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LOANS AND LEASES, NET | 12 Months Ended
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Sep. 30, 2021
Loans and Leases Receivable Disclosure [Abstract] |
LOANS AND LEASES, NET | LOANS AND LEASES, NET Loans and leases consist of the following:
| At September 30,
(Dollars in Thousands) | 2021 |  | 2020
Term lending | $ | 961,019 |  |  | $ | 805,323 |
Asset based lending | 300,225 |  |  | 182,419 |
Factoring | 363,670 |  |  | 281,173 |
Lease financing | 266,050 |  |  | 281,084 |
Insurance premium finance | 428,867 |  |  | 337,940 |
SBA/USDA | 247,756 |  |  | 318,387 |
Other commercial finance | 157,908 |  |  | 101,658 |
Commercial finance | 2,725,495 |  |  | 2,307,984 |
Consumer credit products | 129,251 |  |  | 89,809 |
Other consumer finance | 123,606 |  |  | 134,342 |
Consumer finance | 252,857 |  |  | 224,151 |
Tax services | 10,405 |  |  | 3,066 |
Warehouse finance | 419,926 |  |  | 293,375 |
Community banking | 199,132 |  |  | 485,564 |
Total loans and leases | 3,607,815 |  |  | 3,314,140 |
Net deferred loan origination costs | 1,748 |  |  | 8,625 |
Total gross loans and leases | 3,609,563 |  |  | 3,322,765 |
Allowance for credit losses | (68,281) |  |  | (56,188) |
Total loans and leases, net | $ | 3,541,282 |  |  | $ | 3,266,577 |
During the fiscal years ended September 30, 2021 and 2020, the Company transferred $188.6 million and $542.1 million, respectively, of community banking loans to held for sale. During the fiscal year ended September 30, 2021, the Company originated $601.5 million of other consumer finance, SBA/USDA, and consumer credit product loans as held for sale. During the fiscal year ended September 30, 2020, the Company originated $98.8 million of SBA/USDA and consumer credit product loans as held for sale. The Company sold held for sale loans resulting in proceeds of $890.3 million and gains on sale of $8.6 million during the fiscal year ended September 30, 2021. The Company sold held for sale loans resulting in proceeds of $590.8 million and gains on sale of $7.7 million during the fiscal year ended September 30, 2020. Loans purchased and sold by portfolio segment, including participation interests, were as follows:
| Fiscal Year Ended September 30,
(Dollars in Thousands) | 2021 |  | 2020
Loans Purchased |  |  |
Loans held for investment: |  |  |
Commercial Finance | — |  |  | 2,400 |
Warehouse Finance | 308,014 |  |  | 130,130 |
Community banking | 3,318 |  |  | 18,905 |
Total purchases | 311,332 |  |  | 151,435 |
Loans Sold |  |  |
Loans held for sale: |  |  |
Commercial Finance | 89,276 |  |  | 60,114 |
Consumer Finance | 494,585 |  |  | 123,394 |
Community banking | 308,082 |  |  | 407,296 |
Loans held for investment: |  |  |
Community banking | 13,850 |  |  | 9,991 |
Total sales | 905,793 |  |  | 600,795 |
Leasing Portfolio. The net investment in direct financing and sales-type leases was comprised of the following:
| At September 30,
(Dollars in Thousands) | 2021 |  | 2020
Carrying amount | $ | 278,341 |  |  | $ | 299,487 |
Unguaranteed residual assets | 14,393 |  |  | 17,203 |
Unamortized initial direct costs | 490 |  |  | 2,078 |
Unearned income | (26,684) |  |  | (35,606) |
Total net investment in direct financing and sales-type leases | $ | 266,540 |  |  | $ | 283,162 |
The carrying amount of direct financing and sales-type leases subject to residual value guarantees was $4.2 million at September 30, 2021. The components of total lease income were as follows:
|  | Fiscal Year Ended September 30,
(Dollars in Thousands) |  | 2021 |  | 2020
Interest income - loans and leases |  |  |  |
Interest income on net investments in direct financing and sales-type leases |  | $ | 22,876 |  |  | $ | 18,300 |
Leasing and equipment finance noninterest income |  |  |  |
Lease income from operating lease payments |  | 39,553 |  |  | 44,319 |
Profit (loss) recorded on commencement date on sales-type leases |  | 337 |  |  | 2,152 |
Other(1) |  | 4,986 |  |  | 4,357 |
Total leasing and equipment finance noninterest income |  | 44,876 |  |  | 50,828 |
Total lease income |  | $ | 67,752 |  |  | $ | 69,128 |
