NOTE 1. BASIS OF PRESENTATION
The interim unaudited Condensed Consolidated Financial Statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended September 30, 2020 included in Meta Financial Group, Inc.’s (“Meta” or the “Company”) Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on November 30, 2020. Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted.
The financial information of the Company included herein has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of the three and nine months ended June 30, 2021 are not necessarily indicative of the results expected for the fiscal year ending September 30, 2021.
Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. These changes and reclassifications did not impact previously reported net income or comprehensive income.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS UPDATES ("ASU")
Significant accounting policies in effect and disclosed within the Company’s most recent audited consolidated financial statements as of September 30, 2020 remain substantially unchanged with the exception of the accounting policies for allowance for credit losses and securities impairment as a result of adopting ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related ASUs, as described below.
Allowance for Credit Losses ("ACL"). The ACL represents management’s estimate of current credit losses expected to be incurred by the loan and lease portfolio over the life of each financial asset as of the balance sheet date. The Company individually evaluates loans and leases that do not share similar risk characteristics with other financial assets for impairment, which generally means loans and leases identified as troubled debt restructurings or loans and leases on nonaccrual status. All other loans and leases are evaluated collectively for impairment. A reserve for unfunded credit commitments such as letters of credit and binding unfunded loan commitments is recorded in other liabilities on the Condensed Consolidated Statements of Financial Condition.
Individually evaluated loans and leases are a key component of the ACL. Generally, the Company measures impairment on individually evaluated loans based on the fair value of the collateral less estimated selling costs, as the Company considers these financial assets to be collateral dependent. If an individually evaluated loan or lease is not collateral dependent, impairment is measured at the present value of expected future cash flows discounted at the loan or lease initial effective interest rate.
The impairment of all other loans and leases is evaluated collectively by various characteristics. The collective evaluation of expected losses in all commercial finance portfolios is based on a cohort loss rate and adjustments for forward-looking information, including industry and macroeconomic forecasts. The cohort loss rate is a life of loan loss rate that immediately reverts to historical loss information for the remaining maturity of the financial asset. Management has elected to use a twelve-month reasonable and supportable forecast for forward-looking information. Factors utilized in the determination of the allowance include historical loss experience, current economic forecasts and measurement date credit characteristics such as product type, delinquency, and industry. The unfunded credit commitments depend on these same factors, as well as estimates of lines of credit usage. The various quantitative and qualitative factors used in the methodologies are reviewed quarterly.
The collective evaluation of expected credit losses for certain consumer lending portfolios utilize different methodologies when estimating expected credit losses. The Company’s student loan portfolio utilizes a roll-rate historical loss rate and adjustments for forward-looking information, including macroeconomic conditions. Management has elected to use a twelve-month reasonable and supportable forecast with an immediate reversion to historical loss rates. Factors utilized in the determination of the allowance include historical loss experience, current economic forecasts, and measurement date credit characteristics including delinquency.
Loans and leases are charged off to the extent they are deemed uncollectible. Net charge-offs are included in historical data utilized for calculating the ACL. For commercial loans, the Company generally fully charges off or charges down to net realizable value (fair value of collateral, less estimated costs to sell) for loans secured by collateral when management judges the loan to be uncollectible, repayment is deemed to be protracted beyond a reasonable timeframe, the loan has been classified as a loss by either the Company’s internal loan review process or its banking regulatory agencies, the Company has filed bankruptcy and the loss becomes evident owing to lack of assets, or the loans meets a defined number of days past due unless the loan is both well-secured and is in the process of collection. For consumer loans, the Company fully charges off or charges down to net realizable value when deemed uncollectible due to bankruptcy or other factors or meets a defined number of days past due.
The amount of ACL depends significantly on management’s estimates or key factors and assumptions affecting valuation, appraisals of collateral, evaluations of performance and status, the amounts and timing of future cash flows expected to be received, forecasts of future economic conditions and reversion periods. Such estimates, appraisals, evaluations, cash flows and forecasts may be subject to frequent adjustments due to changing economic prospects of borrowers, lessees, properties or economic conditions. These estimates are reviewed quarterly and adjustments, if necessary, are recorded in the provision for credit losses in the periods in which they become known.
Accrued interest receivable is presented separately on the Condensed Consolidated Statements of Financial Condition, and an ACL is not recorded for these balances. Generally, when a loan or lease is placed on nonaccrual status, typically when the collection of interest or principal is 90 days or more past due, uncollected interest accrued in prior years is charged off against the ACL and interest accrued in the current year is reversed against interest income.
Management maintains a framework of controls over the estimation process for the ACL, including review of collective reserve methodologies for compliance with GAAP. Management has a quarterly process to review the appropriateness of historical observation periods and loss assumptions and risk ratings assigned to loans and leases, if applicable. Management reviews its qualitative framework and the effect on the collective reserve compared with relevant credit risk factors and consistency with credit trends. Management also maintains controls over information systems, models and spreadsheets used in the quantitative components of the reserve estimate. This includes the quality and accuracy of historical data used to derive loss rates, the inputs to industry and macroeconomic forecasts and the reversion periods utilized. The results of this process are summarized and presented to management quarterly for their approval of the recorded allowance. See Note 6. Loans and Leases, Net for further information.
Securities Impairment. The Company evaluates investment securities held-to-maturity for credit losses on a quarterly basis and records any such losses as a component of provision for credit losses in the Condensed Consolidated Statements of Operations. The Company has concluded that its portfolio as of June 30, 2021 has a zero risk of credit loss due to the U.S. Government financial guarantees underlying the securities within the held-to-maturity portfolio and as a result has not recorded an allowance for credit loss.
The Company evaluates investment securities available-for-sale for credit losses on a quarterly basis and records any such losses as a component of provision for credit losses in the Condensed Consolidated Statements of Operations. See Note 5. Securities for further information.
Adopted ASUs
Effective October 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent related ASUs (collectively “Topic 326”), which changes the impairment model for most financial assets, including trade and other receivables, debt securities held-to-maturity, loans, net investments in leases, purchased financial assets with credit deterioration, and off-balance sheet credit exposures. ASU 2016-13 requires the use of a current expected credit loss (“CECL”) methodology to determine the allowance for credit losses for loans and debt securities held-to-maturity. CECL requires loss estimates for the remaining estimated life of the assets to be measured using historical loss data, adjustments for current conditions, and adjustments for reasonable and supportable forecasts of future economic conditions. The Company adopted CECL using the modified retrospective approach with a cumulative effect adjustment to Retained Earnings recorded on October 1, 2020.
Our adoption resulted in an ACL as of October 1, 2020 that is larger than the allowance for loan and lease losses (“ALLL”) that would have been recorded under legacy guidance on the same date by $12.8 million in total for all portfolios. A portion of this increase is a result of new requirements to record ACL on acquired loans and leases, regardless of any credit mark recorded. Under legacy guidance, credit marks were included in the determination of fair value adjustments reflected as a discount to the carrying value of the loans and leases and an ALLL was not recorded on acquired loans and leases until evidence of credit deterioration existed post acquisition. The remaining credit and interest mark will continue to accrete over the life of the loan or lease but will no longer be considered when estimating the ACL for acquired loans and leases under CECL. The adoption of CECL also resulted in an increase in the liability of unfunded commitments of $0.8 million. For other assets in scope of the standard such as held-to-maturity debt securities and trade and other receivables, the impact from this ASU was inconsequential. The cumulative tax effected adjustment to record ACL and to increase the unfunded commitments liability resulted in a reduction to retained earnings of $8.4 million along with $2.5 million attributable to noncontrolling interests. Post adoption, as loans and leases are added to the portfolio, the Company expects higher levels of ACL determined by CECL assumptions, resulting in accelerated recognition of provision for credit losses, as compared to historical results. In response to the COVID-19 pandemic, regulatory agencies have published a final rule that provides the option to delay the cumulative effect of the day 1 impact to CECL adoption on regulatory capital for two years, followed by a three-year phase in period. Management has elected this five-year transition period consistent with the final rule. Additional and modified disclosure requirements under CECL are included in Note 5. Securities and Note 6. Loans and Leases, Net.
The Company also adopted the following ASUs on October 1, 2020, none of which had a material impact on the Company’s Condensed Consolidated Financial Statements:
–ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.
–ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.
–ASU 2018-17, Consolidation (Topic 810) – Targeted Improvements to Related Party Guidance for Variable Interest Entities.
ASUs to be Adopted
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general rules found in Topic 740, Income Taxes. The majority of the amendments are to be applied on a prospective basis. This ASU is effective for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of this guidance on the consolidated financial statements.
ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying Interactions between Topics 321, 323 and 815. This ASU clarifies the interactions between Topic 321, Topic 323 and Topic 815, including accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. Management is currently evaluating the impact of this guidance on the consolidated financial statements.
ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional expedients and exceptions to applying GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform if certain criteria are met. The amendments include a one-time sale or transfer election of held-to-maturity debt securities impacted by reference rate reform. The amendments in this ASU are effective upon issuance through December 31, 2022. The Company is currently evaluating the impact of this guidance on the consolidated financial statements.
ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. This ASU clarifies that an entity should amortize any premium, if applicable, to the next call date, which is the first date when a call option at a specified price becomes exercisable. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. Management is currently evaluating the impact of this guidance on the consolidated financial statements.
ASU 2020-10, Codification Improvements. This ASU provides clarification, corrects unintended application of guidance, and makes minor improvements to various Topics that are not expected to have a significant impact on the Company’s current accounting policies and practices. Amendments within this ASU are effective for fiscal years beginning after December 15, 2020.
NOTE 3. SIGNIFICANT EVENTS
COVID-19 Pandemic
The COVID-19 pandemic began impacting the U.S. and global economies in the first calendar quarter of 2020, with significant deterioration of macroeconomic conditions and markets into 2021. In response to the impacts of COVID-19, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") on March 27, 2020. In addition to the CARES Act, the U.S. federal government enacted the Consolidated Appropriations Act of 2021 ("CAA") on December 27, 2020 and the American Rescue Plan Act of 2021 ("ARP Act") on March 11, 2021, which provide additional COVID-19 relief to American families and business.
The Company is participating in the Paycheck Protection Program ("PPP"), which is being administered by the Small Business Administration ("SBA"). It is the Company's understanding that loans funded through the PPP program are fully guaranteed by the U.S. government and that a portion of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. See Note 6. Loans and Leases, Net for further information related to this program.
In response to the COVID-19 pandemic impact on customers, the Company engaged and continues to engage in more frequent communication with borrowers to better understand their situation and challenges and offered credit-worthy borrowers experiencing temporary hardship certain loan and lease modifications ("COVID modifications"), such as payment deferrals, as a result of interagency guidance issued on March 22, 2020 encouraging companies to work with customers impacted by COVID-19. The Company elected to treat COVID modifications on leases as part of the enforceable rights and obligations of the parties under the existing lease contract, resulting in these payment deferrals being treated as variable lease payments under the existing lease versus lease modifications. Additionally, for COVID modifications on loans, the Company adjusted its effective interest rate to reflect the payment deferral modification and continued accruing interest during this period. Short-term modifications made on a good faith basis in response to COVID-19 borrowers whose payments were current prior to any relief, are not to be considered troubled debt restructurings, and will not be considered delinquent so long as they meet their revised obligations under the modification agreement.
The table below presents the outstanding balances of active COVID-19 related modifications.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Period Ended
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
March 31, 2021
|
|
December 31, 2020
|
|
National Lending
|
|
|
|
|
|
|
Term lending
|
$
|
2,955
|
|
|
$
|
5,460
|
|
|
$
|
18,321
|
|
|
Asset based lending
|
—
|
|
|
—
|
|
|
1,124
|
|
|
|
|
|
|
|
|
|
Lease financing
|
275
|
|
|
379
|
|
|
1,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
3,230
|
|
|
5,839
|
|
|
21,082
|
|
|
Consumer credit products
|
19
|
|
|
301
|
|
|
1,210
|
|
|
Other consumer finance
|
1,609
|
|
|
1,627
|
|
|
2,682
|
|
|
Consumer finance
|
1,628
|
|
|
1,928
|
|
|
3,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
4,858
|
|
|
7,767
|
|
|
24,974
|
|
|
Community Banking
|
|
|
|
|
|
|
Commercial real estate and operating
|
36,632
|
|
|
58,707
|
|
|
60,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Community Banking
|
36,632
|
|
|
58,707
|
|
|
60,319
|
|
|
Total loans and leases
|
41,490
|
|
|
66,474
|
|
|
85,293
|
|
|
|
|
|
|
|
|
|
Total COVID-19 related modifications
|
$
|
41,490
|
|
|
$
|
66,474
|
|
|
$
|
85,293
|
|
NOTE 4. DIVESTITURES
During the fiscal year ended September 30, 2020, the Company sold the Bank's Community Bank division, a component of the Company's Corporate segment, to Central Bank, a state-chartered bank headquartered in Storm Lake, Iowa. The sale included $290.5 million of deposits; $268.6 million of loans; $4.9 million of premises, furniture, and equipment; and $1.3 million of other assets and closed February 29, 2020 (the "Closing Date"). The sale resulted in a gain of $19.3 million before tax that was recognized within noninterest income on the Company's Condensed Consolidated Statements of Operations.
The Company entered a servicing agreement with Central Bank for the retained Community Bank loan portfolio that became effective on the Closing Date. The Company recognized $2.2 million and $1.4 million in servicing fee expense during the nine months ended June 30, 2021 and 2020, respectively, and $3.5 million for the fiscal year ended September 30, 2020.
Since the Closing Date, the Company has entered into subsequent loan portfolio sale agreements with Central Bank. The Company sold no additional loans from the retained Community Bank portfolio in the three months ended June 30, 2021 and 2020, and $233.0 million and none for the nine months ended June 30, 2021 and 2020, respectively. The sales did not result in any significant gains or losses to the Condensed Consolidated Statements of Operations.
As of June 30, 2021, the Company had $18.1 million of community bank loans classified as held for sale and expects to sell those loans in the upcoming fourth fiscal quarter. See Note 6. Loans and Leases, Net for additional information.
