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LOANS AND LEASES, NET | 3 Months Ended
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Dec. 31, 2023
Loans and Leases Receivable Disclosure [Abstract] |
LOANS AND LEASES, NET | LOANS AND LEASES, NET Loans and leases consist of the following:
(Dollars in thousands) | December 31, 2023 |  | September 30, 2023
Term lending | $ | 1,452,274 |  |  | $ | 1,308,133 |
Asset-based lending | 379,681 |  |  | 382,371 |
Factoring | 335,953 |  |  | 358,344 |
Lease financing | 188,889 |  |  | 183,392 |
Insurance premium finance | 671,035 |  |  | 800,077 |
SBA/USDA | 546,048 |  |  | 524,750 |
Other commercial finance | 160,628 |  |  | 166,091 |
Commercial finance | 3,734,508 |  |  | 3,723,158 |
Consumer finance | 301,510 |  |  | 254,416 |
Tax services | 33,435 |  |  | 5,192 |
Warehouse finance | 349,911 |  |  | 376,915 |
Total loans and leases | 4,419,364 |  |  | 4,359,681 |
Net deferred loan origination costs | 6,917 |  |  | 6,435 |
Total gross loans and leases | 4,426,281 |  |  | 4,366,116 |
Allowance for credit losses | (53,785) |  |  | (49,705) |
Total loans and leases, net | $ | 4,372,496 |  |  | $ | 4,316,411 |
During the three months ended December 31, 2023 and 2022, the Company originated $631.9 million and $398.8 million of commercial finance and consumer finance as held for sale, respectively. The Company sold held for sale loans resulting in proceeds of $626.3 million and a nominal gain on sale during the three months ended December 31, 2023. The Company sold held for sale loans resulting in proceeds of $402.9 million and gain on sale of $0.1 million during the three months ended December 31, 2022. Loans purchased and sold by portfolio segment, including participation interests, were as follows:
|  |  | Three Months Ended December 31,
(Dollars in thousands) |  |  |  |  | 2023 |  | 2022
Loans Purchased |  |  |  |  |  |  |
Loans held for investment: |  |  |  |  |  |  |
Warehouse finance |  |  |  |  | $ | 89,390 |  |  | $ | 67,649 |
Total purchases |  |  |  |  | $ | 89,390 |  |  | $ | 67,649 |
Loans Sold |  |  |  |  |  |  |
Loans held for sale: |  |  |  |  |  |  |
Commercial finance |  |  |  |  | $ | 3,872 |  |  | $ | 855 |
Consumer finance |  |  |  |  | 622,464 |  |  | 402,015 |
Total sales |  |  |  |  | $ | 626,336 |  |  | $ | 402,870 |
Leasing Portfolio. The net investment in direct financing and sales-type leases was comprised of the following:
(Dollars in thousands) | December 31, 2023 |  | September 30, 2023
Minimum lease payments receivable | $ | 197,829 |  |  | $ | 191,807 |
Unguaranteed residual assets | 14,388 |  |  | 12,709 |
Unamortized initial direct costs | 114 |  |  | 141 |
Unearned income | (23,181) |  |  | (21,124) |
Total net investment in direct financing and sales-type leases | $ | 189,150 |  |  | $ | 183,533 |
The components of total lease income were as follows:
|  |  | Three Months Ended December 31,
(Dollars in thousands) |  |  |  |  | 2023 |  | 2022
Interest income - loans and leases |  |  |  |  |  |  |
Interest income on net investments in direct financing and sales-type leases |  |  |  |  | $ | 3,108 |  |  | $ | 3,143 |
Leasing and equipment finance noninterest income |  |  |  |  |  |  |
Lease income from operating lease payments |  |  |  |  | 13,255 |  |  | 12,554 |
Other(1) |  |  |  |  | 724 |  |  | 702 |
Total leasing and equipment finance noninterest income |  |  |  |  | 13,979 |  |  | 13,256 |
Total lease income |  |  |  |  | $ | 17,087 |  |  | $ | 16,399 |
(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 December 31, 2023 were as follows:
(Dollars in thousands) |
Remaining in 2024 | $ | 60,302 |
2025 | 54,431 |
2026 | 33,348 |
2027 | 20,287 |
2028 | 15,912 |
Thereafter | 13,549 |
Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases | 197,829 |
Third-party residual value guarantees | — |