(1) Other leasing and equipment finance noninterest income consists of gains (losses) on sales of leased equipment, fees and service charges on leases and gains (losses) on sales of leases. Undiscounted future minimum lease payments receivable for direct financing and sales-type leases, and a reconciliation to the carrying amount recorded at September 30, 2021 were as follows:
(Dollars in Thousands) |
2022 | $ | 109,680 |
2023 | 83,438 |
2024 | 51,901 |
2025 | 24,838 |
2026 | 5,941 |
Thereafter | 2,543 |
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases | 278,341 |
Total carrying amount of direct financing and sales-type leases | $ | 278,341 |
The Company did not record any contingent rental income from sales-type and direct financing leases in the fiscal year ended September 30, 2021. The COVID-19 pandemic began impacting the U.S. and global economies in the first calendar quarter of 2020, with significant deterioration of macroeconomic conditions and markets into 2021. Although macroeconomic conditions and markets have improved since the beginning of 2021, the ultimate impact of this pandemic on the Company's loan and lease portfolio is difficult to predict. Management continues to evaluate the loan and lease portfolio in order to assess the impact on repayment sources and underlying collateral that could result in additional losses and the impact to our customers and businesses as a result of COVID-19 and will refine our estimate as more information becomes available. Effective October 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent related ASUs on a modified retrospective basis. Financial information at and for the quarter ended September 30, 2021 is reflected as such. The historical information disclosed is in accordance with ASC Topic 310, Receivables. Activity in the allowance for credit losses was as follows:
| Fiscal Year Ended September 30,
(Dollars in Thousands) | 2021 |  | 2020 |  | 2019
Beginning balance | $ | 56,188 |  |  | $ | 29,149 |  |  | $ | 13,040 |
Impact of CECL adoption | 12,773 |  |  | — |  |  | — |
Provision for credit losses | 49,939 |  |  | 64,776 |  |  | 55,650 |
Charge-offs | (57,273) |  |  | (41,761) |  |  | (42,854) |
Recoveries | 6,654 |  |  | 4,024 |  |  | 3,313 |
Ending balance | $ | 68,281 |  |  | $ | 56,188 |  |  | $ | 29,149 |
Activity in the allowance for credit losses and balances of loans and leases by portfolio segment was as follows:
| At September 30, 2021
(Dollars in Thousands) | Beginning Balance |  | Impact of CECL Adoption |  | Provision (Recovery) for Credit Losses(2) |  | Charge-offs |  | Recoveries |  | Ending Balance
Allowance for credits losses: |  |  |  |  |  |  |  |  |  |  |
Term lending | $ | 15,211 |  |  | $ | 9,999 |  |  | $ | 16,944 |  |  | $ | (14,090) |  |  | $ | 1,287 |  |  | $ | 29,351 |
Asset based lending | 1,406 |  |  | 164 |  |  | 933 |  |  | (1,200) |  |  | 423 |  |  | 1,726 |
Factoring | 3,027 |  |  | 987 |  |  | (1,192) |  |  | — |  |  | 1,175 |  |  | 3,997 |
Lease financing | 7,023 |  |  | (556) |  |  | 3,758 |  |  | (2,969) |  |  | 373 |  |  | 7,629 |
Insurance premium finance | 2,129 |  |  | (965) |  |  | (555) |  |  | (1,192) |  |  | 1,977 |  |  | 1,394 |
SBA/USDA | 940 |  |  | 2,720 |  |  | (703) |  |  | — |  |  | 21 |  |  | 2,978 |
Other commercial finance | 182 |  |  | 364 |  |  | 622 |  |  | — |  |  | — |  |  | 1,168 |
Commercial finance | 29,918 |  |  | 12,713 |  |  | 19,807 |  |  | (19,451) |  |  | 5,256 |  |  | 48,243 |
Consumer credit products | 845 |  |  | — |  |  | 397 |  |  | — |  |  | — |  |  | 1,242 |
Other consumer finance | 2,821 |  |  | 5,998 |  |  | 297 |  |  | (3,324) |  |  | 320 |  |  | 6,112 |
Consumer finance | 3,666 |  |  | 5,998 |  |  | 694 |  |  | (3,324) |  |  | 320 |  |  | 7,354 |
Tax services | 2 |  |  | — |  |  | 33,276 |  |  | (34,354) |  |  | 1,078 |  |  | 2 |
Warehouse finance | 294 |  |  | (1) |  |  | 127 |  |  | — |  |  | — |  |  | 420 |
Community banking | 22,308 |  |  | (5,937) |  |  | (3,965) |  |  | (144) |  |  | — |  |  | 12,262 |
Total loans and leases | 56,188 |  |  | 12,773 |  |  | 49,939 |  |  | (57,273) |  |  | 6,654 |  |  | 68,281 |
Unfunded commitments(1) | 32 |  |  | 831 |  |  | (173) |  |  | — |  |  | — |  |  | 690 |
