

	June 30, 2019			September 30, 2018
National Lending	(Dollars in Thousands)
Asset based lending	$	615,309		$	477,917
Factoring	320,344			284,221
Lease financing	341,957			265,315
Insurance premium finance	358,772			337,877
SBA/USDA	99,791			59,374
Other commercial finance	99,677			85,145
Commercial finance	1,835,850			1,509,849
Consumer credit products	155,539			80,605
Other consumer finance	164,727			189,756
Consumer finance⁽¹⁾	320,266			270,361
Tax services	24,410			1,073
Warehouse finance⁽¹⁾	250,003			65,000
Total National Lending	2,430,529			1,846,283
Community Banking
Commercial real estate and operating	877,412			790,890
Consumer one-to-four family real estate and other	256,853			247,318
Agricultural real estate and operating	61,169			60,498
Total Community Banking	1,195,434			1,098,706
Total gross loans and leases	3,625,963			2,944,989

Allowance for loan and lease losses	(43,505		)	(13,040		)
Net deferred loan origination fees (costs)	5,068			(250		)
Total loans and leases, net⁽²⁾	$	3,587,526		$	2,931,699

⁽²⁾ As of June 30, 2019, the remaining balance of acquired loans and leases from the Crestmark acquisition was $402.4 million and the remaining balances of the credit and interest rate mark discounts related to the acquired loans and leases held for investment were $6.8 million and $3.2 million, respectively, while the remaining balance of the interest rate mark premium related to the acquired loans held for sale was $0.7 million. On August 1, 2018, the Company acquired loans and leases from the Crestmark acquisition totaling $1.06 billion and recorded related credit and interest rate mark discounts of $12.3 million and $6.0 million, respectively.

During the nine months ended June 30, 2019, the Company transferred $39.5 million of consumer credit product loans to held for sale and originated $104.1 million of SBA/USDA and consumer credit product loans as held for sale. The Company sold held for sale loans resulting in proceeds of $95.7 million and gains on sale of $3.7 million during the nine months ended June 30, 2019. During the nine months ended June 30, 2018, the Company did not designate any loans as held for sale or sell any held for sale loans.



	Three Months Ended				Nine Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Loans Purchased	(Dollars in Thousands)
Loans held for sale	$	6,703	$	—	$	12,643	$	—
Loans held for investment:
Total National Lending	72,737		—		198,328		72,751
Total Community Banking	2,710		6,183		21,223		22,418
Total purchases	82,150		6,183		232,194		95,169
Loans Sold
Loans held for sale	57,661		—		92,565		—
Loans held for investment:
Total Community Banking	2,212		10,379		13,069		19,961
Total sales	$	59,873	$	10,379	$	105,634	$	19,961



Allowance for loan and lease losses:	Beginning balance		Provision (recovery) for loan and lease losses			Charge-offs			Recoveries		Ending balance
Three Months Ended June 30, 2019	(Dollars in Thousands)
National Lending
Asset based lending	$	3,499	$	2,685		$	(1,380	)	$	3	$	4,807
Factoring	1,761		2,747			(1,335		)	31		3,204
Lease financing	1,965		(13		)	(736		)	203		1,419
Insurance premium finance	919		201			(275		)	171		1,016
SBA/USDA	474		449			—			—		923
Other commercial finance	525		432			—			—		957
Commercial finance	9,143		6,501			(3,726		)	408		12,326
Consumer credit products	1,314		142			—			—		1,456
Other consumer finance	5,130		1,890			(1,398		)	28		5,650
Consumer finance	6,444		2,032			(1,398		)	28		7,106
Tax services	24,102		914			(9,627		)	36		15,425
Warehouse finance	185		65			—			—		250
Total National Lending	39,874		9,512			(14,751		)	472		35,107
Community Banking
Commercial real estate and operating	6,673		(249		)	—			—		6,424
Consumer one-to-four family real estate and other	958		(65		)	—			—		893
Agricultural real estate and operating	1,167		(86		)	—			—		1,081
Total Community Banking	8,798		(400		)	—			—		8,398
Total	$	48,672	$	9,112		$	(14,751	)	$	472	$	43,505



