Cover Page - USD ($) $ in Millions	12 Months Ended
Cover Page - USD ($) $ in Millions	Sep. 30, 2019	Nov. 22, 2019	Mar. 31, 2019
Cover page.
Document Type	10-K
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	0-22140
Entity Registrant Name	META FINANCIAL GROUP INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	42-1406262
Entity Address, Address Line One	5501 South Broadband Lane
Entity Address, City or Town	Sioux Falls
Entity Address, State or Province	SD
Entity Address, Postal Zip Code	57108
City Area Code	605
Local Phone Number	782-1767
Title of 12(b) Security	Common Stock, $.01 par value
Trading Symbol	CASH
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 701.3
Entity Common Stock, Shares Outstanding		37,584,488
Entity Central Index Key	0000907471
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Document Annual Report	true
Amendment Flag	false

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
ASSETS
Cash and cash equivalents	$ 126,545	$ 99,977
Investment securities available for sale, at fair value	889,947	1,484,160
Mortgage-backed securities available for sale, at fair value	382,546	364,065
Investment securities held to maturity, at cost	127,582	163,893
Mortgage-backed securities held to maturity, at cost	7,182	7,850
Loans held for sale	148,777	15,606
Loans and leases	3,658,847	2,944,739
Allowance for loan and lease losses	(29,149)	(13,040)
Federal Home Loan Bank Stock, at cost	30,916	23,400
Accrued interest receivable	20,400	22,016
Premises, furniture, and equipment, net	45,932	40,458
Rental equipment, net	208,537	107,290
Bank-owned life insurance	89,827	87,293
Foreclosed real estate and repossessed assets	29,494	31,638
Goodwill	309,505	303,270
Intangible assets	52,810	70,719
Prepaid assets	9,476	27,906
Deferred taxes	18,884	18,737
Other assets	54,832	35,090
Total assets	6,182,890	5,835,067
LIABILITIES
Noninterest-bearing checking	2,358,010	2,405,274
Interest-bearing checking	185,768	111,587
Savings deposits	49,773	54,765
Money market deposits	76,911	51,995
Time certificates of deposit	109,275	276,180
Wholesale deposits	1,557,268	1,531,186
Total deposits	4,337,005	4,430,987
Short-term borrowings	646,019	425,759
Long-term borrowings	215,838	88,963
Accrued interest payable	9,414	7,794
Accrued expenses and other liabilities	130,656	133,838
Total liabilities	5,338,932	5,087,341
STOCKHOLDERS’ EQUITY
Preferred stock, 3,000,000 shares authorized, no shares issued or outstanding at September 30, 2019 and 2018, respectively	0	0
Common stock	378	393
Additional paid-in capital	580,826	565,811
Retained earnings	252,813	213,048
Accumulated other comprehensive income (loss)	6,339	(33,111)
Treasury stock, at cost, 14,444 and 24,783 common shares at September 30, 2019 and 2018, respectively	(445)	(1,989)
Total equity attributable to parent	839,911	744,152
Noncontrolling interest	4,047	3,574
Total stockholders' equity	843,958	747,726
Total liabilities and stockholders’ equity	6,182,890	5,835,067
Nonvoting Common Stock
STOCKHOLDERS’ EQUITY
Common stock	$ 0	$ 0

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares	Sep. 30, 2019	Sep. 30, 2018
STOCKHOLDERS’ EQUITY
Preferred stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, shares issued (in shares)	37,821,508	39,192,063
Common stock, shares outstanding (in shares)	37,807,064	39,167,280
Treasury stock (in shares)	14,444	24,783
Nonvoting Common Stock
STOCKHOLDERS’ EQUITY
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	3,000,000	3,000,000
Common stock, shares issued (in shares)	0	0
Common stock, shares outstanding (in shares)	0	0

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Interest and dividend income:
Loans and leases, including fees	$ 274,528	$ 98,475	$ 52,117
Mortgage-backed securities	11,390	15,479	16,571
Other investments	39,811	44,580	39,415
Total interest and dividend income	325,729	158,534	108,103
Interest expense:
Deposits	46,648	15,163	6,051
FHLB advances and other borrowings	14,874	12,822	8,822
Total interest expense	61,522	27,985	14,873
Net interest income	264,207	130,549	93,230
Provision for loan and lease losses	55,650	29,432	10,589
Net interest income after provision for loan and lease losses	208,557	101,117	82,641
Noninterest income:
Gain (loss) on sale of securities available-for-sale, net (Includes $729, ($8,177), and ($493) reclassified from accumulated other comprehensive income (loss) for net gain (loss) on available for sale securities for the fiscal years ended September 30, 2019, 2018 and 2017, respectively)	729	(8,177)	(493)
Gain on sale of loans and leases	5,244	355	0
Loss on foreclosed real estate	(278)	(19)	(6)
Other income	6,013	1,494	261
Total noninterest income	222,545	184,525	172,172
Noninterest expense:
Compensation and benefits	155,811	109,044	88,728
Refund transfer product expense	7,526	11,750	11,885
Tax advance product expense	3,102	1,817	3,241
Card processing	23,677	26,283	24,130
Occupancy and equipment	28,071	19,740	16,465
Operating lease equipment depreciation	26,181	5,386	0
Legal and consulting	17,310	15,064	8,384
Marketing	1,471	1,226	1,449
Data processing	2,688	2,674	2,117
Intangible amortization	17,711	9,641	12,362
Impairment of Intangible Assets (Excluding Goodwill)	9,660	18	10,248
Other expense	39,952	25,589	20,654
Total noninterest expense	333,160	228,232	199,663
Income before income tax expense	97,942	57,410	55,150
Income tax (benefit) expense (Includes $184, ($2,330), and ($185) reclassified from accumulated other comprehensive income (loss) for the fiscal years ended September 30, 2019, 2018 and 2017, respectively)	(3,374)	5,117	10,233
Net income before noncontrolling interest	101,316	52,293	44,917
Net income attributable to noncontrolling interest	4,312	673	0
Net income attributable to parent	$ 97,004	$ 51,620	$ 44,917
Earnings per common share:
Basic (in dollars per share)	$ 2.49	$ 1.68	$ 1.62
Diluted (in dollars per share)	$ 2.49	$ 1.67	$ 1.61
Refund transfer product fees
Noninterest income:
Noninterest income:	$ 39,198	$ 41,879	$ 38,956
Tax advance product fees
Noninterest income:
Noninterest income:	34,687	35,703	31,913
Total noninterest income	34,687
Card fees
Noninterest income:
Noninterest income:	79,982	94,446	94,707
Total noninterest income	79,982
Rental income
Noninterest income:
Noninterest income:	41,053	7,333	0
Total noninterest income	41,053
Loan and lease fees
Noninterest income:
Noninterest income:	4,292	4,470	3,882
Bank-owned life insurance
Noninterest income:
Noninterest income:	2,535	2,590	2,216
Deposit fees
Noninterest income:
Noninterest income:	$ 9,090	$ 4,451	$ 736

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Noninterest income:
Net gain (loss) on available for sale securities reclassified from accumulated other comprehensive income (loss)	$ 729	$ (8,177)	$ (493)
Income tax expense (benefit) reclassified from accumulated other comprehensive income (loss)	$ 184	$ (2,330)	$ (185)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 101,316	$ 52,293	$ 44,917
Other comprehensive income (loss):
Change in net unrealized gain (loss) on debt securities	53,739	(66,053)	(21,661)
(Gain) loss realized in net income	(729)	8,177	493
Total available for sale adjustment	53,010	(57,876)	(21,168)
Unrealized gain (loss) on currency translation	(122)	3	0
Deferred income tax effect	12,963	(15,596)	(7,414)
Total other comprehensive income (loss)	39,925	(42,277)	(13,754)
Total comprehensive income	141,241	10,016	31,163
Total comprehensive income attributable to noncontrolling interest	4,312	673	0
Total comprehensive income	$ 136,929	$ 9,343	$ 31,163

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Total Meta Stockholders' Equity	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss), Net of Tax	Treasury Stock	Non-controlling Interest
Balance at the beginning of the period at Sep. 30, 2016	$ 334,975	$ 334,975	$ 255	$ 184,610	$ 127,190	$ 22,920	$ 0	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared on common stock	(4,839)	(4,839)			(4,839)
Issuance of common shares due to exercise of stock options	650	650		650
Issuance of common shares due to restricted stock	12	12	12
Issuance of common shares due to ESOP	1,174	1,174		1,174
Issuance of common shares due to acquisition	37,296	37,296	21	37,275
Contingent consideration equity earnout due to acquisition	24,142	24,142		24,142
Shares repurchased	(470)	(470)		(204)			(266)
Stock compensation	10,393	10,393		10,393
Total other comprehensive income	(13,754)	(13,754)				(13,754)
Net income	44,917	44,917			44,917
Balance at the end of the period at Sep. 30, 2017	434,496	434,496	288	258,144	167,164	9,166	(266)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared on common stock	(5,736)	(5,736)			(5,736)
Issuance of common shares due to exercise of stock options	148	148	1	147
Issuance of common shares due to restricted stock	4	4	4
Issuance of common shares due to ESOP	1,606	1,606	1	1,605
Issuance of common shares due to acquisition	295,766	295,766	99	295,667
Shares repurchased	(2,598)	(2,598)		(875)			(1,723)
Stock compensation	11,123	11,123		11,123
Total other comprehensive income	(42,277)	(42,277)				(42,277)
Net income	52,293	51,620			51,620			673
Non-controlling interests due to acquisition	3,167							3,167
Net investment by (distribution to) noncontrolling interests	(266)							(266)
Balance at the end of the period at Sep. 30, 2018	747,726	744,152	393	565,811	213,048	(33,111)	(1,989)	3,574
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared on common stock	(7,760)	(7,760)			(7,760)
Issuance of common shares due to exercise of stock options	44	44		44
Issuance of common shares due to restricted stock	3	3	3
Issuance of common shares due to ESOP	2,011	2,011		2,011
Shares repurchased	(49,912)	(49,912)	(18)	18	(46,500)		(3,412)
Retirement of treasury stock					(4,956)		4,956
Stock compensation	12,942	12,942		12,942
Total other comprehensive income	39,925	39,925				39,925
Net income	101,316	97,004			97,004			4,312
Net investment by (distribution to) noncontrolling interests	(3,839)							(3,839)
Balance at the end of the period at Sep. 30, 2019	$ 843,958	$ 839,911	$ 378	$ 580,826	$ 252,813	$ 6,339	$ (445)	$ 4,047

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared on common stock (in dollars per share)	$ 0.2	$ 0.18	$ 0.17

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net income	$ 101,316	$ 52,293	$ 44,917
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion, net	55,149	37,722	45,048
Stock compensation	12,942	11,123	10,393
Provision (recovery):
Loan and lease losses	55,650	29,432	10,589
Deferred taxes	(14,301)	6,530	(6,286)
Loans held for sale:
Originations	(171,260)	(1,691)	(685,934)
Purchases	(15,443)	0	0
Proceeds from sales	125,357	17,621	685,934
Net change	31,819	952	0
Fair value adjustment of foreclosed real estate	139	29	18
Net realized (gain) loss:
Other assets	(89)	127	406
Foreclosed real estate or other assets	278	19	6
Available for sale securities, net	(729)	8,177	537
Held to maturity securities, net	0	0	(44)
Loans held for sale	(5,089)	(181)	0
Lease receivables and equipment	(2,930)	(526)	0
Net change:
Other assets	(5,427)	2,633	(23,408)
Accrued interest payable	1,620	1,933	1,405
Accrued expenses and other liabilities	16,623	(28,610)	30,806
Accrued interest receivable	1,616	2,745	(2,181)
Impairment on rental equipment	6,194	0	0
Change in bank-owned life insurance value	(2,534)	(2,591)	(2,216)
Impairment of intangibles	111	18	10,248
Excess contingent consideration paid	0	0	(248)
Net cash provided by operating activities	191,012	137,755	119,990
Available for Sale securities:
Purchases	(299,269)	(626,575)	(848,613)
Proceeds from sales	755,616	596,758	457,306
Proceeds from maturities and principal repayments	164,044	162,118	126,420
Held to Maturity:
Purchases	0	0	(932)
Proceeds from sales	0	0	5,870
Proceeds from maturities and principal repayments	35,025	40,525	45,615
Bank Owned Life Insurance:
Purchases	0	0	(25,000)
Loans and leases:
Purchases	(262,622)	(165,670)	(141,403)
Proceeds from sales	13,838	22,611	4,720
Net change	(591,785)	(493,381)	(274,840)
Proceeds from sales of foreclosed real estate or other assets	1,905	244	200
Federal Home Loan Bank stock:
Purchases	(878,316)	(961,124)	(715,891)
Redemption	870,800	998,880	702,280
Rental Equipment:
Purchases	(144,432)	(1,848)	0
Proceeds from sales	8,301	2,362	0
Net change	1,567	(15,000)	0
Premises and equipment:
Purchases	(13,971)	(8,542)	(6,798)
Proceeds from sales	101	0	58
Cash paid for acquisitions	0	(6)	(29,425)
Cash received upon acquisitions	0	58,858	0
Net cash used in investing activities	(339,198)	(389,790)	(700,433)
Cash flows from financing activities:
Checking, savings, and money market deposits	48,897	7	319,524
Time deposits	(167,044)	(143,096)	(2,355)
Wholesale deposits	26,014	229,982	476,173
FHLB and other borrowings	275,000	(415,000)	308,000
Federal funds	55,000	(565,000)	(5,000)
Securities sold under agreements to repurchase	325	1,222	(565)
Short-term borrowings	0	(11,642)	0
Net investment by (distribution to) noncontrolling interests	(3,839)	(266)	0
Proceeds from other liabilities	7,916	0	0
Principal payments: Other liabilities	(11,691)	(4,888)	0
Principal payments: Capital lease obligations	(88)	(62)	(80)
Cash dividends paid	(7,760)	(5,736)	(4,839)
Purchase of shares by ESOP	2,011	1,606	1,174
Issuance of restricted stock	3	4	12
Proceeds from exercise of stock options & issuance of common stock	44	148	650
Shares repurchased	(49,912)	(2,598)	(470)
Contingent consideration - cash paid	0	0	(17,253)
Redemption of long-term borrowings	0	(258)	0
Payment of debt extinguishment costs	0	0	(772)
Net cash provided by (used in) financing activities	174,876	(915,577)	1,074,199
Effect of exchange rate changes on cash	(122)	3	0
Net change in cash and cash equivalents	26,568	(1,167,609)	493,756
Cash and cash equivalents at beginning of fiscal year	99,977	1,267,586	773,830
Cash and cash equivalents at end of fiscal year	126,545	99,977	1,267,586
Supplemental disclosure of cash flow information
Interest	59,902	33,499	16,278
Income taxes	(2,821)	8,946	20,058
Franchise taxes	223	160	187
Other taxes	557	206	290
Transfers
Loans and leases to foreclosed real estate or other assets	0	30,451	440
Loans and leases to rental equipment	0	9	0
Rental equipment to loans and leases	210	993	0
Loans and leases to held for sale	99,992	15,068	0
Contingent consideration - equity	0	0	24,142
Stock issued for acquisitions	0	295,767	37,296
Purchase/Sales of investment securities accrued, not settled Available for sale purchases	0	1,430	0
Securities transferred from held to maturity to available for sale	0	346,771	0
Transfer of Short and Long Term Debt From Other Liabilities	$ 20,026	$ 0	$ 0

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Meta Financial Group, Inc. (the “Company”), a unitary savings and loan holding company located in Sioux Falls, South Dakota, and its wholly-owned subsidiaries. The Company's subsidiaries include MetaBank (the “Bank”), a federally chartered savings bank whose primary federal regulator is the Office of the Comptroller of the Currency (the "OCC"), and Meta Capital, LLC, a wholly-owned service corporation subsidiary of MetaBank which invests in companies in the financial services industry. All significant intercompany balances and transactions have been eliminated. The Company also owns 100% of First Midwest Financial Capital Trust I (the “Trust”), which was formed in July 2001 for the purpose of issuing trust preferred securities, and Crestmark Capital Trust I, which was acquired from the Crestmark Acquisition in August 2018. The Trust and Crestmark Capital Trust I are not included in the Consolidated Financial Statements of the Company. In addition, the Company evaluates its relationships with other entities to identify whether they are variable interest entities ("VIEs") and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the Consolidated Financial Statements.

Variable Interest Entities

VIEs are defined by contractual ownership or other interests that change with fluctuations in the VIE's net asset value. The primary beneficiary is the entity which has both: (1) the power to direct the activities of the VIE that most significantly impacts the VIE’s economic performance, and (2) the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company's involvement with the VIE. Further, the Company assesses whether or not the Company is the primary beneficiary of a VIE on an ongoing basis.

Crestmark Capital Trust I qualifies as a VIE for which the Company is not the primary beneficiary. Consequently, the accounts of that entity are not consolidated in the Company’s Financial Statements.

As a result of the Crestmark Acquisition, the Company acquired existing membership interests of five joint venture limited liability companies (the "LLCs"). The Company holds 80% of the membership interests in each of the five LLC entities, which offer commercial lending and other financing arrangements. In connection with these LLCs, the Company exclusively provides funding for each entity's activities. The Company determined it is the primary beneficiary of all five LLCs as it has the managing power under the terms of each of the LLC operating agreements. Results of the five LLCs are reflected in the Company's September 30, 2019 Consolidated Financial Statements and are summarized below. The assets recognized as a result of consolidating the LLCs are the property of the LLCs and are not available for any other purpose.



	September 30, 2019
(Dollars in Thousands)
Cash and cash equivalents	$	2,064
Loans and leases receivable	139,544
Allowance for loan and lease losses	(702		)
Accrued interest receivable	763
Rental equipment	—
Foreclosed real estate and repossessed assets	1,372
Other assets	5,647
Total assets	148,688
Accrued expenses and other liabilities	3,258
Noncontrolling interest	4,047
Net assets less noncontrolling interest	$	141,383

Amounts for noncontrolling interests reflect the proportionate share of membership interest (equity) and net income attributable to the holders of minority membership interest in the following entities:


•	Capital Equipment Solutions, LLC (“CES”) - CES engages in the business of providing equipment financing term loans.


•	CM Help, LLC - CM Help provides flexible patient loan programs to hospitals and patient clients of hospitals as a financing alternative for the self-pay and co-pay portions of patients’ hospital expenses.


•	CM Southgate II, LLC - CM Southgate II engages in the business of acquiring fleet leases and semi-trailer/tractor loans and leases.


•	CM Sterling, LLC - CM Sterling engages in asset-based lending and factoring.


•	CM TFS, LLC - CM TFS engages in the business of acquiring equipment financing term loans and leases.

NATURE OF BUSINESS AND INDUSTRY SEGMENT INFORMATION

One of the Company's primary sources of revenue relates to payment processing services for prepaid debit cards, ATM sponsorship, tax refund transfer and other money transfer systems and services. Additionally, a significant source of revenue for the Company is interest from the purchase or origination of commercial finance loans, consumer finance loans, warehouse finance loans and community banking loans. The Company accepts deposits from customers in the normal course of business through its community bank division and on a national basis through its MPS and tax services divisions, and through wholesale funding. The Company operates in the banking industry, which accounts for the majority of its revenues and assets. The Company uses the “management approach” for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the management approach model, the Company has determined that its business is comprised of three reporting segments. See Note 19 Segment Reporting for additional information on the Company's segment reporting.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain significant estimates include the valuation of residual values within lease receivables, allowance for loan and lease losses, the valuation of foreclosed real estate and repossessed assets, the valuation of goodwill and intangible assets and the fair values of securities and other financial instruments. These estimates are reviewed by management regularly; however, they are particularly susceptible to significant changes in the future.

On November 20, 2019, the Company entered into an agreement with Central Bank, an Iowa state-chartered bank headquartered in Storm Lake, Iowa, to sell the Company’s Community Bank division. The agreement includes the sale of a portion of the Community Bank’s loan portfolio. Upon entering into the agreement with Central Bank, the Company reclassified the assets and liabilities to be sold as held for sale. The remaining Community Bank loans not being sold to Central Bank will be retained by the Company and will be serviced by Central Bank. As a result, an overall decrease in the allowance for loan and lease losses on the Community Bank loan balances is expected.