Total | $ | 56,220 |  |  | $ | 13,604 |  |  | $ | 49,766 |  |  | $ | (57,273) |  |  | $ | 6,654 |  |  | $ | 68,971 |
(1) Reserve for unfunded commitments is recognized within other liabilities on the Consolidated Statements of Financial Condition. (2) As a result of the adoption of CECL, effective October 1, 2020, the provision for credit losses includes the provision for unfunded commitments that was previously included within other noninterest expense. Activity in the allowance for loan and lease losses and balances of loans and leases by portfolio segment was as follows:
| At September 30, 2020
(Dollars in Thousands) | Beginning Balance |  | Provision (Recovery) for Loan and Lease Losses |  | Charge-offs |  | Recoveries |  | Ending Balance
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |
Term lending | $ | 5,533 |  |  | $ | 19,796 |  |  | $ | (10,458) |  |  | $ | 340 |  |  | $ | 15,211 |
Asset based lending | 2,437 |  |  | (1,036) |  |  | (42) |  |  | 47 |  |  | 1,406 |
Factoring | 3,261 |  |  | (245) |  |  | (915) |  |  | 926 |  |  | 3,027 |
Lease financing | 1,275 |  |  | 6,105 |  |  | (728) |  |  | 371 |  |  | 7,023 |
Insurance premium finance | 1,024 |  |  | 2,489 |  |  | (2,004) |  |  | 620 |  |  | 2,129 |
SBA/USDA | 383 |  |  | 2,688 |  |  | (2,131) |  |  | — |  |  | 940 |
Other commercial finance | 683 |  |  | (501) |  |  | — |  |  | — |  |  | 182 |
Commercial finance | 14,596 |  |  | 29,296 |  |  | (16,278) |  |  | 2,304 |  |  | 29,918 |
Consumer credit products | 1,044 |  |  | (199) |  |  | — |  |  | — |  |  | 845 |
Other consumer finance | 5,118 |  |  | (538) |  |  | (2,649) |  |  | 890 |  |  | 2,821 |
Consumer finance | 6,162 |  |  | (737) |  |  | (2,649) |  |  | 890 |  |  | 3,666 |
Tax services | — |  |  | 22,006 |  |  | (22,834) |  |  | 830 |  |  | 2 |
Warehouse finance | 263 |  |  | 31 |  |  | — |  |  | — |  |  | 294 |
Community banking | 8,128 |  |  | 14,180 |  |  | — |  |  | — |  |  | 22,308 |
Total loans and leases | $ | 29,149 |  |  | $ | 64,776 |  |  | $ | (41,761) |  |  | $ | 4,024 |  |  | $ | 56,188 |
The following table provides additional disclosures previously required by ASC Topic 310 related to the Company's September 30, 2020 balances.
| Allowance |  | Loans and Leases
(Dollars in Thousands) | Ending Balance: Individually Evaluated for Impairment |  | Ending Balance: Collectively Evaluated for Impairment |  | Total |  | Ending Balance: Individually Evaluated for Impairment |  | Ending Balance: Collectively Evaluated for Impairment |  | Total
Recorded investment: |  |  |  |  |  |  |  |  |  |  |
Term lending | $ | 3,155 |  |  | $ | 12,056 |  |  | $ | 15,211 |  |  | $ | 26,085 |  |  | $ | 779,238 |  |  | $ | 805,323 |
Asset based lending | 355 |  |  | 1,051 |  |  | 1,406 |  |  | 5,317 |  |  | 177,102 |  |  | 182,419 |
Factoring | 274 |  |  | 2,753 |  |  | 3,027 |  |  | 5,071 |  |  | 276,102 |  |  | 281,173 |
Lease financing | 1,194 |  |  | 5,829 |  |  | 7,023 |  |  | 4,697 |  |  | 276,387 |  |  | 281,084 |
Insurance premium finance | — |  |  | 2,129 |  |  | 2,129 |  |  | — |  |  | 337,940 |  |  | 337,940 |
SBA/USDA | — |  |  | 940 |  |  | 940 |  |  | 1,436 |  |  | 316,951 |  |  | 318,387 |
Other commercial finance | — |  |  | 182 |  |  | 182 |  |  | — |  |  | 101,658 |  |  | 101,658 |
Commercial finance | 4,978 |  |  | 24,940 |  |  | 29,918 |  |  | 42,606 |  |  | 2,265,378 |  |  | 2,307,984 |
Consumer credit products | — |  |  | 845 |  |  | 845 |  |  | — |  |  | 89,809 |  |  | 89,809 |
Other consumer finance | — |  |  | 2,821 |  |  | 2,821 |  |  | 1,987 |  |  | 132,355 |  |  | 134,342 |
Consumer finance | — |  |  | 3,666 |  |  | 3,666 |  |  | 1,987 |  |  | 222,164 |  |  | 224,151 |
Tax services | — |  |  | 2 |  |  | 2 |  |  | — |  |  | 3,066 |  |  | 3,066 |
Warehouse finance | — |  |  | 294 |  |  | 294 |  |  | — |  |  | 293,375 |  |  | 293,375 |
Community banking | 141 |  |  | 22,167 |  |  | 22,308 |  |  | 6,685 |  |  | 478,879 |  |  | 485,564 |
Total | $ | 5,119 |  |  | $ | 51,069 |  |  | $ | 56,188 |  |  | $ | 51,278 |  |  | $ | 3,262,862 |  |  | $ | 3,314,140 |
Information on loans and leases that are deemed to be collateral dependent and are evaluated individually for the ACL was as follows:
(Dollars in Thousands) | At September 30, 2021
Term lending | $ | 20,965 |
Factoring | 1,268 |
Lease financing | 3,882 |
Commercial finance | 26,115 |
Community banking | 14,915 |
Total | $ | 41,030 |
In response to the ongoing COVID-19 pandemic, the Company allowed modifications, such as payment deferrals and temporary forbearance, to credit-worthy borrowers who are experiencing temporary hardship due to the effects of COVID-19. Accordingly, if all payments were less than 30 days past due prior to the onset of the pandemic effects, the loan or lease will not be reported as past due during the deferral or forbearance period. As of September 30, 2021, $39.1 million of loan and lease that were granted deferral payments by the Company were still in their deferment period compared to $193.3 million as of September 30, 2020. These modifications consisted solely of payment deferrals ranging from 30 days to six months. These modifications are in line with applicable regulatory guidelines and, therefore, they are not reported as troubled debt restructurings. Other than the loan modifications that are on nonaccrual status, the Company is accruing and recognizing interest income on these modifications during the payment deferral period. Federal regulations provide for the classification of loans and other assets such as debt and equity securities considered by the Bank's primary regulator, 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 - A special mention asset is 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. 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. Meta has revised its credit administration policies and reviewed its loan portfolio to better align with OCC guidance for national banks, a process that began during the quarter ending June 30, 2021 and was completed as of September 30, 2021. These credit policy revisions had an impact on our loan and lease risk ratings, resulting in downgrades of certain credits in several categories. Loans and leases, or portions thereof, are charged off when collection of principal becomes doubtful. Generally, this is associated with a delay or shortfall in payments of 210 days or more for commercial insurance premium finance, 180 days or more for the purchased student loan portfolios, 120 days or more for consumer credit products and leases, and 90 days or more for community banking loans and commercial finance loans. Action is taken to charge off ERO loans if such loans have not been collected by the end of June and taxpayer advance loans if such loans have not been collected by the end of the calendar year. Non-accrual loans and troubled debt restructurings are generally individually evaluated for expected credit losses. The Company recognizes that concentrations of credit may naturally occur and may take the form of a large volume of related loans and leases to an individual, a specific industry, or a geographic location. Credit concentration is a direct, indirect, or contingent obligation that has a common bond where the aggregate exposure equals or exceeds a certain percentage of the Company’s Tier 1 Capital plus the allowable Allowance for Credit Losses. The Company has various portfolios of consumer finance and tax services loans that present unique risks that are statistically managed. Due to the unique risks associated with these portfolios, the Company monitors other credit quality indicators in their evaluation of the appropriateness of the allowance for credit losses on these portfolios, and as such, these loans are not included in the asset classification table below, beginning in the fiscal 2020 first quarter. The outstanding balances of consumer finance loans and tax services loans were $252.9 million and $10.4 million at September 30, 2021, respectively, and $224.2 million and $3.1 million at September 30, 2020, respectively. The amortized cost basis of loans and leases by asset classification and year of origination as of September 30, 2021 was as follows:
| Amortized Cost Basis
| Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total
(Dollars in Thousands) | 2021 | 2020 | 2019 | 2018 | 2017 | Prior
Term lending |  |  |  |  |  |  |  |
