| LOANS AND LEASES, NET | 89 Days Past Due Total Past Due Current Total Loans and Leases Receivable > 89 Days Past Due and Accruing Non-accrual balance Total December 31, 2018 (Dollars in Thousands) National Lending Asset based lending $ 739 $ — $ 336 $ 1,075 $ 552,997 $ 554,072 $ — $ 1,007 $ 1,007 Factoring — — — — 284,912 284,912 — 307 307 Lease financing 9,685 4,205 5,259 19,149 271,740 290,889 1,335 4,841 6,176 Insurance premiu" id="sjs-B4">LOANS AND LEASES, NET 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. Loans and leases at December 31, 2018 and September 30, 2018 were as follows: (Dollars in Thousands) December 31, 2018 September 30, 2018 National Lending Asset based lending $ 554,072 $ 477,917 Factoring 284,912 284,221 Lease financing 290,889 265,315 Insurance premium finance 330,712 337,877 SBA/USDA 67,893 59,374 Other commercial finance 89,402 85,145 Commercial finance 1,617,880 1,509,849 Consumer credit products 96,144 80,605 Other consumer finance 182,510 189,756 Consumer finance (1) 278,654 270,361 Tax services 76,575 1,073 Warehouse finance (1) 176,134 65,000 Total National Lending 2,149,243 1,846,283 Community Banking Commercial real estate and operating 863,753 790,890 Consumer one-to-four family real estate and other 256,341 247,318 Agricultural real estate and operating 58,971 60,498 Total Community Banking 1,179,065 1,098,706 Total gross loans and leases 3,328,308 2,944,989 Allowance for loan and lease losses (21,290 ) (13,040 ) Net deferred loan origination fees (costs) 1,190 (250 ) Total loans and leases, net (2) $ 3,308,208 $ 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 December 31, 2018, the remaining balance of acquired loans and leases from the Crestmark acquisition was $889.0 million and the remaining balances of the credit and interest rate mark discounts related to the acquired loans and leases were $10.1 million and $4.8 million , respectively. On August 1, 2018, the Company acquired loans and leases from the Crestmark acquisition totaling $1.06 billion and recorded related credit and interest rate mark discounts of $12.3 million and $6.0 million , respectively. During the three months ended December 31, 2018, the Company transferred $39.5 million of consumer credit product loans to held for sale and originated $7.5 million of SBA/USDA loans as held for sale. The Company sold held for sale loans resulting in proceeds of $22.6 million and gains on sale of $0.6 million during the three months ended December 31, 2018. During the three months ended December 31, 2017, the Company did not designate any loans as held for sale or sell any held for sale loans. During the three months ended December 31, 2018 and December 31, 2017, the Company purchased loans totaling $122.7 million and $75.2 million , respectively. During the three months ended December 31, 2018 and December 31, 2017, the Company sold loans totaling $0.4 million and $5.9 million , respectively. The net investment in direct financing and sales-type leases is comprised of the following as of December 31, 2018 and September 30, 2018 . December 31, 2018 September 30, 2018 (Dollars in Thousands) Minimum lease payments receivable $ 330,273 $ 301,835 Estimated residual value of leased equipment 12,460 12,406 Unamortized initial direct costs (9 ) (3 ) Premium on acquired leases 16 26 Unearned income (51,851 ) (48,949 ) Net investment in direct financing and sales-type leases $ 290,889 $ 265,315 Future minimum lease payments receivable on noncancelable direct financing and sales-type leases were as follows as of December 31, 2018. As of December 31, 2018 (Dollars in thousands) 2019 $ 92,158 2020 96,326 2021 73,057 2022 43,861 2023 21,037 2024 and thereafter 3,834 Total $ 330,273 The Company did not record any contingent rental income from sales-type and direct financing leases in the three months ended December 31, 2018. Activity in the allowance for loan and lease losses and balances of loans and leases by portfolio segment for each of the three months ended December 31, 2018 and 2017 was as follows: Allowance for loan and lease losses: Beginning balance Provision (recovery) for loan and lease losses Charge-offs Recoveries Ending balance Three Months Ended December 31, 2018 National Lending Asset based lending $ 107 $ 2,164 $ (262 ) $ 56 $ 2,065 Factoring 64 1,223 (250 ) 26 1,062 Lease financing 59 (130 ) (418 ) 1,572 1,084 Insurance premium finance 1,031 93 (208 ) 56 972 SBA/USDA 13 240 — — 253 Other commercial finance 28 263 — — 291 