Allowance for loan and lease losses:	Beginning balance		Provision (recovery) for loan and lease losses			Charge-offs			Recoveries		Ending balance
Nine Months Ended June 30, 2019	(Dollars in Thousands)
National Lending
Asset based lending	$	107	$	6,213		$	(1,642	)	$	129	$	4,807
Factoring	64		5,769			(2,711		)	82		3,204
Lease financing	59		1,529			(2,198		)	2,029		1,419
Insurance premium finance	1,031		2,091			(2,359		)	253		1,016
SBA/USDA	13		910			—			—		923
Other commercial finance	28		929			—			—		957
Commercial finance	1,302		17,441			(8,910		)	2,493		12,326
Consumer credit products	785		671			—			—		1,456
Other consumer finance	2,820		8,249			(5,477		)	58		5,650
Consumer finance	3,605		8,920			(5,477		)	58		7,106
Tax services	—		24,883			(9,670		)	212		15,425
Warehouse finance	65		185			—			—		250
Total National Lending	4,972		51,429			(24,057		)	2,763		35,107
Community Banking
Commercial real estate and operating	6,220		204			—			—		6,424
Consumer one-to-four family real estate and other	632		281			(20		)	—		893
Agricultural real estate and operating	1,216		(385		)	—			250		1,081
Total Community Banking	8,068		100			(20		)	250		8,398
Total	$	13,040	$	51,529		$	(24,077	)	$	3,013	$	43,505



Allowance for loan and lease losses:	Beginning balance		Provision (recovery) for loan and lease losses			Charge-offs			Recoveries		Ending balance
Three Months Ended June 30, 2018	(Dollars in Thousands)
National Lending
Insurance premium finance	$	746	$	304		$	(243	)	$	99	$	906
Other commercial finance	4		8			—			—		12
Commercial finance	750		312			(243		)	99		918
Consumer credit products	—		264			—			—		264
Other consumer finance	—		3,000			—			—		3,000
Consumer finance	—		3,264			—			—		3,264
Tax services	19,573		1,189			(10,507		)	1		10,256
Total National Lending	20,323		4,765			(10,750		)	100		14,438
Community Banking
Commercial real estate and operating	4,100		687			—			—		4,787
Consumer one-to-four family real estate and other	901		(218		)	—			—		683
Agricultural real estate and operating	765		(51		)	—			207		921
Unallocated	989		132			—			—		1,121
Total Community Banking	6,755		550			—			207		7,512
Total	$	27,078	$	5,315		$	(10,750	)	$	307	$	21,950



Allowance for loan and lease losses:	Beginning balance		Provision (recovery) for loan and lease losses			Charge-offs			Recoveries		Ending balance
Nine Months Ended June 30, 2018	(Dollars in Thousands)
National Lending
Insurance premium finance	$	796	$	569		$	(711	)	$	252	$	906
Other commercial finance	4		8			—			—		12
Commercial finance	800		577			(711		)	252		918
Consumer credit products	—		264			—			—		264
Other consumer finance	—		3,000			—			—		3,000
Consumer finance	—		3,264			—			—		3,264
Tax services	5		20,335			(10,507		)	423		10,256
Total National Lending	805		24,176			(11,218		)	675		14,438
Community Banking
Commercial real estate and operating	2,820		1,967			—			—		4,787
Consumer one-to-four family real estate and other	809		(98		)	(31		)	3		683
Agricultural real estate and operating	2,574		(1,914		)	—			261		921
Unallocated	526		595			—			—		1,121
Total Community Banking	6,729		550			(31		)	264		7,512
Total	$	7,534	$	24,726		$	(11,249	)	$	939	$	21,950



	Allowance						Loans and Leases
Recorded Investment	Ending balance: individually evaluated for impairment		Ending balance: collectively evaluated for impairment		Total		Ending balance: individually evaluated for impairment		Ending balance: collectively evaluated for impairment		Total
As of June 30, 2019	(Dollars in Thousands)
National Lending
Asset based lending	$	12	$	4,795	$	4,807	$	8,119	$	607,190	$	615,309
Factoring	255		2,949		3,204		7,795		312,549		320,344
Lease financing	—		1,419		1,419		5,455		336,502		341,957
Insurance premium finance	—		1,016		1,016		—		358,772		358,772
SBA/USDA	—		923		923		1,276		98,515		99,791
Other commercial finance	—		957		957		—		99,677		99,677
Commercial finance	267		12,059		12,326		22,645		1,813,205		1,835,850
Consumer credit products	—		1,456		1,456		—		155,539		155,539
Other consumer finance	—		5,650		5,650		1,039		163,688		164,727
Consumer finance	—		7,106		7,106		1,039		319,227		320,266
Tax services	—		15,425		15,425		—		24,410		24,410
Warehouse finance	—		250		250		—		250,003		250,003
Total National Lending	267		34,840		35,107		23,684		2,406,845		2,430,529
Community Banking
Commercial real estate and operating	—		6,424		6,424		319		877,093		877,412
Consumer one-to-four family real estate and other	—		893		893		290		256,563		256,853
Agricultural real estate and operating	—		1,081		1,081		1,237		59,932		61,169
Total Community Banking	—		8,398		8,398		1,846		1,193,588		1,195,434
Total	$	267	$	43,238	$	43,505	$	25,530	$	3,600,433	$	3,625,963