Total carrying amount of direct financing and sales-type leases | $ | 197,829 |
The Company did not record any contingent rental income from direct financing and sales-type leases in the three months ended December 31, 2023. A number of factors affected the economic environment in 2023 including geopolitical conflict, supply chain disruptions, inflation, rising interest rates, and bank failures brought on by, among other things, rising interest rates, deposit outflows and liquidity crises. While the ultimate impact of these factors on the Company's loan and lease portfolio remains 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 these factors impacting the economy and will refine its estimate as developments occur and more information becomes available. Activity in the allowance for credit losses and balances of loans and leases by portfolio segment was as follows:
| Three Months Ended December 31, 2023
(Dollars in thousands) | Beginning Balance | Provision (Reversal) | Charge-offs | Recoveries | Ending Balance
Allowance for credit losses: |  |  |  |  |
Term lending | $ | 25,686 |  | $ | 5,822 |  | $ | (5,121) |  | $ | 626 |  | $ | 27,013 |
Asset-based lending | 2,738 |  | (1,510) |  | — |  | 142 |  | 1,370 |
Factoring | 6,566 |  | 751 |  | (23) |  | 139 |  | 7,433 |
Lease financing | 3,302 |  | 766 |  | (153) |  | 93 |  | 4,008 |
Insurance premium finance | 2,637 |  | (239) |  | (365) |  | 90 |  | 2,123 |
SBA/USDA | 2,962 |  | 327 |  | — |  | — |  | 3,289 |
Other commercial finance | 3,089 |  | 223 |  | — |  | — |  | 3,312 |
Commercial finance | 46,980 |  | 6,140 |  | (5,662) |  | 1,090 |  | 48,548 |
Consumer finance | 2,346 |  | 2,097 |  | (63) |  | — |  | 4,380 |
Tax services | 2 |  | 1,356 |  | (1,145) |  | 294 |  | 507 |
Warehouse finance | 377 |  | (27) |  | — |  | — |  | 350 |
Total loans and leases | 49,705 |  | 9,566 |  | (6,870) |  | 1,384 |  | 53,785 |
Unfunded commitments(1) | 272 |  | 324 |  | — |  | — |  | 596 |
Total | $ | 49,977 |  | $ | 9,890 |  | $ | (6,870) |  | $ | 1,384 |  | $ | 54,381 |
(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.
| Three Months Ended December 31, 2022
(Dollars in thousands) | Beginning Balance | Provision (Reversal) | Charge-offs | Recoveries | Ending Balance
Allowance for credit losses: |  |  |  |  |
Term lending | $ | 24,621 |  | $ | 3,671 |  | $ | (1,817) |  | $ | 277 |  | $ | 26,752 |
Asset-based lending | 1,050 |  | 2,853 |  | — |  | — |  | 3,903 |
Factoring | 6,556 |  | (764) |  | (121) |  | 3 |  | 5,674 |
Lease financing | 5,902 |  | (438) |  | (406) |  | 180 |  | 5,238 |
Insurance premium finance | 1,450 |  | (47) |  | (185) |  | 43 |  | 1,261 |
SBA/USDA | 3,263 |  | (651) |  | — |  | 20 |  | 2,632 |
Other commercial finance | 1,310 |  | 2,046 |  | — |  | — |  | 3,356 |
Commercial finance | 44,152 |  | 6,670 |  | (2,529) |  | 523 |  | 48,816 |
Consumer finance | 1,463 |  | 1,603 |  | (179) |  | — |  | 2,887 |
Tax services | 5 |  | 1,637 |  | (1,731) |  | 698 |  | 609 |
Warehouse finance | 327 |  | (47) |  | — |  | — |  | 280 |
Total loans and leases | 45,947 |  | 9,863 |  | (4,439) |  | 1,221 |  | 52,592 |
Unfunded commitments(1) | 366 |  | (87) |  | — |  | — |  | 279 |
Total | $ | 46,313 |  | $ | 9,776 |  | $ | (4,439) |  | $ | 1,221 |  | $ | 52,871 |
(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.
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 December 31, 2023 |  | At September 30, 2023
Term lending | $ | 4,160 |  |  | $ | 3,516 |
Asset-based lending | 7,731 |  |  | 19,226 |
Factoring | 3,562 |  |  | 1,133 |
Lease financing | 593 |  |  | 630 |
SBA/USDA | 2,591 |  |  | 750 |
Commercial finance(1) | 18,637 |  |  | 25,255 |
Total | $ | 18,637 |  |  | $ | 25,255 |
(1) For Commercial Finance, collateral dependent financial assets have collateral in the form of cash, equipment, or other business assets.