NOTE 5. SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair values of available for sale ("AFS") and held to maturity ("HTM") debt securities are presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Available For Sale
|
|
(Dollars in Thousands)
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
At June 30, 2021
|
|
|
|
|
|
|
|
|
Debt securities AFS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA securities
|
$
|
162,922
|
|
|
$
|
6,263
|
|
|
$
|
—
|
|
|
$
|
169,185
|
|
|
Obligations of states and political subdivisions
|
2,758
|
|
|
8
|
|
|
—
|
|
|
2,766
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
267,031
|
|
|
7,423
|
|
|
(104)
|
|
|
274,350
|
|
|
Asset-backed securities
|
405,857
|
|
|
2,760
|
|
|
(895)
|
|
|
407,722
|
|
|
Mortgage-backed securities
|
1,059,321
|
|
|
9,866
|
|
|
(5,605)
|
|
|
1,063,582
|
|
|
Total debt securities AFS
|
$
|
1,897,889
|
|
|
$
|
26,320
|
|
|
$
|
(6,604)
|
|
|
$
|
1,917,605
|
|
|
At September 30, 2020
|
|
|
|
|
|
|
|
|
Debt securities AFS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA securities
|
$
|
159,722
|
|
|
$
|
5,391
|
|
|
$
|
(158)
|
|
|
$
|
164,955
|
|
|
Obligations of states and political subdivisions
|
825
|
|
|
16
|
|
|
—
|
|
|
841
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
314,819
|
|
|
8,978
|
|
|
(23)
|
|
|
323,774
|
|
|
Asset-backed securities
|
329,139
|
|
|
2,015
|
|
|
(6,229)
|
|
|
324,925
|
|
|
Mortgage-backed securities
|
439,879
|
|
|
14,567
|
|
|
(839)
|
|
|
453,607
|
|
|
Total debt securities AFS
|
$
|
1,244,384
|
|
|
$
|
30,967
|
|
|
$
|
(7,249)
|
|
|
$
|
1,268,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held To Maturity
|
|
(Dollars in Thousands)
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
At June 30, 2021
|
|
|
|
|
|
|
|
|
Debt securities HTM
|
|
|
|
|
|
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
$
|
60,228
|
|
|
$
|
1,104
|
|
|
$
|
(2)
|
|
|
$
|
61,330
|
|
|
Mortgage-backed securities
|
4,019
|
|
|
72
|
|
|
—
|
|
|
4,091
|
|
|
Total debt securities HTM
|
$
|
64,247
|
|
|
$
|
1,176
|
|
|
$
|
(2)
|
|
|
$
|
65,421
|
|
|
At September 30, 2020
|
|
|
Debt securities HTM
|
|
|
|
|
|
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
$
|
87,183
|
|
|
$
|
1,040
|
|
|
$
|
(29)
|
|
|
$
|
88,194
|
|
|
Mortgage-backed securities
|
5,427
|
|
|
124
|
|
|
—
|
|
|
5,551
|
|
|
Total debt securities HTM
|
$
|
92,610
|
|
|
$
|
1,164
|
|
|
$
|
(29)
|
|
|
$
|
93,745
|
|
Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous loss position, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS THAN 12 MONTHS
|
|
OVER 12 MONTHS
|
|
TOTAL
|
|
(Dollars in Thousands)
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
At June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities AFS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
24,357
|
|
|
(104)
|
|
|
—
|
|
|
—
|
|
|
24,357
|
|
|
(104)
|
|
|
Asset-backed securities
|
124,158
|
|
|
(234)
|
|
|
94,726
|
|
|
(661)
|
|
|
218,884
|
|
|
(895)
|
|
|
Mortgage-backed securities
|
695,230
|
|
|
(4,207)
|
|
|
55,415
|
|
|
(1,398)
|
|
|
750,645
|
|
|
(5,605)
|
|
|
Total debt securities AFS
|
$
|
843,745
|
|
|
$
|
(4,545)
|
|
|
$
|
150,141
|
|
|
$
|
(2,059)
|
|
|
$
|
993,886
|
|
|
$
|
(6,604)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS THAN 12 MONTHS
|
|
OVER 12 MONTHS
|
|
TOTAL
|
|
(Dollars in Thousands)
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
At September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities AFS
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA securities
|
$
|
32,257
|
|
|
$
|
(102)
|
|
|
$
|
9,875
|
|
|
$
|
(56)
|
|
|
$
|
42,132
|
|
|
$
|
(158)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
6,265
|
|
|
(6)
|
|
|
3,103
|
|
|
(17)
|
|
|
9,368
|
|
|
(23)
|
|
|
Asset-backed securities
|
106,474
|
|
|
(1,089)
|
|
|
178,686
|
|
|
(5,140)
|
|
|
285,160
|
|
|
(6,229)
|
|
|
Mortgage-backed securities
|
138,338
|
|
|
(839)
|
|
|
—
|
|
|
—
|
|
|
138,338
|
|
|
(839)
|
|
|
Total debt securities AFS
|
$
|
283,334
|
|
|
$
|
(2,036)
|
|
|
$
|
191,664
|
|
|
$
|
(5,213)
|
|
|
$
|
474,998
|
|
|
$
|
(7,249)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS THAN 12 MONTHS
|
|
OVER 12 MONTHS
|
|
TOTAL
|
|
(Dollars in Thousands)
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
At June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities HTM
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
2,859
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
2,859
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities HTM
|
$
|
2,859
|
|
|
$
|
(2)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,859
|
|
|
$
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS THAN 12 MONTHS
|
|
OVER 12 MONTHS
|
|
TOTAL
|
|
(Dollars in Thousands)
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
Fair
Value
|
|
Gross Unrealized (Losses)
|
|
At September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities HTM
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
$
|
7,397
|
|
|
$
|
(9)
|
|
|
$
|
3,637
|
|
|
$
|
(20)
|
|
|
$
|
11,034
|
|
|
$
|
(29)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities HTM
|
$
|
7,397
|
|
|
$
|
(9)
|
|
|
$
|
3,637
|
|
|
$
|
(20)
|
|
|
$
|
11,034
|
|
|
$
|
(29)
|
|
The adoption of CECL was inconsequential to debt securities AFS. At June 30, 2021, there were no ACL for debt securities AFS. At June 30, 2021, there were 49 securities AFS in an unrealized loss position. Management assessed each investment security with unrealized losses for credit impairment and determined substantially all unrealized losses on these securities were due to credit spreads and interest rates versus credit impairment. As part of that assessment, management evaluated and concluded that it is more-likely-than-not that the Company will not be required and does not intend to sell any of the securities prior to recovery of the amortized cost.
The amortized cost and fair value of debt securities by contractual maturity are shown below. Certain securities have call features that allow the issuer to call the security prior to maturity. Expected maturities may differ from contractual maturities in mortgage-backed securities ("MBS") because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Therefore, MBS are not included in the maturity categories in the following maturity summary. The expected maturities of certain SBA securities may differ from contractual maturities because the borrowers may have the right to prepay the obligation. However, certain prepayment penalties may apply.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2021
|
|
At September 30, 2020
|
|
(Dollars in Thousands)
|
Amortized Cost
|
|
Fair
Value
|
|
Amortized Cost
|
|
Fair
Value
|
|
Securities AFS at Fair Value
|
|
Due in one year or less
|
$
|
245
|
|
|
$
|
245
|
|
|
$
|
1,385
|
|
|
$
|
1,398
|
|
|
Due after one year through five years
|
17,884
|
|
|
18,467
|
|
|
20,805
|
|
|
21,769
|
|
|
Due after five years through ten years
|
53,273
|
|
|
55,337
|
|
|
32,441
|
|
|
34,025
|
|
|
Due after ten years
|
767,166
|
|
|
779,974
|
|
|
749,874
|
|
|
757,303
|
|
|
|
838,568
|
|
|
854,023
|
|
|
804,505
|
|
|
814,495
|
|
|
Mortgage-backed securities
|
1,059,321
|
|
|
1,063,582
|
|
|
439,879
|
|
|
453,607
|
|
|
Total securities AFS, at fair value
|
$
|
1,897,889
|
|
|
$
|
1,917,605
|
|
|
$
|
1,244,384
|
|
|
$
|
1,268,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2021
|
|
At September 30, 2020
|
|
(Dollars in Thousands)
|
Amortized Cost
|
|
Fair
Value
|
|
Amortized Cost
|
|
Fair
Value
|
|
Securities HTM at Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
$
|
60,228
|
|
|
$
|
61,330
|
|
|
$
|
87,183
|
|
|
$
|
88,194
|
|
|
|
60,228
|
|
|
61,330
|
|
|
87,183
|
|
|
88,194
|
|
|
Mortgage-backed securities
|
4,019
|
|
|
4,091
|
|
|
5,427
|
|
|
5,551
|
|
|
Total securities HTM, at cost
|
$
|
64,247
|
|
|
$
|
65,421
|
|
|
$
|
92,610
|
|
|
$
|
93,745
|
|
Other investments, at cost, include equity securities without a readily determinable fair value, which are included in other assets on the Condensed Consolidated Statements of Financial Condition, and shares of stock in the Federal Reserve Bank (the "FRB") of Minneapolis and the FHLB of Des Moines.
Equity Securities
Equity securities without a readily determinable fair value totaled $14.7 million at June 30, 2021 and $11.0 million at September 30, 2020.
FRB Stock
The Bank is required by federal law to subscribe to capital stock (divided into shares of $100 each) as a member of the FRB of Minneapolis with an amount equal to six per centum of the paid-up capital stock and surplus. One-half of the subscription is paid at time of application, and one-half is subject to call of the Board of Governors of the Federal Reserve System. FRB of Minneapolis stock held by the Bank totaled $19.7 million at June 30, 2021 and September 30, 2020. These equity securities are 'restricted' in that they can only be owned by member banks.
FHLB Stock
The Company's borrowings from the FHLB are secured by a blanket collateral agreement with respect to a percentage of unencumbered loans and the pledge of specific investment securities. Such advances can be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.
The investments in the FHLB stock are required investments related to the Company's membership in and current borrowings from the FHLB of Des Moines. The investments in the FHLB of Des Moines could be adversely impacted by the financial operations of the FHLB and actions of their regulator, the Federal Housing Finance Agency.
The FHLB stock is carried at cost since it is generally redeemable at par value. The carrying value of the stock held at the FHLB was $8.8 million and $7.5 million at June 30, 2021 and September 30, 2020, respectively.
These equity securities are ‘restricted’ in that they can only be sold back to the respective institution from which they were acquired or another member institution at par. Therefore, FRB and FHLB stocks are less liquid than other marketable equity securities, and the fair value approximates cost. The Company evaluates impairment for investments held at cost on at least an annual basis based on the ultimate recoverability of the par value.
Equity Security Impairment
For investments held at cost, impairment is evaluated on at least an annual basis on the recoverability of the par value. All other equity investments, including those under the equity method, are reviewed for other-than-temporary impairment on at least a quarterly basis. The Company recognized $2.0 million in impairment recognized for such investments for the nine months ended June 30, 2021.
NOTE 6. LOANS AND LEASES, NET
Loans and leases consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
September 30, 2020
|
|
National Lending
|
|
|
|
|
Term lending
|
$
|
920,279
|
|
|
$
|
805,323
|
|
|
Asset based lending
|
263,237
|
|
|
182,419
|
|
|
Factoring
|
320,629
|
|
|
281,173
|
|
|
Lease financing
|
282,940
|
|
|
281,084
|
|
|
Insurance premium finance
|
417,652
|
|
|
337,940
|
|
|
SBA/USDA
|
263,709
|
|
|
318,387
|
|
|
Other commercial finance
|
118,081
|
|
|
101,658
|
|
|
Commercial finance
|
2,586,527
|
|
|
2,307,984
|
|
|
Consumer credit products
|
105,440
|
|
|
89,809
|
|
|
Other consumer finance
|
122,316
|
|
|
134,342
|
|
|
Consumer finance
|
227,756
|
|
|
224,151
|
|
|
Tax services
|
41,268
|
|
|
3,066
|
|
|
Warehouse finance
|
335,704
|
|
|
293,375
|
|
|
Total National Lending
|
3,191,255
|
|
|
2,828,576
|
|
|
Community Banking
|
|
|
|
|
Commercial real estate and operating
|
294,810
|
|
|
457,371
|
|
|
Consumer one-to-four family real estate and other
|
1,349
|
|
|
16,486
|
|
|
Agricultural real estate and operating
|
7,825
|
|
|
11,707
|
|
|
Total Community Banking
|
303,984
|
|
|
485,564
|
|
|
Total loans and leases
|
3,495,239
|
|
|
3,314,140
|
|
|
Net deferred loan origination costs (fees)
|
1,431
|
|
|
8,625
|
|
|
Total gross loans and leases
|
3,496,670
|
|
|
3,322,765
|
|
|
Allowance for credit losses
|
(91,208)
|
|
|
(56,188)
|
|
|
Total loans and leases, net
|
$
|
3,405,462
|
|
|
$
|
3,266,577
|
|
During the nine months ended June 30, 2021, the Company transferred $118.0 million of Community Banking loans to held for sale. During the nine months ended June 30, 2020, the Company transferred $325.1 million of Community Banking loans to held for sale.
During the nine months ended June 30, 2021 and 2020, the Company originated $472.9 million of other consumer finance, SBA/USDA, and consumer credit product loans as held for sale and $63.4 million of SBA/USDA and consumer credit product loans as held for sale, respectively.
The Company sold held for sale loans resulting in proceeds of $694.1 million and gains on sale of $9.8 million during the nine months ended June 30, 2021. The Company sold held for sale loans resulting in proceeds of $440.5 million and gains on sale of $7.0 million during the nine months ended June 30, 2020.
Loans purchased and sold by portfolio segment, including participation interests, for the three and nine months ended were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
|
(Dollars in Thousands)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Loans Purchased
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for investment:
|
|
|
|
|
|
|
|
|
Total National Lending
|
$
|
46,153
|
|
|
$
|
—
|
|
|
$
|
142,389
|
|
|
$
|
103,888
|
|
|
Total Community Banking
|
403
|
|
|
2,728
|
|
|
3,250
|
|
|
16,518
|
|
|
Total purchases
|
$
|
46,556
|
|
|
$
|
2,728
|
|
|
$
|
145,639
|
|
|
$
|
120,406
|
|
|
Loans Sold
|
|
|
|
|
|
|
|
|
Loans held for sale:
|
|
|
|
|
|
|
|
|
Total National Lending
|
$
|
118,132
|
|
|
$
|
8,524
|
|
|
$
|
464,378
|
|
|
$
|
168,814
|
|
|
Total Community Banking
|
—
|
|
|
—
|
|
|
232,979
|
|
|
271,681
|
|
|
Loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Community Banking
|
1,816
|
|
|
—
|
|
|
13,822
|
|
|
3,099
|
|
|
Total sales
|
$
|
119,948
|
|
|
$
|
8,524
|
|
|
$
|
711,179
|
|
|
$
|
443,594
|
|
Leasing Portfolio. The net investment in direct financing and sales-type leases was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
September 30, 2020
|
|
Carrying amount
|
$
|
297,370
|
|
|
$
|
299,487
|
|
|
Unguaranteed residual assets
|
14,770
|
|
|
17,203
|
|
|
Unamortized initial direct costs
|
520
|
|
|
2,078
|
|
|
Unearned income
|
(29,200)
|
|
|
(35,606)
|
|
|
Total net investment in direct financing and sales-type leases
|
$
|
283,460
|
|
|
$
|
283,162
|
|
The carrying amount of direct financing and sales-type leases subject to residual value guarantees was $5.0 million at June 30, 2021.
The components of total lease income were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
|
|
|
(Dollars in Thousands)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Interest income - loans and leases
|
|
|
|
|
|
|
|
|
|
|
Interest income on net investments in direct financing and sales-type leases
|
$
|
6,344
|
|
|
$
|
4,496
|
|
|
$
|
17,779
|
|
|
$
|
12,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing and equipment finance noninterest income
|
|
|
|
|
|
|
|
|
|
|
Lease income from operating lease payments
|
10,047
|
|
|
11,391
|
|
|
29,824
|
|
|
33,857
|
|
|
|
|
Profit (loss) recorded on commencement date on sales-type leases
|
85
|
|
|
103
|
|
|
215
|
|
|
590
|
|
|
|
|
Other(1)
|
901
|
|
|
554
|
|
|
2,657
|
|
|
3,135
|
|
|
|
|
Total leasing and equipment finance noninterest income
|
11,033
|
|
|
12,048
|
|
|
32,696
|
|
|
37,582
|
|
|
|
|
Total lease income
|
$
|
17,377
|
|
|
$
|
16,544
|
|
|
$
|
50,475
|
|
|
$
|
50,540
|
|
|
|
(1) Other leasing and equipment finance noninterest income consists of gains (losses) on sales of leased equipment, fees and service charges on leases and gains (losses) on sales of leases.