	Allowance						Loans and Leases
Recorded Investment	Ending balance: individually evaluated for impairment⁽¹⁾		Ending balance: collectively evaluated for impairment⁽¹⁾		Total		Ending balance: individually evaluated for impairment		Ending balance: collectively evaluated for impairment		Total
As of September 30, 2018	(Dollars in Thousands)
National Lending
Asset based lending	$	—	$	107	$	107	$	1,404	$	476,513	$	477,917
Factoring	—		64		64		3,331		280,890		284,221
Lease financing	—		59		59		8,877		256,438		265,315
Insurance premium finance	—		1,031		1,031		—		337,877		337,877
SBA/USDA	—		13		13		—		59,374		59,374
Other commercial finance	—		28		28		—		85,145		85,145
Commercial finance	—		1,302		1,302		13,612		1,496,237		1,509,849
Consumer credit products	—		785		785		—		80,605		80,605
Other consumer finance	—		2,820		2,820		—		189,756		189,756
Consumer finance	—		3,605		3,605		—		270,361		270,361
Tax services	—		—		—		—		1,073		1,073
Warehouse finance	—		65		65		—		65,000		65,000
Total National Lending	—		4,972		4,972		13,612		1,832,671		1,846,283
Community Banking
Commercial real estate and operating	—		6,220		6,220		451		790,439		790,890
Consumer one-to-four family real estate and other	—		632		632		94		247,224		247,318
Agricultural real estate and operating	—		1,216		1,216		1,454		59,044		60,498
Total Community Banking	—		8,068		8,068		1,999		1,096,707		1,098,706
Total	$	—	$	13,040	$	13,040	$	15,611	$	2,929,378	$	2,944,989

Watch- A watch asset is generally a credit performing well under current terms and conditions but with identifiable weakness meriting additional scrutiny and corrective measures. Watch is not a regulatory classification but can be used to designate assets that are exhibiting one or more weaknesses that deserve management’s attention. These assets are of better quality than special mention assets.

Special Mention- Special mention assets are a credit with potential weaknesses deserving management’s close attention and, if left uncorrected, may result in deterioration of the repayment prospects for the asset. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special mention is a temporary status with aggressive credit management required to garner adequate progress and move to watch or higher.

General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When assets are classified as “loss,” the Company is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. The Company's determinations as to the classification of its assets and the amount of its valuation allowances are subject to review by its regulatory authorities, which may order the establishment of additional general or specific loss allowances.

The Company recognizes that concentrations of credit may naturally occur and may take the form of a large volume of related loans and leases to an individual, a specific industry, or a geographic location. Credit concentration is a direct, indirect, or contingent obligation that has a common bond where the aggregate exposure equals or exceeds a certain percentage of the Company’s Tier 1 Capital plus the Allowance for Loan and Lease Losses.



Asset Classification	Pass		Watch		Special Mention		Substandard		Total
June 30, 2019	(Dollars in Thousands)
National Lending
Asset based lending	$	539,623	$	—	$	67,567	$	8,119	$	615,309
Factoring	272,589		—		39,960		7,795		320,344
Lease financing	323,539		—		12,963		5,455		341,957
Insurance premium finance	358,772		—		—		—		358,772
SBA/USDA	90,110		—		8,405		1,276		99,791
Other commercial finance	99,108		—		569		—		99,677
Commercial finance	1,683,741		—		129,464		22,645		1,835,850
Consumer credit products	155,539		—		—		—		155,539
Other consumer finance	164,727		—		—		—		164,727
Consumer finance	320,266		—		—		—		320,266
Tax services	24,410		—		—		—		24,410
Warehouse finance	250,003		—		—		—		250,003
Total National Lending	2,278,420		—		129,464		22,645		2,430,529
Community Banking
Commercial real estate and operating	866,255		3,962		3,487		3,708		877,412
Consumer one-to-four family real estate and other	254,959		1,403		462		29		256,853
Agricultural real estate and operating	42,808		4,148		5,615		8,598		61,169
Total Community Banking	1,164,022		9,513		9,564		12,335		1,195,434
Total loans and leases	$	3,442,442	$	9,513	$	139,028	$	34,980	$	3,625,963



Asset Classification	Pass		Watch		Special Mention		Substandard		Total
September 30, 2018	(Dollars in Thousands)
National Lending
Asset based lending	$	418,635	$	—	$	57,877	$	1,405	$	477,917
Factoring	248,246		—		32,644		3,331		284,221
Lease financing	252,487		—		3,951		8,877		265,315
Insurance premium finance	336,296		—		1,581		—		337,877
SBA/USDA	39,093		—		20,281		—		59,374
Other commercial finance	85,145		—		—		—		85,145
Commercial finance	1,379,902		—		116,334		13,613		1,509,849
Consumer credit products	80,605		—		—		—		80,605
Other consumer finance	189,756		—		—		—		189,756
Consumer finance	270,361		—		—		—		270,361
Tax services	1,073		—		—		—		1,073
Warehouse finance	65,000		—		—		—		65,000
Total National Lending	1,716,336		—		116,334		13,613		1,846,283
Community Banking
Commercial real estate and operating	778,445		12,251		194		—		790,890
Consumer one-to-four family real estate and other	246,463		537		239		79		247,318
Agricultural real estate and operating	42,292		2,447		4,872		10,887		60,498
Total Community Banking	1,067,200		15,235		5,305		10,966		1,098,706
Total loans and leases	$	2,783,536	$	15,235	$	121,639	$	24,579	$	2,944,989

