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LOANS AND LEASES
 9 Months Ended
Sep. 30, 2024
Receivables [Abstract]  
LOANS AND LEASES LOANS AND LEASES
First Financial offers clients a variety of commercial and consumer loan and lease products with diverse interest rates and payment terms. Commercial loan categories include C&I, CRE, construction real estate and lease financing. Consumer loan categories include residential real estate, home equity, installment and credit card.

Lending activities are primarily concentrated in states where the Bank operates banking centers (Ohio, Indiana, Kentucky and Illinois). First Financial also has certain specialty lending platforms that extend beyond the geographic banking center footprint. These specialty finance businesses provide insurance premium financing, equipment lease financing and financing to franchise owners and clients within the financial services industry.

Credit Quality. To facilitate the monitoring of credit quality for commercial loans, First Financial utilizes the following categories of credit grades:
Pass - Higher quality loans that do not fit any of the other categories described below.

Special Mention - First Financial assigns a special mention rating to loans and leases with potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan, lease or First Financial's credit position at some future date.

Substandard - First Financial assigns a substandard rating to loans or leases that are inadequately protected by the current sound financial worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans and leases have well-defined weaknesses that jeopardize repayment of the debt. Substandard loans and leases are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not addressed.

Doubtful - First Financial assigns a doubtful rating to loans and leases with all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

The credit grades previously described are derived from standard regulatory rating definitions and are assigned upon initial approval of credit to borrowers and updated periodically thereafter.

First Financial considers repayment performance to be the best indicator of credit quality for consumer loans. Consumer loans that have principal and interest payments that are past due by 90 days or more are generally classified as nonperforming. In 2022 and all years prior that are presented below, consumer loans that had been modified in a TDR were classified as nonperforming.

