Stock and Restricted Stock Units
. Employees and directors are eligible to receive grants of restricted stock and restricted stock units. The Company determines stock-based compensation expense using the fair value method. The fair value of restricted stock and restricted stock units is equal to the closing sale price of the Company’s common stock on the date of grant.
During the
nine months
ended
March 31, 2016
and
2015
, the Company granted
615,362
and
648,596
restricted stock units, to employees and directors, respectively. Restricted stock unit awards (“RSUs”) granted during these quarters vest over
three
years, one-third on each anniversary date, except for any RSUs granted to our CEO, which vest one-fourth on each fiscal year end.
The Company’s income before income taxes and net income for the three months ended
March 31, 2016
and
March 31, 2015
included stock award expense of
$3,353
and
$1,772
, with total income tax benefit of
$1,394
and $
728
, respectively. For the nine months ended
March 31, 2016
and
March 31, 2015
stock award expense was
$8,470
and
$4,787
, with total income tax benefit of
$3,532
and
$1,967
, respectively. The Company recognizes compensation expense based upon the grant-date fair value divided by the vesting and the service period between each vesting date. At
March 31, 2016
, unrecognized compensation expense related to non-vested awards aggregated to
$24,825
and is expected to be recognized in future periods as follows:
|
|
|
|
|
(Dollars in thousands)
|
Stock Award
Compensation
Expense
|
For the fiscal year remainder:
|
|
2016
|
$
|
3,171
|
|
2017
|
10,987
|
|
2018
|
7,749
|
|
2019
|
2,918
|
|
Total
|
$
|
24,825
|
|
The following table presents the status and changes in restricted stock unit grants for the periods indicated:
|
|
|
|
|
|
|
|
|
Restricted
Stock Unit Shares
|
|
Weighted-Average
Grant-Date
Fair Value
|
Non-vested balance at June 30, 2014
|
945,756
|
|
|
$
|
10.29
|
|
Granted
|
775,836
|
|
|
19.99
|
|
Vested
|
(519,400
|
)
|
|
10.11
|
|
Canceled
|
(67,104
|
)
|
|
14.13
|
|
Non-vested balance at June 30, 2015
|
1,135,088
|
|
|
$
|
17.01
|
|
Granted
|
615,362
|
|
|
26.61
|
|
Vested
|
(262,747
|
)
|
|
13.77
|
|
Canceled
|
(80,511
|
)
|
|
20.26
|
|
Non-vested balance at March 31, 2016
|
1,407,192
|
|
|
$
|
21.44
|
|
The total fair value of shares vested for the three and
nine
months ended
March 31, 2016
was
$155
and
$7,303
. The total fair value of shares vested for the three and
nine
months ended
March 31, 2015
was
$288
and
$5,223
.
|
|
8.
|
EARNINGS PER SHARE (“EPS”)
|
Basic EPS excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted to common stock that would then share in the Company’s earnings.
The following table presents the calculation of basic and diluted EPS as adjusted to reflect the effects of the Stock Split:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
March 31,
|
|
March 31,
|
(Dollars in thousands, except per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Earnings Per Common Share
1
|
|
|
|
|
|
|
|
Net income
|
$
|
35,914
|
|
|
$
|
21,074
|
|
|
$
|
89,564
|
|
|
$
|
58,287
|
|
Preferred stock dividends
|
(77
|
)
|
|
(77
|
)
|
|
(232
|
)
|
|
(232
|
)
|
Net income attributable to common shareholders
|
$
|
35,837
|
|
|
$
|
20,997
|
|
|
$
|
89,332
|
|
|
$
|
58,055
|
|
Average common shares issued and outstanding
|
63,066,262
|
|
|
60,889,204
|
|
|
62,849,818
|
|
|
59,500,280
|
|
Average unvested RSU shares
|
1,419,603
|
|
|
1,291,012
|
|
|
1,345,764
|
|
|
1,214,684
|
|
Total qualifying shares
|
64,485,865
|
|
|
62,180,216
|
|
|
64,195,582
|
|
|
60,714,964
|
|
Earnings per common share
|
$
|
0.56
|
|
|
$
|
0.34
|
|
|
$
|
1.39
|
|
|
$
|
0.96
|
|
Diluted Earnings Per Common Share
1
|
|
|
|
|
|
|
|
Net income attributable to common shareholders
|
$
|
35,837
|
|
|
$
|
20,997
|
|
|
$
|
89,332
|
|
|
$
|
58,055
|
|
Dilutive net income attributable to common shareholders
|
$
|
35,837
|
|
|
$
|
20,997
|
|
|
$
|
89,332
|
|
|
$
|
58,055
|
|
Average common shares issued and outstanding
|
64,485,865
|
|
|
62,180,216
|
|
|
64,195,582
|
|
|
60,714,964
|
|
Dilutive effect of stock options
|
951
|
|
|
237,544
|
|
|
7,625
|
|
|
236,088
|
|
Total dilutive common shares issued and outstanding
|
64,486,816
|
|
|
62,417,760
|
|
|
64,203,207
|
|
|
60,951,052
|
|
Diluted earnings per common share
|
$
|
0.56
|
|
|
$
|
0.34
|
|
|
$
|
1.39
|
|
|
$
|
0.95
|
|
1. Share and per share amounts have been retroactively restated for all prior periods presented to reflect the four-for-one forward split of the Company’s common stock effected in the form of a stock dividend that was distributed on November 17, 2015
|
|
9.