The Company's commercial finance product lines include asset-based lending, factoring, leasing, commercial insurance premium finance, and other commercial finance products offered on a nationwide basis. Asset-based lending and factoring primarily service small businesses that are startups, distressed and/or generally that may not otherwise qualify for traditional bank financing. Leasing focuses on providing equipment finance solutions to mid-market companies. These product offerings supplement the asset generation capacity in our community bank and tax services divisions and enhance the overall yield of our loan and lease portfolio, enabling us to earn attractive risk-adjusted net interest margins.

Asset-Based Lending. Through its Crestmark division, the Bank provides asset-based loans secured by short-term assets such as inventory, accounts receivable, and work-in-process. Asset-based loans may also be secured by real estate and equipment. The primary sources of repayment are the operating income of the borrower, the collection of the receivables securing the loan, and/or the sale of the inventory securing the loan. Loans are typically revolving lines of credit with terms of one to three years, whereby the Bank withholds a contingency reserve representing the difference between the amount advanced and the fair value of the invoice amount or other collateral value. Credit risk is managed through advance rates appropriate for the collateral, standardized loan policies, established and authorized credit limits, attentive portfolio management and the use of lock box agreements and similar arrangements that result in the Company receiving and controlling the debtors' cash receipts. The Bank also originates collateralized term loans and notes receivable, with terms ranging from three to 25 years.

Factoring. Through its Crestmark division, the Bank provides factoring lending where clients provide detailed inventory, accounts receivable, and work-in-process reports for lending arrangements. The factoring clients are diversified as to industry and geography. With these loans, the Crestmark division withholds a contingency reserve, which is the difference between the fair value of the invoice amount or other collateral value and the amount advanced. This reserve is withheld for nonpayment of factored receivables, service fees and other adjustments. Credit risk is managed through standardized advance policies, established and authorized credit limits, verification of receivables, attentive portfolio management and the use of lock box agreements and similar arrangements that result in the Company receiving and controlling the client's cash receipts. In addition, clients generally guarantee the payment of purchased accounts receivable.

Lease Financing. Through its Crestmark division, the Bank provides creative, flexible lease solutions for technology, capital equipment and select transportation assets like tractors and trailers. Direct financing leases and sales-type leases substantially transfer the benefits and risks of equipment ownership to the lessee. The lease may contain provisions that transfer ownership to the lessee at the end of the initial term, contain a bargain purchase option or allow for purchase of the equipment at fair market value. Residual values are estimated at the inception of the lease. Lease maturities are generally no greater than 84 months. The focus in this lease financing category is to support middle market companies by providing a variety of financing products to help them meet their business objectives.

Insurance Premium Finance. Through its AFS/IBEX division the Bank provides, on a national basis, short-term, primarily collateralized financing to facilitate the commercial customers’ purchase of insurance for various forms of risk, otherwise known as insurance premium financing. This includes, but is not limited to, policies for commercial property, casualty and liability risk. Premiums are advanced either directly to the insurance carrier or through an intermediary/broker and repaid by the policyholder with interest during the policy term. The policyholder generally makes a 20% to 25% down payment to the insurance broker and finances the remainder over nine to 10 months on average. The down payment is set such that if the policy is canceled, the unearned premium is typically sufficient to cover the loan balance and accrued interest. The AFS/IBEX division markets itself to the insurance community as a competitive option based on service, reputation, competitive terms, cost and ease of operation.

Other Commercial Finance. Included in this category of loans are the Company's healthcare receivables loan portfolio primarily comprised of loans to individuals for medical services received. The majority of these loans are guaranteed by the hospital providing the service to the debtor and this guarantee serves to reduce credit risk as the guarantors agree to repurchase severely delinquent loans. Credit risk is minimized on these loans based on the guarantor’s repurchase agreement. This loan category also includes commercial real estate loans to customers of the Crestmark division.