The following table sets forth the Company's loan portfolio at September 30, 2024 by risk attribute and origination date as well as current period gross chargeoffs:
(Dollars in thousands)20242023202220212020PriorTerm TotalRevolvingTotal
Commercial & industrial
Pass$565,576 $749,619 $618,995 $322,452 $190,698 $264,131 $2,711,471 $841,607 $3,553,078 
Special mention4,975 2,713 2,492 210 1,081 14,116 25,587 13,189 38,776 
Substandard6,269 3,678 21,260 9,424 2,563 6,327 49,521 37,171 86,692 
Total$576,820 $756,010 $642,747 $332,086 $194,342 $284,574 $2,786,579 $891,967 $3,678,546 
YTD Gross chargeoffs$239 $996 $1,565 $4,058 $131 $3,326 $10,315 $0 $10,315 
Lease financing
Pass$154,598 $297,383 $83,103 $12,910 $6,291 $1,959 $556,244 $0 $556,244 
Special mention493,74611,035588513015,931015,931
Substandard07,4395,01915582,61915,240015,240
Total$154,647 $308,568 $99,157 $13,653 $6,812 $4,578 $587,415 $0 $587,415 
YTD Gross chargeoffs$0 $132 $396 $33 $0 $0 $561 $0 $561 
Construction real estate
Pass$39,811 $282,001 $321,352 $99,373 $1,365 $5,935 $749,837 $0 $749,837 
Special mention0 0 12,020 0 16,541 10,247 38,808 0 38,808 
Substandard3,119 0 0 10,500 0 0 13,619 0 13,619 
Total$42,930 $282,001 $333,372 $109,873 $17,906 $16,182 $802,264 $0 $802,264 
YTD Gross chargeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial real estate - investor
Pass$328,726 $413,495 $537,659 $375,416 $235,019 $1,020,394 $2,910,709 $40,589 $2,951,298 
Special mention0 15,098 0 8,887 107 25,125 49,217 0 49,217 
Substandard0 0 10,600 0 5,075 30,869 46,544 0 46,544 
Doubtful0 0 0 0 0 0 0 0 0 
(Dollars in thousands)20242023202220212020PriorTerm TotalRevolvingTotal
Total$328,726 $428,593 $548,259 $384,303 $240,201 $1,076,388 $3,006,470 $40,589 $3,047,059 
YTD Gross chargeoffs$0 $0 $0 $0 $788 $4,786 $5,574 $0 $5,574 
Commercial real estate - owner
Pass$175,634 $129,987 $164,655 $108,896 $131,245 $229,396 $939,813 $15,044 $954,857 
Special mention0 3,604 921 1,407 509 2,319 8,760 0 8,760 
Substandard0 0 723 9,715 1,913 11,793 24,144 0 24,144 
Total$175,634 $133,591 $166,299 $120,018 $133,667 $243,508 $972,717 $15,044 $987,761 
YTD Gross chargeoffs$0 $0 $0 $0 $0 $8 $8 $0 $8 
Residential real estate
Performing$138,710 $233,573 $338,573 $242,157 $174,781 $276,090 $1,403,884 $0 $1,403,884 
Nonperforming0 263 916 3,610 3,864 9,649 18,302 0 18,302 
Total$138,710 $233,836 $339,489 $245,767 $178,645 $285,739 $1,422,186 $0 $1,422,186 
YTD Gross chargeoffs$0 $0 $25 $16 $0 $90 $131 $0 $131 
Home equity
Performing$23,480 $25,141 $21,128 $25,694 $29,549 $25,720 $150,712 $668,445 $819,157 
Nonperforming0 97 114 306 151 272 940 5,334 6,274 
Total$23,480 $25,238 $21,242 $26,000 $29,700 $25,992 $151,652 $673,779 $825,431 
YTD Gross chargeoffs$37 $37 $0 $3 $5 $155 $237 $0 $237 
Installment
Performing$10,149 $11,175 $26,059 $13,682 $2,366 $4,041 $67,472 $71,695 $139,167 
Nonperforming208 25 753 503 37 26 1,552 551 2,103 
Total$10,357 $11,200 $26,812 $14,185 $2,403 $4,067 $69,024 $72,246 $141,270 
YTD Gross chargeoffs$189 $855 $3,283 $1,358 $53 $42 $5,780 $0 $5,780 
Credit cards
Performing$0 $0 $0 $0 $0 $0 $0 $60,947 $60,947 
Nonperforming0 0 0 0 0 0 0 193 193 
Total$0 $0 $0 $0 $0 $0 $0 $61,140 $61,140 
YTD Gross chargeoffs$0 $0 $0 $0 $0 $0 $0 $2,094 $2,094 
Total Loans$1,451,304 $2,179,037 $2,177,377 $1,245,885 $803,676 $1,941,028 $9,798,307 $1,754,765 $11,553,072 
Total YTD Gross Chargeoffs$465 $2,020 $5,269 $5,468 $977 $8,407 $22,606 $2,094 $24,700 