Undiscounted future minimum lease payments receivable for direct financing and sales-type leases and a reconciliation to the carrying amount recorded were as follows:
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
Remaining in 2021
|
$
|
28,766
|
|
|
2022
|
108,161
|
|
|
2023
|
80,606
|
|
|
2024
|
48,993
|
|
|
2025
|
22,798
|
|
|
Thereafter
|
8,046
|
|
|
Equipment under leases not yet commenced
|
—
|
|
|
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases
|
297,370
|
|
|
Third-party residual value guarantees
|
—
|
|
|
Total carrying amount of direct financing and sales-type lease
|
$
|
297,370
|
|
The Company did not record any contingent rental income from direct financing and sales-type leases in the nine months ended June 30, 2021.
The COVID-19 pandemic began impacting the U.S. and global economies in the first calendar quarter of 2020, with significant deterioration of macroeconomic conditions and markets into 2021. Although macroeconomic conditions and markets have improved since the beginning of 2021, the ultimate impact of this pandemic on the Company's loan and lease portfolio is difficult to predict. Management continues to evaluate the loan and lease portfolio in order to assess the impact on repayment sources and underlying collateral that could result in additional losses and the impact to our customers and businesses as a result of COVID-19 and will refine our estimate as more information becomes available.
Effective October 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent related ASUs on a modified retrospective basis. Financial information at and for the quarter ended June 30, 2021 is reflected as such. The historical information disclosed is in accordance with Topic 310.
Activity in the allowance for credit losses and balances of loans and leases by portfolio segment was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
(Dollars in Thousands)
|
Beginning Balance
|
|
Provision (Recovery) for Credit Losses(2)
|
|
Charge-offs
|
|
Recoveries
|
|
Ending Balance
|
|
Allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
27,315
|
|
|
$
|
1,199
|
|
|
$
|
(1,998)
|
|
|
$
|
515
|
|
|
$
|
27,031
|
|
|
Asset based lending
|
1,749
|
|
|
21
|
|
|
—
|
|
|
212
|
|
|
1,982
|
|
|
Factoring
|
3,210
|
|
|
33
|
|
|
1
|
|
|
17
|
|
|
3,261
|
|
|
Lease financing
|
6,863
|
|
|
842
|
|
|
(916)
|
|
|
130
|
|
|
6,919
|
|
|
Insurance premium finance
|
1,326
|
|
|
(1,200)
|
|
|
(120)
|
|
|
1,583
|
|
|
1,589
|
|
|
SBA/USDA
|
3,300
|
|
|
(171)
|
|
|
—
|
|
|
—
|
|
|
3,129
|
|
|
Other commercial finance
|
541
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
724
|
|
|
Commercial finance
|
44,304
|
|
|
907
|
|
|
(3,033)
|
|
|
2,457
|
|
|
44,635
|
|
|
Consumer credit products
|
990
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
1,011
|
|
|
Other consumer finance
|
10,093
|
|
|
(180)
|
|
|
(2,327)
|
|
|
57
|
|
|
7,643
|
|
|
Consumer finance
|
11,083
|
|
|
(159)
|
|
|
(2,327)
|
|
|
57
|
|
|
8,654
|
|
|
Tax services
|
29,146
|
|
|
4,685
|
|
|
(9,505)
|
|
|
17
|
|
|
24,343
|
|
|
Warehouse finance
|
332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
332
|
|
|
Total National Lending
|
84,865
|
|
|
5,433
|
|
|
(14,865)
|
|
|
2,531
|
|
|
77,964
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
13,965
|
|
|
(767)
|
|
|
—
|
|
|
—
|
|
|
13,198
|
|
|
Consumer one-to-four family real estate and other
|
17
|
|
|
(13)
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Agricultural real estate and operating
|
45
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
Total Community Banking
|
14,027
|
|
|
(783)
|
|
|
—
|
|
|
—
|
|
|
13,244
|
|
|
Total loans and leases
|
98,892
|
|
|
4,650
|
|
|
(14,865)
|
|
|
2,531
|
|
|
91,208
|
|
|
Unfunded commitments(1)
|
779
|
|
|
(38)
|
|
|
—
|
|
|
—
|
|
|
741
|
|
|
Total
|
$
|
99,671
|
|
|
$
|
4,612
|
|
|
$
|
(14,865)
|
|
|
$
|
2,531
|
|
|
$
|
91,949
|
|
(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.
(2) As a result of the adoption of CECL, effective October 1, 2020, the provision for credit losses includes the provision for unfunded commitments that was previously included within other noninterest expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2021
|
|
(Dollars in Thousands)
|
Beginning Balance
|
|
Impact of CECL Adoption
|
|
Provision (Recovery) for Credit Losses(2)
|
|
Charge-offs
|
|
Recoveries
|
|
Ending Balance
|
|
Allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
15,211
|
|
|
$
|
9,999
|
|
|
$
|
8,621
|
|
|
$
|
(7,787)
|
|
|
$
|
987
|
|
|
$
|
27,031
|
|
|
Asset based lending
|
1,406
|
|
|
164
|
|
|
1,399
|
|
|
(1,199)
|
|
|
212
|
|
|
1,982
|
|
|
Factoring
|
3,027
|
|
|
987
|
|
|
(1,928)
|
|
|
—
|
|
|
1,175
|
|
|
3,261
|
|
|
Lease financing
|
7,023
|
|
|
(556)
|
|
|
2,375
|
|
|
(2,264)
|
|
|
341
|
|
|
6,919
|
|
|
Insurance premium finance
|
2,129
|
|
|
(965)
|
|
|
(609)
|
|
|
(925)
|
|
|
1,959
|
|
|
1,589
|
|
|
SBA/USDA
|
940
|
|
|
2,720
|
|
|
(532)
|
|
|
—
|
|
|
1
|
|
|
3,129
|
|
|
Other commercial finance
|
182
|
|
|
364
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|
724
|
|
|
Commercial finance
|
29,918
|
|
|
12,713
|
|
|
9,504
|
|
|
(12,175)
|
|
|
4,675
|
|
|
44,635
|
|
|
Consumer credit products
|
845
|
|
|
—
|
|
|
166
|
|
|
—
|
|
|
—
|
|
|
1,011
|
|
|
Other consumer finance
|
2,821
|
|
|
5,998
|
|
|
1,568
|
|
|
(2,964)
|
|
|
220
|
|
|
7,643
|
|
|
Consumer finance
|
3,666
|
|
|
5,998
|
|
|
1,734
|
|
|
(2,964)
|
|
|
220
|
|
|
8,654
|
|
|
Tax services
|
2
|
|
|
—
|
|
|
32,819
|
|
|
(9,505)
|
|
|
1,027
|
|
|
24,343
|
|
|
Warehouse finance
|
294
|
|
|
(1)
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
332
|
|
|
Total National Lending
|
33,880
|
|
|
18,710
|
|
|
44,096
|
|
|
(24,644)
|
|
|
5,922
|
|
|
77,964
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
21,867
|
|
|
(5,616)
|
|
|
(2,909)
|
|
|
(144)
|
|
|
—
|
|
|
13,198
|
|
|
Consumer one-to-four family real estate and other
|
298
|
|
|
(247)
|
|
|
(47)
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Agricultural real estate and operating
|
143
|
|
|
(74)
|
|
|
(27)
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
Total Community Banking
|
22,308
|
|
|
(5,937)
|
|
|
(2,983)
|
|
|
(144)
|
|
|
—
|
|
|
13,244
|
|
|
Total loans and leases
|
56,188
|
|
|
12,773
|
|
|
41,113
|
|
|
(24,788)
|
|
|
5,922
|
|
|
91,208
|
|
|
Unfunded commitments(1)
|
32
|
|
|
831
|
|
|
(122)
|
|
|
—
|
|
|
—
|
|
|
741
|
|
|
Total
|
$
|
56,220
|
|
|
$
|
13,604
|
|
|
$
|
40,991
|
|
|
$
|
(24,788)
|
|
|
$
|
5,922
|
|
|
$
|
91,949
|
|
(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.
(2) As a result of the adoption of CECL, effective October 1, 2020, the provision for credit losses includes the provision for unfunded commitments that was previously included within other noninterest expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
The following table provide additional disclosures previously required by ASC Topic 310 related to the Company's September 30, 2020 balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
|
|
Loans and Leases
|
|
(Dollars in Thousands)
|
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
|
|
Recorded Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
3,155
|
|
|
$
|
12,056
|
|
|
$
|
15,211
|
|
|
$
|
26,085
|
|
|
$
|
779,238
|
|
|
$
|
805,323
|
|
|
Asset based lending
|
355
|
|
|
1,051
|
|
|
1,406
|
|
|
5,317
|
|
|
177,102
|
|
|
182,419
|
|
|
Factoring
|
274
|
|
|
2,753
|
|
|
3,027
|
|
|
5,071
|
|
|
276,102
|
|
|
281,173
|
|
|
Lease financing
|
1,194
|
|
|
5,829
|
|
|
7,023
|
|
|
4,697
|
|
|
276,387
|
|
|
281,084
|
|
|
Insurance premium finance
|
—
|
|
|
2,129
|
|
|
2,129
|
|
|
—
|
|
|
337,940
|
|
|
337,940
|
|
|
SBA/USDA
|
—
|
|
|
940
|
|
|
940
|
|
|
1,436
|
|
|
316,951
|
|
|
318,387
|
|
|
Other commercial finance
|
—
|
|
|
182
|
|
|
182
|
|
|
—
|
|
|
101,658
|
|
|
101,658
|
|
|
Commercial finance
|
4,978
|
|
|
24,940
|
|
|
29,918
|
|
|
42,606
|
|
|
2,265,378
|
|
|
2,307,984
|
|
|
Consumer credit products
|
—
|
|
|
845
|
|
|
845
|
|
|
—
|
|
|
89,809
|
|
|
89,809
|
|
|
Other consumer finance
|
—
|
|
|
2,821
|
|
|
2,821
|
|
|
1,987
|
|
|
132,355
|
|
|
134,342
|
|
|
Consumer finance
|
—
|
|
|
3,666
|
|
|
3,666
|
|
|
1,987
|
|
|
222,164
|
|
|
224,151
|
|
|
Tax services
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
3,066
|
|
|
3,066
|
|
|
Warehouse finance
|
—
|
|
|
294
|
|
|
294
|
|
|
—
|
|
|
293,375
|
|
|
293,375
|
|
|
Total National Lending
|
4,978
|
|
|
28,902
|
|
|
33,880
|
|
|
44,593
|
|
|
2,783,983
|
|
|
2,828,576
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
141
|
|
|
21,726
|
|
|
21,867
|
|
|
160
|
|
|
457,211
|
|
|
457,371
|
|
|
Consumer one-to-four family real estate and other
|
—
|
|
|
298
|
|
|
298
|
|
|
104
|
|
|
16,382
|
|
|
16,486
|
|
|
Agricultural real estate and operating
|
—
|
|
|
143
|
|
|
143
|
|
|
6,421
|
|
|
5,286
|
|
|
11,707
|
|
|
Total Community Banking
|
141
|
|
|
22,167
|
|
|
22,308
|
|
|
6,685
|
|
|
478,879
|
|
|
485,564
|
|
|
Total
|
$
|
5,119
|
|
|
$
|
51,069
|
|
|
$
|
56,188
|
|
|
$
|
51,278
|
|
|
$
|
3,262,862
|
|
|
$
|
3,314,140
|
|
Information on impaired loans and leases, all of which are deemed to be collateral dependent and are evaluated individually for the ACL was as follows:
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
National Lending
|
|
|
Term lending
|
$
|
25,994
|
|
|
Asset based lending
|
—
|
|
|
Factoring
|
1,232
|
|
|
Lease financing
|
2,946
|
|
|
|
|
|
SBA/USDA
|
600
|
|
|
|
|
|
Commercial finance
|
30,772
|
|
|
Consumer credit products
|
2,197
|
|
|
|
|
|
Consumer finance
|
2,197
|
|
|
|
|
|
|
|
|
Total National Lending
|
32,969
|
|
|
Community Banking
|
|
|
Commercial real estate and operating
|
17,896
|
|
|
Consumer one-to-four family real estate and other
|
110
|
|
|
Agricultural real estate and operating
|
4,657
|
|
|
Total Community Banking
|
22,663
|
|
|
Total
|
$
|
55,632
|
|
Information on impaired loans and leases as of September 30, 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
Recorded
Balance
|
|
Unpaid Principal
Balance
|
|
Specific
Allowance
|
|
Loans and leases without a specific valuation allowance
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
Term lending
|
$
|
17,349
|
|
|
$
|
18,823
|
|
|
$
|
—
|
|
|
Asset based lending
|
3,914
|
|
|
3,914
|
|
|
—
|
|
|
Factoring
|
3,892
|
|
|
4,967
|
|
|
—
|
|
|
Lease financing
|
1,797
|
|
|
1,805
|
|
|
—
|
|
|
|
|
|
|
|
|
|
SBA/USDA
|
1,436
|
|
|
2,263
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
28,388
|
|
|
31,772
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Other consumer finance
|
1,987
|
|
|
2,104
|
|
|
—
|
|
|
Consumer finance
|
1,987
|
|
|
2,104
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
30,375
|
|
|
33,876
|
|
|
—
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer one-to-four family real estate and other
|
104
|
|
|
104
|
|
|
—
|
|
|
Agricultural real estate and operating
|
6,421
|
|
|
6,421
|
|
|
—
|
|
|
Total Community Banking
|
6,525
|
|
|
6,525
|
|
|
—
|
|
|
Total
|
$
|
36,900
|
|
|
$
|
40,401
|
|
|
$
|
—
|
|
|
Loans and leases with a specific valuation allowance
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
Term lending
|
$
|
8,736
|
|
|
$
|
8,736
|
|
|
$
|
3,155
|
|
|
Asset based lending
|
1,403
|
|
|
1,403
|
|
|
355
|
|
|
Factoring
|
1,179
|
|
|
1,191
|
|
|
274
|
|
|
Lease financing
|
2,900
|
|
|
2,900
|
|
|
1,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
14,218
|
|
|
14,230
|
|
|
4,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
14,218
|
|
|
14,230
|
|
|
4,978
|
|
|
Community Banking
|
|
|
|
|
|
|
Commercial real estate and operating
|
160
|
|
|
160
|
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Community Banking Loans
|
160
|
|
|
160
|
|
|
141
|
|
|
Total
|
$
|
14,378
|
|
|
$
|
14,390
|
|
|
$
|
5,119
|
|
In response to the ongoing COVID-19 pandemic, the Company allowed modifications, such as payment deferrals and temporary forbearances, 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, 2021, $41.5 million of loan and lease balances that were granted deferral payments by the Company were still in their deferment period 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. Other than the loan modifications that are on nonaccrual status, the Company is accruing and recognizing interest income on these modifications during the payment deferral period. The Company continues to regularly assess the collectability of the income on these active deferral relationships and considers adjustments to the accruing status on an individual case basis.
