Loans | Loans Loans consist of the following at the dates indicated: September 30, 2015 June 30, 2015 Retail consumer loans: One-to-four family $ 645,737 $ 650,750 Home equity lines of credit - originated 160,622 161,204 Home equity lines of credit - purchased 102,136 72,010 Construction and land/lots 44,718 45,931 Indirect auto finance 70,564 52,494 Consumer 3,849 3,708 Total retail consumer loans 1,027,626 986,097 Commercial loans: Commercial real estate 452,772 441,620 Construction and development 72,742 64,573 Commercial and industrial 81,497 84,820 Municipal leases 107,477 108,574 Total commercial loans 714,488 699,587 Total loans 1,742,114 1,685,684 Deferred loan costs, net 176 23 Total loans, net of deferred loan fees and discount 1,742,290 1,685,707 Allowance for loan and lease losses (22,112 ) (22,374 ) Loans, net $ 1,720,178 $ 1,663,333 All the qualifying one-to-four family first mortgage loans, home equity lines of credit ("HELOCs") - originated, and FHLB Stock are pledged as collateral by a blanket pledge to secure any outstanding FHLB advances. The Company's total non-purchased and purchased performing loans by segment, class, and risk grade at the dates indicated follow: Pass Special Mention Substandard Doubtful Loss Total September 30, 2015 Retail consumer loans: One-to-four family $ 597,149 $ 9,041 $ 28,416 $ 1,268 $ 8 $ 635,882 HELOCs - originated 155,144 991 4,044 145 4 160,328 HELOCs - purchased 102,136 — — — — 102,136 Construction and land/lots 41,523 631 1,739 124 — 44,017 Indirect auto finance 70,548 16 — — — 70,564 Consumer 3,349 42 265 100 83 3,839 Commercial loans: Commercial real estate 402,036 9,733 13,220 115 — 425,104 Construction and development 62,510 830 4,585 — — 67,925 Commercial and industrial 71,563 1,836 3,105 — 2 76,506 Municipal leases 105,185 1,722 570 — — 107,477 Total loans $ 1,611,143 $ 24,842 $ 55,944 $ 1,752 $ 97 $ 1,693,778 Pass Special Mention Substandard Doubtful Loss Total June 30, 2015 Retail consumer loans: One-to-four family $ 598,417 $ 11,563 $ 28,656 $ 1,772 $ 12 $ 640,420 HELOCs - originated 155,899 580 4,020 407 3 160,909 HELOCs - purchased 72,010 — — — — 72,010 Construction and land/lots 42,689 650 1,754 124 — 45,217 Indirect auto finance 52,396 59 39 — — 52,494 Consumer 3,610 16 32 — 39 3,697 Commercial loans: Commercial real estate 384,525 12,762 13,972 182 — 411,441 Construction and development 50,815 3,567 5,413 — — 59,795 Commercial and industrial 73,774 953 4,781 — 2 79,510 Municipal leases 106,260 1,733 581 — — 108,574 Total loans $ 1,540,395 $ 31,883 $ 59,248 $ 2,485 $ 56 $ 1,634,067 The Company's total PCI loans by segment, class, and risk grade at the dates indicated follow: Pass Special Mention Substandard Doubtful Loss Total September 30, 2015 Retail consumer loans: One-to-four family $ 5,045 $ 831 $ 3,964 $ 15 $ — $ 9,855 HELOCs - originated 259 — 35 — — 294 Construction and land/lots 565 — 136 — — 701 Consumer 10 — — — — 10 Commercial loans: Commercial real estate 19,904 3,907 3,857 — — 27,668 Construction and development 2,236 138 2,443 — — 4,817 Commercial and industrial 4,046 271 674 — — 4,991 Total loans $ 32,065 $ 5,147 $ 11,109 $ 15 $ — $ 48,336 Pass Special Mention Substandard Doubtful Loss Total June 30, 2015 Retail consumer loans: One-to-four family $ 5,176 $ 1,210 $ 3,890 $ 54 $ — $ 10,330 HELOCs - originated 259 — 36 — — 295 Construction and land/lots 571 — 143 — — 714 Consumer 11 — — — — 11 Commercial loans: Commercial real estate 21,550 3,454 5,175 — — 30,179 Construction and development 2,292 146 2,340 — — 4,778 Commercial and industrial 4,349 279 682 — — 5,310 Total loans $ 34,208 $ 5,089 $ 12,266 $ 54 $ — $ 51,617 The Company's total loans by segment, class, and delinquency status at the dates indicated follows: Past Due Total 30-89 Days 90 Days+ Total Current Loans September 30, 2015 Retail consumer loans: One-to-four family $ 4,533 $ 9,185 $ 13,718 $ 632,019 $ 645,737 HELOCs - originated 498 319 817 159,805 160,622 HELOCs - purchased — — — 102,136 102,136 Construction and land/lots 90 370 460 44,258 44,718 Indirect auto finance — — — 70,564 70,564 Consumer 122 — 122 3,727 3,849 Commercial loans: Commercial real estate 3,393 6,722 10,115 442,657 452,772 Construction and development 3,106 2,085 5,191 67,551 72,742 Commercial and industrial 632 2,971 3,603 77,894 81,497 Municipal leases — 202 202 107,275 107,477 Total loans $ 12,374 $ 21,854 $ 34,228 $ 1,707,886 $ 1,742,114 The table above includes PCI loans of $1,161 30-89 days past due and $2,993 90 days or more past due as of September 30, 2015 . Past Due Total 30-89 Days 90 Days+ Total Current Loans June 30, 2015 Retail consumer loans: One-to-four family $ 5,548 $ 8,261 $ 13,809 $ 636,941 $ 650,750 HELOCs - originated 695 808 1,503 159,701 161,204 HELOCs - purchased — — — 72,010 72,010 Construction and land/lots 102 307 409 45,522 45,931 Indirect auto finance — — — 52,494 52,494 Consumer 23 2 25 3,683 3,708 Commercial loans: Commercial real estate 2,758 4,636 7,394 434,226 441,620 Construction and development 166 2,992 3,158 61,415 64,573 Commercial and industrial 439 2,898 3,337 81,483 84,820 Municipal leases 202 — 202 108,372 108,574 Total loans $ 9,933 $ 19,904 $ 29,837 $ 1,655,847 $ 1,685,684 The table above includes PCI loans of $513 30-89 days past due and $3,198 90 days or more past due as of June 30, 2015 . The Company's recorded investment in loans, by segment and class, that are not accruing interest or are 90 days or more past due and still accruing interest at the dates indicated follow: September 30, 2015 June 30, 2015 Nonaccruing 90 Days + & still accruing Nonaccruing 90 Days + & still accruing Retail consumer loans: One-to-four family $ 10,811 $ — $ 10,523 $ — HELOCs - originated 1,540 — 1,856 — Construction and land/lots 524 — 465 — Consumer 98 — 49 — Commercial loans: Commercial real estate 6,870 — 5,103 — Construction and development 2,207 — 3,461 — Commercial and industrial 2,546 — 3,081 — Municipal leases 305 — 316 — Total loans $ 24,901 $ — $ 24,854 $ — PCI loans totaling $8,090 at September 30, 2015 and $8,158 at June 30, 2015 are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. Troubled debt restructurings ("TDRs") are loans which have renegotiated loan terms to assist borrowers who are unable to meet the original terms of their loans. Such modifications to loan terms may include a lower interest rate, a reduction in principal, or a longer term to maturity. Additionally, all TDRs are considered impaired. The Company's loans that were performing under the payment terms of TDRs that were excluded from nonaccruing loans above at the dates indicated follow: September 30, 2015 June 30, 2015 Performing TDRs included in impaired loans $ 21,783 $ 21,891 An analysis of the allowance for loan losses by segment for the periods shown is as follows: Three Months Ended September 30, 2015 Three Months Ended September 30, 2014 PCI Retail Consumer Commercial Total Retail Consumer Commercial Total Balance at beginning of period $ 401 $ 12,575 $ 9,398 $ 22,374 $ 15,731 $ 7,698 $ 23,429 Provision for (recovery of) loan losses (73 ) 73 — — (674 ) 424 (250 ) Charge-offs — (469 ) (334 ) (803 ) (479 ) (197 ) (676 ) Recoveries — 247 294 541 367 210 577 Balance at end of period $ 328 $ 12,426 $ 9,358 $ 22,112 $ 14,945 $ 8,135 $ 23,080 The Company's ending balances of loans and the related allowance, by segment and class, at the dates indicated follows: Allowance for Loan Losses Total Loans Receivable PCI Loans individually evaluated for impairment Loans collectively evaluated Total PCI Loans individually evaluated for impairment Loans collectively evaluated Total September 30, 2015 Retail consumer loans: One-to-four family $ 9 $ 329 $ 7,813 $ 8,151 $ 9,855 $ 15,389 $ 620,493 $ 645,737 HELOCs - originated 3 259 1,432 1,694 