
(Dollars in Thousands)	June 30, 2020		September 30, 2019
National Lending
Term lending⁽¹⁾	$	738,454	$	641,742
Asset based lending⁽¹⁾	181,130		250,465
Factoring	206,361		296,507
Lease financing⁽¹⁾	264,988		177,915
Insurance premium finance	359,147		361,105
SBA/USDA	308,611		88,831
Other commercial finance	100,214		99,665
Commercial finance	2,158,905		1,916,230
Consumer credit products	102,808		106,794
Other consumer finance	138,777		161,404
Consumer finance	241,585		268,198
Tax services	19,168		2,240
Warehouse finance	277,614		262,924
Total National Lending	2,697,272		2,449,592
Community Banking
Commercial real estate and operating	608,303		883,932
Consumer one-to-four family real estate and other	166,479		259,425
Agricultural real estate and operating	24,655		58,464
Total Community Banking	799,437		1,201,821
Total loans and leases	3,496,709		3,651,413
Net deferred loan origination fees (costs)	5,937		7,434
Total gross loans and leases	3,502,646		3,658,847

Allowance for loan and lease losses	(65,747)		(29,149)
Total loans and leases, net⁽²⁾	$	3,436,899	$	3,629,698

⁽¹⁾ The Company has updated the presentation of its loan and lease table beginning in the fiscal 2020 first quarter. The new presentation includes a new category called term lending. Certain balances previously included in the asset based lending and lease financing categories have been reclassified into the new term lending category during the fiscal 2020 first quarter. Prior period balances have been conformed to the new presentation.

⁽²⁾ As of June 30, 2020, the remaining balance of acquired loans and leases from the acquisition of Crestmark Bancorp, Inc. ("Crestmark") and its bank subsidiary, Crestmark Bank (the "Crestmark Acquisition") was $188.3 million and the remaining balances of the credit and interest rate mark discounts related to the acquired loans and leases held for investment were $3.4 million and $2.9 million, respectively. 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.


	Three Months Ended June 30,						Nine Months Ended June 30,
(Dollars in Thousands)	2020		2019		2020		2019
Loans Purchased
Loans held for sale:
Total National Lending	$	—	$	6,703	$	—	$	12,643

Loans held for investment:
Total National Lending	—		72,737		103,888		198,328
Total Community Banking	2,728		2,710		16,518		21,223
Total purchases	$	2,728	$	82,150	$	120,406	$	232,194
Loans Sold
Loans held for sale:
Total National Lending	$	8,524	$	57,661	$	168,814	$	92,565
Total Community Banking	—		—		271,681		—
Loans held for investment:

Total Community Banking	—		2,212		3,099		13,069
Total sales	$	8,524	$	59,873	$	443,594	$	105,634


	June 30, 2020
(Dollars in Thousands)	Three Months Ended		Nine Months Ended
Interest income - loans and leases
Interest income on net investments in direct financing and sales-type leases	$	4,496	$	12,958

Leasing and equipment finance noninterest income
Lease income from operating lease payments	11,391		33,857
Profit (loss) recorded on commencement date on sales-type leases	103		590
Other⁽¹⁾	554		3,135
Total leasing and equipment finance noninterest income	12,048		37,582
Total lease income	$	16,544	$	50,540

During the Company's fiscal 2020 second quarter, the COVID-19 pandemic began impacting global and US markets and macroeconomic conditions, and continues to have an impact. Although the ultimate impact of the pandemic on the Company's loan and lease portfolio is difficult to predict, management performed an evaluation of the loan and lease portfolio in order to assess the impact on repayment sources and underlying collateral that could result in additional losses. The framework for the analysis was based on the Company's then-current allowance for loan and lease losses ("ALLL") methodology with additional considerations. From this impact assessment, additional reserve levels were estimated by increasing qualitative factors. The additional reserves were estimated for loans that were granted short-term payment deferrals related to financial stress stemming from the COVID-19 pandemic along with other loans within certain industries that were considered higher risk for credit loss (e.g. transportation, hospitality, travel, entertainment and retail). The Company continues to assess the impact to our customers and businesses as a result of COVID-19 and will refine our estimate as more information becomes available.