The following table sets forth the Company's loan portfolio at December 31, 2023 by risk attribute and origination date:
(Dollars in thousands)20232022202120202019PriorTerm TotalRevolvingTotal
Commercial & industrial
Pass$848,448 $736,213 $414,460 $265,143 $113,296 $226,970 $2,604,530 $774,080 $3,378,610 
Special mention0 13,373 4,970 882 19,560 1,328 40,113 8,882 48,995 
Substandard3,133 21,505 11,483 1,205 1,023 9,990 48,339 25,277 73,616 
Total$851,581 $771,091 $430,913 $267,230 $133,879 $238,288 $2,692,982 $808,239 $3,501,221 
YTD Gross chargeoffs$10 $2,978 $7,267 $7,055 $936 $929 $19,175 $0 $19,175 
Lease financing
Pass$261,064 $186,997 $6,404 $1,189 $2,222 $523 $458,399 $0 $458,399 
Special mention4,7618,047000012,808012,808 
Substandard1,4071,96197014503,61003,610
Total$267,232 $197,005 $6,501 $1,189 $2,367 $523 $474,817 $0 $474,817 
YTD Gross chargeoffs$0 $0 $4,423 $0 $0 $0 $4,423 $0 $4,423 
Construction real estate
Pass$170,259 $208,446 $108,886 $27,686 $7,784 $6,165 $529,226 $19,275 $548,501 
Special mention0 0 0 16,331 0 0 16,331 0 16,331 
Substandard0 0 0 0 0 0 0 0 0 
Total$170,259 $208,446 $108,886 $44,017 $7,784 $6,165 $545,557 $19,275 $564,832 
YTD Gross chargeoffs$0 $0 $0 $0 $0 $0 $0 $0 $0 
Commercial real estate - investor
Pass$468,579 $595,423 $473,325 $261,794 $554,893 $636,598 $2,990,612 $39,668 $3,030,280 
Special mention7,894 9,345 12,134 110 32,756 14,204 76,443 0 76,443 
Substandard0 0 0 6,238 0 25,668 31,906 0 31,906 
Total$476,473 $604,768 $485,459 $268,142 $587,649 $676,470 $3,098,961 $39,668 $3,138,629 
YTD Gross chargeoffs$0 $0 $859 $2,030 $0 $3,119 $6,008 $0 $6,008 
Commercial real estate - owner
Pass$138,932 $175,336 $130,240 $138,919 $86,182 $215,458 $885,067 $22,639 $907,706 
Special mention396 45 179 2,403 462 19,807 23,292 0 23,292 
Substandard0 0 3,919 835 1,324 5,234 11,312 0 11,312 
Doubtful0 0 0 0 0 0 0 0 0 
Total$139,328 $175,381 $134,338 $142,157 $87,968 $240,499 $919,671 $22,639 $942,310 
YTD Gross chargeoffs$0 $0 $0 $2,643 $1 $71 $2,715 $0 $2,715 
Residential real estate
Performing$325,304 $234,583 $255,964 $188,212 $101,663 $210,583 $1,316,309 $0 $1,316,309 
Nonperforming243 917 2,584 3,496 2,160 7,965 17,365 0 17,365 
Total$325,547 $235,500 $258,548 $191,708 $103,823 $218,548 $1,333,674 $0 $1,333,674 
YTD Gross chargeoffs$0 $0 $8 $1 $27 $3 $39 $0 $39 
Home equity
Performing$28,979 $23,175 $29,084 $32,917 $9,883 $22,419 $146,457 $606,183 $752,640 
Nonperforming20 69 258 162 138 317 964 5,072 6,036 
Total$28,999 $23,244 $29,342 $33,079 $10,021 $22,736 $147,421 $611,255 $758,676 
YTD Gross chargeoffs$0 $0 $7 $0 $174 $159 $340 $0 $340 
Installment
Performing$16,026 $39,212 $22,961 $3,923 $1,691 $3,768 $87,581 $68,673 $156,254 
Nonperforming196 1,142 742 12 12 30 2,134 690 2,824 
Total$16,222 $40,354 $23,703 $3,935 $1,703 $3,798 $89,715 $69,363 $159,078 
YTD Gross chargeoffs$168 $3,189 $2,903 $154 $5 $23 $6,442 $0 $6,442 
Credit cards
(Dollars in thousands)20232022202120202019PriorTerm TotalRevolvingTotal
Performing$0 $0 $0 $0 $0 $0 $0 $59,438 $59,438 
Nonperforming0 0 0 0 0 0 0 501 501 
Total$0 $0 $0 $0 $0 $0 $0 $59,939 $59,939 
YTD Gross chargeoffs$0 $0 $0 $0 $0 $0 $0 $1,173 $1,173 
Total Loans$2,275,641 $2,255,789 $1,477,690 $951,457 $935,194 $1,407,027 $9,302,798 $1,630,378 $10,933,176 
Total YTD Gross Chargeoffs$178 $6,167 $15,467 $11,883 $1,143 $4,304 $39,142 $1,173 $40,315 

