Annual Report 2018 - Page 8

Risk Assets Components of Risk Assets (dollars in thousands) As of December 31 2018 2017 2016 $7,850 1,151 -- $8,751 1,310 -- $5,906 1,483 -- Total risk loans Other property owned 9,001 258 10,061 -- 7,389 1,067 Total risk assets $9,259 $10,061 $8,456 0.2% 0.2% 91.8% 0.1% 0.3% 0.2% 69.3% 0.1% 0.2% 0.2% 85.6% 0.1% Loans: Nonaccrual Accruing restructured Accruing loans 90 days or more past due Total risk loans as a percentage of total loans Nonaccrual loans as a percentage of total loans Current nonaccrual loans as a percentage of total nonaccrual loans Total delinquencies as a percentage of total loans Note: Accruing loans include accrued interest receivable. Our risk assets have decreased from December 31, 2017, and have remained at acceptable levels. Total risk loans as a percentage of total loans were well within our established risk management guidelines. Nonaccrual loans remained at an acceptable level at December 31, 2018, 2017, and 2016. Allowance for Loan Losses The allowance for loan losses is an estimate of inherent losses on loans in our portfolio as of the financial statement date. We determine the appropriate level of allowance for loan losses based on the periodic evaluation of factors such as loan loss history, estimated probability of default, estimated loss severity, portfolio quality, and current economic and environmental conditions. Allowance Coverage Ratios 2018 2017 2016 0.4% 203.4% 177.4% (0.0%) 10.8% 0.4% 181.9% 158.2% 0.0% 13.6% 0.4% 278.2% 222.3% 0.0% 13.0% As of December 31 Allowance as a percentage of: Loans Nonaccrual loans Total risk loans Net (recoveries) charge-offs as a percentage of average loans Adverse assets to risk funds Note: Risk funds includes permanent capital and allowance for loan losses. In our opinion, the allowance for loan losses was reasonable in relation to the risk in our loan portfolio at December 31, 2018. Additional loan information is included in Notes 3, 10, 11, and 12 to the accompanying Consolidated Financial Statements. RESULTS OF OPERATIONS Profitability Information (dollars in thousands) For the year ended December 31 Net income Return on average assets Return on average members' equity Changes in the chart above relate directly to:    Changes in income discussed below Changes in assets discussed in the Loan Portfolio section Changes in capital discussed in the Capital Adequacy section 5 2018 2017 2016 $81,721 2.0% 9.9% $70,142 1.8% 9.0% $61,566 1.7% 8.4%