Based on the Company's ongoing assessment of the COVID-19 pandemic, the Company recognized an additional provision for loan and lease losses of $9.4 million and $25.2 million during the three and nine months ended June 30, 2020, respectively. The Company will continue to assess the impact to their customers and businesses as a result of COVID-19 and refine their estimate as more information becomes available.


	Three Months Ended June 30, 2020
(Dollars in Thousands)	Beginning balance		Provision (recovery) for loan and lease losses		Charge-offs		Recoveries		Ending balance
Allowance for loan and lease losses:
National Lending
Term lending	$	11,647	$	5,672	$	(2,831)	$	25	$	14,513
Asset based lending	2,826		(953)		(42)		—		1,831
Factoring	4,444		(1,997)		(140)		362		2,669
Lease financing	2,683		4,293		(357)		91		6,710
Insurance premium finance	2,142		596		(736)		367		2,369
SBA/USDA	1,558		716		(1,134)		—		1,140
Other commercial finance	552		(381)		—		—		171
Commercial finance	25,852		7,946		(5,240)		845		29,403
Consumer credit products	1,082		(111)		—		—		971
Other consumer finance	3,414		358		(567)		44		3,249
Consumer finance	4,496		247		(567)		44		4,220
Tax services	21,320		(100)		(9,797)		14		11,437
Warehouse finance	334		(56)		—		—		278
Total National Lending	52,002		8,037		(15,604)		903		45,338
Community Banking
Commercial real estate and operating	10,069		6,688		—		—		16,757
Consumer one-to-four family real estate and other	2,350		586		—		—		2,936
Agricultural real estate and operating	934		(218)		—		—		716
Total Community Banking	13,353		7,056		—		—		20,409
Total	$	65,355	$	15,093	$	(15,604)	$	903	$	65,747


	Nine Months Ended June 30, 2020
(Dollars in Thousands)	Beginning balance		Provision (recovery) for loan and lease losses		Charge-offs		Recoveries		Ending balance
Allowance for loan and lease losses:
National Lending
Term lending	$	5,533	$	14,753	$	(6,003)	$	230	$	14,513
Asset based lending	2,437		(611)		(42)		47		1,831
Factoring	3,261		(509)		(875)		792		2,669
Lease financing	1,275		5,841		(725)		319		6,710
Insurance premium finance	1,024		2,671		(1,809)		483		2,369
SBA/USDA	383		2,007		(1,250)		—		1,140
Other commercial finance	683		(512)		—		—		171
Commercial finance	14,596		23,640		(10,704)		1,871		29,403
Consumer credit products	1,044		(73)		—		—		971
Other consumer finance	5,118		(474)		(2,208)		813		3,249
Consumer finance	6,162		(547)		(2,208)		813		4,220
Tax services	—		20,407		(9,797)		827		11,437
Warehouse finance	263		15		—		—		278
Total National Lending	21,021		43,515		(22,709)		3,511		45,338
Community Banking
Commercial real estate and operating	6,208		10,549		—		—		16,757
Consumer one-to-four family real estate and other	1,053		1,883		—		—		2,936
Agricultural real estate and operating	867		(151)		—		—		716
Total Community Banking	8,128		12,281		—		—		20,409
Total	$	29,149	$	55,796	$	(22,709)	$	3,511	$	65,747


	Three Months Ended June 30, 2019
(Dollars in Thousands)	Beginning balance		Provision (recovery) for loan and lease losses		Charge-offs		Recoveries		Ending balance
Allowance for loan and lease losses:
National Lending
Term lending	$	3,121	$	2,564	$	(1,969)	$	45	$	3,761
Asset based lending	1,410		417		(37)		3		1,793
Factoring	1,761		2,747		(1,335)		31		3,204
Lease financing	933		(309)		(110)		158		672
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