CASH AND CASH EQUIVALENTS AND FEDERAL FUNDS SOLD

For purposes of reporting cash flows, cash and cash equivalents is defined to include the Company’s cash on hand and due from financial institutions and short-term interest-bearing deposits in other financial institutions. The Company reports cash flows net for customer loan transactions, securities purchased under agreement to resell, federal funds purchased, deposit transactions, securities sold under agreements to repurchase, and Federal Home Loan Bank ("FHLB") advances with terms less than 90 days. The Bank is required to maintain reserve balances in cash or on deposit with the FRB, based on a percentage of deposits. The total of those reserve balances was $33.9 million at September 30, 2019, and $16.5 million at September 30, 2018. The Company at times maintains balances in excess of insured limits at various financial institutions including the FHLB, the FRB and other private institutions. At September 30, 2019, the Company had $6.0 million interest-bearing deposits held at the FHLB and $11.3 million in interest-bearing deposits held at the FRB. At September 30, 2019, the Company had no federal funds sold. The Company does not believe these instruments carry a significant risk of loss, but cannot provide assurances that no losses could occur if these institutions were to become insolvent.

SECURITIES

GAAP requires that, at acquisition, an enterprise classify debt securities into one of three categories: Available for Sale (“AFS”), Held to Maturity (“HTM”) or trading. AFS securities are carried at fair value on the Consolidated Statements of Financial Condition, and unrealized holding gains and losses are excluded from earnings and recognized as a separate component of equity in accumulated other comprehensive income (loss) (“AOCI”). See Note 22. Fair Value Measurements for additional information on fair value of AFS securities. HTM debt securities are measured at amortized cost. The Company classifies the majority of its securities as AFS, which are those the Company may decide to sell if needed for liquidity, asset/liability management, or other reasons. Both AFS and HTM are subject to review for other-than-temporary impairment. Meta did not hold trading securities at September 30, 2019 or 2018.

Gains and losses on the sale of securities are determined using the specific identification method based on amortized cost and are reflected in results of operations at the time of sale. Interest and dividend income, adjusted by amortization of purchase premium or discount using the level yield method, is included in income as earned. For callable debt securities, any purchase premium is amortized to the first call date while any discount is accreted over the contractual life of the security.

Securities Impairment

Management continually monitors the investment securities portfolio for impairment on a security-by-security basis and has a process in place to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves the consideration of the length of time and extent to which the fair value has been less than the amortized cost basis, review of available information regarding the financial position of the issuer, monitoring the rating of the security, monitoring changes in value, cash flow projections, and the Company’s intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost, which, in some cases, may extend to maturity. To the extent the Company determines that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the Company recognizes an other-than-temporary impairment for the difference between amortized cost and fair value. If the Company does not expect to recover the amortized cost basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell the security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. For those securities, the Company separates the total impairment into a credit loss component recognized in net income, and the amount of the loss related to other factors is recognized in other comprehensive income, net of taxes.

The amount of the credit loss component of a debt security impairment is estimated as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate of cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. In fiscal 2019, 2018 and 2017, there was no other-than-temporary impairment recorded.

Equity Investments

The Company holds marketable equity securities, which have readily determinable fair value, and include common equity and mutual funds. These securities are recorded at fair value with unrealized gains and losses, due to changes in fair value, reflected in earnings. Interest and dividend income from these securities is recognized in interest income. See Note 3. Securities for additional information on marketable equity securities.

The Company also holds non-marketable equity investments that are included in Other Assets in the Company’s Consolidated Financial Statements. The Company generally accounts for these investments under the equity method or the provisions of Accounting Standards Update 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities ("ASU 2016-01"), beginning October 1, 2018. Investments where the Company has significant influence, but not control, over the investee are accounted for under the equity method. Investments where the Company cannot exercise significant influence over the investee are accounted for under ASU 2016-01, which requires such investments to be measured at fair value, with changes in fair value recognized in earnings, unless those investments have no readily determinable fair value. Investments without readily determinable fair value are measured under the measurement alternative, which reflects cost less impairment, with adjustments in value resulting from observable price changes arising from orderly transactions of the same or a similar security from the same issuer ("measurement alternative investments").

The Company reviews for impairment for equity method, fair value and measurement alternative investments and includes an analysis of the facts and circumstances for each investment, expectations of cash flows, capital needs, and viability of its business model. For equity method and fair value investments, the asset carrying value is reduced when the decline in fair value is considered to be other than temporary. For measurement alternative investments, the asset carrying value is reduced when the fair value is less than the carrying value, without the consideration of recovery. There was no impairment recognized on equity method, fair value or measurement alternative investments during the fiscal year ended September 30, 2019.

The Company held the following non-marketable equity investments as of September 30, 2019:

•

Equity Method - The Company held equity method investments of $20.6 million within other assets as of September 30, 2019. The Company’s ownership of such investments typically ranges from 5% - 25% of the investee. The Company recognized net earnings from these investments in the amount of $1.0 million within noninterest income for the fiscal year ended September 30, 2019. The Company elected to classify distributions received from equity method investments using the cumulative earnings approach on the Consolidated Statement of Cash Flows.

•

Fair Value Method - The Company held equity investments measured at net asset value (NAV) per share (or its equivalent) of $1.7 million as of September 30, 2019 where NAV is considered the fair value practical expedient. These investments are recorded within other assets on the Company’s Consolidated Financial Statements. Fluctuations in fair value are recognized in earnings within noninterest Income.


•	Measurement Alternative - The Company held equity investments measured using the measurement alternative under ASU 2016-01 of $6.5 million as of September 30, 2019 within other assets on the Company’s Consolidated Financial Statements. The Company did not recognize any unrealized or realized gain or loss on such investments during the fiscal year ended September 30, 2019.

LOANS HELD FOR SALE ("LHFS")

LHFS include commercial loans originated under the guidelines of the SBA or USDA and consumer credit products originated under the program agreement with Health Credit Services ("HCS"). LHFS are held at the lower of cost or fair value. Generally, LHFS are valued on an aggregate portfolio basis. Any amount by which the cost exceeds fair value is initially recorded as a valuation allowance and subsequently reflected in the gain or loss on sale when sold. At September 30, 2019 and 2018, there was no valuation allowance recorded for LHFS. Gains and losses on LHFS are recorded in noninterest income on the Consolidated Statement of Operations. Loan costs and fees are deferred at origination and are recognized in income at the time of sale. Interest income is calculated based on the note rate of the loan and is recorded as interest income. For loans transferred to LHFS due to change in intent of holding the loans to maturity or for the foreseeable future, such loans are transferred at lower of cost or fair value.

LOANS AND LEASES RECEIVABLE

LOANS RECEIVABLE

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balances net of any unearned income, cumulative charge-offs, unamortized deferred fees and costs on originated loans, and unamortized premiums or discounts on purchased loans.

Interest income on loans is accrued over the term of the loans based upon the amount of principal outstanding except when serious doubt exists as to the collectability of a loan, in which case the accrual of interest is discontinued. Unearned income, deferred loan fees and costs, and discounts and premiums are amortized to interest income over the contractual life of the loan using the interest method. The Company generally places Community Banking loans on nonaccrual status when: the full and timely collection of interest or principal becomes uncertain; they are 90 days past due for interest or principal, unless they are both well-secured and in the process of collection; or part of the principal balance has been charged off. The majority of the Company's National Lending loans follow the same nonaccrual policy as Community Banking loans with certain commercial finance, consumer finance and tax service loans not generally being placed on non-accrual status, but instead are charged off when the collection of principal and interest become doubtful. When placed on nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and any remaining amortizing of net deferred fees is suspended. Cash collected on these loans is applied to first reduce the carrying value of the loan with any remainder being recognized as interest income. Generally, a loan can return to accrual status when all delinquent interest and principal become current under the terms of the loan agreement and collectability of the remaining principal and interest is no longer doubtful. Loans are considered past due when contractually required principal or interest payments have not been made on the due dates.

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 loans to be uncollectible; repayment is deemed to be protracted beyond reasonable time frames; the loan has been classified as a loss by either the Company's internal loan review process or its banking regulatory agencies; the customer has filed bankruptcy and the loss becomes evident owing to lack of assets; or the loan meets a defined number of days past due unless the loan is both well-secured and 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 Company generally considers a loan to be impaired when, based on current information and events, it determines that it will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. The Company's impaired loans predominantly include loans on nonaccrual status in the Banking segment and loans modified in a troubled-debt-restructuring, whether on accrual or nonaccrual status. The Company measures the amount of impairment, if any, based on the difference between the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount) and the present value of expected future cash flows, discounted at the loans effective interest rate. When collateral is the sole source of repayment for the impaired loan, the Company charges down to net realizable value.

As part of the Company’s ongoing risk management practices, management generally attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Modified loan terms may include interest rate reductions, principal forgiveness, term extensions, payment forbearance or other actions intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of the collateral. Each occurrence is unique to the borrower and is evaluated separately. In a situation where an economic concession has been granted to a borrower that is experiencing financial difficulty, the Company identifies and reports that loan as a troubled debt restructuring (“TDR”). Management considers regulatory guidelines when restructuring loans to ensure that prudent lending practices are followed. As such, qualification criteria and payment terms consider the borrower’s current and prospective ability to comply with the modified terms of the loan. Additionally, the Company structures loan modifications with the intent of strengthening repayment prospects. Loans that are reported as TDRs apply the identical criteria in the determination of whether the loan should be accruing or not accruing. The event of classifying the loan as a TDR due to a modification of terms may be independent from the determination of accruing interest on a loan.

LEASES RECEIVABLE

The Company provides various types of commercial lease financing that are classified for accounting purposes as direct financing, sales-type or operating leases. Leases that transfer substantially all of the benefits and risks of ownership to the lessee are classified as direct financing or sales-type leases and are included in loans and leases receivable on the Consolidated Statements of Financial Condition. Direct financing and sales-type leases are carried at the combined present value of future minimum lease payments and lease residual values. The determination of lease classification requires various judgments and estimates by management, including the fair value of equipment at lease inception, useful life of the equipment under lease, lease residual value, and collectability of minimum lease payments.

Sales-type leases generate dealer profit, which is recognized at lease inception by recording lease revenue net of lease cost. Lease revenue consists of the present value of the future minimum lease payments. Lease cost consists of the lease equipment’s book value, less the present value of its residual. Interest income on direct financing and sales-type leases is recognized using methods that approximate a level yield over the fixed, non-cancelable term of the lease. Recognition of interest income is generally discontinued at the time the lease becomes 90 days delinquent, unless the lease is well-secured and in process of collection. Delinquency and past due status is based on the contractual terms of the lease. The Company receives pro rata rent payments for the interim period until the lease contract commences and the fixed, non-cancelable lease term begins. Interim payments are recognized in the month they are earned and are recorded in interest income. Management has policies and procedures in place for the determination of lease classification and review of the related judgments and estimates for all lease financings.

The Company generally fully charges off or charges down to net realizable value (fair value of collateral, less estimated costs to sell) for leases when management judges the lease to be uncollectible; repayment is deemed to be protracted beyond reasonable time frames; the lease has been classified as a loss by either the Company's internal review process or its banking regulatory agencies; the customer has filed bankruptcy and the loss becomes evident owing to lack of assets; or the lease meets a defined number of days past due unless the lease is both well-secured and in the process of collection.

Some lease financings include a residual value component, which represents the estimated fair value of the leased equipment at the expiration of the initial term of the transaction. The estimation of the residual value involves judgments regarding product and technology changes, customer behavior, shifts in supply and demand, and other economic assumptions. The Company reviews residual assumptions at least annually and records impairment, if necessary, which is charged to non-interest expense in the period it becomes known. The Company may purchase and sell minimum lease payments, primarily as a credit risk reduction tool, to third-party financial institutions at fixed rates on a non-recourse basis with its underlying equipment as collateral. For those transactions that achieve sale treatment, the related lease cash flow stream and the non-recourse financing are derecognized. For those transactions that do not achieve sale treatment, the underlying lease remains on the Company’s Consolidated Statements of Financial Condition and non-recourse debt is recorded in the amount of the proceeds received. The Company retains servicing of these leases and bills, collects, and remits funds to the third-party financial institution. Upon default by the lessee, the third-party financial institutions may take control of the underlying collateral which the Company would otherwise retain as residual value.

Leases that do not transfer substantially all benefits and risks of ownership to the lessee are classified as operating leases. Such leased equipment are included in rental equipment on the Consolidated Statements of Financial Condition and are depreciated on a straight-line basis over the term of the lease to its estimated residual value. Depreciation expense is recorded as operating lease equipment depreciation expense within noninterest expense. Operating lease rental income is recognized when it becomes due and is reflected as a component of noninterest income. An allowance for lease losses is not provided on operating leases.

LOAN SERVICING AND TRANSFERS OF FINANCIAL ASSETS

The Company, from time to time, sells loan participations, generally without recourse. The Company also sells commercial SBA and USDA loans to third parties, generally without recourse. Sold loans are not included in the Consolidated Financial Statements. The Bank generally retains the right to service the sold loans for a fee and records a servicing asset, which is included within other assets on the Consolidated Statements of Financial Condition. At September 30, 2019 and 2018, the Bank was servicing loans for others with aggregate unpaid principal balances of $175.5 million and $134.0 million, respectively. The service fees and ancillary income related to these loans were immaterial.

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been legally isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

ALLOWANCE FOR LOAN AND LEASE LOSSES

The allowance for loan and lease losses ("ALLL") represents management’s estimate of probable loan and lease losses that have been incurred as of the date of the Consolidated Financial Statements. The ALLL is increased by a provision for loan and lease losses charged to expense and decreased by charge-offs (net of recoveries). Estimating the risk of loss and the amount of loss on any loan or lease is necessarily subjective. Management’s periodic evaluation of the appropriateness of the ALLL is based on the Company’s and peer group’s past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. While management may periodically allocate portions of the ALLL for specific problem loan or lease situations, the entire ALLL is available for any loan or lease charge-offs that occur. The ALLL consists of specific and general components.

The specific component of the ALLL relates to impaired loans and leases. Loans are generally considered impaired if full principal or interest payments are not probable in accordance with the contractual loan terms. Leases are generally considered impaired if collectability of the remaining minimum lease payments becomes uncertain. Often this is associated with a delay or shortfall in payments of 90 days or more for community banking loans and leases. Non-accrual loans and leases and all TDRs are considered impaired. Impaired loans and leases, or portions thereof, are charged off when deemed uncollectible. Impaired loans are carried at the present value of expected future cash flows discounted at the loan’s effective interest rate or at the fair value of the collateral if the loan is collateral dependent. For such loans, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

The general reserve covers certain Community Bank and Commercial Finance loans and leases not considered impaired and is determined based upon both quantitative and qualitative analysis. A separate general reserve analysis is performed for individual classified non-impaired loans and leases and for non-classified smaller-balance homogeneous loans. The three main assumptions for the quantitative components for 2019 and 2018 are historical loss rates, the look back period (“LBP”) and the loss emergence period (“LEP”).


•	The historical loss experience is determined by portfolio segment and is based on the actual loss history of the Company over a specified period of time. The period of time varies by portfolio and ranges from three to seven years. For the individual classified loans, historic charge-off rates for the Company’s classified loan population are utilized.


•	A three to seven-year LBP is appropriate as it captures the Company’s ability to workout troubled loans or relationships while continuing to factor in the loss experience resulting from varying economic cycles and other factors.


•	The weighted average LEP is an estimate of the average amount of time from the point the Company identifies a credit event of the borrower to the point the loss is confirmed by the Company weighted by the dollar value of the write off. The LEP is only applied to the non-classified loan general reserve in the Company's Community Bank portfolio.

Qualitative adjustment considerations for the general reserve include considerations of changes in lending and leasing policies and procedures, changes in national and local economic and business conditions and developments, changes in the nature and volume of the loan and lease portfolio, changes in lending and leasing management and staff, trending in past due, classified, nonaccrual, and other loan and lease categories, changes in the Company’s loan and lease review system and oversight, changes in collateral and residual values, credit concentration risk, and the regulatory and legal requirements and environment.

National Lending portfolios, outside of certain loans and leases in the Commercial Finance portfolio, primarily utilize a general reserve process that mostly uses historical factors related to the specific loan and lease portfolio, although other qualitative factors may be considered in the final loss rate used to calculate the reserve on these portfolios. Loans in these portfolios are generally not placed on non-accrual status or impaired. The balances are generally written off after a loan becomes past due greater than 210 days for insurance premium finance loans, 180 days for tax and other specialty lending loans, 120 days for consumer credit products and 90 days for other loans. See Note 4. Loans and Leases Receivable, Net for further information on the ALLL.

The following are risk characteristics of the Company’s loan and lease portfolio:

Commercial Finance

Commercial Finance loans and leases in the National Lending portfolio are subject to adverse market conditions which may impact the borrower’s ability to make repayment on the loan or lease or could cause a decline in the value of the collateral that secures the loan or lease. The loans or leases are primarily made based on the operating cash flows of the borrower and on the underlying collateral provided by the borrower. The cash flows of borrowers may be volatile and the value of the collateral securing these loans and leases may be difficult to measure. Most commercial finance loans and leases are secured by the assets being financed or other business assets such as accounts receivable or inventory. Although the loans and leases are often collateralized by equipment, inventory, accounts receivable, insurance premiums or other business assets, the liquidation of collateral in the event of a borrower default may be an insufficient source of repayment, because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use. The Company attempts to mitigate these risks by adhering to its underwriting policies in evaluating the management of the business and the credit-worthiness of borrowers and guarantors.

Consumer Finance

The Bank designs its consumer credit products and programs with credit protections in a manner so that the Bank earns a reasonable risk adjusted return, but is protected by certain layers of credit support, similar to what you would find in structured finance. The Bank will hold a portion of the originated asset on its own balance sheet but retains the flexibility to sell a portion of the originated asset to other interested parties, thereby supporting program liquidity.

Tax Services

The Bank's tax services division provides short-term taxpayer advance loans. Taxpayers are underwritten to determine eligibility for these unsecured loans. In the event of default, the Bank has no recourse against the tax consumer.

Through its tax services division, the Bank provides short-term electronic return originator ("ERO") advance loans on a nationwide basis. These loans are typically utilized by tax preparers to purchase tax preparation software and to prepare tax office operations for the upcoming tax season. EROs go through an underwriting process to determine eligibility for the unsecured advances. ERO loans are not collateralized. Collection on ERO advances begins once the ERO begins to process refund transfers.

Warehouse Finance

The Bank participates in several asset-backed warehouse lines of credit whereby the Bank is in a senior, secured position as the first out participant. These facilities are primarily collateralized by consumer receivables, with the Bank holding a senior collateral position enhanced by a subordinate party structure.

Community Bank

Community Bank loans are subject to adverse employment conditions in the local economy which could increase default rates. In addition, mortgage loans and real estate-based loans are subject to adverse market conditions which could cause a decline in the value of collateral that secures the loan. The Company attempts to mitigate these lending risks by adhering to its underwriting policies in evaluating the collateral and the credit-worthiness of the borrower.

FORECLOSED REAL ESTATE AND REPOSSESSED ASSETS

Real estate properties and repossessed assets acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less selling costs at the date of foreclosure, establishing a new cost basis. The fair value of the real estate owned is based on independent appraisals, real estate brokers’ price opinions, or automated valuation methods, less costs to sell. The fair value of repossessed assets is based on available pricing guides, auction results or price opinions, less costs to sell. Any reduction to fair value from the carrying value of the related loan at the time of acquisition is accounted for as a loan loss and charged against the allowance for loan and lease losses. Subsequent valuations are periodically performed by management. If the subsequent fair value, less costs to sell, declines to less than the carrying amount of the asset, the shortfall is recognized in the period it becomes known as an impairment in noninterest expense and a valuation allowance is recorded for the asset. Operating expenses of properties are also recorded in noninterest expense. Rental income of properties is recorded in noninterest income.

INCOME TAXES

The Company records income tax expense based on the amount of taxes due on its tax return plus deferred taxes computed based on the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, using enacted tax rates. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In accordance with ASC 740, Income Taxes, the Company recognizes a tax position as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized upon examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in noninterest income or noninterest expense. The effect on deferred tax assets and liabilities from a change in tax rates is recorded in income tax expense in the Consolidated Statements of Operations in the period in which the enactment date occurs. If current period income tax rates change, the impact on the annual effective income tax rate is applied year to date in the period of enactment. See Note 14. Income Taxes for further information on Income Taxes.

PREMISES, FURNITURE AND EQUIPMENT

Land is carried at cost. Buildings, furniture, fixtures, leasehold improvements and equipment are carried at cost, less accumulated depreciation and amortization. Capital leases, where the Company is the lessee, are included in premises and equipment at the capitalized amount less accumulated amortization. The Company primarily uses the straight-line method of depreciation over the estimated useful lives of the assets, which range from 10 years to 40 years for buildings, and two years to 15 years for leasehold improvements, and for furniture, fixtures and equipment. Assets are reviewed for impairment when events indicate the carrying amount may not be recoverable. See Note 6. Premises, Furniture and Equipment, net for further information on Premises, Furniture and Equipment.

