MPS, through the Bank, owns or is seeking a number of patents, trademarks and other forms of intellectual property with respect to the operation of its business and the protection of such intellectual property may in the future require material expenditures.

In its operations, MPS, through the Bank, seeks protection for various forms of intellectual property from time to time. No assurance can be given that such protection will be granted. In addition, given the competitive market environment of its business, the Bank must be vigilant in ensuring that its patents and other intellectual property are protected and not exploited by unlicensed third parties.

The Bank must also protect itself and defend against intellectual property challenges initiated by third parties making various claims against MPS. With respect to these claims, regardless of whether we are pursuing our claims against perceived infringers or defending our intellectual property from third parties asserting various claims of infringement, it is possible that significant personnel time and monetary resources could be used to pursue or defend such claims.

It should also be noted that intellectual property risks extend to foreign countries whose protections of such property are not as extensive as those in the United States. As such, the Bank may need to spend additional sums to ensure that its intellectual property protections are maximized globally. Moreover, should there be a material, improper use of the Bank’s intellectual property, this could have an impact on the division’s operations.

Costs of conforming products and services to the Payment Card Industry Data Security Standards (the “PCI DSS”) are costly and could continue to affect the operations of MPS.

The PCI DSS is a multifaceted standard that includes data security management, policies and procedures as well as other protective measures, that was created by the largest credit card associations in the world in an effort to protect the nonpublic personal information of all types of cardholders, including prepaid cardholders and holders of network branded credit cards (such as Discover, MasterCard and Visa). The PCI DSS mandates a prescribed technical foundation for the collection, storage and transmission of cardholder data and also contains significant provisions regarding the testing of security protections by various entities in the payment card industry, including MPS. Compliance with the PCI DSS is costly and changes to the standards could have an equal, or greater, effect on profitability of the relevant business division.

The potential for fraud in the card payment industry is significant.

Issuers of prepaid and credit cards have suffered significant losses in recent years with respect to the theft of cardholder data that has been illegally exploited for personal gain. The theft of such information is regularly reported and affects not only individuals but businesses as well. Many types of credit card fraud exist, including the counterfeiting of cards and “skimming.”

Losses from fraud have been substantial for certain card industry participants. Although fraud has not had a material impact on the profitability of the Bank, it is possible that such activity could adversely impact in the future, notwithstanding, our recent introduction of EMV (i.e., chip-enabled) cards.

Part of our business depends on sales agents who do not sell our products exclusively.

Our business model, to some degree, depends upon the use of sales agents who are not our employees. These agents sell the products and services of many different processors to merchants and other parties in need of card services. Failure to maintain good relations with such sales agents could have a negative impact on our business.

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Products and services offered by MPS involve many business parties and the possibility of collusion exists.

As described above, the theft of cardholder data is a significant threat in the industry in which MPS operates. This threat also includes the possibility that there is collusion between certain participants in the card system to act illegally. Although MPS is not aware of any instances to date, it is possible that such activities could occur in the future, thereby impacting its operation and profitability.

Competition in the card industry is significant. In order to maintain an edge to its products and offerings, MPS must invest significantly in technology and research and development.

The heavy emphasis upon technology in the products and services offered by MPS requires significant expenditures with respect to research and development both to exploit technological gains and to develop new products and services to meet customers’ needs. As is common with most research and development, while some efforts may yield substantial benefits for the division, others will not, thereby resulting in expenditures for which profits will not be realized. MPS is not able to predict with any degree of certainty as to the level of research and development that will be required in the future, how much those efforts will cost, or how profitable such developments will be for the division once undertaken.

Our business could suffer if there is a decline in the use of prepaid cards or there are adverse developments with respect to the prepaid financial services industry in general.

As the prepaid financial services industry evolves, consumers may find prepaid financial services to be less attractive than other financial services. Consumers might not use prepaid financial services for any number of reasons. For example, negative publicity surrounding the Company or other prepaid financial service providers could impact MPS’ business and prospects for growth to the extent it adversely impacts the perception of prepaid financial services. If consumers do not continue or increase their usage of prepaid cards, MPS’ operating revenues may remain at current levels or decline. Growth of prepaid financial services as an electronic payment mechanism may not occur or may occur more slowly than estimated. If there is a shift in the mix of payment forms used by consumers (i.e., cash, credit cards, traditional debit cards and prepaid cards) away from products and services offered by MPS, such a shift could have a material adverse effect on our financial condition and results of operations.

Discover, MasterCard and Visa, as well as other electronic funds networks in which MPS operates, could change their rules.

Pursuant to the agreements between MPS and Discover, MasterCard, Visa and other card networks, these third parties typically have retained the right to prescribe certain business practices and procedures with respect to parties such as MPS. Such prescribed terms include, but are not limited to, a contracting party’s level of capital as well as other business requirements.

Discover, MasterCard and Visa also retain the right in their agreements with industry participants such as MPS to unilaterally change the rules under which such transactions are processed with little or no advance warning. This power includes the power to prevent MPS from accessing their networks in order to process transactions. Should any third party choose to invoke this right unilaterally, such changes could materially impact the operations of MPS.

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Our business is heavily dependent upon the Internet and any negative disruptions to its operation could negatively impact our business.

Much of our business depends upon transactions being processed through the Internet. Like nearly all other commercial enterprises, we rely upon others to provide the Internet so that commerce can be conducted. Were there to be a failure in the operation of the Internet or a significant impairment in our ability to move information on the Internet or our ability to do so in accordance with customer safeguard protocols, MPS would develop alternative processes during which time revenues and profitability may be lower.

Our ability to process transactions requires functioning communication and electricity lines.

The nature of the banking industry in general, and the credit card and debit card industry in particular, is that it must be operational every day of the week and every hour of the week. Any disruption in the utilities utilized by the Bank or MPS could have a negative effect on our operations and extensive disruptions could materially affect our operations, and have a material adverse effect on our financial condition and results of operations.

Data encryption technology has not been perfected and vigilance in MPS’ information technology systems is costly.

MPS holds sensitive business and personal information with respect to the products and services it offers. This information, which is generally digitally encrypted, is passed along various technology channels, including the Internet. Although MPS encrypts its customer and other sensitive information and expends significant financial and personnel resources to maintain the integrity of its technology networks and the confidentiality of nonpublic customer information, because such information may travel on public technology and other non-secure channels, the confidential information is potentially susceptible to hacking and other illegal intrusions. Were such a security breach to occur, the provision of products and services to customers of MPS would be impaired. In addition, were a breach to occur, we could incur significant fines from the electronic funds associations involved, or from federal and/or state regulators, and be subject to other prohibitions, as well as extensive litigation from commercial parties and consumers affected by such breach, that would have a material adverse effect on our financial condition and results of operations.

Unclaimed funds represented by unused value on the cards presents compliance and other risks.

The concept of escheatment involves the reporting and delivery of property to states that is abandoned when its rightful owner cannot be readily located and/or identified. In the context of prepaid cards, the funds in connection with such cards can sometimes be “abandoned” or unused for the relevant period of time set forth in each applicable state’s abandoned property laws. MPS utilizes automated programs to ensure its operations are compliant with such applicable laws and regulations. There appears, however, to be a movement among some state regulators to interpret definitions in escheatment statutes and regulations in a manner that is more aggressive. Should such state regulators choose to do so, they may initiate collection or other litigation action against prepaid card issuers for unreported abandoned property. Such actions may seek to assess fines and penalties.

MPS operates in a highly competitive environment and the ability to attract and retain qualified personnel may be difficult.

MPS competes in a highly competitive environment with other larger and better capitalized financial intermediaries. In addition, the field of professionals involved in the design and production of products and services offered by MPS is highly skilled and actively sought after by financial institutions, electronic card networks and other commercial entities. As such, MPS must spend significant sums to attract employees and executives and must monitor compensation and other employment trends to ensure that compensation packages both foster the necessary creative environment and appropriately compensate such individuals in order to retain them.

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MPS Revenue Concentration.

MPS works with a large number of business partners to derive its revenue. The Company believes four of its partners have reached a size that, should these partners’ business with the Company end or there is a significant decrease in revenues associated with any of these business relationships, the earnings attributable to them would have a material effect on the financial results of the Company.

Item 1B.

Unresolved Staff Comments

Not applicable.

Item 2.

Properties

The Bank is a federally chartered savings bank which operates 10 full-service branch banking offices in four market areas in Iowa and South Dakota: Northwest Iowa, Brookings, Central Iowa and Sioux Empire, one non-retail service branch in Memphis, Tennessee, and three non-branch offices located in Texas, California and Kentucky related to the Bank's AFS/IBEX and Refund Advantage operations. The Bank’s home office, with Federal approval in 2015, has been moved from 121 East Fifth Street in Storm Lake, Iowa to 5501 South Broadband Lane in Sioux Falls, South Dakota. Our Meta Payment Systems division offers prepaid cards and other payment industry products and services nationwide. Our AFS/IBEX division provides nationwide commercial insurance premium financing for business and insurance agencies and has two agency offices, one in Dallas, Texas, and one in Southern California.

Of the 17 properties, the Company leases 11 of them, all on market terms. See Note 6 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.

Though the Company has experienced rapid growth, particularly as a result of growth of MPS, management believes current facilities are adequate to meet its present needs.

The Bank maintains an online database with a service bureau, whose primary business is providing such services to financial institutions.

Item 3.

Legal Proceedings

The Bank has been named as a defendant, along with other defendants, in four class action litigations commenced in three different federal district courts between October 23, 2015 and November 5, 2015: (1) Fuentes, et al. v. UniRush LLC, et al. (S.D.N.Y. Case No. 1:15-cv-08372); (2) Huff et al. v. UniRush, LLC et al. (E.D. Cal. Case No. 2:15-cv-02253-KJM-CMK); (3) Peterkin v. UniRush LLC, et al. (S.D.N.Y. Case No. 1:15-cv-08573); and (4) Jones v. UniRush, LLC et al. (E.D. Pa. Case No. 5:15-cv-05996-JLS). The complaints in each of these actions seek monetary damages for the alleged inability of customers of the prepaid card product RushCard to access the product for up to two weeks starting on or about October 12, 2015. The plaintiffs allege claims for breach of contract, fraud, misrepresentation, negligence, unjust enrichment, conversion, and breach of fiduciary duty and violations of various state consumer protection statutes prohibiting unfair or deceptive acts or trade/business practices. Due to the recent filing of the complaints, the Company is evaluating the cases and has not yet filed an answer. In addition, the OCC and the CFPB are examining the events surrounding the allegations with respect to the Company and the other defendants, respectively. The OCC has broad supervisory powers with respect to the Bank and could seek to initiate supervisory action if it believes such action is warranted. Because these cases were recently filed and are in their early stages and because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for these actions because, among other things, our potential liability depends on whether a class is certified and, if so, the composition and size of any such class, as well as on an assessment of the appropriate measure of damages if we were to be found liable. Accordingly, we have not recognized any liability associated with these actions.

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The Bank was served on April 15, 2013, with a lawsuit captioned Inter National Bank v. NetSpend Corporation, MetaBank, BDO USA, LLP d/b/a BDO Seidman, Cause No. C-2084-12-I filed in the District Court of Hidalgo County, Texas. The Plaintiff’s Second Amended Original Petition and Application for Temporary Restraining Order and Temporary Injunction adds both MetaBank and BDO Seidman to the original causes of action against NetSpend. NetSpend acts as a prepaid card program manager and processor for both INB and MetaBank. According to the Petition, NetSpend has informed Inter National Bank (“INB”) that the depository accounts at INB for the NetSpend program supposedly contained $10.5 million less than they should. INB alleges that NetSpend has breached its fiduciary duty by making affirmative misrepresentations to INB about the safety and stability of the program, and by failing to timely disclose the nature and extent of any alleged shortfall in settlement of funds related to cardholder activity and the nature and extent of NetSpend’s systemic deficiencies in its accounting and settlement processing procedures. To the extent that an accounting reveals that there is an actual shortfall, INB alleges that MetaBank may be liable for portions or all of said sum due to the fact that funds have been transferred from INB to MetaBank, and thus MetaBank would have been unjustly enriched. The Bank is vigorously contesting this matter. In January 2014, NetSpend was granted summary judgment in this matter which is under appeal. Because the theory of liability against both NetSpend and the Bank is the same, the Bank views the NetSpend summary judgment as a positive in support of our position. An estimate of a range of reasonably possible loss cannot be made at this stage of the litigation because discovery is still being conducted.

Certain corporate clients of an unrelated company named Springbok Services, Inc. (“Springbok”) requested through counsel a mediation as a means of reaching a settlement in lieu of commencing litigation against MetaBank. The results of that mediation have not led to a settlement. These claimants purchased MetaBank prepaid reward cards from Springbok, prior to Springbok’s bankruptcy. As a result of Springbok’s bankruptcy and cessation of business, some of the rewards cards that had been purchased were never activated or funded. Counsel for these companies have indicated that they are prepared to assert claims totaling approximately $1.5 million against MetaBank based on principal/agency or failure to supervise theories. The Company denies liability with respect to these claims. The Company’s estimate of a range of reasonably possible loss is approximately $0 to $0.3 million.

The Bank commenced action against C&B Farms, LLC, Dakota River Farms, LLC, Dakota Grain Farms, LLC, Heather Swenson and Tracy Clement in early July, 2015, in the Third Judicial Circuit Court of the State of South Dakota, seeking to collect upon certain delinquent loans made in connection with the 2014 farming operations of the three identified limited liability companies and the personal guaranties of Swenson and Clement. The three companies and Clement have answered the Complaint and asserted a counterclaim against the Bank and a third-party claim against the Bank’s loan officer. The counterclaim and third-party claim allege that the Bank and its loan officer made certain statements to Clement in early 2015 indicating that the Bank would renew the operating lines and provide financing to the entities for the 2015 growing season. The claimants assert that the Bank abruptly changed course in March, 2015, and ultimately declined to extend new operating lines to the defendants for the 2015 season. The claimants assert that the Bank’s conduct amounted to a fraud and misrepresentation. Additionally, they assert promissory estoppel based on their reliance upon the Bank’s earlier assurances of additional credit from the Bank to their detriment. They assert unspecified damages based on the Bank’s alleged actions, including higher costs of financing from a new lender and, additionally, that they were unable to take advantage of other discount and sale opportunities to their detriment. The Bank intends to vigorously defend the claims. An estimate of a range of reasonably possible loss cannot be made at this stage of the litigation because discovery is still being conducted.

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Other than the matters set forth above, there are no other new material pending legal proceedings or updates to which the Company or its subsidiaries is a party other than ordinary litigation routine to their respective businesses.

Item 4.

Mine Safety Disclosures

Not applicable.

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PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock trades on the NASDAQ Global Market^® under the symbol “CASH.” Quarterly dividends for 2015 and 2014 were $0.13. The high and low sales price of the common stock, as reported on the NASDAQ Global Market, was as follows:

	Fiscal Year 2015				Fiscal Year 2014
	Low		High		Low		High

First Quarter	$	33.76	$	38.47	$	36.54	$	40.88
Second Quarter		32.02		40.49		38.07		45.99
Third Quarter		38.41		43.81		35.04		45.34
Fourth Quarter		41.43		53.51		34.85		40.06

Prices disclose inter-dealer quotations without retail mark-up, mark-down or commissions and do not necessarily represent actual transactions.

Dividend payment decisions are made with consideration of a variety of factors including earnings, financial condition, market considerations and regulatory restrictions.

As of December 9, 2015, the Company had 8,220,075 shares of common stock outstanding, which were held by approximately 185 stockholders of record, and 189,088 shares subject to outstanding options. The stockholders of record number does not reflect approximately 1,800 persons or entities that hold their stock in nominee or “street” name.

The transfer agent for the Company’s common stock is Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845.

There were no purchases by the Company during the fiscal year ended September 30, 2015, of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.

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Item 6.

Selected Financial Data

SEPTEMBER 30,	2015		2014		2013		2012		2011

SELECTED FINANCIAL CONDITION DATA
(Dollars in Thousands)

Total assets	$	2,529,705	$	2,054,031	$	1,691,989	$	1,648,898	$	1,275,481
Loans receivable, net		706,255		493,007		380,428		326,981		314,410
Securities available for sale		1,256,087		1,140,216		881,193		1,116,692		619,248
Securities held to maturity		345,744		282,933		288,026		-		-
Goodwill and intangible assets		70,505		2,588		2,339		2,035		1,315
Deposits		1,657,534		1,366,541		1,315,283		1,379,794		1,141,620
Total borrowings		561,317		497,721		216,456		47,710		29,365
Stockholders' equity		271,335		174,802		142,984		145,859		80,577

YEAR ENDED SEPTEMBER 30,		2015		2014		2013		2012		2011

SELECTED OPERATIONS DATA
(Dollars in Thousands, Except Per Share Data)

Total interest income	$	61,607	$	48,660	$	38,976	$	37,297	$	39,059
Total interest expense		2,387		2,398		2,954		3,563		4,747
Net interest income		59,220		46,262		36,022		33,734		34,312
Provision for loan losses		1,465		1,150		-		1,049		278
Net interest income after provision for loan losses		57,755		45,112		36,022		32,685		34,034
Total non-interest income		58,174		51,738		55,503		69,574		57,491
Total non-interest expense		96,506		78,231		74,403		75,463		83,262
Income (loss) before income tax expense (benefit)		19,423		18,619		17,122		26,796		8,263
Income tax expense (benefit)		1,368		2,906		3,704		9,682		3,623
Net income (loss)		18,055		15,713		13,418		17,114		4,640

Earnings per common share:
Basic	$	2.68	$	2.57	$	2.40	$	4.94	$	1.49
Diluted	$	2.66	$	2.53	$	2.38	$	4.92	$	1.49

YEAR ENDED SEPTEMBER 30,	2015			2014			2013			2012			2011

SELECTED FINANCIAL RATIOS AND OTHER DATA

PERFORMANCE RATIOS
Return on average assets		0.78	%		0.81	%		0.78	%		1.22	%		0.41	%
Return on average equity		8.83	%		10.01	%		9.36	%		18.47	%		5.71	%
Net interest margin		3.03	%		2.80	%		2.48	%		2.56	%		3.21	%

QUALITY RATIOS
Non-performing assets to total assets		0.31	%		0.05	%		0.05	%		0.16	%		1.24	%
Allowance for loan losses to non-performing loans		80	%		547	%		568	%		219	%		53	%

CAPITAL RATIOS
Stockholders' equity to total assets		10.73	%		8.51	%		8.45	%		8.85	%		6.32	%
Average stockholders' equity to average assets		8.81	%		8.14	%		8.37	%		6.62	%		7.16	%

OTHER DATA
Book value per common share outstanding at end of year	$	33.24		$	28.33		$	23.55		$	26.79		$	25.61
Tangible book value per common share outstanding at end of year	$	24.60		$	27.91		$	23.17		$	26.42		$	25.19
Dividends declared per share at end of year		0.52			0.52			0.52			0.52			0.52
Number of full-service offices at end of year		10			11			11			12			12

Common Shares Outstanding		8,163,022			6,169,604			6,070,654			5,443,881			3,146,867

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Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section should be read in conjunction with the following parts of this Form 10-K: Part II, Item 8 “Financial Statements and Supplementary Data,” Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” and Part I, Item 1 “Business.”

General

The Company, a registered unitary savings and loan holding company, is a Delaware corporation, the principal assets of which are all the issued and outstanding shares of the Bank, a federal savings bank. Unless the context otherwise requires, references herein to the Company include Meta Financial and the Bank, and all subsidiaries of Meta Financial, direct or indirect, on a consolidated basis.

The Company’s stock trades on the NASDAQ Global Select Market under the symbol “CASH.”

Overview of Corporate Developments

On December 2, 2014, the Company, through its bank subsidiary, MetaBank, completed an acquisition of substantially all of the commercial loan portfolio and related assets of AFS/IBEX Financial Services, Inc. The acquisition included the AFS/IBEX operating platform, other related assets and approximately $74.1 million of outstanding insurance premium finance loan receivables. The purchase price for the acquisition included the payment of $99.3 million in cash. The AFS/IBEX business, now an operating division of the Bank, continues to serve businesses and insurance agencies nationwide with commercial insurance premium financing. The AFS/IBEX division is located in Dallas, Texas, with a full-service office in Southern California. The Company reviewed its securities portfolio in connection with the AFS/IBEX acquisition and sold approximately $80 million of investment securities to fund the loan portfolio acquisition. Securities were selected and sold during November and December 2014 on an opportunistic basis at a net loss of approximately $1.4 million with the intent to minimize the recoupment period. See Note 2 to the “Notes to Consolidated Financial Statements.”

In March 2015, Meta announced the sale of 740,654 common shares under its “at-the-market” equity offering announced on December 17, 2014. The common shares sold at an average price of $35.03 per share. Proceeds to the Company, net of direct selling costs, were $25.4 million.

On September 8, 2015, the Company completed the acquisition of substantially all of the assets and liabilities of Fort Knox Financial Services Corporation and its subsidiary, Tax Product Services LLC (together “Refund Advantage”). The Company will continue to provide its Refund Advantage professional tax refund‑transfer software services used by independent Electronic Refund Originators and their customers. The purchase price for the acquisition included the payment of $26 million in cash as well as the issuance of 581,260 shares of the Company’s common stock to the shareholders of Fort Knox. The cash portion of the purchase price was funded from the proceeds of a private placement of 535,000 shares of the Company’s common stock to certain institutional investors. See Note 2 to the “Notes to Consolidated Financial Statements.”

The Company recorded net income of $18.1 million in fiscal 2015 compared to $15.7 million in fiscal 2014. The primary reasons for the increase in net income were increases in both investment securities portfolio interest income and loan portfolio interest income, bolstered by a significant increase in non-interest income from $51.7 million in fiscal 2014 to $58.2 million in fiscal 2015. In fiscal 2015, the Company’s net interest income was $59.2 million, compared to $46.3 million in fiscal 2014 and $36.0 million in fiscal 2013. The increase was primarily driven by growth in loan volumes and rates achieved on loans receivable, particularly aided by the loans produced at the Company’s AFS/IBEX division. Additionally, the overall increase was driven by higher volume and yields attained from investments. Offsetting higher net interest income and non-interest income in part was non-interest expense, which rose $18.3 million, from $78.2 million in fiscal 2014, to $96.5 million in fiscal 2015.

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Retail Bank segment 2015 fiscal year net income was $9.1 million compared to $8.7 million in fiscal 2014. Retail Bank checking balances continued to grow from $80.8 million at September 30, 2014, to $88.7 million, or 9.8%, at September 30, 2015. Retail Bank total loans increased $106.1 million during the fiscal year, or 21.8%, to $593.3 million, from strong growth in the residential real estate, commercial and multi-family real estate, and agricultural lending segments.

MPS segment 2015 fiscal year net income was $8.8 million compared to $7.7 million in fiscal 2014. This increase was primarily the result of an increase in tax-related prepaid card volume and the addition of new partners throughout the year. The average internal net interest yield MPS received for its deposits was 1.45% for the 2015 fiscal year and 1.48% in the comparable 2014 period.

Overall cost of funds at MetaBank averaged 0.11% during fiscal 2015, compared to 0.14% for 2014.

