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Loans

12 Months Ended

Dec. 31, 2023

Note E—Loans

The Company has several lending lines of business including: SBLs, comprised primarily of SBA loans; direct lease financing primarily for commercial vehicles and to a lesser extent equipment; SBLOC collateralized by marketable securities; IBLOC collateralized by the cash value of eligible life insurance policies; and investment advisor financing for purposes of debt refinance, acquisition of another firm or internal succession. Prior to 2020, the Company also originated commercial real estate bridge loans for sale into securitizations. At origination, the Company elected fair value treatment for these loans as they were originally held-for-sale, to better reflect the economics of the transactions. In 2020, the Company decided to retain these loans on its balance sheet. Therefore, these loans are no longer accounted for as held-for-sale, but the Company continues to present them at fair value. These loans are included in commercial loans, at fair value which, at December 31, 2023 and 2022, amounted to $332.8 million and $589.1 million, respectively, with an amortized cost of $336.5 million and $589.8 million, respectively. Those totals also include the guaranteed portion of certain SBA loans, also previously held for sale. Included in “Net realized and unrealized gains (losses) on commercial loans, at fair value” in the consolidated statements of operations are changes in the fair value of such loans resulting in an unrealized loss of $3.1 million in 2023, an unrealized loss of $6.1 million in 2022 and an unrealized gain of $285,000 in 2021. These amounts include unrealized credit related losses of $1.7 million, $7.7 million and $201,000, respectively, in 2023, 2022 and 2021. Interest earned on loans held at fair value during the period held is recorded in “Interest Income – Loans, including fees” in the consolidated statements of operations. The $1.7 million credit related unrealized loss in 2023 resulted from a non-controlling participation in a multi-family apartment building. Included in the $6.1 million loss in 2022 was a $4.0 million third quarter unrealized loss to reflect a write-down to a September 2022 appraisal, less estimated disposition costs, of a $9.5 million loan. The loan, collateralized by a movie theater, had been current and performing but missed its August 2022 payment, and the tenant ceased operations in that month. The property was subsequently transferred to OREO, and the unrealized loss was realized in 2023 upon sale of the property. The loan represented the only movie theater loan in the Company’s portfolios and was originated in 2015, before non-SBA commercial loan originations were primarily comprised of apartment building loans. Of the $2.21 billion of non-SBA commercial loans, at fair value and REBL loans which together comprise the non-SBA commercial real estate portfolios, $2.17 billion are comprised of apartment building loans. In the third quarter of 2021, the Company resumed the origination of such loans which it also intends to hold for investment and which are accounted for at amortized cost. They are captioned as REBLs as they are transitional commercial mortgage loans which are made to improve and rehabilitate existing properties which already have cash flow. The Bank has pledged the majority of its loans held for investment at amortized cost and commercial loans, at fair value to either the FHLB or the Federal Reserve Bank for lines of credit with those institutions. The amount of loans pledged varies and the collateral may be unpledged at any time to the extent the collateral exceeds advances. The lines are maintained consistent with the Bank’s liquidity policy which maximizes potential liquidity. At December 31, 2023, $2.43 billion of loans were pledged to the Federal Reserve Bank and $1.10 billion of loans were pledged to the FHLB against lines of credit which provide a source of liquidity to the Bank. There were no amounts drawn against these lines at December 31, 2023.

Of the six securities purchased by the Bank from its securitizations, all have been repaid except one issued by CRE-2. As of December 31, 2023, the principal balance of the Bank’s CRE-2-issued security was $12.6 million and it is subordinate to the repayment of a senior tranche with a remaining balance of $3.3 million. A resulting total of $15.9 million plus trustee fees, late charges and unpaid interest is required to repay the Bank tranche. The collateral remaining to repay the $15.9 million consists of a suburban office building in New Jersey and a retail facility in Missouri, the combined most recent appraisals for which total $33.0 million. The excess of the $33.0 million appraised value over the $15.9 million provides repayment protection for the Bank-owned tranche. Efforts to resolve the New Jersey suburban office loan and stabilize the property have not been successful to date. A 2023 broker’s opinion of the property’s liquidation value was $20.9 million versus a loan balance of $24.5 million. Negotiations with the borrower continue, with no plan for immediate liquidation. The Missouri retail facility is held as real estate owned by the trust and is also not yet stabilized, and the special servicer expects to market the property for liquidation. The March 9, 2023 appraised value of the property was $12.1 million versus a loan balance of $16.3 million. Since borrowers are no longer making payments, accrued interest and the Bank’s remaining $12.6 million of principal are not expected to be repaid until collateral liquidation.

The Company analyzes credit risk prior to making loans, on an individual loan basis. The Company considers relevant aspects of the borrowers’ financial position and cash flow, past borrower performance, management’s knowledge of market conditions, collateral and the ratio of the loan amount to estimated collateral value in making its credit determinations. For SBLOC the Company relies on the market value of the underlying securities collateral as adjusted by margin requirements, generally 50% for equities and 80% for investment grade securities. For IBLOC, the Company relies on the cash value of insurance policy collateral.