Management has identified certain structured finance credits for alternative energy projects in which a substantial cash collateral account has been established to mitigate credit risk. Due to the nature of the transactions and significant cash collateral positions, these credits are evaluated individually. The balance of these pass rated cash collateral loans totaled $114.3 million and $117.0 million at December 31, 2023 and at September 30, 2023, respectively. 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. Loans and leases, or portions thereof, are generally charged off when collection of principal becomes doubtful. Typically, this is associated with a delay or shortfall in payments of 210 days or more for insurance premium finance, 120 days or more for consumer credit products and leases, and 90 days or more for commercial finance loans. Action is taken to charge off electronic return originator ("ERO") loans if such loans have not been collected by the end of June and refund advance loans if such loans have not been collected by the end of the calendar year. The Company individually evaluates loans and leases that do not share similar risk characteristics with other financial assets, which generally means loans and leases identified as modifications or loans and leases on nonaccrual status. 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 its evaluation of the appropriateness of the ACL on these portfolios, and as such, these loans are not included in the asset classification table below. The outstanding balances of consumer finance loans and tax services loans were $301.5 million and $33.4 million at December 31, 2023, respectively, and $254.4 million and $5.2 million at September 30, 2023, respectively. The amortized cost basis of loans and leases by asset classification and year of origination was as follows:
| Amortized Cost Basis
(Dollars in thousands) | Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total
At December 31, 2023 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior
Term lending |  |  |  |  |  |  |  |
Pass | $ | 234,250 |  | $ | 496,789 |  | $ | 138,710 |  | $ | 110,564 |  | $ | 59,710 |  | $ | 55,391 |  | $ | — |  | $ | 1,095,414 |
Watch | 61,518 |  | 32,021 |  | 43,154 |  | 23,282 |  | 13,908 |  | 2,416 |  | — |  | 176,299 |
Special mention | 922 |  | 24,558 |  | 13,232 |  | 26,952 |  | 572 |  | 283 |  | — |  | 66,519 |
Substandard | 9,393 |  | 25,451 |  | 27,768 |  | 13,345 |  | 23,610 |  | 4,953 |  | — |  | 104,520 |
Doubtful | 715 |  | 1,202 |  | 4,300 |  | 976 |  | 879 |  | 1,450 |  | — |  | 9,522 |
Total | 306,798 |  | 580,021 |  | 227,164 |  | 175,119 |  | 98,679 |  | 64,493 |  | — |  | 1,452,274 |
Current period charge-offs | — |  | 118 |  | 2,524 |  | 1,673 |  | 618 |  | 188 |  | — |  | 5,121 |
Asset-based lending |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 187,835 |  | 187,835 |
Watch | — |  | — |  | — |  | — |  | — |  | — |  | 159,962 |  | 159,962 |
Special mention | — |  | — |  | — |  | — |  | — |  | — |  | 22,378 |  | 22,378 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 9,506 |  | 9,506 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 379,681 |  | 379,681 |
Current period charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Factoring |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 253,129 |  | 253,129 |
Watch | — |  | — |  | — |  | — |  | — |  | — |  | 63,492 |  | 63,492 |
Special mention | — |  | — |  | — |  | — |  | — |  | — |  | 5,528 |  | 5,528 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 13,804 |  | 13,804 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 335,953 |  | 335,953 |