Tangible book value per common share decreased by $3.31, or 12%, to $24.60 per share at September 30, 2015, from $27.91 per share at September 30, 2014. This decrease is primarily attributable to increases in goodwill, intangible assets and shares issued in connection with the Refund Advantage asset purchase. Partially offsetting this reduction was an increase in retained earnings. The tangible book value per common share, excluding accumulated other comprehensive income (“AOCI”) was $24.30 as of September 30, 2015, compared to $28.47 as of September 30, 2014. Book value per common share outstanding increased by $4.91, or 17%, to $33.24 per share at September 30, 2015, from $28.33 per share at September 30, 2014.

The Company’s non-performing assets (“NPAs”) were 0.31% of total assets at September 30, 2015, compared to 0.05% at September 30, 2014, and 0.33% at June 30, 2015. The increase from September 2014 was mainly due to the previously reported downgrade of a large agriculture lending relationship. Excluding the AFS/IBEX portfolio, NPAs were 0.24% of total assets at September 30, 2015.

On January 5, 2015, the FDIC published industry guidance (the “Guidance”) in the form of Frequently Asked Questions with respect to the categorization of deposit liabilities as "brokered" deposits; this guidance was supplemented with additional proposed guidance on November 13, 2015. The Company had $1.1 billion, or 65.1% of its deposit liabilities, and 47.8% of its total liabilities, in brokered deposits, as of September 30, 2015. See “Business – Regulation – FDIC Deposit Classification Guidance.”

Financial Condition

As of September 30, 2015, the Company’s assets grew by $475.7 million, or 23.2%, to $2.5 billion compared to $2.1 billion at September 30, 2014. The increase in assets was reflected primarily in increases in the Company’s loan balances, investment securities portfolio, goodwill and intangibles associated with the Refund Advantage and AFS/IBEX asset purchases.

Total cash and cash equivalents and federal funds sold were $27.7 million at September 30, 2015, a decrease of $2.1 million from $29.8 million at September 30, 2014. In general, the Company maintains its cash investments in interest-bearing overnight deposits with the FHLB of Des Moines and the FRB of Minneapolis. At September 30, 2015, the Company had no federal funds sold.

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The total of mortgage-backed securities (“MBS”) and investment securities increased $178.7 million, or 12.6%, to $1.6 billion at September 30, 2015, as investment purchases exceeded related maturities, sales and principal pay downs. The Company’s portfolio of securities consists primarily of MBS, which have relatively short expected lives and non-bank qualified obligations of states and political subdivisions (“NBQ”) which mature in approximately 15 years or less. All MBS held by the Company are issued by a U.S. Government agency or instrumentality. Of the total of $643.2 million of MBS, $576.6 million are classified as available for sale (“AFS”), and $66.6 million are classified as held to maturity (“HTM”). Of the total of $958.7 million of investment securities, $679.5 million are classified as AFS and $279.2 million are classified as HTM. During fiscal 2015, the Company purchased $543.8 million of MBS with an average life in total estimated at approximately five years or less or stated final maturities of approximately 30 years or less and sold MBS in the amount of $489.4 million. In addition, the Company purchased $350.5 million of investment securities which are primarily comprised of tax exempt municipal bonds and Small Business Administration related securities. See Note 6 to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

The Company’s portfolio of net loans receivable increased by $213.2 million, or 43.3%, to $706.3 million at September 30, 2015, from $493.0 million at September 30, 2014. These increases from September 30, 2014 primarily relate to the AFS/IBEX premium finance loans of $106.5 million, and growth in commercial and multi-family real estate loans, one-to-four family real estate loans, and agricultural real estate loans of $85.9, $8.6 and $8.2 million, respectively. Consumer loans and agricultural operating loans also increased with the commercial operating category representing the only decrease. See Note 3 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.

Through the Bank, the Company owns stock in the FHLB due to the Bank’s membership and participation in this banking system. The FHLB requires a level of stock investment based on a pre-determined formula. The Company’s investment in such stock increased $3.2 million, or 14.9%, to $24.4 million at September 30, 2015, from $21.2 million at September 30, 2014. The increase directly correlates with the higher overnight federal funds purchased.

Intangible assets and goodwill increased significantly due to the asset purchases of AFS/IBEX and Refund Advantage. Intangible assets increased $31.0 million to $33.6 million. Goodwill increased $36.9 million from $0 at September 30, 2014.

Total deposits increased by $291.0 million, or 21.3%, to $1.7 billion at September 30, 2015, from $1.4 billion at September 30, 2014. Deposits attributable to MPS were up $324.8 million, or 29.5%, at September 30, 2015, as compared to September 30, 2014. The increase is due to the addition of several new partners during fiscal 2015, along with natural growth in existing programs.

The Company’s total borrowings increased $63.6 million, or 12.8%, from $497.7 million at September 30, 2014, to $561.3 million at September 30, 2015, primarily due to the increase in federal funds purchased. The Company’s overnight federal funds purchased fluctuates on a daily basis due to the nature of a portion of its non-interest-bearing deposit base, primarily related to payroll processing timing with a higher volume of overnight federal funds purchased on Monday and Tuesday, which are typically paid down throughout the week. This predictable fluctuation may be augmented near a month-end by a prefunding of certain programs.

See Notes 8, 9 and 10 to the “Notes to Consolidated Financial Statements,” which are included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

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At September 30, 2015, the Company’s stockholders’ equity totaled $271.3 million, an increase of $96.5 million from $174.8 million at September 30, 2014. Stockholders’ equity increased primarily as a result of issuances of common stock, an increase in retained earnings and unrealized income on investment securities due to market conditions. At September 30, 2015, the Bank continued to meet regulatory requirements for classification as a well-capitalized institution. See Note 15 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.

Results of Operations

The Company’s results of operations are dependent on net interest income, provision for loan losses, non-interest income, non-interest expense, income tax expense and other comprehensive income or loss. Net interest income is the difference, or spread, between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. Notwithstanding that a significant amount of the Company’s deposits, primarily those attributable to MPS, pay low rates of interest or none at all, the Company, like other financial institutions, is subject to interest rate risk to the extent that its interest-earning assets mature or reprice at different times, or on a different basis, than its interest-bearing liabilities.

The Company’s non-interest income is derived primarily from prepaid card, credit products, ATM fees attributable to MPS and fees charged on bank loans and transaction accounts. Non-interest income is also derived from net gains on the sale of securities available for sale as well as the Company’s holdings of bank-owned life insurance. This income is offset by expenses, such as compensation and occupancy expenses associated with additional personnel and office locations as well as card processing expenses attributable to MPS. Non-interest expense is also impacted by acquisition-related expenses, occupancy and equipment expenses, regulatory expenses, and legal and consulting expenses.

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Average Balances, Interest Rates and Yields

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. Only the yield/rate have tax equivalent adjustments. Non-Accruing loans have been included in the table as loans carrying a zero yield.

Year Ended September 30,	2015							2014							2013
(Dollars in Thousands)	Average Outstanding Balance		Interest Earned / Paid		Yield / Rate			Average Outstanding Balance		Interest Earned / Paid		Yield / Rate			Average Outstanding Balance		Interest Earned / Paid		Yield / Rate
Interest-earning assets:
Loans receivable	$	617,866	$	29,565		4.79	%	$	439,323	$	19,674		4.48	%	$	340,702	$	16,151		4.74	%
Mortgage-backed securities		695,539		13,979		2.01	%		694,510		15,343		2.21	%		700,709		11,900		1.70	%
Other investments and fed funds sold		905,384		18,063		2.89	%		721,141		13,643		2.68	%		598,003		10,925		2.61	%
Total interest-earning assets		2,218,789	$	61,607		3.14	%		1,854,974	$	48,660		2.93	%		1,639,414	$	38,976		2.66	%
Non-interest-earning assets		103,138							73,878							72,600
Total assets	$	2,321,927						$	1,928,852						$	1,712,014

Non-interest bearing deposits	$	1,632,130	$	-		0.00	%	$	1,319,447	$	-		0.00	%	$	1,192,969	$	-		0.00	%
Interest-bearing liabilities:
Interest-bearing checking		35,610		88		0.25	%		33,353		96		0.29	%		32,030		125		0.39	%
Savings		34,129		40		0.12	%		28,882		47		0.16	%		27,907		39		0.14	%
Money markets		39,401		61		0.15	%		40,589		72		0.18	%		40,694		100		0.25	%
Time deposits		85,843		537		0.63	%		110,992		750		0.68	%		101,552		1,016		1.00	%
FHLB advances		7,000		495		7.07	%		7,000		495		7.07	%		8,087		727		8.99	%
Overnight fed funds purchased		234,025		691		0.30	%		185,440		538		0.29	%		129,016		423		0.33	%
Other borrowings		21,193		475		2.24	%		20,433		400		1.96	%		20,839		524		2.51	%
Total interest-bearing liabilities		457,201		2,387		0.52	%		426,689		2,398		0.56	%		360,125		2,954		0.82	%
Total deposits and interest-bearing liabilities		2,089,331	$	2,387		0.11	%		1,746,136	$	2,398		0.14	%		1,553,094	$	2,954		0.19	%
Other non-interest bearing liabilities		28,009							25,748							15,605
Total liabilities		2,117,340							1,771,884							1,568,699
Stockholders' equity		204,587							156,968							143,315
Total liabilities and stockholders' equity	$	2,321,927						$	1,928,852						$	1,712,014
Net interest income and net interest rate spread including non-interest bearing deposits			$	59,220		3.03	%			$	46,262		2.79	%			$	36,022		2.47	%

Net interest margin						3.03	%						2.80	%						2.48	%

Rate / Volume Analysis

The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the change related to higher outstanding balances and the change due to the levels and volatility of interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

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Rate / Volume

Year Ended September 30,	2015 vs. 2014									2014 vs. 2013

	Increase / (Decrease) Due to Volume			Increase / (Decrease) Due to Rate			Total Increase / (Decrease)			Increase / (Decrease) Due to Volume			Increase / (Decrease) Due to Rate			Total Increase / (Decrease)
Interest-earning assets
Loans Receivable	$	8,452		$	1,439		$	9,891		$	4,451		$	(928	)	$	3,523
Mortgage-backed securities		23			(1,387	)		(1,364	)		(106	)		3,549			3,443
Other investments		3,383			1,037			4,420			2,405			313			2,718
Total interest-earning assets	$	11,858		$	1,089		$	12,947		$	6,750		$	2,934		$	9,684

Interest-bearing liabilities
Interest-bearing checking	$	6		$	(14	)	$	(8	)	$	5		$	(34	)	$	(29	)
Savings		7			(14	)		(7	)		2			6			8
Money markets		(2	)		(9	)		(11	)		(0	)		(28	)		(28	)
Time deposits		(161	)		(52	)		(213	)		86			(352	)		(266	)
FHLB advances		-			-			-			(90	)		(142	)		(232	)
Overnight fed funds purchased		135			18			153			171			(56	)		115
Other borrowings		15			60			75			(10	)		(114	)		(124	)
Total interest-bearing liabilities	$	0		$	(11	)	$	(11	)	$	164		$	(720	)	$	(556	)

Net effect on net interest income	$	11,858		$	1,100		$	12,958		$	6,586		$	3,654		$	10,240

Comparison of Operating Results for the Years Ended

September 30, 2015, and September 30, 2014

General. The Company recorded net income of $18.1 million, or $2.66 per diluted share, for the year ended September 30, 2015, compared to $15.7 million, or $2.53 per diluted share, for the year ended September 30, 2014, an increase of $2.4 million. The increase in net income was primarily caused by a $9.9 million increase in loan income, a $5.8 million increase in card fee income, a $3.1 million increase related to the securities portfolio and a decrease in tax expense of $1.5 million. The net income increase was offset in part primarily by an increase in compensation and benefits expense of $8.3 million, increased occupancy and equipment expense of $2.4 million, an increased loss on sale of securities of $1.7 million, increased intangible amortization expense of $1.3 million, increased regulatory expense of $1.1 million and increased card processing expense of $1.0 million.

Net Interest Income. Net interest income for fiscal 2015 increased by $12.9 million, or 28.0%, to $59.2 million from $46.3 million for the prior year. Net interest margin increased to 3.03% in fiscal 2015 as compared to 2.80% in 2014. The increases are mainly due to an improved mix of earning assets, particularly growth in loans receivable and corresponding yields achieved in that portfolio. Additionally, the overall increase was driven by a higher volume and yields of other investments (primarily AA and AAA rated General Obligation (“GO”) municipal bonds).

The Company’s average earning assets increased $363.8 million, or 20.0%, to $2.2 billion during fiscal 2015 from $1.8 billion during 2014. The increase is primarily the result of the increase in the Company’s investment securities and non-bank qualified, high-quality municipal portfolios as well as loans receivable.

Overall, when using a taxable equivalent yield (“TEY”), the Company’s interest earning asset yield increased by 21 basis points primarily driven by a shift in the earning asset mix to increased volume in loans and investment securities and improved yields achieved within those portfolios. The improvement in yield/rate on loans receivable also reflects the acquired and newly generated premium finance loans. The yield on non-MBS investment securities increased by 25 basis points on a TEY basis. The yield on government-related MBS decreased 20 basis points as longer-term interest rates decreased materially throughout the fiscal year. Average TEY on the securities portfolio increased by 8 basis points in fiscal 2015 compared to fiscal 2014.

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The Company’s average total deposits and interest-bearing liabilities increased $343.2 million, or 19.7%, to $2.1 billion during fiscal 2015 from $1.7 billion during 2014. The increase resulted mainly from an increase in the Company’s non-interest-bearing deposits and federal funds purchased. The average outstanding balance of non-interest-bearing deposits increased from $1.3 billion in fiscal 2014 to $1.6 billion in fiscal 2015. The Company’s cost of total deposits and interest-bearing liabilities declined three basis points to 0.11% during fiscal 2015 from 0.14% during 2014, primarily due to continued migration to low- and no-cost deposits provided by MPS.

Provision for Loan Losses. In fiscal 2015, the Company recorded $1.5 million in provision for loan loss, compared to $1.2 million in 2014. The increased provision was primarily due to loan growth.

Management closely monitors economic developments, both regionally and nationwide, and considers these factors when assessing the appropriateness of its allowance for loan losses. While the current economic environment is still slightly strained, it has begun to show signs of improvement in the Company’s markets. The Company’s loss rates over the past three years have been very low. Notwithstanding these signs of improvement, the Company does not believe it is likely these low loss conditions will continue indefinitely. All of the Company’s markets indirectly benefit from the current agricultural market. Loss rates in the agricultural real estate and agricultural operating loan portfolios have been minimal in the past three years. Low loss rates are primarily due to good weather, higher than average livestock prices and strong crop yields over the last few years, offset by lower grain prices in 2014 and 2015. Overall, these factors have created positive economic conditions for most farmers in our markets during this time period. Nonetheless, management expects that future losses in this portfolio could be higher than recent historical experience in that low commodity prices and high input costs have the potential to negatively impact potential yields.

The allowance for loan losses for MPS credits, which constitute a small portion of the Company’s loans, results from an estimation process that evaluates relevant characteristics of its credit portfolio(s). MPS also considers other internal and external environmental factors such as changes in operations or personnel and economic events that may affect the adequacy of the allowance for credit losses. Adjustments to the allowance for loan losses are recorded periodically based on the result of this estimation process. The exact methodology to determine the allowance for loan losses for each program will not be identical. Each program may have differing attributes including such factors as levels of risk, definitions of delinquency and loss, inclusion/exclusion of credit bureau criteria, roll rate migration dynamics and other factors. Similarly, the additional capital required to offset the increased risk in subprime lending activities may vary by credit program. Each program is evaluated separately.

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 current level of the allowance for loan losses at September 30, 2015, reflects an appropriate allowance against probable losses from the loan portfolio. Although the Company maintains its allowance for loan losses at a level that it considers to be adequate, 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 its regulatory agencies, the OCC and the Federal Reserve, which can require the establishment of additional general or specific allowances.

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Non‑Interest Income. Non-interest income increased by $6.4 million, or 12.4%, to $58.2 million for fiscal 2015 from $51.7 million for 2014 primarily due to an increase in fees earned on prepaid debit cards, credit products and other payment systems products of $5.8 million due to the addition of multiple new partners and growth in existing MPS programs. Loan fees also increased by $1.4 million from retail loan growth and the addition of AFS/IBEX. These increases in non-interest income were partially offset by an increased loss on the securities available for sale of $1.7 million sold primarily to fund the AFS/IBEX transaction.

Non-Interest Expense. Non-interest expense increased by $18.3 million, or 23.4%, to $96.5 million for fiscal 2015 from $78.2 million for fiscal 2014.

Compensation expense increased $8.3 million during fiscal 2015 compared to 2014, occupancy and equipment increased $2.4 million, and intangible amortization expense increased $1.3 million. These increases were principally due to the Refund Advantage and AFS/IBEX acquisitions and to additional product development and IT developer staffing to support the Company’s growth initiatives and prepare for other business opportunities. In addition, regulatory expense increased $1.1 million primarily relating to an increase in FDIC insurance due to brokered deposit classification guidance published in January 2015 and higher deposit balances.

Income Tax Expense. Income tax expense for fiscal 2015 was $1.4 million, resulting in an effective tax rate of 7.0%, compared to a tax expense of $2.9 million and an effective tax rate of 15.6%, in fiscal 2014. The decrease in the Company’s recorded income tax expense for 2015 was impacted primarily by an increase in the amount of tax-exempt municipal bond income as a percent of net income before tax.

Comparison of Operating Results for the Years Ended

September 30, 2014, and September 30, 2013

General. The Company recorded net income of $15.7 million, or $2.53 per diluted share, for the year ended September 30, 2014, compared to $13.4 million, or $2.38 per diluted share, for the year ended September 30, 2013, an increase of $2.3 million. The increase in net income was primarily caused by a $6.2 million increase in interest income related to the securities portfolio and a $3.5 million increase in loan income, offset in part by an increase in compensation and benefits expense of $4.0 million, reduced gain on sale of securities of $2.5 million and a provision for loan loss of $1.1 million.

Net Interest Income. Net interest income for fiscal 2014 increased by $10.3 million, or 28.4%, to $46.3 million from $36.0 million for the prior year. Net interest margin increased to 2.80% in fiscal 2014 as compared to 2.48% in 2013.

The Company’s average earning assets increased $215.6 million, or 13.1%, to $1.8 billion during fiscal 2014 from $1.6 billion during 2013. The increase is primarily the result of the increase in the Company’s investment securities and non-bank qualified municipal portfolios as well as loans receivable. Overall, asset yields increased by 27 basis points primarily driven by a shift in the earning asset mix to more loans and increased volume in the securities and loan portfolios, and improved yields achieved in the securities portfolio.

The Company’s average total deposits and interest-bearing liabilities increased $193.0 million, or 12.4%, to $1.7 billion during fiscal 2014 from $1.6 billion during 2013. The increase resulted mainly from an increase in the Company’s non-interest-bearing deposits and federal funds purchased. The average outstanding balance of non-interest-bearing deposits increased from $1.2 billion in fiscal 2013 to $1.3 billion in fiscal 2014. The Company’s cost of total deposits and interest-bearing liabilities declined 5 basis points to 0.14% during fiscal 2014 from 0.19% during 2013, primarily due to continued migration to low- and no-cost deposits provided by MPS.

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Provision for Loan Losses. In fiscal 2014, the Company recorded $1.1 million in provision for loan loss, compared to no provision in 2013. The increased provision was primarily due to loan growth.

Non‑Interest Income. Non-interest income decreased by $3.8 million, or 6.8%, to $51.7 million for fiscal 2014 from $55.5 million for 2013 primarily due to a decrease in the gain on sale of securities available for sale of $2.5 million. Fees earned on prepaid debit cards, credit products and other payment systems products and services decreased to $48.7 million for fiscal 2014 as compared to $50.8 million for 2013, primarily due to reduced income tax-related prepaid card volume.

Non-Interest Expense. Non-interest expense increased by $3.8 million, or 5.1%, to $78.2 million for fiscal 2014 from $74.4 million for fiscal 2013.

Compensation expense increased $4.0 million during 2014 compared to fiscal 2013. In addition, the Company recorded $0.6 million in acquisition-related expenses and occupancy and equipment expense increased $0.5 million. These increased expenses were offset in part by a $0.6 million decrease in impairment on assets held for sale due to the fiscal 2013 sale of a branch in the Central Iowa market.

Income Tax Expense. Income tax expense for fiscal 2014 was $2.9 million, resulting in an effective tax rate of 15.6%, compared to a tax expense of $3.7 million and an effective tax rate of 21.6%, in fiscal 2013. The decrease in the Company’s recorded income tax expense for 2014 was impacted primarily by an increase in the amount of tax-exempt municipal bond income as a percent of net income before tax.

Critical Accounting Estimates

The Company’s financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The financial information contained within these statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. Based on its consideration of accounting policies that: (i) involve the most complex and subjective decisions and assessments which may be uncertain at the time the estimate was made, and (ii) different estimates that reasonably could have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the financial statements, management has identified the policies described below as Critical Accounting Policies.

Allowance for Loan Losses. The Company’s allowance for loan loss methodology incorporates a variety of risk considerations, both quantitative and qualitative, in establishing an allowance for loan loss that management believes is appropriate at each reporting date. Quantitative factors include the Company’s historical loss experience, delinquency and charge-off trends, collateral values, changes in non-performing loans and other factors. Quantitative factors also incorporate known information about individual loans, including borrowers’ sensitivity to interest rate movements. Qualitative factors include the general economic environment in the Company’s markets, including economic conditions throughout the Midwest and, in particular, the state of certain industries. Size and complexity of individual credits in relation to loan structure, existing loan policies and pace of portfolio growth are other qualitative factors that are considered in the methodology. Although management believes the levels of the allowance as of both September 30, 2015, and September 30, 2014, were adequate to absorb probable losses inherent in the loan portfolio, a decline in local economic conditions or other factors could result in increasing losses.

Goodwill and Intangible Assets. Goodwill is recorded in business combinations under the purchase method of accounting. We assess goodwill for impairment on an annual basis or more frequently if significant changes occur. We initially perform a qualitative assessment of goodwill to test for impairment. If, based on our qualitative review, we conclude that more likely than not the fair value is less than its carrying amount, then we complete quantitative steps to determine if goodwill is impaired.

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Intangible assets include customer relationships, patents, trademarks and non-compete agreements. Intangible assets are tested annually for impairment or more often if conditions indicate a possible impairment.

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate future cash flows, risk-adjusted discount rates, future economic and market conditions, comparison of the Company’s market value to book value and determination of appropriate market comparables. Actual future results may differ from those estimates.

Each quarter, the Company evaluates the estimated useful lives of intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. In accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other, recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.

Assumptions and estimates about future values and remaining useful lives of the Company’s intangible and other long-lived assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in the Company’s business strategy and internal forecasts. Although the Company believes the historical assumptions and estimates used are reasonable and appropriate, different assumptions and estimates could materially impact the reported financial results.

Deferred Tax Assets. The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates applicable to income for the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. An estimate of probable income tax benefits that will not be realized in future years is required in determining the necessity for a valuation allowance.