Major classifications of loans, excluding commercial loans, at fair value, are as follows (in thousands):


	December 31,		December 31,
	2023		2022

SBL non-real estate	$	137,752	$	108,954
SBL commercial mortgage		606,986		474,496
SBL construction		22,627		30,864
SBLs		767,365		614,314
Direct lease financing		685,657		632,160
SBLOC / IBLOC⁽¹⁾		1,627,285		2,332,469
Advisor financing⁽²⁾		221,612		172,468
Real estate bridge lending		1,999,782		1,669,031
Other loans⁽³⁾		50,638		61,679
		5,352,339		5,482,121
Unamortized loan fees and costs		8,800		4,732
Total loans, net of unamortized loan fees and costs	$	5,361,139	$	5,486,853


	December 31,		December 31,
	2023		2022

SBLs, including costs net of deferred fees of $9,502 and $7,327 for December 31, 2023 and December 31, 2022, respectively	$	776,867	$	621,641
SBLs included in commercial loans, at fair value		119,287		146,717
Total SBLs⁽⁴⁾	$	896,154	$	768,358

⁽¹⁾SBLOC are collateralized by marketable securities, while IBLOC are collateralized by the cash surrender value of insurance policies. At December 31, 2023 and December 31, 2022, respectively, IBLOC loans amounted to $646.9 million and $1.12 billion.

⁽²⁾In 2020 the Company began originating loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession. Maximum loan amounts are subject to loan-to-value ratios of 70% of the business enterprise value based on a third-party valuation, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate.

⁽³⁾Includes demand deposit overdrafts reclassified as loan balances totaling $1.7 million and $2.6 million at December 31, 2023 and December 31, 2022, respectively. Estimated overdraft charge-offs and recoveries are reflected in the ACL and have been immaterial.

⁽⁴⁾The SBLs held at fair value are comprised of the government guaranteed portion of 7(a) Program (as defined below) loans at the dates indicated.

‎

The following table provides information about loans individually evaluated for credit loss at December 31, 2023 and 2022 (in thousands). Legacy commercial real estate is comprised of Philadelphia community bank commercial loans, a business line which was exited.


	December 31, 2023
	Recorded ‎investment		Unpaid ‎principal ‎balance		Related ‎ACL		Average ‎recorded ‎investment		Interest ‎income ‎recognized
Without an ACL
SBL non-real estate	$	522	$	1,714	$	—	$	380	$	—
SBL commercial mortgage		1,546		1,546		—		1,028		—
Direct lease financing		167		167		—		78		—
Legacy commercial real estate		—		—		—		2,131		—
Consumer - home equity		230		230		—		255		8
With an ACL
SBL non-real estate		1,397		1,397		(670)		1,011		3
SBL commercial mortgage		835		835		(343)		1,553		—
SBL construction		3,385		3,385		(44)		3,385		—
Direct lease financing		3,618		3,804		(1,827)		2,814		—
IBLOC		—		—		—		95		—
Legacy commercial real estate		—		—		—		710
Other loans		132		132		(4)		384		—
Total
SBL non-real estate		1,919		3,111		(670)		1,391		3
SBL commercial mortgage		2,381		2,381		(343)		2,581		—
SBL construction		3,385		3,385		(44)		3,385		—
Direct lease financing		3,785		3,971		(1,827)		2,892		—
IBLOC		—		—		—		95		—
Legacy commercial real estate and Other loans		132		132		(4)		3,225		—
Consumer - home equity		230		230		—		255		8
	$	11,832	$	13,210	$	(2,888)	$	13,824	$	11

	December 31, 2022
	Recorded ‎investment		Unpaid ‎principal ‎balance		Related ‎ACL		Average ‎recorded ‎investment		Interest ‎income ‎recognized
Without an ACL
SBL non-real estate	$	400	$	2,762	$	—	$	388	$	—
SBL commercial mortgage		—		—		—		45		—
Direct lease financing		—		—		—		52		—
Legacy commercial real estate		3,552		3,552		—		1,421		150
Consumer - home equity		295		295		—		306		9
With an ACL
SBL non-real estate		974		974		(525)		1,237		7
SBL commercial mortgage		1,423		1,423		(441)		1,090		—
SBL construction		3,386		3,386		(153)		1,245		—
Direct lease financing		3,550		3,550		(933)		710		—
Other loans		692		692		(15)		1,923		—
Total
SBL non-real estate		1,374		3,736		(525)		1,625		7
SBL commercial mortgage		1,423		1,423		(441)		1,135		—
SBL construction		3,386		3,386		(153)		1,245		—
Direct lease financing		3,550		3,550		(933)		762		—
Legacy commercial real estate and Other loans		4,244		4,244		(15)		3,344		150
Consumer - home equity		295		295		—		306		9
	$	14,272	$	16,634	$	(2,067)	$	8,417	$	166

The loan review department recommends non-accrual status for loans to the surveillance committee, where interest income appears to be uncollectible or a protracted delay in collection becomes evident. The surveillance committee further vets and approves the non-accrual status.