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance represents the cash surrender value of investments in life insurance contracts. Earnings on the contracts are based on the earnings on the cash surrender value, less mortality costs.

EMPLOYEE STOCK OWNERSHIP PLAN (“ESOP”)

The cost of shares issued to the ESOP, but not yet allocated to participants, are presented in the Consolidated Statements of Financial Condition as a reduction of stockholders’ equity. Compensation expense is recorded based on the market price of the shares as they are committed to be released for allocation to participant accounts. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings. Dividends on unallocated shares are used to reduce the accrued interest and principal amount of the ESOP’s loan payable to the Company. At September 30, 2019 and 2018, all shares in the ESOP were allocated. See Note 12. Employee Stock Ownership and Profit Sharing Plans for further information on ESOP.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company, in the normal course of business, makes commitments to make loans which are not reflected in the Consolidated Financial Statements. The reserve for these unfunded commitments is included within Other Liabilities on the Consolidated Statements of Financial Condition.

GOODWILL

Goodwill represents the cost in excess of the fair value of net assets acquired (including identifiable intangibles) in transactions accounted for as business acquisitions. Goodwill is evaluated annually for impairment at a reporting unit level. The Company has determined that its reporting units are one level below the operating segments and distinguish these reporting units based on how the segments and reporting units are managed, taking into consideration the economic characteristics, nature of the products, and customers of the segments and reporting units. The Company performs its impairment evaluation as of September 30 of each fiscal year. If the carrying amount of the reporting unit with goodwill exceeds its fair value, goodwill is considered impaired and is written down by the excess carrying value of the reporting unit. Subsequent increases in goodwill are not recognized in the Consolidated Financial Statements. No goodwill impairment was recognized during the fiscal years ended September 30, 2019, 2018 or 2017. See Note 8. Goodwill and Intangible Assets for further information on Goodwill.

INTANGIBLE ASSETS

Intangible assets other than goodwill are amortized over their respective estimated lives. All intangible assets are subject to an impairment test at least annually or more often if conditions indicate a possible impairment. See Note 8. Goodwill and Intangible Assets for further information on Intangible Assets.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company enters into sales of securities under agreements to repurchase with primary dealers only, which provide for the repurchase of the same security. Securities sold under agreements to repurchase identical securities are collateralized by assets which are held in safekeeping in the name of the Bank or by the dealers who arranged the transaction. Securities sold under agreements to repurchase are treated as financings, and the obligations to repurchase such securities are reflected as a liability. The securities underlying the agreements remain in the asset accounts of the Company. See Note 10. Short-Term and Long-Term Borrowings for further information on Securities Sold under Agreements to Repurchase.

REVENUE RECOGNITION

Interest revenue from loans, leases, and investments is recognized on the accrual basis of accounting as the interest is earned according to the terms of the particular loan, lease, or investment. Income from service and other customer charges is recognized as earned. Revenue within the Payments segment is recognized as services are performed and service charges are earned in accordance with the terms of the various programs. The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers, and related amendments on October 1, 2018 under the cumulative-effect method. ASU 2014-09 modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of non-financial assets, unless those contracts are within the scope of other guidance. Upon adoption, the Company recorded a cumulative effect adjustment of $1.5 million to retained earnings, net of tax, due to changes in timing of revenue recognition from breakage of unregistered, unused prepaid cards in the Company’s MPS division. Results for prior periods have not been adjusted and continue to be reported in accordance with the Company’s historical accounting policies. Refer to Note 18. Revenue from Contracts with Customers for additional information.

EARNINGS PER COMMON SHARE (“EPS”)

Basic earnings per share is computed 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 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 and after the allocation of earnings to the participating securities. See Note 5. Earnings per Common Share for further information on EPS.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes the change in net unrealized gains and losses on securities AFS, net of reclassification adjustments and tax effects. Accumulated other comprehensive income (loss) is recognized as a separate component of stockholders’ equity.

STOCK COMPENSATION

Compensation expense for share-based awards is recorded over the vesting period at the fair value of the award at the time of grant. The exercise price of options or fair value of non-vested (restricted) shares granted under the Company’s incentive plans is equal to the fair market value of the underlying stock at the grant date. The Company has elected, with the adoption of ASU 2016-09, to record forfeitures as they occur. See Note 13. Stock Compensation for further information on Stock Compensation.

RELATED PARTY TRANSACTIONS

The Company has disclosed information on its equity investments and relationships with variable interest entities in Note 1. Summary of Significant Accounting Policies.

At September 30, 2019 and 2018, the Company had $5.1 million and $0.7 million, respectively, of loans outstanding with individuals deemed under Regulation O to be directors, executive officers and/or employees of the Company.

All related party transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates, as those prevailing at the same time for comparable transactions with other customers.

RECLASSIFICATION AND REVISION OF PRIOR PERIOD BALANCES

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.

Certain prior year amounts in the Consolidated Financial Statements and the investment securities tables presented in Note 3 to the Consolidated Financial Statements have been reclassified from what was previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2018 due to the adoption of ASU 2016-01 as discussed below.

Loan and lease tables have been conformed to be consistent with the Company’s updated presentation of its lending portfolio. All current and prior period numbers are reflective of this new presentation and total loan and lease balances remain unchanged.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

The following Accounting Standards Updates ("ASUs") were adopted by the Company during the fiscal year ended September 30, 2019.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequent related updates

ASU 2016-04, Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products

In May 2014, the FASB issued a new standard related to revenue recognition. Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the standard effective October 1, 2018, using the modified retrospective approach with a cumulative effect adjustment of $1.5 million, net of tax, included in retained earnings due to changes in timing of revenue recognition from breakage of unregistered, unused prepaid cards in the Company’s MPS division. All other revenue streams remain substantially unchanged. Results for prior period amounts will not be adjusted and will continue to be reported in accordance with the Company’s historical accounting policies. The Company implemented internal controls and key system functionality to enable the preparation of financial information on adoption.

ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10)

These ASUs make revisions to seven areas of Subtopic 825-10, including that equity investments will be required to be measured at fair value with changes in fair value being recognized in net income, simplifying the impairment assessment for equity investments without readily determinable fair value, eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate fair value for financial instruments measured at amortized cost, requiring public business entities to use exit price notions when measuring fair value of financial instruments, requiring separate presentation in other comprehensive income of the portion of total change in fair value of a liability resulting from a change in the instrument specific credit risk, requiring separate presentation of financial assets and liabilities by measurement category and form of financial asset, and clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to AFS securities in combination with the entity’s other deferred tax assets. The Company adopted the standard effective October 1, 2018 with a cumulative effect adjustment that reclassed $0.5 million, net of tax, from accumulated other comprehensive income to retained earnings, due to the Company’s cumulative change in fair value of equity securities with readily determinable fair value.

The Company also adopted the following ASUs effective October 1, 2018, none of which had a material impact on the Company’s Consolidated Financial Statements.


–	ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Receipts and Cash Payments


–	ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash


–	ASU 2017-01, Clarifying the Definition of a Business


–	ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment


–	ASU 2017-05, Other Income - Gains and Losses from Derecognition of Non-Financial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-Financial Assets


–	ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Date Securities


–	ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses

This ASU requires entities to replace the incurred loss impairment methodology with a methodology reflecting expected credit losses with considerations for a broader range of reasonable and supportable information to substantiate credit loss estimates and applies to loans, net investments in leases, debt securities, certain financial assets not accounted for at fair value through net income, and certain off-balance sheet credit exposures. This ASU is effective for the Company on October 1, 2020 and will be adopted on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company's implementation process includes loss forecasting model development, evaluation of technical accounting topics, updates to the Company's allowance documentation, reporting processes and related internal controls, and operational readiness for the adoption of this ASU.

The Company has selected a third-party vendor software and is in the process of building in assumptions, validating historical data, and developing forecasting elements for the various loan portfolios. The Company has begun to run its key processes in parallel and will continue to refine its estimates throughout 2020, as CECL models are implemented and the results are vetted.

The amount of the change in the Company's allowance for loan and lease losses will be impacted by the portfolio composition and credit quality at the adoption date as well as economic conditions and forecasts at that time. At adoption, the Company expects to have a cumulative-effect adjustment to retained earnings for the change in the allowance for loan and lease losses, which will impact capital. Federal banking regulatory agencies have agreed to limit the initial capital impact of this ASU by allowing a phased adoption over three years, on a straight-line basis. An increase in the Company's allowance for loan and lease losses will result in a reduction to regulatory capital amounts and ratios; however, at this point in implementation, the Company is unable to provide a more precise estimate of the impact as this process is still under development, including refinement and development of certain models, estimation techniques and the build-out of the operational and control structure supporting the end-to-end process.

ASU 2016-02, Leases (Topic 842)

ASU 2018-10, Codification Improvements to Topic 842

ASU 2018-11, Targeted Improvements

ASU 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors

ASU 2019-01, Leases (Topic 842): Codification Improvements

For lessees, Topic 842 requires leases to be recognized on the balance sheet, along with disclosure of key information about leasing arrangements. The new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification expense recognition in the income statement.

For lessors, Topic 842 requires lessors to classify leases as sales-type, direct financing or operating leases. A lease is a sales-type lease if any one of five criteria are met, each of which indicate that the lease, in effect, transfers control of the underlying asset to the lessee. If none of those five criteria are met, but two additional criteria are both met, indicating the lessor has transferred substantially all the risks and benefits of the underlying asset to the lessee and a third party, the lease is a direct financing lease. All leases that are not sales-type or direct financing leases are operating leases.

The Company adopted this standard effective October 1, 2019 using the modified retrospective transition approach under the effective date method. As a result, financial information and disclosures required under the new standard will not be provided for dates and periods before October 1, 2019. The Company did not recognize a cumulative effect adjustment to retained earnings as a result of adopting the new standard due to transition practical expedients available. Upon adoption, the Company recognized $27.5 million in operating lease ROU assets and $28.4 million in liabilities. There were no material changes to the timing of expense recognition on these operating leases or the recognition and measurement of the Company's lessor accounting. While the increase to total consolidated assets from recognition of operating lease ROU assets increases the Company’s risk-weighted assets and decreases its capital ratios, the change is not material.

ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

This ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. The reclassification is not required but is an accounting policy election that must be disclosed during the year of adoption. This ASU will be effective for the Company on October 1, 2019. At this time, the Company does not expect to elect the reclassification option.

ASU 2018-09, Codification Improvements

This ASU represents changes in various Subtopics to clarify, correct errors, or make minor improvements. The amendments are not expected to have a significant effect on current accounting practice. Subtopics impacted by this ASU that are relevant to the Company include Subtopic 220-10 Income Statement - Reporting Comprehensive Income-Overall, Subtopic 718-740 Compensation - Stock Compensation-Income Taxes, Subtopic 805-740 Business Combinations - Income Taxes, and Subtopic 820-10 Fair Value Measurement-Overall. Many of the amendments within this ASU do not require transition and are effective upon issuance. However, some of the amendments within this ASU are not effective for the Company until October 1, 2019. The amendments within this ASU are not expected to materially impact the Company's Consolidated Financial Statements.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

This ASU modifies the disclosure requirements on fair value measurements in Topic 820, including the removal, modification to, and addition of, certain disclosure requirements. This ASU will be effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The majority of the disclosure changes are to be applied on a prospective basis. The Company plans to adopt the modified disclosure requirements beginning October 1, 2020. Although this ASU has a significant impact to the Company’s fair value disclosures, no additional impact to the Consolidated Financial Statements is expected.

ASU 2018-17, Consolidation (Topic 810) - Targeted Improvements to Related Party Guidance for Variable Interest Entities

The relevant amendments in this ASU provide updated guidance when determining whether a decision-making fee is a variable interest and requires reporting entities to consider indirect interest held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety. The likely result of these amendments is more decision-makers not having a variable interest through their decision-making arrangements. These amendments will also create alignment between determining whether a decision-making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. This ASU is effective for fiscal years beginning after December 15, 2019. The Company does not expect a material impact on the Consolidated Financial Statements.

ACQUISITIONS

12 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

ACQUISITIONS

There were no new acquisitions during fiscal year 2019, and there were no pending acquisitions as of September 30, 2019.

The Company acquired Crestmark Bancorp, Inc. ("Crestmark") and its bank subsidiary, Crestmark Bank, on August 1, 2018 for a purchase price of $295.8 million paid by issuance of 9,919,512 shares of Meta common stock (the "Crestmark Acquisition"). The initial accounting for certain assets, liabilities and goodwill acquired in the Crestmark Acquisition were incomplete and the initial amounts recorded were considered provisional. The Company recognized certain measurement period adjustments through July 31, 2019 as the one-year measurement period allowed under GAAP expired on August 1, 2019. The following table summarizes the allocation of the purchase price to net assets of Crestmark as of the acquisition date.



(Dollars in Thousands)	Estimated fair value as previously reported⁽¹⁾		Measurement period adjustments			Fair value as adjusted
Rental equipment	$	98,977	$	(3,355	)	$	95,622
Intangible assets	28,253		(117		)	28,136
Goodwill	204,547		6,235			210,782
Accrued expenses and other liabilities	88,301		1,199			89,500
Net other assets	55,464		(1,564		)	53,900
Noncontrolling interest	3,167		—			3,167
Purchase price	295,773		—			295,773

⁽¹⁾As previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2018.

Measurement Period Adjustments and Impairment - DC Solar

The Company previously purchased a portfolio of mobile solar generators ("MSGs") from DC Solar Solutions, Inc. and certain of its affiliates, a relationship in the Company's solar leasing business, and, in turn, leased the MSGs to DC Solar Distribution, Inc., an affiliate of DC Solar Solutions. During 2019, the Company became aware that the DC Solar entities and their affiliates filed for bankruptcy and the entities, including their principals, are subjects of ongoing federal investigations involving allegations of fraudulent misconduct. The Company had three separate operating leases with DC Solar - two of which were included in the acquired Crestmark balances on August 1, 2018. The third transaction was originated in August 2018, after the closing of the Crestmark Acquisition. The Company considered the bankruptcy filing and fraud allegations as new facts and circumstances and concluded the alleged fraud existed at the acquisition date for the acquired DC Solar transactions. As a result, the identified impairment for the acquired DC Solar transactions and other related adjustments were recorded as measurement period adjustments to the acquired assets and liability amounts recognized and were offset through provisional goodwill. The impairment and related adjustments for the DC Solar transaction originated post-acquisition are reflected in current earnings.

The Company has repossessed 173 of the 176 underlying assets and is in the process of performing repairs and general maintenance to the assets where needed to ensure they are in prime condition for re-lease. The adjustments to goodwill and impairment recognized for the DC Solar events reflect the Company's best estimate of the potential loss incurred, based on the Company's understanding of the relevant facts at September 30, 2019. Assumptions utilized in the estimate included recoverability of the MSGs and the Company's ability to re-lease them, contractual rents, and residual values. As the measurement period expired on August 1, 2019, any additional exposure identified as new facts and circumstances that become available will be reflected in current earnings.

The table below reflects the net impact of the foregoing DC Solar matters, based upon the Company's understanding of the relevant facts and circumstances at September 30, 2019, to the Company's financial statements at September 30, 2019 and for the fiscal year ended September 30, 2019.



		Increase (Decrease)
Balance Sheet:		(Dollars in Thousands)
	Operating lease equipment	$	(12,589	)
	Goodwill	1,968
	Other assets	(394		)
	Liabilities	(4,461		)
	Total balance sheet impact	$	(6,554	)

	Regulatory capital impact	$	(8,522	)

		Income (Expense)
Income Statement:
	Rental income	$	1,633
	Other income	315
	Impairment	(9,549		)
	Income tax benefit	1,047
	Impact to net income	$	(6,554	)

Measurement Period Adjustments - Other

The Company recorded additional measurement period adjustments in 2019 for provisional tax, compensation liabilities and other liabilities assumed through the Crestmark Acquisition. The Company obtained additional information about facts and circumstances existing at the Crestmark Acquisition date that resulted in a net increase to liabilities and goodwill recognized of $3.8 million.

SECURITIES

12 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

SECURITIES

On October 1, 2018, the Company adopted ASU 2016-01 on a prospective basis, which redefined the definition of equity securities and required their segregation from available for sale ("AFS") debt securities. While changes in the fair value of debt securities continue to be recorded in the equity category of accumulated other comprehensive income, the new guidance requires that changes in fair value of equity securities with readily determinable fair value be recorded in current earnings. As required by the new guidance, the unrealized gain in fair value on equity securities with readily determinable fair value (recorded in accumulated other comprehensive income at September 30, 2018) was reclassified to retained earnings on October 1, 2018. The amount of the reclassification was $0.5 million, net of tax. Equity securities with readily determinable fair value include mutual funds of $1.8 million at cost and $1.9 million at fair value at September 30, 2019.

The amortized cost, gross unrealized gains and losses and estimated fair values of AFS and HTM debt securities at September 30, 2019 and September 30, 2018 are presented below.



At September 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
(Dollars in Thousands)
Debt securities AFS
SBA securities	$	182,327	$	3,655	$	—		$	185,982
Obligation of states and political subdivisions	858		16		—			874
Non-bank qualified obligations of states and political subdivisions	396,430		5,030		(903		)	400,557
Asset-backed securities	305,603		262		(3,331		)	302,534
Mortgage-backed securities	378,670		5,731		(1,855		)	382,546
Total debt securities AFS	$	1,263,888	$	14,694	$	(6,089	)	$	1,272,493
Common equities and mutual funds⁽¹⁾⁽²⁾	$	2,435	$	171	$	—		$	2,606

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and September 30, 2018.

⁽²⁾ASU 2016-01 adopted on October 1, 2018, on a prospective basis, removed equity securities from AFS category at September 30, 2019.



At September 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
(Dollars in Thousands)
Debt securities AFS
SBA securities	$	45,591	$	1	$	(1,255	)	$	44,337
Obligation of states and political subdivisions	17,154		49		(293		)	16,910
Non-bank qualified obligations of states and political subdivisions	1,140,884		826		(31,825		)	1,109,885
Asset-backed securities	310,700		2,585		(257		)	313,028
Mortgage-backed securities	378,301		—		(14,236		)	364,065
Total debt securities AFS	1,892,630		3,461		(47,866		)	1,848,225
Common equities and mutual funds⁽¹⁾	3,172		635		(7		)	3,800
Total AFS securities⁽¹⁾	$	1,895,802	$	4,096	$	(47,873	)	$	1,852,025

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and September 30, 2018.



At September 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
(Dollars in Thousands)
Debt securities HTM
Non-bank qualified obligations of states and political subdivisions	$	127,582	$	108	$	(1,403	)	$	126,287
Mortgage-backed securities	7,182		14		(13		)	7,183
Total HTM securities	$	134,764	$	122	$	(1,416	)	$	133,470



At September 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
(Dollars in Thousands)
Debt securities HTM
Non-bank qualified obligations of states and political subdivisions	$	163,893	$	—	$	(10,758	)	$	153,135
Mortgage-backed securities	7,850		—		(422		)	7,428
Total HTM securities	$	171,743	$	—	$	(11,180	)	$	160,563

Management has implemented processes to identify securities that could potentially have a credit impairment that is other-than-temporary. This process can include, but is not limited to, evaluating the length of time and extent to which the fair value has been less than the amortized cost basis, reviewing available information regarding the financial position of the issuer, interest or dividend payment status, monitoring the rating of the security, monitoring changes in value, and projecting cash flows. Management also determines whether the Company intends to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost basis which, in some cases, may extend to maturity. To the extent the Company determines that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized.

For all securities considered temporarily impaired, the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost, which may occur at maturity. The Company believes collection will occur for all principal and interest due on all investments with amortized cost in excess of fair value and considered only temporarily impaired.

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at September 30, 2019, and 2018, were as follows:



At September 30, 2019	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
(Dollars in Thousands)	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
Debt securities AFS
SBA securities	$	10,262	$	—		$	—	$	—		$	10,262	$	—
Obligations of states and political subdivisions	—		—			—		—			—		—
Non-bank qualified obligations of states and political subdivisions	66,326		(177		)	55,428		(726		)	121,754		(903		)
Asset-backed securities	158,176		(1,823		)	93,259		(1,508		)	251,435		(3,331		)
Mortgage-backed securities	1,713		(1		)	89,634		(1,854		)	91,347		(1,855		)
Total debt securities AFS	$	236,477	$	(2,001	)	$	238,321	$	(4,088	)	$	474,798	$	(6,089	)
Common equities and mutual funds⁽¹⁾⁽²⁾	$	—	$	—		$	—	$	—		$	—	$	—

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and September 30, 2018.