Current period charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | 23 |  | 23 |
Lease financing |  |  |  |  |  |  |  |
Pass | 26,190 |  | 62,933 |  | 13,847 |  | 13,464 |  | 22,422 |  | 2,564 |  | — |  | 141,420 |
Watch | 1,266 |  | 458 |  | 9,747 |  | 10,573 |  | 3,769 |  | 1,635 |  | — |  | 27,448 |
Special mention | — |  | 2 |  | — |  | 175 |  | 360 |  | 265 |  | — |  | 802 |
Substandard | — |  | 6,126 |  | 2,005 |  | 5,642 |  | 2,884 |  | 2,272 |  | — |  | 18,929 |
Doubtful | — |  | — |  | — |  | 64 |  | — |  | 226 |  | — |  | 290 |
Total | 27,456 |  | 69,519 |  | 25,599 |  | 29,918 |  | 29,435 |  | 6,962 |  | — |  | 188,889 |
Current period charge-offs | — |  | — |  | 44 |  | 42 |  | 67 |  | — |  | — |  | 153 |
Insurance premium finance |  |  |  |  |  |  |  |
Pass | 238,408 |  | 430,949 |  | 352 |  | — |  | — |  | — |  | — |  | 669,709 |
Watch | — |  | 251 |  | — |  | — |  | — |  | — |  | — |  | 251 |
Special mention | — |  | 420 |  | — |  | — |  | — |  | — |  | — |  | 420 |
Substandard | — |  | 317 |  | 4 |  | — |  | — |  | — |  | — |  | 321 |
Doubtful | — |  | 326 |  | 8 |  | — |  | — |  | — |  | — |  | 334 |
Total | 238,408 |  | 432,263 |  | 364 |  | — |  | — |  | — |  | — |  | 671,035 |
Current period charge-offs | — |  | 202 |  | 163 |  | — |  | — |  | — |  | — |  | 365 |
SBA/USDA |  |  |  |  |  |  |  |
Pass | 27,424 |  | 154,580 |  | 147,067 |  | 24,847 |  | 35,508 |  | 26,629 |  | — |  | 416,055 |
Watch | — |  | 53,475 |  | 48,374 |  | 650 |  | 61 |  | 3,309 |  | — |  | 105,869 |
Special mention | — |  | — |  | — |  | 525 |  | — |  | — |  | — |  | 525 |
Substandard | — |  | 252 |  | 2,339 |  | 1,706 |  | 5,377 |  | 13,925 |  | — |  | 23,599 |
Total | 27,424 |  | 208,307 |  | 197,780 |  | 27,728 |  | 40,946 |  | 43,863 |  | — |  | 546,048 |
Current period charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Other commercial finance |  |  |  |  |  |  |  |
Pass | — |  | 2,300 |  | 18,958 |  | 32,615 |  | 1,105 |  | 76,911 |  | — |  | 131,889 |
Watch | — |  | 1,736 |  | — |  | — |  | — |  | — |  | — |  | 1,736 |
Substandard | — |  | 2,717 |  | 58 |  | 24,228 |  | — |  | — |  | — |  | 27,003 |
Total | — |  | 6,753 |  | 19,016 |  | 56,843 |  | 1,105 |  | 76,911 |  | — |  | 160,628 |
Current period charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Warehouse finance |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 349,911 |  | 349,911 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 349,911 |  | 349,911 |
Current period charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Total loans and leases |  |  |  |  |  |  |  |
Pass | 526,272 |  | 1,147,551 |  | 318,934 |  | 181,490 |  | 118,745 |  | 161,495 |  | 790,875 |  | 3,245,362 |
Watch | 62,784 |  | 87,941 |  | 101,275 |  | 34,505 |  | 17,738 |  | 7,360 |  | 223,454 |  | 535,057 |
Special mention | 922 |  | 24,980 |  | 13,232 |  | 27,652 |  | 932 |  | 548 |  | 27,906 |  | 96,172 |
Substandard | 9,393 |  | 34,863 |  | 32,174 |  | 44,921 |  | 31,871 |  | 21,150 |  | 23,310 |  | 197,682 |
Doubtful | 715 |  | 1,528 |  | 4,308 |  | 1,040 |  | 879 |  | 1,676 |  | — |  | 10,146 |
Total | $ | 600,086 |  | $ | 1,296,863 |  | $ | 469,923 |  | $ | 289,608 |  | $ | 170,165 |  | $ | 192,229 |  | $ | 1,065,545 |  | $ | 4,084,419 |
Current period charge-offs | $ | — |  | $ | 320 |  | $ | 2,731 |  | $ | 1,715 |  | $ | 685 |  | $ | 188 |  | $ | 23 |  | $ | 5,662 |
| Amortized Cost Basis