	Nine Months Ended June 30, 2019
(Dollars in Thousands)	Beginning balance		Provision (recovery) for loan and lease losses		Charge-offs		Recoveries		Ending balance
Allowance for loan and lease losses:
National Lending
Term lending	$	89	$	4,928	$	(2,751)	$	1,495	$	3,761
Asset based lending	47		1,775		(37)		8		1,793
Factoring	64		5,769		(2,711)		82		3,204
Lease financing	30		1,039		(1,052)		655		672
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										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, 2020	(Dollars in Thousands)
National Lending
Term lending	$	3,366	$	11,147	$	14,513	$	31,467	$	706,987	$	738,454
Asset based lending	—		1,831		1,831		2,805		178,325		181,130
Factoring	189		2,480		2,669		2,165		204,196		206,361
Lease financing	1,350		5,360		6,710		4,695		260,293		264,988
Insurance premium finance	—		2,369		2,369		—		359,147		359,147
SBA/USDA	241		899		1,140		2,380		306,231		308,611
Other commercial finance	—		171		171		—		100,214		100,214
Commercial finance	5,146		24,257		29,403		43,512		2,115,393		2,158,905
Consumer credit products	—		971		971		—		102,808		102,808
Other consumer finance	—		3,249		3,249		2,177		136,600		138,777
Consumer finance	—		4,220		4,220		2,177		239,408		241,585
Tax services	—		11,437		11,437		—		19,168		19,168
Warehouse finance	—		278		278		—		277,614		277,614
Total National Lending	5,146		40,192		45,338		45,689		2,651,583		2,697,272
Community Banking
Commercial real estate and operating	141		16,616		16,757		419		607,884		608,303
Consumer one-to-four family real estate and other	—		2,936		2,936		177		166,302		166,479
Agricultural real estate and operating	—		716		716		2,437		22,218		24,655
Total Community Banking	141		20,268		20,409		3,033		796,404		799,437
Total	$	5,287	$	60,460	$	65,747	$	48,722	$	3,447,987	$	3,496,709

In response to the ongoing COVID-19 pandemic, the Company allowed modifications, such as payment deferrals and temporary forbearance, to credit-worthy borrowers who are experiencing temporary hardship due to the effects of COVID-19. Accordingly, if all payments were less than 30 days past due prior to the onset of the pandemic effects, the loan or lease will not be reported as past due during the deferral or forbearance period. As of June 30, 2020, the Company granted deferral payments on a total of $352.1 million of loan and lease balances due to performing borrowers experiencing temporary hardship from COVID-19. These modifications consisted solely of payment deferrals ranging from 30 days to six months. These modifications are in line with applicable regulatory guidelines and, therefore, they are not reported as troubled-debt restructurings. The Company elected to accrue and recognize interest income on these modifications during the payment deferral period.

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- A special mention asset is 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.

Beginning in the fiscal 2020 first quarter the Company implemented changes to the risk rating approach on certain commercial finance portfolios as part of a streamlining process to provide a more consistent risk rating approach across all of its lending portfolios. Based upon a study of the Company's special mention commercial finance loans and leases, the Company determined that approximately $117.0 million of those loans and leases should be rated as watch under the new approach. Prior to the fiscal 2020 first quarter, none of the Company's commercial finance loans and leases were rated as watch. Based on Meta's allowance methodology, these changes in risk ratings did not have a direct impact on the allowance for loan and lease losses. The aggregate balance of watch and special mention loans and leases within the commercial finance portfolio increased to $179.8 million at June 30, 2020, compared to $145.0 million at September 30, 2019.

The Company has various portfolios of consumer finance and tax services loans that present unique risks. Due to the unique risks associated with these portfolios, the Company monitors other credit quality indicators in their evaluation of the appropriateness of the allowance for loan losses on these portfolios, and as such, these loans are not included in the asset classification table below, beginning in the fiscal 2020 first quarter. The September 30, 2019 asset classification table has been conformed to the current presentation. The outstanding balances of consumer finance loans and tax services loans were $241.6 million and $19.2 million at June 30, 2020, respectively, and $268.2 million and $2.2 million at September 30, 2019, respectively.


Asset Classification	Pass		Watch		Special Mention		Substandard		Doubtful		Total
As of June 30, 2020	(Dollars in Thousands)
National Lending
Term lending	$	656,198	$	42,015	$	8,774	$	28,579	$	2,888	$	738,454
Asset based lending	108,069		58,415		11,841		2,805		—		181,130
Factoring	161,075		22,255		20,865		2,166		—		206,361
Lease financing	257,540		1,875		879		4,553		141		264,988
Insurance premium finance	356,821		1,305		402		125		494		359,147
SBA/USDA	295,815		10,339		77		2,380		—		308,611
Other commercial finance	99,495		719		—		—		—		100,214
Commercial finance	1,935,013		136,923		42,838		40,608		3,523		2,158,905
Warehouse finance	277,614		—		—		—		—		277,614
Total National Lending	2,212,627		136,923		42,838		40,608		3,523		2,436,519
Community Banking
Commercial real estate and operating	599,144		698		4,019		3,862		580		608,303
Consumer one-to-four family real estate and other	165,518		42		655		264		—		166,479
Agricultural real estate and operating	11,946		—		4,909		7,800		—		24,655
Total Community Banking	776,608		740		9,583		11,926		580		799,437
Total loans and leases	$	2,989,235	$	137,663	$	52,421	$	52,534	$	4,103	$	3,235,956