The following table summarizes non-accrual loans with and without an ACL as of the periods indicated (in thousands):


	December 31, 2023						December 31, 2022
	Non-accrual loans with a related ACL		Non-accrual loans without a related ACL		Total non-accrual loans		Total non-accrual loans
SBL non-real estate	$	1,320	$	522	$	1,842	$	1,249
SBL commercial mortgage		835		1,546		2,381		1,423
SBL construction		3,385		—		3,385		3,386
Direct leasing		3,618		167		3,785		3,550
Legacy commercial real estate and Other loans		132		—		132		692
Consumer - home equity		—		—		—		56
	$	9,290	$	2,235	$	11,525	$	10,356

The Company had $16.9 million of OREO at December 31, 2023, and $21.2 million of OREO at December 31, 2022. The following table summarizes the Company’s non-accrual loans, loans past due 90 days or more, and OREO at December 31, 2023, and 2021, respectively:


	December 31,
	2023		2022
		(in thousands)
Non-accrual loans
SBL non-real estate	$	1,842	$	1,249
SBL commercial mortgage		2,381		1,423
SBL construction		3,385		3,386
Direct leasing		3,785		3,550
Legacy commercial real estate and Other loans		132		692
Consumer - home equity		—		56
Total non-accrual loans		11,525		10,356

Loans past due 90 days or more and still accruing		1,744		7,775
Total non-performing loans		13,269		18,131
OREO		16,949		21,210
Total non-performing assets	$	30,218	$	39,341

Of the $11.5 million of nonaccrual loans at December 31, 2023, $2.9 million were guaranteed under various SBA loan programs. Of the $10.4 million of nonaccrual loans at December 31, 2022, $3.1 million were guaranteed under various SBA loan programs.

Interest which would have been earned on loans classified as non-accrual at December 31, 2023 and 2022, was $738,000 and $224,000, respectively. No income on non-accrual loans was recognized during 2023 or 2022. In 2023, $89,000 of legacy commercial real estate, $89,000 of SBL commercial real estate, $44,000 of SBL non-real estate, $13,000 of IBLOC, and $110,000 of direct leasing were reversed from interest income, which represented interest accrued on loans placed into non-accrual status during the period. In 2022, $139,000 of SBL commercial mortgage, $109,000 of SBL construction, $100,000 of SBL non-real estate, and $23,000 of direct leasing were reversed from interest income, which represented interest accrued on loans placed into non-accrual status during the period. Material amounts of non-accrual interest reversals are charged to the ACL, but such amounts were not material in either 2023 or 2022.

Effective January 1, 2023 loan modifications to borrowers experiencing financial difficulty are required to be disclosed by type of modification and by type of loan. Prior accounting guidance classified loans which were modified as troubled debt restructurings only if the modification reflected a concession from the lender in the form of a below market interest rate or other concession in addition to borrower financial difficulty. Under the new guidance, loans with modifications will be reported whether a concession is made or not. Loans previously classified as troubled debt restructurings will continue to be reported in the following tables and loans with modifications made after January 1, 2023 are reported under the new loan modification guidance.

Loans which are experiencing financial stress are reviewed by the loan review department, which is independent of the lending lines. The review includes an analysis for a potential specific reserve allocation in the ACL. For REBL, updated appraisals are generally obtained in conjunction with modifications. In the fourth quarter of 2023, an increasing trend in substandard loans was reflected in an increase in the risk level for the REBL ACL economic qualitative factor, which resulted in a $1.0 million increase in the fourth quarter provision for credit loss on loans.

As of December 31, 2023 loans modified and related information are as follows (dollars in thousands):


	December 31, 2023
	Payment delay as a result of a payment deferral		Payment delay and term extension		Total		Percent of total loan category
SBL non-real estate	$	651	$	—	$	651		0.47%
Direct lease financing		—		127		127		0.02%
Real estate bridge lending⁽¹⁾		—		12,300		12,300		0.62%
Total	$	651	$	12,427	$	13,078		0.24%

⁽¹⁾The modifications consisted of a one year extension for principal with an interest deferral, after an original three year loan term. The average loan to value was less than 70%, based on updated "as is" appraised value. Apartment improvements and renovations continue, utilizing additional borrower capital.

The following table shows an analysis of loans that were modified during the twelve months prior to December 31, 2023 presented by loan classification (dollars in thousands):


	Payment Status (Amortized Cost Basis)
	30-59 Days		60-89 Days		90+ Days				Total
	past due		past due		still accruing		Non-accrual		delinquent		Current		Total
SBL non-real estate	$	—	$	—	$	—	$	156	$	156	$	495	$	651
Direct lease financing		—		—		—		127		127		—		127
Real estate bridge lending⁽¹⁾		—		—		—		—		—		12,300		12,300
	$	—	$	—	$	—	$	283	$	283	$	12,795	$	13,078

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty as of December 31, 2023 (dollars in thousands):


	Combined Rate and Maturity
	Weighted average interest rate reduction	Weighted average term extension (in months)	More-Than-Insignificant-Payment Delay⁽²⁾
SBL non-real estate	—	—	0.47%
Direct lease financing	—	3	—
Real estate bridge lending⁽¹⁾	—	12	—

⁽²⁾Percentage represents the principal of loans deferred divided by the principal of the total loan portfolio.