Commercial finance 1,302 3,853 (1,138 ) 1,710 5,727 Consumer credit products 785 366 — — 1,151 Other consumer finance 2,820 3,023 (1,624 ) 3 4,222 Consumer finance 3,605 3,389 (1,624 ) 3 5,373 Tax services — 1,496 (42 ) 92 1,546 Warehouse finance 65 111 — — 176 Total National Lending 4,972 8,849 (2,804 ) 1,805 12,822 Community Banking (2,804 ) Commercial real estate and operating 6,220 350 — — 6,570 Consumer one-to-four family real estate and other 632 87 — — 719 Agricultural real estate and operating 1,216 (187 ) — 150 1,179 Total Community Banking 8,068 250 — 150 8,468 Total $ 13,040 $ 9,099 $ (2,804 ) $ 1,955 $ 21,290 Allowance for loan and lease losses: Beginning balance Provision (recovery) for loan and lease losses Charge-offs Recoveries Ending balance Three Months Ended December 31, 2017 (Dollars in Thousands) National Lending Insurance premium finance $ 796 $ 51 $ (129 ) $ 7 $ 725 Other commercial finance 4 — — — 4 Commercial finance 800 51 (129 ) 7 729 Tax services 5 1,017 — 413 1,435 Total National Lending 805 1,068 (129 ) 420 2,164 Community Banking Commercial real estate and operating 2,820 329 — — 3,149 Consumer one-to-four family real estate and other 809 (113 ) (31 ) — 665 Agricultural real estate and operating 2,574 (590 ) — — 1,984 Unallocated 526 374 — — 900 Total Community Banking 6,729 — (31 ) — 6,698 Total $ 7,534 $ 1,068 $ (160 ) $ 420 $ 8,862 Allowance Loans and Leases Recorded Investment Ending balance: individually evaluated for impairment Ending balance: collectively evaluated for impairment Total Ending balance: individually evaluated for impairment Ending balance: collectively evaluated for impairment Total As of December 31, 2018 (Dollars in Thousands) National Lending Asset based lending $ — $ 2,065 $ 2,065 $ 2,371 $ 551,701 $ 554,072 Factoring 134 928 1,062 1,680 283,232 284,912 Lease financing — 1,084 1,084 5,000 285,889 290,889 Insurance premium finance — 972 972 — 330,712 330,712 SBA/USDA — 253 253 — 67,893 67,893 Other commercial finance — 291 291 — 89,402 89,402 Commercial finance 134 5,593 5,727 9,051 1,608,829 1,617,880 Consumer credit products — 1,151 1,151 — 96,144 96,144 Other consumer finance — 4,222 4,222 — 182,510 182,510 Consumer finance — 5,373 5,373 — 278,654 278,654 Tax services — 1,546 1,546 — 76,575 76,575 Warehouse finance — 176 176 — 176,134 176,134 Total National Lending 134 12,688 12,822 9,051 2,140,192 2,149,243 Community Banking Commercial real estate and operating — 6,570 6,570 402 863,351 863,753 Consumer one-to-four family real estate and other — 719 719 138 256,203 256,341 Agricultural real estate and operating — 1,179 1,179 1,511 57,460 58,971 Total Community Banking — 8,468 8,468 2,051 1,177,014 1,179,065 Total $ 134 $ 21,156 $ 21,290 $ 11,102 $ 3,317,206 $ 3,328,308 Allowance Loans and Leases Recorded Investment Ending balance: individually evaluated for impairment (1) Ending balance: collectively evaluated for impairment (1) Total Ending balance: individually evaluated for impairment Ending balance: collectively evaluated for impairment Total As of September 30, 2018 (Dollars in Thousands) National Lending Asset based lending $ — $ 107 $ 107 $ 1,404 $ 476,513 $ 477,917 Factoring — 64 64 3,331 280,890 284,221 Lease financing — 59 59 8,877 256,438 265,315 Insurance premium finance — 1,031 1,031 — 337,877 337,877 SBA/USDA — 13 13 — 59,374 59,374 Other commercial finance — 28 28 — 85,145 85,145 Commercial finance — 1,302 1,302 13,612 1,496,237 1,509,849 Consumer credit products — 785 785 — 80,605 80,605 Other consumer finance — 2,820 2,820 — 189,756 189,756 Consumer finance — 3,605 3,605 — 270,361 270,361 Tax services — — — — 1,073 1,073 Warehouse finance — 65 65 — 65,000 65,000 Total National Lending — 4,972 4,972 13,612 1,832,671 1,846,283 Community Banking Commercial real estate and operating — 6,220 6,220 451 790,439 790,890 Consumer one-to-four family real estate and other — 632 632 94 247,224 247,318 Agricultural real estate and operating — 1,216 1,216 1,454 59,044 60,498 Total Community Banking — 8,068 8,068 1,999 1,096,707 1,098,706 Total $ — $ 13,040 $ 13,040 $ 15,611 $ 2,929,378 $ 2,944,989 (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. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When assets are classified as “loss,” the Company is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. The Company's determinations as to the classification of its assets and the amount of its valuation allowances are subject to review by its regulatory authorities, which may order the establishment of additional general or specific loss allowances. The Company recognizes that concentrations of credit may naturally occur and may take the form of a large volume of related loans and leases to an individual, a specific industry, or a geographic location. Credit concentration is a direct, indirect, or contingent obligation that has a common bond where the aggregate exposure equals or exceeds a certain percentage of the Company’s Tier 1 Capital plus the Allowance for Loan and Lease Losses. The asset classification of loans and leases at December 31, 2018 and September 30, 2018 were as follows: Asset Classification Pass Watch Special Mention Substandard Total December 31, 2018 (Dollars in Thousands) National Lending Asset based lending $ 498,694 $ — $ 53,007 $ 2,371 554,072 Factoring 244,992 — 38,240 1,680 284,912 Lease financing 284,239 — 1,650 5,000 290,889 Insurance premium finance 329,131 — 1,581 — 330,712 SBA/USDA 53,539 — 14,354 — 67,893 Other commercial finance 89,049 — 353 — 89,402 Commercial finance 1,499,644 — 109,185 9,051 1,617,880 Consumer credit products 96,144 — — — 96,144 Other consumer finance 182,510 — — — 182,510 Consumer finance 278,654 — — — 278,654 Tax services 76,575 — — — 76,575 Warehouse finance 176,134 — — — 176,134 Total National Lending 2,031,007 — 109,185 9,051 2,149,243 Community Banking Commercial real estate and operating 848,456 15,297 — — 863,753 Consumer one-to-four family real estate and other 254,458 1,496 308 79 256,341 Agricultural real estate and operating 40,558 1,590 4,836 11,987 58,971 Total Community Banking 1,143,472 18,383 5,144 12,066 1,179,065 Total loans and leases $ 3,174,479 $ 18,383 $ 114,329 $ 21,117 $ 3,328,308 Asset Classification Pass Watch Special Mention Substandard Total September 30, 2018 (Dollars in Thousands) National Lending Asset based lending $ 418,635 $ — $ 57,877 $ 1,405 $ 477,917 Factoring 248,246 — 32,644 3,331 284,221 Lease financing 252,487 — 3,951 8,877 265,315 Insurance premium finance 336,296 — 1,581 — 337,877 SBA/USDA 39,093 — 20,281 — 59,374 Other commercial finance 85,145 — — — 85,145 Commercial finance 1,379,902 — 116,334 13,613 1,509,849 Consumer credit products 80,605 — — — 80,605 Other consumer finance 189,756 — — — 189,756 Consumer finance 270,361 — — — 270,361 Tax services 1,073 — — — 1,073 Warehouse finance 65,000 — — — 65,000 Total National Lending 1,716,336 — 116,334 13,613 1,846,283 Community Banking Commercial real estate and operating 778,445 12,251 194 — 790,890 Consumer one-to-four family real estate and other 246,463 537 239 79 247,318 Agricultural real estate and operating 42,292 2,447 4,872 10,887 60,498 Total Community Banking 1,067,200 15,235 5,305 10,966 1,098,706 Total loans and leases $ 2,783,536 $ 15,235 $ 121,639 $ 24,579 $ 2,944,989 National Lending (Commercial Finance, Consumer Finance, Tax Services and Warehouse Finance) Commercial Finance The Company's commercial finance product lines include asset-based lending, factoring, leasing, commercial insurance premium finance, and other commercial finance products offered on a nationwide basis. Asset-based lending and factoring primarily service small businesses that are startups, distressed and/or generally that may not otherwise qualify for traditional bank financing. Leasing focuses on providing equipment finance solutions to mid-market companies. These product offerings supplement the asset generation capacity in our community bank and tax services divisions and enhance the overall yield of our loan and lease portfolio, enabling us to earn attractive risk-adjusted net interest margins. Asset-Based Lending . Through its Crestmark division, the Bank provides asset-based loans secured by debtors' short-term assets such as inventory, accounts receivable, and work-in-process. Asset-based loans may also be secured by real estate and equipment. The primary sources of repayment are the operating income of the borrower, the collection of the receivables securing the loan, and/or the sale of the inventory securing the loan. Loans are typically revolving lines of credit with terms of one to three years, whereby the Bank withholds a contingency reserve representing the difference between the amount advanced and the fair value of the invoice amount or other collateral value. Credit risk is managed through advance rates appropriate for the collateral, standardized loan policies, established and authorized credit limits, attentive portfolio management and the use of