CASH 2018 Annual Report

93 Liquidity and Capital Resources The Company’s primary sources of funds are deposits, derived principally through its Payments divisions, and to a lesser extent through its community bank division, borrowings, principal and interest payments on loans and leases and MBS, and maturing investment securities. In addition, the Company utilizes wholesale deposit sources to provide funding when necessary or when favorable terms are available. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan repayments are influenced by the level of interest rates, general economic conditions and competition. The Company relies on advertising, quality customer service, convenient locations and competitive pricing to attract and retain its community bank deposits and primarily solicits these deposits from its core market areas. Based on its experience, the Company believes that its consumer checking, savings and money market accounts are relatively stable sources of deposits. The Company’s ability to attract and retain time deposits has been, and will continue to be, affected by market conditions. However, the Company does not foresee any significant community bank funding issues resulting from the sensitivity of time deposits to such market factors. The low-cost checking deposits generated through the Company's Payments divisions may carry a greater degree of concentration risk than traditional consumer checking deposits but, based on experience, the Company believes that Payments generated deposits are a stable source of funding. To date, the Company has not experienced any material net outflows related to Payments-generated deposits, though no assurance can be given that this will continue to be the case. The Bank is required by regulation to maintain sufficient liquidity to assure its safe and sound operation. In the opinion of management, the Bank is in compliance with this requirement. Liquidity management is both a daily and long-term function of the Company’s management strategy. The Company adjusts its investments in liquid assets based upon management’s assessment of (i) expected loan demand, (ii) the projected availability of purchased loan products, (iii) expected deposit flows, (iv) yields available on interest-bearing deposits and (v) the objectives of its asset/liability management program. Excess liquidity is generally invested in interest-earning overnight deposits and other short-term government agency or instrumentality obligations. If the Company requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB and other wholesale funding sources. The Company is not aware of any facts that would be reasonably likely to have a material adverse impact on the Company’s liquidity or its ability to borrow additional funds. The primary investing activities of the Company are the origination of loans and leases, the acquisitions of companies and the purchase of securities. During the years ended September 30, 2018, 2017 and 2016, the Company originated loans and leases totaling $4.4 billion, $2.6 billion and $968.4 million, respectively. Purchases of loans and leases totaled $165.7 million and $141.4 million during the years ended September 30, 2018 and 2017, respectively, and the Company did not purchase any loans during the year ended September 30, 2016. During the years ended September 30, 2018, 2017 and 2016, the Company purchased MBS and other securities in the amount of $653.2 million, $849.5 million and $902.9 million, respectively. Of these purchases there were no securities designated as held to maturity in 2018 and $0.9 million and $298.9 million designated as held to maturity in 2017 and 2016, respectively. At September 30, 2018, the Company had unfunded loan and lease commitments of $748.8 million. See Note 14 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. Certificates of deposit scheduled to mature in one year or less at September 30, 2018 totaled $1.56 billion, of which $1.32 billion were wholesale time deposits and $246.4 million were non-wholesale time deposits. Management believes that loan repayment and other sources of funds will be adequate to meet the Company’s foreseeable short- and long-term liquidity needs.