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 allowable Allowance for Credit Losses.
Federal regulations provide for the classification of loans and other assets such as debt and equity securities considered by the Bank's primary regulator, the Office of the Comptroller of the Currency (the “OCC”), to be of lesser quality as “substandard,” “doubtful” or “loss.”
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 credit losses on these portfolios, and as such, these loans are not included in the asset classification table below. The outstanding balances of consumer finance loans and tax services loans were $227.8 million and $41.3 million at June 30, 2021, respectively, and $224.2 million and $3.1 million at September 30, 2020, respectively. The amortized cost basis of loans and leases by asset classification and year of origination was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost Basis
|
|
(Dollars in Thousands)
|
Term Loans and Leases by Origination Year
|
Revolving Loans and Leases
|
Total
|
|
As of June 30, 2021
|
2021
|
2020
|
2019
|
2018
|
2017
|
Prior
|
|
Term lending
|
|
|
|
|
|
|
|
|
|
Pass
|
$
|
310,845
|
|
$
|
333,608
|
|
$
|
119,271
|
|
$
|
62,381
|
|
$
|
4,217
|
|
$
|
5,433
|
|
$
|
—
|
|
$
|
835,755
|
|
|
Watch
|
6,568
|
|
9,609
|
|
5,821
|
|
450
|
|
43
|
|
1,397
|
|
—
|
|
23,888
|
|
|
Special Mention
|
595
|
|
3,934
|
|
6,579
|
|
1,026
|
|
35
|
|
1,241
|
|
—
|
|
13,410
|
|
|
Substandard
|
7,732
|
|
8,347
|
|
19,708
|
|
4,347
|
|
162
|
|
359
|
|
—
|
|
40,655
|
|
|
Doubtful
|
71
|
|
1,207
|
|
4,982
|
|
311
|
|
—
|
|
—
|
|
—
|
|
6,571
|
|
|
Total
|
325,811
|
|
356,705
|
|
156,361
|
|
68,515
|
|
4,457
|
|
8,430
|
|
—
|
|
920,279
|
|
|
Asset based lending
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
162,787
|
|
162,787
|
|
|
Watch
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
66,290
|
|
66,290
|
|
|
Special Mention
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
19,253
|
|
19,253
|
|
|
Substandard
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14,907
|
|
14,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
263,237
|
|
263,237
|
|
|
Factoring
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
278,665
|
|
278,665
|
|
|
Watch
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
19,261
|
|
19,261
|
|
|
Special Mention
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,853
|
|
11,853
|
|
|
Substandard
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,850
|
|
10,850
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
320,629
|
|
320,629
|
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
Pass
|
87,134
|
|
118,080
|
|
38,073
|
|
10,010
|
|
4,766
|
|
687
|
|
—
|
|
258,750
|
|
|
Watch
|
4,574
|
|
10,358
|
|
490
|
|
349
|
|
253
|
|
197
|
|
—
|
|
16,221
|
|
|
Special Mention
|
1,119
|
|
558
|
|
114
|
|
206
|
|
39
|
|
—
|
|
—
|
|
2,036
|
|
|
Substandard
|
—
|
|
571
|
|
3,961
|
|
844
|
|
36
|
|
156
|
|
—
|
|
5,568
|
|
|
Doubtful
|
—
|
|
133
|
|
167
|
|
65
|
|
|
|
—
|
|
365
|
|
|
Total
|
92,827
|
|
129,700
|
|
42,805
|
|
11,474
|
|
5,094
|
|
1,040
|
|
—
|
|
282,940
|
|
|
Insurance premium finance
|
|
|
|
|
|
|
|
|
|
Pass
|
411,729
|
|
5,080
|
|
14
|
|
—
|
|
—
|
|
—
|
|
—
|
|
416,823
|
|
|
Watch
|
421
|
|
34
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
455
|
|
|
Special Mention
|
72
|
|
11
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
83
|
|
|
Substandard
|
16
|
|
45
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
61
|
|
|
Doubtful
|
187
|
|
43
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
230
|
|
|
Total
|
412,425
|
|
5,213
|
|
14
|
|
—
|
|
—
|
|
—
|
|
—
|
|
417,652
|
|
|
SBA/USDA
|
|
|
|
|
|
|
|
|
|
Pass
|
108,286
|
|
80,971
|
|
23,094
|
|
22,268
|
|
8,066
|
|
4,222
|
|
—
|
|
246,907
|
|
|
Watch
|
|
—
|
|
926
|
|
822
|
|
2,272
|
|
935
|
|
—
|
|
4,955
|
|
|
Special Mention
|
|
6,755
|
|
675
|
|
1,803
|
|
—
|
|
—
|
|
—
|
|
9,233
|
|
|
Substandard
|
|
|
|
1,196
|
|
695
|
|
723
|
|
—
|
|
2,614
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
108,286
|
|
87,726
|
|
24,695
|
|
26,089
|
|
11,033
|
|
5,880
|
|
—
|
|
263,709
|
|
|
Other commercial finance
|
|
|
|
|
|
|
|
|
|
Pass
|
19,070
|
|
17,525
|
|
9,387
|
|
6,277
|
|
3,579
|
|
59,273
|
|
—
|
|
115,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Watch
|
556
|
|
—
|
|
—
|
|
—
|
|
847
|
|
1,292
|
|
—
|
|
2,695
|
|
|
|
|
|
|
|
|
|
|
|
|
Substandard
|
—
|
|
—
|
|
—
|
|
275
|
|
—
|
|
—
|
|
—
|
|
275
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
19,626
|
|
17,525
|
|
9,387
|
|
6,552
|
|
4,426
|
|
60,565
|
|
—
|
|
118,081
|
|
|
Warehouse finance
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
335,704
|
|
335,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
335,704
|
|
335,704
|
|
|
Total National Lending
|
|
|
|
|
|
|
|
|
|
Pass
|
937,063
|
|
555,264
|
|
189,839
|
|
100,936
|
|
20,628
|
|
69,614
|
|
777,156
|
|
2,650,500
|
|
|
Watch
|
12,120
|
|
20,001
|
|
7,237
|
|
1,621
|
|
3,415
|
|
3,820
|
|
85,551
|
|
133,765
|
|
|
Special Mention
|
1,786
|
|
11,258
|
|
7,368
|
|
3,035
|
|
76
|
|
1,241
|
|
31,106
|
|
55,870
|
|
|
Substandard
|
7,748
|
|
8,963
|
|
23,669
|
|
6,662
|
|
893
|
|
1,238
|
|
25,757
|
|
74,930
|
|
|
Doubtful
|
258
|
|
1,383
|
|
5,149
|
|
376
|
|
—
|
|
—
|
|
—
|
|
7,166
|
|
|
Total
|
958,975
|
|
596,869
|
|
233,262
|
|
112,630
|
|
25,012
|
|
75,913
|
|
919,570
|
|
2,922,231
|
|
|
Commercial real estate and operating
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
13,841
|
|
85,971
|
|
63,844
|
|
27,728
|
|
528
|
|
—
|
|
191,912
|
|
|
Watch
|
—
|
|
924
|
|
3,128
|
|
10,952
|
|
15,834
|
|
2,656
|
|
—
|
|
33,494
|
|
|
Special Mention
|
—
|
|
—
|
|
224
|
|
13,681
|
|
—
|
|
669
|
|
—
|
|
14,574
|
|
|
Substandard
|
—
|
|
300
|
|
1,497
|
|
44,948
|
|
4,472
|
|
3,613
|
|
—
|
|
54,830
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
15,065
|
|
90,820
|
|
133,425
|
|
48,034
|
|
7,466
|
|
—
|
|
294,810
|
|
|
Consumer 1-4 family real estate and other
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
—
|
|
157
|
|
234
|
|
368
|
|
355
|
|
—
|
|
1,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Substandard
|
—
|
|
—
|
|
108
|
|
—
|
|
—
|
|
127
|
|
—
|
|
235
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
—
|
|
265
|
|
234
|
|
368
|
|
482
|
|
—
|
|
1,349
|
|
|
Agricultural real estate and other
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
—
|
|
—
|
|
108
|
|
—
|
|
2,586
|
|
—
|
|
2,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Substandard
|
—
|
|
3,277
|
|
—
|
|
1,263
|
|
—
|
|
591
|
|
—
|
|
5,131
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
3,277
|
|
—
|
|
1,371
|
|
—
|
|
3,177
|
|
—
|
|
7,825
|
|
|
Total Community Bank
|
|
|
|
|
|
|
|
|
|
Pass
|
—
|
|
13,841
|
|
86,128
|
|
64,185
|
|
28,097
|
|
3,469
|
|
—
|
|
195,720
|
|
|
Watch
|
—
|
|
924
|
|
3,128
|
|
10,952
|
|
15,834
|
|
2,656
|
|
—
|
|
33,494
|
|
|
Special Mention
|
—
|
|
—
|
|
224
|
|
13,681
|
|
—
|
|
669
|
|
—
|
|
14,574
|
|
|
Substandard
|
—
|
|
3,577
|
|
1,605
|
|
46,212
|
|
4,471
|
|
4,331
|
|
—
|
|
60,196
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
—
|
|
18,342
|
|
91,085
|
|
135,030
|
|
48,402
|
|
11,125
|
|
—
|
|
303,984
|
|
|
Total Loans and Leases
|
|
|
|
|
|
|
|
|
|
Pass
|
937,063
|
|
569,104
|
|
275,967
|
|
165,121
|
|
48,725
|
|
73,084
|
|
777,156
|
|
2,846,220
|
|
|
Watch
|
12,120
|
|
20,925
|
|
10,365
|
|
12,573
|
|
19,249
|
|
6,476
|
|
85,551
|
|
167,259
|
|
|
Special Mention
|
1,786
|
|
11,258
|
|
7,592
|
|
16,717
|
|
76
|
|
1,909
|
|
31,106
|
|
70,444
|
|
|
Substandard
|
7,748
|
|
12,541
|
|
25,274
|
|
52,873
|
|
5,364
|
|
5,569
|
|
25,757
|
|
135,126
|
|
|
Doubtful
|
258
|
|
1,383
|
|
5,149
|
|
376
|
|
—
|
|
—
|
|
—
|
|
7,166
|
|
|
Total
|
$
|
958,975
|
|
$
|
615,211
|
|
$
|
324,347
|
|
$
|
247,660
|
|
$
|
73,414
|
|
$
|
87,038
|
|
$
|
919,570
|
|
$
|
3,226,215
|
|
The recorded investment of loans and leases by asset classification was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Classification
|
Pass
|
|
Watch
|
|
Special Mention
|
|
Substandard
|
|
Doubtful
|
|
Total
|
|
As of September 30, 2020
|
(Dollars in Thousands)
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
725,101
|
|
|
$
|
29,637
|
|
|
$
|
24,501
|
|
|
$
|
21,249
|
|
|
$
|
4,835
|
|
|
$
|
805,323
|
|
|
Asset based lending
|
102,013
|
|
|
62,512
|
|
|
12,577
|
|
|
5,317
|
|
|
—
|
|
|
182,419
|
|
|
Factoring
|
217,245
|
|
|
45,200
|
|
|
13,657
|
|
|
5,071
|
|
|
—
|
|
|
281,173
|
|
|
Lease financing
|
264,700
|
|
|
8,879
|
|
|
2,808
|
|
|
4,148
|
|
|
549
|
|
|
281,084
|
|
|
Insurance premium finance
|
336,364
|
|
|
284
|
|
|
222
|
|
|
701
|
|
|
369
|
|
|
337,940
|
|
|
SBA/USDA
|
308,549
|
|
|
8,328
|
|
|
74
|
|
|
1,436
|
|
|
—
|
|
|
318,387
|
|
|
Other commercial finance
|
100,727
|
|
|
931
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101,658
|
|
|
Commercial finance
|
2,054,699
|
|
|
155,771
|
|
|
53,839
|
|
|
37,922
|
|
|
5,753
|
|
|
2,307,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse finance
|
293,375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
293,375
|
|
|
Total National Lending
|
2,348,074
|
|
|
155,771
|
|
|
53,839
|
|
|
37,922
|
|
|
5,753
|
|
|
2,601,359
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
336,236
|
|
|
98,295
|
|
|
4,049
|
|
|
18,211
|
|
|
580
|
|
|
457,371
|
|
|
Consumer one-to-four family real estate and other
|
15,648
|
|
|
41
|
|
|
609
|
|
|
188
|
|
|
—
|
|
|
16,486
|
|
|
Agricultural real estate and operating
|
1,526
|
|
|
—
|
|
|
4,930
|
|
|
5,251
|
|
|
—
|
|
|
11,707
|
|
|
Total Community Banking
|
353,410
|
|
|
98,336
|
|
|
9,588
|
|
|
23,650
|
|
|
580
|
|
|
485,564
|
|
|
Total loans and leases
|
$
|
2,701,484
|
|
|
$
|
254,107
|
|
|
$
|
63,427
|
|
|
$
|
61,572
|
|
|
$
|
6,333
|
|
|
$
|
3,086,923
|
|
Past due loans and leases were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
87,905
|
|
|
$
|
87,905
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
11,146
|
|
|
6,714
|
|
|
4,820
|
|
|
22,680
|
|
|
897,599
|
|
|
920,279
|
|
|
2,073
|
|
|
14,470
|
|
|
16,543
|
|
|
Asset based lending
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
263,237
|
|
|
263,237
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Factoring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
320,629
|
|
|
320,629
|
|
|
—
|
|
|
37
|
|
|
37
|
|
|
Lease financing
|
9,076
|
|
|
3,514
|
|
|
2,550
|
|
|
15,140
|
|
|
267,800
|
|
|
282,940
|
|
|
1,403
|
|
|
2,208
|
|
|
3,611
|
|
|
Insurance premium finance
|
552
|
|
|
422
|
|
|
874
|
|
|
1,848
|
|
|
415,804
|
|
|
417,652
|
|
|
874
|
|
|
—
|
|
|
874
|
|
|
SBA/USDA
|
1,343
|
|
|
—
|
|
|
600
|
|
|
1,943
|
|
|
261,766
|
|
|
263,709
|
|
|
—
|
|
|
600
|
|
|
600
|
|
|
Other commercial finance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118,081
|
|
|
118,081
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial finance
|
22,117
|
|
|
10,650
|
|
|
8,844
|
|
|
41,611
|
|
|
2,544,916
|
|
|
2,586,527
|
|
|
4,350
|
|
|
17,315
|
|
|
21,665
|
|
|
Consumer credit products
|
843
|
|
|
1,009
|
|
|
525
|
|
|
2,377
|
|
|
204,642
|
|
|
207,019
|
|
|
469
|
|
|
—
|
|
|
469
|
|
|
Other consumer finance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,737
|
|
|
20,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer finance
|
843
|
|
|
1,009
|
|
|
525
|
|
|
2,377
|
|
|
225,379
|
|
|
227,756
|
|
|
469
|
|
|
—
|
|
|
469
|
|
|
Tax services
|
—
|
|
|
40,958
|
|
|
—
|
|
|
40,958
|
|
|
310
|
|
|
41,268
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Warehouse finance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
335,704
|
|
|
335,704
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total National Lending
|
22,960
|
|
|
52,617
|
|
|
9,369
|
|
|
84,946
|
|
|
3,106,309
|
|
|
3,191,255
|
|
|
4,819
|
|
|
17,315
|
|
|
22,134
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
294,799
|
|
|
294,810
|
|
|
—
|
|
|
17,896
|
|
|
17,896
|
|
|
Consumer one-to-four family real estate and other
|
51
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
1,298
|
|
|
1,349
|
|
|
—
|
|
|
108
|
|
|
108
|
|
|
Agricultural real estate and operating
|
—
|
|
|
—
|
|
|
1,769
|
|
|
1,769
|
|
|
6,056
|
|
|
7,825
|
|
|
—
|
|
|
1,769
|
|
|
1,769
|
|
|
Total Community Banking
|
62
|
|
|
—
|
|
|
1,769
|
|
|
1,831
|
|
|
302,153
|
|
|
303,984
|
|
|
—
|
|
|
19,773
|
|
|
19,773
|
|
|