lock box agreements and similar arrangements that result in the Company receiving and controlling the debtors' cash receipts. The Bank also originates collateralized term loans and notes receivable, with terms ranging from three to 25 years. Factoring. Through its Crestmark division, the Bank provides factoring lending where clients provide detailed inventory, accounts receivable, and work-in-process reports for lending arrangements. The factoring clients are diversified as to industry and geography. With these loans, the Crestmark division withholds a contingency reserve, which is the difference between the fair value of the invoice amount or other collateral value and the amount advanced. This reserve is withheld for nonpayment of factored receivables, service fees and other adjustments. Credit risk is managed through standardized advance policies, established and authorized credit limits, verification of receivables, attentive portfolio management and the use of lock box agreements and similar arrangements that result in the Company receiving and controlling the client's cash receipts. In addition, clients generally guarantee the payment of purchased accounts receivable. Lease Financing. Through its Crestmark division, the Bank provides creative, flexible lease solutions for technology, capital equipment and select transportation assets like tractors and trailers. Direct financing leases and sales-type leases substantially transfer the benefits and risks of equipment ownership to the lessee. The lease may contain provisions that transfer ownership to the lessee at the end of the initial term, contain a bargain purchase option or allow for purchase of the equipment at fair market value. Residual values are estimated at the inception of the lease. Lease maturities are generally no greater than 84 months. The focus in this lease financing category is to support middle market companies by providing a variety of financing products to help them meet their business objectives. Insurance Premium Finance. Through its AFS/IBEX division the Bank provides, on a national basis, short-term, primarily collateralized financing to facilitate the commercial customers’ purchase of insurance for various forms of risk, otherwise known as insurance premium financing. This includes, but is not limited to, policies for commercial property, casualty and liability risk. Premiums are advanced either directly to the insurance carrier or through an intermediary/broker and repaid by the policyholder with interest during the policy term. The policyholder generally makes a 20% to 25% down payment to the insurance broker and finances the remainder over nine to 10 months on average. The down payment is set such that if the policy is canceled, the unearned premium is typically sufficient to cover the loan balance and accrued interest. The AFS/IBEX division markets itself to the insurance community as a competitive option based on service, reputation, competitive terms, cost and ease of operation. Small Business Administration ("SBA") and United States Department of Agriculture ("USDA"). The Bank originates loans through programs partially guaranteed by the SBA or USDA. These loans are made to small businesses and professionals with what the Bank believes are lower risk characteristics. Other Commercial Finance. Included in this category of loans are the Company's healthcare receivables loan portfolio primarily comprised of loans to individuals for medical services received. The majority of these loans are guaranteed by the hospital providing the service to the debtor and this guarantee serves to reduce credit risk as the guarantors agree to repurchase severely delinquent loans. Credit risk is minimized on these loans based on the guarantor’s repurchase agreement. This loan category also includes commercial real estate loans to customers of the Crestmark division. Consumer Finance Consumer Credit Products. Through the acquisition of Specialty Consumer Services, the Bank acquired a platform that provides a total solution for marketplace lending, including underwriting and loan management in the direct-to-consumer credit business. The acquired platform allows the Bank to provide innovative lending solutions through consumer credit products. The Company designs and structures its credit programs in an effort to insulate the Company from program losses and to potentially increase the liquidity attributes of such lending programs' marketability to potential bank or