Delinquency. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the date of the scheduled payment.

Loan delinquency, including loans classified as nonaccrual, was as follows:
 As of September 30, 2024
(Dollars in thousands)30 – 59
days
past due		60 – 89
days
past due		> 89 days
past due		Total
past
due		CurrentTotal> 89 days
past due
and still
accruing
Loans       
Commercial & industrial$2,799 $1,431 $5,452 $9,682 $3,668,864 $3,678,546 $4 
Lease financing2,641 903 6,723 10,267 577,148 587,415 266 
Construction real estate0 0 0 0 802,264 802,264 0 
Commercial real estate-investor27 0 17,464 17,491 3,029,568 3,047,059 0 
Commercial real estate-owner91 861 5,421 6,373 981,388 987,761 0 
Residential real estate5,759 225 5,310 11,294 1,410,892 1,422,186 0 
Home equity1,408 1,229 2,014 4,651 820,780 825,431 0 
Installment848 574 556 1,978 139,292 141,270 0 
Credit card356 205 193 754 60,386 61,140 193 
Total$13,929 $5,428 $43,133 $62,490 $11,490,582 $11,553,072 $463 

 As of December 31, 2023
(Dollars in thousands)30 – 59
days
past due		60 – 89
days
past due		> 89 days
past due		Total
past
due		CurrentTotal> 89 days
past due
and still
accruing
Loans       
Commercial & industrial$1,717 $733 $4,822 $7,272 $3,493,949 $3,501,221 $376 
Lease financing790 1,028 4,224 6,042 468,775 474,817 1,151 
Construction real estate0 0 0 0 564,832 564,832 0 
Commercial real estate-investor19 16,455 6,238 22,712 3,115,917 3,138,629 0 
Commercial real estate-owner269 205 5,290 5,764 936,546 942,310 0 
Residential real estate4,786 1,929 3,744 10,459 1,323,215 1,333,674 0 
Home equity1,998 1,082 1,919 4,999 753,677 758,676 0 
Installment1,157 864 669 2,690 156,388 159,078 0 
Credit card320 211 501 1,032 58,907 59,939 501 
Total$11,056 $22,507 $27,407 $60,970 $10,872,206 $10,933,176 $2,028 

Financial Difficulty Modifications. FDM might result when a borrower is in financial distress, and may be in the form of principal forgiveness, an interest rate reduction, a term extension or an other-than-insignificant payment delay. In some cases, the Company might provide multiple types of modifications for a single loan. One type of modification, such as payment delay, may be granted initially, however, if the borrower continues to experience financial difficulty, another modification, such as term extension and/or interest rate reduction might be granted. Loans included in the "combination" column in the table that follows have more than one modification made to the same loan within the current reporting period. Additionally, modifications with a term extension or interest rate reduction are intended to reduce the borrower’s monthly payment, while modifications with a payment delay, which typically allow borrowers to make monthly payments or interest only payments for a period of time, are structured to cure the payment defaults by making delinquent payments due at maturity. Payment deferrals may be up to one year and have minimal financial impact since the deferred payments are paid at maturity.
The following tables provide the amortized cost basis, as of the period end date, of FDMs that were granted modifications during the three months ended September 30, 2024 and 2023:
Three months ended September 30, 2024
(Dollars in thousands)Principal forgivenessPayment delayTerm extensionInterest rate reductionCombination: Term extension and interest rate reductionTotalPercent of total class of loans
Commercial & industrial$0 $0 $0 $0 $0 $0 0.00 %
Construction real estate0 0 10,500 0 0 10,500 1.31 %
Residential real estate0 921 4 0 0 925 0.07 %
Home equity0 48 0 0 0 480.01 %
Total$0 $969 $10,504 $0 $0 $11,473 0.10 %

Three months ended September 30, 2023
(Dollars in thousands)Principal forgivenessPayment delayTerm extensionInterest rate reductionCombination: Term extension and interest rate reductionTotalPercent of total class of loans
Commercial & industrial$0 $2,834 $0 $0 $0 $2,834 0.08 %
Residential real estate0 756 0 0 0 756 0.06 %
Home equity0 0 0 0 0 00.00 %
Total$0 $3,590 $0 $0 $0 $3,590 0.03 %

The following tables provide the amortized cost basis, as of the period end date, of FDMs that were granted modifications during the nine months ended September 30, 2024 and 2023:

Nine months ended September 30, 2024
(Dollars in thousands)Principal forgivenessPayment delayTerm extensionInterest rate reductionCombination: Term extension and interest rate reductionTotalPercent of total class of loans
Commercial & industrial$0 $383 $15,860 $0 $0 $16,243 0.44 %
Construction real estate0 0 10,500 0 0 10,500 1.31 %
Residential real estate0 1,955 4 0 0 1,959 0.14 %
Home equity0 285 0 0 0 2850.03 %
Total$0 $2,623 $26,364 $0 $0 $28,987 0.25 %

Nine months ended September 30, 2023
(Dollars in thousands)Principal forgivenessPayment delayTerm extensionInterest rate reductionCombination: Term extension and interest rate reductionTotalPercent of total class of loans
Commercial & industrial$0 $2,834 $3,561 $0 $0 $6,395 0.19 %
Residential real estate0 1,772 99 0 57 1,928 0.15 %
Home equity0 168 0 0 15 1830.02 %
Total$0 $4,774 $3,660 $0 $72 $8,506 0.08 %
The following table provides the financial effect of FDMs granted during the three months ended September 30, 2024 and 2023:
Three months ended September 30, 2024
(Dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial & industrial$0 0.00 %N/A
Construction real estate00.00 %0.3 years
Residential real estate0 0.00 %3.0 years
Home equity0 0.00 %N/A
Total$0 0.00 %0.3 years
Three months ended September 30, 2023
(Dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial & industrial$0 0.00 %N/A
Residential real estate0 0.00 %N/A
Home equity0 0.00 %N/A
Total$0 0.00 %N/A