Under previous accounting guidance which was effective through December 31, 2022, the Company’s loans that were modified as of December 31, 2023 and 2022 and considered troubled debt restructurings are as follows (in thousands):


	December 31, 2023						December 31, 2022
	Number		Pre-modification recorded investment		Post-modification recorded investment		Number		Pre-modification recorded investment		Post-modification recorded investment
SBL non-real estate		6	$	514	$	514		8	$	650	$	650
SBL commercial mortgage		1		834		834		1		834		834
Legacy commercial real estate		—		—		—		1		3,552		3,552
Consumer - home equity		1		230		230		1		239		239
Total⁽¹⁾		8	$	1,578	$	1,578		11	$	5,275	$	5,275

⁽¹⁾Troubled debt restructurings included non-accrual loans of $1.3 million and $1.4 million at December 31, 2023 and December 31, 2022, respectively.

The balances below provide information as to how the loans were modified as troubled debt restructured loans at December 31, 2023 and 2022 (in thousands):


	December 31, 2023						December 31, 2022

	Adjusted interest rate		Extended maturity		Combined rate and maturity		Adjusted interest rate		Extended maturity		Combined rate and maturity
SBL non-real estate	$	—	$	—	$	514	$	—	$	—	$	650
SBL commercial mortgage		—		—		834		—		—		834
Legacy commercial real estate		—		—		—		—		—		3,552
Consumer - home equity		—		—		230		—		—		239
Total⁽¹⁾	$	—	$	—	$	1,578	$	—	$	—	$	5,275

⁽¹⁾Troubled debt restructurings included non-accrual loans of $1.3 million and $1.4 million at December 31, 2023 and December 31, 2022, respectively.

The Company had no commitments to extend additional credit to loans classified as troubled debt restructurings as of either December 31, 2023 or 2022.

Under the previous accounting guidance explained above, when loans were classified as troubled debt restructurings, the Company estimated the value of underlying collateral and repayment sources. A specific reserve in the ACL was established if the collateral valuation, less estimated disposition costs, is lower than the recorded loan value. The amount of the specific reserve serves to increase the provision for credit losses in the quarter the loan is classified as a troubled debt restructuring. As of December 31, 2023, there were eight troubled debt restructured loans with an aggregate balance of $1.6 million which had specific reserves of $591,000. As of December 31, 2022, there were eleven troubled debt restructured loans with an aggregate balance of $5.3 million which had specific reserves of $637,000. Substantially all of these reserves related to the non-guaranteed portion of SBA loans for start-up businesses. While the new guidance eliminates the troubled debt restructuring classification, loans previously classified as such will now be reported as loans with modifications, whether or not the modification reflected a lender concession. Specific reserves for loans with balances which exceed collateral values will continue to be required in the ACL. Under the new accounting guidance effective January 1, 2023, which broadened the reporting of loan restructurings to include all modifications, there were $13.1 million of loans classified as modified as of December 31, 2023 with specific reserves of $127,000.

The following table summarizes loans that were restructured within the twelve months ended December 31, 2023 that have subsequently defaulted (in thousands).

Management estimates the ACL quarterly, and except for SBLOC, IBLOC and other loans uses relevant internal and external historical loan performance information, current economic conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the initial basis for the estimation of expected credit losses over the estimated remaining life of the loans. The methodology used in the estimation of the ACL, which is performed at least quarterly, is also designed to be responsive to changes in portfolio credit quality and the impact of current and future economic conditions on loan performance. The review of the appropriateness of the ACL is performed by the Chief Credit Officer and presented to the Audit Committee of the Board for their review. With the exception of SBLOC and IBLOC, which utilize probability of loss/loss given default, and the other loan category, which uses discounted cash flow to determine a reserve, the ACLs for other categories are determined by establishing reserves on loan pools with similar risk characteristics based on a lifetime loss-rate model, or vintage analysis, as described in the following paragraph. Loans that do not share risk characteristics are evaluated on an individual basis. If foreclosure is believed to be probable or repayment is expected from the sale of the collateral, a reserve for deficiency is established within the ACL. Those reserves are estimated based on the difference between loan principal and the estimated fair value of the collateral, adjusted for estimated disposition costs.