other purchasers. While each program is different, all contain one or more types of credit enhancements, loss protections, or trigger events. When determining the applicable program enhancement, generally, the Company uses proprietary data provided by the Company’s partner, with respect to such program, supplemented with public data to design and shape appropriate loss curves, as well as implement stresses significantly higher than base to provide protection in changing credit cycles. Credit enhancements are typically built through holding excess program interest and fees in a reserve account to pay program credit losses. Cash flow waterfall positioning allows for losses and Company program principal and interest to be paid, under certain circumstances, before servicing or other program expenses. Trigger events allow programs and originations to be suspended if certain vintage loss limits, during a specific period of time, are triggered or if cumulative loss percentages are triggered. These triggers are designed to allow the Company to address potential issues quickly. Other trigger events in certain programs provide for excess credit or reserve enhancements, which could be beyond excess interest amounts, if certain loss triggers are breached. The Bank applies a reserve for loan losses of approximately 1% on outstanding loan balances within each of the consumer credit product programs. Through December 31, 2018 , the Bank has launched two consumer credit programs. During the second quarter of fiscal 2018, the Bank entered into a three-year program agreement with Liberty Lending, LLC ("Liberty Lending") whereby the Bank provides personal loans to Liberty Lending customers. The Bank and Liberty Lending market the program jointly through a wide variety of marketing channels. The loan products under the agreement with Liberty Lending are closed-end installment loans ranging from $3,500 to $45,000 in initial principal amount with durations of between 13 and 60 months. The Bank entered into a three-year agreement with Health Credit Services ("HCS") during the third quarter of fiscal 2018. The Bank approves and originates loans for elective medical procedures for select HCS provider offices throughout the United States. HCS works with its provider partners to market the loans, as well as provide servicing for them. The loan products offered are unsecured, closed-end installment loans with terms between 12 and 84 months and revolving lines of credit with durations between six and 60 months. Other Consumer Finance. The Bank's purchased student loan portfolios are seasoned, floating rate, private portfolios that are serviced by a third-party servicer. The portfolio purchased during the first quarter of fiscal year 2018 is indexed to one-month LIBOR, while the portfolio purchased in the first quarter of fiscal year 2017 is indexed to three-month LIBOR plus various margins. The Company received written notification on June 18, 2018 from ReliaMax Surety Company ("ReliaMax"), the company that provided insurance coverage for the student loan portfolios, which informed policy holders that the South Dakota Division of Insurance filed a petition to have ReliaMax declared insolvent and to adopt a plan of liquidation. An Order of Liquidation was entered on June 27, 2018 by the Sixth Circuit Court in Hughes County, South Dakota, declaring ReliaMax insolvent and appointing the South Dakota Division of Insurance as liquidator to adopt a plan of liquidation. The Company expects to ultimately recover a portion of the unearned premiums, which could take a year or longer. Tax Services The Bank's tax services division provides short-term taxpayer advance loans. Taxpayers are underwritten to determine eligibility for these unsecured loans. Due to the nature of taxpayer advance loans, it typically takes no more than three e-file cycles (the period of time between scheduled IRS payments) from when the return is accepted by the IRS to collect from the borrower. In the event of default, the Bank has no recourse against the tax consumer. The Bank will charge off the balance of a taxpayer advance loan if there is a balance at the end of the calendar year, or when collection of principal becomes doubtful. Through its tax services division, the Bank provides short-term electronic return originator ("ERO") advance loans on a nationwide basis. These loans are typically utilized by tax preparers to purchase tax preparation software and to prepare tax office operations for