The following table provides the financial effect of FDMs granted during the nine months ended September 30, 2024 and 2023:
Nine months ended September 30, 2024
(Dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial & industrial$0 0.00 %0.4 years
Construction real estate0 0.00 %0.3 years
Residential real estate0 0.00 %3.0 years
Home equity0 0.00 %N/A
Total$0 0.00 %0.4 years
Nine months ended September 30, 2023
(Dollars in thousands)Principal forgivenessWeighted average interest rate reductionWeighted average term extension
Commercial & industrial$0 0.00 %0.2 years
Residential real estate0 2.00 %11.4 years
Home equity0 0.31 %22.6 years
Total$0 1.65 %0.8 years

The Company has committed to lend no additional amounts to the borrowers who have been classified as FDM as of either September 30, 2024 or September 30, 2023. Additionally, there was one FDM with a balance of $0.1 million that defaulted during the three months ended September 30, 2024 and six FDMs totaling $0.5 million that defaulted during the nine months ended September 30, 2024 and were classified as FDMs during the twelve months preceding the default date. There were four FDMs with a balance of $0.4 million that defaulted during the three months ended September 30, 2023 and five FDMs with a balance of $0.6 million that defaulted during the nine months ended September 30, 2023 and were classified as FDMs during the twelve months preceding the default date.
The Company closely monitors the performance of FDMs to understand the effectiveness of its modification efforts. The following table provides the performance of loans, as of the period end date, of FDMs granted during the twelve months preceding September 30, 2024.
Twelve months ended September 30, 2024
(Dollars in thousands)Current30 – 59 days past due60 – 89 days past due> 89 days past dueTotal
Commercial & industrial$16,184 $0 $0 $0 $16,184 
Construction real estate10,500 0 0 0 10,500 
Residential real estate1,949 86 75 125 2,235 
Home equity299 0 0 0 299 
Total$28,932 $86 $75 $125 $29,218 

The following table presents the performance as of September 30, 2023 for FDMs granted since the January 1, 2023 adoption date.
Nine months ended September 30, 2023
(Dollars in thousands)Current30 – 59 days past due60 – 89 days past due> 89 days past dueTotal
Commercial & industrial$6,395 $0 $0 $0 $6,395 
Residential real estate1,334 538 0 57 1,929 
Home equity182 0 0 0 182 
Total$7,911 $538 $0 $57 $8,506 

Nonaccrual loans. Loans are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful or when principal or interest payments are 90 days or more past due. Generally, loans are classified as nonaccrual due to the continued failure to adhere to contractual payment terms by the borrower, coupled with other pertinent factors. When a loan is classified as nonaccrual, the accrual of interest income is discontinued and previously accrued but unpaid interest is reversed. Any payments received while a loan is on nonaccrual status are applied as a reduction to the carrying value of the loan. A loan classified as nonaccrual may return to accrual status if none of the principal and interest is due and unpaid, and the Bank expects repayment of the remaining contractual principal and interest.

First Financial individually reviews all nonaccrual loan relationships greater than $250,000 to determine if a reserve is required based on the borrower’s overall financial condition, resources and payment record, support from guarantors and the realizable value of any collateral. These reserves are based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans.

The following table provides information on nonaccrual loans and leases:

September 30, 2024December 31, 2023
(Dollars in thousands)Nonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrualNonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrual
Nonaccrual loans  
Commercial & industrial$3,732 $6,971 $10,703 $3,329 $12,417 $15,746 
Lease financing10,666 966 11,632 1,505 2,105 3,610 
Construction real estate0 0 0 0 0 0 
Commercial real estate12,253 11,355 23,608 16,356 11,628 27,984 
Residential real estate0 14,596 14,596 0 14,067 14,067 
Home equity0 4,074 4,074 0 3,476 3,476 
Installment0 826 826 0 870 870 
Total nonaccrual loans$26,651 $38,788 $65,439 $21,190 $44,563 $65,753 
First Financial recognized interest income on nonaccrual loans and leases of $0.2 million for the three months ended September 30, 2024 and $0.7 million for the three months ended September 30, 2023, and $0.8 million for the nine months ended September 30, 2024 and $1.3 million for the nine months ended September 30, 2023.