(Dollars in thousands) | Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total
At September 30, 2023 | 2023 | 2022 | 2021 | 2020 | 2019 | Prior
Term lending |  |  |  |  |  |  |  |
Pass | $ | 539,448 |  | $ | 149,190 |  | $ | 99,677 |  | $ | 73,132 |  | $ | 14,368 |  | $ | 85,812 |  | $ | — |  | $ | 961,627 |
Watch | 53,481 |  | 51,036 |  | 58,041 |  | 12,230 |  | 4,483 |  | 727 |  | — |  | 179,998 |
Special mention | 26,539 |  | 13,853 |  | 20,463 |  | 723 |  | 2,932 |  | 75 |  | — |  | 64,585 |
Substandard | 20,437 |  | 30,451 |  | 14,729 |  | 24,613 |  | 3,872 |  | 764 |  | — |  | 94,866 |
Doubtful | 200 |  | 2,655 |  | 1,691 |  | 1,121 |  | 165 |  | 1,225 |  | — |  | 7,057 |
Total | 640,105 |  | 247,185 |  | 194,601 |  | 111,819 |  | 25,820 |  | 88,603 |  | — |  | 1,308,133 |
Asset-based lending |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 161,744 |  | 161,744 |
Watch | — |  | — |  | — |  | — |  | — |  | — |  | 174,243 |  | 174,243 |
Special mention | — |  | — |  | — |  | — |  | — |  | — |  | 26,382 |  | 26,382 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 19,501 |  | 19,501 |
Doubtful | — |  | — |  | — |  | — |  | — |  | — |  | 501 |  | 501 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 382,371 |  | 382,371 |
Factoring |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 270,754 |  | 270,754 |
Watch | — |  | — |  | — |  | — |  | — |  | — |  | 70,833 |  | 70,833 |
Special mention | — |  | — |  | — |  | — |  | — |  | — |  | 8,892 |  | 8,892 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 7,865 |  | 7,865 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 358,344 |  | 358,344 |
Lease financing |  |  |  |  |  |  |  |
Pass | 57,123 |  | 15,941 |  | 15,167 |  | 27,489 |  | 4,036 |  | 1,281 |  | — |  | 121,037 |
Watch | 793 |  | 10,436 |  | 12,566 |  | 4,494 |  | 1,579 |  | 55 |  | — |  | 29,923 |
Special mention | — |  | — |  | 847 |  | 415 |  | 195 |  | — |  | — |  | 1,457 |
Substandard | 14,890 |  | 1,983 |  | 7,082 |  | 3,660 |  | 3,062 |  | 33 |  | — |  | 30,710 |
Doubtful | — |  | — |  | 71 |  | 61 |  | — |  | 133 |  | — |  | 265 |
Total | 72,806 |  | 28,360 |  | 35,733 |  | 36,119 |  | 8,872 |  | 1,502 |  | — |  | 183,392 |
Insurance premium finance |  |  |  |  |  |  |  |
Pass | 797,267 |  | 1,210 |  | — |  | — |  | — |  | — |  | — |  | 798,477 |
Watch | 858 |  | 34 |  | — |  | — |  | — |  | — |  | — |  | 892 |
Special mention | 250 |  | 15 |  | — |  | — |  | — |  | — |  | — |  | 265 |
Substandard | 91 |  | 20 |  | — |  | — |  | — |  | — |  | — |  | 111 |
Doubtful | 180 |  | 152 |  | — |  | — |  | — |  | — |  | — |  | 332 |
Total | 798,646 |  | 1,431 |  | — |  | — |  | — |  | — |  | — |  | 800,077 |
SBA/USDA |  |  |  |  |  |  |  |
Pass | 158,675 |  | 148,525 |  | 26,244 |  | 36,274 |  | 8,798 |  | 18,252 |  | — |  | 396,768 |
Watch | 49,010 |  | 48,833 |  | 658 |  | 51 |  | 357 |  | 2,572 |  | — |  | 101,481 |
Special mention | — |  | — |  | 530 |  | — |  | — |  | — |  | — |  | 530 |
Substandard | 252 |  | 2,356 |  | 1,718 |  | 5,418 |  | 8,509 |  | 7,718 |  | — |  | 25,971 |
Total | 207,937 |  | 199,714 |  | 29,150 |  | 41,743 |  | 17,664 |  | 28,542 |  | — |  | 524,750 |
Other commercial finance |  |  |  |  |  |  |  |
Pass | 2,330 |  | 18,927 |  | 32,737 |  | 1,137 |  | 10,122 |  | 69,927 |  | — |  | 135,180 |
Watch | 1,742 |  | — |  | — |  | — |  | — |  | — |  | — |  | 1,742 |
Substandard | 2,753 |  | 450 |  | 25,708 |  | — |  | — |  | 258 |  | — |  | 29,169 |
Total | 6,825 |  | 19,377 |  | 58,445 |  | 1,137 |  | 10,122 |  | 70,185 |  | — |  | 166,091 |
Warehouse finance |  |  |  |  |  |  |  |