⁽²⁾ASU 2016-01 adopted on October 1, 2018, on a prospective basis, removed equity securities from AFS category at September 30, 2019.



At September 30, 2018	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
(Dollars in Thousands)	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
Debt securities AFS
SBA securities	$	43,097	$	(1,255	)	$	—	$	—		$	43,097	$	(1,255	)
Obligations of state and political subdivisions	11,036		(279		)	881		(14		)	11,917		(293		)
Non-bank qualified obligations of states and political subdivisions	626,693		(13,539		)	358,095		(18,286		)	984,788		(31,825		)
Asset-backed securities	146,638		(257		)	—		—			146,638		(257		)
Mortgage-backed securities	121,217		(3,292		)	242,849		(10,944		)	364,066		(14,236		)
Total debt securities AFS	948,681		(18,622		)	601,825		(29,244		)	1,550,506		(47,866		)
Common equities and mutual funds⁽¹⁾	1,818		(7		)	—		—			1,818		(7		)
Total debt AFS securities⁽¹⁾	$	950,499	$	(18,629	)	$	601,825	$	(29,244	)	$	1,552,324	$	(47,873	)

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and September 30, 2018.



At September 30, 2019	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
(Dollars in Thousands)	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
Debt securities HTM
Non-bank qualified obligations of states and political subdivisions	$	5,967	$	(6	)	$	109,368	$	(1,397	)	$	115,335	$	(1,403	)
Mortgage-backed securities	1,471		—			1,803		(13		)	3,274		(13		)
Total HTM securities	$	7,438	$	(6	)	$	111,171	$	(1,410	)	$	118,609	$	(1,416	)



At September 30, 2018	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
(Dollars in Thousands)	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
Debt securities HTM
Non-bank qualified obligations of states and political subdivisions	$	5,767	$	(287	)	$	147,368	$	(10,471	)	$	153,135	$	(10,758	)
Mortgage-backed securities	—		—			7,428		(422		)	7,428		(422		)
Total HTM securities	$	5,767	$	(287	)	$	154,796	$	(10,893	)	$	160,563	$	(11,180	)

At September 30, 2019 and 2018, the Company's investment portfolio included securities with current unrealized losses that have existed for longer than one year. All of these securities are considered to be acceptable credit risks. Because (i) the declines in fair value were due to changes in market interest rates, not in estimated cash flows, (ii) the Company does not intend or has not made a decision to sell these securities and (iii) it is not more likely than not that the Company will be required to sell the securities before recovery of their amortized cost basis, which may occur at maturity, no other-than-temporary impairment was recorded at September 30, 2019 or 2018.

The amortized cost and fair value of debt securities by contractual maturity are shown below. Certain securities have call features which allow the issuer to call the security prior to maturity. Expected maturities may differ from contractual maturities in 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.



AFS Securities at Fair Value
At September 30, 2019	Amortized Cost		Fair Value
(Dollars in Thousands)
Due in one year or less	$	—	$	—
Due after one year through five years	16,749		17,143
Due after five years through ten years	50,263		51,840
Due after ten years	818,206		820,964
	885,218		889,947
Mortgage-backed securities	378,670		382,546
Total securities at fair value	$	1,263,888	$	1,272,493



At September 30, 2018	Amortized Cost		Fair Value
(Dollars in Thousands)
Due in one year or less	$	2,532	$	2,529
Due after one year through five years	41,415		41,504
Due after five years through ten years	352,099		350,143
Due after ten years	1,118,283		1,089,984
	1,514,329		1,484,160
Mortgage-backed securities	378,301		364,065
Common equities and mutual funds⁽¹⁾	3,172		3,800
Total securities at fair value	$	1,895,802	$	1,852,025

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and September 30, 2018



HTM Securities at Fair Value
At September 30, 2019	Amortized Cost		Fair Value
(Dollars in Thousands)
Due after ten years	$	127,582	$	126,287
	127,582		126,287
Mortgage-backed securities	7,182		7,183
Total HTM securities at cost	$	134,764	$	133,470



At September 30, 2018	Amortized Cost		Fair Value
(Dollars in Thousands)
Due after ten years	$	163,893	$	153,135
	163,893		153,135
Mortgage-backed securities	7,850		7,428
Total HTM securities at cost	$	171,743	$	160,563

Activities related to the sale of securities are summarized below.



Fiscal Year ended	2019		2018			2017
(Dollars in Thousands)
Available For Sale
Proceeds from sales	$	755,616	$	596,758		$	457,306
Gross gains on sales	6,006		2,551			4,091
Gross losses on sales	5,277		10,728			4,628
Net gain (loss) on available for sale securities	$	729	$	(8,177	)	$	(537	)

Held To Maturity
Net carrying amount of securities sold	$	—	$	—		$	5,826
Gross realized gain on sales	—		—			92
Gross realized losses on sales	—		—			48
Net gain on held to maturity securities	$	—	$	—		$	44

During the fiscal 2018 fourth quarter, the Company completed a balance sheet restructuring related to the closing of the Crestmark Acquisition, selling approximately $260 million of lower-yielding AFS securities.

Securities with fair values of approximately $21.9 million and $8.0 million at September 30, 2019 and 2018, respectively, were pledged as collateral for public funds on deposit. Securities with fair values of approximately $4.8 million and $5.9 million at September 30, 2019, and 2018, respectively, were pledged as collateral for individual, trust and estate deposits.

Federal Home Loan Bank ("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 FHLBs and actions of their regulator, the Federal Housing Finance Agency. The Company periodically evaluates investments for other than temporary impairment. There was no impairment of this investment in 2019, 2018 or 2017.

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 $30.9 million and $23.4 million at September 30, 2019 and 2018, respectively. At fiscal year end 2019 and 2018, the Company pledged securities with fair values of approximately $812.2 million and $1.06 billion, respectively, against specific FHLB advances. In addition, a combination of qualifying residential and other real estate loans of approximately $928.8 million and $756.0 million were pledged as collateral at September 30, 2019 and 2018, respectively.

Included in Interest and Dividend Income from other investments is $1.0 million, $1.1 million and $0.5 million related to dividend income on FHLB stock for the fiscal years ended September 30, 2019, 2018 and 2017, respectively.

LOANS AND LEASES RECEIVABLE, NET

12 Months Ended

Sep. 30, 2019

Loans and Leases Receivable Disclosure [Abstract]

LOANS AND LEASES RECEIVABLE, NET

Loans and Leases

Loan and lease tables have been conformed to be consistent with the Company's updated categorization of its lending portfolio between National Lending and Community Banking.

Fiscal year-end loans and leases receivable were as follows:



(Dollars in Thousands)	September 30, 2019			September 30, 2018
National Lending
Asset based lending	$	688,520		$	477,917
Factoring	296,507			284,221
Lease financing	381,602			265,315
Insurance premium finance	361,105			337,877
SBA/USDA	88,831			59,374
Other commercial finance	99,665			85,145
Commercial finance	1,916,230			1,509,849
Consumer credit products	106,794			80,605
Other consumer finance	161,404			189,756
Consumer finance⁽¹⁾	268,198			270,361
Tax services	2,240			1,073
Warehouse finance⁽¹⁾	262,924			65,000
Total National Lending	2,449,592			1,846,283
Community Banking
Commercial real estate and operating	883,932			790,890
Consumer one-to-four family real estate and other	259,425			247,318
Agricultural real estate and operating	58,464			60,498
Total Community Banking	1,201,821			1,098,706
Total loans and leases	3,651,413			2,944,989
Net deferred loan origination fees (costs)	7,434			(250		)
Total gross loans and leases	3,658,847			2,944,739

Allowance for loan and lease losses	(29,149		)	(13,040		)
Total loans and leases, net⁽²⁾	$	3,629,698		$	2,931,699

⁽¹⁾Warehouse finance loans are presented in their own line. Previously, these balances were included with consumer finance loans. Prior period balances have also been adjusted to reflect this change.

⁽²⁾As of September 30, 2019, the remaining balance of acquired loans and leases from the Crestmark Acquisition was $312.5 million and the remaining balances of the credit and interest rate mark discounts related to the acquired loans and leases held for investment were $5.6 million and $2.6 million, respectively, while the remaining balance of the interest rate mark premium related to the acquired loans held for sale was $0.7 million. On August 1, 2018, the Company acquired loans and leases from the Crestmark Acquisition totaling $1.06 billion and recorded related credit and interest rate mark discounts of $12.3 million and $6.0 million, respectively.

During the fiscal year ended September 30, 2019, the Company transferred $100.0 million of consumer credit product loans to held for sale and originated $171.3 million of SBA/USDA and consumer credit product loans as held for sale. The Company sold held for sale loans resulting in proceeds of $125.4 million and gains on sale of $5.1 million during the fiscal year ended September 30, 2019. The Company sold held for sale loans resulting in proceeds of $17.6 million and gains on sale of $0.4 million during the fiscal year ended September 30, 2018.

Loans purchased and sold by portfolio segment, including participation interests, for the fiscal years ended September 30, 2019 and 2018 were as follows:



	Fiscal Year Ended
(Dollars in Thousands)	September 30, 2019		September 30, 2018
Loans Purchased
Loans held for sale	$	15,443	$	—
Loans held for investment:
Total National Lending	235,918		137,751
Total Community Banking	26,704		27,919
Total purchases	278,065		165,670
Loans Sold
Loans held for sale	121,071		17,621
Loans held for investment:
Total Community Banking	13,069		22,611
Total sales	$	134,140	$	40,232

The net investment in direct financing and sales-type leases was comprised of the following as of September 30, 2019 and September 30, 2018.



	September 30, 2019			September 30, 2018
(Dollars in Thousands)
Minimum lease payments receivable	$	430,391		$	301,835
Estimated residual value of leased equipment	13,352			12,406
Unamortized initial direct costs	6,026			1,806
Premium on acquired leases	—			26
Unearned income	(62,088		)	(48,949		)
Net investment in direct financing and sales-type leases	$	387,681		$	267,124

Future minimum lease payments receivable on noncancelable direct financing and sales-type leases were as follows as of September 30, 2019.



	As of September 30, 2019
(Dollars in thousands)
2020	$	146,067
2021	124,702
2022	85,081
2023	50,625
2024	21,007
2025 and thereafter	2,909
Total	$	430,391

The Company did not record any contingent rental income from sales-type and direct financing leases in the fiscal year ended September 30, 2019.

Annual activity in the allowance for loan and lease losses was as follows:



Fiscal Year Ended September 30,	2019			2018			2017
(Dollars in Thousands)
Beginning balance	$	13,040		$	7,534		$	5,635
Provision for loan and lease losses	55,650			29,433			10,589
Recoveries	3,313			2,037			307
Charge offs	(42,854		)	(25,964		)	(8,997		)
Ending balance	$	29,149		$	13,040		$	7,534

Activity in the allowance for loan and lease losses and balances of loans and leases by portfolio segment for the fiscal years ended September 30, 2019 and 2018 were as follows:



Allowance for loan and lease losses:	Beginning balance		Provision (recovery) for loan and lease losses			Charge-offs			Recoveries		Ending balance
Fiscal Year Ended September 30, 2019
National Lending	(Dollars in Thousands)
Asset based lending	$	107	$	8,663		$	(2,486	)	$	159	$	6,443
Factoring	64		5,849			(2,725		)	73		3,261
Lease financing	59		4,009			(3,473		)	2,207		2,802
Insurance premium finance	1,031		2,361			(2,689		)	321		1,024
SBA/USDA	13		370			—			—		383
Other commercial finance	28		655			—			—		683
Commercial finance	1,302		21,907			(11,373		)	2,760		14,596
Consumer credit products	785		259			—			—		1,044
Other consumer finance	2,820		8,563			(6,346		)	81		5,118
Consumer finance	3,605		8,822			(6,346		)	81		6,162
Tax services	—		24,873			(25,095		)	222		—
Warehouse finance	65		198			—			—		263
Total National Lending	4,972		55,800			(42,814		)	3,063		21,021
Community Banking
Commercial real estate and operating	6,220		(12		)	—			—		6,208
Consumer one-to-four family real estate and other	632		461			(40		)	—		1,053
Agricultural real estate and operating	1,216		(599		)	—			250		867
Total Community Banking	8,068		(150		)	(40		)	250		8,128
Total	$	13,040	$	55,650		$	(42,854	)	$	3,313	$	29,149



Allowance for loan and lease losses:	Beginning balance		Provision (recovery) for loan and lease losses			Charge-offs			Recoveries		Ending balance
Fiscal Year Ended September 30, 2018
National Lending	(Dollars in Thousands)
Asset based lending	$	—	$	(249	)	$	—		$	356	$	107
Factoring	—		434			(821		)	451		64
Lease financing	—		147			(135		)	47		59
Insurance premium finance	796		998			(1,078		)	315		1,031
SBA/USDA	—		622			(609		)	—		13
Other commercial finance	4		24			—			—		28
Commercial finance	800		1,976			(2,643		)	1,169		1,302
Consumer credit products	—		785			—			—		785
Other consumer finance	—		4,263			(1,443		)	—		2,820
Consumer finance	—		5,048			(1,443		)	—		3,605
Tax services	5		21,344			(21,802		)	453		—
Warehouse finance	—		65			—			—		65
Total National Lending	805		28,433			(25,888		)	1,622		4,972
Community Banking
Commercial real estate and operating	2,820		3,400			—			—		6,220
Consumer one-to-four family real estate and other	809		(104		)	(76		)	3		632
Agricultural real estate and operating	2,574		(1,769		)	—			411		1,216
Total Community Banking	6,203		1,527			(76		)	414		8,068
Unallocated	527		(527		)	—			—		—
Total	$	7,534	$	29,433		$	(25,964	)	$	2,037	$	13,040

The following tables provide details regarding the allowance for loan and lease losses and balances by type of allowance as of September 30, 2019 and 2018.



	Allowance						Loans and Leases
Recorded Investment	Ending balance: individually evaluated for impairment		Ending balance: collectively evaluated for impairment		Total		Ending balance: individually evaluated for impairment		Ending balance: collectively evaluated for impairment		Total
Fiscal Year Ended September 30, 2019
National Lending	(Dollars in Thousands)
Asset based lending	$	443	$	6,000	$	6,443	$	16,727	$	671,793	$	688,520
Factoring	1,262		1,999		3,261		3,824		292,683		296,507
Lease financing	119		2,683		2,802		4,432		377,170		381,602
Insurance premium finance	—		1,024		1,024		—		361,105		361,105
SBA/USDA	51		332		383		3,841		84,990		88,831
Other commercial finance	—		683		683		—		99,665		99,665
Commercial finance	1,875		12,721		14,596		28,824		1,887,406		1,916,230
Consumer credit products	—		1,044		1,044		—		106,794		106,794
Other consumer finance	—		5,118		5,118		1,472		159,932		161,404
Consumer finance	—		6,162		6,162		1,472		266,726		268,198
Tax services	—		—		—		—		2,240		2,240
Warehouse finance	—		263		263		—		262,924		262,924
Total National Lending	1,875		19,146		21,021		30,296		2,419,296		2,449,592
Community Banking
Commercial real estate and operating	—		6,208		6,208		258		883,674		883,932
Consumer one-to-four family real estate and other	—		1,053		1,053		100		259,325		259,425
Agricultural real estate and operating	—		867		867		2,985		55,479		58,464
Total Community Banking	—		8,128		8,128		3,343		1,198,478		1,201,821
Total	$	1,875	$	27,274	$	29,149	$	33,639	$	3,617,774	$	3,651,413



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

⁽¹⁾Balances have been restated from what was previously reported as of September 30, 2018 on the Company's Annual Report on Form 10-K for its fiscal year ended September 30, 2018.

The asset classification of loans and leases at September 30, 2019, and 2018, were as follows:



Asset Classification	Pass		Watch		Special Mention		Substandard		Doubtful		Total
Fiscal Year Ended September 30, 2019
National Lending	(Dollars in Thousands)
Asset based lending	$	581,803	$	—	$	89,990	$	16,183	$	544	$	688,520
Factoring	256,048		—		36,635		3,824		—		296,507
Lease financing	367,791		—		9,379		4,432		—		381,602
Insurance premium finance	361,105		—		—		—		—		361,105
SBA/USDA	76,609		—		8,381		3,841		—		88,831
Other commercial finance	99,057		—		608		—		—		99,665
Commercial finance	1,742,413		—		144,993		28,280		544		1,916,230
Consumer credit products	106,794		—		—		—		—		106,794
Other consumer finance	161,404		—		—		—		—		161,404
Consumer finance	268,198		—		—		—		—		268,198
Tax services	2,240		—		—		—		—		2,240
Warehouse finance	262,924		—		—		—		—		262,924
Total National Lending	2,275,775		—		144,993		28,280		544		2,449,592
Community Banking
Commercial real estate and operating	875,933		1,494		2,884		3,621		—		883,932
Consumer one-to-four family real estate and other	257,575		946		708		196		—		259,425
Agricultural real estate and operating	39,409		4,631		5,876		8,548		—		58,464
Total Community Banking	1,172,917		7,071		9,468		12,365		—		1,201,821
Total loans and leases	$	3,448,692	$	7,071	$	154,461	$	40,645	$	544	$	3,651,413



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

Federal regulations provide for the classification of loans and other assets such as debt and equity securities considered by the Bank's regulator, the OCC, to be of lesser quality as “substandard,” “doubtful” or “loss.” The loan classification and risk rating definitions are as follows:

Pass- A pass asset is of sufficient quality in terms of repayment, collateral and management to preclude a special mention or an adverse rating.

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

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

The adverse classifications are as follows:

Substandard- A substandard asset is inadequately protected by the net worth and/or repayment ability or by a weak collateral position. Assets so classified will have well-defined weaknesses creating a distinct possibility the Bank will sustain some loss if the weaknesses are not corrected. Loss potential does not have to exist for an asset to be classified as substandard.

Doubtful- A doubtful asset has weaknesses similar to those classified substandard, with the degree of weakness causing the likely loss of some principal in any reasonable collection effort. Due to pending factors, the asset’s classification as loss is not yet appropriate.

Loss- A loss asset is considered uncollectible and of such little value that the asset’s continuance on the Bank’s balance sheet is no longer warranted. This classification does not necessarily mean an asset has no recovery or salvage value leaving room for future collection efforts.

Loans and leases, or portions thereof, are charged off when collection of principal becomes doubtful. Generally, this is associated with a delay or shortfall in payments of 210 days or more for commercial insurance premium finance, 180 days or more for the purchased student loan portfolios, 120 days or more for consumer credit products and leases, and 90 days or more for community banking loans and commercial finance loans. Action is taken to charge off ERO loans if such loans have not been collected by the end of June and taxpayer advance loans if such loans have not been collected by the end of the calendar year. Non-accrual loans and troubled debt restructurings are generally considered impaired.

Past due loans and leases at September 30, 2019 and 2018 were as follows:



Past Due Loans and Leases	Accruing and Non-accruing Loans and Leases												Non-performing Loans and Leases
Fiscal Year Ended September 30, 2019	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
(Dollars in Thousands)
Loans held for sale	$	1,122	$	755	$	964	$	2,841	$	145,936	$	148,777	$	964	$	—	$	964

National Lending
Asset based lending	109		243		11,771		12,123		676,397		688,520		482		11,332		11,814
Factoring	—		—		—		—		296,507		296,507		—		1,669		1,669
Lease financing	3,213		1,801		4,063		9,077		372,525		381,602		3,289		1,122		4,411
Insurance premium finance	1,999		2,881		3,807		8,687		352,418		361,105		3,807		—		3,807
SBA/USDA	83		—		255		338		88,493		88,831		—		255		255
Other commercial finance	—		—		—		—		99,665		99,665		—		—		—
Commercial finance	5,404		4,925		19,896		30,225		1,886,005		1,916,230		7,578		14,378		21,956
Consumer credit products	627		557		239		1,423		105,371		106,794		239		—		239
Other consumer finance	932		1,005		1,078		3,015		158,389		161,404		1,078		—		1,078
Consumer finance	1,559		1,562		1,317		4,438		263,760		268,198		1,317		—		1,317
Tax services	—		—		2,240		2,240		—		2,240		2,240		—		2,240
Warehouse finance	—		—		—		—		262,924		262,924		—		—		—
Total National Lending	6,963		6,487		23,453		36,903		2,412,689		2,449,592		11,135		14,378		25,513
Community Banking
Commercial real estate and operating	565		—		—		565		883,367		883,932		—		—		—
Consumer one-to-four family real estate and other	458		—		9		467		258,958		259,425		—		44		44
Agricultural real estate and operating	49		—		—		49		58,415		58,464		—		—		—
Total Community Banking	1,072		—		9		1,081		1,200,740		1,201,821		—		44		44
Total loans and leases held for investment	8,035		6,487		23,462		37,984		3,613,429		3,651,413		11,135		14,422		25,557

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



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

Non-accruing loans and leases were $14.4 million and $2.9 million at September 30, 2019 and 2018, respectively. There were $12.1 million and $7.3 million in accruing loans and leases delinquent 90 days or more at September 30, 2019 and 2018, respectively. For the fiscal year ended September 30, 2019, gross interest income, which would have been recorded had the non-accruing loans and leases been current in accordance with their original terms, was insignificant, none of which was included in interest income.