Except for SBLOC, IBLOC and other loans as noted above, for purposes of determining the pool-basis reserve, the loans not assigned an individual reserve are segregated by product type, to recognize differing risk characteristics within portfolio segments, and an average historical loss rate is calculated for each product type. Loss rates are computed by classifying net charge-offs by year of

loan origination, and dividing into total originations for that specific year. This methodology is referred to as vintage analysis. The average loss rate is then projected over the estimated remaining loan lives unique to each loan pool, to determine estimated lifetime losses. For SBLOC and IBLOC, since losses have not been incurred, probability of loss/loss given default considerations are utilized. For the other loan category discounted cash flow is utilized to determine a reserve. For all loan pools the Company considers the need for an additional ACL based upon qualitative factors such as the Company’s current loan performance statistics by pool, and economic conditions. These qualitative factors are intended to account for forward looking expectations over a twelve to eighteen month period not reflected in historical loss rates and otherwise unaccounted for in the quantitative process. Accordingly, such factors may increase or decrease the allowance compared to historical loss rates as the Company’s forward looking expectations change. The qualitative factor percentages are applied against the pool balances as of the end of the period. Aside from the qualitative adjustments to account for forward looking expectations of loss over a twelve to eighteen month projection period, the balance of the ACL reverts directly to the Company’s quantitative analysis derived from its historical loss rates. The qualitative and historical loss rate component, together with the reserves on specific loans, comprise the total ACL.

A similar process is employed to calculate an ACL assigned to off-balance sheet commitments, which are comprised of unfunded loan commitments and letters of credit. That ACL for unfunded commitments is recorded in other liabilities. Even though portions of the ACL may be allocated to loans that have been individually measured for credit deterioration, the entire ACL is available for any credit that, in management’s judgment, should be charged off.

At December 31, 2023, the ACL for off-balance sheet commitments amounted to $2.6 million and the ACL for loans amounted to $27.4 million. Of the $27.4 million, $11.5 million of allowances resulted from the Company’s historical charge-off ratios, $2.9 million from reserves on specific loans, with the balance comprised of the qualitative component. The $11.5 million resulted primarily from SBA non-real estate and leasing charge-offs. The proportion of qualitative reserves compared to charge-off history related reserves reflects that significant levels of charge-offs have not been experienced in the Company’s largest loan portfolios consisting of SBLOC and IBLOC and real estate bridge lending. The absence of significant charge-offs reflects, at least in part, the nature of related collateral respectively consisting of marketable securities, the cash value of life insurance and workforce apartment buildings. As charge-offs are nonetheless possible, significant subjectivity is required to consider qualitative factors to derive the related component of the allowance.

The Company ranks its qualitative factors in five levels: minimal, low, moderate, moderate-high and high risk. The individual qualitative factors for each portfolio segment have their own scale based on an analysis of that segment. A high risk ranking has the greatest impact on the ACL calculation with each level below having a lesser impact on a sliding scale. The qualitative factors used for each portfolio are described below in the description of each portfolio segment. In the second quarter of 2021, the Company reassessed qualitative factors increased as a result of the pandemic and reversed increases to moderate-high for certain pools, based upon increased vaccination rates and significant reopening of the economy. As a result of continuing economic uncertainty, including heightened inflation and increased risks of recession, the qualitative factors which had been set in anticipation of a downturn at January 1, 2020, were maintained through the third quarter of 2022. In the fourth quarter of 2022, as risks of a recession increased, the economic qualitative risk factor was increased for non-real estate SBL and leasing. Those higher qualitative allocations were retained in the first quarter of 2023, as negative economic indications persisted. In the second quarter of 2023, CECL model adjustments of $1.7 million resulted from a $2.5 million CECL model decrease from changes in estimated average lives, partially offset by a $794,000 CECL model increase resulting from increasing economic and collateral risk factors to respective moderate-high and moderate risk levels. The elevated economic risk level for leasing reflected input from department heads regarding the potential borrower impact of the higher rate environment. The elevated collateral risk level for leasing reflected lower auction prices for vehicles and uncertainty over the extent to which such prices might decrease in the future. The adjustment for average lives reflected a change in the estimated lives of leases, higher variances for which may result from their short maturities.The Company has not increased qualitative risk levels for SBLOC or IBLOC because of the nature of related collateral. SBLOC loans are subject to maximum loan to marketable securities value, and notwithstanding historic drops in the stock market in recent years, significant losses have not been realized. IBLOC loans are limited to borrowers with insurance companies which exceed credit requirements, and are limited to life insurance cash values. The Company had, prior to the fourth quarter of 2023, not increased the economic factor for real estate bridge lending. While Federal Reserve rate increases in 2022 and 2023 directly increased real estate bridge loan floating rate borrowing costs, those borrowers are generally required to establish an interest reserve and purchase interest rate caps, that will partially limit the increase in borrowing costs during the term of the loan. Additionally, there continues to be several additional mitigating factors within the multi-family sector that are expected to continue fueling demand. Higher interest rates are increasing the cost to purchase a home, which in turn is increasing the number of renters and subsequent demand for multi-family. There is also a continued shortage of housing , which will therefore continue to fuel demand for multi-family apartment homes. However, in the

fourth quarter of 2023, an increasing trend in substandard loans was reflected in an increase in the risk level for the REBL ACL economic qualitative factor, which resulted in a $1.0 million increase in the fourth quarter provision for credit losses on loans.