Security Impairment. Management continually monitors the investment securities portfolio for impairment on a security-by-security basis. Management has a process in place to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves 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 we determine 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 in earnings for the difference between amortized cost and fair value. If we do not expect to recover the amortized cost basis, we do not plan to sell the security and if it is not more likely than not that the Company would be required to sell a 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 earnings, and the amount of the loss related to other factors is recognized in other comprehensive income net of taxes.

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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. Cash flow estimates for trust preferred securities are derived from scenario-based outcomes of forecasted default rates, loss severity, prepayment speeds and structural support.

In fiscal 2015, 2014 and 2013, there were no other-than-temporary impairment losses.

Level 3 Fair Value Measurement. U.S. GAAP requires the Company to measure the fair value of financial instruments under a standard that describes three levels of inputs that may be used to measure fair value. Level 3 measurement includes significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Although management believes that it uses a best estimate of information available to determine fair value, due to the uncertainty of future events, the approach includes a process that may differ significantly from other methodologies and still produce an estimate that is in accordance with U.S. GAAP.

Interest Rate Risk (“IRR”)

Overview. The Company actively manages interest rate risk, as changes in market interest rates can have a significant impact on reported earnings. The Bank, like other financial institutions, is subject to interest rate risk to the extent that its interest-bearing liabilities mature or reprice more rapidly than its interest-earning assets. The interest rate risk process is designed to compare income simulations in market scenarios designed to alter the direction, magnitude and speed of interest rate changes, as well as the slope of the yield curve. The Company does not currently engage in trading activities to control interest rate risk although it may do so in the future, if deemed necessary, to help manage interest rate risk.

Earnings at risk and economic value analysis. As a continuing part of its financial strategy, the Bank considers methods of managing an asset/liability mismatch consistent with maintaining acceptable levels of net interest income. In order to monitor interest rate risk, the Board of Directors has created an Investment Committee whose principal responsibilities are to assess the Bank’s asset/liability mix and implement strategies that will enhance income while managing the Bank’s vulnerability to changes in interest rates.

The Company uses two approaches to model interest rate risk: Earnings at Risk (“EAR analysis”) and Economic Value of Equity (“EVE analysis”). Under EAR analysis, net interest income is calculated for each interest rate scenario to the net interest income forecast in the base case. EAR analysis measures the sensitivity of interest-sensitive earnings over a one-year minimum time horizon. The results are affected by projected rates, prepayments, caps and floors. Market-implied forward rates and various likely and extreme interest rate scenarios can be used for EAR analysis. These likely and extreme scenarios can include rapid and gradual interest rate ramps, rate shocks and yield curve twists.

The EAR analysis used in the following table reflects the required analysis used no less than quarterly by management. It models -100, +100, +200, +300 and +400 basis point parallel shifts in market interest rates over the next one-year period. Due to the current low level of interest rates, only a ‑100 basis point parallel shift is represented.

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The Company is within policy limits for the -100 scenario while slightly outside Board policy limits for rising rate scenarios using the snapshot as of September 30, 2015, as required by regulation. The table below shows the results of the scenarios as of September 30, 2015:

Net Sensitive Earnings at Risk as of September 30, 2015

Net Sensitive Earnings at Risk
Balances as of September 30, 2015	Standard (Parallel Shift) Year 1
	Net Interest Income at Risk%
	-100			+100			+200			+300			+400
Basis Point Change Scenario		-1.6	%		-5.2	%		-10.3	%		-15.7	%		-21.3	%
Board Policy Limits		-5.0	%		-5.0	%		-10.0	%		-15.0	%		-20.0	%

The EAR analysis reported at September 30, 2015, shows that in an increasing interest rate environment, more liabilities (primarily due to the overnight federal funds purchased) than assets will reprice over the modeled one-year period.

IRR is a snapshot in time. The Company’s business and deposits are very predictably cyclical on a weekly, monthly and yearly basis. For example, yearly cyclicality is related to the Company dollar cost averaging its investment security purchases into its sizable deposit growth period related to both Christmas and income tax season. Doing so increases the overall average level of borrowings over the short term which are paid down as these large deposit inflows are realized. The Company’s IRR results may also vary depending on which day of the week and timing in relation to certain payrolls, as well as time of the month in regard to early funding of certain programs, when this snapshot is taken. The Company’s overnight federal funds purchased fluctuates on a predictable daily and monthly basis due to fluctuations in a portion of its non-interest bearing deposit base, primarily related to payroll processing and timing of when certain programs are prefunded and when the funds are received. First, IRR was negatively affected because fiscal fourth quarter 2015 ended on a Wednesday, which, resulting from payroll processing timing in concert with typical early week activity, tends to necessitate a higher than average amount of overnight federal funds purchased that are typically paid down on Thursday and Friday. Second, certain government programs were prefunded on September 25th and 28th of 2015. The corresponding deposits were received on October 1st and 2nd of 2015. This timing difference allowed program participants to spend the prefunded amounts initiating the need for incremental borrowings until the corresponding deposits were received, thereby temporarily and predictably increasing overnight borrowings. For perspective, the amount of overnight federal funds purchased on Wednesday, September 30, 2015, was over $184 million higher than the average amount of federal funds purchased throughout the month of September 2015. Owing to the snapshot nature of IRR, as is required by regulators, in concert with the Company’s predictable weekly, monthly and yearly fluctuating deposit base and overnight borrowings, the results produced by static IRR analysis are not necessarily representative of what management, the Board of Directors and others would view as the Company’s true IRR positioning. Management and the Board are aware of and understand these typical borrowing and deposit fluctuations as well as the point in time nature of IRR analysis and anticipated an outcome where the Company may temporarily be outside of Board policy limits based on a snapshot analysis.

For management to better understand the IRR position of the Bank, an alternative IRR run was completed wherein all September 30, 2015 values were utilized with the exception of overnight borrowings, non-interest bearing deposits and non-earning assets. To eliminate timing issues documented above, quarterly average balances were utilized for overnight borrowings and non-interest-bearing deposits. Non-earning assets were used to balance the balance sheet. Management feels this view on IRR more accurately portrays the Bank’s IRR position. As noted in the below chart, the alternative EAR results are much improved as timing issues in deposits and overnight borrowings are removed.

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The Company would be within policy limits in all scenarios utilizing the alternative IRR scenario run for management purposes. The table below highlights those results:

Alternative Net Sensitive Earnings at Risk

Net Sensitive Earnings at Risk
Alternative IRR Results	Standard (Parallel Shift) Year 1
	Net Interest Income at Risk%
	-100			+100			+200			+300			+400
Basis Point Change Scenario		-2.1	%		-2.4	%		-4.9	%		-7.6	%		-10.5	%
Board Policy Limits		-5.0	%		-5.0	%		-10.0	%		-15.0	%		-20.0	%

Management is investigating the utilization of advanced interest rate risk modeling software to potentially enhance the Company’s analysis and reporting. In discussions with the current IRR provider, a missing component in the current IRR system of record is the projected increase in yield within the fixed-rate MBS portfolio in an instantaneous, parallel increasing interest rate environment. This yield increase would positively affect EAR results and the corresponding projected income increase is not modeled in the current IRR system of record. The Company also anticipates improved IRR results as it continues the integration of AFS/IBEX and the continuation of execution on its strategic plans, particularly in a rising interest rate environment.

Net Sensitive Earnings at Risk as of September 30, 2015

Balances as of September 30, 2015			% of			Change in Interest Income/Expense for a given change in interest rates
	Total Earning		Total Earning			Over / (Under) Base Case Parallel Ramp
Basis Point Change Scenario	Assets (in $000's)		Assets			-100		Base		+100		+200		+300		+400
Total Loans		703,628		29.9	%		34,132		35,792		37,641		39,464		41,280		42,938
Total Investments (non-TEY) and other Earning Assets		1,653,301		70.1	%		36,212		37,003		37,658		38,263		38,840		39,409
Total Interest -Sensitive Income		2,356,929		100.0	%		70,344		72,795		75,299		77,727		80,120		82,347
Total Interest-Bearing Deposits		208,433		27.4	%		418		662		1,558		2,405		3,363		4,264
Total Borrowings		551,006		72.6	%		1,050		2,141		7,355		12,569		17,783		22,997
Total Interest-Sensitive Expense		759,439		100.0	%		1,468		2,803		8,913		14,974		21,146		27,261

Alternative Net Sensitive Earnings at Risk

Alternative IRR Results			% of			Change in Interest Income/Expense for a given change in interest rates
	Total Earning		Total Earning			Over / (Under) Base Case Parallel Ramp
Basis Point Change Scenario	Assets (in $000's)		Assets			-100		Base		+100		+200		+300		+400
Total Loans		703,628		29.9	%		34,132		35,792		37,641		39,464		41,280		42,938
Total Investments (non-TEY) and other Earning Assets		1,653,301		70.1	%		36,212		37,003		37,658		38,263		38,840		39,409
Total Interest -Sensitive Income		2,356,929		100.0	%		70,344		72,795		75,299		77,727		80,120		82,347
Total Interest-Bearing Deposits		208,433		37.0	%		418		662		1,558		2,405		3,363		4,264
Total Borrowings		354,973		63.0	%		854		1,553		4,888		8,223		11,559		14,894
Total Interest-Sensitive Expense		563,406		100.0	%		1,272		2,215		6,446		10,628		14,922		19,158

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The Company believes that its growing portfolio of MPS non-interest-bearing deposits provides a stable and profitable funding vehicle and a significant competitive advantage in a rising interest rate environment as the Company’s cost of funds will likely remain relatively low, with less increase expected relative to other banks. When not able to match loan growth to deposit growth, the Company continues to execute its investment strategy of primarily purchasing NBQ municipal bonds and agency MBS; however, the Bank reviews opportunities to add diverse, high-quality securities at attractive relative rates when opportunities present themselves. The NBQ municipal bonds are tax-exempt and as such have a tax equivalent yield higher than their book yield. The tax equivalent yield calculation for NBQ municipal bonds uses the Company’s cost of funds as one of its components. With the Company’s large volume of non-interest-bearing deposits, the tax equivalent yield for these NBQ municipal bonds is higher than a similar term investment in other investment categories of similar risk and higher than most other banks can realize on the same instruments. The above interest income figures are quoted on a pre-tax basis.

Under EVE analysis, the economic value of financial assets, liabilities and off-balance sheet instruments is derived under each rate scenario. The economic value of equity is calculated as the difference between the estimated market value of assets and liabilities, net of the impact of off-balance sheet instruments.

The EVE analysis used in the following table reflects the required analysis used no less than quarterly by management. It models immediate -100, +100, +200, 300 and +400 basis point parallel shifts in market interest rates. Due to the current low level of interest rates, only a -100 basis point parallel shift is represented.

The Company is within Board policy limits for all scenarios. The table below shows the results of the scenario as of September 30, 2015:

Economic Value Sensitivity as of September 30, 2015

Balances as of September 30, 2015	Standard (Parallel Shift)
	Economic Value of Equity at Risk%
	-100			+100			+200			+300			+400
Basis Point Change Scenario		-6.4	%		-0.7	%		-4.5	%		-10.2	%		-17.2	%
Board Policy Limits		-10.0	%		-10.0	%		-20.0	%		-30.0	%		-40.0	%

The EVE at risk reported at September 30, 2015, shows that as interest rates increase immediately, the economic value of equity position will decrease from the base, partially due to the degree of the economic value of its base asset size in relation to the economic value of its base liabilities. These results also suffered from the timing issues noted above in the EAR section.

The Company would be within policy limits in all scenarios utilizing the alternative IRR scenario run for management purposes. The table below highlights those results:

Alternative Economic Value Sensitivity

Alternative IRR Results	Standard (Parallel Shift)
	Economic Value of Equity at Risk%
	-100			+100			+200			+300			+400
Basis Point Change Scenario		-9.1	%		2.0	%		0.8	%		-2.5	%		-7.3	%
Board Policy Limits		-10.0	%		-10.0	%		-20.0	%		-30.0	%		-40.0	%

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The EVE at risk reported using the alternative methodology used for management purposes shows that, as interest rates increase immediately in the +100 and +200 scenarios, the economic value of equity position will increase from the base as non-interest-bearing deposits become more valuable in these increasing interest rate scenarios. These results are much improved over the static snapshot as timing issues noted above are removed.

Detailed Economic Value Sensitivity as of September 30, 2015

The following table details the economic value sensitivity to changes in market interest rates at September 30, 2015, for loans, investments, deposits, borrowings and other assets and liabilities (dollars in thousands). The analysis reflects that in +100, +200 and +300 rising interest rate scenarios, total assets are less sensitive than total liabilities. In a +400 rate environment, total assets are slightly more sensitive than liabilities. However, since the economic value asset base is materially larger than the economic value liability base, EVE decreases in all increasing rate scenarios. Investments and other earning assets contribute to sensitivity, largely due to fixed-rate securities investments. This sensitivity is offset by the non-interest-bearing deposits. As can be seen in the below tables, the economic value provided by these stable, longer-term non-interest-bearing deposits is immense. Day of the week timing, as discussed previously, also contributes to sensitivity.

Balances as of September 30, 2015			% of			Change in Economic Value for a given change in interest rates
	Book		Total			Over / (Under) Base Case Parallel Ramp
Basis Point Change Scenario	Value (in $000's)		Assets			-100			+100			+200			+300			+400
Total Loans		703,628		28	%		2.1	%		-2.8	%		-5.6	%		-8.2	%		-10.7	%
Total Investment		1,625,931		64	%		3.9	%		-4.7	%		-9.4	%		-14.2	%		-18.9	%
Other Assets		199,449		8	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Assets		2,529,008		100	%		3.1	%		-3.8	%		-7.6	%		-11.4	%		-15.1	%
Interest Bearing Deposits		208,433		9	%		2.7	%		-2.0	%		-3.9	%		-5.4	%		-6.9	%
Non-Interest Bearing Deposits		1,463,093		65	%		6.9	%		-6.4	%		-12.2	%		-17.4	%		-22.2	%
Total Borrowings & Other Liabilities		589,859		26	%		0.1	%		-0.1	%		-0.2	%		-0.3	%		-0.3	%
Liabilities		2,261,385		100	%		4.7	%		-4.3	%		-8.1	%		-11.6	%		-14.8	%

Detailed Alternative Economic Value Sensitivity

The following is EVE at risk reported using the alternative methodology used for management purposes, for loans, investments, deposits, borrowings and other assets and liabilities (dollars in thousands). The analysis reflects that in all rising interest rate scenarios, total assets are less sensitive than total liabilities. These results are much improved over the static snapshot as timing issues noted above are removed.

Alternative IRR Results			% of			Change in Economic Value for a given change in interest rates
Economic Value Sensitivity	Book		Total			Over / (Under) Base Case Parallel Ramp
Basis Point Change Scenario	Value (in $000's)		Assets			-100			+100			+200			+300			+400
Total Loans		703,628		28	%		2.1	%		-2.8	%		-5.6	%		-8.2	%		-10.7	%
Total Investment		1,625,931		64	%		3.9	%		-4.7	%		-9.4	%		-14.2	%		-18.9	%
Other Assets		199,449		8	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Assets		2,529,008		100	%		3.2	%		-3.8	%		-7.7	%		-11.5	%		-15.3	%
Interest Bearing Deposits		208,433		9	%		2.7	%		-2.0	%		-3.9	%		-5.4	%		-6.9	%
Non-Interest Bearing Deposits		1,463,093		65	%		6.9	%		-6.4	%		-12.2	%		-17.4	%		-22.2	%
Total Borrowings & Other Liabilities		589,859		26	%		0.1	%		-0.1	%		-0.2	%		-0.3	%		-0.4	%
Liabilities		2,261,385		100	%		5.3	%		-4.8	%		-9.2	%		-13.1	%		-16.7	%

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We caution that the models discussed above will, at best, produce approximate results, and that there are certain shortcomings inherent in the methods of analysis discussed above and as presented in the table; for example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Furthermore, although management has estimated changes in the levels of prepayments and early withdrawal in these rate environments, such levels would likely deviate from those assumed in calculating the table. Finally, the ability of some borrowers to service their debt may decrease in the event of an interest rate increase.

Asset Quality

It is management’s belief, based on information available at the end of fiscal 2015, that the Company’s current asset quality is satisfactory. At September 30, 2015, non-performing assets, consisting of impaired/non-accruing loans, accruing loans delinquent 90 days or more, foreclosed real estate and repossessed consumer property totaled $7.8 million, or 0.3% of total assets, compared to $1.0 million, or 0.1% of total assets, at September 30, 2014. The noted change in NPAs is primarily due to the downgrade of a large agricultural relationship, and, to a lesser extent, to the acquisition of AFS/IBEX. As discussed previously, due to notification requirements and processing time by most insurance carriers, many premium finance receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management will continue to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay off the outstanding balance and contractual interest due.

Non-accruing loans at September 30, 2015, totaled $6.1 million, or 0.2% of total assets. There were no foreclosed real estate or repossessed assets at September 30, 2015.

The Company maintains an allowance for loan losses because it is probable that some loans may not be repaid in full. At September 30, 2015, the Company had an allowance for loan losses of $6.2 million as compared to $5.4 million at September 30, 2014. Management’s periodic review of the allowance for loan losses is based on various subjective and objective factors including the Company’s past 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 allocate portions of the allowance for specifically identified problem loan situations, the majority of the allowance is based on both subjective and objective factors related to the overall loan portfolio and is available for any loan charge-offs that may occur. As stated previously, there can be no assurance future losses will not exceed estimated amounts, or that additional provisions for loan losses will not be required in future periods. In addition, the Bank is subject to review by the OCC, which has the authority to require management to make changes to the allowance for loan losses, and the Company is subject to similar review by the Federal Reserve.

In determining the allowance for loan losses, the Company specifically identifies loans it considers to have potential collectability problems. Based on criteria established by ASC 310, Receivables, some of these loans are considered to be “impaired” while others are not considered to be impaired, but possess weaknesses that the Company believes merit additional analysis in establishing the allowance for loan losses. All other loans are evaluated by applying estimated loss ratios to various pools of loans. The Company then analyzes other qualitative factors (such as economic conditions) in determining the aggregate amount of the allowance needed.

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At September 30, 2015, $3.5 million of the allowance for loan losses was allocated to impaired loans, representing 52.8% of the related loan balances. See Note 3 of 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. $0.2 million of the allowance was allocated to other identified problem loan situations, representing 0.6% of the related loan balances, and $3.0 million, representing 0.5% of the related loan balances, was allocated to the remaining overall loan portfolio based on historical loss experience and qualitative factors. At September 30, 2014, $0.7 million of the allowance for loan losses was allocated to impaired loans, representing 11.1% of the related loan balances. $0.4 million was allocated to other identified problem loan situations, and $4.3 million was allocated against losses from the overall loan portfolio based on historical loss experience and qualitative factors.

The Company maintains an internal loan review and classification process which involves multiple officers of the Company and is designed to assess the general quality of credit underwriting and to promote early identification of potential problem loans. All loan officers are charged with the responsibility of risk rating all loans in their portfolios and updating the ratings, positively or negatively, on an ongoing basis as conditions warrant.

The level of potential problem loans is another predominant factor in determining the relative level of risk in the loan portfolio and in determining the appropriate level of the allowance for loan losses. Potential problem loans are generally defined by management to include loans rated as substandard by management but that are not considered impaired (i.e., nonaccrual loans and accruing troubled debt restructurings); however, there are circumstances present to create doubt as to the ability of the borrower to comply with present repayment terms. The decision of management to include performing loans in potential problem loans does not necessarily mean that the Company expects losses to occur, but that management recognizes a higher degree or risk associated with these loans. The loans that have been reported as potential problem loans are predominantly commercial loans covering a diverse range of businesses and real estate property types. At September 30, 2015, potential problem loans totaled $5.8 million, compared to $11.0 million at September 30, 2014. The $5.2 million decrease in potential problem loans since September 30, 2014, was primarily due to a $5.2 million decrease in the agricultural operating category, due to the upgrading of multiple loans during fiscal 2015.

Liquidity and Capital Resources

The Company’s primary sources of funds are deposits, derived principally through its MPS division, and to a lesser extent through its Retail Bank division, borrowings, principal and interest payments on loans and mortgage-backed securities, and maturing investment securities. 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 Retail 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 Retail Bank funding issues resulting from the sensitivity of time deposits to such market factors.

The Company is aware that the low-cost checking deposits generated through MPS may carry a greater degree of concentration risk than traditional consumer checking deposits but, based on experience, believes that MPS‑generated deposits are a stable source of funding. To date, the Company has not experienced any material net outflows related to MPS‑generated deposits, though no assurance can be given that this will continue to be the case.

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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 significant trends in the Company’s liquidity or its ability to borrow additional funds if needed.

The primary investing activities of the Company are the origination of loans, acquisition of new companies and purchase of securities. During the years ended September 30, 2015, 2014 and 2013, the Company originated loans totaling $672.8 million, $472.4 million and $394.1 million, respectively. Purchases of loans totaled $74.1 million, $0.3 million and $4.0 million during the years ended September 30, 2015, 2014 and 2013, respectively. During the years ended September 30, 2015, 2014 and 2013, the Company purchased mortgage-backed securities and other securities in the amount of $894.3 million, $506.5 million and $514.8 million, respectively. Of these purchases in 2015 and 2014, $75.8 million and $15.1 million, respectively, were securities designated as held to maturity.

At September 30, 2015, the Company had unfunded loan commitments of $158.4 million. See Note 16 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 from September 30, 2015 totaled $67.0 million. Based on its historical experience, management believes that a significant portion of such deposits will remain with the Company; however, there can be no assurance that the Company can retain all such 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.

The following table summarizes the Company’s significant contractual obligations at September 30, 2015 (dollars in thousands)

Contractual Obligations	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years

Time deposits	$	91,171	$	66,964	$	19,232	$	4,975	$	-
Long-term debt		7,000		-		-		5,000		2,000
Short-term debt		544,007		544,007		-		-		-
Operating leases		18,211		1,349		2,287		1,949		12,626
Subordinate debentures issued to capital trust		10,310		-		-		-		10,310
Data processing services		28,967		2,814		6,686		7,002		12,465
Total	$	699,666	$	615,134	$	28,205	$	18,926	$	37,401

During July 2001, the Company’s unconsolidated trust subsidiary, First Midwest Financial Capital Trust I, sold $10.3 million in floating-rate cumulative preferred securities. Proceeds from the sale were used to purchase subordinated debentures of the Company, which mature in 2031, and are redeemable at any time after five years. The capital securities are required to be redeemed on July 25, 2031; however, the Company has the option to redeem them earlier. The Company used the proceeds for general corporate purposes. See Note 11 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.

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The Company and the Bank met regulatory requirements for classification as well-capitalized institutions at September 30, 2015. See Note 15 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.

The payment of dividends and repurchase of shares have the effect of reducing stockholders’ equity. Prior to authorizing such transactions, the Board of Directors considers the effect the dividend or repurchase of shares would have on liquidity and regulatory capital ratios.

