CASH 2017 Annual Report

17 Management believes that, based on a detailed review of the loan portfolio, historic loan losses, current economic conditions, the size of the loan portfolio and other factors, the level of the allowance for loan losses at September 30, 2017 reflected an appropriate allowance against probable losses from the loan portfolio. Although the Company maintains its allowance for loan losses at a level it considers to be appropriate, investors and others are cautioned that there can be no assurance that future losses will not exceed estimated amounts, or that additional provisions for loan losses will not be required in future periods. In addition, the Company’s determination of the allowance for loan losses is subject to review by the OCC, which can require the establishment of additional general or specific allowances. Real estate properties acquired through foreclosure are recorded at fair value. If fair value at the date of foreclosure is lower than the balance of the related loan, the difference will be charged to the allowance for loan losses at the time of transfer. Valuations are periodically updated by management and, if the value declines, a specific provision for losses on such property is established by a charge to operations. The following table sets forth an analysis of the Company’s allowance for loan losses. September 30, 2017 2016 2015 2014 2013 (Dollars in Thousands) Balance at Beginning of Period $ 5,635 $ 6,255 $ 5,397 $ 3,930 $ 3,971 Charge Offs: 1-4 Family Real Estate — (32) (45) — (25) Commercial & Multi-Family Real Estate (138) (385) (214) — (194) Consumer (7,084) (728) — — (1) Commercial Operating (1,149) (249) — — — Agricultural Operating — (3,252) (186) (50) — Premium Finance (626) (726) (285) — — Total Charge Offs (8,997) (5,372) (730) (50) (220) Recoveries: 1-4 Family Real Estate — — — 2 2 Commercial & Multi-Family Real Estate — 27 6 347 113 Consumer 209 11 — — 1 Commercial Operating 25 — 3 18 63 Agricultural Operating 12 2 — — — Premium Finance 61 107 114 — — Total Recoveries 307 147 123 367 179 Net (Charge Offs) Recoveries (8,690) (5,225) (607) 317 (41) Provision Charged to Expense 10,589 4,605 1,465 1,150 — Balance at End of Period $ 7,534 $ 5,635 $ 6,255 $ 5,397 $ 3,930 Ratio of Net Charge Offs During the Period to Average Loans Outstanding During the Period 0.73% 0.06% 0.10% (0.07)% 0.01% Ratio of Net Charge Offs During the Period to Non-Performing Assets at Year End 22.94% 443.84% 7.78% (31.66)% 5.07% Allowance to Total Loans 0.57% 0.61% 0.88% 1.08 % 1.02% Allowance to Total Loans - excluding insured loans (1) 0.63% 0.61% 0.88% 1.08 % 1.02% (1) Excludes from the total loan balance student loans that are insured by ReliaMax Surety Company.