Pass | — |  | — |  | — |  | — |  | — |  | — |  | 376,915 |  | 376,915 |
Total | — |  | — |  | — |  | — |  | — |  | — |  | 376,915 |  | 376,915 |
Total loans and leases |  |  |  |  |  |  |  |
Pass | 1,554,843 |  | 333,793 |  | 173,825 |  | 138,032 |  | 37,324 |  | 175,272 |  | 809,413 |  | 3,222,502 |
Watch | 105,884 |  | 110,339 |  | 71,265 |  | 16,775 |  | 6,419 |  | 3,354 |  | 245,076 |  | 559,112 |
Special mention | 26,789 |  | 13,868 |  | 21,840 |  | 1,138 |  | 3,127 |  | 75 |  | 35,274 |  | 102,111 |
Substandard | 38,423 |  | 35,260 |  | 49,237 |  | 33,691 |  | 15,443 |  | 8,773 |  | 27,366 |  | 208,193 |
Doubtful | 380 |  | 2,807 |  | 1,762 |  | 1,182 |  | 165 |  | 1,358 |  | 501 |  | 8,155 |
Total | $ | 1,726,319 |  | $ | 496,067 |  | $ | 317,929 |  | $ | 190,818 |  | $ | 62,478 |  | $ | 188,832 |  | $ | 1,117,630 |  | $ | 4,100,073 |
Past due loans and leases were as follows:
| At December 31, 2023
| 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 | $ | 1,173 |  | $ | 786 |  | $ | 661 |  | $ | 2,620 |  | $ | 66,898 |  | $ | 69,518 |  |  | $ | 661 |  | $ | — |  | $ | 661 |
Term lending | 28,694 |  | 6,156 |  | 14,385 |  | 49,235 |  | 1,403,039 |  | 1,452,274 |  |  | 4,006 |  | 17,978 |  | 21,984 |
Asset-based lending | — |  | — |  | 123 |  | 123 |  | 379,558 |  | 379,681 |  |  | — |  | 4,593 |  | 4,593 |
Factoring | — |  | — |  | — |  | — |  | 335,953 |  | 335,953 |  |  | — |  | 1,173 |  | 1,173 |
Lease financing | 1,944 |  | 1,107 |  | 2,161 |  | 5,212 |  | 183,677 |  | 188,889 |  |  | 1,488 |  | 1,645 |  | 3,133 |
Insurance premium finance | 2,666 |  | 999 |  | 1,924 |  | 5,589 |  | 665,446 |  | 671,035 |  |  | 1,924 |  | — |  | 1,924 |
SBA/USDA | 102 |  | 79 |  | 2,146 |  | 2,327 |  | 543,721 |  | 546,048 |  |  | 444 |  | 2,710 |  | 3,154 |
Other commercial finance | — |  | — |  | — |  | — |  | 160,628 |  | 160,628 |  |  | — |  | — |  | — |
Commercial finance | 33,406 |  | 8,341 |  | 20,739 |  | 62,486 |  | 3,672,022 |  | 3,734,508 |  |  | 7,862 |  | 28,099 |  | 35,961 |
Consumer finance | 4,258 |  | 3,345 |  | 2,859 |  | 10,462 |  | 291,048 |  | 301,510 |  |  | 2,859 |  | — |  | 2,859 |
Tax services | — |  | — |  | — |  | — |  | 33,435 |  | 33,435 |  |  | — |  | — |  | — |
Warehouse finance | — |  | — |  | — |  | — |  | 349,911 |  | 349,911 |  |  | — |  | — |  | — |
Total loans and leases held for investment | 37,664 |  | 11,686 |  | 23,598 |  | 72,948 |  | 4,346,416 |  | 4,419,364 |  |  | 10,721 |  | 28,099 |  | 38,820 |
Total loans and leases | $ | 38,837 |  | $ | 12,472 |  | $ | 24,259 |  | $ | 75,568 |  | $ | 4,413,314 |  | $ | 4,488,882 |  |  | $ | 11,382 |  | $ | 28,099 |  | $ | 39,481 |
| At September 30, 2023
| 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 | $ | 626 |  | $ | 549 |  | $ | 306 |  | $ | 1,481 |  | $ | 76,298 |  | $ | 77,779 |  |  | $ | 306 |  | $ | — |  | $ | 306 |
Term lending | 13,898 |  | 7,723 |  | 11,136 |  | 32,757 |  | 1,275,376 |  | 1,308,133 |  |  | 3,737 |  | 15,324 |  | 19,061 |
Asset-based lending | — |  | — |  | 123 |  | 123 |  | 382,248 |  | 382,371 |  |  | — |  | 18,082 |  | 18,082 |
Factoring | — |  | — |  | — |  | — |  | 358,344 |  | 358,344 |  |  | — |  | 1,298 |  | 1,298 |
Lease financing | 6,865 |  | 158 |  | 4,828 |  | 11,851 |  | 171,541 |  | 183,392 |  |  | 4,242 |  | 1,666 |  | 5,908 |
Insurance premium finance | 2,159 |  | 1,262 |  | 2,339 |  | 5,760 |  | 794,317 |  | 800,077 |  |  | 2,339 |  | — |  | 2,339 |
SBA/USDA | 512 |  | — |  | 1,835 |  | 2,347 |  | 522,403 |  | 524,750 |  |  | 833 |  | 1,002 |  | 1,835 |