Consumer Credit Products. Through the acquisition of Specialty Consumer Services, the Bank acquired a platform that provides a total solution for marketplace lending, including underwriting and loan management in the direct-to-consumer credit business. The acquired platform allows the Bank to provide innovative lending solutions through consumer credit products. The Company designs and structures its credit programs in an effort to insulate the Company from program losses and to potentially increase the liquidity attributes of such lending programs' marketability to potential bank or other purchasers. While each program is different, all contain one or more types of credit enhancements, loss protections, or trigger events. When determining the applicable program enhancement, generally, the Company uses proprietary data provided by the Company’s partner, with respect to such program, supplemented with public data to design and shape appropriate loss curves, as well as implement stresses significantly higher than base to provide protection in changing credit cycles. Credit enhancements are typically built through holding excess program interest and fees in a reserve account to pay program credit losses. Cash flow waterfall positioning allows for losses and Company program principal and interest to be paid, under certain circumstances, before servicing or other program expenses. Trigger events allow programs and originations to be suspended if certain vintage loss limits, during a specific period of time, are triggered or if cumulative loss percentages are triggered. These triggers are designed to allow the Company to address potential issues quickly. Other trigger events in certain programs provide for excess credit or reserve enhancements, which could be beyond excess interest amounts, if certain loss triggers are breached. The Bank applies a reserve for loan losses of approximately 1% on outstanding loan balances within each of the consumer credit product programs.

Through June 30, 2019, the Bank has launched two consumer credit programs. During the second quarter of fiscal 2018, the Bank entered into a three years program agreement with Liberty Lending, LLC ("Liberty Lending") whereby the Bank provides personal loans to Liberty Lending customers. The Bank and Liberty Lending market the program jointly through a wide variety of marketing channels. The loan products under the agreement with Liberty Lending are closed-end installment loans ranging from $3,500 to $45,000 in initial principal amount with durations between 13 months and 60 months.

The Bank entered into an agreement for 3 years with Health Credit Services ("HCS") during the third quarter of fiscal 2018. The Bank approves and originates loans for elective medical procedures for select HCS provider offices throughout the United States. HCS works with its provider partners to market the loans, as well as provide servicing for them. The loan products offered are unsecured, closed-end installment loans with terms between 12 months and 84 months and revolving lines of credit with durations between six months and 60 months.

Other Consumer Finance. The Bank's purchased student loan portfolios are seasoned, floating rate, private portfolios that are serviced by a third-party servicer. The portfolio purchased during the first quarter of fiscal year 2018 is indexed to one-month LIBOR, while the portfolio purchased in the first quarter of fiscal year 2017 is indexed to three-month LIBOR plus various margins. The Company received written notification on June 18, 2018 from ReliaMax Surety Company ("ReliaMax"), the company that provided insurance coverage for the student loan portfolios, which informed policy holders that the South Dakota Division of Insurance filed a petition to have ReliaMax declared insolvent and to adopt a plan of liquidation. An Order of Liquidation was entered on June 27, 2018 by the Sixth Circuit Court in Hughes County, South Dakota, declaring ReliaMax insolvent and appointing the South Dakota Division of Insurance as liquidator to adopt a plan of liquidation. The Company expects to ultimately recover a portion of the unearned premiums, though the Company can provide no assurance as to the timing and amount of any such recovery.

The Bank's tax services division provides short-term taxpayer advance loans. Taxpayers are underwritten to determine eligibility for these unsecured loans. Due to the nature of taxpayer advance loans, it typically takes no more than three e-file cycles (the period of time between scheduled IRS payments) from when the return is accepted by the IRS to collect from the borrower. In the event of default, the Bank has no recourse against the tax consumer. The Bank will charge off the balance of a taxpayer advance loan if there is a balance at the end of the calendar year, or when collection of principal becomes doubtful.

Through its tax services division, the Bank provides short-term electronic return originator ("ERO") advance loans on a nationwide basis. These loans are typically utilized by tax preparers to purchase tax preparation software and to prepare tax office operations for the upcoming tax season. EROs go through an underwriting process to determine eligibility for the unsecured advances. ERO loans are not collateralized. Collection on ERO advances begins once the ERO begins to process refund transfers. Generally, the Bank will charge off the balance of an ERO advance loan if there is a balance at the end of June, or when collection of principal becomes doubtful.

In fiscal 2018, the Bank entered into a first-out participation agreement in a consumer receivable asset-backed warehouse line of credit, with the Bank holding a senior collateral position enhanced by a subordinate party structure. During the first quarter of fiscal 2019, the Bank entered into two additional first-out participation agreements in asset-backed warehouse lines of credit, including consumer loan receivables and small business loan receivables. The senior collateral position of the Bank is supported by a subordinate party position. During the third quarter of fiscal 2019, the Bank entered into a first-out participation agreement in a consumer receivable asset-backed warehouse line of credit, with the Bank holding a senior collateral position enhanced by a subordinate party structure.