The Board of Directors approved a goal, reflected in its capital plan, for the Bank to stay at or above an 8% Tier 1 capital to adjusted total assets ratio during fiscal 2016. While management expects the Bank to meet this goal, if it fails to do so, it could be subject to additional material regulatory restrictions or requirements.

The Board of Directors is also mindful of new capital rules that will increase bank and holding company capital requirements and liquidity requirements. No assurance can be given that our regulators will consider our liquidity level, or our capital level, though substantially in excess of current rules pursuant to which we are considered “well-capitalized,” to be sufficiently high in the future.

Off-Balance Sheet Financing Arrangements

For discussion of the Company’s off-balance sheet financing arrangements, see Note 16 of “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. Depending on the extent to which the commitments or contingencies described in Note 16 occur, the effect on the Company’s capital and net income could be significant.

Impact of Inflation and Changing Prices

The Consolidated Financial Statements and Notes thereto presented in this Annual Report have been prepared in accordance with U.S. GAAP, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation is reflected in the increased cost of the Company’s operations. Unlike most industrial companies, virtually all the assets and liabilities of the Company are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction, or to the same extent, as the prices of goods and services.

Impact of New Accounting Standards

See Note 1 to the Consolidated Financial Statements for information regarding recently issued accounting pronouncements.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

As stated above, the Company derives a portion of its income from the excess of interest collected over interest paid. The rates of interest the Company earns on assets and pays on liabilities generally are established contractually for a period of time. Market interest rates change over time. Accordingly, the Company’s results of operations, like those of most financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of its assets and liabilities. The risk associated with changes in interest rates and the Company’s ability to adapt to these changes is known as interest rate risk and is the Company’s only significant “market” risk.

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The Company monitors and measures its exposure to changes in interest rates in order to comply with applicable government regulations and risk policies established by the Board of Directors, and in order to preserve stockholder value. In monitoring interest rate risk, the Company analyzes assets and liabilities based on characteristics including size, coupon rate, repricing frequency, maturity date and likelihood of prepayment.

If the Company’s assets mature or reprice more rapidly or to a greater extent than its liabilities, then economic value of equity and net interest income would tend to increase during periods of rising rates and decrease during periods of falling interest rates. Conversely, if the Company’s assets mature or reprice more slowly or to a lesser extent than its liabilities, then economic value of equity and net interest income would tend to decrease during periods of rising interest rates and increase during periods of falling interest rates.

The Company currently focuses lending efforts toward originating and purchasing competitively priced adjustable-rate and fixed-rate loan products with short to intermediate terms to maturity, generally five years or less. This theoretically allows the Company to maintain a portfolio of loans that will have relatively little sensitivity to changes in the level of interest rates, while providing a reasonable spread to the cost of liabilities used to fund the loans.

The Company’s primary objective for its investment portfolio is to provide a source of liquidity for the Company. In addition, the investment portfolio may be used in the management of the Company’s interest rate risk profile. The investment policy generally calls for funds to be invested among various categories of security types and maturities based upon the Company’s need for liquidity, desire to achieve a proper balance between minimizing risk while maximizing yield, the need to provide collateral for borrowings and to fulfill the Company’s asset/liability management goals.

The Company’s cost of funds responds to changes in interest rates due to the relatively short-term nature of its deposit portfolio, and due to the relatively short-term nature of its borrowed funds. The Company believes that its growing portfolio of low-cost deposits provides a stable and profitable funding vehicle, but also subjects the Company to greater risk in a falling interest rate environment than it would otherwise have without this portfolio. This risk is due to the fact that, while asset yields may decrease in a falling interest rate environment, the Company cannot significantly reduce interest costs associated with these deposits, which thereby compresses the Company’s net interest margin. As a result of the Company’s interest rate risk exposure in this regard, the Company has elected not to enter into any new longer-term wholesale borrowings, and generally has not emphasized longer-term time deposit products.

The Board of Directors and relevant government regulations establish limits on the level of acceptable interest rate risk at the Company, to which management adheres. There can be no assurance, however, that, in the event of an adverse change in interest rates, the Company’s efforts to limit interest rate risk will be successful.

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Item 8.

Financial Statements and Supplementary Data

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Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements
Statements of Financial Condition
Statements of Operations
Statements of Comprehensive Income (Loss)
Statements of Changes in Stockholders’ Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements

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KPMG LLP

2500 Ruan Center

666 Grand Avenue

Des Moines, IA 50309

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Meta Financial Group, Inc.:

We have audited the accompanying consolidated statements of financial condition of Meta Financial Group, Inc. and subsidiaries (the Company) as of September 30, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended September 30, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Meta Financial Group, Inc. and subsidiaries as of September 30, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three‑year period ended September 30, 2015, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Meta Financial Group, Inc.’s internal control over financial reporting as of September 30, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated December 14, 2015 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

	/s/ KPMG LLP

Des Moines, Iowa
December 14, 2015

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META FINANCIAL GROUP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except Share and Per Share Data)

ASSETS	September 30, 2015			September 30, 2014

Cash and cash equivalents	$	27,658		$	29,832
Investment securities available-for-sale		679,504			482,346
Mortgage-backed securities available-for-sale		576,583			657,870
Investment securities held to maturity		279,167			212,899
Mortgage-backed securities held to maturity		66,577			70,034
Loans receivable - net of allowance for loan losses of $6,255 at September 30, 2015 and $5,397 at September 30, 2014		706,255			493,007
Federal Home Loan Bank stock, at cost		24,410			21,245
Accrued interest receivable		13,352			11,222
Insurance receivable		-			269
Premises, furniture, and equipment, net		17,393			16,462
Bank-owned life insurance		45,830			35,469
Foreclosed real estate and repossessed assets		-			15
Goodwill		36,928			-
Intangible assets		33,577			2,588
Prepaid assets		9,360			9,495
Deferred taxes		6,997			6,591
MPS accounts receivable		5,337			3,935
Other assets		777			752

Total assets	$	2,529,705		$	2,054,031

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Non-interest-bearing checking	$	1,449,101		$	1,126,715
Interest-bearing checking		33,320			37,188
Savings deposits		41,720			27,610
Money market deposits		42,222			40,475
Time certificates of deposit		91,171			134,553
Total deposits		1,657,534			1,366,541
Advances from Federal Home Loan Bank		7,000			7,000
Federal funds purchased		540,000			470,000
Securities sold under agreements to repurchase		4,007			10,411
Subordinated debentures		10,310			10,310
Capital lease		2,143			-
Accrued interest payable		272			318
Contingent liability		331			331
Accrued expenses and other liabilities		36,773			14,318
Total liabilities		2,258,370			1,879,229

STOCKHOLDERS’ EQUITY
Preferred stock, 3,000,000 shares authorized, no shares issued or outstanding at September 30, 2015 and 2014, respectively		-			-
Common stock, $.01 par value; 10,000,000 shares authorized, 8,183,272 and 6,213,979 shares issued, 8,163,022 and 6,169,604 shares outstanding at September 30, 2015 and 2014, respectively		82			62
Additional paid-in capital		170,749			95,079
Retained earnings		98,359			83,797
Accumulated other comprehensive income (loss)		2,455			(3,409	)
Treasury stock, 20,250 and 44,375 common shares, at cost, at September 30, 2015 and 2014, respectively		(310	)		(727	)
Total stockholders’ equity		271,335			174,802

Total liabilities and stockholders’ equity	$	2,529,705		$	2,054,031

See Notes to Consolidated Financial Statements.

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META FINANCIAL GROUP, INC

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Share and Per Share Data)

	For the Years Ended September 30,
	2015			2014			2013

Interest and dividend income:
Loans receivable, including fees	$	29,565		$	19,674		$	16,151
Mortgage-backed securities		13,979			15,343			11,900
Other investments		18,063			13,643			10,925
		61,607			48,660			38,976
Interest expense:
Deposits		726			965			1,280
FHLB advances and other borrowings		1,661			1,433			1,674
		2,387			2,398			2,954
Net interest income		59,220			46,262			36,022
Provision for loan losses		1,465			1,150			-
Net interest income after provision for loan losses		57,755			45,112			36,022
Non-interest income:
Card fees		54,542			48,738			50,790
Bank-owned life insurance income		2,030			1,139			998
Loan fees		2,348			981			868
Deposit fees		593			616			632
Gain (loss) on sale of securities available-for-sale, net (Includes ($1,634), $107, and $2,546 reclassified from accumulated other comprehensive income (loss) for net gains (losses) on available for sale securities for the fiscal years ended September 30, 2015, 2014 and 2013, respectively)		(1,634	)		107			2,546
Gain (loss) on foreclosed real estate		28			(93	)		(268	)
Other income (loss)		267			250			(63	)
Total non-interest income		58,174			51,738			55,503

Non-interest expense:
Compensation and benefits		46,493			38,155			34,106
Card processing expense		16,508			15,487			15,584
Occupancy and equipment expense		11,399			8,979			8,479
Legal and consulting expense		4,978			4,145			4,048
Data processing expense		1,347			1,316			1,228
Marketing		1,537			1,034			981
Impairment on assets held for sale		-			-			589
Other expense		14,244			9,115			9,388
Total non-interest expense		96,506			78,231			74,403

Income before income tax expense		19,423			18,619			17,122
Income tax expense (benefit) (Includes ($597), $39 and $924 income tax expense (benefit) reclassified from accumulated other comprehensive income (loss) for the fiscal years ended September 30, 2015, 2014 and 2013, respectively)		1,368			2,906			3,704

Net income	$	18,055		$	15,713		$	13,418

Earnings per common share:
Basic	$	2.68		$	2.57		$	2.40
Diluted	$	2.66		$	2.53		$	2.38

See Notes to Consolidated Financial Statements.

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META FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Dollars in Thousands)

	For the Years Ended September 30,
	2015		2014			2013

Net income	$	18,055	$	15,713		$	13,418

Other comprehensive income (loss):
Change in net unrealized gain (loss) on securities		7,723		26,790			(44,301	)
Losses (gains) realized in net income		1,634		(107	)		(2,546	)
		9,357		26,683			(46,847	)
Deferred income tax effect		3,493		9,807			(18,049	)
Total other comprehensive income (loss)		5,864		16,876			(28,798	)
Total comprehensive income (loss)	$	23,919	$	32,589		$	(15,380	)

See Notes to Consolidated Financial Statements.

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META FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity

For the Years Ended September 30, 2013, 2014 and 2015

(Dollars in Thousands, Except Share and Per Share Data)

	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss), Net of Tax			Treasury Stock			Total Stockholders’ Equity

Balance, September 30, 2012	$	56	$	78,769		$	60,776		$	8,513		$	(2,255	)	$	145,859

Cash dividends declared on common stock ($0.52 per share)		-		-			(2,926	)		-			-			(2,926	)

Issuance of common shares from the sales of equity securities		5		12,713			-			-			-			12,718

Issuance of common shares due to issuance of stock options and restricted stock		-		1,316			-			-			1,232			2,548

Stock compensation		-		165			-			-			-			165

Net change in unrealized losses on securities, net of income taxes		-		-			-			(28,798	)		-			(28,798	)

Net income		-		-			13,418			-			-			13,418

Balance, September 30, 2013	$	61	$	92,963		$	71,268		$	(20,285	)	$	(1,023	)	$	142,984

Balance, September 30, 2013	$	61	$	92,963		$	71,268		$	(20,285	)	$	(1,023	)	$	142,984

Cash dividends declared on common stock ($0.52 per share)		-		-			(3,184	)		-			-			(3,184	)

Issuance of common shares from the sales of equity securities		1		(52	)		-			-			-			(51	)

Issuance of common shares due to issuance of stock options and restricted stock		-		2,080			-			-			296			2,376

Stock compensation		-		88			-			-			-			88

Net change in unrealized losses on securities, net of income taxes		-		-			-			16,876			-			16,876

Net income		-		-			15,713			-			-			15,713

Balance, September 30, 2014	$	62	$	95,079		$	83,797		$	(3,409	)	$	(727	)	$	174,802

Balance, September 30, 2014	$	62	$	95,079		$	83,797		$	(3,409	)	$	(727	)	$	174,802

Cash dividends declared on common stock ($0.52 per share)		-		-			(3,493	)		-			-			(3,493	)

Issuance of common shares from the sales of equity securities		14		50,737			-			-			417			51,168

Issuance of common shares due to issuance of stock options and restricted stock		-		378			-			-			-			378

Issuance of common shares due to acquisition		6		24,297			-			-			-			24,303

Stock compensation		-		258			-			-			-			258

Net change in unrealized losses on securities, net of income taxes		-		-			-			5,864			-			5,864

Net income		-		-			18,055			-			-			18,055

Balance, September 30, 2015	$	82	$	170,749		$	98,359		$	2,455		$	(310	)	$	271,335

See Notes to Consolidated Financial Statements.

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META FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in Thousands)

	For the Years Ended September 30,
	2015			2014			2013

Cash flows from operating activities:
Net income	$	18,055		$	15,713		$	13,418
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net		28,882			18,147			21,104
Provision (recovery) for loan losses		1,465			1,150			-
Provision (recovery) for deferred taxes		(3,896	)		(1,755	)		(395	)
(Gain) loss on other assets		6			(43	)		309
(Gain) loss on foreclosed real estate		(28	)		93			268
(Gain) loss on sale of securities available-for-sale, net		1,634			(107	)		(2,546	)
Capital lease obligations interest expense		131			-			-
Net change in accrued interest receivable		(2,130	)		(2,640	)		(1,872	)
Impairment on assets held for sale		-			-			589
Change in bank-owned life insurance value		(1,225	)		(1,639	)		(998	)
Net change in other assets		(672	)		(807	)		(9,876	)
Net change in accrued interest payable		(46	)		27			114
Net change in accrued expenses and other liabilities		6,780			(2,326	)		(43,183	)
Net cash provided by (used in) operating activities		48,956			25,813			(23,068	)

Cash flows from investing activities:
Purchase of securities available-for-sale		(810,624	)		(491,416	)		(505,863	)
Proceeds from sales of securities available-for-sale		566,371			166,804			209,172
Proceeds from maturities and principal repayments of securities available-for-sale		124,558			81,754			187,245
Purchase of securities held to maturity		(72,759	)		(15,117	)		(8,946	)
Proceeds from maturities and principal repayments of securities held to maturity		9,879			16,802			3,837
Purchase of bank-owned life insurance		(10,000	)		(500	)		(18,000	)
Proceeds from bank-owned life insurance death benefit		864			-			-
Loans purchased		-			(343	)		(4,699	)
Loans sold		(5,462	)		(11,747	)		(19,922	)
Net change in loans receivable		(135,187	)		(101,639	)		(28,826	)
Proceeds from sales of foreclosed real estate		86			8			478
Cash paid for acquisitions		(125,314	)		-			-
Cash received upon acquisitions		9,768			-			-
Federal Home Loan Bank stock purchases		(544,324	)		(445,971	)		(414,833	)
Federal Home Loan Bank stock redemptions		541,160			434,720			406,959
Proceeds from the sale of premises and equipment		2,100			1,178			-
Purchase of premises and equipment		(5,031	)		(2,329	)		(5,262	)
Net cash provided by (used in) investing activities		(453,915	)		(367,796	)		(198,660	)

Cash flows from financing activities:
Net change in checking, savings, and money market deposits		334,375			48,304			(96,954	)
Net change in time deposits		(43,382	)		2,954			32,443
Repayment of FHLB and other borrowings		-			-			(4,000	)
Net change in federal funds		70,000			280,000			190,000
Net change in securities sold under agreements to repurchase		(6,404	)		1,265			(17,254	)
Principal payments on capital lease obligations		(116	)		-			-
Cash dividends paid		(3,493	)		(3,184	)		(2,926	)
Stock compensation		258			88			165
Proceeds from issuance of common stock		51,547			2,325			15,266
Net cash provided by (used in) financing activities		402,785			331,752			116,740

Net change in cash and cash equivalents		(2,174	)		(10,231	)		(104,988	)

Cash and cash equivalents at beginning of year		29,832			40,063			145,051
Cash and cash equivalents at end of year	$	27,658		$	29,832		$	40,063

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META FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Con't.)

(Dollars in Thousands)

	For the Years Ended September 30,
	2015			2014		2013

Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest	$	2,433		$	2,371	$	2,840
Income taxes		5,277			4,451		3,761
Franchise taxes		98			109		70
Other taxes		48			-		-

Supplemental disclosure of non-cash investing and financing activities:
Common stock issued for acquisition	$	(24,303	)	$	-	$	-
Capital lease obligation	$	(2,259	)	$	-	$	-
Securities transferred from available-for-sale to held to maturity	$	310		$	-	$	282,195
Purchase of available-for-sale securities accrued, not paid	$	(7,877	)	$	-	$	-
Purchase of held-to-maturity securities accrued, not paid	$	(3,000	)	$	-	$	-
Loans transferred to foreclosed real estate	$	54		$	-	$	-

See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. 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 which include MetaBank (the “Bank”), a federally chartered savings bank whose primary federal regulator is the Office of the Comptroller of the Currency and First Services Financial Limited, which offered noninsured investment products and was dissolved on December 3, 2013. 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. The Trust is not included in the consolidated financial statements of the Company. All significant intercompany balances and transactions have been eliminated.

NATURE OF BUSINESS AND INDUSTRY SEGMENT INFORMATION

The primary source of income 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 income for the Company is interest from the purchase or origination of consumer, commercial, agricultural, commercial real estate, and residential real estate loans. The Company accepts deposits from customers in the normal course of business primarily in northwest and central Iowa, and eastern South Dakota and on a national basis for the MPS division. 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 two reporting segments.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

The preparation of consolidated financial statements in conformity with U.S. 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 allowance for loan losses, the valuation of 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 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 $4.1 million and $8.3 million at September 30, 2015, and 2014, respectively. 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, 2015, the Company had no interest-bearing deposits held at the FHLB and $7.2 million in interest-bearing deposits held at the FRB. At September 30, 2015, 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.

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SECURITIES

GAAP require 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”). HTM debt securities are measured at amortized cost. Both AFS and HTM are subject to review for other-than-temporary impairment. Meta Financial has no trading securities.

The Company classifies the majority of its securities as AFS. AFS securities are those the Company may decide to sell if needed for liquidity, asset-liability management or other reasons. During the 2013 fiscal year, the Company reclassified a portion of its securities portfolio from the AFS to the HTM category. The reclassification was made to better reflect the revised intentions of the Company to maintain these securities in its portfolio; in response to the potential impact on tangible book value should interest rates rise, due to the mark to market on these bonds; and to mitigate possible negative impacts on its regulatory capital under the proposed Dodd-Frank and Basel III capital guidelines, whereby unrealized losses on AFS securities could become a direct deduction from regulatory capital. Subsequent to the reclassification and prior to June 30, 2013, the Basel III Accord was finalized and clarified that unrealized losses and gains on securities will not affect regulatory capital for those companies that opt out of the requirement, which the Company has done.

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 over the estimated life of the security using the level yield method, is included in income as earned.

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or 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 that utilizes several sources for valuing fixed-income securities. Sources utilized by the third-party provider include pricing models that vary based on asset class and include available trade, bid, and other market information. This methodology includes broker quotes, proprietary models, descriptive terms and conditions databases, as well as extensive quality control programs.

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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 2015, 2014 and 2013, there was no other-than-temporary impairment recorded.

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 reduced by the allowance for loan losses and any deferred fees or costs on originated 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. Interest income is subsequently recognized only to the extent that cash payments are received until, in management’s judgment, the borrower has demonstrated a continued ability to make contractual interest and principal payments, in which case the loan is returned to accrual status.

Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method.

As part of the Company’s ongoing risk management practices, management 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. 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.

The Company considers whether a borrower is experiencing financial difficulties, as well as whether a concession has been granted to a borrower determined to be troubled, when determining whether a modification meets the criteria of being a TDR. For such purposes, evidence which may indicate that a borrower is troubled includes, among other factors, the borrower’s default on debt, the borrower’s declaration of bankruptcy or preparation for the declaration of bankruptcy, the borrower’s forecast that entity-specific cash flows will be insufficient to service the related debt, or the borrower’s inability to obtain funds from sources other than existing creditors at an effective interest rate equal to the current market interest rate for similar debt for a non-troubled debtor. If a borrower is determined to be troubled based on such factors or similar evidence, a concession will be deemed to have been granted if a modification of the terms of the debt occurred that management would not otherwise consider. Such concessions may include, among other modifications, a reduction of the stated interest for the remaining original life of the debt, an extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk, a reduction of accrued interest, or a reduction of the face amount or maturity amount of the debt.

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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.

Generally, when a loan becomes delinquent 90 days or more for Retail Bank or 210 days or more for Premium Finance or when the collection of principal or interest becomes doubtful, the Company will place the loan on a non-accrual status and, as a result, previously accrued interest income on the loan is reversed against current income. The loan will remain on a non-accrual status until the loan becomes current and has demonstrated a sustained period of satisfactory performance.

MORTGAGE SERVICING AND TRANSFERS OF FINANCIAL ASSETS

The Company, from time to time, sells loan participations, 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. At September 30, 2015 and 2014, the Bank was servicing loans for others with aggregate unpaid principal balances of $22.2 million and $22.6 million, respectively.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses represents management’s estimate of probable loan losses that have been incurred as of the date of the consolidated financial statements. The allowance for loan losses is increased by a provision for loan 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 is necessarily subjective. Management’s periodic evaluation of the appropriateness of the allowance is based on the Company’s and peer group’s past loan 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 allowance for specific problem loan situations, the entire allowance is available for any loan charge-offs that occur. The allowance consists of specific, general and unallocated components.

The specific component relates to impaired loans. Loans are considered impaired if full principal or interest payments are not probable in accordance with the contractual loan terms. Often this is associated with a delay or shortfall in payments of 210 days or more for premium finance loans and 90 days or more for other loan categories. Non-accrual loans and all TDRs are considered impaired. Impaired loans, 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 loans not considered impaired and is comprised of both quantitative and qualitative analysis. A separate general reserve analysis is performed for individual classified non-impaired loans and for non-classified smaller-balance homogeneous loans. The three main assumptions for the quantitative components for 2015 are historical loss rates, the look back period (“LBP”) and the loss emergence period (“LEP”).

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The historical loss experience is determined by portfolio segment and is based on the actual loss history of the Company over the past five years. For the individual classified loans, historic charge-off rates for the Company’s classified loan population are utilized.

In prior periods, management utilized a three-year historical loss experience methodology. A five-year LBP is appropriate to capture a wider range of losses due to historically low levels in recent years and to continue to factor in loss experience resulting from the credit crisis and other factors.

The LEP is an estimate of the average amount of time from the point the customer incurs a loss to the point the loss is confirmed by the Company. During management’s most recent periodic evaluation, we studied the LEPs for our loan portfolio utilizing Company charge-off history. The LEP is only applied to the non-classified homogeneous loan general reserve.

The main assumptions for the quantitative components in 2014 are historical loss rates and other qualitative adjustments.

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

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

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. 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 losses. Valuations are periodically performed by management and valuation allowances are increased through a charge to income for reductions in fair value or increases in estimated selling costs.

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.

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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 income tax expense.