Total loans and leases held for investment
|
23,022
|
|
|
52,617
|
|
|
11,138
|
|
|
86,777
|
|
|
3,408,462
|
|
|
3,495,239
|
|
|
4,819
|
|
|
37,088
|
|
|
41,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases
|
$
|
23,022
|
|
|
$
|
52,617
|
|
|
$
|
11,138
|
|
|
$
|
86,777
|
|
|
$
|
3,496,367
|
|
|
$
|
3,583,144
|
|
|
$
|
4,819
|
|
|
$
|
37,088
|
|
|
$
|
41,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
183,577
|
|
|
$
|
183,577
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
11,900
|
|
|
3,851
|
|
|
6,390
|
|
|
22,141
|
|
|
783,182
|
|
|
805,323
|
|
|
266
|
|
|
16,274
|
|
|
16,540
|
|
|
Asset based lending
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
182,402
|
|
|
182,419
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Factoring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281,173
|
|
|
281,173
|
|
|
—
|
|
|
1,096
|
|
|
1,096
|
|
|
Lease financing
|
194
|
|
|
9,746
|
|
|
6,882
|
|
|
16,822
|
|
|
264,262
|
|
|
281,084
|
|
|
4,344
|
|
|
3,583
|
|
|
7,927
|
|
|
Insurance premium finance
|
1,227
|
|
|
748
|
|
|
2,364
|
|
|
4,339
|
|
|
333,601
|
|
|
337,940
|
|
|
2,364
|
|
|
—
|
|
|
2,364
|
|
|
SBA/USDA
|
—
|
|
|
—
|
|
|
1,027
|
|
|
1,027
|
|
|
317,360
|
|
|
318,387
|
|
|
427
|
|
|
600
|
|
|
1,027
|
|
|
Other commercial finance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101,658
|
|
|
101,658
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial finance
|
13,338
|
|
|
14,345
|
|
|
16,663
|
|
|
44,346
|
|
|
2,263,638
|
|
|
2,307,984
|
|
|
7,401
|
|
|
21,553
|
|
|
28,954
|
|
|
Consumer credit products
|
377
|
|
|
358
|
|
|
499
|
|
|
1,233
|
|
|
88,576
|
|
|
89,809
|
|
|
499
|
|
|
—
|
|
|
499
|
|
|
Other consumer finance
|
600
|
|
|
536
|
|
|
373
|
|
|
1,509
|
|
|
132,833
|
|
|
134,342
|
|
|
373
|
|
|
—
|
|
|
373
|
|
|
Consumer finance
|
977
|
|
|
894
|
|
|
872
|
|
|
2,743
|
|
|
221,408
|
|
|
224,151
|
|
|
872
|
|
|
—
|
|
|
872
|
|
|
Tax services
|
—
|
|
|
—
|
|
|
1,743
|
|
|
1,743
|
|
|
1,323
|
|
|
3,066
|
|
|
1,743
|
|
|
—
|
|
|
1,743
|
|
|
Warehouse finance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
293,375
|
|
|
293,375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total National Lending
|
14,315
|
|
|
15,239
|
|
|
19,278
|
|
|
48,832
|
|
|
2,779,744
|
|
|
2,828,576
|
|
|
10,016
|
|
|
21,553
|
|
|
31,569
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
—
|
|
|
—
|
|
|
630
|
|
|
630
|
|
|
456,741
|
|
|
457,371
|
|
|
50
|
|
|
580
|
|
|
630
|
|
|
Consumer one-to-four family real estate and other
|
905
|
|
|
114
|
|
|
50
|
|
|
1,069
|
|
|
15,417
|
|
|
16,486
|
|
|
—
|
|
|
50
|
|
|
50
|
|
|
Agricultural real estate and operating
|
—
|
|
|
—
|
|
|
1,769
|
|
|
1,769
|
|
|
9,938
|
|
|
11,707
|
|
|
—
|
|
|
1,769
|
|
|
1,769
|
|
|
Total Community Banking
|
905
|
|
|
114
|
|
|
2,449
|
|
|
3,468
|
|
|
482,096
|
|
|
485,564
|
|
|
50
|
|
|
2,399
|
|
|
2,449
|
|
|
Total loans and leases held for investment
|
15,220
|
|
|
15,353
|
|
|
21,727
|
|
|
52,300
|
|
|
3,261,840
|
|
|
3,314,140
|
|
|
10,066
|
|
|
23,952
|
|
|
34,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases
|
$
|
15,220
|
|
|
$
|
15,353
|
|
|
$
|
21,727
|
|
|
$
|
52,300
|
|
|
$
|
3,445,417
|
|
|
$
|
3,497,717
|
|
|
$
|
10,066
|
|
|
$
|
23,952
|
|
|
$
|
34,018
|
|
Nonaccrual loans and leases by year of origination were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost Basis
|
|
|
(Dollars in Thousands)
|
Term Loans and Leases by Origination Year
|
Revolving Loans and Leases
|
Total
|
Nonaccrual With No ACL
|
|
June 30, 2021
|
2021
|
2020
|
2019
|
2018
|
2017
|
Prior
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
20
|
|
$
|
2,506
|
|
$
|
6,862
|
|
$
|
2,865
|
|
$
|
147
|
|
$
|
2,070
|
|
$
|
—
|
|
$
|
14,470
|
|
$
|
7,558
|
|
|
Asset based lending
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Factoring
|
—
|
|
—
|
|
13
|
|
—
|
|
—
|
|
24
|
|
—
|
|
37
|
|
37
|
|
|
Lease financing
|
|
248
|
|
1,519
|
|
276
|
|
9
|
|
156
|
|
—
|
|
2,208
|
|
824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA/USDA
|
|
|
|
|
600
|
|
—
|
|
—
|
|
600
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
20
|
|
2,754
|
|
8,394
|
|
3,141
|
|
756
|
|
2,250
|
|
—
|
|
17,315
|
|
9,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
20
|
|
2,754
|
|
8,394
|
|
3,141
|
|
756
|
|
2,250
|
|
—
|
|
17,315
|
|
9,019
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
—
|
|
300
|
|
700
|
|
16,896
|
|
—
|
|
—
|
|
—
|
|
17,896
|
|
—
|
|
|
Consumer one-to-four family real estate and other
|
—
|
|
—
|
|
108
|
|
—
|
|
—
|
|
—
|
|
—
|
|
108
|
|
108
|
|
|
Agricultural real estate and operating
|
—
|
|
—
|
|
—
|
|
1,263
|
|
—
|
|
506
|
|
—
|
|
1,769
|
|
1,769
|
|
|
Total Community Banking
|
—
|
|
300
|
|
808
|
|
18,159
|
|
—
|
|
506
|
|
—
|
|
19,773
|
|
1,877
|
|
|
Total nonaccrual loans and leases
|
$
|
20
|
|
$
|
3,054
|
|
$
|
9,202
|
|
$
|
21,300
|
|
$
|
756
|
|
$
|
2,756
|
|
$
|
—
|
|
$
|
37,088
|
|
$
|
10,896
|
|
Loans and leases that are 90 days or more delinquent and accruing by year of origination were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost Basis
|
|
(Dollars in Thousands)
|
Term Loans and Leases by Origination Year
|
Revolving Loans and Leases
|
Total
|
|
June 30, 2021
|
2021
|
2020
|
2019
|
2018
|
2017
|
Prior
|
|
National Lending
|
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
1,142
|
|
$
|
685
|
|
$
|
36
|
|
$
|
196
|
|
$
|
14
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease financing
|
356
|
|
426
|
|
223
|
|
372
|
|
26
|
|
—
|
|
—
|
|
1,403
|
|
|
Insurance premium finance
|
769
|
|
105
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
2,267
|
|
1,216
|
|
259
|
|
568
|
|
40
|
|
—
|
|
—
|
|
4,350
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer finance
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
383
|
|
—
|
|
383
|
|
|
Consumer finance (1)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
383
|
|
—
|
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
2,267
|
|
1,216
|
|
259
|
|
568
|
|
40
|
|
383
|
|
—
|
|
4,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 90 days or more delinquent and accruing
|
$
|
2,267
|
|
$
|
1,216
|
|
$
|
259
|
|
$
|
568
|
|
$
|
40
|
|
$
|
383
|
|
$
|
—
|
|
$
|
4,733
|
|
(1) Consumer credit products are not included in the table as they are evaluated under a separate methodology for allowance for credit loss purposes that considers the overall Program structure. Refer to the Company’s most recent audited financial statements for additional information on these Programs.
Certain loans and leases 90 days or more past due as to interest or principal continue to accrue because they are (1) well-secured and in the process of collection or (2) one-to-four family real estate loans or consumer loans exempt under regulatory rules from being classified as non-accrual until later delinquency, usually 120 days past due.
When analysis of borrower or lessee operating results and financial condition indicates that underlying cash flows of the borrower’s business are not adequate to meet its debt service requirements, the loan or lease is evaluated for impairment. Often, this is associated with a delay or shortfall in scheduled payments, as described above.
The following table provides the average recorded investment in non-accrual loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Recorded Investment
|
|
|
|
(Dollars in Thousands)
|
Three Months Ended June 30, 2021
|
|
Nine Months Ended June 30, 2021
|
|
|
|
National Lending
|
|
|
|
|
|
|
Term lending
|
$
|
14,964
|
|
|
$
|
14,190
|
|
|
|
|
Asset based lending
|
127
|
|
|
591
|
|
|
|
|
Factoring
|
33
|
|
|
337
|
|
|
|
|
Lease financing
|
2,435
|
|
|
2,994
|
|
|
|
|
|
|
|
|
|
|
|
SBA/USDA
|
600
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
18,159
|
|
|
18,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
18,159
|
|
|
18,712
|
|
|
|
|
Community Banking
|
|
|
|
|
|
|
Commercial real estate and operating
|
17,896
|
|
|
14,235
|
|
|
|
|
Consumer one-to-four family real estate and other
|
136
|
|
|
140
|
|
|
|
|
Agricultural real estate and operating
|
1,769
|
|
|
1,769
|
|
|
|
|
Total Community Banking
|
19,801
|
|
|
16,144
|
|
|
|
|
Total loans and leases
|
$
|
37,960
|
|
|
$
|
34,856
|
|
|
|
The recognized interest income on the Company's nonaccrual loans and leases for the three and nine months ended June 30, 2021 was not significant.
The following table provides the average recorded investment in impaired loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
Nine Months Ended June 30, 2020
|
|
(Dollars in Thousands)
|
Average Recorded Investment
|
|
Recognized Interest Income
|
|
Average Recorded Investment
|
|
Recognized Interest Income
|
|
National Lending
|
|
|
|
|
|
|
|
|
Term lending
|
$
|
28,848
|
|
|
$
|
121
|
|
|
$
|
24,946
|
|
|
$
|
240
|
|
|
Asset based lending
|
935
|
|
|
—
|
|
|
571
|
|
|
—
|
|
|
Factoring
|
4,715
|
|
|
—
|
|
|
4,387
|
|
|
—
|
|
|
Lease financing
|
2,946
|
|
|
2
|
|
|
2,929
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
SBA/USDA
|
3,162
|
|
|
—
|
|
|
3,530
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
40,606
|
|
|
123
|
|
|
36,363
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer finance
|
1,999
|
|
|
37
|
|
|
1,775
|
|
|
111
|
|
|
Consumer finance
|
1,999
|
|
|
37
|
|
|
1,775
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
42,605
|
|
|
160
|
|
|
38,138
|
|
|
365
|
|
|
Community Banking
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
405
|
|
|
1
|
|
|
511
|
|
|
27
|
|
|
Consumer one-to-four family real estate and other
|
131
|
|
|
—
|
|
|
101
|
|
|
9
|
|
|
Agricultural real estate and operating
|
2,437
|
|
|
10
|
|
|
2,677
|
|
|
(134)
|
|
|
Total Community Banking
|
2,973
|
|
|
11
|
|
|
3,289
|
|
|
(98)
|
|
|
Total loans and leases
|
$
|
45,578
|
|
|
$
|
171
|
|
|
$
|
41,427
|
|
|
$
|
267
|
|
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 $3.9 million of national lending loans that were modified in a TDR during the three months ended June 30, 2021, all of which were modified to extend the term of the loan, and no community banking loans. There were $1.4 million of national lending loans and leases that were modified in a TDR during the three months ended June 30, 2020 and no community banking loans.
During the nine months ended June 30, 2021, there were $6.0 million of national lending loans that were modified in a TDR, all of which were modified to extend the term of the loan, and no community bank loans. There were $5.5 million of national lending loans and leases and $0.6 million of community banking loans that were modified in a TDR during the nine months ended June 30, 2020.
During the nine months ended June 30, 2021, the Company had $0.6 million of national lending loans and no 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, 2020, the Company had $3.3 million of community banking loans and $1.3 million 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 credit losses were insignificant during the quarters ended June 30, 2021 and June 30, 2020.
NOTE 7. EARNINGS PER COMMON SHARE ("EPS")
The Company has granted restricted share awards with dividend rights that are considered to be participating securities. Accordingly, a portion of the Company’s earnings is allocated to those participating securities in the earnings per share calculation under the two-class method. Basic earnings per common share is computed using the two-class method by dividing income available to common stockholders after the allocation of dividends and undistributed earnings to the participating securities by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated using the more dilutive of the treasury stock method or the two-class method. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, and is computed after giving consideration to the weighted average dilutive effect of the Company’s stock options, performance share units, and nonvested restricted stock, where applicable. Diluted EPS under the two-class method also considers the allocation of earnings to the participating securities. Antidilutive securities are disregarded in earnings per share calculations. Diluted EPS shown below reflects the two-class method, as diluted EPS under the two-class method was more dilutive than under the treasury stock method.