the upcoming tax season. EROs go through an underwriting process to determine eligibility for the unsecured advances. ERO loans are not collateralized. Collection on ERO advances begins once the ERO begins to process refund transfers. Generally, the Bank will charge off the balance of an ERO advance loan if there is a balance at the end of June, or when collection of principal becomes doubtful. Warehouse Finance In fiscal 2018, the Bank entered into a first-out participation agreement in a consumer receivable asset-backed warehouse line of credit, with the Bank holding a senior collateral position enhanced by a subordinate party structure. During the first quarter of fiscal 2019, the Bank entered into two additional first-out participation agreements in asset-backed warehouse lines of credit, including consumer loan receivables and small business loan receivables. The senior collateral position of the Bank is supported by a subordinate party position. Community Banking Commercial Real Estate and Operating . The Company engages in commercial and multi-family real estate lending in the community bank's primary market areas and surrounding areas. These loans are secured primarily by apartment buildings, office buildings, and hotels. Commercial and multi-family real estate loans generally are underwritten with terms not exceeding 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property securing the loan, and are typically secured by guarantees of the borrowers. The Company has a variety of rate adjustment features and other terms in its commercial and multi-family real estate loan portfolio. Commercial and multi-family real estate loans provide for a margin over a number of different indices. In underwriting these loans, the Company analyzes the financial condition of the borrower, the borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent appraisers. The repayment of loans secured by commercial and multi-family real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, or a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired. The Company originates its community banking commercial operating loans primarily in its market areas. Most of these commercial operating loans have been extended to finance local and regional businesses and include short-term loans to finance machinery and equipment purchases, inventory and accounts receivable. Commercial loans also may involve the extension of revolving credit for a combination of equipment acquisitions and working capital in expanding companies. The maximum term for loans extended on machinery and equipment is based on the projected useful life of such machinery and equipment. Generally, the maximum term on non-mortgage lines of credit is one year. The Company’s commercial operating lending policy includes credit file documentation and analysis of the borrower’s management ability, capacity to repay the loan, the adequacy of the borrower’s capital and collateral as well as an evaluation of conditions affecting the borrower. Analysis of the borrower’s past, present and future cash flows is also an important aspect of the Company’s current credit analysis. Commercial operating loans typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial operating loans may be substantially dependent on the success of the business itself (which, in turn, is likely to be dependent upon the general economic environment). The Company’s commercial operating loans are usually secured by business assets and personal guarantees. However, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. Consumer One-to-Four Family Real Estate and Other . One-to-four family real estate loan originations are typically generated by the Company’s marketing efforts, its present customers, walk-in customers and referrals. The Company offers fixed-rate loans and adjustable-rate mortgage ("ARM") loans for both permanent structures and those under construction. The Company’s one-to-four family real estate loan originations are secured primarily by properties located in the community bank's primary market areas and surrounding areas. The Company originates one-to-four family real estate loans with terms up to a maximum of 30 years and with loan-to-value ratios up to 100% of the lesser of the appraised value of the property securing the loan or the contract price. However, the vast majority of these loans are originated with loan-to-value ratios below 80%. The Company generally requires that private mortgage insurance be