Other commercial finance | — |  | — |  | 91 |  | 91 |  | 166,000 |  | 166,091 |  |  | 91 |  | — |  | 91 |
Commercial finance | 23,434 |  | 9,143 |  | 20,352 |  | 52,929 |  | 3,670,229 |  | 3,723,158 |  |  | 11,242 |  | 37,372 |  | 48,614 |
Consumer finance | 2,992 |  | 2,425 |  | 2,210 |  | 7,627 |  | 246,789 |  | 254,416 |  |  | 2,210 |  | — |  | 2,210 |
Tax services | — |  | — |  | 5,082 |  | 5,082 |  | 110 |  | 5,192 |  |  | 5,082 |  | — |  | 5,082 |
Warehouse finance | — |  | — |  | — |  | — |  | 376,915 |  | 376,915 |  |  | — |  | — |  | — |
Total loans and leases held for investment | 26,426 |  | 11,568 |  | 27,644 |  | 65,638 |  | 4,294,043 |  | 4,359,681 |  |  | 18,534 |  | 37,372 |  | 55,906 |
Total loans and leases | $ | 27,052 |  | $ | 12,117 |  | $ | 27,950 |  | $ | 67,119 |  | $ | 4,370,341 |  | $ | 4,437,460 |  |  | $ | 18,840 |  | $ | 37,372 |  | $ | 56,212 |
Nonaccrual loans and leases by year of origination were as follows:
| Amortized Cost Basis
(Dollars in thousands) | Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total | Nonaccrual with No ACL
At December 31, 2023 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior
Term lending | $ | 1,264 |  | $ | 2,002 |  | $ | 7,666 |  | $ | 2,082 |  | $ | 1,925 |  | $ | 3,039 |  | $ | — |  | $ | 17,978 |  | $ | — |
Asset-based lending | — |  | — |  | — |  | — |  | — |  | — |  | 4,593 |  | 4,593 |  | 4,469 |
Factoring | — |  | — |  | — |  | — |  | — |  | — |  | 1,173 |  | 1,173 |  | — |
Lease financing | — |  | — |  | — |  | 439 |  | 781 |  | 425 |  | — |  | 1,645 |  | 593 |
SBA/USDA | — |  | 1,008 |  | — |  | — |  | 1,301 |  | 401 |  | — |  | 2,710 |  | 750 |
Commercial finance | 1,264 |  | 3,010 |  | 7,666 |  | 2,521 |  | 4,007 |  | 3,865 |  | 5,766 |  | 28,099 |  | 5,812 |
Total nonaccrual loans and leases | $ | 1,264 |  | $ | 3,010 |  | $ | 7,666 |  | $ | 2,521 |  | $ | 4,007 |  | $ | 3,865 |  | $ | 5,766 |  | $ | 28,099 |  | $ | 5,812 |
| Amortized Cost Basis
(Dollars in thousands) | Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total | Nonaccrual with No ACL
At September 30, 2023 | 2023 | 2022 | 2021 | 2020 | 2019 | Prior
Term lending | $ | 865 |  | $ | 4,942 |  | $ | 2,933 |  | $ | 2,165 |  | $ | 3,134 |  | $ | 1,285 |  | $ | — |  | $ | 15,324 |  | $ | — |
Asset-based lending | — |  | — |  | — |  | — |  | — |  | — |  | 18,082 |  | 18,082 |  | — |
Factoring | — |  | — |  | — |  | — |  | — |  | — |  | 1,298 |  | 1,298 |  | — |
Lease financing | — |  | — |  | 446 |  | 660 |  | — |  | 560 |  | — |  | 1,666 |  | 1 |
SBA/USDA | — |  | 750 |  | — |  | — |  | — |  | 252 |  | — |  | 1,002 |  | — |
Commercial finance | 865 |  | 5,692 |  | 3,379 |  | 2,825 |  | 3,134 |  | 2,097 |  | 19,380 |  | 37,372 |  | 1 |
Total nonaccrual loans and leases | $ | 865 |  | $ | 5,692 |  | $ | 3,379 |  | $ | 2,825 |  | $ | 3,134 |  | $ | 2,097 |  | $ | 19,380 |  | $ | 37,372 |  | $ | 1 |
Loans and leases that are 90 days or more delinquent and accruing by year of origination were as follows:
| Amortized Cost Basis
(Dollars in thousands) | Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total
At December 31, 2023 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior
Loans held for sale | $ | — |  | $ | 661 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 661 |
Term lending | — |  | 1,139 |  | 2,290 |  | 186 |  | 383 |  | 8 |  | — |  | 4,006 |
Lease financing | — |  | — |  | 498 |  | 895 |  | 95 |  | — |  | — |  | 1,488 |
Insurance premium finance | — |  | — |  | 910 |  | 5 |  | — |  | 1,009 |  | — |  | 1,924 |