Certain loans and leases 89 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 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 is evaluated for impairment. Often, this is associated with a delay or shortfall in scheduled payments, as described above.

Impaired loans and leases at September 30, 2019 and 2018 were as follows:



September 30, 2019	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans and leases without a specific valuation allowance
National Lending	(Dollars in Thousands)
Asset based lending	$	12,187	$	13,487	$	—
Factoring	1,563		2,638		—
Lease financing	1,897		1,897		—
SBA/USDA	2,595		2,595		—
Commercial finance	18,242		20,617		—
Other consumer finance	1,472		1,539		—
Consumer finance	1,472		1,539		—
Total National Lending	19,714		22,156		—
Community Banking
Commercial real estate and operating	258		258		—
Consumer one-to-four family real estate and other	100		100		—
Agricultural real estate and operating	2,985		2,985		—
Total Community Banking	3,343		3,343		—
Total	$	23,057	$	25,499	$	—
Loans and leases with a specific valuation allowance
National Lending
Asset based lending	$	4,540	$	4,567	$	443
Factoring	2,261		3,601		1,262
Lease financing	2,535		2,535		119
SBA/USDA	1,246		1,246		51
Commercial finance	10,582		11,949		1,875
Total National Lending	10,582		11,949		1,875
Total	$	10,582	$	11,949	$	1,875



September 30, 2018⁽¹⁾	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans and leases without a specific valuation allowance
National Lending	(Dollars in Thousands)
Asset based lending	$	1,404	$	1,404	$	—
Factoring	3,331		3,911		—
Lease financing	8,877		8,877		—
Commercial finance	13,612		14,192		—
Total National Lending	13,612		14,192		—
Community Banking
Commercial real estate and operating	405		405		—
Consumer one-to-four family real estate and other	140		140		—
Agricultural real estate and operating	1,454		1,454		—
Total Community Banking	1,999		1,999		—
Total	$	15,611	$	16,191	$	—

⁽¹⁾Balances have been restated from what was previously reported as of September 30, 2018 on the Company's Annual Report on Form 10-K for its fiscal year ended September 30, 2018.

There were no loans and leases with a specific valuation allowance at September 30, 2018.

The following table provides the average recorded investment in impaired loans and leases for the fiscal years ended September 30, 2019 and 2018.



Fiscal Year Ended September 30,	2019				2018
(Dollars in thousands)	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
National Lending
Asset based lending	$	5,742	$	344	$	117	$	—
Factoring	4,751		5		277		—
Lease financing	5,037		17		740		—
SBA/USDA	639		—		—		—
Commercial finance	16,169		366		1,134		$	—
Other consumer finance	1,207		67		—		—
Consumer finance	1,207		67		—		—
Total National Lending	17,376		433		1,134		—
Community Banking
Commercial real estate and operating	269		14		673		19
Consumer one-to-four family real estate and other	172		6		226		14
Agricultural real estate and operating	1,483		107		1,652		127
Total Community Banking	1,924		127		2,551		160
Total loans and leases	$	19,300	$	560	$	3,685	$	160

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 $2.9 million of National Lending loans and leases and $2.5 million of Community Banking loans that were modified in a TDR during the fiscal year ended September 30, 2019, all of which were modified to extend the term of the loan. There were $4.7 million of Community Banking loans that were modified in a TDR during the fiscal year ended September 30, 2018. During the fiscal year ended September 30, 2019, the Company had $0.9 million of Community Banking loans and $0.2 million of National Lending loans that were modified in a TDR within the previous 12 months and for which there was a payment default. During the fiscal year ended September 30, 2018, the Company had $0.1 million of Community Banking loans and no National Lending loans or leases that were modified in a TDR within the previous 12 months and for which there was a payment default. TDR net charge-offs and the impact of TDRs on the Company's allowance for loan and lease losses were insignificant during the fiscal years ended September 30, 2019 and September 30, 2018.

At September 30, 2019, foreclosed and repossessed assets totaled $29.5 million, compared to $31.6 million at September 30, 2018. At September 30, 2019, the Company had established a valuation allowance of $0.1 million for foreclosed and repossessed assets. The Company did not have a valuation allowance established for any foreclosed and repossessed assets at September 30, 2018. There were no impairments on any foreclosed and repossessed assets or loans in the process of foreclosure at September 30, 2019 and none at September 30, 2018. On November 14, 2019, the Company disposed of assets related to a previously disclosed agricultural relationship that were held in other real estate owned. The Company expects to incur a pre-tax net loss of approximately $4.3 million in the quarter ended December 31, 2019 related to the disposition of these assets.

EARNINGS PER COMMON SHARE

12 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER COMMON SHARE

Earnings per common share is computed after deducting any preferred dividends, if applicable. 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. Basic earnings per common share is computed 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 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 and after the allocation of earnings to the participating securities. Antidilutive options are disregarded in earnings per share calculations.

A reconciliation of net income and common stock share amounts used in the computation of basic and diluted earnings per share for the fiscal years ended September 30, 2019, 2018 and 2017 is presented below.



(Dollars in Thousands, Except Share and Per Share Data)	2019		2018		2017
Basic income per common share:
Net income attributable to Meta Financial Group, Inc.	$	97,004	$	51,620	$	44,917
Weighted average common shares outstanding	38,880,919		30,737,499		27,741,276
Basic income per common share	$	2.49	$	1.68	$	1.62

Diluted income per common share:
Net income attributable to Meta Financial Group, Inc.	$	97,004	$	51,620	$	44,917
Weighted average common shares outstanding	38,880,919		30,737,499		27,741,276
Outstanding options - based upon the two-class method	40,718		115,551		166,956
Weighted average diluted common shares outstanding	38,921,637		30,853,050		27,908,232
Diluted income per common share	$	2.49	$	1.67	$	1.61

PREMISES, FURNITURE, AND EQUIPMENT, NET

12 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

PREMISES, FURNITURE, AND EQUIPMENT, NET

PREMISES, FURNITURE AND EQUIPMENT, NET

Fiscal year-end premises and equipment were as follows:



September 30,	2019			2018
(Dollars in Thousands)
Land	$	2,932		$	2,932
Buildings	30,906			29,459
Furniture, fixtures, and equipment	61,216			56,597
	95,054			88,988
Less: accumulated depreciation and amortization	(49,122		)	(48,530		)
Net book value	$	45,932		$	40,458

Depreciation expense of premises, furniture and equipment included in occupancy and equipment expense was approximately $8.6 million, $5.7 million and $5.5 million for the fiscal years ended September 30, 2019, 2018 and 2017, respectively.

RENTAL EQUIPMENT, NET

Rental equipment was as follows as of September 30, 2019 and September 30, 2018.



	September 30, 2019			September 30, 2018
(Dollars in thousands)
Computers and IT networking equipment	$	37,352		$	53,035
Motor vehicles and other	98,149			43,505
Office furniture and equipment	2,875			3,590
Solar panels and equipment	116,505			57,242
Total	254,881			157,372

Accumulated depreciation	(46,344		)	(50,082		)
Net book value	$	208,537		$	107,290

During fiscal year 2019, an impairment was recorded related to solar panels and equipment. Please refer to Note 2 for further discussion.

Future minimum lease payments receivable on equipment under operating leases were as follows as of September 30, 2019.



	September 30, 2019
(Dollars in thousands)
2020	$	31,300
2021	26,951
2022	20,076
2023	16,237
2024	11,173
2025 and thereafter	22,138
Total	$	127,875

RENTAL EQUIPMENT, NET

12 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

RENTAL EQUIPMENT, NET

PREMISES, FURNITURE AND EQUIPMENT, NET

Fiscal year-end premises and equipment were as follows:



September 30,	2019			2018
(Dollars in Thousands)
Land	$	2,932		$	2,932
Buildings	30,906			29,459
Furniture, fixtures, and equipment	61,216			56,597
	95,054			88,988
Less: accumulated depreciation and amortization	(49,122		)	(48,530		)
Net book value	$	45,932		$	40,458

Depreciation expense of premises, furniture and equipment included in occupancy and equipment expense was approximately $8.6 million, $5.7 million and $5.5 million for the fiscal years ended September 30, 2019, 2018 and 2017, respectively.

RENTAL EQUIPMENT, NET

Rental equipment was as follows as of September 30, 2019 and September 30, 2018.



	September 30, 2019			September 30, 2018
(Dollars in thousands)
Computers and IT networking equipment	$	37,352		$	53,035
Motor vehicles and other	98,149			43,505
Office furniture and equipment	2,875			3,590
Solar panels and equipment	116,505			57,242
Total	254,881			157,372

Accumulated depreciation	(46,344		)	(50,082		)
Net book value	$	208,537		$	107,290

During fiscal year 2019, an impairment was recorded related to solar panels and equipment. Please refer to Note 2 for further discussion.

Future minimum lease payments receivable on equipment under operating leases were as follows as of September 30, 2019.



	September 30, 2019
(Dollars in thousands)
2020	$	31,300
2021	26,951
2022	20,076
2023	16,237
2024	11,173
2025 and thereafter	22,138
Total	$	127,875

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

The Company held a total of $309.5 million of goodwill as of September 30, 2019. The recorded goodwill is a result of multiple business combinations that have occurred since fiscal year 2015, the most recent being the Crestmark Acquisition that closed on August 1, 2018. Goodwill is assessed for impairment at a reporting unit level, which is one level below the operating segments.

The changes in the carrying amount of the Company’s goodwill and intangible assets for the fiscal years ended September 30, 2019 and 2018 were as follows:



(Dollars in Thousands)	Payments		Banking		Corporate Services/Other		Total
Goodwill
September 30, 2018	$	87,145	$	216,125	$	—	$	303,270
Acquisitions	—		—		—		—
Measurement Period Adjustments ⁽¹⁾	—		6,235		—		6,235
Impairment	—		—		—		—
September 30, 2019	$	87,145	$	222,360	$	—	$	309,505

September 30, 2017	$	87,145	$	11,578	$	—	$	98,723
Acquisitions	—		204,547		—		204,547
Impairment	—		—		—		—
September 30, 2018	$	87,145	$	216,125	$	—	$	303,270

⁽¹⁾The Company recognized measurement period adjustments on provisional goodwill during fiscal year 2019 related to the Crestmark Acquisition. Refer to Note 2. Acquisitions.

The Company completed an annual goodwill impairment test for the fiscal year ended September 30, 2019. Based on the results of the qualitative analysis, it was identified that it was more likely than not the fair value of the goodwill recorded exceeded the current carrying value. The Company concluded a quantitative analysis was not required and no impairment existed.



(Dollars in Thousands)	Trademark ⁽¹⁾			Non-Compete ⁽²⁾			Customer Relationships ⁽³⁾			All Others ⁽⁴⁾			Total
Intangibles
Balance as of September 30, 2018	$	12,987		$	1,297		$	48,455		$	7,980		$	70,719
Acquisitions during the period	—			—			—			115			115
Amortization during the period	(1,028		)	(470		)	(15,248		)	(965		)	(17,711		)
Write-offs during the period	—			—			—			(313		)	(313		)
Balance as of September 30, 2019	$	11,959		$	827		$	33,207		$	6,817		$	52,810

Gross carrying amount	$	14,624		$	2,480		$	82,088		$	10,703		$	109,895
Accumulated amortization	(2,665		)	(1,653		)	(38,633		)	(3,227		)	(46,178		)
Accumulated impairment							(10,248		)	(659		)	(10,907		)
Balance as of September 30, 2019	$	11,959		$	827		$	33,207		$	6,817		$	52,810

⁽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
Intangibles
Balance as of September 30, 2017	$	10,051		$	1,782		$	31,707		$	8,638		$	52,178
Acquisitions during the period	3,634			—			24,278			449			28,361
Amortization during the period	(698		)	(485		)	(7,530		)	(928		)	(9,641		)
Write-offs during the period	—			—			—			(179		)	(179		)
Balance as of September 30, 2018	$	12,987		$	1,297		$	48,455		$	7,980		$	70,719

Gross carrying amount	$	14,624		$	2,480		$	82,088		$	10,951		$	110,143
Accumulated amortization	(1,637		)	(1,183		)	(23,385		)	(2,263		)	(28,468		)
Accumulated impairment	—			—			(10,248		)	(708		)	(10,956		)
Balance as of September 30, 2018	$	12,987		$	1,297		$	48,455		$	7,980		$	70,719

⁽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 Company tests intangible assets for impairment at least annually or more often if conditions indicate a possible impairment. The Company recorded an $0.1 million impairment charge during the second quarter of fiscal 2019 within its Payments segment and an immaterial impairment charge during the fourth quarter of fiscal 2018 within its Banking segment. Intangible impairment expense is recorded within the impairment expense line of the Consolidated Statements of Operations.

The anticipated future amortization of intangibles is as follows:



Fiscal Year Ended	Anticipated Amortization
(Dollars in Thousands)
2020	$	10,987
2021	8,528
2022	6,402
2023	5,083
2024	4,365
Thereafter	17,445
Total anticipated intangible amortization	$	52,810

TIME CERTIFICATES OF DEPOSITS

12 Months Ended

Sep. 30, 2019

Deposits [Abstract]

TIME CERTIFICATES OF DEPOSITS

Time certificates of deposits in denominations of $250,000 or more were approximately $51.4 million and $163.3 million at September 30, 2019, and 2018, respectively.

At September 30, 2019, the scheduled maturities of time certificates of deposits were as follows for the fiscal years ending:



As of September 30,
(Dollars in Thousands)
2020	$	1,289,068
2021	114,051
2022	11,719
2023	1,445
2024	207
Total ⁽¹⁾	$	1,416,490

⁽¹⁾ As of September 30, 2019, the Company had $1.3 billion of certificates of deposits which were recorded in wholesale deposits on the Consolidated Statements of Financial Condition.

Under the Dodd-Frank Act, IRA and non-IRA deposit accounts are permanently insured up to $250,000 by the DIF under management of the FDIC.

SHORT-TERM DEBT AND LONG-TERM BORROWINGS

12 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

SHORT-TERM DEBT AND LONG-TERM BORROWINGS

SHORT-TERM AND LONG-TERM BORROWINGS

Short-Term Borrowings



September 30,	2019		2018
(Dollars in Thousands)
Overnight federal funds purchased	$	642,000	$	422,000
Repurchase agreements	4,019		3,694
Other short-term borrowings	—		65
Total	$	646,019	$	425,759

The Company had $477.0 million of overnight federal funds purchased from the FHLB and $165.0 million from other financial institutions at September 30, 2019, as compared to $422.0 million at September 30, 2018. At September 30, 2019 and 2018, the Company had no short-term advances from the FHLB.

The Bank has executed blanket pledge agreements whereby the Bank assigns, transfers, and pledges to the FHLB and grants to the FHLB a security interest in real estate and securities collateral. The Bank has the right to use, commingle, and dispose of the collateral it has assigned to the FHLB. Under the agreement, the Bank must maintain “eligible collateral” that has a “lending value” at least equal to the “required collateral amount,” all as defined by the agreement.

At fiscal year-end 2019 and 2018, the Bank pledged securities with fair values of approximately $812.2 million and $1.06 billion, respectively, against specific FHLB advances. In addition, qualifying real estate loans of approximately $928.8 million, and $756.0 million were pledged as collateral at September 30, 2019, and 2018, respectively.

Securities sold under agreements to repurchase totaled approximately $4.0 million and $3.7 million at September 30, 2019, and 2018, respectively.

An analysis of securities sold under agreements to repurchase at September 30, 2019 and 2018 follows:



September 30,	2019			2018
(Dollars in Thousands)
Highest month-end balance	$	4,306		$	3,740
Average balance	3,542			2,557
Weighted average interest rate for the fiscal year	2.67		%	2.05		%
Weighted average interest rate at fiscal year end	2.41		%	2.48		%

The Company pledged securities with fair values of approximately $4.9 million at September 30, 2019, as collateral for securities sold under agreements to repurchase. There were $13.9 million of securities pledged as collateral for securities sold under agreements to repurchase at September 30, 2018.

The Company has a line of credit with another financial institution for $25.0 million as of September 30, 2019. This line of credit has no fee, and, as of September 30, 2019, the Company had not drawn on it.

Long-Term Borrowings



September 30,	2019		2018
(Dollars in Thousands)
Long-term FHLB advances	$	110,000	$	—
Trust preferred securities	13,661		13,661
Subordinated debentures (net of issuance costs)	73,644		73,491
Other long-term borrowings ⁽¹⁾	18,533		1,811
Total	$	215,838	$	88,963

⁽¹⁾Includes $16.6 million of discounted leases and $1.9 million of capital lease obligations at September 30, 2019.

At September 30, 2019, the scheduled maturities of the Company's long-term borrowings were as follows for the fiscal years ending:



September 30,	Long-term FHLB advances		Trust preferred securities		Subordinated debentures		Other long-term borrowings		Total
(Dollars in Thousands)
2020	$	—	$	—	$	—	$	7,301	$	7,301
2021	110,000		—		—		5,074		115,074
2022	—		—		—		2,355		2,355
2023	—		—		—		1,615		1,615
2024	—		—		—		793		793
Thereafter	—		13,661		73,644		1,395		88,700
Total long-term borrowings	$	110,000	$	13,661	$	73,644	$	18,533	$	215,838

Certain trust preferred securities are due to First Midwest Financial Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The securities were issued in 2001 in conjunction with the Trust’s issuance of 10,000 shares of Trust Preferred Securities. The securities bear the same interest rate and terms as the trust preferred securities. The securities are included on the Consolidated Statements of Financial Condition as liabilities.

The Company issued all of the 10,310 authorized shares of trust preferred securities of First Midwest Financial Capital Trust I holding solely securities. Distributions are paid semi-annually. Cumulative cash distributions are calculated at a variable rate of LIBOR plus 3.75% (5.81% at September 30, 2019, and 6.35% at September 30, 2018), not to exceed 12.5%. The Company may, at one or more times, defer interest payments on the capital securities for up to 10 consecutive semi-annual periods, but not beyond July 25, 2031. At the end of any deferral period, all accumulated and unpaid distributions are required to be paid. The capital securities are required to be redeemed on July 25, 2031; however, the Company has a semi-annual option to shorten the maturity date. The redemption price is $1,000 per capital security plus any accrued and unpaid distributions to the date of redemption.

Holders of the capital securities have no voting rights, are unsecured and rank junior in priority of payment to all of the Company’s indebtedness and senior to the Company’s common stock.

Although the securities issued by the Trust are not included as a component of stockholders’ equity, the securities are treated as capital for regulatory purposes, subject to certain limitations.

Through the Crestmark Acquisition, the Company acquired $3.4 million in floating rate capital securities due to Crestmark Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The subordinated debentures bear interest at LIBOR plus 3.00%, have a stated maturity of 30 years and are redeemable by the Company at par, with regulatory approval. The interest rate is reset quarterly at distribution dates in February, May, August, and November. The interest rate as of September 30, 2019 was 5.09%. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.

The Company completed the public offering of $75.0 million of 5.75% fixed-to-floating rate subordinated debentures during fiscal year 2016. These notes are due August 15, 2026. The subordinated debentures were sold at par, resulting in net proceeds of approximately $73.9 million. At September 30, 2019, the Company had $73.6 million in aggregate principal amount in subordinated debentures, net of issuance costs of $1.4 million.

STOCKHOLDERS' EQUITY	12 Months Ended
STOCKHOLDERS' EQUITY	Sep. 30, 2019
Equity [Abstract]
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY Retirement of Treasury Stock On June 25, 2019, Meta retired $5.0 million, or 114,558 shares, of common stock held in treasury. The Company accounts for the retirement of repurchased shares, including treasury stock, 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. Repurchase of Common Stock On March 26, 2019, Meta announced a share repurchase program of up to 2,000,000 of its outstanding shares of common stock, or approximately 5% of its outstanding shares. The program became effective on May 1, 2019. During fiscal year 2019, Meta repurchased under the program a total of $46.5 million, or 1,680,772 shares of its common stock, at an average price of $27.67 per share. 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 September 30, 2019, the remaining number of shares available for repurchase under this program was 319,228 shares of common stock. For the fiscal years ended September 30, 2019, and 2018, the Company also repurchased 104,219 and 20,947 shares, or $3.4 million and $1.7 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock. As referenced in Note 23. Subsequent Events, on November 20, 2019, the Company announced the authorization by its Board of Directors of a new share repurchase program to repurchase up to an additional 7,500,000 shares of the Company's outstanding common stock. The new authorization will be effective November 21, 2019 through December 31, 2022.