A loan is considered to be collateral dependent when the borrower is experiencing financial difficulty and the repayment is expected to be provided substantially through the operation or sale of collateral. The following table presents the amortized cost basis of collateral dependent loans by class of loan.
September 30, 2024
Type of Collateral
(Dollar in thousands)Business
assets		Commercial real estateEquipmentLandResidential real estateOtherTotal
Class of loan
Commercial & industrial$6,196 $0 $2,353 $0 $0 $2,154 $10,703 
Lease financing00 11,632 0 0 0 11,632 
Commercial real estate-investor017,464 0 0 0 0 17,464 
Commercial real estate-owner04,250 1,894 0 0 0 6,144 
Residential real estate00 0 0 14,596 0 14,596 
Home equity00004,074 0 4,074 
Installment00000 826 826 
Total$6,196 $21,714 $15,879 $0 $18,670 $2,980 $65,439 
December 31, 2023
Type of Collateral
(Dollar in thousands)Business
assets		Commercial real estateEquipmentLandResidential real estateOtherTotal
Class of loan
Commercial & industrial$10,952 $0 $3,869 $0 $0 $925 $15,746 
Lease financing00 3,610 0 0 0 3,610 
Commercial real estate-investor022,694 0 0 0 0 22,694 
Commercial real estate-owner03,397 1,893 0 0 0 5,290 
Residential real estate00 0 0 14,067 0 14,067 
Home equity00003,476 0 3,476 
Installment00000 870 870 
Total$10,952 $26,091 $9,372 $0 $17,543 $1,795 $65,753 

Lease financing - Lessor. First Financial originates both sales-type and direct financing leases, and the Company manages and reviews lease residuals in accordance with its credit policies. Payments are generally fixed, however, in some agreements, lease payments are based on a rate or index plus a spread. Sales-type lease contracts contain the ability to purchase the underlying equipment at lease maturity and profit or loss is recognized at lease commencement.  Direct financing leases are generally three to five years in length and may be extended at maturity, however, early cancellation may result in a fee to the borrower.  For direct financing leases, the net unearned income is deferred and amortized over the life of the lease.
The components of the Company's net investments in direct financing and sales-type leases, which are included in Lease financing on the Consolidated Balance Sheets are as follows:
(Dollar in thousands)September 30, 2024December 31, 2023
Direct financing leases
Lease receivables$13,545 $16,272 
Unguaranteed residual values10,073 11,402 
Sales-type leases
Lease receivables558,144 444,144 
Unguaranteed residual values5,653 2,999 
Total net investment in direct financing and sales-type leases$587,415 $474,817 

Interest income for direct financing and sales-type leases was $9.3 million and $6.8 million for the three months ended September 30, 2024 and September 30, 2023, respectively. Interest income for direct financing and sales-type leases was $26.6 million and $17.9 million for the nine months ended September 30, 2024 and September 30, 2023, respectively.

The remaining maturities of lease receivables were as follows:
(Dollars in thousands)Direct financing and Sales-type
Remainder of 2024$47,499 
2025182,346 
2026159,623 
2027129,063 
202875,447 
Thereafter60,663 
Total lease payments654,641 
Less: unearned interest income(82,952)
Net lease receivables$571,689 
OREO. OREO consists of properties acquired by the Company primarily through the loan foreclosure or repossession process, that results in partial or total satisfaction of problem loans.

Changes in OREO were as follows:
Three months endedNine months ended
 September 30,September 30,
(Dollars in thousands)2024202320242023
Balance at beginning of period$30 $281 $106 $191 
Additions
Commercial real estate0 0 0 0 
Residential real estate0 68 55 387 
Total additions0 68 55 387 
Disposals  
Commercial real estate0 0 0 0 
Residential real estate0 (167)(106)(252)
Total disposals0 (167)(106)(252)
Valuation adjustment  
Commercial real estate0 0 0 0 
Residential real estate0 (40)(25)(184)
Total valuation adjustment0 (40)(25)(184)
Balance at end of period$30 $142 $30 $142