Asset Classification	Pass		Watch		Special Mention		Substandard		Doubtful		Total
As of September 30, 2019	(Dollars in Thousands)
National Lending
Term lending	$	585,382	$	—	$	36,792	$	19,024	$	544	$	641,742
Asset based lending	192,427		—		57,660		378		—		250,465
Factoring	256,048		—		36,635		3,824		—		296,507
Lease financing	171,785		—		4,917		1,213		—		177,915
Insurance premium finance	361,105		—		—		—		—		361,105
SBA/USDA	76,609		—		8,381		3,841		—		88,831
Other commercial finance	99,057		—		608		—		—		99,665
Commercial finance	1,742,413		—		144,993		28,280		544		1,916,230




Warehouse finance	262,924		—		—		—		—		262,924
Total National Lending	2,005,337		—		144,993		28,280		544		2,179,154
Community Banking
Commercial real estate and operating	875,933		1,494		2,884		3,621		—		883,932
Consumer one-to-four family real estate and other	257,575		946		708		196		—		259,425
Agricultural real estate and operating	39,409		4,631		5,876		8,548		—		58,464
Total Community Banking	1,172,917		7,071		9,468		12,365		—		1,201,821
Total loans and leases	$	3,178,254	$	7,071	$	154,461	$	40,645	$	544	$	3,380,975

Term Lending. Through its Crestmark division, the Bank originates a variety of collateralized conventional term loans and notes receivable, while terms range from three years to 25 years, the weighted average life is approximately 53 months. These term loans may be secured by equipment, recurring revenue streams, or real estate. Credit risk is managed through setting loan amounts appropriate for the collateral by utilizing information ranging from equipment cost, appraisals, valuations, or lending history. The Bank follows standardized loan policies and established and authorized credit limits and applies attentive portfolio management, which includes monitoring past dues, financial performance, financial covenants, and industry trends. As of June 30, 2020, 20% of the term lending portfolio exposure is concentrated in solar/alternative energy, most of which are construction projects that will convert to longer term government guaranteed facilities upon completion of the construction phase. Equipment Finance Agreements ("EFAs") and Installment Purchase Agreements ("IPAs") make up $299.1 million, or 41%, of the term lending total as of June 30, 2020. The remaining 39% are a variety of investment advisory loans and other more traditional term equipment and general purpose commercial loans.

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 year 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 (generally, advance rates on accounts receivable is 85% and inventory advance rates range from 40% to 50%), 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. As of June 30, 2020, approximately 50% of these loans were backed by accounts receivable.

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 (generally, advance rates are 85% on accounts receivable). 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. As of June 30, 2020, approximately 80% of these loans were backed by 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 months 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 and is returned by the insurer to the Bank on a pro rata basis. Over 99% of the portfolio finances policies provided by investment grade-rated insurance company partners.

Small Business Administration ("SBA") and United States Department of Agriculture ("USDA"). The Bank originates loans through programs partially guaranteed by the SBA or USDA. These loans are made to small businesses and professionals with what the Bank believes are lower risk characteristics. Certain guaranteed portions of these loans are generally sold to the secondary market. Also see Note 3 to the Condensed Consolidated Financial Statements included in this quarterly report. As part of the SBA's coronavirus debt relief efforts, the SBA will pay six months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020. As of June 30, 2020, there were 145 loans with a retained outstanding balance of $48.4 million receiving six months principal and interest from the SBA. The Company is also participating in the PPP, which is being administered by the SBA. The Company expects that some portion of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. Loans funded through the PPP program are fully guaranteed by the U.S. government. As of June 30, 2020, the Company authorized 686 applications, totaling $215.5 million in PPP loan requests as part of the program.