Commercial Real Estate and Operating. The Company engages in commercial and multi-family real estate lending in the community bank's primary market areas and surrounding areas. These loans are secured primarily by apartment buildings, office buildings, and hotels. Commercial and multi-family real estate loans generally are underwritten with terms not exceeding 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property securing the loan, and are typically secured by guarantees of the borrowers. The Company has a variety of rate adjustment features and other terms in its commercial and multi-family real estate loan portfolio. Commercial and multi-family real estate loans provide for a margin over a number of different indices. In underwriting these loans, the Company analyzes the financial condition of the borrower, the borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent appraisers.

The repayment of loans secured by commercial and multi-family real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, or a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.

The Company originates its community banking commercial operating loans primarily in the community bank's market areas. Most of these commercial operating loans have been extended to finance local and regional businesses and include short-term loans to finance machinery and equipment purchases, inventory and accounts receivable. Commercial loans also may involve the extension of revolving credit for a combination of equipment acquisitions and working capital in expanding companies. The maximum term for loans extended on machinery and equipment is based on the projected useful life of such machinery and equipment. Generally, the maximum term on non-mortgage lines of credit is one year.

The Company’s commercial operating lending policy includes credit file documentation and analysis of the borrower’s management ability, capacity to repay the loan, the adequacy of the borrower’s capital and collateral as well as an evaluation of conditions affecting the borrower. Analysis of the borrower’s past, present and future cash flows is also an important aspect of the Company’s current credit analysis. Commercial operating loans typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial operating loans may be substantially dependent on the success of the business itself (which, in turn, is likely to be dependent upon the general economic environment). The Company’s commercial operating loans are usually secured by business assets and personal guarantees. However, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business.

Consumer One-to-Four Family Real Estate and Other. One-to-four family real estate loan originations are typically generated by the Company’s marketing efforts, its present customers, walk-in customers and referrals. The Company offers fixed-rate loans and adjustable-rate mortgage ("ARM") loans for both permanent structures and those under construction. The Company’s one-to-four family real estate loan originations are secured primarily by properties located in the community bank's primary market areas and surrounding areas.

The Company originates one-to-four family real estate loans with terms up to a maximum of 30 years and with loan-to-value ratios up to 100% of the lesser of the appraised value of the property securing the loan or the contract price. However, the vast majority of these loans are originated with loan-to-value ratios below 80%. The Company generally requires that private mortgage insurance be obtained in an amount sufficient to reduce the Company’s exposure to at or below the 80% loan‑to‑value level. Due to consumer demand, the Company also offers fixed-rate mortgage loans with terms up to 30 years, which may conform to secondary market standards such as those imposed by Fannie Mae, Ginnie Mae, and Freddie Mac. The Company typically holds all fixed-rate mortgage loans and does not engage in secondary market sales. The Company also offers ARM loans with terms up to five years and ten years.

In underwriting one-to-four family real estate loans, the Company evaluates both the borrower’s ability to make monthly payments and the value of the property securing the loan. Properties securing real estate loans made by the Company are appraised by independent appraisers approved by the Board of Directors of the Company. The Company generally requires borrowers to obtain an attorney’s title opinion or title insurance, as well as fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan. Real estate loans originated by the Company generally contain a “due on sale” clause that allows the Company to declare the unpaid principal balance due and payable upon the sale of the security property. The Company has not engaged in sub-prime residential mortgage originations.

The Company originates a variety of secured consumer loans, including home equity, home improvement, automobile and boat loans, as well as loans secured by savings deposits in its primary market areas and surrounding areas. Substantially all of the Company’s home equity loans and lines of credit are secured by second mortgages on principal residences. The Bank will lend amounts that, together with all prior liens, may be up to 90% of the appraised value of the property securing the loan. Home equity loans and lines of credit generally have maximum terms of five years.

Consumer loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower. The underwriting standards employed by the Bank for consumer loans include an application, a determination of the applicant’s payment history on other debts and an assessment of ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of the applicant is a primary consideration, the underwriting process also may include a comparison of the value of the security, if any, in relation to the proposed loan amount.

Agricultural Real Estate and Operating. The Company originates loans to finance the purchase of farmland, livestock, farm machinery and equipment, seed, fertilizer, and other farm-related products, primarily in its market areas. Agricultural operating loans are originated at either an adjustable- or fixed-rate of interest for up to a 1 year term or, in the case of livestock, are due upon sale. Agricultural real estate loans are frequently originated with adjustable rates of interest. Generally, such loans provide for a fixed rate of interest for the first 5 years to 10 years, after which the loan will balloon or the interest rate will adjust annually. These loans generally amortize over a period of 20 to 25 years. Fixed-rate agricultural real estate loans typically have terms up to 10 years. Agricultural real estate loans are generally limited to 75% of the value of the property securing the loan.