obtained in an amount sufficient to reduce the Company’s exposure to at or below the 80% loan‑to‑value level. Due to consumer demand, the Company also offers fixed-rate mortgage loans with terms up to 30 years, which may conform to secondary market standards such as Fannie Mae, Ginnie Mae, and Freddie Mac standards. The Company typically holds all fixed-rate mortgage loans and does not engage in secondary market sales. The Company also currently offers five- and ten-year ARM loans. In underwriting one-to-four family real estate loans, the Company evaluates both the borrower’s ability to make monthly payments and the value of the property securing the loan. Properties securing real estate loans made by the Company are appraised by independent appraisers approved by the Board of Directors of the Company. The Company generally requires borrowers to obtain an attorney’s title opinion or title insurance, as well as fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan. Real estate loans originated by the Company generally contain a “due on sale” clause that allows the Company to declare the unpaid principal balance due and payable upon the sale of the security property. The Company has not engaged in sub-prime residential mortgage originations. The Company originates a variety of secured consumer loans, including home equity, home improvement, automobile and boat loans, as well as loans secured by savings deposits in its primary market areas and surrounding areas. Substantially all of the Company’s home equity loans and lines of credit are secured by second mortgages on principal residences. The Bank will lend amounts that, together with all prior liens, may be up to 90% of the appraised value of the property securing the loan. Home equity loans and lines of credit generally have maximum terms of five years. Consumer loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower. The underwriting standards employed by the Bank for consumer loans include an application, a determination of the applicant’s payment history on other debts and an assessment of ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of the applicant is a primary consideration, the underwriting process also may include a comparison of the value of the security, if any, in relation to the proposed loan amount. Agricultural Real Estate and Operating . The Company originates loans to finance the purchase of farmland, livestock, farm machinery and equipment, seed, fertilizer, and other farm-related products, primarily in its market areas. Agricultural operating loans are originated at either an adjustable- or fixed-rate of interest for up to a one-year term or, in the case of livestock, are due upon sale. Agricultural real estate loans are frequently originated with adjustable rates of interest. Generally, such loans provide for a fixed rate of interest for the first five to 10 years, after which the loan will balloon or the interest rate will adjust annually. These loans generally amortize over a period of 20 to 25 years. Fixed-rate agricultural real estate loans typically have terms up to 10 years. Agricultural real estate loans are generally limited to 75% of the value of the property securing the loan. Payments on loans are dependent on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. The success of the loan may also be affected by many factors outside the control of the borrower such as weather, government support programs and grain and livestock prices. These risks may be reduced, by the farmer, with the use of crop insurance coverage and futures contracts or options to mitigate price risk, both of which the Company frequently requires of the borrowers to help ensure loan repayment. Many farms are also dependent on a limited number of key individuals whose injury or death may result in an inability to successfully operate the farm. Past due loans and leases at December 31, 2018 and September 30, 2018 were as follows: Accruing and Non-accruing Loans and Leases Non-performing Loans and Leases Past Due Loans and Leases 30-59 Days Past Due 60-89 Days Past Due > 89 Days Past Due Total Past Due Current Total Loans and Leases Receivable > 89 Days Past Due and Accruing Non-accrual balance Total December 31, 2018 (Dollars in Thousands) National Lending Asset based lending $ 739 $ — $ 336 $ 1,075 $ 552,997 $ 554,072 $ — $ 1,007 $ 1,007 Factoring — — — — 284,912 284,912 — 307 307 Lease financing 9,685 4,205 5,259 19,149 271,740 290,889 1,335 4,841 6,176 Insurance premiu |