The economic qualitative factor is based on the estimated impact of economic conditions on the loan pools, as distinguished from the economic factors themselves, for the following reasons. The Company has experienced limited multi-family (apartment building) losses, despite stressed economic conditions. Accordingly, the ACL for this pool was derived from a qualitative factor based on industry loss information for multi-family housing. The Company’s charge-offs have been immaterial for SBLOC and IBLOC notwithstanding stressed economic periods, and accordingly their ACL is also determined by a qualitative factor. Investment advisor loans were first offered in 2020 with limited performance history, during which charge-offs have not been experienced. For investment advisor loans, the nature of the underlying ultimate repayment source was considered, namely the fee-based advisory income streams resulting from investment portfolios under management and the impact changes in economic conditions would have on those payment streams. Additionally, the Company’s charge-off histories for SBLs, primarily SBA, and leases have not correlated with economic conditions, including trends in unemployment. While specific economic factors did not correlate with actual historical losses, multiple economic factors are considered. For the non-guaranteed portion of SBA loans, leases, real estate bridge lending and investment advisor financing the Company’s loss forecasting analysis included a review of industry statistics. However, the Company’s own charge-off history and average life estimates, for categories in which the Company has experienced charge-offs, was the primary quantitatively derived element in the forecasts. The qualitative component results from management’s qualitative assessments. In the second quarter of 2022, the Company adjusted its collateral qualitative factor for SBLs downward to account for a greater percentage of government guaranteed balances in applicable pools as compared to prior periods. Additionally, in the second quarter of 2022, allowances on credit deteriorated loans were reduced. The largest reduction was $1.0 million which resulted when single family units from a construction loan were sold for higher than expected prices. That loan had been included in discontinued loans prior to first quarter 2022, when discontinued assets were reclassified to continuing operations. The Company no longer engages in new construction residential lending.

Below are the portfolio segments used to pool loans with similar risk characteristics and align with the Company’s methodology for measuring expected credit losses. These pools have similar risk and collateral characteristics, and certain of these pools are broken down further in determining and applying the vintage loss estimates previously discussed. For instance, within the direct lease financing pool, government and public institution leases are considered separately. Additionally, the Company evaluates its loans under an internal loan risk rating system as a means of identifying problem loans. The special mention classification indicates weaknesses that may, if not cured, threaten the borrower’s future repayment ability. A substandard classification reflects an existing weakness indicating the possible inadequacy of net worth and other repayment sources. These classifications are used both by regulators and peers, as they have been correlated with an increased probability of credit losses. Increases in substandard loans do not necessarily require increased provisions for credit losses or allowance allocations on the basis of loan-to-value and other considerations based upon assessments by the loan review department which is independent of the lending lines. A summary of the Company’s primary portfolio pools and loans accordingly classified, by year of origination, at December 31, 2023 and December 31, 2022 is as follows (in thousands):


As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving loans at amortized cost		Total
SBL non real estate
Non-rated⁽¹⁾	$	507	$	—	$	—	$	—	$	—	$	—	$	—	$	507
Pass		47,066		32,512		26,919		9,662		4,334		5,357		—		125,850
Special mention		460		—		258		1,101		119		337		—		2,275
Substandard		—		495		632		564		250		562		—		2,503
Total SBL non-real estate		48,033		33,007		27,809		11,327		4,703		6,256		—		131,135

SBL commercial mortgage
Pass		128,375		138,281		93,399		67,635		58,550		98,704		—		584,944
Special mention		375		—		10,764		—		595		1,363		—		13,097
Substandard		—		—		—		452		1,853		1,928		—		4,233
Total SBL commercial mortgage		128,750		138,281		104,163		68,087		60,998		101,995		—		602,274

SBL construction
Pass		2,848		5,966		1,877		927		4,534		—		—		16,152
Special mention		—		—		3,090		—		—		—		—		3,090
Substandard		—		—		2,675		—		—		710		—		3,385
Total SBL construction		2,848		5,966		7,642		927		4,534		710		—		22,627

Direct lease financing
Non-rated		1,273		—		—		—		—		—		—		1,273
Pass		302,362		221,768		92,945		37,664		17,469		4,349		—		676,557
Special mention		—		666		202		125		146		—		—		1,139
Substandard		135		3,898		1,998		372		184		101		—		6,688
Total direct lease financing		303,770		226,332		95,145		38,161		17,799		4,450		—		685,657

SBLOC
Non-rated		—		—		—		—		—		—		3,261		3,261
Pass		—		—		—		—		—		—		977,158		977,158
Total SBLOC		—		—		—		—		—		—		980,419		980,419

IBLOC
Pass		—		—		—		—		—		—		646,230		646,230
Substandard		—		—		—		—		—		—		636		636
Total IBLOC		—		—		—		—		—		—		646,866		646,866

Advisor financing
Pass		92,273		63,083		40,994		24,321		—		—		—		220,671
Special mention		—		—		—		941		—		—		—		941
Total advisor financing		92,273		63,083		40,994		25,262		—		—		—		221,612

Real estate bridge lending
Pass		397,073		1,013,199		461,474		—		—		—		—		1,871,746
Special mention		—		59,423		16,913		—		—		—		—		76,336
Substandard		12,300		—		39,400		—		—		—		—		51,700
Total real estate bridge lending		409,373		1,072,622		517,787		—		—		—		—		1,999,782