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 we are the lessee, are included in premises and equipment at the capitalized amount less accumulated amortization. We primarily use the straight-line method of depreciation over the estimated useful lives of the assets, which range from 10 to 40 years for buildings, and 2 to 15 years for leasehold improvements, and for furniture, fixtures and equipment. We amortize capitalized leased assets on a straight-line basis over the lives of the respective leases. Assets are reviewed for impairment when events indicate the carrying amount may not be recoverable.

TRANSFERS OF FINANCIAL ASSETS

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.

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, 2015 and 2014, 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.

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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.

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.

REVENUE RECOGNITION

Interest revenue from loans and investments is recognized on the accrual basis of accounting as the interest is earned according to the terms of the particular loan or investment. Income from service and other customer charges is recognized as earned. Revenue within the MPS division is recognized as services are performed and service charges are earned in accordance with the terms of the various programs.

EARNINGS PER COMMON SHARE (“EPS”)

Basic EPS is based on the net income divided by the weighted-average number of common shares outstanding during the period. Allocated ESOP shares are considered outstanding for earnings per common share calculations, as they are committed to be released; unallocated ESOP shares are not considered outstanding. Diluted EPS shows the dilutive effect of additional potential common shares issuable under stock option plans.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of net income and other comprehensive income or loss. Other comprehensive income includes the change in net unrealized gains and losses on securities available for sale, 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 nonvested 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 assumes no projected forfeitures on its stock-based compensation, since actual historical forfeiture rates on its stock-based incentive awards have been negligible.

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NEW ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) No 2015-16 – Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments

This ASU provides guidance regarding recognizing adjustments to provisional goodwill identified during the measurement period in the reporting period in which the adjustment is determined. Income statement effects, if any, will also need to be recorded in the period in which the adjustment is determined, as if the accounting had been completed at the acquisition date. This update is in effect for annual and interim periods beginning after December 15, 2015, and the Company does not expect a material impact on the Company’s consolidated financial statements.

ASU No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure

This ASU provides guidance on when a loan should be derecognized and collateral assets recognized during an in-substance repossession or foreclosure. The objective of this ASU is to eliminate diversity in practice related to the topic. The ASU states creditors are considered to have physical possession of residential real estate property when either the creditor obtains title for the property or the borrower transfers all interest in the property through a deed or other legal agreement. When physical possession occurs, the loan should be derecognized and collateral assets recognized. This update was effective for annual and interim periods beginning after December 15, 2014, and does not have a material impact on the Company’s consolidated financial statements.

ASU No. 2014-09, Revenue Recognition – Revenue from Contracts with Customers (Topic 606)

This ASU provides guidance on when to recognize revenue from contracts with customers. The objective of this ASU is to eliminate diversity in practice related to this topic and to develop guidance that would streamline and enhance revenue recognition requirements. The ASU defines five steps to recognize revenue, including identify the contract with a customer, identify the performance obligations in the contract, determine a transaction price, allocate the transaction price to the performance obligations and then recognize the revenue when or as the entity satisfies a performance obligation. This update is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and the Company is currently assessing the potential impact to the consolidated financial statements.

ASU No. 2014-14, Troubled Debt Restructuring by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

This ASU provides guidance on how to account for certain foreclosed government-guaranteed mortgage loans. The creditor should recognize a separate other receivable in the amount the creditor expects to recover from the guarantor. This update was effective for annual and interim periods beginning after December 15, 2014, and will not have a material impact on the Company’s consolidated financial statements.

ASU No. 2015-01, Income Statement, Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

This ASU eliminates the concept of extraordinary items from U.S. GAAP. The ASU does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. This update is effective for annual and interim periods beginning after December 15, 2015, and is not expected to have a material impact on the Company’s consolidated financial statements.

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ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis

This ASU changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity (“VIE”), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. It also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. This update is effective for annual and interim periods beginning after December 15, 2015, and is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 2. ACQUISITIONS

The Company completed two acquisitions for the fiscal year ended September 30, 2015. The two purchase transactions are detailed below.

AFS/IBEX

On December 2, 2014, the Company, through its wholly-owned subsidiary, MetaBank, purchased substantially all of the commercial loan portfolio and related assets of AFS/IBEX Financial Services, Inc. (“AFS/IBEX”), an insurance premium finance company based in Dallas, Texas. Following the acquisition, MetaBank established its AFS/IBEX division, which provides short-term, collateralized financing to facilitate the purchase of insurance for commercial property, casualty, and liability risk through a network of over 1,300 independent insurance agencies throughout the United States. In addition to its operations at the Bank’s main office, the AFS/IBEX division has two agency offices, one in Dallas, Texas, and one in southern California.

Under the terms of the purchase agreement, the aggregate purchase price, which was based upon the December 2, 2014 tangible book value of AFS/IBEX, was approximately $99.3 million, all of which was paid in cash. The Company acquired assets with approximate fair values of $6.9 million for cash and cash equivalents, $74.1 million net loans receivable, $0.7 million other assets, $8.2 million intangible assets including customer relationships, trademark, and non-compete agreements, and $11.6 million goodwill. The Company also assumed liabilities of $2.2 million consisting of accrued expenses and other liabilities. All amounts are at estimated fair market values.

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The following table represents the approximate fair value of assets acquired and liabilities assumed of AFS/IBEX on the consolidated balance sheet as of December 2, 2014:

	As of December 2, 2014
	(Dollars in Thousands)
Fair value of consideration paid
Cash	$	99,255
Total consideration paid		99,255

Fair value of assets acquired
Cash and cash equivalents		6,947
Loans receivable, net		74,120
Prepaid assets		156
Furniture and equipment, net		449
Intangible assets		8,213
Other assets		6
Total assets		89,891
Fair value of liabilities assumed
Accrued expenses and other liabilities		2,214
Total liabilities assumed		2,214
Fair value of net assets acquired		87,677
Goodwill resulting from acquisition	$	11,578

The AFS/IBEX transaction has been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the transaction date. The Company made significant estimates and exercised judgment in estimating fair values and accounting for such acquired assets and liabilities.

The Company recognized goodwill of $11.6 million, which is calculated as the excess of both the consideration exchanged and the liabilities assumed as compared to the fair value of identifiable assets acquired. Goodwill resulted from expected operational synergies, an enhanced market area, and expanded product lines and is expected to be deductible for tax purposes. The intangible assets consist primarily of customer relationships that will be amortized over 30 years and will be deductible for tax purposes. See Note 22 to the Consolidated Financial Statements for further information on goodwill.

Acquired loans were recorded at fair value based on a discounted cash flow valuation which considered default rates, loss given defaults, and recovery rates, among other things. No allowance for credit losses was carried over on December 2, 2014. The Company recorded $7.6 million in revenue and $0.8 million in net income for AFS/IBEX during fiscal 2015. In addition, the Company incurred transaction costs of approximately $0.6 million in 2015 in connection with the acquisition, which are included in legal and consulting and other expenses on our consolidated statement of operations for the year ended September 30, 2015.

This acquisition is not deemed significant to the overall Company’s financial statements.

REFUND ADVANTAGE

On September 8, 2015, the Company, through its wholly-owned subsidiary, MetaBank, purchased substantially all the assets and related liabilities of Fort Knox Financial Services Corporation and its subsidiary, Tax Product Services LLC (together “Refund Advantage”). Refund Advantage is a provider of integrated tax refund processing services.

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Under the terms of the purchase agreement, the aggregate purchase price was approximately $50.4 million, of which $26.1 million was paid in cash and $24.3 million was issued in Meta common stock. The Company acquired assets with approximate fair values of $2.8 million for cash and cash equivalents, $0.5 million other assets, $24.1 million intangible assets including customer relationships, trademark, and non-compete agreements, and $25.4 million goodwill. The Company also assumed liabilities of $2.5 million consisting of accrued expenses and other liabilities. All amounts are at estimated fair market values.

The following table represents the approximate fair value of assets acquired and liabilities assumed of Refund Advantage on the consolidated balance sheet as of September 8, 2015:

	As of September 8, 2015
	(Dollars in Thousands)
Fair value of consideration paid
Cash	$	26,060
Stock issued	$	24,303
Total consideration paid		50,363

Fair value of assets acquired
Cash and cash equivalents		2,821
Prepaid assets		23
Furniture and equipment, net		55
Intangible assets		24,119
Other assets		457
Total assets		27,475
Fair value of liabilities assumed
Accrued expenses and other liabilities		2,463
Total liabilities assumed		2,463
Fair value of net assets acquired		25,012
Goodwill resulting from acquisition	$	25,351

The Refund Advantage transaction has been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the transaction date. The Company made significant estimates and exercised judgment in estimating fair values and accounting for such acquired assets and liabilities.

The Company recognized goodwill of $25.4 million, which is calculated as the excess of both the consideration exchanged and the liabilities assumed as compared to the fair value of identifiable assets acquired. Goodwill resulted from expected operational synergies, an enhanced market area, and expanded product lines and is expected to be deductible for tax purposes. The intangible assets consist primarily of customer relationships that will be amortized over between 12 and 20 years and the Refund Advantage trademark, which will be amortized over 15 years and will be deductible for tax purposes. See Note 22 to the Consolidated Financial Statements for further information on goodwill.

We incurred transaction costs of approximately $0.9 million in connection with the acquisition, which are included in legal and consulting and other expenses on our consolidated statement of operations for the year ended September 30, 2015.

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The following unaudited pro forma summary financial results present the consolidated results of operations as if the acquisition of Refund Advantage had occurred as of October 1, 2013, after the effect of certain adjustments, including amortization of certain identifiable intangible assets, income and expense items not attributable to ongoing operations and related tax effects. The unaudited pro forma condensed consolidated statement of operations does not include any adjustments for any restructuring activities, operating efficiencies or cost savings. The pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the Refund Advantage acquisition been made as of October 1, 2013, or of any potential results which may occur in the future.

	September 30,
	2015		2014
	(Dollars in Thousands)

Total income	$	142,876	$	127,150
Net income attributable to common stock	$	19,724	$	19,087
Basic earnings per common share		2.51		2.64
Diluted earnings per common share		2.49		2.61
Basic weighted-average common shares, issued and outstanding		7,850,582		7,229,536
Diluted weighted-average common shares, issued and outstanding		7,915,811		7,314,669

NOTE 3. LOANS RECEIVABLE, NET

Year-end loans receivable were as follows:

	September 30, 2015			September 30, 2014
	(Dollars in Thousands)

1-4 Family Real Estate	$	125,021		$	116,395
Commercial and Multi-Family Real Estate		310,199			224,302
Agricultural Real Estate		64,316			56,071
Consumer		33,527			29,329
Commercial Operating		29,893			30,846
Agricultural Operating		43,626			42,258
Premium Finance		106,505			-
Total Loans Receivable		713,087			499,201

Less:
Allowance for Loan Losses		(6,255	)		(5,397	)
Net Deferred Loan Origination Fees		(577	)		(797	)
Total Loans Receivable, Net	$	706,255		$	493,007

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

Year ended September 30,	2015			2014			2013
	(Dollars in Thousands)

Beginning balance	$	5,397		$	3,930		$	3,971
Provision (recovery) for loan losses		1,465			1,150			-
Recoveries		123			367			179
Charge offs		(730	)		(50	)		(220	)
Ending balance	$	6,255		$	5,397		$	3,930

Allowance for Loan Losses and Recorded Investment in loans at September 30, 2015 and 2014 are as follows:

	1-4 Family Real Estate			Commercial and Multi-Family Real Estate			Agricultural Real Estate			Consumer			Commercial Operating			Agricultural Operating			Premium Finance			Unallocated			Total
	(Dollars in Thousands)
Year Ended September 30, 2015

Allowance for loan losses:
Beginning balance	$	552		$	1,575		$	263		$	78		$	93		$	719		$	-		$	2,117		$	5,397
Provision (recovery) for loan losses		(229	)		(180	)		(100	)		(58	)		(68	)		3,004			464			(1,368	)		1,465
Charge offs		(45	)		(214	)		-			-			-			(186	)		(285	)		-			(730	)
Recoveries		-			6			-			-			3			-			114			-			123
Ending balance	$	278		$	1,187		$	163		$	20		$	28		$	3,537		$	293		$	749		$	6,255

Ending balance: individually evaluated for impairment		-			241			-			-			-			3,252			-			-			3,493
Ending balance: collectively evaluated for impairment		278			946			163			20			28			285			293			749			2,762
Total	$	278		$	1,187		$	163		$	20		$	28		$	3,537		$	293		$	749		$	6,255

Loans:
Ending balance: individually evaluated for impairment		121			1,350			-			-			11			5,132			-			-			6,614
Ending balance: collectively evaluated for impairment		124,900			308,849			64,316			33,527			29,882			38,494			106,505			-			706,473
Total	$	125,021		$	310,199		$	64,316		$	33,527		$	29,893		$	43,626		$	106,505		$	-		$	713,087

	1-4 Family Real Estate		Commercial and Multi-Family Real Estate			Agricultural Real Estate		Consumer		Commercial Operating		Agricultural Operating			Premium Finance		Unallocated		Total
	(Dollars in Thousands)
Year Ended September 30, 2014

Allowance for loan losses:
Beginning balance	$	333	$	1,937		$	112	$	74	$	49	$	267		$	-	$	1,158	$	3,930
Provision (recovery) for loan losses		217		(709	)		151		4		26		502			-		959		1,150
Charge offs		-		-			-		-		-		(50	)		-		-		(50	)
Recoveries		2		347			-		-		18		-			-		-		367
Ending balance	$	552	$	1,575		$	263	$	78	$	93	$	719		$	-	$	2,117	$	5,397


Ending balance: individually evaluated for impairment		23		350			-		-		-		340			-		-		713
Ending balance: collectively evaluated for impairment		529		1,225			263		78		93		379			-		2,117		4,684
Total	$	552	$	1,575		$	263	$	78	$	93	$	719		$	-	$	2,117	$	5,397

Loans:
Ending balance: individually evaluated for impairment		387		5,655			-		-		22		340			-		-		6,404
Ending balance: collectively evaluated for impairment		116,008		218,647			56,071		29,329		30,824		41,918			-		-		492,797
Total	$	116,395	$	224,302		$	56,071	$	29,329	$	30,846	$	42,258		$	-	$	-	$	499,201

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The asset classification of loans at September 30, 2015, and 2014, are as follows:

September 30, 2015	1-4 Family Real Estate		Commercial and Multi-Family Real Estate		Agricultural Real Estate		Consumer		Commercial Operating		Agricultural Operating		Premium Finance		Total
	(Dollars in Thousands)

Pass	$	124,775	$	307,876	$	35,106	$	33,527	$	29,052	$	29,336	$	106,505	$	666,177
Watch		212		1,419		26,703		-		712		1,079		-		30,125
Special Mention		10		-		877		-		-		4,014		-		4,901
Substandard		24		904		1,630		-		129		9,197		-		11,884
Doubtful		-		-		-		-		-		-		-		-
	$	125,021	$	310,199	$	64,316	$	33,527	$	29,893	$	43,626	$	106,505	$	713,087

September 30, 2014	1-4 Family Real Estate		Commercial and Multi-Family Real Estate		Agricultural Real Estate		Consumer		Commercial Operating		Agricultural Operating		Premium Finance		Total
	(Dollars in Thousands)

Pass	$	115,700	$	222,074	$	52,364	$	29,329	$	30,709	$	32,261	$	-	$	482,437
Watch		369		852		273		-		137		369		-		2,000
Special Mention		81		96		1,660		-		-		63		-		1,900
Substandard		245		1,280		1,774		-		-		9,565		-		12,864
Doubtful		-		-		-		-		-		-		-		-
	$	116,395	$	224,302	$	56,071	$	29,329	$	30,846	$	42,258	$	-	$	499,201

Federal regulations provide for the classification of loans and other assets such as debt and equity securities considered by our regulator, the Office of the Comptroller of the Currency (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.

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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.

Past due loans at September 30, 2015 and 2014 are as follows:

September 30, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Non-Accrual Loans		Total Loans Receivable
	(Dollars in Thousands)

1-4 Family Real Estate	$	142	$	-	$	-	$	142	$	124,855	$	24	$	125,021
Commercial and Multi-Family Real Estate		-		-		-		-		309,295		904		310,199
Agricultural Real Estate		-		-		-		-		64,316		-		64,316
Consumer		152		-		13		165		33,362		-		33,527
Commercial Operating		-		-		-		-		29,893		-		29,893
Agricultural Operating		-		-		-		-		38,494		5,132		43,626
Premium Finance		702		362		1,728		2,792		103,713		-		106,505
Total	$	996	$	362	$	1,741	$	3,099	$	703,928	$	6,060	$	713,087

September 30, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Non-Accrual Loans		Total Loans Receivable
	(Dollars in Thousands)

1-4 Family Real Estate	$	111	$	37	$	-	$	148	$	115,966	$	281	$	116,395
Commercial and Multi-Family Real Estate		-		-		-		-		223,990		312		224,302
Agricultural Real Estate		-		-		-		-		56,071		-		56,071
Consumer		2		12		54		68		29,261		-		29,329
Commercial Operating		-		-		-		-		30,846		-		30,846
Agricultural Operating		-		-		-		-		41,918		340		42,258
Total	$	113	$	49	$	54	$	216	$	498,052	$	933	$	499,201

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 payments of 210 days or more for Premium Finance loans and 90 days or more for other loan categories. As of September 30, 2015, there were no Premium Finance loans greater than 210 days past due.

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Impaired loans at September 30, 2015 and 2014 are as follows:

	Recorded Balance		Unpaid Principal Balance		Specific Allowance
September 30, 2015	(Dollars in Thousands)

Loans without a specific valuation allowance
1-4 Family Real Estate	$	121	$	121	$	-
Commercial and Multi-Family Real Estate		446		446		-
Commercial Operating		11		11		-
Total	$	578	$	578	$	-
Loans with a specific valuation allowance
1-4 Family Real Estate	$	-	$	-	$	-
Commercial and Multi-Family Real Estate		904		904		241
Agricultural Operating		5,132		5,282		3,252
Total	$	6,036	$	6,186	$	3,493

	Recorded Balance		Unpaid Principal Balance		Specific Allowance
September 30, 2014	(Dollars in Thousands)

Loans without a specific valuation allowance
1-4 Family Real Estate	$	142	$	142	$	-
Commercial and Multi-Family Real Estate		4,375		4,375		-
Commercial Operating		22		22		-
Total	$	4,539	$	4,539	$	-
Loans with a specific valuation allowance
1-4 Family Real Estate	$	245	$	245	$	23
Commercial and Multi-Family Real Estate		1,280		1,280		350
Agricultural Operating		340		340		340
Total	$	1,865	$	1,865	$	713

Cash interest collected on impaired loans was not material during the years ended September 30, 2015 and 2014.

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The following table provides the average recorded investment in impaired loans for the years ended September 30, 2015 and 2014.

	Year Ended September 30,
	2015		2014
	Average Recorded Investment		Average Recorded Investment


1-4 Family Real Estate	$	238	$	574
Commercial and Multi-Family Real Estate		2,114		6,526
Commercial Operating		17		34
Agricultural Operating		3,559		29
Total	$	5,928	$	7,163

For fiscal 2015 and 2014, the Company’s TDRs (which involved forgiving a portion of interest or principal on any loans or making loans at a rate materially less than that of market rates) are included in the table above.

No TDRs were recorded during fiscal 2015 or 2014. Also, no TDRs which had been modified during the 12-month period prior to default had a payment default during fiscal 2015 or 2014.

Virtually all of the Company’s originated loans are to Iowa- and South Dakota-based individuals and organizations. The Company’s purchased loans totaled $8.1 million at September 30, 2015, which were secured by properties located, as a percentage of total loans, as follows: 1% combined in Oregon and North Dakota and less than 1% in Minnesota, North Carolina, South Dakota and Connecticut.

The Company originates and purchases commercial real estate loans. These loans are considered by management to be of somewhat greater risk of not being collected due to the dependency on income production. The Company’s commercial real estate loans include $51.1 million of loans secured by hotel properties and $99.6 million of multi-family properties at September 30, 2015. The Company’s commercial real estate loans include $40.7 million of loans secured by hotel properties and $62.3 million of multi-family properties at September 30, 2014. The remainder of the commercial real estate portfolio is diversified by industry. The Company’s policy for requiring collateral and guarantees varies with the creditworthiness of each borrower.

Non-accruing loans were $6.1 million and $0.9 million at September 30, 2015 and 2014, respectively. There were $1.7 million and $0.1 million accruing loans delinquent 90 days or more at September 30, 2015 and 2014, respectively. For the year ended September 30, 2015, gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to approximately $0.9 million, of which none was included in interest income.

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NOTE 4. LOAN SERVICING

Loans serviced for others are not reported as assets. The unpaid principal balances of these loans at year-end were as follows:

September 30,	2015		2014		2013
	(Dollars in Thousands)

Mortgage loan portfolios serviced for Fannie Mae	$	5,055	$	5,948	$	7,361
Other		17,156		16,576		9,930
	$	22,211	$	22,524	$	17,291

NOTE 5. EARNINGS PER COMMON SHARE

Basic EPS is based on the net income divided by the weighted-average number of common shares outstanding during the period. Allocated Employee Stock Ownership Plan (“ESOP”) shares are considered outstanding for EPS calculations, as they are committed to be released; unallocated ESOP shares are not considered outstanding. All ESOP shares were allocated as of September 30, 2015, and September 30, 2014. Diluted EPS shows the dilutive effect of additional common shares issuable pursuant to stock option agreements.

A reconciliation of the net income and common stock share amounts used in the computation of basic and diluted EPS for the fiscal years ended September 30, 2015, 2014 and 2013 is presented below.

	2015			2014			2013
	(Dollars in Thousands, Except Share and Per Share Data)
Earnings
Net income	$	18,055		$	15,713		$	13,418

Basic EPS
Weighted average common shares outstanding		6,730,086			6,117,577			5,595,733
Less weighted average nonvested shares		(4,237	)		(4,301	)		(2,032	)
Weighted average common shares outstanding		6,725,849			6,113,276			5,593,701

Earnings Per Common Share
Basic	$	2.68		$	2.57		$	2.40

Diluted EPS
Weighted average common shares outstanding for basic earnings per common share		6,725,849			6,113,276			5,593,701
Add dilutive effect of assumed exercises of stock options, net of tax benefits		68,951			85,133			53,437
Weighted average common and dilutive potential common shares outstanding		6,794,800			6,198,409			5,647,138

Earnings Per Common Share
Diluted	$	2.66		$	2.53		$	2.38

Stock options totaling 28,891, 29,984 and 88,828 were not considered in computing diluted earnings per common share for the years ended September 30, 2015, 2014 and 2013, respectively, because they were anti-dilutive.