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. The Bank designs its credit program relationships with certain desired outcomes. Three high priority outcomes are liquidity, credit protection, and risk retention. The Bank believes the benefits of these outcomes not only support its goals but the goals of the credit program partner as well. The Bank designs its program credit protections in a manner so that the Bank earns a reasonable risk adjusted return, but is protected by certain layers of credit support, similar to what you would find in structured finance. The Bank will hold a sizable portion of the originated asset on its own balance sheet, but retains the flexibility to sell a portion of the originated asset to other interested parties, thereby supporting program liquidity.

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 fiscal 2018 first quarter is indexed to one-month of the London Interbank Offered Rate ("LIBOR"), while the portfolio purchased in the fiscal 2017 first quarter 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.

Effective on the Closing Date of the Community Bank division sale to Central Bank, the Company substantially ceased originating loans within its Community Banking loan portfolio. The Company entered a servicing agreement with Central Bank for the retained Community Bank loan portfolio that became effective on the Closing Date. See Note 4. Divestitures for further information related to the Community Banking lending portfolio.

The Company's commercial and multi-family real estate loans are secured primarily by apartment buildings, office buildings, and hotels. Commercial and multi-family real estate loans generally were 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. As of June 30, 2020, multi-family real estate loan balances totaled $138.7 million, over 94% of which were located within the Community Bank division's footprint of South Dakota and Iowa. The average loan-to-value ratio on multi-family real estate loans at the time of the Company's most recently completed annual stress test analysis was approximately 69%.

As of June 30, 2020, hospitality loan balances totaled $169.0 million, of which approximately 28% were located in the Community Bank division's footprint of South Dakota and Iowa, while the majority of the remaining balances were through developers headquartered in the Community Bank division footprint with properties located in Minnesota, North Dakota, Nebraska, Wisconsin, Kansas, Arizona, Colorado and California. Over 98% of the outstanding loan balances are flagged hotel relationships and a large majority of the loans have guarantors by individuals with a strong combined net worth. Based on the latest appraisals the Company has on file, the average loan-to-value ratio on hospitality loans was approximately 60%.

Most of the Company's commercial operating loans were extended to finance local and regional businesses and include short-term loans to finance machinery and equipment purchases, inventory and accounts receivable. Commercial operating 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 one-to-four family residential mortgage loans have 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 were originated with loan-to-value ratios below 80%. The Company also has five year and ten year ARM loans. As of June 30, 2020, over 93% of the one-to-four family real estate loans were located within the Community Bank division's footprint of South Dakota and Iowa.

The Company also has a variety of secured consumer loans, primarily made up of home equity and home improvement loans. Substantially all of the Company’s home equity loans and lines of credit are secured by second mortgages on principal residences. The Bank lent amounts which, together with all prior liens, may have been 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. As of June 30, 2020, the outstanding balance in these secured consumer loans was less than $4.0 million and approximately 99% of those were located within the Community Bank division's footprint of South Dakota and Iowa.

The Company's agricultural loans finance the purchase of farmland, livestock, farm machinery and equipment, seed, fertilizer, and other farm-related products. Agricultural operating loans are at either an adjustable- or fixed-rate of interest for up to a one year term or, in the case of livestock, are due upon sale. Agricultural real estate loans were frequently originated with adjustable rates of interest. Generally, such loans provide for a fixed rate of interest for the first five 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 years 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. As of June 30, 2020, 70% of the agricultural loans were real estate loans while the remaining 30% were agricultural operating loans and approximately 91% of the total agricultural loans were located within the Community Bank division's footprint of South Dakota and Iowa.


	Accruing and Nonaccruing Loans and Leases																		Nonperforming Loans and Leases
(Dollars in Thousands)	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
As of June 30, 2020
Loans held for sale	$	—	$	—	$	—	$	—	$	79,905	$	79,905	$	—	$	—	$	—