Pass | $ | 362,443 |  | $ | 192,305 |  | $ | 63,708 |  | $ | 34,381 |  | $ | 3,195 |  | $ | 1,236 |  | $ | — |  | $ | 657,268 |
Watch | 63,046 |  | 71,701 |  | 32,941 |  | 21,419 |  | 76 |  | 3,628 |  | — |  | 192,811 |
Special Mention | 6,422 |  | 26,673 |  | 4,821 |  | 932 |  | 70 |  | 633 |  | — |  | 39,551 |
Substandard | 18,569 |  | 16,810 |  | 26,920 |  | 3,529 |  | 928 |  | 641 |  | — |  | 67,397 |
Doubtful | 252 |  | 1,673 |  | 1,756 |  | 311 |  | — |  | — |  | — |  | 3,992 |
Total | 450,732 |  | 309,162 |  | 130,146 |  | 60,572 |  | 4,269 |  | 6,138 |  | — |  | 961,019 |
Asset based lending |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 185,432 |  | 185,432 |
Watch | — |  | — |  | — |  | — |  | — |  | — |  | 52,072 |  | 52,072 |
Special Mention | — |  | — |  | — |  | — |  | — |  | — |  | 43,135 |  | 43,135 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 19,586 |  | 19,586 |
Doubtful | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 300,225 |  | 300,225 |
Factoring |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 294,124 |  | 294,124 |
Watch | — |  | — |  | — |  | — |  | — |  | — |  | 17,984 |  | 17,984 |
Special Mention | — |  | — |  | — |  | — |  | — |  | — |  | 33,035 |  | 33,035 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 18,527 |  | 18,527 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 363,670 |  | 363,670 |
Lease financing |  |  |  |  |  |  |  |
Pass | 54,434 |  | 73,629 |  | 17,153 |  | 7,511 |  | 1,857 |  | 203 |  | — |  | 154,787 |
Watch | 22,061 |  | 20,455 |  | 9,274 |  | 2,739 |  | 1,454 |  | — |  | — |  | 55,983 |
Special Mention | 15,402 |  | 20,595 |  | 4,148 |  | 1,546 |  | 61 |  | — |  | — |  | 41,752 |
Substandard | 479 |  | 4,765 |  | 4,981 |  | 831 |  | 25 |  | — |  | — |  | 11,081 |
Doubtful | — |  | 6 |  | 2,402 |  | 38 |  |  |  | — |  | 2,447 |
Total | 92,376 |  | 119,450 |  | 37,958 |  | 12,665 |  | 3,398 |  | 203 |  | — |  | 266,050 |
Insurance premium finance |  |  |  |  |  |  |  |
Pass | 428,131 |  | 144 |  | 9 |  | — |  | — |  | — |  | — |  | 428,284 |
Watch | 262 |  | 5 |  | — |  | — |  | — |  | — |  | — |  | 267 |
Special Mention | 58 |  | 5 |  | — |  | — |  | — |  | — |  | — |  | 63 |
Substandard | 68 |  | 107 |  | — |  | — |  | — |  | — |  | — |  | 175 |
Doubtful | 58 |  | 20 |  | — |  | — |  | — |  | — |  | — |  | 78 |
Total | 428,577 |  | 281 |  | 9 |  | — |  | — |  | — |  | — |  | 428,867 |
SBA/USDA |  |  |  |  |  |  |  |
Pass | 110,122 |  | 37,006 |  | 14,461 |  | 12,760 |  | 6,525 |  | 3,779 |  | — |  | 184,653 |
Watch | — |  | 20,431 |  | 1,996 |  | 1,670 |  | 1,394 |  | 298 |  | — |  | 25,789 |
Special Mention | — |  | 8,333 |  | 214 |  | 3,348 |  | 177 |  | 919 |  | — |  | 12,991 |
Substandard | — |  | 3,812 |  | 9,550 |  | 8,079 |  | 2,169 |  | 713 |  | — |  | 24,323 |
Total | 110,122 |  | 69,582 |  | 26,221 |  | 25,857 |  | 10,265 |  | 5,709 |  | — |  | 247,756 |
Other commercial finance |  |  |  |  |  |  |  |
Pass | 56,957 |  | 642 |  | 5,786 |  | 6,075 |  | 3,345 |  | 60,965 |  | — |  | 133,770 |
Watch | — |  | 17,404 |  | 3,409 |  | 451 |  | — |  | — |  | — |  | 21,264 |
Substandard | 466 |  | — |  | — |  | 273 |  | 837 |  | 1,299 |  | — |  | 2,875 |
Total | 57,423 |  | 18,046 |  | 9,195 |  | 6,799 |  | 4,182 |  | 62,264 |  | — |  | 157,909 |
Warehouse finance |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 419,926 |  | 419,926 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 419,926 |  | 419,926 |
Community banking |  |  |  |  |  |  |  |
Pass | — |  | — |  | 4,159 |  | — |  | 5,683 |  | 472 |  | — |  | 10,314 |
Watch | — |  | 10,134 |  | — |  | 10,854 |  | 6,133 |  | — |  | — |  | 27,121 |
Special Mention | — |  | — |  | 35,916 |  | — |  | — |  | — |  | — |  | 35,916 |
Substandard | — |  | 119 |  | 49,449 |  | 50,626 |  | 13,933 |  | 6,110 |  | — |  | 120,237 |
Doubtful | — |  | 122 |  | — |  | 5,422 |  | — |  | — |  | — |  | 5,544 |
Total | — |  | 10,375 |  | 89,524 |  | 66,902 |  | 25,749 |  | 6,582 |  | — |  | 199,132 |
Total Loans and Leases |  |  |  |  |  |  |  |
Pass | 1,012,088 |  | 303,727 |  | 105,274 |  | 60,727 |  | 20,605 |  | 66,655 |  | 899,481 |  | 2,468,557 |
Watch | 85,369 |  | 140,131 |  | 47,620 |  | 37,132 |  | 9,057 |  | 3,926 |  | 70,056 |  | 393,291 |