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NOTE 6. SECURITIES

Securities available for sale were as follows:

Available For Sale			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2015	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	16,199	$	8	$	(2,263	)	$	13,944
Small business administration securities		54,493		1,563		-			56,056
Non-bank qualified obligations of states and political subdivisions		603,165		7,240		(1,815	)		608,590
Mortgage-backed securities		580,165		1,283		(4,865	)		576,583
Total debt securities		1,254,022		10,094		(8,943	)		1,255,173
Common equities and mutual funds		639		283		(8	)		914
Total available for sale securities	$	1,254,661	$	10,377	$	(8,951	)	$	1,256,087

			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2014	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	48,747	$	191	$	(2,009	)	$	46,929
Small business administration securities		66,541		543		(72	)		67,012
Non-bank qualified obligations of states and political subdivisions		368,897		2,494		(3,811	)		367,580
Mortgage-backed securities		663,690		3,519		(9,339	)		657,870
Total debt securities		1,147,875		6,747		(15,231	)		1,139,391
Common equities and mutual funds		539		291		(5	)		825
Total available for sale securities	$	1,148,414	$	7,038	$	(15,236	)	$	1,140,216

Securities held to maturity were as follows:

Held to Maturity			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2015	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Obligations of states and political subdivisions	$	19,540	$	60	$	(187	)	$	19,413
Non-bank qualified obligations of states and political subdivisions		259,627		2,122		(419	)		261,330
Mortgage-backed securities		66,577		-		(473	)		66,104
Total held to maturity securities	$	345,744	$	2,182	$	(1,079	)	$	346,847

			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2014	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Obligations of states and political subdivisions	$	19,304	$	48	$	(372	)	$	18,980
Non-bank qualified obligations of states and political subdivisions		193,595		894		(2,329	)		192,160
Mortgage-backed securities		70,034		-		(1,862	)		68,172
Total held to maturity securities	$	282,933	$	942	$	(4,563	)	$	279,312

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Included in securities available for sale are trust preferred securities as follows:

At September 30, 2015
Issuer⁽¹⁾	Amortized Cost		Fair Value		Unrealized Gain (Loss)			S&P Credit Rating	Moody's Credit Rating
	(Dollars in Thousands)

Key Corp. Capital I	$	4,986	$	4,189	$	(797	)	BB+	Baa2
Huntington Capital Trust II SE		4,979		4,076		(903	)	BB	Baa2
PNC Capital Trust		4,965		4,402		(563	)	BBB-	Baa1
Total	$	14,930	$	12,667	$	(2,263	)

(1)	Trust preferred securities are single-issuance. There are no known deferrals, defaults or excess subordination.

At September 30, 2014
Issuer⁽¹⁾	Amortized Cost		Fair Value		Unrealized Gain (Loss)			S&P Credit Rating	Moody's Credit Rating
	(Dollars in Thousands)

Key Corp. Capital I	$	4,985	$	4,400	$	(585	)	BB+	Baa3
Huntington Capital Trust II SE		4,977		4,300		(677	)	BB	Baa3
PNC Capital Trust		4,962		4,400		(562	)	BBB-	Baa2
Wells Fargo (Corestates Capital) Trust		4,444		4,400		(44	)	BBB+	A3
Total	$	19,368	$	17,500	$	(1,868	)

(1)	Trust preferred securities are single-issuance. There are no known deferrals, defaults or excess subordination.

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 we 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 we determine 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.

Generally accepted accounting principles require that, at acquisition, an enterprise classify debt securities into one of three categories: Available for sale, Held to Maturity 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. HTM debt securities are measured at amortized cost. Both AFS and HTM are subject to review for other-than-temporary impairment. Meta Financial has no trading securities.

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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, 2015, and 2014, are as follows:

Available For Sale	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
At September 30, 2015	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	-	$	-		$	12,667	$	(2,263	)	$	12,667	$	(2,263	)
Non-bank qualified obligations of states and political subdivisions		97,006		(860	)		42,583		(955	)		139,589		(1,815	)
Mortgage-backed securities		448,988		(4,301	)		48,079		(564	)		497,067		(4,865	)
Total debt securities		545,994		(5,161	)		103,329		(3,782	)		649,323		(8,943	)
Common equities and mutual funds		-		-			121		(8	)		121		(8	)
Total available for sale securities	$	545,994	$	(5,161	)	$	103,450	$	(3,790	)	$	649,444	$	(8,951	)

	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
At September 30, 2014	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	6,073	$	(47	)	$	25,359	$	(1,962	)	$	31,432	$	(2,009	)
Small Business Administration securities		8,454		(72	)		-		-			8,454		(72	)
Non-bank qualified obligations of states and political subdivisions		27,062		(70	)		191,146		(3,741	)		218,208		(3,811	)
Mortgage-backed securities		238,980		(1,248	)		234,347		(8,091	)		473,327		(9,339	)
Total debt securities		280,569		(1,437	)		450,852		(13,794	)		731,421		(15,231	)
Common equities and mutual funds		123		(5	)		-		-			123		(5	)
Total available for sale securities	$	280,692	$	(1,442	)	$	450,852	$	(13,794	)	$	731,544	$	(15,236	)

Held To Maturity	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
At September 30, 2015	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
	(Dollars in Thousands)
Debt securities
Obligations of states and political subdivisions	$	5,528	$	(34	)	$	7,964	$	(153	)	$	13,492	$	(187	)
Non-bank qualified obligations of states and political subdivisions		78,663		(365	)		4,136		(54	)		82,799		(419	)
Mortgage-backed securities		5,509		(43	)		60,595		(430	)		66,104		(473	)
Total held to maturity securities	$	89,700	$	(442	)	$	72,695	$	(637	)	$	162,395	$	(1,079	)

	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
At September 30, 2014	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
	(Dollars in Thousands)
Debt securities
Obligations of states and political subdivisions	$	1,056	$	(2	)	$	14,079	$	(370	)	$	15,135	$	(372	)
Non-bank qualified obligations of states and political subdivisions		-		-			147,949		(2,329	)		147,949		(2,329	)
Mortgage-backed securities		-		-			68,172		(1,862	)		68,172		(1,862	)
Total held to maturity securities	$	1,056	$	(2	)	$	230,200	$	(4,561	)	$	231,256	$	(4,563	)

As of September 30, 2015 and 2014, the investment portfolio included securities with current unrealized losses which have existed for longer than one year. All of these securities are considered to be acceptable credit risks. Because the declines in fair value were due to changes in market interest rates, not in estimated cash flows, and the Company does not intend to sell these securities (has not made a decision to sell) and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may occur at maturity, no other-than-temporary impairment was recorded at September 30, 2015 and 2014.

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 mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary. The expected maturities of certain Small Business Administration securities may differ from contractual maturities because the borrowers may have the right to prepay the obligation. However, certain prepayment penalties may apply.

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Available For Sale	AMORTIZED COST		FAIR VALUE
At September 30, 2015	(Dollars in Thousands)

Due in one year or less	$	-	$	-
Due after one year through five years		1,174		1,207
Due after five years through ten years		370,087		376,394
Due after ten years		302,596		300,989
		673,857		678,590
Mortgage-backed securities		580,165		576,583
Common equities and mutual funds		639		914
Total available for sale securities	$	1,254,661	$	1,256,087

	AMORTIZED COST		FAIR VALUE
At September 30, 2014	(Dollars in Thousands)

Due in one year or less	$	2,999	$	3,048
Due after one year through five years		9,922		10,079
Due after five years through ten years		285,413		285,698
Due after ten years		185,851		182,696
		484,185		481,521
Mortgage-backed securities		663,690		657,870
Common equities and mutual funds		539		825
Total available for sale securities	$	1,148,414	$	1,140,216

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Held To Maturity	AMORTIZED COST		FAIR VALUE
At September 30, 2015	(Dollars in Thousands)

Due in one year or less	$	95	$	96
Due after one year through five years		8,411		8,430
Due after five years through ten years		140,145		140,505
Due after ten years		130,516		131,712
		279,167		280,743
Mortgage-backed securities		66,577		66,104
Total held to maturity securities	$	345,744	$	346,847

	AMORTIZED COST		FAIR VALUE
At September 30, 2014	(Dollars in Thousands)

Due in one year or less	$	347	$	348
Due after one year through five years		4,726		4,718
Due after five years through ten years		91,532		89,984
Due after ten years		116,294		116,090
		212,899		211,140
Mortgage-backed securities		70,034		68,172
Total held to maturity securities	$	282,933	$	279,312

Activities related to the sale of securities available for sale are summarized below.

	2015		2014		2013
September 30,	(Dollars in Thousands)

Proceeds from sales	$	566,371	$	166,804	$	209,172
Gross gains on sales		2,753		2,292		2,947
Gross losses on sales		4,387		2,185		401

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NOTE 7. PREMISES, FURNITURE AND EQUIPMENT, NET

Year-end premises and equipment were as follows:

September 30,	2015			2014
	(Dollars in Thousands)

Land	$	1,578		$	1,673
Buildings		10,315			12,275
Furniture, fixtures, and equipment		35,571			30,947
Capitalized leases		2,259			-
		49,723			44,895
Less: accumulated depreciation and amortization		(32,330	)		(28,433	)
Net book value	$	17,393		$	16,462

Depreciation expense of premises, furniture and equipment included in occupancy and equipment expense was approximately $4.6 million, $3.5 million and $3.3 million for the years ended September 30, 2015, 2014 and 2013, respectively. Amortization expense on capitalized leases was $0.1 million, $0 and $0 and is included in occupancy and equipment expense.

NOTE 8. TIME CERTIFICATES OF DEPOSITS

Time certificates of deposits in denominations of $250,000 or more were approximately $38.5 million and $87.1 million at September 30, 2015, and 2014, respectively.

At September 30, 2015, the scheduled maturities of time certificates of deposits were as follows for the years ending:

September 30,
(Dollars in Thousands)

2016	$	66,964
2017		13,638
2018		5,594
2019		2,787
2020		2,188
Thereafter		-
Total Certificates	$	91,171

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. Previous to the legislation in 2010, the coverage of $250,000 was temporary until December 2013.

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NOTE 9. ADVANCES FROM THE FEDERAL HOME LOAN BANK AND OTHER BORROWINGS

At September 30, 2015, the Company’s advances from the FHLB had fixed rates ranging from 6.97% to 7.01% with a weighted-average rate of 6.98%. The scheduled maturities of FHLB advances were as follows for the years ending:

September 30,
(Dollars in Thousands)

2016	$	-
2017		-
2018		-
2019		5,000
2020		2,000
Thereafter		-
Total FHLB Advances	$	7,000

The Company had $540.0 million of overnight federal funds purchased from the FHLB as of September 30, 2015. At September 30, 2014, the Company’s advances from the FHLB totaled $7.0 million and carried a weighted-average rate of 6.98%. The Company had $470.0 million in overnight federal funds purchased from the FHLB at September 30, 2014.

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 all mortgage collateral 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 year-end 2015 and 2014, the Bank pledged securities with fair values of approximately $625.2 million and $422.9 million, respectively, against specific FHLB advances. In addition, qualifying mortgage loans of approximately $106.5 million, and $83.3 million were pledged as collateral at September 30, 2015, and 2014, respectively.

NOTE 10. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase totaled approximately $4.0 million and $10.4 million at September 30, 2015, and 2014, respectively.

An analysis of securities sold under agreements to repurchase follows:

September 30,	2015			2014
	(Dollars in Thousands)

Highest month-end balance	$	17,400		$	33,999
Average balance		10,883			10,137
Weighted average interest rate for the year		0.52	%		0.52	%
Weighted average interest rate at year end		0.58	%		0.52	%

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The Company pledged securities with fair values of approximately $20.6 million at September 30, 2015, as collateral for securities sold under agreements to repurchase. There were $36.4 million securities pledged as collateral for securities sold under agreements to repurchase at September 30, 2014.

NOTE 11. SUBORDINATED DEBENTURES AND TRUST PREFERRED SECURITIES

Subordinated debentures are due to First Midwest Financial Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The debentures were issued in 2001 in conjunction with the Trust’s issuance of 10,000 shares of Trust Preferred Securities. The debentures bear the same interest rate and terms as the trust preferred securities. The debentures are included on the consolidated balance sheets 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 subordinated debt securities. Distributions are paid semi-annually. Cumulative cash distributions are calculated at a variable rate of London Interbank Offered Rate (“LIBOR”) plus 3.75% (4.28% at September 30, 2015, and 4.08% at September 30, 2014), 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.

NOTE 12. 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 one year at the Bank and who have attained age 21. ESOP expense of $994,000, $703,000 and $694,000 was recorded for the years ended September 30, 2015, 2014 and 2013, respectively. Contributions of $992,038, $850,406 and $485,548 were made to the ESOP during the years ended September 30, 2015, 2014 and 2013, 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 years ended September 30, 2015, 2014 and 2013, 23,750 shares, 24,125 shares and 17,715 shares with a fair value of $41.77, $35.25 and $37.99 per share, respectively, were released. Also for the years ended September 30, 2015, 2014 and 2013, allocated shares and total ESOP shares reflect 10,294 shares, 10,643 shares and 45,225 shares, respectively, withdrawn from the ESOP by participants who are no longer with the Company or by participants diversifying their holdings. At September 30, 2015, 2014 and 2013, there were 2,974, 2,529 and 3,526 shares purchased, respectively, for dividend reinvestment.

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Year-end ESOP shares are as follows:

September 30,	2015		2014		2013
	(Dollars in Thousands)

Allocated shares		256,283		239,879		223,868
Unearned shares		-		-		-
Total ESOP shares		256,283		239,879		223,868

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 years ended September 30, 2015, 2014 and 2013 was $1.1 million, $0.9 million and $0.8 million, respectively.

NOTE 13. SHARE-BASED COMPENSATION PLANS

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 years ended September 30, 2015, 2014 and 2013.

Year Ended September 30,	2015		2014		2013
	(Dollars in Thousands)
Total employee stock-based compensation expense recognized in income, net of tax effects of $192, $66 and $51, respectively	$	334	$	120	$	103

As of September 30, 2015, stock-based compensation expense not yet recognized in income totaled $0.4 million, which is expected to be recognized over a weighted-average remaining period of 1.93 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 10-year periods with 100% vesting generally occurring either at grant date or over a four-year period. No options were granted during the years ended September 30, 2015, 2014 and 2013. The intrinsic value of options exercised during the years ended September 30, 2015, 2014 and 2013 were $0.9 million, $1.4 million and $0.8 million, respectively.

Shares are granted each year to executives and senior leadership members under the 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 years ended September 30, 2015, 2014 and 2013 was $0.2 million, $0.1 million and $0.1 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 year ended September 30, 2015; however, previously awarded options were exercised under this plan during the year.

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The following tables show the activity of options and nonvested (restricted) shares granted, exercised or forfeited under all of the Company’s option and incentive plans during the years ended September 30, 2015 and 2014.

	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, 2014		235,766		$	25.20		3.78	$	2,507
Granted		-			-		-		-
Exercised		(46,678	)		22.98		-		925
Forfeited or expired		-			-		-		-
Options outstanding, September 30, 2015		189,088		$	25.74		3.16	$	3,027

Options exercisable end of year		189,088		$	25.74		3.16	$	3,027

	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, 2013		318,648		$	24.44		4.18	$	4,376
Granted		-			-		-		-
Exercised		(82,882	)		22.31		-		1,389
Forfeited or expired		-			-		-		-
Options outstanding, September 30, 2014		235,766		$	25.20		3.78	$	2,507

Options exercisable end of year		235,766		$	25.20		3.78	$	2,507

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	Number of Shares			Weighted Average Fair Value At Grant
	(Dollars in Thousands, Except Share and Per Share Data)

Nonvested shares outstanding, September 30, 2014		4,000		$	28.61
Granted		51,217			41.10
Vested		(11,215	)		37.81
Forfeited or expired		-			-
Nonvested shares outstanding, September 30, 2015		44,002		$	40.80

	Number of Shares			Weighted Average Fair Value At Grant
	(Dollars in Thousands, Except Share and Per Share Data)

Nonvested shares outstanding, September 30, 2013		4,000		$	25.67
Granted		4,267			37.82
Vested		(4,267	)		35.07
Forfeited or expired		-			-
Nonvested shares outstanding, September 30, 2014		4,000		$	28.61

NOTE 14. INCOME TAXES

The Company and its subsidiaries file a consolidated federal income tax return on a fiscal year basis. The provision for income taxes consists of:

Years ended September 30,	2015			2014			2013
	(Dollars in Thousands)
Federal:
Current	$	4,217		$	3,787		$	2,847
Deferred		(3,896	)		(1,765	)		(536	)
		321			2,022			2,311

State:
Current		1,048			874			1,252
Deferred		(1	)		10			141
		1,047			884			1,393

Income tax expense	$	1,368		$	2,906		$	3,704

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Total income tax expense differs from the statutory federal income tax rate as follows:

Years ended September 30,	2015			2014			2013
	(Dollars in Thousands)

Income tax expense at federal tax rate	$	6,798		$	6,517		$	5,993
Increase (decrease) resulting from:
State income taxes net of federal benefit		692			575			1,092
Nontaxable buildup in cash surrender value		(711	)		(399	)		(349	)
Incentive stock option expense		(37	)		(187	)		(97	)
Tax exempt income		(5,230	)		(3,594	)		(2,815	)
Nondeductible expenses		188			120			41
Other, net		(332	)		(126	)		(161	)
Total income tax expense (benefit)	$	1,368		$	2,906		$	3,704

The components of the net deferred tax asset (liability) at September 30, 2015 and 2014 are:

September 30,	2015			2014
	(Dollars in Thousands)
Deferred tax assets:
Bad debts	$	2,286		$	1,955
Deferred compensation		1,040			708
Stock based compensation		235			271
Operational reserve		453			464
AMT Credit		4,490			2,239
Intangibles		573
Net unrealized losses on securities available for sale		-			2,969
Indirect tax benefits of unrecognized tax positions		384			376
Other assets		1,293			759
		10,754			9,741

Deferred tax liabilities:
FHLB stock dividend		(414	)		(410	)
Premises and equipment		(1,222	)		(1,060	)
Patents		(967	)		(937	)
Prepaid expenses		(633	)		(743	)
Net unrealized gains on securities available for sale		(521	)		-
Deferred loan fees		-			-
		(3,757	)		(3,150	)

Net deferred tax assets (liabilities)	$	6,997		$	6,591

As of September 30, 2015 and 2014, the Company had a gross deferred tax asset of $829,000 and $780,000, respectively, for separate company state cumulative net operating loss carryforwards, which was fully reserved for as the Company does not anticipate any state taxable income at the holding company level in future periods.

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Finally, 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, 2015, and 2014 with the exception of the state cumulative net operating loss carryforwards discussed above.

Federal income tax laws provided savings banks with additional bad debt deductions through September 30, 1987, totaling $6.7 million for the Bank. Accounting standards do not require a deferred tax liability to be recorded on this amount, which liability otherwise would total approximately $2.3 million at September 30, 2015 and 2014. If the Bank were to be liquidated or otherwise cease to be a bank, or if tax laws were to change, the $2.3 million would be recorded as expense.

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’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, 2012 and later remain subject to examination by the Internal Revenue Service. For state purposes, the tax years ended September 30, 2012 and later remain open for examination, with few exceptions. A federal income tax review for fiscal year ended September 30, 2012, was completed in the current fiscal year. The review resulted in no changes being made.

A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits for the years ended September 30, 2015, and 2014 follows:

September 30,	2015			2014
	(Dollars in Thousands)

Balance at beginning of year	$	983		$	931
Additions for tax positions related to the current year		49			118
Additions for tax positions related to the prior years		4			-
Reductions for tax positions due to settlement with taxing authorities		(62	)		(16	)
Reductions for tax positions related to prior years		-			(50	)
Balance at end of year	$	974		$	983

The total amount of unrecognized tax benefits that, if recognized, would impact the effective rate was $641,000 as of September 30, 2015. 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 $155,000 as of September 30, 2015. The Company does not anticipate any significant change in the total amount of unrecognized tax benefits within the next 12 months.

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NOTE 15. CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

In July 2013, the Company’s primary federal regulator, the Federal Reserve and the Bank’s primary federal regulator, the OCC, approved final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Basel III Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework referred to as “Basel III” for strengthening international capital standards. The Basel III Capital Rules substantially revise the risk-based capital requirements applicable to financial institution holding companies and their depository institution subsidiaries, including us and the Bank, as compared to the current U.S. general risk-based capital rules. The Basel III Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Basel III Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach, which was derived from the Basel Committee’s 1988 “Basel I” capital accords, with a more risk-sensitive approach based, in part, on the “standardized approach” in the Basel Committee’s 2004 “Basel II” capital accords. In addition, the Basel III Capital Rules implement certain provisions of the Dodd-Frank Act, including the requirements of Section 939A to remove references to credit ratings from the federal agencies’ rules. The Basel III Capital Rules became effective for us and the Bank on January 1, 2015, subject to phase-in periods for certain of their components and other provisions.

Pursuant to the Basel III Capital Rules, our Company and Bank, respectively, are subject to new regulatory capital adequacy requirements promulgated by the Federal Reserve and the OCC. Failure by our Company or Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by our regulators that could have a material adverse effect on our consolidated financial statements. Prior to January 1, 2015, our Bank was subject to capital requirements under Basel I and there were no capital requirements for our Company. Under the capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measures of our Company’s and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and 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, 2015, 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.

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	Company (Actual)					Bank (Actual)					Minimum Requirement For Capital Adequacy Purposes					Minimum Requirement To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount			Ratio
	(Dollars in Thousands)
September 30, 2015

Tier 1 (core) capital (to adjusted total assets)	$	224,426		9.36	%	$	213,220		8.89	%	$	8,977		4.00	%	$	11,221			5.00	%
Common equity Tier 1 (to risk-weighted assets)		216,931		19.85			213,220		19.52			9,762		4.50			14,101			6.50
Tier 1 (core) capital (to risk-weighted assets)		224,426		20.54			213,220		19.52			13,466		6.00			17,954			8.00
Total qualifying capital (to risk-weighted assets)		230,820		21.12			219,614		20.11			18,466		8.00			23,082			10.00

September 30, 2014

Tangible capital (to tangible assets)	$	176,388		8.60	%	$	176,388		8.60	%	$	30,771		1.50	%	$	n/	a		n/a	%
Tier 1 (core) capital (to adjusted total assets)		176,388		8.60			176,388		8.60			82,057		4.00			102,571			5.00
Tier 1 (core) capital (to risk-weighted assets)		176,388		20.95			176,388		20.95			33,672		4.00			50,508			6.00
Total risk based capital (to risk-weighted assets)		181,786		21.59			181,786		21.59			67,344		8.00			84,180			10.00

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

	Standardized Approach (1) September 30, 2015
	(Dollars in Thousands)

Total equity	$	271,335
Adjustments:
LESS: Goodwill, net of associated deferred tax liabilities		36,642
LESS: Certain other intangible assets		13,431
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards		1,876
LESS: Net unrealized gains (losses) on available-for-sale securities		2,455
Common Equity Tier 1 ⁽¹⁾		216,931
Long-term debt and other instruments qualifying as Tier 1		10,310
LESS: Additional tier 1 capital deductions		2,815
Total Tier 1 capital		224,426
Allowance for loan losses		6,394
Total qualifying capital		230,820

(1)

Basel III revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio. Those changes became effective for the Company on January 1, 2015, and are being fully phased in through the end of 2021. The capital ratios were determined using the Basel III capital rules that became effective on January 1, 2015.