|
COMMITMENTS AND CONTINGENCIES
|
Credit-Related Financial Instruments
. The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments.
At
March 31, 2016
, the Company had commitments to originate
$91,724
in fixed rate loans and
$133,203
in variable rate loans, totaling an aggregate outstanding principal balance of
$224,927
. Our fixed rate loan commitments to originate had rates ranging from
2.75%
to
6.59%
. At
March 31, 2016
, the Company also had commitments to sell
$105,352
in fixed rate loans and
$1,431
in variable rate loans, totaling an aggregate outstanding principal balance of
$106,783
. At
March 31, 2016
, the Company also had commitments to originate fixed rate leases of
$2,095
.
Commitments to extend credit are agreements to lend to a customer so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.
Litigation.
On October 15, 2015, the Company, its Chief Executive Officer and its Chief Financial Officer were named defendants in a putative class action lawsuit styled
Golden v. BofI Holding, Inc., et al
, and brought in United States District Court for the Southern District of California (the “Golden Case”). On November 3, 2015, the Company, its Chief Executive Officer and its Chief Financial Officer were named defendants in a second putative class action lawsuit styled
Hazan v. BofI Holding, Inc., et al
, and also brought in the United States District Court for the Southern District of California (the “Hazan Case”). On February 1, 2016, the Golden Case and the Hazan Case were consolidated as
In re BofI Holding, Inc. Securities Litigation,
Case #: 3:15-cv-02324-GPC-KSC (the “Class Action”), and the Houston Municipal Employees Pension System was appointed lead plaintiff. The Class Action complaint was amended by a certain Consolidated Amended Class Complaint filed on April 11, 2016. The Class Action plaintiff seeks monetary damages and other relief on behalf of a putative class that has not been certified by the Court.
The complaints filed in the Golden Case and the Hazan Case both allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by failing to disclose the wrongful conduct that is alleged in a complaint that was filed in a wrongful termination of employment lawsuit (the “Employment Matter”), and that as a result the Company’s statements regarding its internal controls, as well as portions of its financial statements, were false and misleading. The Company and the other named defendants dispute the allegations advanced by the plaintiffs in the Class Action and in the Employment Matter, as well as those plaintiffs’ statement of the underlying factual circumstances, and are vigorously defending both cases.
In addition to the Class Action, two separate shareholder derivative actions were filed in December, 2015, purportedly on behalf of the Company. The first derivative action,
Calcaterra v. Garrabrants
, et al, was filed in the United States District Court for the Southern District of California on December 3, 2015. The second derivative action,
Dow v. Micheletti
, et al, was filed in the San Diego County Superior Court on December 16, 2015. A third derivative action,
DeYoung v. Garrabrants
, et al, was filed in the United States District Court for the Southern District of California on January 22, 2016, a fourth derivative action,
Yong v. Garrabrants
, et al, was filed in the United States District Court for the Southern District of California on January 29, 2016, and a fifth derivative action
Laborers Pension Trust Fund of Northern Nevada v. Allrich
et al, was filed in the United States District Court for the Southern District of California on February 2, 2016. Each of these five derivative actions names the Company as a nominal defendant, and certain of its officers and directors as defendants. Each complaint sets forth allegations of breaches of fiduciary duties, gross mismanagement, abuse of control, and unjust enrichment against the defendant officers and directors. The plaintiffs in these derivative actions seek damages in unspecified amounts on the Company’s behalf from the officer and director defendants, certain corporate governance actions, and an award of their costs and attorney’s fees. The Company and the other defendants dispute these allegations and are vigorously defending these actions.
|
|
10.
|
RELATED PARTY TRANSACTIONS
|
In the ordinary course of business, the Company has granted related party loans collateralized by real property to officers, directors and their affiliates that are considered to be insiders by regulation. There were
no
new related party loans granted under the provisions of the employee loan program and
no
refinances of existing loans during the
nine months
ended
March 31, 2016
, and
no
new loans and
no
refinances of existing loans during the
nine months
ended
March 31, 2015
.