EMPLOYEE STOCK OWNERSHIP AND PROFIT SHARING PLANS

12 Months Ended

Sep. 30, 2019

EMPLOYEE STOCK OWNERSHIP AND PROFIT SHARING PLANS [Abstract]

EMPLOYEE STOCK OWNERSHIP AND PROFIT SHARING PLANS

The Company maintains an Employee Stock Ownership Plan (“ESOP”) for eligible employees who have 1,000 hours of employment with the Bank, have worked at least one year at the Bank and who have attained age 21. ESOP expense of $2.9 million, $2.1 million and $1.7 million was recorded for the fiscal years ended September 30, 2019, 2018 and 2017, respectively. Contributions of $3.2 million, $2.0 million and $1.6 million were made to the ESOP during the fiscal years ended September 30, 2019, 2018 and 2017, respectively.

Contributions to the ESOP and shares released from suspense are allocated among ESOP participants on the basis of compensation in the year of allocation. Benefits generally become 100% vested after seven years of credited service. Prior to the completion of seven years of credited service, a participant who terminates employment for reasons other than death or disability receives a reduced benefit based on the ESOP’s vesting schedule. Forfeitures are reallocated among remaining participating employees in the same proportion as contributions. Benefits are payable in the form of stock upon termination of employment. The Company’s contributions to the ESOP are not fixed, so benefits payable under the ESOP cannot be estimated.

For the fiscal years ended September 30, 2019, 2018 and 2017, 98,753 shares, 72,996 shares and 61,458 shares, from the suspense account, with a fair value of $32.61, $27.55 and $26.13 per share, respectively, were released. For the fiscal years ended September 30, 2019, 2018 and 2017, allocated shares and total ESOP shares reflect 79,926 shares, 6,687 shares and 42,378 shares, respectively, withdrawn from the ESOP by participants who were no longer with the Company or by participants diversifying their holdings. At September 30, 2019, 2018 and 2017, there were 5,336, 3,987 and 4,437 shares purchased, respectively, for dividend reinvestment.

Fiscal year-end ESOP shares are as follows:



At September 30,	2019		2018		2017
(Dollars in Thousands)
Allocated shares	778,088		812,346		768,657
Unearned shares	—		—		—
Total ESOP shares	778,088		812,346		768,657
Fair value of unearned shares	$	—	$	—	$	—

The Company also has a profit sharing plan covering substantially all full-time employees. Contribution expense to the profit sharing plan, included in compensation and benefits, for the fiscal years ended September 30, 2019, 2018 and 2017 was $3.3 million, $2.2 million and $1.6 million, respectively.

STOCK COMPENSATION

12 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

STOCK COMPENSATION

The Company maintains the 2002 Omnibus Incentive Plan, as amended and restated, which, among other things, provides for the awarding of stock options and nonvested restricted shares 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.

The following table shows the effect to income, net of tax benefits, of share-based expense recorded in the fiscal years ended September 30, 2019, 2018 and 2017.



Fiscal Year Ended September 30,	2019		2018		2017
(Dollars in Thousands)
Total employee stock-based compensation expense recognized in income, net of tax effects of $3,230, $3,139, and $3,907, respectively	$	9,716	$	7,878	$	6,486

As of September 30, 2019, stock-based compensation expense not yet recognized in income totaled $11.9 million, which is expected to be recognized over a weighted-average remaining period of 3.07 years.

At grant date, the fair value of options awarded to recipients is estimated using a Black-Scholes valuation model. The exercise price of stock options equals the fair market value of the underlying stock at the date of grant. Options are issued for a period of 10 years with 100% vesting generally occurring either at grant date or over a period of four years. No options were granted during the fiscal years ended September 30, 2019, 2018 or 2017. The intrinsic value of options exercised during the fiscal years ended September 30, 2019, 2018 and 2017 were $1.8 million, $1.9 million and $1.8 million, respectively.

Shares have previously been granted each year to executives and senior leadership members under the applicable Company incentive plan. These shares vest at various times ranging from immediately to four years based on circumstances at time of grant. The fair value is determined based on the fair market value of the Company’s stock on the grant date. Director shares are issued to the Company’s directors, and these shares vest immediately. The total fair value of director’s shares granted during the fiscal years ended September 30, 2019, 2018 and 2017 was $1.0 million, $1.1 million and $0.5 million, respectively.

In addition to the Company’s 2002 Omnibus Incentive Plan, the Company also maintains the 1995 Stock Option and Incentive Plan. No new options were, or could have been, awarded under the 1995 plan during the fiscal years ended September 30, 2019 and 2018; however, previously awarded options were exercised under this plan during the fiscal year ended September 30, 2017.

In addition, during the first and second quarters of fiscal 2017, shares were granted to certain executive officers of the Company in connection with their signing of employment agreements with the Company. These stock awards vest in equal installments over eight years.

The following tables show the activity of options and share awards (including shares of restricted stock subject to vesting and fully-vested restricted stock) granted, exercised or forfeited under all of the Company’s option and incentive plans during the fiscal years ended September 30, 2019 and 2018.



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Yrs)	Aggregate Intrinsic Value
(Dollars in Thousands, Except Share and Per Share Data)
Options outstanding, September 30, 2018	155,961		$	8.48	1.78	$	2,974
Granted	—		—		—	—
Exercised	(93,099	)	8.68		—	1,842
Forfeited or expired	(3,027	)	10.60		—	33
Options outstanding, September 30, 2019	59,835		$	8.06	1.54	$	1,469

Options exercisable end of fiscal year	59,835		$	8.06	1.54	$	1,469



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Yrs)	Aggregate Intrinsic Value
(Dollars in Thousands, Except Share and Per Share Data)
Options outstanding, September 30, 2017	227,271		$	7.54	2.28	$	4,225
Granted	—		—		—	—
Exercised	(71,310	)	5.48		—	1,909
Forfeited or expired	—		—		—	—
Options outstanding, September 30, 2018	155,961		$	8.48	1.78	$	2,974

Options exercisable end of fiscal year	155,961		$	8.48	1.78	$	2,974



	Number of Shares		Weighted Average Fair Value At Grant
(Dollars in Thousands, Except Share and Per Share Data)
Nonvested shares outstanding, September 30, 2018	1,005,813		$	29.89
Granted	315,802		25.18
Vested	(391,061	)	26.97
Forfeited or expired	(4,432	)	25.98
Nonvested shares outstanding, September 30, 2019	926,122		$	29.54



	Number of Shares		Weighted Average Fair Value At Grant
(Dollars in Thousands, Except Share and Per Share Data)
Nonvested shares outstanding, September 30, 2017	913,578		$	28.99
Granted	354,108		30.36
Vested	(253,944	)	27.49
Forfeited or expired	(7,929	)	23.27
Nonvested shares outstanding, September 30, 2018	1,005,813		$	29.89

INCOME TAXES

12 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

The Company and its subsidiaries file a consolidated federal income tax return on a fiscal year basis. The provision for income taxes for the years presented below consisted of the following:



Fiscal Years Ended September 30,	2019			2018			2017
(Dollars in Thousands)
Federal:
Current	$	5,278		$	(4,023	)	$	12,153
Deferred	(14,831		)	5,895			(5,040		)
	(9,553		)	1,872			7,113

State:
Current	5,649			2,611			4,366
Deferred	530			634			(1,246		)
	6,179			3,245			3,120

Income tax (benefit) expense	$	(3,374	)	$	5,117		$	10,233

The tax effects of the Company's temporary differences that give rise to significant portions of its deferred tax assets and liabilities at September 30, 2019 and 2018 were:



September 30,	2019			2018
(Dollars in Thousands)
Deferred tax assets:
Bad debts	$	6,805		$	3,224
Deferred compensation	1,626			3,495
Stock based compensation	4,296			3,758
Net unrealized losses on securities available for sale	—			10,663
Valuation adjustments	6,596			6,991
General business credits⁽¹⁾	27,935			12,243
Accrued expenses	3,767			3,144
Other assets	3,144			1,629
	54,169			45,147

Deferred tax liabilities:
Premises and equipment	(3,084		)	(347		)
Intangibles	(1,812		)	(4,231		)
Net unrealized gains on securities available for sale	(2,146		)	—
Deferred income	(179		)	(2,070		)
Leased assets	(24,996		)	(17,985		)
Other liabilities	(3,068		)	(1,777		)
	(35,285		)	(26,410		)

Net deferred tax assets	$	18,884		$	18,737

⁽¹⁾The general business credits are investment tax credits generated from qualified solar energy property placed in service during the fiscal years ended September 30, 2019 and 2018. These credits expire on September 30, 2039.

As of September 30, 2019, the Company had a gross deferred tax asset of $2.0 million for separate company state cumulative net operating loss carryforwards, for which $2.0 million was reserved. At September 30, 2018, the Company had a gross deferred tax asset of $2.0 million for separate company state cumulative net operating loss carryforwards, for which $1.6 million was reserved. These state operating loss carryforwards will expire in various subsequent periods.

In general, management believes that the realization of its deferred tax assets is more likely than not based on the expectations as to future taxable income; therefore, there was no deferred tax valuation allowance at September 30, 2019, or 2018 with the exception of the state cumulative net operating loss carryforwards discussed above.

The table below reconciles the statutory federal income tax expense and rate to the effective income tax expense and rate for the fiscal years presented. The Company's effective tax rate is calculated by dividing income tax expense by income before income tax expense.



Fiscal Years Ended September 30,	2019					2018					2017
	Amount			Rate		Amount			Rate		Amount			Rate
(Dollars in Thousands)
Statutory federal income tax expense and rate	$	20,568		21.0	%	$	14,082		24.5	%	$	19,303		35.0	%
Change in tax rate resulting from:
State income taxes net of federal benefits	5,000			5.1	%	2,461			4.3	%	2,014			3.7	%
162(m) disallowance	2,777			2.8	%	—			—	%	—			—	%
Tax exempt income	(2,714		)	(2.8	)%	(6,968		)	(12.1	)%	(9,991		)	(18.1	)%
Nondeductible acquisition costs	—			—	%	1,295			2.3	%	—			—	%
General business credits	(27,126		)	(27.7	)%	(3,948		)	(6.9	)%	—			—	%
Tax reform	—			—	%	3,849			6.7	%	—			—	%
Amended Crestmark Bancorp historical tax return	—			—	%	(4,644		)	(8.1	)%	—			—	%
Other, net	(1,879		)	(1.8	)%	(1,010		)	(1.7	)%	(1,093		)	(2.0	)%
Total income tax (benefit) expense	$	(3,374	)	(3.4	)%	$	5,117		9.0	%	$	10,233		18.6	%

The provisions of ASC 740, Income Taxes, address the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the Consolidated Financial Statements. Under ASC 740, the Company recognizes the tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination, with a tax examination being presumed to occur, including the resolution of any related appeals or litigation. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured as the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

The Company uses the flow through method of accounting for investment tax credits under which the credits are recognized as a reduction to income tax expense in the period in which the credit arises. During the fiscal years ended September 30, 2019 and 2018, $27.1 million and $4.0 million in investment tax credits were recognized as a reduction to income tax expense, respectively. During the fiscal year ended September 30, 2017, no investment tax credits were recognized.

The Company’s tax reserves reflect management’s judgment as to the resolution of the issues involved if subject to judicial review. While the Company believes that its reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed its related reserve. With respect to these reserves, the Company’s income tax expense would include (i) any changes in tax reserves arising from material changes during the period in the facts and circumstances surrounding a tax issue, and (ii) any difference from the Company’s tax position as recorded in the Consolidated Financial Statements and the final resolution of a tax issue during the period.

The tax years ended September 30, 2016 and later remain subject to examination by the Internal Revenue Service. For state purposes, the tax years ended September 30, 2016 and later remain open for examination, with few exceptions.

A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits for the fiscal years ended September 30, 2019 and 2018 follows:



September 30,	2019			2018
(Dollars in Thousands)
Balance at beginning of fiscal year	$	434		$	645
Reductions for tax positions related to prior years	(66		)	(211		)
Balance at end of fiscal year	$	368		$	434

The total amount of unrecognized tax benefits that, if recognized, would impact the effective rate was $291,000 as of September 30, 2019. The Company recognizes interest related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest related to unrecognized tax benefits was $77,000 as of September 30, 2019. The Company does not anticipate any significant change in the total amount of unrecognized tax benefits within the next 12 months.

CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

12 Months Ended

Sep. 30, 2019

CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS [Abstract]

CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

As U.S. banking organizations, the Company and the Bank are required to comply with the regulatory capital rules adopted by the Federal Reserve and the OCC (the "Capital Rules") that became effective on January 1, 2015, subject to phase-in periods for certain requirements and other provisions of the Capital Rules. Under the Capital Rules and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

The Capital Rules require the Company and the Bank to maintain minimum ratios (set forth in the table below) of total risk-based capital and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and a leverage ratio consisting of Tier 1 capital (as defined) to average assets (as defined). At September 30, 2019, both the Bank and the Company exceeded federal regulatory minimum capital requirements to be classified as well-capitalized under the prompt corrective action requirements. The Company and the Bank took the accumulated other comprehensive income (“AOCI”) opt-out election; under the rule, non-advanced approach banking organizations were given a one-time option to exclude certain AOCI components. The table below includes certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity.



	Company		Bank		Minimum to be Adequately Capitalized Under Prompt Corrective Action Provisions		Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
September 30, 2019
Tier 1 leverage capital ratio	8.33	%	9.65	%	4.00	%	5.00	%
Common equity Tier 1 capital ratio	10.35		12.31		4.50		6.50
Tier 1 capital ratio	10.71		12.37		6.00		8.00
Total capital ratio	13.01		13.02		8.00		10.00

September 30, 2018
Tier 1 leverage capital ratio	8.50	%	9.75	%	4.00	%	5.00	%
Common equity Tier 1 capital ratio	10.56		12.50		4.50		6.50
Tier 1 capital ratio	10.97		12.56		6.00		8.00
Total capital ratio	13.18		12.89		8.00		10.00

The following table provides a reconciliation of the amounts included in the table above for the Company.



	Standardized Approach⁽¹⁾ September 30, 2019
(Dollars in Thousands)
Total stockholders' equity	$	843,958
Adjustments:
LESS: Goodwill, net of associated deferred tax liabilities	304,020
LESS: Certain other intangible assets	50,501
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards	15,569
LESS: Net unrealized gains (losses) on available-for-sale securities	6,458
LESS: Noncontrolling interest	4,047
LESS: Unrealized currency gains (losses)	—
Common Equity Tier 1 ⁽¹⁾	463,363
Long-term borrowings and other instruments qualifying as Tier 1	13,661
Tier 1 minority interest not included in common equity tier 1 capital	2,350
Total Tier 1 capital	479,374
Allowance for loan and lease losses	29,272
Subordinated debentures (net of issuance costs)	73,644
Total capital	$	582,290

⁽¹⁾Capital Ratios were determined using the Capital Rules that became effective on January 1, 2015. The Capital Rules revised the definition of capital, increased minimum capital ratios, and introduced a minimum common equity tier 1 capital ratio; those changes are being fully phased in through the end of 2021.

Since January 1, 2016, the Company and the Bank have been required to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively composed of Common Equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not the leverage ratio. On January 1, 2019, the Company and Bank were in compliance with the capital conservation buffer requirement. The implementation of the capital conservation buffer by annual increments finished on January 1, 2019, so that the required Common Equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios with the buffer are currently 7.0%, 8.5% and 10.5%, respectively.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References

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+ Details

COMMITMENTS AND CONTINGENCIES	12 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES In the normal course of business, the Bank makes various commitments to extend credit which are not reflected in the accompanying Consolidated Financial Statements. At September 30, 2019 and 2018, unfunded loan commitments approximated $978.1 million and $748.8 million, 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 September 30, 2019 and $1.4 million at September 30, 2018. The Company had no commitments to sell securities at September 30, 2019 or September 30, 2018. 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. Management monitors several factors when estimating its allowance for uncollectible off-balance-sheet credit exposures, including, but not limited to, economic developments and historical loss rates. At September 30, 2019 and 2018, the Company had an allowance for credit losses on off-balance sheet credit exposures of $0.1 million. This amount is maintained as a separate liability account within other liabilities. 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. As disclosed in Note 2. Acquisitions, the Company continues to monitor the bankruptcy proceedings and federal investigations related to DC Solar. As of the date of the filing of this annual report, the Company has not accrued for any additional loss contingencies related to DC Solar as of September 30, 2019. 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 the right to appeal once the ruling is finalized. The Bank intends to continue to vigorously defend this claim, if appealed. An estimate of a range of reasonably possible loss cannot be made at this stage of the litigation. 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. The Bank was served on December 24, 2018, with a lawsuit captioned The Ohio Valley Bank Company v. MetaBank dba Refund Advantage, Case No. 18 CV 134 in the Court of Common Pleas, Gallia County, Ohio. This action alleges that MetaBank breached a contract with The Ohio Valley Bank Company by terminating the contract before the term expired, resulting in over $3.0 million in damages. The Bank intends to vigorously defend this claim. The Company has established an accrual for this claim. 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.

LEASE COMMITMENTS

12 Months Ended

Sep. 30, 2019

Leases [Abstract]

LEASE COMMITMENTS

The Company has leased property under various non-cancelable operating lease agreements which expire at various times through 2036, and require annual rentals ranging from $2,000 to $867,000 plus the payment of property taxes, normal maintenance, and insurance on certain properties. The Company is also a party to capital lease agreements for building and equipment that expire at various times through fiscal year 2035. Interest expense for these capital lease obligations was $0.1 million for the fiscal year ended September 30, 2019, and is included in interest expense. Depreciation expense for the capital lease assets was $0.1 million for the fiscal year ended September 30, 2019 and is included in noninterest expense.

The following table shows the total minimum rental commitment for the Company's operating and capital leases for each of the fiscal years presented below as of September 30, 2019.



	Fiscal Year Ended September 30,
(Dollars in Thousands)	Operating Leases		Capital Leases
2020	$	3,709	$	216
2021	3,429		216
2022	2,955		216
2023	2,561		216
2024	2,457		194
Thereafter	18,971		1,876
Total leases commitments	$	34,082	$	2,934

Amounts representing interest			$	986
Present value of net minimum lease payments			1,948

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

On October 1, 2018, the Company adopted Topic 606 (which is described in more detail below in this Note 18) on a modified retrospective basis. Prior period amounts have not been adjusted to reflect the adoption of Topic 606 and continue to be reported in accordance with the Company’s historical accounting policies. The impact of the Company’s adoption of Topic 606 was limited to the MPS division within the Payments reporting segment. Upon adoption, Meta recorded a cumulative-effect adjustment that increased retained earnings by $1.5 million, net of tax.

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 19. Segment Reporting to the Consolidated Financial Statements.



Fiscal Year Ended September 30, 2019	Payments		Banking			Corporate Services/Other			Consolidated Company
(Dollars in thousands)
Net interest income (expense)⁽¹⁾	$	52,506	$	228,667		$	(16,966	)	$	264,207
Noninterest income:
Refund transfer product fees	39,198		—			—			39,198
Tax advance product fees⁽¹⁾	34,687		—			—			34,687
Card fees	79,628		354			—			79,982
Rental income⁽¹⁾	12		41,041			—			41,053
Loan and lease fees⁽¹⁾	—		4,292			—			4,292
Bank-owned life insurance⁽¹⁾	—		—			2,535			2,535
Deposit fees	7,502		1,588			—			9,090
Gain (loss) on sale of securities available-for-sale, net⁽¹⁾	—		—			729			729
Gain on sale of loans and leases⁽¹⁾	—		5,244			—			5,244
Loss on foreclosed real estate⁽¹⁾	—		(278		)	—			(278		)
Other income⁽¹⁾	871		3,988			1,154			6,013
Total noninterest income (expense)	161,898		56,229			4,418			222,545
Revenue (expense)	$	214,404	$	284,896		$	(12,548	)	$	486,752

⁽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 during each period, and, 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. As of September 30, 2019, 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 Payments reporting segment.

Card Fees

Card fees relate to MPS, retail 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, which 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 the Payments and Banking reporting segments.