SBA/USDA | — |  | — |  | — |  | — |  | 191 |  | 253 |  | — |  | 444 |
Commercial finance | — |  | 1,139 |  | 3,698 |  | 1,086 |  | 669 |  | 1,270 |  | — |  | 7,862 |
Consumer finance | — |  | 1,898 |  | 706 |  | 235 |  | — |  | — |  | 20 |  | 2,859 |
Total loans and leases held for investment | — |  | 3,037 |  | 4,404 |  | 1,321 |  | 669 |  | 1,270 |  | 20 |  | 10,721 |
Total 90 days or more delinquent and accruing | $ | — |  | $ | 3,698 |  | $ | 4,404 |  | $ | 1,321 |  | $ | 669 |  | $ | 1,270 |  | $ | 20 |  | $ | 11,382 |
| Amortized Cost Basis
(Dollars in thousands) | Term Loans and Leases by Origination Year | Revolving Loans and Leases | Total
At September 30, 2023 | 2023 | 2022 | 2021 | 2020 | 2019 | Prior
Loans held for sale | $ | 306 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 306 |
Term lending | 1,604 |  | 1,371 |  | 500 |  | 233 |  | 29 |  | — |  | — |  | 3,737 |
Lease financing | 151 |  | 490 |  | 979 |  | 784 |  | 1,794 |  | 44 |  | — |  | 4,242 |
Insurance premium finance | — |  | 414 |  | 114 |  | — |  | 334 |  | 1,477 |  | — |  | 2,339 |
SBA/USDA | — |  | — |  | — |  | 833 |  | — |  | — |  | — |  | 833 |
Other commercial finance | — |  | — |  | — |  | — |  | — |  | 91 |  | — |  | 91 |
Commercial finance | 1,755 |  | 2,275 |  | 1,593 |  | 1,850 |  | 2,157 |  | 1,612 |  | — |  | 11,242 |
Consumer finance | 891 |  | 1,045 |  | 246 |  | — |  | — |  | — |  | 28 |  | 2,210 |
Tax services | 5,082 |  | — |  | — |  | — |  | — |  | — |  | — |  | 5,082 |
Total loans and leases held for investment | 7,728 |  | 3,320 |  | 1,839 |  | 1,850 |  | 2,157 |  | 1,612 |  | 28 |  | 18,534 |
Total 90 days or more delinquent and accruing | $ | 8,034 |  | $ | 3,320 |  | $ | 1,839 |  | $ | 1,850 |  | $ | 2,157 |  | $ | 1,612 |  | $ | 28 |  | $ | 18,840 |
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 nonaccrual until later delinquency, usually 120 days past due. The following table provides the average recorded investment in nonaccrual loans and leases:
|  |  | Three Months Ended December 31,
(Dollars in thousands) |  |  |  |  | 2023 |  | 2022
Term lending |  |  |  |  | $ | 17,419 |  |  | $ | 8,796 |
Asset-based lending |  |  |  |  | 9,711 |  |  | 4,272 |
Factoring |  |  |  |  | 1,180 |  |  | 708 |
Lease financing |  |  |  |  | 1,623 |  |  | 3,623 |
SBA/USDA |  |  |  |  | 1,488 |  |  | 1,420 |
Commercial finance |  |  |  |  | 31,421 |  |  | 18,819 |
Total loans and leases |  |  |  |  | $ | 31,421 |  |  | $ | 18,819 |
The recognized interest income on the Company's nonaccrual loans and leases for the three months ended December 31, 2023 and 2022 was not significant. Effective October 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on a prospective basis. Financial information at and for the quarter ended December 31, 2023 is reflected as such. The historical information disclosed is in accordance with Subtopic ASC 310-40, Receivables – Troubled Debt Restructurings by Creditors. Modifications made to borrowers experiencing financial difficulty during the three months ended December 31, 2023 were insignificant. No loans were modified in a TDR during the three months ended December 31, 2022. The Company had $0.1 million of commercial finance loans that were modified within the previous 12 months experience a payment default during the three months ended December 31, 2022. TDR net charge-offs and the impact of TDRs on the Company's allowance for credit losses were insignificant during the three months ended December 31, 2022.

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