CASH 2018 Annual Report

21 The distribution of the Company’s allowance for losses on loans and leases at the dates indicated is summarized as follows: At September 30, 2018 2017 2016 2015 2014 Amount Percent of Loans and Leases in Each Category of Total Loans and Leases Amount Percent of Loans in Each Category of Total Loans Amount Percent of Loans in Each Category of Total Loans Amount Percent of Loans in Each Category of Total Loans Amount Percent of Loans in Each Category of Total Loans (Dollars in Thousands) Commercial finance $ 1,302 51.3% $ 800 19.2% $ 588 18.8% $ 293 14.9% $ — —% Consumer finance 3,670 11.4 — 10.6 — 1.5 — 1.9 — 2.4 Tax services — — 5 — 5 — — — — — Total National Lending 4,972 62.7 805 29.8 593 20.4 293 16.8 — 2.4 Commercial & multi-family real estate 6,047 25.4 2,670 44.1 2,198 45.7 1,187 43.5 1,575 44.9 1-4 family real estate 590 7.7 803 14.8 654 17.5 278 17.5 552 23.3 Agricultural 1,216 2.0 2,574 7.2 1,474 10.9 3,700 15.1 982 19.7 Commercial operating 173 1.4 150 2.3 112 3.1 28 4.2 93 6.2 Consumer 42 0.8 6 1.7 51 2.5 20 2.8 78 3.5 Total Community Lending 8,068 37.3 6,203 70.2 4,489 79.6 5,213 83.2 3,280 97.6 Unallocated — — 527 — 553 749 — 2,117 — Total $ 13,040 100.0% $ 7,534 100.0% $ 5,635 100.0% $ 6,255 100.0% $ 5,397 100.0% Investment Activities General The investment policy of the Company generally is to invest funds among various categories of investments andmaturities based upon the Company’s need for liquidity, to achieve the proper balance between its desire to minimize risk and maximize yield, to provide collateral for borrowings and to fulfill the Company’s asset/liability management policies. The Company’s investment and mortgage-backed securities portfolios are managed in accordance with a written investment policy adopted by the Board of Directors, which is implemented by members of the Company’s Investment Committee. The Company closely monitors balances in these accounts, and maintains a portfolio of highly liquid assets to fund potential deposit outflows or other liquidity needs. To date, the Company has not experienced any significant outflows related to the MPS division deposits, though no assurance can be given that this will continue to be the case. As of September 30, 2018, investment securities and MBS with fair values of approximately $1.06 billion, $317.4 million, and $13.9 million were pledged as collateral for the Bank’s Federal Home Loan Bank of Des Moines (“FHLB”) advances, Federal Reserve Bank (“FRB”) advances and collateral for securities sold under agreements to repurchase, respectively. For additional information regarding the Company’s collateralization of borrowings, see Notes 8 and 9 to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Investment Securities It is the Company’s general policy to purchase investment securities which are U.S. Government-related securities, U.S. Government-related agency and instrumentality securities, U.S. Government-related agency or instrumentality collateralized securities, state and local government obligations, commercial paper, corporate debt securities and overnight federal funds.