Deposit Fees

Fees are earned on depository accounts for commercial and consumer 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. Deposit fees are recorded within the Payments and Banking reporting segment.

Principal vs Agent

The Payments reporting segment includes principal/agent relationships. Within this segment, MPS relationships are recorded on a gross basis within the income statement, as Meta is the principal in MPS Contracts, with the exception of association/network contracts and partner/processer contracts for prepaid cards, which are recorded on a net basis within the income statement as Meta is the agent in those contracts. Also within this segment, tax service relationships are recorded on a gross basis within the income statement, as Meta is the principal in tax service contracts, with the exception of contracts with software providers and merchants, which are recorded on a net basis within the income statement as Meta is the agent in those contracts.

SEGMENT REPORTING

12 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

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: Payments, Banking, and Corporate Services/Other. The Meta Payment Systems and Tax Services divisions are reported in the Payments segment. The Community Banking, Commercial Finance and Consumer Finance divisions are reported in the Banking segment. Certain shared services, including the investment portfolio, wholesale deposits and borrowings, are included in Corporate Services/Other segment. The Company does not allocate indirect general and administrative expenses to the Payments and Banking segments.

The following tables present segment data for the Company for the fiscal years ended September 30, 2019, 2018 and 2017, respectively.



	Payments		Banking		Corporate Services/Other			Total
Fiscal Year Ended September 30, 2019
Net interest income (expense)	$	52,506	$	228,667	$	(16,966	)	$	264,207
Provision for loan and lease losses	24,874		30,776		—			55,650
Noninterest income	161,898		56,229		4,418			222,545
Noninterest expense	88,627		145,206		99,327			333,160
Income (loss) before income tax expense (benefit)	100,903		108,914		(111,875		)	97,942

Total assets	190,348		4,337,221		1,655,321			6,182,890
Total goodwill	87,145		222,360		—			309,505
Total deposits	2,434,306		293,072		1,609,627			4,337,005



	Payments		Banking		Corporate Services/Other			Total
Fiscal Year Ended September 30, 2018
Net interest income	$	22,841	$	90,805	$	16,903		$	130,549
Provision for loan and lease losses	21,344		8,088		—			29,432
Noninterest income (expense)	176,250		13,950		(5,675		)	184,525
Noninterest expense	126,610		46,982		54,640			228,232
Income (loss) before income tax expense (benefit)	51,137		49,685		(43,412		)	57,410

Total assets	186,502		3,413,409		2,235,156			5,835,067
Total goodwill	87,145		216,125		—			303,270
Total deposits	2,412,986		746,003		1,271,998			4,430,987



	Payments		Banking		Corporate Services/Other			Total
Fiscal Year Ended September 30, 2017
Net interest income	$	13,342	$	49,508	$	30,380		$	93,230
Provision for loan losses	7,613		2,976		—			10,589
Noninterest income	165,707		4,685		1,780			172,172
Noninterest expense	132,984		24,520		42,159			199,663
Income (loss) before income tax expense (benefit)	38,452		26,697		(9,999		)	55,150

Total assets	185,521		1,343,968		3,698,843			5,228,332
Total goodwill	87,145		11,578		—			98,723
Total deposits	2,436,893		229,969		556,562			3,223,424

PARENT COMPANY FINANCIAL STATEMENTS

12 Months Ended

Sep. 30, 2019

Condensed Financial Information Disclosure [Abstract]

PARENT COMPANY FINANCIAL STATEMENTS

Presented below are condensed financial statements for the parent company, Meta, at the dates and for the fiscal years presented below.

CONDENSED STATEMENTS OF FINANCIAL CONDITION



September 30,	2019			2018
(Dollars in Thousands)
ASSETS
Cash and cash equivalents	$	8,111		$	28,209
Investment securities held to maturity, at cost	411			411
Investment in subsidiaries	933,196			823,215
Other assets	159			124
Total assets	$	941,877		$	851,959

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Long-term borrowings	$	87,305		$	87,152
Other liabilities	10,614			17,081
Total liabilities	$	97,919		$	104,233

STOCKHOLDERS' EQUITY
Common stock	$	378		$	393
Additional paid-in capital	580,826			565,811
Retained earnings	252,813			213,048
Accumulated other comprehensive income (loss)	6,339			(33,111		)
Treasury stock, at cost	(445		)	(1,989		)
Total equity attributable to parent	839,911			744,152
Noncontrolling interest	4,047			3,574
Total stockholders' equity	843,958			747,726
Total liabilities and stockholders' equity	$	941,877		$	851,959

CONDENSED STATEMENTS OF OPERATIONS



Fiscal Years Ended September 30,	2019			2018			2017
(Dollars in Thousands)
Interest expense	$	5,296		$	5,061		$	4,959
Other expense	1,044			663			440
Total expense	6,340			5,724			5,399

Loss before income taxes and equity in undistributed net income of subsidiaries	(6,340		)	(5,724		)	(5,399		)

Income tax (benefit)	(1,374		)	(1,504		)	(1,935		)

Loss before equity in undistributed net income of subsidiaries	(4,966		)	(4,220		)	(3,464		)

Equity in undistributed net income of subsidiaries	101,970			55,840			48,381

Net income attributable to parent	$	97,004		$	51,620		$	44,917

CONDENSED STATEMENTS OF CASH FLOWS



For the Fiscal Years Ended September 30,	2019			2018			2017
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income attributable to parent	$	97,004		$	51,620		$	44,917
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion, net	153			143			136
Equity in undistributed net income of subsidiaries	(101,970		)	(55,840		)	(48,381		)
Stock compensation	12,942			11,123			10,393
Other assets	(35		)	232			7
Accrued expenses and other liabilities	(6,468		)	(860		)	16,636
Cash dividend received	33,980			45,315			—
Net cash provided by operating activities	35,606			51,733			23,708

CASH FLOWS FROM INVESTING ACTIVITES
Held to maturity:
Proceeds from maturities and principal repayments	—			8			—
Capital contributions to subsidiaries	—			(20,322		)	(82,820		)
Net cash (used in) investing activities	—			(20,314		)	(82,820		)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid	(7,760		)	(5,736		)	(4,839		)
Payment:
Short-term borrowings	—			(11,642		)	—
Long-term borrowings	—			(258		)	—
Purchase of shares by ESOP	2,011			1,606			1,174
Proceeds/(payment):
Contingent consideration - equity	—			—			24,142
Exercise of stock options & issuance of common stock	44			148			650
Issuance of restricted stock	3			4			12
Issuance of commons shares due to acquisitions	—			295,767			37,296
Cash acquired due to acquisitions	—			697			—
Net increase in investment in subsidiaries	(90		)	(295,767		)	—
Shares repurchased for tax withholdings on stock compensation	(49,912		)	(2,598		)	(470		)
Net cash provided by (used in) financing activities	(55,704		)	(17,779		)	57,965

Net change in cash and cash equivalents	$	(20,098	)	$	13,640		$	(1,147	)

CASH AND CASH EQUIVALENTS
Beginning of fiscal year	28,209			14,569			15,716
End of fiscal year	$	8,111		$	28,209		$	14,569

The extent to which the Company may pay cash dividends to stockholders will depend on the cash currently available at the Company, as well as the ability of the Bank to pay dividends to the Company. For further discussion, see Note 15 herein.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Sep. 30, 2019

Quarterly Financial Information Disclosure [Abstract]

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



	QUARTER ENDED
(Dollars in Thousands, Except Per Share Data)	December 31		March 31		June 30		September 30
Fiscal Year 2019
Interest and dividend income	$	74,976	$	88,294	$	81,632	$	80,828
Interest expense	14,704		16,944		14,664		15,211
Net interest income	60,272		71,350		66,968		65,617
Provision for loan and lease losses	9,099		33,318		9,112		4,121
Noninterest income	37,751		105,025		43,790		35,980
Net income attributable to parent	15,398		32,120		29,291		20,195
Earnings per common share
Basic	$	0.39	$	0.81	$	0.75	$	0.53
Diluted	0.39		0.81		0.75		0.53
Dividend declared per share	0.05		0.05		0.05		0.05

Fiscal Year 2018
Interest and dividend income	$	30,857	$	33,371	$	34,104	$	60,202
Interest expense	4,661		5,966		5,693		11,665
Net interest income	26,196		27,405		28,411		48,537
Provision for loan and lease losses	1,068		18,343		5,315		4,706
Noninterest income	29,268		97,419		33,225		24,613
Net income attributable to parent	4,670		31,436		6,792		8,722
Earnings per common share
Basic	$	0.15	$	1.07	$	0.22	$	0.24
Diluted	0.15		1.06		0.22		0.24
Dividend declared per share	0.04		0.04		0.04		0.05

Fiscal Year 2017
Interest and dividend income	$	22,575	$	27,718	$	28,861	$	28,949
Interest expense	2,742		3,752		3,918		4,461
Net interest income	19,833		23,966		24,943		24,488
Provision (recovery) for loan losses	843		8,649		1,240		(144		)
Noninterest income	19,349		92,170		30,820		29,833
Net income attributable to parent	1,244		32,142		9,787		1,744
Earnings per common share
Basic	$	0.05	$	1.15	$	0.35	$	0.07
Diluted	0.05		1.14		0.35		0.07
Dividend declared per share	0.04		0.04		0.04		0.04

FAIR VALUES OF FINANCIAL INSTRUMENTS

12 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

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. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

There were no transfers between levels of the fair value hierarchy for the fiscal years ended September 30, 2019 or 2018.

Available for Sale and Held to Maturity Debt Securities. 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 values of available for sale debt securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or valuation 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 2 inputs). The Company considers these valuations supplied by a third-party provider which utilizes several sources for valuing fixed-income securities. These sources include Interactive Data Corporation, Reuters, Standard and Poor’s, Bloomberg Financial Markets, Street Software Technology and the third‑party provider’s own matrix and desk pricing. The Company, no less than annually, reviews the third party’s methods and source’s methodology for reasonableness and to ensure an understanding of inputs utilized in determining fair value. Sources utilized by the third-party provider include but are not limited to pricing models that vary based on asset class and include available trade, bid, and other market information. This methodology includes but is not limited to broker quotes, proprietary models, descriptive terms and conditions databases, as well as extensive quality control programs. Monthly, the Company receives and compares prices provided by multiple securities dealers and pricing providers to validate the accuracy and reasonableness of prices received from the third-party provider. On a monthly basis, the Investment Committee reviews mark-to-market changes in the securities portfolio for reasonableness.

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 table summarizes the fair values of debt securities available for sale and equity securities at September 30, 2019 and 2018, as they are measured at fair value on a recurring basis.



	Fair Value At September 30, 2019
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3
Debt securities AFS
SBA securities	$	185,982	$	—	$	185,982	$	—
Obligations of states and political subdivisions	874		—		874		—
Non-bank qualified obligations of states and political subdivisions	400,557		—		400,557		—
Asset-backed securities	302,534		—		302,534		—
Mortgage-backed securities	382,546		—		382,546		—
Total debt securities AFS	1,272,493		—		1,272,493		—
Common equities and mutual funds⁽¹⁾⁽²⁾	$	2,606	$	2,606	$	—	$	—
Non-marketable equity securities⁽³⁾	$	1,669	$	—	$	—	$	—

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and 2018.

⁽²⁾ASU 2016-01 adopted on October 1, 2018, on a prospective basis, removed equity securities from AFS category at September 30, 2019.

⁽³⁾ 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.



	Fair Value At September 30, 2018
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3
Debt securities AFS
SBA securities	$	44,337	$	—	$	44,337	$	—
Obligations of states and political subdivisions	16,910		—		16,910		—
Non-bank qualified obligations of states and political subdivisions	1,109,885		—		1,109,885		—
Asset-backed securities	313,028		—		313,028		—
Mortgage-backed securities	364,065		—		364,065		—
Total debt securities AFS	1,848,225		—		1,848,225		—
Common equities and mutual funds⁽¹⁾	3,800		3,800		—		—
Total securities	$	1,852,025	$	3,800	$	1,848,225	$	—

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and 2018.

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 considered impaired, an allowance for loan and lease losses is established. Once a loan or lease is identified as individually impaired, management measures impairment in accordance with ASC 310, Receivables.

The following table summarizes the assets of the Company that are measured at fair value in the Consolidated Statements of Financial Condition on a non-recurring basis as of September 30, 2019 and 2018.



	Fair Value at September 30, 2019
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3
Impaired loans and leases, net
Commercial finance	$	8,707	$	—	$	—	$	8,707
Total National Lending	8,707		—		—		8,707
Total impaired loans and leases	8,707		—		—		8,707
Foreclosed assets, net	29,494		—		—		29,494
Total	$	38,201	$	—	$	—	$	38,201



	Fair Value At September 30, 2018
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3
Impaired loans and leases, net
Commercial finance	$	4,825	$	—	$	—	$	4,825
Total National Lending	4,825		—		—		4,825
Total impaired loans and leases	4,825		—		—		4,825
Foreclosed assets, net	31,638		—		—		31,638
Total	$	36,463	$	—	$	—	$	36,463



	Quantitative Information About Level 3 Fair Value Measurements
(Dollars in Thousands)	Fair Value at September 30, 2019		Fair Value at September 30, 2018		Valuation Technique	Unobservable Input	Range of Inputs
Impaired loans and leases, net	$	8,707	$	4,825	Market approach	Appraised values⁽¹⁾	4.00 - 10.00%
Foreclosed assets, net	$	29,494	$	31,638	Market approach	Appraised values⁽¹⁾	4.00 - 30.00%

⁽¹⁾ The Company generally relies on external appraisers to develop this information. Management reduced the appraised value by estimated selling costs and other inputs in a range of 4% to 30%.

The following tables disclose the Company’s estimated fair value amounts of its financial instruments at the dates set forth below. It is management’s belief that the fair values presented below are reasonable based on the valuation techniques and data available to the Company as of September 30, 2019 and 2018, as more fully described below. The operations of the Company are managed from a going concern basis and not a liquidation basis. As a result, the ultimate value realized for the financial instruments presented could be substantially different when actually recognized over time through the normal course of operations. Additionally, a substantial portion of the Company’s inherent value is the Bank’s capitalization and franchise value. Neither of these components have been given consideration in the presentation of fair values below.

The following presents the carrying amount and estimated fair value of the financial instruments held by the Company at September 30, 2019 and 2018.



	September 30, 2019
(Dollars in Thousands)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	126,545	$	126,545	$	126,545	$	—	$	—
Debt securities available for sale	1,272,493		1,272,493		—		1,272,493		—
Debt securities held to maturity	134,764		133,470		—		133,470		—
Common equities and mutual funds⁽¹⁾	2,606		2,606		2,606		—		—
Non-marketable equity securities⁽¹⁾⁽²⁾	8,169		8,169		—		6,500		—
Loans held for sale	148,777		148,777		—		148,777		—
Loans and leases receivable	3,651,413		3,622,597		—		—		3,622,597
Federal Home Loan Bank stock	30,916		30,916		—		30,916		—
Accrued interest receivable	20,400		20,400		20,400		—		—

Financial liabilities
Deposits	4,337,005		4,338,510		2,920,516		1,417,994		—
Overnight federal funds purchased	642,000		642,000		642,000		—		—
Federal Home Loan Bank advances	110,000		110,691		—		110,691		—
Other short- and long-term borrowings	109,857		113,876		—		113,876		—
Accrued interest payable	9,414		9,414		9,414		—		—

⁽¹⁾Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2019 and 2018.

⁽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, 2018
(Dollars in Thousands)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	99,977	$	99,977	$	99,977	$	—	$	—
Debt securities available for sale	1,852,025		1,852,025		3,800		1,848,225		—
Debt securities held to maturity	172,154		160,974		—		160,974		—
Loans held for sale	15,606		15,606		—		15,606		—
Loans and leases receivable	2,944,989		2,927,755		—		—		2,927,755
Federal Home Loan Bank stock	23,400		23,400		—		23,400		—
Accrued interest receivable	22,016		22,016		22,016		—		—

Financial liabilities
Deposits	4,430,987		4,423,951		2,718,005		1,705,946		—
Overnight federal funds purchased	422,000		422,000		422,000		—		—
Other short- and long-term borrowings	92,722		94,999		—		94,999		—
Accrued interest payable	7,794		7,794		7,794		—		—

The following sets forth the methods and assumptions used in determining the fair value estimates for the Company’s financial instruments at September 30, 2019 and 2018.

CASH AND CASH EQUIVALENTS

The carrying amount of cash and short-term investments is assumed to approximate the fair value.

DEBT SECURITIES AVAILABLE FOR SALE AND EQUITY SECURITIES

Debt securities available for sale and marketable equity securities are recorded at fair value on a recurring basis. Fair values for these investment securities are based on obtaining quoted prices on nationally recognized securities exchanges, or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. Non-marketable equity securities are measured at fair value using NAV per share (or its equivalent) as a practical expedient.

LOANS HELD FOR SALE

The carrying amount of loans held for sale is assumed to approximate the fair value.

LOANS AND LEASES, NET

Upon adoption of ASU 2016-01, the fair value of loans and leases were estimated using an exit price methodology. The exit price estimation of fair value is based on the present value of expected cash flows, which are based on the contractual terms of the loans, adjusted for prepayments and a discount rate based on the relative risk of the cash flows. Other considerations include the loan type, remaining life of the loan and credit risk. In comparison, loan and lease fair values as of September 30, 2018 were estimated on an entrance price methodology, which discounts future cash flows using the then-current rates at which a similar loan would be made to borrowers with similar credit ratings and for the same remaining maturities. The fair value of non-impaired loans and leases as of September 30, 2019 and September 30, 2018 are not comparable.

FEDERAL HOME LOAN BANK STOCK

The fair value of FHLB stock is assumed to approximate book value since the Company is only able to redeem this stock at par value.

ACCRUED INTEREST RECEIVABLE

The carrying amount of accrued interest receivable is assumed to approximate the fair value.

DEPOSITS

The carrying values of noninterest-bearing checking deposits, interest-bearing checking deposits, savings, money markets, and wholesale non-maturing deposits are assumed to approximate fair value since deposits are immediately withdrawable without penalty. The fair value of time certificate deposits and wholesale certificate deposits are estimated using a discounted cash flows calculation that applies the FHLB Des Moines curve to aggregated expected maturities of time deposits. In accordance with Subtopic 825-10, Financial Instruments, no value has been assigned to the Company’s long-term relationships with its deposit customers (core value of deposits intangible) since such intangible is not a financial instrument as defined under Subtopic 825-10.

ADVANCES FROM FHLB

The fair value of such advances was estimated by discounting the expected future cash flows using current interest rates for advances with similar terms and remaining maturities.

FEDERAL FUNDS PURCHASED

The carrying amount of federal funds purchased is assumed to approximate the fair value.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, SUBORDINATED DEBENTURES AND OTHER BORROWINGS

The fair value of these instruments was estimated by discounting the expected future cash flows using derived interest rates approximating market over the contractual maturity of such borrowings.

ACCRUED INTEREST PAYABLE

The carrying amount of accrued interest payable is assumed to approximate the fair value.

LIMITATIONS

Fair value estimates are made at a specific point in time and are based on relevant market information about the financial instrument. Additionally, fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business, customer relationships and the value of assets and liabilities that are not considered financial instruments. These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time. Furthermore, since no market exists for certain of the Company’s financial instruments, fair value estimates may be based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with a high level of precision. Changes in assumptions as well as tax considerations could significantly affect the estimates. Accordingly, based on the limitations described above, 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2019
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS Management has evaluated subsequent events that occurred after September 30, 2019. During this period, up to the filing date of this Annual Report on Form 10-K, management identified the following subsequent events: On October 1, 2019, the Company sold $111.7 million in held-for-sale consumer credit product loan balances and will be recording a gain on sale of $0.2 million to noninterest income in the first quarter of fiscal year 2020. On November 14, 2019, the Company disposed of assets related to a previously disclosed agricultural relationship that were held in other real estate owned. The Company expects to incur a pre-tax net loss of approximately $4.3 million in the quarter ended December 31, 2019 related to the disposition of these assets. On November 20, 2019, the Company entered into an agreement with Central Bank, an Iowa state-chartered bank headquartered in Storm Lake, Iowa, to sell the Company’s Community Bank division, as announced on November 20, 2019. The Community Bank division is a component of the Company’s Banking segment. The sale includes substantially all deposits, branch locations, fixed assets, employees, and a portion of the Community Bank’s loan portfolio. Upon entering into the board approved agreement with Central Bank, the Company reclassified the assets and liabilities to be sold as held for sale. The remaining Community Bank loans not being sold to Central Bank will be retained by the Company. The sale, which is subject to customary closing conditions, including the receipt of all necessary regulatory approvals, is expected to be completed in the second fiscal quarter of 2020. On November 20, 2019, the Company also announced the authorization by its Board of Directors of a new share repurchase program to repurchase up to an additional 7,500,000 shares of the Company's outstanding common stock. The new authorization will be effective November 21, 2019 through December 31, 2022.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Meta Financial Group, Inc. (the “Company”), a unitary savings and loan holding company located in Sioux Falls, South Dakota, and its wholly-owned subsidiaries. The Company's subsidiaries include MetaBank (the “Bank”), a federally chartered savings bank whose primary federal regulator is the Office of the Comptroller of the Currency (the "OCC"), and Meta Capital, LLC, a wholly-owned service corporation subsidiary of MetaBank which invests in companies in the financial services industry. All significant intercompany balances and transactions have been eliminated. The Company also owns 100% of First Midwest Financial Capital Trust I (the “Trust”), which was formed in July 2001 for the purpose of issuing trust preferred securities, and Crestmark Capital Trust I, which was acquired from the Crestmark Acquisition in August 2018. The Trust and Crestmark Capital Trust I are not included in the Consolidated Financial Statements of the Company. In addition, the Company evaluates its relationships with other entities to identify whether they are variable interest entities ("VIEs") and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the Consolidated Financial Statements.