294 1,147 159,181 160,622 HELOCs - purchased — — 409 409 — — 102,136 102,136 Construction and land/lots — 350 1,159 1,509 701 1,342 42,675 44,718 Indirect auto finance — — 569 569 — — 70,564 70,564 Consumer — 83 99 182 10 — 3,839 3,849 Commercial loans: Commercial real estate 297 — 5,421 5,718 27,668 7,722 417,382 452,772 Construction and development — — 1,523 1,523 4,817 2,597 65,328 72,742 Commercial and industrial 19 936 737 1,692 4,991 2,445 74,061 81,497 Municipal leases — — 665 665 — 305 107,172 107,477 Total $ 328 $ 1,957 $ 19,827 $ 22,112 $ 48,336 $ 30,947 $ 1,662,831 $ 1,742,114 June 30, 2015 Retail consumer loans: One-to-four family $ 35 $ 492 $ 7,463 $ 7,990 $ 10,330 $ 22,841 $ 617,579 $ 650,750 HELCOs - originated 3 275 1,499 1,777 295 2,608 158,301 161,204 HELOCs - purchased — — 432 432 — — 72,010 72,010 Construction and land/lots — 531 1,291 1,822 714 1,926 43,291 45,931 Indirect auto finance — — 464 464 — — 52,494 52,494 Consumer — 39 89 128 11 45 3,652 3,708 Commercial loans: Commercial real estate 334 — 6,005 6,339 30,179 10,961 400,480 441,620 Construction and development — 119 1,462 1,581 4,778 5,161 54,634 64,573 Commercial and industrial 29 400 675 1,104 5,310 4,537 74,973 84,820 Municipal leases — — 737 737 — 316 108,258 108,574 Total $ 401 $ 1,856 $ 20,117 $ 22,374 $ 51,617 $ 48,395 $ 1,585,672 $ 1,685,684 During the quarter ended September 30, 2015, the Company increased its thresholds for loans individually evaluated for impairment under ASC 310-10. These changes primarily impacted the retail consumer loan segment, which contains loan that are more homogeneous in nature. This increase was appropriate given the growth in loans as well as the improvement in the overall credit quality of the portfolio. While these changes decreased the loans individually evaluated for impairment by $11,913, it did not have a material impact on the Company’s allowance for loan losses at September 30, 2015 or provision for loan losses for the quarter ended September 30, 2015. Loans acquired from acquisitions are initially excluded from the allowance for loan losses in accordance with the acquisition method of accounting for business combinations. The Company records these loans at fair value, which includes a credit discount, therefore, no allowance for loan losses are established for these acquired loans at acquisition. A provision for loan losses is recorded for any further deterioration in these acquired loans subsequent to the acquisition. The Company's impaired loans and the related allowance, by segment and class, at the dates indicated follows: Total Impaired Loans Unpaid Principal Balance Recorded Investment With a Recorded Allowance Recorded Investment With No Recorded Allowance Total Related Recorded Allowance September 30, 2015 Retail consumer loans: One-to-four family $ 30,335 $ 12,677 $ 15,634 $ 28,311 $ 455 HELOCs - originated 4,461 2,673 664 3,337 278 Construction and land/lots 3,179 1,517 486 2,003 365 Indirect auto finance — — — — — Consumer 2,462 81 43 124 86 Commercial loans: Commercial real estate 10,627 1,647 8,130 9,777 323 Construction and development 3,225 487 3,265 3,752 12 Commercial and industrial 1,993 2,997 33 3,030 962 Municipal leases 305 — 305 305 — Total impaired loans $ 56,587 $ 22,079 $ 28,560 $ 50,639 $ 2,481 June 30, 2015 Retail consumer loans: One-to-four family $ 31,590 $ 10,340 $ 19,164 $ 29,504 $ 598 HELOCs - originated 6,019 2,565 1,543 4,108 294 Construction and land/lots 3,303 1,225 758 1,983 533 Indirect auto finance 10 — — — — Consumer 1,966 13 45 58 39 Commercial loans: Commercial real estate 13,829 696 10,971 11,667 412 Construction and development 6,615 1,268 4,241 5,509 64 Commercial and industrial 5,668 688 4,051 4,739 431 Municipal leases 316 — 316 316 — Total impaired loans $ 69,316 $ 16,795 $ 41,089 $ 57,884 $ 2,371 Impaired loans above excludes $842 at September 30, 2015 and $644 at June 30, 2015 in PCI loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. The table above includes $19,692 and $9,492 , of impaired loans that were not individually evaluated at September 30, 2015 and June 30, 2015 , respectively, because these loans did not meet the Company's threshold for individual impairment evaluation. The recorded allowance above includes $524 and $515 related to these loans that were not individually evaluated at September 30, 2015 and June 30, 2015 , respectively. The Company's average recorded investment in impaired loans and interest income recognized on impaired loans for the three months ended September 30, 2015 and 2014 was as follows: Three Months Ended September 30, 2015 September 30, 2014 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Retail consumer loans: One-to-four family $ 28,907 $ 338 $ 31,842 $ 451 HELOCs - originated 3,722 50 4,710 75 Construction and land/lots 1,993 28 2,098 36 Indirect auto finance — 1 — — Consumer 91 14 31 3 Commercial loans: Commercial real estate 10,722 38 16,903 210 Construction and development 4,631 14 6,103 32 Commercial and industrial 3,885 13 2,901 76 Municipal leases 311 10 152 — Total loans $ 54,262 $ 506 $ 64,740 $ 883 A summary of changes in the accretable yield for PCI loans for the three months ended September 30, 2015 and 2014 was as follows: Three Months Ended September 30, 2015 September 30, 2014 Accretable yield, beginning of period $ 11,096 $ 6,151 Addition from the Bank of Commerce acquisition — 7,315 Reclass from nonaccretable yield (1) 366 — Other changes, net (2) (111 ) — Interest income (1,588 ) (931 ) Accretable yield, end of period $ 9,763 $ 12,535 ______________________________________ (1) Represents changes attributable to expected losses assumptions. (2) Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, and changes in interest rates. For the three months ended September 30, 2015 and 2014 , the following table presents a breakdown of the types of concessions made on TDRs by loan class: Three Months Ended September 30, 2015 Three Months Ended September 30, 2014 Number of Loans Pre Modification Outstanding Recorded Investment Post Modification Outstanding Recorded Investment Number of Loans Pre Modification Outstanding Recorded Investment Post Modification Outstanding Recorded Investment Extended term: Retail consumer: One-to-four family 1 $ 29 $ 29 1 $ 146 $ 147 HELOCs - originated 1 18 14 1 46 46 Total 2 $ 47 $ 43 2 $ 192 $ 193 Other TDRs: Retail consumer: One-to-four family 6 $ 523 $ 528 4 $ 314 $ 324 HELOCs - originated — — — 1 100 105 Construction and land/lots — — — 1 106 100 Total 6 $ 523 $ 528 6 $ 520 $ 529 Total 8 $ 570 $ 571 8 $ 712 $ 722 The following table presents loans that were modified as TDRs within the previous 12 months and for which there was a payment default during the three months ended September 30, 2015 and 2014 : Three Months Ended September 30, 2015 Three Months Ended September 30, 2014 Number of Loans Recorded Investment Number of Loans Recorded Investment Below market interest rate: Retail consumer: One-to-four family 1 $ 6 — $ — Total 1 $ 6 — $ — Other TDRs: Retail consumer: One-to-four family 1 $ 182 4 $ 312 HELOCs - originated 1 — — — Total 2 $ 182 4 $ 312 Total 3 $ 188 4 $ 312 Other TDRs include TDRs that have a below market interest rate and extended payment terms. The Company does not typically forgive principal when restructuring troubled debt. In the determination of the allowance for loan losses, management considers TDRs for all loan classes, and the subsequent nonperformance in accordance with their modified terms, by measuring impairment on a loan-by-loan basis based on either the value of the loan's expected future cash flows discounted at the loan's original effective interest rate or on the collateral value, net of the estimated costs of disposal, if the loan is collateral dependent. |