Special Mention | 21,882 |  | 55,606 |  | 45,099 |  | 5,826 |  | 307 |  | 1,552 |  | 76,171 |  | 206,443 |
Substandard | 19,584 |  | 25,613 |  | 90,900 |  | 63,338 |  | 17,891 |  | 8,762 |  | 38,113 |  | 264,201 |
Doubtful | 310 |  | 1,822 |  | 4,158 |  | 5,770 |  | 1 |  | — |  | — |  | 12,061 |
Total | $ | 1,139,233 |  | $ | 526,899 |  | $ | 293,051 |  | $ | 172,793 |  | $ | 47,861 |  | $ | 80,895 |  | $ | 1,083,821 |  | $ | 3,344,553 |
The recorded investment of loans and leases by asset classification was as follows:
(Dollars in Thousands) | At September 30, 2020
Asset Classification | Pass |  | Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Total
Term lending | $ | 725,101 |  |  | $ | 29,637 |  |  | $ | 24,501 |  |  | $ | 21,249 |  |  | $ | 4,835 |  |  | $ | 805,323 |
Asset based lending | 102,013 |  |  | 62,512 |  |  | 12,577 |  |  | 5,317 |  |  | — |  |  | 182,419 |
Factoring | 217,245 |  |  | 45,200 |  |  | 13,657 |  |  | 5,071 |  |  | — |  |  | 281,173 |
Lease financing | 264,700 |  |  | 8,879 |  |  | 2,808 |  |  | 4,148 |  |  | 549 |  |  | 281,084 |
Insurance premium finance | 336,364 |  |  | 284 |  |  | 222 |  |  | 701 |  |  | 369 |  |  | 337,940 |
SBA/USDA | 308,549 |  |  | 8,328 |  |  | 74 |  |  | 1,436 |  |  | — |  |  | 318,387 |
Other commercial finance | 100,727 |  |  | 931 |  |  | — |  |  | — |  |  | — |  |  | 101,658 |
Commercial finance | 2,054,699 |  |  | 155,771 |  |  | 53,839 |  |  | 37,922 |  |  | 5,753 |  |  | 2,307,984 |
Warehouse finance | 293,375 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 293,375 |
Community banking | 353,410 |  |  | 98,336 |  |  | 9,588 |  |  | 23,650 |  |  | 580 |  |  | 485,564 |
Total loans and leases | $ | 2,701,484 |  |  | $ | 254,107 |  |  | $ | 63,427 |  |  | $ | 61,572 |  |  | $ | 6,333 |  |  | $ | 3,086,923 |
Past due loans and leases were as follows:
| At September 30, 2021
| Accruing and Nonaccruing Loans and Leases |  | Nonperforming Loans and Leases
(Dollars in Thousands) | 30-59 Days Past Due |  | 60-89 Days Past Due |  | > 89 Days Past Due |  | Total Past Due |  | Current |  | Total Loans and Leases Receivable |  | > 89 Days Past Due and Accruing |  | Nonaccrual Balance |  | Total
Loans held for sale | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 56,194 |  |  | $ | 56,194 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Term lending | 11,879 |  |  | 2,703 |  |  | 5,452 |  |  | 20,034 |  |  | 940,985 |  |  | 961,019 |  |  | 2,558 |  |  | 14,904 |  |  | 17,462 |
Asset based lending | — |  |  | — |  |  | — |  |  | — |  |  | 300,225 |  |  | 300,225 |  |  | — |  |  | — |  |  | — |
Factoring | — |  |  | — |  |  | — |  |  | — |  |  | 363,670 |  |  | 363,670 |  |  | — |  |  | 1,268 |  |  | 1,268 |
Lease financing | 4,909 |  |  | 3,336 |  |  | 8,401 |  |  | 16,646 |  |  | 249,404 |  |  | 266,050 |  |  | 8,345 |  |  | 3,158 |  |  | 11,503 |
Insurance premium finance | 1,415 |  |  | 375 |  |  | 599 |  |  | 2,389 |  |  | 426,478 |  |  | 428,867 |  |  | 599 |  |  | — |  |  | 599 |
SBA/USDA | 66 |  |  | 974 |  |  | 987 |  |  | 2,027 |  |  | 245,729 |  |  | 247,756 |  |  | 987 |  |  | — |  |  | 987 |
Other commercial finance | — |  |  | — |  |  | — |  |  | — |  |  | 157,908 |  |  | 157,908 |  |  | — |  |  | — |  |  | — |
Commercial finance | 18,269 |  |  | 7,388 |  |  | 15,439 |  |  | 41,096 |  |  | 2,684,399 |  |  | 2,725,495 |  |  | 12,489 |  |  | 19,330 |  |  | 31,819 |
Consumer credit products | 713 |  |  | 527 |  |  | 511 |  |  | 1,751 |  |  | 127,500 |  |  | 129,251 |  |  | 511 |  |  | — |  |  | 511 |
Other consumer finance | 963 |  |  | 285 |  |  | 725 |  |  | 1,973 |  |  | 121,633 |  |  | 123,606 |  |  | 725 |  |  | — |  |  | 725 |
Consumer finance | 1,676 |  |  | 812 |  |  | 1,236 |  |  | 3,724 |  |  | 249,133 |  |  | 252,857 |  |  | 1,236 |  |  | — |  |  | 1,236 |
Tax services | — |  |  | — |  |  | 7,962 |  |  | 7,962 |  |  | 2,443 |  |  | 10,405 |  |  | 7,962 |  |  | — |  |  | 7,962 |
Warehouse finance | — |  |  | — |  |  | — |  |  | — |  |  | 419,926 |  |  | 419,926 |  |  | — |  |  | — |  |  | — |
Community banking | — |  |  | — |  |  | — |  |  | — |  |  | 199,132 |  |  | 199,132 |  |  | — |  |  | 14,915 |  |  | 14,915 |