NATURE OF BUSINESS AND INDUSTRY SEGMENT INFORMATION

One of the Company's primary sources of revenue relates to payment processing services for prepaid debit cards, ATM sponsorship, tax refund transfer and other money transfer systems and services. Additionally, a significant source of revenue for the Company is interest from the purchase or origination of commercial finance loans, consumer finance loans, warehouse finance loans and community banking loans. The Company accepts deposits from customers in the normal course of business through its community bank division and on a national basis through its MPS and tax services divisions, and through wholesale funding. The Company operates in the banking industry, which accounts for the majority of its revenues and assets. The Company uses the “management approach” for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the management approach model, the Company has determined that its business is comprised of three reporting segments.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain significant estimates include the valuation of residual values within lease receivables, allowance for loan and lease losses, the valuation of foreclosed real estate and repossessed assets, the valuation of goodwill and intangible assets and the fair values of securities and other financial instruments. These estimates are reviewed by management regularly; however, they are particularly susceptible to significant changes in the future.

CASH AND CASH EQUIVALENTS AND FEDERAL FUNDS SOLD

For purposes of reporting cash flows, cash and cash equivalents is defined to include the Company’s cash on hand and due from financial institutions and short-term interest-bearing deposits in other financial institutions. The Company reports cash flows net for customer loan transactions, securities purchased under agreement to resell, federal funds purchased, deposit transactions, securities sold under agreements to repurchase, and Federal Home Loan Bank ("FHLB") advances with terms less than 90 days. The Bank is required to maintain reserve balances in cash or on deposit with the FRB, based on a percentage of deposits. The total of those reserve balances was $33.9 million at September 30, 2019, and $16.5 million at September 30, 2018. The Company at times maintains balances in excess of insured limits at various financial institutions including the FHLB, the FRB and other private institutions. At September 30, 2019, the Company had $6.0 million interest-bearing deposits held at the FHLB and $11.3 million in interest-bearing deposits held at the FRB. At September 30, 2019, the Company had no federal funds sold. The Company does not believe these instruments carry a significant risk of loss, but cannot provide assurances that no losses could occur if these institutions were to become insolvent.

SECURITIES

GAAP requires that, at acquisition, an enterprise classify debt securities into one of three categories: Available for Sale (“AFS”), Held to Maturity (“HTM”) or trading. AFS securities are carried at fair value on the Consolidated Statements of Financial Condition, and unrealized holding gains and losses are excluded from earnings and recognized as a separate component of equity in accumulated other comprehensive income (loss) (“AOCI”). See Note 22. Fair Value Measurements for additional information on fair value of AFS securities. HTM debt securities are measured at amortized cost. The Company classifies the majority of its securities as AFS, which are those the Company may decide to sell if needed for liquidity, asset/liability management, or other reasons. Both AFS and HTM are subject to review for other-than-temporary impairment. Meta did not hold trading securities at September 30, 2019 or 2018.

Gains and losses on the sale of securities are determined using the specific identification method based on amortized cost and are reflected in results of operations at the time of sale. Interest and dividend income, adjusted by amortization of purchase premium or discount using the level yield method, is included in income as earned. For callable debt securities, any purchase premium is amortized to the first call date while any discount is accreted over the contractual life of the security.

Securities Impairment

Management continually monitors the investment securities portfolio for impairment on a security-by-security basis and has a process in place to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves the consideration of the length of time and extent to which the fair value has been less than the amortized cost basis, review of available information regarding the financial position of the issuer, monitoring the rating of the security, monitoring changes in value, cash flow projections, and the Company’s intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost, which, in some cases, may extend to maturity. To the extent the Company determines that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the Company recognizes an other-than-temporary impairment for the difference between amortized cost and fair value. If the Company does not expect to recover the amortized cost basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell the security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. For those securities, the Company separates the total impairment into a credit loss component recognized in net income, and the amount of the loss related to other factors is recognized in other comprehensive income, net of taxes.

The amount of the credit loss component of a debt security impairment is estimated as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate of cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. In fiscal 2019, 2018 and 2017, there was no other-than-temporary impairment recorded.

LOANS AND LEASES RECEIVABLE

LOANS RECEIVABLE

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balances net of any unearned income, cumulative charge-offs, unamortized deferred fees and costs on originated loans, and unamortized premiums or discounts on purchased loans.

Interest income on loans is accrued over the term of the loans based upon the amount of principal outstanding except when serious doubt exists as to the collectability of a loan, in which case the accrual of interest is discontinued. Unearned income, deferred loan fees and costs, and discounts and premiums are amortized to interest income over the contractual life of the loan using the interest method. The Company generally places Community Banking loans on nonaccrual status when: the full and timely collection of interest or principal becomes uncertain; they are 90 days past due for interest or principal, unless they are both well-secured and in the process of collection; or part of the principal balance has been charged off. The majority of the Company's National Lending loans follow the same nonaccrual policy as Community Banking loans with certain commercial finance, consumer finance and tax service loans not generally being placed on non-accrual status, but instead are charged off when the collection of principal and interest become doubtful. When placed on nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and any remaining amortizing of net deferred fees is suspended. Cash collected on these loans is applied to first reduce the carrying value of the loan with any remainder being recognized as interest income. Generally, a loan can return to accrual status when all delinquent interest and principal become current under the terms of the loan agreement and collectability of the remaining principal and interest is no longer doubtful. Loans are considered past due when contractually required principal or interest payments have not been made on the due dates.

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 loans to be uncollectible; repayment is deemed to be protracted beyond reasonable time frames; the loan has been classified as a loss by either the Company's internal loan review process or its banking regulatory agencies; the customer has filed bankruptcy and the loss becomes evident owing to lack of assets; or the loan meets a defined number of days past due unless the loan is both well-secured and 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 Company generally considers a loan to be impaired when, based on current information and events, it determines that it will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. The Company's impaired loans predominantly include loans on nonaccrual status in the Banking segment and loans modified in a troubled-debt-restructuring, whether on accrual or nonaccrual status. The Company measures the amount of impairment, if any, based on the difference between the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount) and the present value of expected future cash flows, discounted at the loans effective interest rate. When collateral is the sole source of repayment for the impaired loan, the Company charges down to net realizable value.

As part of the Company’s ongoing risk management practices, management generally attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Modified loan terms may include interest rate reductions, principal forgiveness, term extensions, payment forbearance or other actions intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of the collateral. Each occurrence is unique to the borrower and is evaluated separately. In a situation where an economic concession has been granted to a borrower that is experiencing financial difficulty, the Company identifies and reports that loan as a troubled debt restructuring (“TDR”). Management considers regulatory guidelines when restructuring loans to ensure that prudent lending practices are followed. As such, qualification criteria and payment terms consider the borrower’s current and prospective ability to comply with the modified terms of the loan. Additionally, the Company structures loan modifications with the intent of strengthening repayment prospects. Loans that are reported as TDRs apply the identical criteria in the determination of whether the loan should be accruing or not accruing. The event of classifying the loan as a TDR due to a modification of terms may be independent from the determination of accruing interest on a loan.

LEASES RECEIVABLE

The Company provides various types of commercial lease financing that are classified for accounting purposes as direct financing, sales-type or operating leases. Leases that transfer substantially all of the benefits and risks of ownership to the lessee are classified as direct financing or sales-type leases and are included in loans and leases receivable on the Consolidated Statements of Financial Condition. Direct financing and sales-type leases are carried at the combined present value of future minimum lease payments and lease residual values. The determination of lease classification requires various judgments and estimates by management, including the fair value of equipment at lease inception, useful life of the equipment under lease, lease residual value, and collectability of minimum lease payments.

Sales-type leases generate dealer profit, which is recognized at lease inception by recording lease revenue net of lease cost. Lease revenue consists of the present value of the future minimum lease payments. Lease cost consists of the lease equipment’s book value, less the present value of its residual. Interest income on direct financing and sales-type leases is recognized using methods that approximate a level yield over the fixed, non-cancelable term of the lease. Recognition of interest income is generally discontinued at the time the lease becomes 90 days delinquent, unless the lease is well-secured and in process of collection. Delinquency and past due status is based on the contractual terms of the lease. The Company receives pro rata rent payments for the interim period until the lease contract commences and the fixed, non-cancelable lease term begins. Interim payments are recognized in the month they are earned and are recorded in interest income. Management has policies and procedures in place for the determination of lease classification and review of the related judgments and estimates for all lease financings.

The Company generally fully charges off or charges down to net realizable value (fair value of collateral, less estimated costs to sell) for leases when management judges the lease to be uncollectible; repayment is deemed to be protracted beyond reasonable time frames; the lease has been classified as a loss by either the Company's internal review process or its banking regulatory agencies; the customer has filed bankruptcy and the loss becomes evident owing to lack of assets; or the lease meets a defined number of days past due unless the lease is both well-secured and in the process of collection.

Some lease financings include a residual value component, which represents the estimated fair value of the leased equipment at the expiration of the initial term of the transaction. The estimation of the residual value involves judgments regarding product and technology changes, customer behavior, shifts in supply and demand, and other economic assumptions. The Company reviews residual assumptions at least annually and records impairment, if necessary, which is charged to non-interest expense in the period it becomes known. The Company may purchase and sell minimum lease payments, primarily as a credit risk reduction tool, to third-party financial institutions at fixed rates on a non-recourse basis with its underlying equipment as collateral. For those transactions that achieve sale treatment, the related lease cash flow stream and the non-recourse financing are derecognized. For those transactions that do not achieve sale treatment, the underlying lease remains on the Company’s Consolidated Statements of Financial Condition and non-recourse debt is recorded in the amount of the proceeds received. The Company retains servicing of these leases and bills, collects, and remits funds to the third-party financial institution. Upon default by the lessee, the third-party financial institutions may take control of the underlying collateral which the Company would otherwise retain as residual value.

Leases that do not transfer substantially all benefits and risks of ownership to the lessee are classified as operating leases. Such leased equipment are included in rental equipment on the Consolidated Statements of Financial Condition and are depreciated on a straight-line basis over the term of the lease to its estimated residual value. Depreciation expense is recorded as operating lease equipment depreciation expense within noninterest expense. Operating lease rental income is recognized when it becomes due and is reflected as a component of noninterest income. An allowance for lease losses is not provided on operating leases.

LOAN SERVICING AND TRANSFERS OF FINANCIAL ASSETS

The Company, from time to time, sells loan participations, generally without recourse. The Company also sells commercial SBA and USDA loans to third parties, generally without recourse. Sold loans are not included in the Consolidated Financial Statements. The Bank generally retains the right to service the sold loans for a fee and records a servicing asset, which is included within other assets on the Consolidated Statements of Financial Condition.

ALLOWANCE FOR LOAN LOSSES

ALLOWANCE FOR LOAN AND LEASE LOSSES

The allowance for loan and lease losses ("ALLL") represents management’s estimate of probable loan and lease losses that have been incurred as of the date of the Consolidated Financial Statements. The ALLL is increased by a provision for loan and lease losses charged to expense and decreased by charge-offs (net of recoveries). Estimating the risk of loss and the amount of loss on any loan or lease is necessarily subjective. Management’s periodic evaluation of the appropriateness of the ALLL is based on the Company’s and peer group’s past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. While management may periodically allocate portions of the ALLL for specific problem loan or lease situations, the entire ALLL is available for any loan or lease charge-offs that occur. The ALLL consists of specific and general components.

The specific component of the ALLL relates to impaired loans and leases. Loans are generally considered impaired if full principal or interest payments are not probable in accordance with the contractual loan terms. Leases are generally considered impaired if collectability of the remaining minimum lease payments becomes uncertain. Often this is associated with a delay or shortfall in payments of 90 days or more for community banking loans and leases. Non-accrual loans and leases and all TDRs are considered impaired. Impaired loans and leases, or portions thereof, are charged off when deemed uncollectible. Impaired loans are carried at the present value of expected future cash flows discounted at the loan’s effective interest rate or at the fair value of the collateral if the loan is collateral dependent. For such loans, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

The general reserve covers certain Community Bank and Commercial Finance loans and leases not considered impaired and is determined based upon both quantitative and qualitative analysis. A separate general reserve analysis is performed for individual classified non-impaired loans and leases and for non-classified smaller-balance homogeneous loans. The three main assumptions for the quantitative components for 2019 and 2018 are historical loss rates, the look back period (“LBP”) and the loss emergence period (“LEP”).


•	The historical loss experience is determined by portfolio segment and is based on the actual loss history of the Company over a specified period of time. The period of time varies by portfolio and ranges from three to seven years. For the individual classified loans, historic charge-off rates for the Company’s classified loan population are utilized.


•	A three to seven-year LBP is appropriate as it captures the Company’s ability to workout troubled loans or relationships while continuing to factor in the loss experience resulting from varying economic cycles and other factors.


•	The weighted average LEP is an estimate of the average amount of time from the point the Company identifies a credit event of the borrower to the point the loss is confirmed by the Company weighted by the dollar value of the write off. The LEP is only applied to the non-classified loan general reserve in the Company's Community Bank portfolio.

Qualitative adjustment considerations for the general reserve include considerations of changes in lending and leasing policies and procedures, changes in national and local economic and business conditions and developments, changes in the nature and volume of the loan and lease portfolio, changes in lending and leasing management and staff, trending in past due, classified, nonaccrual, and other loan and lease categories, changes in the Company’s loan and lease review system and oversight, changes in collateral and residual values, credit concentration risk, and the regulatory and legal requirements and environment.

National Lending portfolios, outside of certain loans and leases in the Commercial Finance portfolio, primarily utilize a general reserve process that mostly uses historical factors related to the specific loan and lease portfolio, although other qualitative factors may be considered in the final loss rate used to calculate the reserve on these portfolios. Loans in these portfolios are generally not placed on non-accrual status or impaired. The balances are generally written off after a loan becomes past due greater than 210 days for insurance premium finance loans, 180 days for tax and other specialty lending loans, 120 days for consumer credit products and 90 days for other loans. See Note 4. Loans and Leases Receivable, Net for further information on the ALLL.

FORECLOSED REAL ESTATE AND REPOSSESSED ASSETS

Real estate properties and repossessed assets acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less selling costs at the date of foreclosure, establishing a new cost basis. The fair value of the real estate owned is based on independent appraisals, real estate brokers’ price opinions, or automated valuation methods, less costs to sell. The fair value of repossessed assets is based on available pricing guides, auction results or price opinions, less costs to sell. Any reduction to fair value from the carrying value of the related loan at the time of acquisition is accounted for as a loan loss and charged against the allowance for loan and lease losses. Subsequent valuations are periodically performed by management. If the subsequent fair value, less costs to sell, declines to less than the carrying amount of the asset, the shortfall is recognized in the period it becomes known as an impairment in noninterest expense and a valuation allowance is recorded for the asset. Operating expenses of properties are also recorded in noninterest expense. Rental income of properties is recorded in noninterest income.

INCOME TAXES

The Company records income tax expense based on the amount of taxes due on its tax return plus deferred taxes computed based on the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, using enacted tax rates. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In accordance with ASC 740, Income Taxes, the Company recognizes a tax position as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized upon examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in noninterest income or noninterest expense. The effect on deferred tax assets and liabilities from a change in tax rates is recorded in income tax expense in the Consolidated Statements of Operations in the period in which the enactment date occurs. If current period income tax rates change, the impact on the annual effective income tax rate is applied year to date in the period of enactment.

PREMISES, FURNITURE, AND EQUIPMENT

PREMISES, FURNITURE AND EQUIPMENT

Land is carried at cost. Buildings, furniture, fixtures, leasehold improvements and equipment are carried at cost, less accumulated depreciation and amortization. Capital leases, where the Company is the lessee, are included in premises and equipment at the capitalized amount less accumulated amortization. The Company primarily uses the straight-line method of depreciation over the estimated useful lives of the assets, which range from 10 years to 40 years for buildings, and two years to 15 years for leasehold improvements, and for furniture, fixtures and equipment. Assets are reviewed for impairment when events indicate the carrying amount may not be recoverable.

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance represents the cash surrender value of investments in life insurance contracts. Earnings on the contracts are based on the earnings on the cash surrender value, less mortality costs.

EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

EMPLOYEE STOCK OWNERSHIP PLAN (“ESOP”)

The cost of shares issued to the ESOP, but not yet allocated to participants, are presented in the Consolidated Statements of Financial Condition as a reduction of stockholders’ equity. Compensation expense is recorded based on the market price of the shares as they are committed to be released for allocation to participant accounts. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings. Dividends on unallocated shares are used to reduce the accrued interest and principal amount of the ESOP’s loan payable to the Company. At September 30, 2019 and 2018, all shares in the ESOP were allocated.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company, in the normal course of business, makes commitments to make loans which are not reflected in the Consolidated Financial Statements. The reserve for these unfunded commitments is included within Other Liabilities on the Consolidated Statements of Financial Condition.

GOODWILL

Goodwill represents the cost in excess of the fair value of net assets acquired (including identifiable intangibles) in transactions accounted for as business acquisitions. Goodwill is evaluated annually for impairment at a reporting unit level. The Company has determined that its reporting units are one level below the operating segments and distinguish these reporting units based on how the segments and reporting units are managed, taking into consideration the economic characteristics, nature of the products, and customers of the segments and reporting units. The Company performs its impairment evaluation as of September 30 of each fiscal year. If the carrying amount of the reporting unit with goodwill exceeds its fair value, goodwill is considered impaired and is written down by the excess carrying value of the reporting unit. Subsequent increases in goodwill are not recognized in the Consolidated Financial Statements. No goodwill impairment was recognized during the fiscal years ended September 30, 2019, 2018 or 2017. See Note 8. Goodwill and Intangible Assets for further information on Goodwill.

INTANGIBLE ASSETS

Intangible assets other than goodwill are amortized over their respective estimated lives. All intangible assets are subject to an impairment test at least annually or more often if conditions indicate a possible impairment. See Note 8. Goodwill and Intangible Assets for further information on Intangible Assets.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company enters into sales of securities under agreements to repurchase with primary dealers only, which provide for the repurchase of the same security. Securities sold under agreements to repurchase identical securities are collateralized by assets which are held in safekeeping in the name of the Bank or by the dealers who arranged the transaction. Securities sold under agreements to repurchase are treated as financings, and the obligations to repurchase such securities are reflected as a liability. The securities underlying the agreements remain in the asset accounts of the Company. See Note 10. Short-Term and Long-Term Borrowings for further information on Securities Sold under Agreements to Repurchase.

REVENUE RECOGNITION

Interest revenue from loans, leases, and investments is recognized on the accrual basis of accounting as the interest is earned according to the terms of the particular loan, lease, or investment. Income from service and other customer charges is recognized as earned. Revenue within the Payments segment is recognized as services are performed and service charges are earned in accordance with the terms of the various programs. The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers, and related amendments on October 1, 2018 under the cumulative-effect method. ASU 2014-09 modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of non-financial assets, unless those contracts are within the scope of other guidance. Upon adoption, the Company recorded a cumulative effect adjustment of $1.5 million to retained earnings, net of tax, due to changes in timing of revenue recognition from breakage of unregistered, unused prepaid cards in the Company’s MPS division. Results for prior periods have not been adjusted and continue to be reported in accordance with the Company’s historical accounting policies. Refer to Note 18. Revenue from Contracts with Customers for additional information.

EARNINGS PER COMMON SHARE ("EPS")