A reconciliation of net income and common stock share amounts used in the computation of basic and diluted earnings per share is presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
|
(Dollars in Thousands, Except Share and Per Share Data)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Basic income per common share:
|
|
|
|
|
|
|
|
|
Net income attributable to Meta Financial Group, Inc.
|
$
|
38,701
|
|
|
$
|
18,190
|
|
|
$
|
125,805
|
|
|
$
|
91,562
|
|
|
Dividends and undistributed earnings allocated to participating securities
|
(729)
|
|
|
(432)
|
|
|
(2,411)
|
|
|
(2,097)
|
|
|
Basic net earnings available to common stockholders
|
37,972
|
|
|
17,758
|
|
|
123,394
|
|
|
89,465
|
|
|
Undistributed earnings allocated to nonvested restricted stockholders
|
699
|
|
|
391
|
|
|
2,318
|
|
|
1,974
|
|
|
Reallocation of undistributed earnings to nonvested restricted stockholders
|
(699)
|
|
|
(391)
|
|
|
(2,316)
|
|
|
(1,973)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings available to common stockholders
|
$
|
37,972
|
|
|
$
|
17,758
|
|
|
$
|
123,396
|
|
|
$
|
89,466
|
|
|
|
|
|
|
|
|
|
|
|
Total weighted-average basic common shares outstanding
|
31,320,893
|
|
|
33,794,154
|
|
|
31,880,653
|
|
|
35,180,068
|
|
|
Effect of dilutive securities(1)
|
|
|
|
|
|
|
|
|
Stock options
|
—
|
|
|
21,497
|
|
|
—
|
|
|
21,634
|
|
|
Performance share units
|
18,054
|
|
|
—
|
|
|
19,944
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total effect of dilutive securities
|
18,054
|
|
|
21,497
|
|
|
19,944
|
|
|
21,634
|
|
|
Total weighted-average diluted common shares outstanding
|
31,338,947
|
|
|
33,815,651
|
|
|
31,900,597
|
|
|
35,201,702
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share:
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
$
|
1.21
|
|
|
$
|
0.53
|
|
|
$
|
3.87
|
|
|
$
|
2.54
|
|
|
Diluted earnings per common share(2)
|
$
|
1.21
|
|
|
$
|
0.53
|
|
|
$
|
3.87
|
|
|
$
|
2.54
|
|
(1) Represents the effect of the assumed exercise of stock options and vesting of performance share units and restricted stock, as applicable, utilizing the treasury stock method.
(2) Excluded from the computation of diluted earnings per share for the three months ended June 30, 2021 and 2020, respectively, were 601,693 and 821,884 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive. Excluded from the computation of diluted earnings per share for the nine months ended June 30, 2021 and 2020, respectively, were 622,954 and 824,809 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive.
NOTE 8. RENTAL EQUIPMENT, NET
Rental equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
September 30, 2020
|
|
Computers and IT networking equipment
|
$
|
16,878
|
|
|
$
|
15,926
|
|
|
Motor vehicles and other
|
81,881
|
|
|
52,913
|
|
|
Office furniture and equipment
|
52,276
|
|
|
74,197
|
|
|
Solar panels and equipment
|
122,483
|
|
|
118,808
|
|
|
Total
|
273,518
|
|
|
261,844
|
|
|
|
|
|
|
|
Accumulated depreciation
|
(63,766)
|
|
|
(57,601)
|
|
|
Unamortized initial direct costs
|
1,616
|
|
|
1,721
|
|
|
Net book value
|
$
|
211,368
|
|
|
$
|
205,964
|
|
Undiscounted future minimum lease payments expected to be received for operating leases were as follows:
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
Remaining in 2021
|
$
|
9,517
|
|
|
2022
|
31,311
|
|
|
2023
|
27,132
|
|
|
2024
|
19,511
|
|
|
2025
|
13,704
|
|
|
Thereafter
|
20,303
|
|
|
Total undiscounted future minimum lease payments receivable for operating leases
|
$
|
121,478
|
|
NOTE 9. FORECLOSED REAL ESTATE AND REPOSSESSED ASSETS
The following table provides an analysis of changes in foreclosed real estate and repossessed assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30,
|
|
(Dollars in Thousands)
|
2021
|
|
2020
|
|
Balance, beginning of period
|
$
|
9,957
|
|
|
$
|
29,494
|
|
|
Additions
|
9
|
|
|
5,983
|
|
|
Reductions:
|
|
|
|
|
Write-downs
|
481
|
|
|
568
|
|
|
Sales
|
8,285
|
|
|
23,086
|
|
|
(Gain) loss on sale
|
(4)
|
|
|
5,039
|
|
|
Total reductions
|
8,762
|
|
|
28,693
|
|
|
Balance, ending of period
|
$
|
1,204
|
|
|
$
|
6,784
|
|
At June 30, 2021 and September 30, 2020, the Company had established a valuation allowance of $1.0 million and $0.5 million for repossessed assets, respectively. As of June 30, 2021 and September 30, 2020, the Company had no loans or leases in the process of foreclosure.
During the fiscal year ended September 30, 2020, the Company sold $28.1 million of other real estate owned ("OREO"), which consisted of assets related to a Community Bank agriculture real estate customer. The sale consisted of 30-plus parcels of land and the Company recognized a $5.0 million loss that was included in the "Gain (loss) on sale of other" line on the Condensed Consolidated Statements of Operations. The Company also recognized $1.1 million in deferred rental income and $0.2 million in OREO expenses related to these foreclosed properties.
NOTE 10. GOODWILL AND INTANGIBLE ASSETS
The Company held a total of $309.5 million of goodwill at June 30, 2021. The recorded goodwill is a result of multiple business combinations that have been consummated since fiscal year 2015, with the most recent being the merger with Crestmark pursuant to the Crestmark Acquisition that closed on August 1, 2018. Goodwill is assessed for impairment at least annually or more often if conditions indicate a possible impairment. The assessment is done at a reporting unit level, which is one level below the operating segments. There have been no changes to the carrying amount of goodwill during the nine months ended June 30, 2021.
The changes in the carrying amount of the Company’s intangible assets for the nine months ended June 30, 2021 and 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
Trademark(1)
|
|
Non-Compete(2)
|
|
Customer Relationships(3)
|
|
All Others(4)
|
|
Total
|
|
Balance as of September 30, 2020
|
$
|
10,901
|
|
|
$
|
422
|
|
|
$
|
24,333
|
|
|
$
|
6,036
|
|
|
$
|
41,692
|
|
|
Acquisitions during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
Amortization during the period
|
(816)
|
|
|
(286)
|
|
|
(5,202)
|
|
|
(480)
|
|
|
(6,784)
|
|
|
Write-offs during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
(24)
|
|
|
(24)
|
|
|
Balance as of June 30, 2021
|
$
|
10,085
|
|
|
$
|
136
|
|
|
$
|
19,131
|
|
|
$
|
5,546
|
|
|
$
|
34,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount
|
$
|
14,624
|
|
|
$
|
2,481
|
|
|
$
|
82,088
|
|
|
$
|
10,131
|
|
|
$
|
109,324
|
|
|
Accumulated amortization
|
(4,539)
|
|
|
(2,345)
|
|
|
(52,709)
|
|
|
(4,367)
|
|
|
(63,960)
|
|
|
Accumulated impairment
|
—
|
|
|
—
|
|
|
(10,248)
|
|
|
(218)
|
|
|
(10,466)
|
|
|
Balance as of June 30, 2021
|
$
|
10,085
|
|
|
$
|
136
|
|
|
$
|
19,131
|
|
|
$
|
5,546
|
|
|
$
|
34,898
|
|
(1) Book amortization period of 5-15 years. Amortized using the straight line and accelerated methods.
(2) Book amortization period of 3-5 years. Amortized using the straight line method.
(3) Book amortization period of 10-30 years. Amortized using the accelerated method.
(4) Book amortization period of 3-20 years. Amortized using the straight line method.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
Trademark(1)
|
|
Non-Compete(2)
|
|
Customer Relationships(3)
|
|
All Others(4)
|
|
Total
|
|
Balance as of September 30, 2019
|
$
|
11,959
|
|
|
$
|
827
|
|
|
$
|
33,207
|
|
|
$
|
6,817
|
|
|
$
|
52,810
|
|
|
Acquisitions during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
35
|
|
|
Amortization during the period
|
(793)
|
|
|
(310)
|
|
|
(7,112)
|
|
|
(499)
|
|
|
(8,714)
|
|
|
Write-offs during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
(157)
|
|
|
(157)
|
|
|
Balance as of June 30, 2020
|
$
|
11,166
|
|
|
$
|
517
|
|
|
$
|
26,095
|
|
|
$
|
6,196
|
|
|
$
|
43,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount
|
$
|
14,624
|
|
|
$
|
2,480
|
|
|
$
|
82,088
|
|
|
$
|
10,112
|
|
|
$
|
109,304
|
|
|
Accumulated amortization
|
(3,458)
|
|
|
(1,963)
|
|
|
(45,745)
|
|
|
(3,726)
|
|
|
(54,892)
|
|
|
Accumulated impairment
|
—
|
|
|
—
|
|
|
(10,248)
|
|
|
(190)
|
|
|
(10,438)
|
|
|
Balance as of June 30, 2020
|
$
|
11,166
|
|
|
$
|
517
|
|
|
$
|
26,095
|
|
|
$
|
6,196
|
|
|
$
|
43,974
|
|
(1) Book amortization period of 5-15 years. Amortized using the straight line and accelerated methods.
(2) Book amortization period of 3-5 years. Amortized using the straight line method.
(3) Book amortization period of 10-30 years. Amortized using the accelerated method.
(4) Book amortization period of 3-20 years. Amortized using the straight line method.
The estimated amortization expense of intangible assets assumes no activities, such as acquisitions, which would result in additional amortizable intangible assets. Estimated amortization expense of intangible assets in the remaining three months of fiscal 2021 and subsequent fiscal years was as follows:
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
Remaining in 2021
|
$
|
1,762
|
|
|
2022
|
6,419
|
|
|
2023
|
5,101
|
|
|
2024
|
4,383
|
|
|
2025
|
3,827
|
|
|
2026
|
3,253
|
|
|
Thereafter
|
10,153
|
|
|
Total anticipated intangible amortization
|
$
|
34,898
|
|
The Company tests intangible assets for impairment at least annually or more often if conditions indicate a possible impairment. There were no impairments to intangible assets during the nine months ended June 30, 2021 and 2020.
NOTE 11. OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES
Operating lease ROU assets, included in other assets, were $35.4 million at June 30, 2021.
Operating lease liabilities, included in accrued expenses and other liabilities, were $37.6 million at June 30, 2021.
Undiscounted future minimum operating lease payments and a reconciliation to the amount recorded as operating lease liabilities were as follows:
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
June 30, 2021
|
|
Remaining in 2021
|
$
|
1,232
|
|
|
2022
|
4,687
|
|
|
2023
|
4,180
|
|
|
2024
|
4,152
|
|
|
2025
|
4,027
|
|
|
Thereafter
|
24,926
|
|
|
Total undiscounted future minimum lease payments
|
43,204
|
|
|
Discount
|
(5,652)
|
|
|
Total operating lease liabilities
|
$
|
37,552
|
|
The weighted-average discount rate and remaining lease term for operating leases were as follows:
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Weighted-average discount rate
|
2.31
|
%
|
|
Weighted-average remaining lease term (years)
|
11.00
|
The components of total lease costs for operating leases were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
|
(Dollars in Thousands)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Lease expense
|
$
|
1,191
|
|
|
$
|
920
|
|
|
$
|
3,136
|
|
|
$
|
2,533
|
|
|
Short-term and variable lease cost
|
35
|
|
|
118
|
|
|
167
|
|
|
452
|
|
|
ROU asset impairment
|
—
|
|
|
—
|
|
|
224
|
|
|
—
|
|
|
Sublease income
|
(126)
|
|
|
(188)
|
|
|
(411)
|
|
|
(552)
|
|
|
Total lease cost for operating leases
|
$
|
1,100
|
|
|
$
|
850
|
|
|
$
|
3,116
|
|
|
$
|
2,433
|
|
NOTE 12. STOCKHOLDERS' EQUITY
Repurchase of Common Stock
The Company's Board of Directors authorized the November 20, 2019 share repurchase program to repurchase up to 7,500,000 shares of the Company's outstanding common stock. This authorization is effective from November 21, 2019 through December 31, 2022. During the nine months ended June 30, 2021, and 2020, the Company repurchased 2,684,408 and 3,498,394 shares, respectively, as part of the share repurchase program.
Under the repurchase program, repurchased shares were retired and designated as authorized but unissued shares. The Company accounts for repurchased shares using the par value method under which the repurchase price is charged to paid-in capital up to the amount of the original proceeds of those shares. When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings. As of June 30, 2021, the remaining number of shares available for repurchase under this program was 1,550,173 shares of common stock.
For the nine months ended June 30, 2021, and 2020, the Company also repurchased 84,950 and 89,613 shares, or $2.0 million and $3.0 million of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.
NOTE 13. STOCK COMPENSATION
The Company maintains the Meta Financial Group, Inc. 2002 Omnibus Incentive Plan, as amended and restated (the "2002 Omnibus Incentive Plan"), which, among other things, provides for the awarding of stock options, nonvested (restricted) shares, and performance share units ("PSUs") to certain officers and directors of the Company. Awards are granted by the Compensation Committee of the Board of Directors based on the performance of the award recipients or other relevant factors.
Compensation expense for share-based awards is recorded over the vesting period at the fair value of the award at the time of the grant. The exercise price of options or fair value of nonvested (restricted) shares and performance share units granted under the Company’s incentive plan is equal to the fair market value of the underlying stock at the grant date, adjusted for dividends where applicable. The Company has elected, with the adoption of ASU 2016-09, to record forfeitures as they occur.
The following tables show the activity of nonvested (restricted) shares and PSUs granted, vested, or forfeited under the 2002 Omnibus Incentive Plan for the nine months ended June 30, 2021. There were no options granted, exercised, or forfeited under this plan during the nine months ended June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands, Except Per Share Data)
|
Number of Shares
|
|
Weighted Average Fair Value at Grant
|
|
Nonvested shares outstanding, September 30, 2020
|
790,083
|
|
|
$
|
30.03
|
|
|
Granted
|
189,187
|
|
|
30.78
|
|
|
Vested
|
(277,429)
|
|
|
30.19
|
|
|
Forfeited or expired
|
(103,798)
|
|
|
29.66
|
|
|
Nonvested shares outstanding, June 30, 2021
|
598,043
|
|
|
$
|
30.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands, Except Per Share Data)
|
Number of Units
|
|
Weighted Average Fair Value at Grant
|
|
Performance share units outstanding, September 30, 2020
|
—
|
|
|
$
|
—
|
|
|
Granted(1)
|
60,984
|
|
|
34.03
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited or expired
|
—
|
|
|
—
|
|
|
Performance share units outstanding, June 30, 2021
|
60,984
|
|
|
$
|
34.03
|
|
(1) The number of PSUs granted reflects the target number of PSUs able to be earned under a given award.
At June 30, 2021, stock-based compensation expense not yet recognized in income totaled $7.2 million, which is expected to be recognized over a weighted average remaining period of 2.01 years.
NOTE 14. INCOME TAXES
The Company recorded an income tax expense of $9.6 million for the nine months ended June 30, 2021, resulting in an effective tax rate of 6.92%, compared to an income tax expense of $3.9 million, or an effective tax rate of 3.91%, for the nine months ended June 30, 2020. The Company’s effective tax rate was lower than the U.S. statutory rate of 21% primarily because of the anticipated effect of investment tax credits during fiscal year 2021. The Company’s effective tax rate in the future will depend in part on actual investment tax credits earned as part of its financing of solar energy projects.