National Lending
Term lending	7,371		6,957		16,965		31,293		707,161		738,454		2,578		16,524		19,102
Asset based lending	—		—		—		—		181,130		181,130		—		—		—
Factoring	—		—		—		—		206,361		206,361		—		733		733
Lease financing	4,623		5,669		4,583		14,875		250,113		264,988		1,907		3,518		5,425
Insurance premium finance	1,711		3,379		3,723		8,813		350,334		359,147		3,723		—		3,723
SBA/USDA	160		—		1,879		2,039		306,572		308,611		427		1,510		1,937
Other commercial finance	—		—		—		—		100,214		100,214		—		—		—
Commercial finance	13,865		16,005		27,150		57,020		2,101,885		2,158,905		8,635		22,285		30,920
Consumer credit products	506		412		337		1,255		101,553		102,808		337		—		337
Other consumer finance	144		211		572		927		137,850		138,777		572		—		572
Consumer finance	650		623		909		2,182		239,403		241,585		909		—		909
Tax services	—		19,168		—		19,168		—		19,168		—		—		—
Warehouse finance	—		—		—		—		277,614		277,614		—		—		—
Total National Lending	14,515		35,796		28,059		78,370		2,618,902		2,697,272		9,544		22,285		31,829
Community Banking
Commercial real estate and operating	2,791		580		258		3,629		604,674		608,303		258		580		838
Consumer one-to-four family real estate and other	863		—		121		984		165,495		166,479		—		121		121
Agricultural real estate and operating	1,256		45		6,506		7,807		16,848		24,655		4,737		1,769		6,506
Total Community Banking	4,910		625		6,885		12,420		787,017		799,437		4,995		2,470		7,465
Total loans and leases held for investment	19,425		36,421		34,944		90,790		3,405,919		3,496,709		14,539		24,755		39,294

Total loans and leases	$	19,425	$	36,421	$	34,944	$	90,790	$	3,485,824	$	3,576,614	$	14,539	$	24,755	$	39,294


	Accruing and Nonaccruing Loans and Leases																		Nonperforming Loans and Leases
(Dollars in Thousands)	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
As of September 30, 2019
Loans held for sale	$	1,122	$	755	$	964	$	2,841	$	145,936	$	148,777	$	964	$	—	$	964

National Lending
Term lending	2,162		910		14,098		17,170		624,572		641,742		2,241		12,146		14,387
Asset based lending	—		—		—		—		250,465		250,465		—		—		—
Factoring	—		—		—		—		296,507		296,507		—		1,669		1,669
Lease financing	1,160		1,134		1,736		4,030		173,885		177,915		1,530		308		1,838
Insurance premium finance	1,999		2,881		3,807		8,687		352,418		361,105		3,807		—		3,807
SBA/USDA	83		—		255		338		88,493		88,831		—		255		255
Other commercial finance	—		—		—		—		99,665		99,665		—		—		—
Commercial finance	5,404		4,925		19,896		30,225		1,886,005		1,916,230		7,578		14,378		21,956
Consumer credit products	627		557		239		1,423		105,371		106,794		239		—		239
Other consumer finance	932		1,005		1,078		3,015		158,389		161,404		1,078		—		1,078
Consumer finance	1,559		1,562		1,317		4,438		263,760		268,198		1,317		—		1,317
Tax services	—		—		2,240		2,240		—		2,240		2,240		—		2,240
Warehouse finance	—		—		—		—		262,924		262,924		—		—		—
Total National Lending	6,963		6,487		23,453		36,903		2,412,689		2,449,592		11,135		14,378		25,513
Community Banking
Commercial real estate and operating	565		—		—		565		883,367		883,932		—		—		—
Consumer one-to-four family real estate and other	458		—		9		467		258,958		259,425		—		44		44
Agricultural real estate and operating	49		—		—		49		58,415		58,464		—		—		—
Total Community Banking	1,072		—		9		1,081		1,200,740		1,201,821		—		44		44
Total loans and leases held for investment	8,035		6,487		23,462		37,984		3,613,429		3,651,413		11,135		14,422		25,557

Total loans and leases	$	9,157	$	7,242	$	24,426	$	40,825	$	3,759,365	$	3,800,190	$	12,099	$	14,422	$	26,521


As of June 30, 2020	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans and leases without a specific valuation allowance	(Dollars in Thousands)
National Lending
Term lending	$	17,442	$	20,217	$	—
Asset based lending	2,805		2,805		—
Factoring	1,282		2,357		—
Lease financing	1,474		1,482		—

SBA/USDA	870		870		—

Commercial finance	23,873		27,731		—

Other consumer finance	2,177		2,314		—
Consumer finance	2,177		2,314		—


Total National Lending	26,050		30,045		—
Community Banking
Commercial real estate and operating	259		259		—
Consumer one-to-four family real estate and other	177		177		—
Agricultural real estate and operating	2,437		2,437		—
Total Community Banking	2,873		2,873		—
Total	$	28,923	$	32,918	$	—
Loans and leases with a specific valuation allowance
National Lending
Term lending	$	14,025	$	14,037	$	3,366