Beginning January 1, 2016, Basel III implements a requirement for all banking organizations 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 will be 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, 2016, our Company and Bank will be expected to comply with the capital conservation buffer requirement, which will increase the three risk-based capital ratios by 0.625% each year through 2019, at which point the Common Equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively.

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NOTE 16. 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, 2015 and 2014, unfunded loan commitments approximated $158.3 million and $96.0 million, respectively, excluding undisbursed portions of loans in process. Unfunded loan commitments at September 30, 2015 and 2014 were principally for variable rate loans. Commitments, which are disbursed subject to certain limitations, extend over various periods of time. Generally, unused commitments are cancelled upon expiration of the commitment term as outlined in each individual contract.

At September 30, 2015, the Company had two commitments to purchase securities available for sale totaling $7.9 million and three commitments to purchase securities held to maturity totaling $3.0 million. The Company had no commitments to purchase securities at September 30, 2014.

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.

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.

Securities with fair values of approximately $5.8 million at September 30, 2015 and 2014 were pledged as collateral for public funds on deposit. Securities with fair values of approximately $0 and $7.4 million at September 30, 2015, and 2014, respectively, were pledged as collateral for individual, trust and estate deposits.

Legal Proceedings

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NOTE 17. 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 $600 to $789,000 plus the payment of the property taxes, normal maintenance, and insurance on certain property. The Company also entered into capital lease agreements during fiscal year ended September 30, 2015, for building and equipment expiring at various times through 2035. Amortization expense for these capital leases was $0.1 million for the fiscal year ended September 30, 2015, and included in noninterest expense.

The following table shows the total minimum rental commitment for our operating and capital leases as of September 30, 2015.

	Year Ended September 30,
	(Dollars in Thousands)

	Operating Leases		Capital Leases
2016	$	1,708	$	252
2017		1,752		201
2018		1,464		179
2019		1,394		179
2020		1,277		182
Thereafter		12,476		2,604
Total Leases Commitments	$	20,071	$	3,597

Amounts representing interest			$	1,454
Present value of net minimum lease payments				2,143

NOTE 18. 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 has determined that it has two reportable segments. The first reportable segment, Retail Banking, a division of the Bank, which includes AFS/IBEX operates as a traditional community bank providing deposit, loan and other related products to individuals and small businesses, primarily in the communities where its offices are located. The second reportable segment, MPS, which includes Refund Advantage is also a division of the Bank. MPS provides a number of products and services to financial institutions and other businesses. These products and services include issuance of prepaid debit cards, sponsorship of Automated Teller Machines into the debit networks, credit programs, Automated Clearing House (“ACH”) origination services, gift card programs, rebate programs, travel programs and tax-related programs and services. Other programs are in the process of development. The remaining grouping under the caption “All Others” consists of the operations of the Company and inter-segment eliminations as well as specialty lending.

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Transactions between affiliates, the resulting revenues of which are shown in the intersegment revenue category, are conducted at market prices, meaning prices that would be paid if the companies were not affiliates.

	Retail Banking			Meta Payment Systems^®		All Others			Total

Year Ended September 30, 2015
Interest income	$	33,980		$	21,590	$	6,037		$	61,607
Interest expense		1,675			169		543			2,387
Net interest income (expense)		32,305			21,421		5,494			59,220
Provision (recovery) for loan losses		1,000			-		465			1,465
Non-interest income		2,243			54,417		1,514			58,174
Non-interest expense		23,780			66,415		6,311			96,506
Income (loss) before income tax expense (benefit)		9,768			9,423		232			19,423
Income tax expense (benefit)		688			663		17			1,368
Net income (loss)	$	9,080		$	8,760	$	215		$	18,055

Inter-segment revenue (expense)	$	(16,547	)	$	16,547	$	-		$	-
Total assets		840,177			1,579,856		109,672			2,529,705
Total deposits		242,580			1,424,304		(9,350	)		1,657,534

	Retail Banking		Meta Payment Systems^®			All Others			Total

Year Ended September 30, 2014
Interest income	$	31,635	$	17,025		$	-		$	48,660
Interest expense		1,926		124			348			2,398
Net interest income (expense)		29,709		16,901			(348	)		46,262
Provision (recovery) for loan losses		1,150		-			-			1,150
Non-interest income		3,214		48,524			-			51,738
Non-interest expense		21,227		56,234			770			78,231
Income (loss) before income tax expense (benefit)		10,546		9,191			(1,118	)		18,619
Income tax expense (benefit)		1,846		1,482			(422	)		2,906
Net income (loss)	$	8,700	$	7,709		$	(696	)	$	15,713

Inter-segment revenue (expense)	$	12,793	$	(12,793	)	$	-		$	-
Total assets		805,494		1,245,110			3,427			2,054,031
Total deposits		273,399		1,099,548			(6,406	)		1,366,541

	Retail		Meta Payment
	Banking		Systems^®			All Others			Total

Year Ended September 30, 2013
Interest income	$	24,169	$	14,807		$	-		$	38,976
Interest expense		2,361		124			469			2,954
Net interest income (expense)		21,808		14,683			(469	)		36,022
Provision (recovery) for loan losses		-		-			-			-
Non-interest income		5,226		50,290			(13	)		55,503
Non-interest expense		19,479		53,983			941			74,403
Income (loss) before income tax expense (benefit)		7,555		10,990			(1,423	)		17,122
Income tax expense (benefit)		1,615		2,611			(522	)		3,704
Net income (loss)	$	5,940	$	8,379		$	(901	)	$	13,418

Inter-segment revenue (expense)	$	12,106	$	(12,106	)	$	-		$	-
Total assets		487,754		1,201,531			2,704			1,691,989
Total deposits		260,525		1,063,770			(9,012	)		1,315,283

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NOTE 19. PARENT COMPANY FINANCIAL STATEMENTS

Presented below are condensed financial statements for the parent company, Meta Financial.

CONDENSED STATEMENTS OF FINANCIAL CONDITION

September 30,	2015			2014
	(Dollars in Thousands)
ASSETS
Cash and cash equivalents	$	14,280		$	9,439
Investment in subsidiaries		267,623			175,568
Other assets		408			393
Total assets	$	282,311		$	185,400

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Subordinated debentures	$	10,310		$	10,310
Other liabilities		666			288
Total liabilities	$	10,976		$	10,598

STOCKHOLDERS' EQUITY
Common stock	$	82		$	62
Additional paid-in capital		170,749			95,079
Retained earnings		98,359			83,797
Accumulated other comprehensive income (loss)		2,455			(3,409	)
Treasury stock, at cost		(310	)		(727	)
Total stockholders' equity	$	271,335		$	174,802
Total liabilities and stockholders' equity	$	282,311		$	185,400

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CONDENSED STATEMENTS OF OPERATIONS

Years ended September 30,	2015			2014			2013
	(Dollars in Thousands)
Total other income	$	-		$	-		$	-

Interest expense		418			348			469
Other expense		269			770			941
Total expense		687			1,118			1,410

Gain (loss) before income taxes and equity in undistributed net income of subsidiaries		(687	)		(1,118	)		(1,410	)

Income tax benefit		(324	)		(422	)		(509	)

Gain (loss) before equity in undistributed net income of subsidiaries		(363	)		(696	)		(901	)

Equity in undistributed net income of subsidiaries		18,418			16,409			14,319

Net income	$	18,055		$	15,713		$	13,418

CONDENSED STATEMENTS OF CASH FLOWS

For the Years Ended September 30,	2015			2014			2013
	(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	18,055		$	15,713		$	13,418
Adjustments to reconcile net income to net cash provided by (used in) operating activites
Depreciation, amortization and accretion, net		-			(310	)		-
Equity in undistributed net income of subsidiaries		(18,418	)		(16,409	)		(14,319	)
Change in other assets		(15	)		246			54
Change in other liabilities		378			(332	)		(339	)
Net cash provided by (used in) operating activities		(0	)		(1,092	)		(1,186	)

CASH FLOWS FROM INVESTING ACTIVITES
Capital contributions to subsidiaries		(67,600	)		-			(6,000	)
Net cash provided by (used in) investing activites		(67,600	)		-			(6,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid		(3,493	)		(3,184	)		(2,926	)
Stock compensation		253			4			165
Proceeds from issuance of common stock		75,471			(51	)		12,718
Proceeds from exercise of stock options		210			2,376			2,548
Other, net		-			-			(38	)
Net cash provided by (used in) financing activities		72,441			(855	)		12,467

Net change in cash and cash equivalents	$	4,841		$	(1,947	)	$	5,281

CASH AND CASH EQUIVALENTS
Beginning of year	$	9,439		$	11,386		$	6,105
End of year	$	14,280		$	9,439		$	11,386

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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.

NOTE 20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

	QUARTER ENDED
	December 31		March 31			June 30		September 30
	(Dollars in Thousands)

Fiscal Year 2015
Interest income	$	14,232	$	15,758		$	15,254	$	16,363
Interest expense		661		473			593		660
Net interest income		13,571		15,285			14,661		15,703
Provision (recovery) for loan losses		48		593			700		124
Net Income (loss)		3,595		5,181			4,640		4,639
Earnings (loss) per common and common equivalent share
Basic	$	0.58	$	0.79		$	0.67	$	0.64
Diluted		0.58		0.78			0.66		0.64
Dividend declared per share		0.13		0.13			0.13		0.13

Fiscal Year 2014
Interest income	$	11,162	$	12,063		$	12,566	$	12,869
Interest expense		649		544			638		567
Net interest income		10,513		11,519			11,928		12,302
Provision (recovery) for loan losses		-		300			300		550
Net Income (loss)		4,002		4,144			4,204		3,363
Earnings (loss) per common and common equivalent share
Basic	$	0.66	$	0.68		$	0.69	$	0.54
Diluted		0.65		0.67			0.68		0.53
Dividend declared per share		0.13		0.13			0.13		0.13

Fiscal Year 2013
Interest income	$	9,630	$	9,718		$	9,825	$	9,803
Interest expense		833		813			666		642
Net interest income		8,797		8,905			9,159		9,161
Provision (recovery) for loan losses		-		(300	)		-		300
Net Income (loss)		3,125		3,147			3,672		3,474
Earnings (loss) per common and common equivalent share
Basic	$	0.57	$	0.57		$	0.67	$	0.59
Diluted		0.57		0.57			0.66		0.58
Dividend declared per share		0.13		0.13			0.13		0.13

NOTE 21. FAIR VALUES OF FINANCIAL INSTRUMENTS

Accounting Standards Codification (“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.

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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 years ended September 30, 2015 and 2014.

Securities Available for Sale and Held to Maturity. Securities available for sale are recorded at fair value on a recurring basis and securities held to maturity are carried at amortized cost. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using an independent pricing service. For both Level 1 and Level 2 securities, management uses various methods and techniques to corroborate prices obtained from the pricing service, including but not limited to reference to dealer or other market quotes, and by reviewing valuations of comparable instruments. The Company’s Level 1 securities include equity securities and mutual funds. The Company’s Level 2 securities include U.S. Government agency and instrumentality securities, U.S. Government agency and instrumentality mortgage-backed securities, municipal bonds, corporate debt securities and trust preferred securities. The Company had no Level 3 securities at September 30, 2015, and had no Level 3 securities at September 30, 2014.

The fair values of 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.

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The following table summarizes the fair values of securities available for sale and held to maturity at September 30, 2015 and 2014. Securities available for sale are measured at fair value on a recurring basis, while securities held to maturity are carried at amortized cost in the consolidated statements of financial condition.

	Fair Value At September 30, 2015
	Available For Sale								Held to Maturity
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Debt securities
Trust preferred and corporate securities	$	13,944	$	-	$	13,944	$	-	$	-	$	-	$	-	$	-
Small business administration securities		56,056		-		56,056		-		-		-		-		-
Obligations of states and political subdivisions		-		-		-		-		19,413		-		19,413		-
Non-bank qualified obligations of states and political subdivisions		608,590		-		608,590		-		261,330		-		261,330		-
Mortgage-backed securities		576,583		-		576,583		-		66,104		-		66,104		-
Total debt securities		1,255,173		-		1,255,173		-		346,847		-		346,847		-
Common equities and mutual funds		914		914		-		-		-		-		-		-
Total securities	$	1,256,087	$	914	$	1,255,173	$	-	$	346,847	$	-	$	346,847	$	-

	Fair Value At September 30, 2014
	Available For Sale								Held to Maturity
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Debt securities
Trust preferred and corporate securities	$	46,929	$	-	$	46,929	$	-	$	-	$	-	$	-	$	-
Small business administration securities		67,012		-		67,012		-		-		-		-		-
Obligations of states and political subdivisions		-		-		-		-		18,980		-		18,980		-
Non-bank qualified obligations of states and political subdivisions		367,580		-		367,580		-		192,160		-		192,160		-
Mortgage-backed securities		657,870		-		657,870		-		68,172		-		68,172		-
Total debt securities		1,139,391		-		1,139,391		-		279,312		-		279,312		-
Common equities and mutual funds		825		825		-		-		-		-		-		-
Total securities	$	1,140,216	$	825	$	1,139,391	$	-	$	279,312	$	-	$	279,312	$	-

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. The Company does not record loans at fair value on a recurring basis. However, if a loan is considered impaired, an allowance for loan losses is established. Once a loan 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, 2015 and 2014.

	Fair Value at September 30, 2015
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3
Impaired Loans, net
Commercial and multi-family real estate loans	$	663	$	-	$	-	$	663
Agricultural operating loans		1,880		-		-		1,880
Total	$	2,543	$	-	$	-	$	2,543

	Fair Value at September 30, 2014
(Dollars in Thousands)	Total		Level 1		Level 2		Level 3
Impaired Loans, net
One to four family residential mortgage loans	$	222	$	-	$	-	$	222
Commercial and multi-family real estate loans		930		-		-		930
Total Impaired Loans		1,152		-		-		1,152
Foreclosed Assets, net		15		-		-		15
Total	$	1,167	$	-	$	-	$	1,167

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	Quantitative Information About Level 3 Fair Value Measurements
(Dollars in Thousands)	Fair Value at September 30, 2015		Fair Value at September 30, 2014		Valuation Technique	Unobservable Input

Impaired Loans, net	$	2,543	$	1,152	Market approach	Appraised values ⁽¹⁾
Foreclosed Assets, net		-		15	Market approach	Appraised values ⁽¹⁾

(1)	The Company generally relies on external appraisers to develop this information. Management reduced the appraised value by estimated selling costs in a range of 4% to 10%.

The following table discloses the Company’s estimated fair value amounts of its financial instruments. 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, 2015 and 2014, 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.

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The following presents the carrying amount and estimated fair value of the financial instruments held by the Company at September 30, 2015 and 2014.

	September 30, 2015
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Financial assets
Cash and cash equivalents	$	27,658	$	27,658	$	27,658	$	-	$	-

Securities available for sale		1,256,087		1,256,087		914		1,255,173		-
Securities held to maturity		345,743		346,847		-		346,847		-
Total securities		1,601,830		1,602,934		914		1,602,020		-

Loans receivable:
One to four family residential mortgage loans		125,021		121,385		-		-		121,385
Commercial and multi-family real estate loans		310,199		314,372		-		-		314,372
Agricultural real estate loans		64,316		66,682		-		-		66,682
Consumer loans		33,527		33,504		-		-		33,504
Commercial operating loans		29,893		23,245		-		-		23,245
Agricultural operating loans		43,626		40,003		-		-		40,003
Premium finance loans		106,505		108,583		-		-		108,583
Total loans receivable		713,087		707,774		-		-		707,774

Federal Home Loan Bank stock		24,410		24,410		-		24,410		-
Accrued interest receivable		13,352		13,352		13,352		-		-

Financial liabilities
Noninterest bearing demand deposits		1,449,101		1,369,672		1,369,672		-		-
Interest bearing demand deposits, savings, and money markets		117,262		115,204		115,204		-		-
Certificates of deposit		91,171		91,304		-		91,304		-
Total deposits		1,657,534		1,576,180		1,484,876		91,304		-

Advances from Federal Home Loan Bank		7,000		8,630		-		8,630		-
Federal funds purchased		540,000		540,000		-		540,000		-
Securities sold under agreements to repurchase		4,007		4,007		-		4,007		-
Subordinated debentures		10,310		10,416		-		10,416		-
Accrued interest payable		272		272		272		-		-

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	September 30, 2014
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Financial assets
Cash and cash equivalents	$	29,832	$	29,832	$	29,832	$	-	$	-

Securities available for sale		1,140,216		1,140,216		825		1,139,391		-
Securities held to maturity		282,933		279,312		-		279,312		-
Total securities		1,423,149		1,419,528		825		1,418,703		-

Loans receivable:
One to four family residential mortgage loans		116,395		111,254		-		-		111,254
Commercial and multi-family real estate loans		224,302		234,845		-		-		234,845
Agricultural real estate loans		56,071		58,651		-		-		58,651
Consumer loans		29,329		29,580		-		-		29,580
Commercial operating loans		30,846		25,660		-		-		25,660
Agricultural operating loans		42,258		44,398		-		-		44,398
Total loans receivable		499,201		504,388		-		-		504,388

Federal Home Loan Bank stock		21,245		21,245		-		21,245		-
Accrued interest receivable		11,222		11,222		11,222		-		-

Financial liabilities
Noninterest bearing demand deposits		1,126,715		1,126,715		1,126,715		-		-
Interest bearing demand deposits, savings, and money markets		105,273		105,273		105,273		-		-
Certificates of deposit		134,553		134,746		-		134,746		-
Total deposits		1,366,541		1,366,734		1,231,988		134,746		-

Advances from Federal Home Loan Bank		7,000		8,789		-		8,789		-
Federal funds purchased		470,000		470,000		-		470,000		-
Securities sold under agreements to repurchase		10,411		10,414		-		10,414		-
Subordinated debentures		10,310		10,415		-		10,415		-
Accrued interest payable		318		318		318		-		-

The following sets forth the methods and assumptions used in determining the fair value estimates for the Company’s financial instruments at September 30, 2015 and 2014.

CASH AND CASH EQUIVALENTS

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

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

Securities available for sale are recorded at fair value on a recurring basis and securities held to maturity are carried at amortized cost. Fair values for 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.

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LOANS RECEIVABLE, NET

The fair value of loans is estimated using a historical or replacement cost basis concept (i.e., an entrance price concept). The fair value of loans was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers and for similar remaining maturities. When using the discounting method to determine fair value, loans were grouped by homogeneous loans with similar terms and conditions and discounted at a target rate at which similar loans would be made to borrowers at September 30, 2015 and 2014. In addition, when computing the estimated fair value for all loans, allowances for loan losses have been subtracted from the calculated fair value as a result of the discounted cash flow which approximates the fair value adjustment for the credit quality component.

FHLB STOCK

The fair value of such stock is assumed to approximate book value since the Company is generally 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 non-interest-bearing checking deposits, interest-bearing checking deposits, savings and money markets is assumed to approximate fair value, since such deposits are immediately withdrawable without penalty. The fair value of time certificates of deposit was estimated by discounting expected future cash flows by the current rates offered on certificates of deposit with similar remaining maturities.

In accordance with ASC 825, 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 ASC 825.

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 AND SUBORDINATED DEBENTURES

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

It must be noted that fair value estimates are made at a specific point in time, 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.

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NOTE 22. GOODWILL AND INTANGIBLE ASSETS

The Company recorded a total of $36.9 million of goodwill during the fiscal year ended September 30, 2015, due to two separate business combinations – $11.6 million of goodwill in connection with the purchase of substantially all of the commercial loan portfolio and related assets of AFS/IBEX on December 2, 2014, and $25.4 million in goodwill in connection with the purchase of substantially all of the assets and liabilities of Refund Advantage, on September 8, 2015. The goodwill associated with these transactions are deductible for tax purposes.

As part of the each business combination, the Company also recognized the following amortizable intangible assets:

AFS/IBEX:

Intangible	Amount		Book Amortization Period (Years)		Method

Trademark	$	540		15	Straight Line
Non-Compete	$	260		3	Straight Line
Customer Relationships	$	7,240		30	Accelerated
Other	$	173	Varied		Straight Line

Refund Advantage:

Intangible	Amount		Book Amortization Period (Years)		Method

Trademark	$	4,950		15	Accelerated
Non-Compete	$	40		3	Straight Line
Customer Relationships	$	18,800	12 to 20		Accelerated
Other	$	329	Varied		Straight Line

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The changes in the carrying amount of the Company’s goodwill and intangible assets for the years ended September 30, 2015 and 2014 are as follows:

	September 30,
	2015		2014
	(Dollars in Thousands)
Goodwill
Balance as of September 30, 2014	$	-	$	-
Acquisitions during the period		36,928		-
Write-offs during the period		-		-
Balance as of September 30, 2015	$	36,928	$	-

The Company completed an annual goodwill impairment test for the fiscal year ended September 30, 2015. 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 quantitative analysis was not required and no impairment existed.

	Trademark			Non-Compete			Customer Relationships			All Others			Total
Intangibles
Balance as of September 30, 2014	$	-		$	-		$	-		$	2,588		$	2,588
Acquisitions during the period		5,490			300			26,040			855			32,685
Amortization during the period		(51	)		(73	)		(1,229	)		(282	)		(1,635	)
Write-offs during the period		-			-			-			(61	)		(61	)
Balance as of September 30, 2015	$	5,439		$	227		$	24,811		$	3,100		$	33,577

	Trademark		Non-Compete		Customer Relationships		All Others			Total
Intangibles
Balance as of September 30, 2013	$	-	$	-	$	-	$	2,339		$	2,339
Acquisitions during the period		-		-		-		331			331
Amortization during the period		-		-		-		(78	)		(78	)
Write-offs during the period		-		-		-		(4	)		(4	)
Balance as of September 30, 2014	$	-	$	-	$	-	$	2,588		$	2,588

The Company tests intangible assets for impairment at least annually or more often if conditions indicate a possible impairment.

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The anticipated future amortization of intangibles is as follows:

	September 30,
	(Dollars in Thousands)
2016	$	4,819
2017		4,116
2018		3,517
2019		3,001
2020		2,598
Thereafter		15,526
Total anticipated intangible amortization	$	33,577

NOTE 23. SUBSEQUENT EVENTS

Management has evaluated subsequent events. There were no material subsequent events that would require recognition or disclosure, other than noted above, in our consolidated financial statements as of and for the year ended September 30, 2015.

Item 9.

Disclosure

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

(a)	Evaluation of Disclosure Controls and Procedures.

Management, under the direction of its Chief Executive Officer and Chief Financial Officer, is responsible for maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “1934 Act”) that are designed to ensure that information required to be disclosed in reports filed or submitted under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this Annual Report on Form 10-K, management evaluated the Company’s disclosure controls and procedures. The evaluation was performed under the direction of the Company’s Chief Executive Officer and Chief Financial Officer to determine the effectiveness, as of September 30, 2015, of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company required to be included in the Company’s periodic SEC filings. In addition, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fourth quarter of our fiscal year ended September 30, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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(b)	Management’s Annual Report on Internal Control over Financial Reporting.

The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company assets that could have a material effect on the financial statements.