Other loans
Non-rated		2,555		—		—		—		—		11,513		—		14,068
Pass		165		260		363		2,609		2,314		40,101		1,593		47,405
Special mention		—		—		—		—		—		362		—		362
Substandard		—		—		—		—		—		132		—		132
Total other loans⁽²⁾		2,720		260		363		2,609		2,314		52,108		1,593		61,967

	$	987,767	$	1,539,551	$	276,116	$	146,373	$	90,348	$	165,519	$	1,628,878	$	5,352,339

Unamortized loan fees and costs		—		—		—		—		—		—		—		8,800
Total															$	5,361,139

⁽¹⁾Included in the SBL non real estate pass total of $125.9 million was $2.1 million of SBA Paycheck Protection Program (“PPP”) loans, which are guaranteed by the U.S. government.

⁽²⁾Included in Other loans are $11.3 million of SBA loans purchased for Community Reinvestment Act (“CRA”) purposes as of March 31, 2023. These loans are classified as SBL in the Company’s loan table, which classifies loans by type, as opposed to risk characteristics.


As of December 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving loans at amortized cost		Total
SBL non real estate
Non-rated⁽¹⁾	$	2,075	$	4,266	$	273	$	—	$	—	$	—	$	—	$	6,614
Pass		32,402		30,388		13,432		5,599		3,931		4,555		—		90,307
Special mention		—		—		—		—		585		284		—		869
Substandard		—		—		320		242		15		642		—		1,219
Total SBL non-real estate		34,477		34,654		14,025		5,841		4,531		5,481		—		99,009

SBL commercial mortgage
Non-rated		10,600		—		—		—		—		—		—		10,600
Pass		116,647		97,968		64,388		64,692		42,461		68,193		—		454,349
Special mention		—		—		—		1,853		—		630		—		2,483
Substandard		—		—		141		—		834		589		—		1,564
Total SBL commercial mortgage		127,247		97,968		64,529		66,545		43,295		69,412		—		468,996

SBL construction
Pass		3,153		11,650		9,712		2,964		—		—		—		27,479
Substandard		—		2,676		—		—		—		710		—		3,386
Total SBL construction		3,153		14,326		9,712		2,964		—		710		—		30,865
		.
Direct lease financing
Non-rated		73,424		30,900		8,245		1,153		429		108		—		114,259
Pass		254,063		129,763		71,043		38,038		13,722		4,291		—		510,920
Special mention		—		—		61		—		—		—		—		61
Substandard		2,854		2,324		1,658		84		—		—		—		6,920
Total direct lease financing		330,341		162,987		81,007		39,275		14,151		4,399		—		632,160

SBLOC
Non-rated		—		—		—		—		—		—		4,284		4,284
Pass		—		—		—		—		—		—		1,205,098		1,205,098
Total SBLOC		—		—		—		—		—		—		1,209,382		1,209,382

IBLOC
Non-rated		—		—		—		—		—		—		555,219		555,219
Pass		—		—		—		—		—		—		567,868		567,868
Total IBLOC		—		—		—		—		—		—		1,123,087		1,123,087

Advisor financing
Non-rated		3,318		909		—		—		—		—		—		4,227
Pass		68,078		64,498		35,665		—		—		—		—		168,241
Total advisor financing		71,396		65,407		35,665		—		—		—		—		172,468

Real estate bridge lending
Pass		1,009,708		659,323		—		—		—		—		—		1,669,031
Total real estate bridge lending		1,009,708		659,323		—		—		—		—		—		1,669,031

Other loans
Non-rated		4,374		29		37		—		—		16,326		488		21,254
Pass		264		366		2,611		2,750		2,820		41,571		1,187		51,569
Special mention		—		—		—		—		—		3,552		—		3,552
Substandard		—		—		—		—		—		692		56		748
Total other loans⁽²⁾		4,638		395		2,648		2,750		2,820		62,141		1,731		77,123

Total	$	1,580,960	$	375,737	$	207,586	$	117,375	$	64,797	$	142,143	$	2,334,200	$	5,482,121

Unamortized loan fees and costs		—		—		—		—		—		—		—		4,732
Total															$	5,486,853

⁽¹⁾Included in the SBL non real estate non-rated total of $6.6 million was $4.5 million of SBA PPP loans, which are guaranteed by the U.S. government.

⁽²⁾Included in Other loans are $15.4 million of SBA loans purchased for CRA purposes as of December 31, 2022. These loans are classified as SBL in the Company’s loan table, which classifies loans by type, as opposed to risk characteristics.

The following loan review percentages are performed over periods of eighteen to twenty-four months. At December 31, 2023, in excess of 50% of the total loan portfolio was reviewed by the loan review department which is independent of lending lines or, for SBLs, rated internally by that department. In addition to the review of all loans classified as either special mention classified loans, the targeted coverages and scope of the reviews are risk-based and vary according to each portfolio as follows:

SBLOC – The targeted review threshold for 2023 was 40% comprised of a sample of the largest SBLOCs by commitment. At December 31, 2023, approximately 47% of the SBLOC portfolio had been reviewed.