Payments on loans are dependent on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. The success of the loan may also be affected by many factors outside the control of the borrower such as weather, government support programs and grain and livestock prices. These risks may be reduced, by the farmer, with the use of crop insurance coverage and futures contracts or options to mitigate price risk, both of which the Company frequently requires of the borrowers to help ensure loan repayment. Many farms are also dependent on a limited number of key individuals whose injury or death may result in an inability to successfully operate the farm.



	Accruing and Non-accruing Loans and Leases												Non-performing Loans and Leases
Past Due Loans and Leases	30-59 Days Past Due		60-89 Days Past Due		> 89 Days Past Due		Total Past Due		Current		Total Loans and Leases Receivable		> 89 Days Past Due and Accruing		Non-accrual balance		Total
June 30, 2019	(Dollars in Thousands)
National Lending
Asset based lending	$	1,701	$	428	$	2,890	$	5,019	$	610,290	$	615,309	$	180	$	5,654	$	5,834
Factoring	—		—		20		20		320,324		320,344		—		4,846		4,846
Lease financing	2,080		1,816		5,408		9,304		332,653		341,957		4,225		1,936		6,161
Insurance premium finance	2,233		1,081		1,679		4,993		353,779		358,772		1,679		—		1,679
SBA/USDA	85		—		259		344		99,447		99,791		—		259		259
Other commercial finance	—		—		—		—		99,677		99,677		—		—		—
Commercial finance	6,099		3,325		10,256		19,680		1,816,170		1,835,850		6,084		12,695		18,779
Consumer credit products	1,454		1,039		703		3,196		152,343		155,539		703		—		703
Other consumer finance	996		614		1,083		2,693		162,034		164,727		1,083		—		1,083
Consumer finance	2,450		1,653		1,786		5,889		314,377		320,266		1,786		—		1,786
Tax services	—		24,410		—		24,410		—		24,410		—		—		—
Warehouse finance	—		—		—		—		250,003		250,003		—		—		—
Total National Lending	8,549		29,388		12,042		49,979		2,380,550		2,430,529		7,870		12,695		20,565
Community Banking
Commercial real estate and operating	—		—		—		—		877,412		877,412		—		—		—
Consumer one-to-four family real estate and other	54		36		233		323		256,530		256,853		—		233		233
Agricultural real estate and operating	1,745		—		—		1,745		59,424		61,169		—		—		—
Total Community Banking	1,799		36		233		2,068		1,193,366		1,195,434		—		233		233
Total Loans and Leases	$	10,348	$	29,424	$	12,275	$	52,047	$	3,573,916	$	3,625,963	$	7,870	$	12,928	$	20,798



	Accruing and Non-accruing Loans and Leases												Non-performing Loans and Leases
Past Due Loans and Leases	30-59 Days Past Due		60-89 Days Past Due		> 89 Days Past Due		Total Past Due		Current		Total Loans and Leases Receivable		> 89 Days Past Due and Accruing		Non-accrual balance		Total
September 30, 2018	(Dollars in Thousands)
National Lending
Asset based lending	$	1,235	$	2,151	$	94	$	3,480	$	474,437	$	477,917	$	94	$	—	$	94
Factoring	—		—		—		—		284,221		284,221		—		—		—
Lease financing	16,542		532		2,921		19,995		245,320		265,315		726		2,864		3,590
Insurance premium finance	1,864		1,019		2,981		5,864		332,013		337,877		2,981		—		2,981
SBA/USDA	1,067		—		—		1,067		58,307		59,374		—		—		—
Other commercial finance	—		—		—		—		85,145		85,145		—		—		—
Commercial finance	20,708		3,702		5,996		30,406		1,479,443		1,509,849		3,801		2,864		6,665
Consumer credit products	532		284		147		963		79,642		80,605		147		—		147
Other consumer finance	2,677		1,311		2,237		6,225		183,531		189,756		2,237		—		2,237
Consumer finance	3,209		1,595		2,384		7,188		263,173		270,361		2,384		—		2,384
Tax services	—		—		1,073		1,073		—		1,073		1,073		—		1,073
Warehouse finance	—		—		—		—		65,000		65,000		—		—		—
Total National Lending	23,917		5,297		9,453		38,667		1,807,616		1,846,283		7,258		2,864		10,122
Community Banking
Commercial real estate and operating	—		—		—		—		790,890		790,890		—		—		—
Consumer one-to-four family real estate and other	105		—		79		184		247,134		247,318		79		—		79
Agricultural real estate and operating	—		—		—		—		60,498		60,498		—		—		—
Total Community Banking	105		—		79		184		1,098,522		1,098,706		79		—		79
Total Loans and Leases	$	24,022	$	5,297	$	9,532	$	38,851	$	2,906,138	$	2,944,989	$	7,337	$	2,864	$	10,201