Internal control over financial reporting, no matter how well designed, has inherent limitations. Because of such inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2015, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control Integrated Framework (2013).” Based on our assessment, which excluded Refund Advantage as described below, our internal control over financial reporting was effective as of September 30, 2015.

The Company’s most recent acquisition of Refund Advantage on September 8, 2015, was excluded from the scope of this report as allowed by the Securities and Exchange Commission. Refund Advantage assets comprised less than 1% of the Company’s assets at September 30, 2015, and Refund Advantage’s net income was less than 1% of the Company’s net income for 2015.

The effectiveness of the Company’s internal control over financial reporting as of September 30, 2015, has been audited by KPMG LLP, the independent registered public accounting firm that also has audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K. KPMG LLP’s report on the Company’s internal control over financial reporting appears below.

(c)	Changes in Internal Control over Financial Reporting.

There were no changes in the Company's internal control over financial reporting that occurred during the fourth quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 9B.

Other Information

None.

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KPMG LLP

2500 Ruan Center

666 Grand Avenue

Des Moines, IA 50309

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Meta Financial Group, Inc.:

We have audited Meta Financial Group, Inc.’s (the Company) internal control over financial reporting as of September 30, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Meta Financial Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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The Company acquired Refund Advantage on September 8, 2015, and management excluded Refund Advantage from its assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2015. Refund Advantage’s assets comprised less than 1% of the Company’s total assets and net income included in the consolidated financial statements of the Company as of and for the year ended September 30, 2015. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Refund Advantage.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial condition of Meta Financial Group, Inc. and subsidiaries as of September 30, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended September 30, 2015, and our report dated December 14, 2015 expressed an unqualified opinion on those consolidated financial statements.

	/s/ KPMG LLP

Des Moines, Iowa
December 14, 2015

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PART III

Item 10.

Directors, Executive Officers and Corporate Governance

Directors

Information concerning directors of the Company required by this item will be included under the captions “Election of Directors,” “Communicating with Our Directors” and “Stockholder Proposals For The Year 2016 Annual Meeting” in the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on January 25, 2016 (the “2015 Proxy Statement”), a copy of which will be filed not later than 120 days after September 30, 2015, and is incorporated herein by reference.

Executive Officers

Information concerning the executive officers of the Company required by this item is set forth under the caption “Executive Officers of the Company Who Are Not Directors” contained in Part I, Item 1 “Business” of this Annual Report on Form 10-K and is incorporated herein by reference.

Compliance with Section 16(a)

Information required by this item regarding compliance with Section 16(a) of the Exchange Act will be included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

Audit Committee Financial Expert

Information regarding the audit committee of the Company’s Board of Directors, including information regarding Fred Moore, the audit committee financial expert serving on the audit committee for fiscal 2015, will be included under the captions “Meetings and Committees” and “Election of Directors” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

Code of Ethics

Information regarding the Company’s Code of Ethics will be included under the caption “Corporate Governance” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

Item 11.

Executive Compensation

Information concerning executive and director compensation will be included under the captions “Compensation Processes and Procedures,” “Compensation of Directors” and “Executive Compensation” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a) Security Ownership of Certain Beneficial Owners and Management

The information required by this item will be included under the caption “Stock Ownership” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

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(b) Changes in Control

Management of the Company knows of no arrangements, including any pledge by any persons of securities of the Company, the operation of which may, at a subsequent date, result in a change in control of the Registrant.

The Company maintains the 2002 Omnibus Incentive Plan for purposes of issuing stock-based compensation to employees and directors. An amendment to this plan, authorizing an additional 750,000 shares to be issued under this plan, was approved by the Board of Directors on November 30, 2007, and by the stockholders at the annual meeting held February 12, 2008. The Company also has unexercised options outstanding under a previous stock option plan. The following table provides information about the Company’s common stock that may be issued under the Company’s omnibus incentive plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plan excluding securities reflected in (a)

Equity compensation plans approved by stockholders		189,088	$	25.74		543,442
Equity compensation plans not approved by stockholders		-	$	-		-

Item 13.

Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be included under the captions “Election of Directors,” “Meetings and Committees” and “Related Person Transactions” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

The information required by this item will be included under the caption “Independent Registered Public Accounting Firm” in the Company’s 2015 Proxy Statement and is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

The following is a list of documents filed as Part of this report:

(a) Financial Statements:

The following financial statements are included under Part II, Item 8 of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm.

Consolidated Statements of Financial Condition as of September 30, 2015, and 2014.

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Consolidated Statements of Operations for the Years Ended September 30, 2015, 2014, and 2013.

Consolidated Statements of Comprehensive Income (Loss) for the Years ended September 30, 2015, 2014, and 2013.

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended September 30, 2015, 2014, and 2013.

Consolidated Statements of Cash Flows for the Years Ended September 30, 2015, 2014, and 2013.

Notes to Consolidated Financial Statements.

(b) Exhibits:

See Index to Exhibits.

All financial statement schedules have been omitted as the information is not required under the related instructions or is inapplicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	META FINANCIAL GROUP, INC.

Date: December 14, 2015	By:	/s/ J. Tyler Haahr
		J. Tyler Haahr, Chairman of the Board
		and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ J. Tyler Haahr	Date: December 14, 2015
	J. Tyler Haahr, Chairman of the Board
	and Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Bradley C. Hanson	Date: December 14, 2015
	Bradley C. Hanson, President and Director

By:	/s/ Douglas J. Hajek	Date: December 14, 2015
	Douglas J. Hajek, Director

By:	/s/ Elizabeth G. Hoople	Date: December 14, 2015
	Elizabeth G. Hoople, Director

By:	/s/ Frederick V. Moore	Date: December 14, 2015
	Frederick V. Moore, Director

By:	/s/ Troy Moore III	Date: December 14, 2015
	Troy Moore III, Director

By:	/s/ Rodney G. Muilenburg	Date: December 14, 2015
	Rodney G. Muilenburg, Director

By:	/s/ Glen W. Herrick	Date: December 14, 2015
	Glen W. Herrick, Executive Vice
	President and Chief Financial Officer

By:	/s/ Sonja A. Theisen	Date: December 14, 2015
	Sonja A. Theisen, Senior Vice President
	and Chief Accounting Officer
	(Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibit Number	Description

2.1	Asset Purchase Agreement, dated as of July 15, 2015, by and among Meta Financial Group, Inc., MetaBank, Fort Knox Financial Services Corporation, Tax Product Services LLC, Alan D. Lodge Family Trust, Michael E. Boone, Michael J. Boone, Cary Shields and Alan D. Lodge filed on July 16, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

3(i)	Registrant’s Certificate of Incorporation, as amended, filed on May 10, 2013, as an exhibit to the Registrant’s registration statement on Form S-3 (Commission File No. 333-188535), is incorporated herein by reference.

3(ii)	Registrant’s Amended and Restated By-laws, as amended.

4.1	Registrant’s Specimen Stock Certificate, filed on February 19, 2010 as an exhibit to the Registrant’s registration statement on Form S-3 (Commission File No. 333-164997), is incorporated herein by reference.

4.2	Sales Agency Agreement, dated December 17, 2014, among Meta Financial Group, Inc., MetaBank and Sandler O’Neill & Partners, L.P. filed on December 17, 2014 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

¹10.1	Registrant’s 1995 Stock Option and Incentive Plan, filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended September 30, 1996, is incorporated herein by reference.

^*10.2	Employment Agreement between MetaBank and J. Tyler Haahr, originally filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 1997, is incorporated herein by reference. First amendment to such agreement, filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008, is incorporated herein by reference.

^*10.3	Registrant’s Supplemental Employees’ Investment Plan, originally filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended September 30, 1994. First amendment to such agreement, filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008, is incorporated herein by reference.

^*10.5	Registrant’s 2002 Omnibus Incentive Plan, as amended and restated effective November 24, 2014, filed on December 16, 2014 as Appendix A to the Registrant’s Schedule 14A (DEF 14A) Proxy Statement, is incorporated herein by reference.

* Management Contract or Compensatory Plan or Agreement

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^*10.6	Employment Agreement between MetaBank and Bradley C. Hanson, originally filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005. First amendment to such agreement, filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008, is incorporated herein by reference.

^*10.7	Employment Agreement between MetaBank and Troy Moore III, originally filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005. First amendment to such agreement, filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008, is incorporated herein by reference.

^*10.8	Employment Agreement between MetaBank and David W. Leedom, dated October 27, 2008 filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008, is incorporated herein by reference.

10.9	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Consector Partners Master Fund, LP, dated as of June 25, 2015 filed on July 1, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.10	Registration Rights Agreement by and between Meta Financial Group, Inc. and Consector Partners Master Fund, LP, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.11	Securities Purchase Agreement by and among Meta Financial Group, Inc. and Boathouse Row I, LP, Boathouse Row II, LP, Boathouse Row Offshore Ltd., and OC 532 Offshore Fund, Ltd., dated as of June 25, 2015 filed on July 1, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.12	Registration Rights Agreement by and among Meta Financial Group, Inc. and Boathouse Row I, LP, Boathouse Row II, LP, Boathouse Row Offshore Ltd., and OC 532 Offshore Fund, Ltd., dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.13	Securities Purchase Agreement by and among Meta Financial Group, Inc., Patriot Financial Partners II, L.P. and Patriot Financial Partners Parallel II, L.P., dated as of June 25, 2015 filed on July 1, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

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10.14	Registration Rights Agreement by and among Meta Financial Group, Inc., Patriot Financial Partners II, L.P. and Patriot Financial Partners Parallel II, L.P., dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.15	Investor Rights Agreement by and among Meta Financial Group, Inc., Patriot Financial Partners II, L.P. and Patriot Financial Partners Parallel II, L.P., dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.16	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Hawk Ridge Master Fund LP, dated as of June 29, 2015 filed on July 1, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.17	Registration Rights Agreement by and between Meta Financial Group, Inc. and Hawk Ridge Master Fund LP, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.18	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Fort George Investments, LLC, dated as of July 7, 2015 filed on July 13, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.19	Registration Rights Agreement by and between Meta Financial Group, Inc. and Fort George Investments, LLC, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.20	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Nantahala Capital Partners SI, LP, dated as of July 7, 2015 filed on July 13, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.21	Registration Rights Agreement by and between Meta Financial Group, Inc. and Nantahala Capital Partners SI, LP, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference

10.22	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Blackwell Partners LLC Series A, dated as of July 7, 2015 filed on July 13, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.23	Registration Rights Agreement by and between Meta Financial Group, Inc. and Blackwell Partners LLC Series A, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

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10.24	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Nantahala Capital Partners II Limited Partnership, dated as of July 7, 2015 filed on July 13, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.25	Registration Rights Agreement by and between Meta Financial Group, Inc. and Nantahala Capital Partners II Limited Partnership, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.26	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Silver Creek CS SAV, L.L.C., dated as of July 7, 2015 filed on July 13, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.27	Registration Rights Agreement by and between Meta Financial Group, Inc. and Silver Creek CS SAV, L.L.C., dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.28	Securities Purchase Agreement by and between Meta Financial Group, Inc. and Nantahala Capital Partners Limited Partnership, dated as of July 7, 2015 filed on July 13, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.29	Registration Rights Agreement by and between Meta Financial Group, Inc. and Nantahala Capital Partners Limited Partnership, dated as of September 8, 2015 filed on September 8, 2015 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

10.30	Securities Purchase Agreement by and among Meta Financial Group, Inc. and BEP IV LLC and BEP Investors LLC, dated as of September 23, 2015 filed on September 24 as an exhibit to the Registrant’s Current Report on Form 8-K, is incorporated herein by reference.

11	Statement re: computation of per share earnings (See Note 2 of “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).

21	Subsidiaries of the Registrant is filed herewith.

23.1	Consent of Independent Registered Public Accounting Firm is filed herewith.

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 is filed herewith.

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 is filed herewith.

32.1	Certification of the CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.

32.2	Certification of the CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.

101.INS	Instance Document Filed Herewith.

101.SCH	XBRL Taxonomy Extension Schema Document Filed Herewith.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document Filed Herewith.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document Filed Herewith.

101.LAB	XBRL Taxonomy Extension Label Linkbase Document Filed Herewith.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document Filed Herewith.

Delaware		42‑1406262
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5501 South Broadband Lane, Sioux Falls, SD		57108
(Address of principal executive offices)		(Zip Code)

Title of Class		Name of each exchange on which registered
Common Stock, par value $0.01 per share		NASDAQ Global Market

	September 30,
	2015					2014					2013					2012					2011
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in Thousands)

Fixed Rate Loans:
Real Estate:
1-4 Family	$	116,171		16.3	%	$	105,870		21.2	%	$	75,477		19.6	%	$	44,045		13.3	%	$	30,410		9.5	%
Commercial & Multi-Family		284,586		39.9	%		203,840		40.8	%		173,373		45.1	%		162,552		49.1	%		155,786		48.8	%
Agricultural		59,219		8.3	%		49,643		10.0	%		22,433		5.8	%		15,399		4.6	%		16,416		5.1	%
Total Fixed-Rate Real Estate Loans		459,976		64.5	%		359,353		72.0	%		271,283		70.5	%		221,996		67.0	%		202,612		63.4	%
Consumer		20,842		2.9	%		19,279		3.9	%		20,129		5.2	%		20,322		6.1	%		15,494		4.9	%
Agricultural Operating		35,802		5.0	%		24,991		5.0	%		23,137		6.0	%		10,627		3.2	%		12,570		3.9	%
Commercial Operating		15,520		2.2	%		13,659		2.7	%		8,070		2.1	%		6,818		2.1	%		7,138		2.3	%
Premium Finance		106,505		15.0	%		-		0.0	%		-		0.0	%		-		0.0	%		-		0.0	%
Total Fixed-Rate Loans		638,645		89.6	%		417,282		83.6	%		322,619		83.8	%		259,763		78.4	%		237,814		74.5	%

Adjustable Rate Loans:
Real Estate:
1-4 Family		8,850		1.2	%		10,525		2.1	%		6,810		1.8	%		5,089		1.5	%		3,718		1.2	%
Commercial & Multi-Family		25,613		3.6	%		20,461		4.1	%		19,413		5.0	%		29,353		8.9	%		38,628		12.1	%
Agricultural		5,097		0.7	%		6,429		1.3	%		7,119		1.9	%		4,462		1.4	%		3,904		1.2	%
Total Adjustable Real Estate Loans		39,560		5.5	%		37,415		7.5	%		33,342		8.7	%		38,904		11.8	%		46,250		14.5	%
Consumer		12,685		1.8	%		10,050		2.0	%		10,185		2.6	%		12,516		3.8	%		18,904		5.9	%
Agricultural Operating		7,824		1.1	%		17,267		3.5	%		10,613		2.8	%		10,354		3.1	%		8,630		2.7	%
Commercial Operating		14,373		2.0	%		17,187		3.4	%		8,194		2.1	%		9,634		2.9	%		7,817		2.4	%
Total Adjustable Loans		74,442		10.4	%		81,919		16.4	%		62,334		16.2	%		71,408		21.6	%		81,601		25.5	%
Total Loans		713,087		100.0	%		499,201		100.0	%		384,953		100.0	%		331,171		100.0	%		319,415		100.0	%

Less:
Deferred Fees and Discounts		577					797					595					219					79
Allowance for Loan Losses		6,255					5,397					3,930					3,971					4,926

Total Loans Receivable, Net	$	706,255				$	493,007				$	380,428				$	326,981				$	314,410

	Real Estate ⁽¹⁾					Consumer					Commercial Operating					Agricultural Operating					Premium Finance					Total
	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in Thousands)

Due in one year or less ⁽²⁾	$	14,921		4.78	%	$	14,626		0.49	%	$	9,693		3.91	%	$	31,157		4.34	%	$	106,505		7.83	%	$	176,902		6.13	%
Due after one year through five years		153,818		4.40	%		17,283		4.27	%		16,316		4.33	%	$	9,430		4.06	%	$	-		0.00	%		196,847		4.37	%
Due after five years		330,797		4.35	%		1,618		5.07	%		3,884		4.09	%	$	3,039		4.58	%	$	-		0.00	%		339,338		4.35	%
Total	$	499,536				$	33,527				$	29,893				$	43,626				$	106,505				$	713,087

		Page No.

	PART I

Item 1.	Business	3
Item 1A.	Risk Factors	52
Item 1B.	Unresolved Staff Comments	74
Item 2.	Properties	74
Item 3.	Legal Proceedings	74
Item 4.	Mine Safety Disclosures	76

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	77
Item 6.	Selected Financial Data	78
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	79
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	97
Item 8.	Financial Statements and Supplementary Data	99
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	155
Item 9A.	Controls and Procedures	155
Item 9B.	Other Information	156

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	159
Item 11.	Executive Compensation	159
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	159
Item 13.	Certain Relationships and Related Transactions, and Director Independence	160
Item 14.	Principal Accountant Fees and Services	160

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	160

	At September 30,
	2015					2014					2013					2012					2011
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in Thousands)

Real Estate Loans:
1-4 Family	$	125,021		17.5	%	$	116,395		23.3	%	$	82,287		21.4	%	$	49,134		14.9	%	$	34,128		10.7	%
Commercial & Multi-Family		310,199		43.5	%		224,302		44.9	%		192,786		50.1	%		191,905		57.9	%		194,414		60.9	%
Agricultural		64,316		9.0	%		56,071		11.3	%		29,552		7.7	%		19,861		6.0	%		20,320		6.4	%
Total Real Estate Loans		499,536		70.0	%		396,768		79.5	%		304,625		79.2	%		260,900		78.8	%		248,862		78.0	%

Other Loans:
Consumer Loans:
Home Equity		18,463		2.6	%		15,116		3.0	%		13,799		3.6	%		13,299		4.0	%		14,835		4.6	%
Automobile		573		0.1	%		671		0.1	%		658		0.1	%		792		0.2	%		794		0.2	%
Other (1)		14,491		2.0	%		13,542		2.7	%		15,857		4.1	%		18,747		5.7	%		18,769		5.9	%
Total Consumer Loans		33,527		4.7	%		29,329		5.8	%		30,314		7.8	%		32,838		9.9	%		34,398		10.7	%

Agricultural Operating		43,626		6.1	%		42,258		8.5	%		33,750		8.8	%		20,981		6.3	%		21,200		6.6	%
Commercial Operating		29,893		4.2	%		30,846		6.2	%		16,264		4.2	%		16,452		5.0	%		14,955		4.7	%
Premium Finance		106,505		15.0	%		-		0.0	%		-		0.0	%		-		0.0	%		-		-

Total Other Loans		213,551		30.0	%		102,433		20.5	%		80,328		20.8	%		70,271		21.2	%		70,553		22.0	%
Total Loans		713,087		100.0	%		499,201		100.0	%		384,953		100.0	%		331,171		100.0	%		319,415		100.0	%

	Loans Delinquent For:
	30-59 Days							60-89 Days							90 Days and Over
	Number		Amount		Percent of Category			Number		Amount		Percent of Category			Number		Amount		Percent of Category
								(Dollars in Thousands)
Real Estate:
1-4 Family		4	$	142		14.2	%		-	$	-		0.0	%		-	$	-		0.0	%
Consumer		3		152		15.3	%		-		-		0.0	%		1		13		0.2	%
Agricultural Operating		-		-		0.0	%		-		-		0.0	%		4		4,197		70.7	%
Premium Finance		288		702		70.5	%		270		362		100.0	%		978		1,728		29.1	%
Total		295	$	996		100.0	%		270	$	362		100.0	%		983	$	5,938		100.0	%

	At September 30, 2015
	1 Year or Less			After 1 Year Through 5 Years			After 5 Years Through 10 Years			After 10 Years			Total Investment Securities
	Carrying Value			Carrying Value			Carrying Value			Carrying Value			Amortized Cost			Fair Value
Available for Sale	(Dollars in Thousands)

Trust preferred and corporate securities	$	-		$	-		$	1,277		$	12,667		$	16,199		$	13,944
Small business administration securities		-			-			56,056			-			54,493			56,056
Non-bank qualified obligations of states and political subdivisions		-			1,207			319,061			288,322			603,165			608,590
Total Investment Securities AFS	$	-		$	1,207		$	376,394		$	300,989		$	673,857		$	678,590

Weighted Average Yield ⁽¹⁾		0.00	%		1.37	%		2.01	%		2.29	%		2.27	%		2.14	%

	Variable				0.00- 1.99	%		2.00- 3.99	%	Total			Percent of Total
	(Dollars in Thousands)
Certificate accounts maturing in quarter ending:

December 31, 2015		24			34,821			1,414			36,259			39.8
March 31, 2016		53			19,738			166			19,957			21.9
June 30, 2016		19			8,813			184			9,016			9.9
September 30, 2016		47			1,545			140			1,732			1.9
December 31, 2016		10			5,438			21			5,469			6.0
March 31, 2017		39			991			10			1,040			1.1
June 30, 2017		-			6,014			-			6,014			6.6
September 30, 2017		-			1,114			-			1,114			1.2
December 31, 2017		-			3,457			-			3,457			3.8
March 31, 2018		-			555			-			555			0.6
June 30, 2018		-			1,307			-			1,307			1.4
September 30, 2018		-			275			-			275			0.3
Thereafter		-			4,976			-			4,976			5.5

Total	$	192		$	89,044		$	1,935		$	91,171			100.0	%

Percent of total		0.2	%		97.7	%		2.1	%		100.0	%

	Maturity
	3 Months or Less		After 3 to 6 Months		After 6 to 12 Months		After 12 Months		Total
	(Dollars in Thousands)

Certificates of deposit less than $250,000	$	16,774	$	3,206	$	9,503	$	23,144	$	52,627

Certificates of deposit of $250,000 or more		19,485		16,752		1,243		1,064	$	38,544

Total certificates of deposit	$	36,259	$	19,958	$	10,746	$	24,208	$	91,171

	Company (Actual)					Bank (Actual)					Minimum Requirement For Capital Adequacy Purposes					Minimum Requirement To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
September 30, 2015

Tier 1 (core) capital (to adjusted total assets)	$	224,426		9.36	%	$	213,220		8.89	%	$	8,977		4.00	%	$	11,221		5.00	%
Common equity Tier 1 (to risk-weighted assets)		216,931		19.85			213,220		19.52			9,762		4.50			14,101		6.50
Tier 1 (core) capital (to risk-weighted assets)		224,426		20.54			213,220		19.52			13,466		6.00			17,954		8.00
Total qualifying capital (to risk-weighted assets)		230,820		21.12			219,614		20.11			18,466		8.00			23,082		10.00

	Standardized Approach (1) September 30, 2015
	(Dollars in Thousands)

Total equity	$	271,335
Adjustments:
LESS: Goodwill, net of associated deferred tax liabilities		36,642
LESS: Certain other intangible assets		13,431
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards		1,876
LESS: Net unrealized gains (losses) on available-for-sale securities		2,455
Common Equity Tier 1 ⁽¹⁾		216,931
Long-term debt and other instruments qualifying as Tier 1		10,310
LESS: Additional tier 1 capital deductions		2,815
Total Tier 1 capital		224,426
Allowance for loan losses		6,394
Total qualifying capital		230,820