Total loans and leases held for investment | 19,945 |  |  | 8,200 |  |  | 24,637 |  |  | 52,782 |  |  | 3,555,033 |  |  | 3,607,815 |  |  | 21,687 |  |  | 34,245 |  |  | 55,932 |
Total loans and leases | $ | 19,945 |  |  | $ | 8,200 |  |  | $ | 24,637 |  |  | $ | 52,782 |  |  | $ | 3,611,227 |  |  | $ | 3,664,009 |  |  | $ | 21,687 |  |  | $ | 34,245 |  |  | $ | 55,932 |
| At September 30, 2020
| Accruing and Nonaccruing Loans and Leases |  | Nonperforming Loans and Leases
(Dollars in Thousands) | 30-59 Days Past Due |  | 60-89 Days Past Due |  | > 89 Days Past Due |  | Total Past Due |  | Current |  | Total Loans and Leases Receivable |  | > 89 Days Past Due and Accruing |  | Nonaccrual Balance |  | Total
Loans held for sale | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 183,577 |  |  | $ | 183,577 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Term lending | 11,900 |  |  | 3,851 |  |  | 6,390 |  |  | 22,141 |  |  | 783,182 |  |  | 805,323 |  |  | 266 |  |  | 16,274 |  |  | 16,540 |
Asset based lending | 17 |  |  | — |  |  | — |  |  | 17 |  |  | 182,402 |  |  | 182,419 |  |  | — |  |  | — |  |  | — |
Factoring | — |  |  | — |  |  | — |  |  | — |  |  | 281,173 |  |  | 281,173 |  |  | — |  |  | 1,096 |  |  | 1,096 |
Lease financing | 194 |  |  | 9,746 |  |  | 6,882 |  |  | 16,822 |  |  | 264,262 |  |  | 281,084 |  |  | 4,344 |  |  | 3,583 |  |  | 7,927 |
Insurance premium finance | 1,227 |  |  | 748 |  |  | 2,364 |  |  | 4,339 |  |  | 333,601 |  |  | 337,940 |  |  | 2,364 |  |  | — |  |  | 2,364 |
SBA/USDA | — |  |  | — |  |  | 1,027 |  |  | 1,027 |  |  | 317,360 |  |  | 318,387 |  |  | 427 |  |  | 600 |  |  | 1,027 |
Other commercial finance | — |  |  | — |  |  | — |  |  | — |  |  | 101,658 |  |  | 101,658 |  |  | — |  |  | — |  |  | — |
Commercial finance | 13,338 |  |  | 14,345 |  |  | 16,663 |  |  | 44,346 |  |  | 2,263,638 |  |  | 2,307,984 |  |  | 7,401 |  |  | 21,553 |  |  | 28,954 |
Consumer credit products | 377 |  |  | 358 |  |  | 499 |  |  | 1,233 |  |  | 88,576 |  |  | 89,809 |  |  | 499 |  |  | — |  |  | 499 |
Other consumer finance | 600 |  |  | 536 |  |  | 373 |  |  | 1,509 |  |  | 132,833 |  |  | 134,342 |  |  | 373 |  |  | — |  |  | 373 |
Consumer finance | 977 |  |  | 894 |  |  | 872 |  |  | 2,743 |  |  | 221,408 |  |  | 224,151 |  |  | 872 |  |  | — |  |  | 872 |
Tax services | — |  |  | — |  |  | 1,743 |  |  | 1,743 |  |  | 1,323 |  |  | 3,066 |  |  | 1,743 |  |  | — |  |  | 1,743 |
Warehouse finance | — |  |  | — |  |  | — |  |  | — |  |  | 293,375 |  |  | 293,375 |  |  | — |  |  | — |  |  | — |
Community banking | 905 |  |  | 114 |  |  | 2,449 |  |  | 3,468 |  |  | 482,096 |  |  | 485,564 |  |  | 50 |  |  | 2,399 |  |  | 2,449 |
Total loans and leases held for investment | 15,220 |  |  | 15,353 |  |  | 21,727 |  |  | 52,300 |  |  | 3,261,840 |  |  | 3,314,140 |  |  | 10,066 |  |  | 23,952 |  |  | 34,018 |
Total loans and leases | $ | 15,220 |  |  | $ | 15,353 |  |  | $ | 21,727 |  |  | $ | 52,300 |  |  | $ | 3,445,417 |  |  | $ | 3,497,717 |  |  | $ | 10,066 |  |  | $ | 23,952 |  |  | $ | 34,018 |
Nonaccrual loans and leases by year of origination at September 30, 2021 were as follows:
| Amortized Cost Basis |
| Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total | Nonaccrual with No ACL
(Dollars in Thousands) | 2021 | 2020 | 2019 | 2018 | 2017 | Prior
Term lending | $ | 131 |  | $ | 3,812 |  | $ | 10,072 |  | $ | 756 |  | $ | 133 |  | $ | — |  | $ | — |  | $ | 14,904 |  | $ | 12,103 |
Factoring | — |  | — |  | — |  | — |  | — |  | — |  | 1,268 |  | 1,268 |  | 1,268 |
Lease financing |  | 30 |  | 2,471 |  | 632 |  | 25 |  | — |  | — |  | 3,158 |  | 541 |
Commercial finance | 131 |  | 3,842 |  | 12,543 |  | 1,388 |  | 158 |  | — |  | 1,268 |  | 19,330 |  | 13,912 |
Community Banking | — |  | 242 |  | — |  | 14,673 |  | — |  | — |  | — |  | 14,915 |  | — |
Total nonaccrual loans and leases | $ | 131 |  | $ | 4,084 |  | $ | 12,543 |  | $ | 16,061 |  | $ | 158 |  | $ | — |  | $ | 1,268 |  | $ | 34,245 |  | $ | 13,912 |
Loans and leases that are 90 days or more delinquent and accruing by year of origination at September 30, 2021 were as follows:
| Amortized Cost Basis
| Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total
(Dollars in Thousands) | 2021 | 2020 | 2019 | 2018 | 2017 | Prior
Term lending | $ | 2,546 |  | $ | — |  | $ | 12 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 2,558 |
Lease financing | 429 |  | 7,558 |  | 224 |  | 99 |  | 31 |  | 4 |  | — |  | 8,345 |
Insurance premium finance | 468 |  | 131 |  | — |  | — |  | — |  | — |  | — |  | 599 |
SBA/USDA | — |  | 987 |  | — |  | — |  | — |  | — |  | — |  | 987 |
Commercial finance | 3,443 |  | 8,676 |  | 236 |  | 99 |  | 31 |  | 4 |  | — |  | 12,489 |
Consumer credit products | 206 |  | 77 |  | 224 |  | 3 |  | — |  | — |  | — |  | 510 |
Other consumer finance | — |  | — |  | — |  | — |  | — |  | 725 |  | — |  | 725 |
Consumer finance | 206 |  | 77 |  | 224 |  | 3 |  | — |  | 725 |  | — |  | 1,235 |
Tax services | 7,962 |  | — |  | — |  | — |  | — |  | — |  | — |  | 7,962 |
Total 90 days or more delinquent and accruing | $ | 11,611 |  | $ | 8,753 |  | $ | 460 |  | $ | 102 |  | $ | 31 |  | $ | 729 |  | $ | — |  | $ | 21,686 |
Certain loans and leases 90 days or more past due as to interest or principal continue to accrue because they are (1) well-secured and in the process of collection or (2) consumer loans exempt under regulatory rules from being classified as non-accrual until later delinquency, usually 120 days past due. When analysis of borrower or lessee 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 scheduled payments, as described above. Information on impaired loans and leases, all of which are deemed to be collateral dependent and are evaluated individually for the ACL was as follows:
(Dollars in Thousands) | Fiscal Year Ended September 30, 2021
Term lending | $ | 20,965 |
Factoring | 1,268 |
Lease financing | 3,882 |
Commercial finance | 26,115 |
Other consumer finance | 2,294 |
Consumer finance | 2,294 |
Community banking | 14,915 |
Total loans and leases | $ | 43,324 |
The recognized interest income on the Company's nonaccrual loans and leases for the fiscal year ended September 30, 2021 was not significant. The following table provides the average recorded investment in impaired loans and leases:
| Fiscal Year Ended September 30, 2020
(Dollars in Thousands) | Average Recorded Investment |  | Recognized Interest Income
Term lending | $ | 26,126 |  |  | $ | 386 |
Asset based lending | 1,339 |  |  | — |
Factoring | 4,075 |  |  | 13 |
Lease financing | 3,370 |  |  | 16 |
SBA/USDA | 3,164 |  |  | — |
Commercial finance | 38,074 |  |  | 415 |
Other consumer finance | 1,860 |  |  | 143 |
Consumer finance | 1,860 |  |  | 143 |
Community banking | 3,529 |  |  | (37) |
Total loans and leases | $ | 43,463 |  |  | $ | 521 |
The Company’s troubled debt restructurings ("TDRs") typically involve forgiving a portion of interest or principal on existing loans, making loans at a rate materially less than current market rates, or extending the term of the loan. There were $5.9 million of commercial finance loans, and $0.3 million of consumer finance loans that were modified in a TDR during the fiscal year ended September 30, 2021, all of which were modified to extend the term of the loan, and no community banking loans. There were $8.7 million of commercial finance loans, and $0.8 million of consumer finance loans that were modified in a TDR during the fiscal year ended September 30, 2020 and $5.2 million community banking loans. During the fiscal year ended September 30, 2021, the Company had $3.4 million of commercial finance loans, $0.3 million of consumer finance loans, and no community banking loans that were modified in a TDR within the previous 12 months and for which there was a payment default. During the fiscal year ended September 30, 2020, the Company had $3.3 million of commercial finance loans, $0.6 million of consumer finance loans, and $3.3 million of community banking loans that were modified in a TDR within the previous 12 months and for which there was a payment default. TDR net charge-offs and the impact of TDRs on the Company's allowance for credit losses were insignificant during the fiscal years ended September 30, 2021 and September 30, 2020.

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