June 30, 2019	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans and leases without a specific valuation allowance	(Dollars in Thousands)
National Lending
Asset based lending	$	8,024	$	9,362	$	—
Factoring	3,580		4,655		—
Lease financing	5,455		5,455		—
SBA/USDA	1,276		1,276		—
Commercial finance	18,335		20,748		—
Other consumer finance	1,039		1,089		—
Consumer finance	1,039		1,089		—
Total National Lending	19,374		21,837		—
Community Banking
Commercial real estate and operating	319		319		—
Consumer one-to-four family real estate and other	290		290		—
Agricultural real estate and operating	1,237		1,237		—
Total Community Banking	1,846		1,846		—
Total	$	21,220	$	23,683	$	—
Loans and leases with a specific valuation allowance
National Lending
Asset based lending	$	95	$	107	$	12
Factoring	4,215		5,555		255
Commercial finance	4,310		5,662		267
Total National Lending	4,310		5,662		267
Total	$	4,310	$	5,662	$	267



September 30, 2018	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans and leases without a specific valuation allowance	(Dollars in Thousands)
National Lending
Asset based lending	$	1,325	$	1,325	$	—
Factoring	1,383		1,713		—
Lease financing	5,491		5,491		—
Commercial finance	8,199		8,529		—
Total National Lending	8,199		8,529		—
Community Banking
Commercial real estate and operating	405		405		—
Consumer one-to-four family real estate and other	140		140		—
Agricultural real estate and operating	1,454		1,454		—
Total Community Banking	1,999		1,999		—
Total	$	10,198	$	10,528	$	—
Loans and leases with a specific valuation allowance
National Lending
Asset based lending	$	79	$	79	$	22
Factoring	1,948		2,198		49
Lease financing	3,386		3,386		517
Commercial finance	5,413		5,663		588
Total National Lending	5,413		5,663		588
Total	$	5,413	$	5,663	$	588



Three Months Ended June 30,	2019				2018
	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
	(Dollars in Thousands)
National Lending
Asset based lending	$	6,683	$	88	$	—	$	—
Factoring	6,621		—		—		—
Lease financing	3,351		—		—		—
SBA/USDA	425		—		—		—
Commercial finance	17,080		88		—		—
Other consumer finance	1,190		28		—		—
Consumer finance	1,190		28		—		—
Total National Lending	18,270		116		—		—
Community Banking
Commercial real estate and operating	106		5		604		4
Consumer one-to-four family real estate and other	186		1		342		2
Agricultural real estate and operating	1,226		28		2,670		42
Total Community Banking	1,518		34		3,616		48
Total loans and leases	$	19,788	$	150	$	3,616	$	48



Nine Months Ended June 30,	2019				2018
	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
	(Dollars in Thousands)
National Lending
Asset based lending	$	3,993	$	262	$	—	$	—
Factoring	4,178		5		—		—
Lease financing	5,012		17		—		—
SBA/USDA	142		—		—		—
Commercial finance	13,325		284		—		—
Other consumer finance	1,215		38		—		—
Consumer finance	1,215		38		—		—
Total National Lending	14,540		322		—		—
Community Banking
Commercial real estate and operating	259		9		761		14
Consumer one-to-four family real estate and other	154		3		224		11
Agricultural real estate and operating	1,371		63		1,567		106
Total Community Banking	1,784		75		2,552		131
Total loans and leases	$	16,324	$	397	$	2,552	$	131

The Company’s troubled debt restructurings ("TDRs") typically involve forgiving a portion of interest or principal on existing loans, making loans at a rate materially less than current market rates, or extending the term of the loan. There were $0.7 million of Community Banking loans and $0.1 million of National Lending loans that were modified in a TDR during the three months ended June 30, 2019, all of which were modified to extend the term of the loan. No loans and leases were modified in a TDR during the three months ended June 30, 2018.

There were $1.7 million of National Lending loans and leases and $0.7 million of Community Banking loans that were modified in a TDR during the nine months ended June 30, 2019, all of which were modified to extend the term of the loan. There were $3.8 million of Community Banking loans that were modified in a TDR during the nine months ended June 30, 2018. During the nine months ended June 30, 2019, the Company had $0.9 million of Community Banking loans that were modified in a TDR within the previous 12 months and for which there was a payment default. During the nine months ended June 30, 2018, the Company had $0.1 million of Community Banking loans that were modified in a TDR within the previous 12 months and for which there was a payment default.

At June 30, 2019, foreclosed and repossessed assets totaled $29.5 million, compared to $31.6 million at September 30, 2018. At June 30, 2019, the Company had established a valuation allowance of $0.1 million for repossessed assets. The Company did not have a valuation allowance established for any foreclosed and repossessed assets at September 30, 2018. There were no impairments on any foreclosed and repossessed assets at either date. The Company had $0.2 million of Community Banking loans in the process of foreclosure at June 30, 2019 and none at September 30, 2018.