Factoring	883		883		189
Lease financing	3,221		3,221		1,350

SBA/USDA	1,510		1,510		241

Commercial finance	19,639		19,651		5,146





Total National Lending	19,639		19,651		5,146
Community Banking
Commercial real estate and operating	160		160		141


Total Community Banking Loans	160		160		141
Total	$	19,799	$	19,811	$	5,287


As of September 30, 2019	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans and leases without a specific valuation allowance	(Dollars in Thousands)
National Lending
Term lending	$	12,644	$	13,944	$	—
Asset based lending	378		378		—
Factoring	1,563		2,638		—
Lease financing	1,062		1,062		—

SBA/USDA	2,595		2,595		—

Commercial finance	18,242		20,617		—

Other consumer finance	1,472		1,539		—
Consumer finance	1,472		1,539		—


Total National Lending	19,714		22,156		—
Community Banking
Commercial real estate and operating	258		258		—
Consumer one-to-four family real estate and other	100		100		—
Agricultural real estate and operating	2,985		2,985		—
Total Community Banking	3,343		3,343		—
Total	$	23,057	$	25,499	$	—
Loans and leases with a specific valuation allowance
National Lending
Term lending	$	6,924	$	6,951	$	450

Factoring	2,261		3,601		1,262
Lease financing	151		151		112

SBA/USDA	1,246		1,246		51

Commercial finance	10,582		11,949		1,875





Total National Lending	10,582		11,949		1,875





Total	$	10,582	$	11,949	$	1,875


	Three Months Ended June 30,
	2020						2019
(Dollars in Thousands)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
National Lending
Term lending	$	28,848	$	121	$	3,906	$	88
Asset based lending	935		—		2,777		—
Factoring	4,715		—		6,621		—
Lease financing	2,946		2		3,351		—

SBA/USDA	3,162		—		425		—

Commercial finance	40,606		123		17,080		88

Other consumer finance	1,999		37		1,190		28
Consumer finance	1,999		37		1,190		28


Total National Lending	42,605		160		18,270		116
Community Banking
Commercial real estate and operating	405		1		106		5
Consumer one-to-four family real estate and other	131		—		186		1
Agricultural real estate and operating	2,437		10		1,226		28
Total Community Banking	2,973		11		1,518		34
Total loans and leases	$	45,578	$	171	$	19,788	$	150


	Nine Months Ended June 30,
	2020						2019
(Dollars in Thousands)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
National Lending
Term lending	$	24,946	$	240	$	4,667	$	262
Asset based lending	571		—		1,267		—
Factoring	4,387		—		4,178		5
Lease financing	2,929		14		3,070		17

SBA/USDA	3,530		—		142		—

Commercial finance	36,363		254		13,325		284

Other consumer finance	1,775		111		1,215		38
Consumer finance	1,775		111		1,215		38


Total National Lending	38,138		365		14,540		322
Community Banking
Commercial real estate and operating	511		27		259		9
Consumer one-to-four family real estate and other	101		9		154		3
Agricultural real estate and operating	2,677		(134)		1,371		63
Total Community Banking	3,289		(98)		1,784		75
Total loans and leases	$	41,427	$	267	$	16,324	$	397

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 $1.4 million of national lending loans that were modified in a TDR during the three months ended June 30, 2020, all of which were modified to extend the term of the loan, and no community banking loans. There were $0.7 million community banking loans and $0.1 million of national lending loans and leases that were modified in a TDR during the three months ended June 30, 2019.

During the nine months ended June 30, 2020, there were $5.5 million of national lending loans and $0.6 million of community bank loans that were modified in a TDR, all of which were modified to extend the term of the loan. 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.

During the nine months ended June 30, 2020, the Company had $3.3 million of community banking loans and $1.3 million of national lending 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, 2019, the Company had $0.9 million of community banking loans and no national lending loans that were modified in a TDR within the previous 12 months and for which there was a payment default. TDR net charge-offs and the impact of TDRs on the Company's allowance for loan and lease losses were insignificant during the quarters ended June 30, 2020 and June 30, 2019.