The table below compares the income tax expense components for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30,
|
|
(Dollars in Thousands)
|
2021
|
|
2020
|
|
Provision at statutory rate
|
$
|
28,435
|
|
|
$
|
20,041
|
|
|
Tax-exempt income
|
(674)
|
|
|
(936)
|
|
|
State income taxes
|
6,120
|
|
|
4,475
|
|
|
Interim period effective rate adjustment
|
(5,181)
|
|
|
(8,850)
|
|
|
Tax credit investments, net - federal
|
(18,854)
|
|
|
(9,863)
|
|
|
Research tax credit
|
(323)
|
|
|
(1,709)
|
|
|
IRC 162(m) nondeductible compensation
|
677
|
|
|
1,250
|
|
|
Other, net
|
(600)
|
|
|
(538)
|
|
|
Income tax expense
|
$
|
9,600
|
|
|
$
|
3,870
|
|
|
Effective tax rate
|
6.92
|
%
|
|
3.91
|
%
|
NOTE 15. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Bank makes various commitments to extend credit that are not reflected in the accompanying Condensed Consolidated Financial Statements as described below.
At June 30, 2021 and September 30, 2020, unfunded loan commitments approximated $1.32 billion and $1.22 billion, respectively, excluding undisbursed portions of loans in process. Commitments, which are disbursed subject to certain limitations, extend over various periods of time. Generally, unused commitments are canceled upon expiration of the commitment term as outlined in each individual contract.
The Company had no commitments to purchase securities at June 30, 2021 or September 30, 2020. The Company had no commitments to sell securities at June 30, 2021 or September 30, 2020.
The exposure to credit loss in the event of non-performance by other parties to financial instruments for commitments to extend credit is represented by the contractual amount of those instruments. The same credit policies and collateral requirements are used in making commitments and conditional obligations as are used for on-balance-sheet instruments.
Since certain commitments to make loans and to fund lines of credit expire without being used, the amount does not necessarily represent future cash commitments. In addition, commitments used to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
Legal Proceedings
The Bank was served, on October 14, 2016, with a lawsuit captioned Card Limited, LLC v. MetaBank dba Meta Payment Systems, Civil No. 2:16-cv-00980 in the United States District Court for the District of Utah. This action was initiated by a former prepaid program manager of the Bank, which was terminated by the Bank in fiscal year 2016. Card Limited alleges that, after all of the programs were wound down, there were two accounts with positive balances to which Card Limited is entitled. The Bank’s position is that Card Limited is not entitled to the funds contained in said accounts. The total amount to which Card Limited claims it is entitled is $4.0 million. The Court ruled in favor of MetaBank on cross motions for summary judgment and vacated the trial. Card Limited has appealed the decision, but thereafter agreed to settle this claim for a nominal amount. This payment has been made and the case has been dismissed.
On February 9, 2018, the Bank’s AFS/IBEX division filed a lawsuit in the United States District Court for the Eastern District of New York captioned AFS/IBEX, a division of MetaBank v. Aegis Managing Agency Limited ("AMA"), Aegis Syndicate 1225 (together with AMA, the "Aegis defendants"), CRC Insurance Services, Inc. ("CRC"), and Transportation Underwriters, Inc. The suit was filed against commercial insurance underwriters and brokers that facilitated the issuance of commercial insurance policies to Red Hook Construction Group-II, LLC (“Red Hook”). The Bank’s position is that both CRC and Transportation Underwriters represented to the Bank that, upon cancellation of the insurance policies prior to their stated terms, any unearned premiums would be refunded. The Bank then provided insurance premium financing to Red Hook, and Red Hook executed a written premium finance agreement pursuant to which Red Hook assigned its rights to any unearned premiums to the Bank. After the policies were cancelled, the Aegis defendants failed to return the unearned insurance premiums totaling just over $1.6 million owed to the Bank under the insurance policies and the premium finance agreement. The Bank is seeking recovery of all amounts to which it is entitled at law or equity and intends to vigorously pursue its claims against the defendants. Following the trial court granting a Motion for Summary Judgment filed by the Bank, the parties have agreed to a formal settlement of this matter on terms acceptable to the Bank.
From time to time, the Company or its subsidiaries are subject to certain legal proceedings and claims in the ordinary course of business. Accruals have been recorded when the outcome is probable and can be reasonably estimated. While management currently believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s financial position or its results of operations, legal proceedings are inherently uncertain and unfavorable resolution of some or all of these matters could, individually or in the aggregate, have a material adverse effect on the Company’s and its subsidiaries’ respective businesses, financial condition or results of operations.
NOTE 16. REVENUE FROM CONTRACTS WITH CUSTOMERS
Topic 606 applies to all contracts with customers unless such revenue is specifically addressed under existing guidance. The table below presents the Company’s revenue by operating segment. For additional descriptions of the Company’s operating segments, including additional financial information and the underlying management accounting process, see Note 17. Segment Reporting to the Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
Consumer
|
|
Commercial
|
|
Corporate Services/Other
|
|
Consolidated Company
|
|
Three Months Ended June 30,
|
2021
|
2020
|
|
2021
|
2020
|
|
2021
|
2020
|
|
2021
|
2020
|
|
Net interest income(1)
|
$
|
23,254
|
|
$
|
25,754
|
|
|
$
|
44,728
|
|
$
|
36,104
|
|
|
$
|
493
|
|
$
|
279
|
|
|
$
|
68,475
|
|
$
|
62,137
|
|
|
Noninterest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Refund transfer product fees
|
12,073
|
|
4,595
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
12,073
|
|
4,595
|
|
|
Tax advance product fees(1)
|
891
|
|
28
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
891
|
|
28
|
|
|
Payment card and deposit fees
|
29,203
|
|
21,302
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
29,203
|
|
21,302
|
|
|
Other bank and deposit fees
|
—
|
|
—
|
|
|
334
|
|
213
|
|
|
4
|
|
1
|
|
|
338
|
|
214
|
|
|
Rental income(1)
|
6
|
|
5
|
|
|
9,970
|
|
11,226
|
|
|
—
|
|
—
|
|
|
9,976
|
|
11,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of other(1)
|
—
|
|
—
|
|
|
5,982
|
|
1,214
|
|
|
(27)
|
|
—
|
|
|
5,955
|
|
1,214
|
|
|
Other income(1)
|
1,056
|
|
324
|
|
|
1,702
|
|
1,267
|
|
|
1,259
|
|
873
|
|
|
4,017
|
|
2,464
|
|
|
Total noninterest income
|
43,229
|
|
26,254
|
|
|
17,988
|
|
13,920
|
|
|
1,236
|
|
874
|
|
|
62,453
|
|
41,048
|
|
|
Revenue
|
$
|
66,483
|
|
$
|
52,008
|
|
|
$
|
62,716
|
|
$
|
50,024
|
|
|
$
|
1,729
|
|
$
|
1,153
|
|
|
$
|
130,928
|
|
$
|
103,185
|
|
(1) These revenues are not within the scope of Topic 606. Additional details are included in other footnotes to the accompanying financial statements. The scope of Topic 606 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities, including loans, leases, and securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
Consumer
|
|
Commercial
|
|
Corporate Services/Other
|
|
Consolidated Company
|
|
Nine Months Ended June 30,
|
2021
|
2020
|
|
|
2021
|
2020
|
|
|
2021
|
2020
|
|
|
2021
|
2020
|
|
|
Net interest income(1)
|
$
|
70,686
|
|
$
|
58,473
|
|
|
|
$
|
128,980
|
|
$
|
112,866
|
|
|
|
$
|
8,658
|
|
$
|
23,186
|
|
|
|
$
|
208,324
|
|
$
|
194,525
|
|
|
|
Noninterest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refund transfer product fees
|
35,400
|
|
33,726
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
35,400
|
|
33,726
|
|
|
|
Tax advance product fees(1)
|
47,413
|
|
31,840
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
47,413
|
|
31,840
|
|
|
|
Payment card and deposit fees
|
81,641
|
|
65,957
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
81,641
|
|
65,957
|
|
|
|
Other bank and deposit fees
|
—
|
|
—
|
|
|
|
694
|
|
759
|
|
|
|
15
|
|
324
|
|
|
|
709
|
|
1,083
|
|
|
|
Rental income(1)
|
16
|
|
14
|
|
|
|
29,691
|
|
33,354
|
|
|
|
—
|
|
1,314
|
|
|
|
29,707
|
|
34,682
|
|
|
|
Net gain realized on investment securities(1)
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
6
|
|
—
|
|
|
|
6
|
|
—
|
|
|
|
Gain on divestitures(1)
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
19,275
|
|
|
|
—
|
|
19,275
|
|
|
|
Gain (loss) on sale of other(1)
|
—
|
|
(19)
|
|
|
|
10,198
|
|
6,131
|
|
|
|
737
|
|
(5,143)
|
|
|
|
10,935
|
|
969
|
|
|
|
Other income(1)
|
2,135
|
|
2,709
|
|
|
|
6,511
|
|
4,178
|
|
|
|
6,904
|
|
4,625
|
|
|
|
15,550
|
|
11,512
|
|
|
|
Total noninterest income
|
166,605
|
|
134,227
|
|
|
|
47,094
|
|
44,422
|
|
|
|
7,662
|
|
20,395
|
|
|
|
221,361
|
|
199,044
|
|
|
|
Revenue
|
$
|
237,291
|
|
$
|
192,700
|
|
|
|
$
|
176,074
|
|
$
|
157,288
|
|
|
|
$
|
16,320
|
|
$
|
43,581
|
|
|
|
$
|
429,685
|
|
$
|
393,569
|
|
|
(1) These revenues are not within the scope of Topic 606. Additional details are included in other footnotes to the accompanying financial statements. The scope of Topic 606 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities, including loans, leases, and securities.
Following is a discussion of key revenues within the scope of Topic 606. The Company provides services to customers that have related performance obligations that must be completed to recognize revenue. Revenues are generally recognized immediately upon the completion of the service or over time as services are performed. Any services performed over time generally require that the Company renders services each period; therefore, the Company measures progress in completing these services based upon the passage of time. Revenue from contracts with customers did not generate significant contract assets and liabilities.
Refund Transfer Product Fees. Refund transfer fees are specific to the tax products offered by Refund Advantage and EPS. These fees are for products, services such as payment processing, and product referral commissions. Software partner fees paid and/or incurred are recorded on a net basis. The Company’s obligation for product fees and commissions is satisfied at the time of the product delivery and obligation for payment processing is satisfied at the time of processing. The transaction price for such activity is based upon stand-alone fees within the terms and conditions. At June 30, 2021 and September 30, 2020, there were no receivables related to refund transfer fees, which reflect earned revenue with unconditional rights to payment for product fee income. All refund transfer fees are recorded within the Consumer reporting segment.
Card Fees. Card fees relate to MPS, Community Bank, Refund Advantage and EPS products. These fees are for products and services such as card activation, product support, processing, and servicing. The Company earns these fees based upon the underlying terms and conditions with each cardholder over the contract term. Agreements with the Company’s cardholders are considered daily service contracts as they are not fixed in duration. The Company’s obligation for card activation and product support fees is satisfied at the time of product delivery, while the obligation for processing and servicing is satisfied over the course of each month. The transaction price for such activity is based upon the stand-alone fees within the terms and conditions of the cardholder agreements. Card fee revenue also includes income from sponsorships, associations and networks, and interchange income. Sponsorship income relates to fees charged to the Company’s ATM sponsorship partners, where the obligation is satisfied over the course of each month. Association and network income reflect incentives, performance bonuses and rebates with MasterCard and Visa. The obligation for such income is satisfied at the time when certain thresholds of transaction volume have been met. Interchange income is generated by cardholder activity, and therefore the Company’s obligations are satisfied as activity occurs. The transaction price for such activity is based on underlying rates and activity thresholds within the terms and conditions of the applicable agreements. Card fee revenue also includes breakage revenue. Breakage represents the estimated amount that will not be redeemed by the holder of unregistered, unused prepaid cards for goods or services. Breakage revenue is recognized ratably over the expected customer usage period and is an estimate based on cardholder behavior and breakage rates. Breakage is also impacted by escheatment laws. Card fees are recorded within both the Consumer and Commercial reporting segments, the substantial majority of which is derived from the Company's payments divisions and reported in payments card and deposit fees. Card fees related to the Community Bank are reported within other bank and deposit fees.
Bank and Deposit Fees. Fees are earned on depository accounts for consumer and commercial customers and include fees for account services, overdraft services, safety deposit box rentals, and event-driven services (i.e. returned checks, ATM surcharge, card replacement, wire transfers, and stop pays). The Company’s obligation for event-driven services is satisfied at the time of the event when the service is delivered, while its obligation for account services is satisfied over the course of each month. The Company’s obligation for overdraft services is satisfied at the time of overdraft. The transaction price for such activity is based upon stand-alone fees within the terms and conditions of the deposit agreements. Bank and deposit fees are recorded within both the Consumer and Commercial reporting segments, the majority of which are derived from the Company's payments divisions. Bank and deposit fees related to the Community Bank are reported within other bank and deposit fees.
Principal vs Agent. The Consumer reporting segment includes principal/agent relationships. Within this segment, MPS relationships are recorded on a gross basis within the Condensed Consolidated Statements of Operations, as Meta is the principal in the contract, with the exception of association/network contracts and partner/processor contracts for prepaid cards, which are recorded on a net basis within the Condensed Consolidated Statements of Operations as Meta is the agent in these contracts. Also within this segment, Tax Service relationships are recorded on a gross basis within the Condensed Consolidated Statements of Operations, as Meta is the principal in the contract, with the exception of contracts with software providers and merchants, which are recorded on a net basis within the Condensed Consolidated Statements of Operations as Meta is the agent in these contracts.
NOTE 17. SEGMENT REPORTING
An operating segment is generally defined as a component of a business for which discrete financial information is available and whose results are reviewed by the chief operating decision-maker. Operating segments are aggregated into reportable segments if certain criteria are met.
The Company reports its results of operations through the following three business segments: Consumer, Commercial, and Corporate Services/Other. The Meta Payment Systems and Tax Services divisions, as well as the Consumer Credit Products and ClearBalance business lines, are reported in the Consumer segment. The Crestmark and AFS divisions are reported in the Commercial segment. The Community Bank division, Warehouse Finance, and Student Loan lending portfolio are included in the Corporate Services/Other segment. The Corporate Services/Other segment also includes certain shared services as well as treasury related functions such as the investment portfolio, wholesale deposits and borrowings. The Company does not report indirect general and administrative expenses in the Consumer and Commercial segments. Beginning October 1, 2020, Warehouse Finance, formerly reported in the Consumer segment, is now included in the Corporate Services/Other segment. Prior periods have been reclassified to conform to the current presentation.
The Company adopted ASU 2018-02 as of October 1, 2020. The amendments in this ASU allow for a reclassification from AOCI to Retained Earnings for stranded tax effects from the Tax Cuts and Jobs Act of 2017 ("TCJA"). For the Company, these amendments are limited to any unrealized gains and losses held in Other Comprehensive Income for debt securities AFS held at the time of the TCJA enactment. The Company determined there were no stranded tax effects from the TCJA enactment and has not made any reclassification from AOCI to Retained Earnings upon adoption of this ASU.
The following tables present segment data for the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
(Dollars in Thousands)
|
Consumer
|
|
Commercial
|
|
Corporate
Services/Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
$
|
23,254
|
|
|
$
|
44,728
|
|
|
$
|
493
|
|
|
$
|
68,475
|
|
|
Provision (recovery) for credit losses
|
4,507
|
|
|
870
|
|
|
(765)
|
|
|
4,612
|
|
|
Noninterest income
|
43,229
|
|
|
17,988
|
|
|
1,236
|
|
|
62,453
|
|
|
Noninterest expense
|
20,561
|
|
|
28,604
|
|
|
32,358
|
|
|
81,523
|
|
|
Income (loss) before income tax expense
|
41,415
|
|
|
33,242
|
|
|
(29,864)
|
|
|
44,793
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
337,438
|
|
|
3,086,556
|
|
|
3,627,818
|
|
|
7,051,812
|
|
|
Total goodwill
|
87,145
|
|
|
222,360
|
|
|
—
|
|
|
309,505
|
|
|
Total deposits
|
5,715,197
|
|
|
8,941
|
|
|
164,733
|
|
|
5,888,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
(Dollars in Thousands)
|
Consumer
|
|
Commercial
|
|
Corporate
Services/Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
$
|
25,754
|
|
|
$
|
36,104
|
|
|
$
|
279
|
|
|
$
|
62,137
|
|
|
Provision (recovery) for loan and lease losses
|
(210)
|
|
|
7,946
|
|
|
7,357
|
|
|
15,093
|
|
|
Noninterest income
|
26,254
|
|
|
13,920
|
|
|
874
|
|
|
41,048
|
|
|
Noninterest expense
|
15,282
|
|
|
26,729
|
|
|
29,230
|
|
|
71,241
|
|
|
Income (loss) before income tax expense
|
36,936
|
|
|
15,349
|
|
|
(35,434)
|
|
|
16,851
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
372,549
|
|
|
2,690,719
|
|
|
5,715,758
|
|
|
8,779,026
|
|
|
Total goodwill
|
87,145
|
|
|
222,360
|
|
|
—
|
|
|
309,505
|
|
|
Total deposits
|
6,767,516
|
|
|
9,243
|
|
|
813,566
|
|
|
7,590,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2021
|
|
(Dollars in Thousands)
|
Consumer
|
|
Commercial
|
|
Corporate
Services/Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
$
|
70,686
|
|
|
$
|
128,980
|
|
|
$
|
8,658
|
|
|
$
|
208,324
|
|
|
Provision (recovery) for credit losses
|
34,893
|
|
|
9,540
|
|
|
(3,442)
|
|
|
40,991
|
|
|
Noninterest income
|
166,605
|
|
|
47,094
|
|
|
7,662
|
|
|
221,361
|
|
|
Noninterest expense
|
68,912
|
|
|
83,601
|
|
|
97,555
|
|
|
250,068
|
|
|
Income (loss) before income tax expense
|
133,486
|
|
|
82,933
|
|
|
(77,793)
|
|
|
138,626
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
337,438
|
|
|
3,086,556
|
|
|
3,627,818
|
|
|
7,051,812
|
|
|
Total goodwill
|
87,145
|
|
|
222,360
|
|
|
—
|
|
|
309,505
|
|
|
Total deposits
|
5,715,197
|
|
|
8,941
|
|
|
164,733
|
|
|
5,888,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2020
|
|
(Dollars in Thousands)
|
Consumer
|
|
Commercial
|
|
Corporate
Services/Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
$
|
58,473
|
|
|
$
|
112,866
|
|
|
$
|
23,186
|
|
|
$
|
194,525
|
|
|
Provision for loan and lease losses
|
20,334
|
|
|
23,641
|
|
|
11,821
|
|
|
55,796
|
|
|
Noninterest income
|
134,227
|
|
|
44,422
|
|
|
20,395
|
|
|
199,044
|
|
|
Noninterest expense
|
62,473
|
|
|
80,815
|
|
|
95,480
|
|
|
238,768
|
|
|
Income (loss) before income tax expense
|
109,893
|
|
|
52,832
|
|
|
(63,720)
|
|
|
99,005
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
372,549
|
|
|
2,690,719
|
|
|
5,715,758
|
|
|
8,779,026
|
|
|
Total goodwill
|
87,145
|
|
|
222,360
|
|
|
—
|
|
|
309,505
|
|
|
Total deposits
|
6,767,516
|
|
|
9,243
|
|
|
813,566
|
|
|
7,590,325
|
|
NOTE 18. FAIR VALUES OF FINANCIAL INSTRUMENTS
ASC 820, Fair Value Measurements defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system and requires disclosures about fair value measurement. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts.
The fair value hierarchy is as follows:
Level 1 Inputs - Valuation is based upon quoted prices for identical instruments traded in active markets that the Company has the ability to access at measurement date.
Level 2 Inputs - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which significant assumptions are observable in the market.
Level 3 Inputs - Valuation is generated from model-based techniques that use significant assumptions not observable in the market and are used only to the extent that observable inputs are not available. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.
Debt Securities Available for Sale and Held to Maturity. Debt securities available for sale are recorded at fair value on a recurring basis and debt securities held to maturity are carried at amortized cost.
The fair value of debt securities available for sale, categorized primarily as Level 2, is recorded using prices obtained from independent asset pricing services that are based on observable transactions, but not quoted markets. Management reviews the prices obtained from independent asset pricing servicing for unusual fluctuations and comparison to current market trading activity.
Equity Securities. Marketable equity securities and certain non-marketable equity securities are recorded at fair value on a recurring basis. The fair values of marketable equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs).
The following tables summarize the fair values of debt securities available for sale and equity securities as they are measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value At June 30, 2021
|
|
(Dollars in Thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Debt securities AFS
|
|
|
|
|
|
|
|
|
SBA securities
|
$
|
169,185
|
|
|
$
|
—
|
|
|
$
|
169,185
|
|
|
$
|
—
|
|
|
Obligations of states and political subdivisions
|
2,766
|
|
|
—
|
|
|
2,766
|
|
|
—
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
274,350
|
|
|
—
|
|
|
274,350
|
|
|
—
|
|
|
Asset-backed securities
|
407,722
|
|
|
—
|
|
|
407,722
|
|
|
—
|
|
|
Mortgage-backed securities
|
1,063,582
|
|
|
—
|
|
|
1,063,582
|
|
|
—
|
|
|
Total debt securities AFS
|
$
|
1,917,605
|
|
|
$
|
—
|
|
|
$
|
1,917,605
|
|
|
$
|
—
|
|
|
Common equities and mutual funds(1)
|
$
|
3,324
|
|
|
$
|
3,324
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Non-marketable equity securities(2)
|
$
|
4,724
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2021 and September 30, 2020.
(2) Consists of certain non-marketable equity securities that are measured at fair value using net asset value ("NAV") per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value At September 30, 2020
|
|
(Dollars in Thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Debt securities AFS
|
|
|
|
|
|
|
|
|
SBA securities
|
$
|
164,955
|
|
|
$
|
—
|
|
|
$
|
164,955
|
|
|
$
|
—
|
|
|
Obligations of states and political subdivisions
|
841
|
|
|
—
|
|
|
841
|
|
|
—
|
|
|
Non-bank qualified obligations of states and political subdivisions
|
323,774
|
|
|
—
|
|
|
323,774
|
|
|
—
|
|
|
Asset-backed securities
|
324,925
|
|
|
—
|
|
|
324,925
|
|
|
—
|
|
|
Mortgage-backed securities
|
453,607
|
|
|
—
|
|
|
453,607
|
|
|
—
|
|
|
Total debt securities AFS
|
$
|
1,268,102
|
|
|
$
|
—
|
|
|
$
|
1,268,102
|
|
|
$
|
—
|
|
|
Common equities and mutual funds(1)
|
$
|
2,969
|
|
|
$
|
2,969
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Non-marketable equity securities(2)
|
$
|
2,784
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2021 and September 30, 2020.
(2) Consists of certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.
Foreclosed Real Estate and Repossessed Assets. Real estate properties and repossessed assets are initially recorded at the fair value less selling costs at the date of foreclosure, establishing a new cost basis. The carrying amount represents the lower of the new cost basis or the fair value less selling costs of foreclosed assets that were measured at fair value subsequent to their initial classification as foreclosed assets.
Loans and Leases. The Company does not record loans and leases at fair value on a recurring basis. However, if a loan or lease is individually evaluated for risk of credit loss and repayment is expected to be solely provided by the values of the underlying collateral, the Company measures fair value on a nonrecurring basis. Fair value is determined by the fair value of the underlying collateral less estimated costs to sell. The fair value of the collateral is determined based on internal estimates and/or assessments provided by third-party appraisers and the valuation relies on discount rates ranging from 4% to 90%.
The following table summarizes the assets of the Company that are measured at fair value in the Condensed Consolidated Statements of Financial Condition on a non-recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value At June 30, 2021
|
|
(Dollars in Thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Impaired loans and leases, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
$
|
4,312
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
4,312
|
|
|
—
|
|
|
—
|
|
|
4,312
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
9,029
|
|
|
—
|
|
|
—
|
|
|
9,029
|
|
|
|
|
|
|
|
|
|
|
|
Total Community Banking
|
9,029
|
|
|
—
|
|
|
—
|
|
|
9,029
|
|
|
Total impaired loans and leases, net
|
13,341
|
|
|
—
|
|
|
—
|
|
|
13,341
|
|
|
Foreclosed assets, net
|
1,204
|
|
|
—
|
|
|
—
|
|
|
1,204
|
|
|
Total
|
$
|
14,545
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value At September 30, 2020
|
|
(Dollars in Thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Impaired loans and leases, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance
|
$
|
9,240
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total National Lending
|
9,240
|
|
|
—
|
|
|
—
|
|
|
9,240
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate and operating
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
Total Community Banking
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
Total impaired loans and leases, net
|
9,260
|
|
|
—
|
|
|
—
|
|
|
9,260
|
|
|
Foreclosed assets, net
|
9,957
|
|
|
—
|
|
|
—
|
|
|
9,957
|
|
|
Total
|
$
|
19,217
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantitative Information About Level 3 Fair Value Measurements
|
|
(Dollars in Thousands)
|
Fair Value at
June 30, 2021
|
|
Fair Value at
September 30, 2020
|
|
Valuation
Technique
|
|
Unobservable Input
|
|
Range of Inputs
|
|
Impaired loans and leases, net
|
$
|
13,341
|
|
|
9,260
|
|
|
Market approach
|
|
Appraised values(1)
|
|
4% - 90%
|
|
Foreclosed assets, net
|
$
|
1,204
|
|
|
9,957
|
|
|
Market approach
|
|
Appraised values(1)
|
|
4% - 30%
|
(1) The Company generally relies on external appraisers to develop this information. Management reduced the appraised value by estimating selling costs and other inputs in a range of 4% to 90%.
Management discloses the estimated fair value of financial instruments, including assets and liabilities on and off the Condensed Consolidated Statements of Financial Condition, for which it is practicable to estimate fair value. These fair value estimates were made at June 30, 2021 and September 30, 2020 based on relevant market information and information about financial instruments. Fair value estimates are intended to represent the price at which an asset could be sold or a liability could be settled. However, since there is no active market for certain financial instruments of the Company, the estimates of fair value are subjective in nature, involve uncertainties, and include matters of significant judgment. Changes in assumptions as well as tax considerations could significantly affect the estimated values. Accordingly, the aggregate fair value estimates are not intended to represent the underlying value of the Company, on either a going concern or a liquidation basis.
The following tables present the carrying amount and estimated fair value of the financial instruments held by the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
(Dollars in Thousands)
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
720,243
|
|
|
$
|
720,243
|
|
|
$
|
720,243
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Debt securities available for sale
|
1,917,605
|
|
|
1,917,605
|
|
|
—
|
|
|
1,917,605
|
|
|
—
|
|
|
Debt securities held to maturity
|
64,247
|
|
|
65,421
|
|
|
—
|
|
|
65,421
|
|
|
—
|
|
|
Common equities and mutual funds(1)
|
3,324
|
|
|
3,324
|
|
|
3,324
|
|
|
—
|
|
|
—
|
|
|
Non-marketable equity securities(1)(2)
|
19,474
|
|
|
19,474
|
|
|
—
|
|
|
14,750
|
|
|
—
|
|
|
Loans held for sale
|
87,905
|
|
|
87,905
|
|
|
—
|
|
|
87,905
|
|
|
—
|
|
|
Loans and leases receivable
|
3,495,239
|
|
|
3,498,673
|
|
|
—
|
|
|
—
|
|
|
3,498,673
|
|
|
Federal Reserve Bank and Federal Home Loan Bank stocks
|
28,433
|
|
|
28,433
|
|
|
—
|
|
|
28,433
|
|
|
—
|
|
|
Accrued interest receivable
|
16,230
|
|
|
16,230
|
|
|
16,230
|
|
|
—
|
|
|
—
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
5,888,871
|
|
|
5,888,971
|
|
|
5,851,452
|
|
|
37,519
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other short- and long-term borrowings
|
93,634
|
|
|
94,979
|
|
|
—
|
|
|
94,979
|
|
|
—
|
|
|
Accrued interest payable
|
1,853
|
|
|
1,853
|
|
|
1,853
|
|
|
—
|
|
|
—
|
|
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2021.
(2) Includes certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
(Dollars in Thousands)
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
427,367
|
|
|
$
|
427,367
|
|
|
$
|
427,367
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Debt securities available for sale
|
1,268,102
|
|
|
1,268,102
|
|
|
—
|
|
|
1,268,102
|
|
|
—
|
|
|
Debt securities held to maturity
|
92,610
|
|
|
93,745
|
|
|
—
|
|
|
93,745
|
|
|
—
|
|
|
Common equities and mutual funds(1)
|
2,969
|
|
|
2,969
|
|
|
2,969
|
|
|
—
|
|
|
—
|
|
|
Non-marketable equity securities(1)(2)
|
14,784
|
|
|
14,784
|
|
|
—
|
|
|
12,000
|
|
|
—
|
|
|
Loans held for sale
|
183,577
|
|
|
183,577
|
|
|
—
|
|
|
183,577
|
|
|
—
|
|
|
Loans and leases receivable
|
3,314,140
|
|
|
3,307,037
|
|
|
—
|
|
|
—
|
|
|
3,307,037
|
|
|
Federal Reserve Bank and Federal Home Loan Bank stocks
|
27,138
|
|
|
27,138
|
|
|
—
|
|
|
27,138
|
|
|
—
|
|
|
Accrued interest receivable
|
16,628
|
|
|
16,628
|
|
|
16,628
|
|
|
—
|
|
|
—
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
4,979,200
|
|
|
4,980,073
|
|
|
4,705,028
|
|
|
275,045
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other short- and long-term borrowings
|
98,224
|
|
|
100,185
|
|
|
—
|
|
|
100,185
|
|
|
—
|
|
|
Accrued interest payable
|
1,923
|
|
|
1,923
|
|
|
1,923
|
|
|
—
|
|
|
—
|
|
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at September 30, 2020.
(2) Includes certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.
NOTE 19. SUBSEQUENT EVENTS
Management has evaluated subsequent events that occurred after June 30, 2021. During this period, up to the filing date of this Quarterly Report on Form 10-Q, management did not identify any material subsequent events that would require recognition or disclosure in our Condensed Consolidated Financial Statements as of or for the quarter ended June 30, 2021.