IBLOC – The targeted review threshold for 2023 was 40% comprised of a sample of the largest IBLOCs by commitment. At December 31, 2023, approximately 53% of the IBLOC portfolio had been reviewed.

Advisor Financing – The targeted review threshold for 2023 was 50%. At December 31, 2023, approximately 92% of the investment advisor financing portfolio had been reviewed. The loan balance review threshold is $1.0 million.

SBLs – The targeted review threshold for 2023 was 60%, to be rated and/or reviewed within 90 days of funding, excluding fully guaranteed loans purchased for CRA purposes, and fully guaranteed PPP loans. The loan balance review threshold is $1.5 million. At December 31, 2023, 71% of the non-government guaranteed SBL loan portfolio had been reviewed.

Direct Lease Financing – The targeted review threshold for 2023 was 35%. At December 31, 2023, approximately 51% of the leasing portfolio had been reviewed. All lease relationships exceeding $1.5 million are reviewed.

Commercial Real Estate Bridge Loans, at fair value and Commercial Real Estate Bridge Loans, at amortized cost (floating rate, excluding SBA, which are included in SBLs above) – The targeted review threshold for 2023 was 60%. Floating rate loans are reviewed initially within 90 days of funding and monitored on an ongoing basis as to payment status. Subsequent reviews are performed for relationships over $10.0 million. At December 31, 2023, approximately 100% of the floating rate, non-SBA commercial real estate bridge loans outstanding for more than 90 days had been reviewed.

Commercial Real Estate Loans, at fair value (fixed rate, excluding SBA, which are included in SBLs above) – The targeted review threshold for 2023 was 100%. At December 31, 2023, approximately 100% of the fixed rate, non-SBA commercial real estate loan portfolio had been reviewed.

Other minor loan categories are reviewed at the discretion of the loan review department.

SBL. Substantially all SBLs consist of SBA loans. The Bank participates in loan programs established by the SBA, including the 7(a) Loan Guarantee Program (the “7(a) Program”), the 504 Fixed Asset Financing Program (the “504 Program”), and the discontinued PPP. The 7(a) Program is designed to help small business borrowers start or expand their businesses by providing partial guarantees of loans made by banks and non-bank lending institutions for specific business purposes, including long- or short- term working capital; funds for the purchase of equipment, machinery, supplies and materials; funds for the purchase, construction or renovation of real estate; and funds to acquire, operate or expand an existing business or refinance existing debt, all under conditions established by the SBA. The 504 Program includes the financing of real estate and commercial mortgages. In 2020 and 2021, the Company also participated in the PPP, which provided short-term loans to small businesses. PPP loans are fully guaranteed by the U.S. government. This program was a specific response to the COVID-19 pandemic, and the vast majority of these loans have been reimbursed by the U.S. government, with $2.1 million remaining to be reimbursed as of December 31, 2023. The Company segments the SBL portfolio into four pools: non-real estate, commercial mortgage and construction to capture the risk characteristics of each pool, and the PPP loans discussed above. PPP loans are not included in the risk pools because they have inherently different risk characteristics due to the U.S. government guarantee. In the table above, the PPP loans are included in non-rated SBL non-real estate. The qualitative factors for SBLs focus on pool loan performance, underlying collateral for collateral dependent loans and changes in economic conditions. Additionally, the construction segment adds a qualitative factor for general construction risk, such as construction delays resulting from labor shortages or availability/pricing of construction materials.

Direct lease financing. The Company provides lease financing for commercial and government vehicle fleets and, to a lesser extent, provides lease financing for other equipment. Leases are either open-end or closed-end. An open-end lease is one in which, at the end of the lease term, the lessee must pay the difference between the amount at which the Company sells the leased asset and the stated termination value. Termination value is a contractual value agreed to by the parties at the inception of a lease as to the value of the leased asset at the end of the lease term. A closed-end lease is one for which no such payment is due on lease termination. In a closed-end lease, the risk that the amount received on a sale of the leased asset will be less than the residual value is assumed by the Bank, as lessor. The qualitative factors for direct lease financing focus on underlying collateral for collateral dependent loans, portfolio loan performance, loan concentrations and changes in economic conditions.

SBLOC. SBLOC loans are made to individuals, trusts and other entities and are secured by a pledge of marketable securities maintained in one or more accounts for which the Company obtains a securities account control agreement. The securities pledged may be either debt or equity securities or a combination thereof, but all such securities must be listed for trading on a national securities exchange or automated inter-dealer quotation system. SBLOCs are typically payable on demand. Maximum SBLOC line amounts are calculated by applying a standard “advance rate” calculation against the eligible security type depending on asset class: typically, up to 50% for equity securities and mutual fund securities and 80% for investment grade (Standard & Poor’s rating of BBB- or higher, or Moody’s rating of Baa3 or higher) municipal or corporate debt securities. Substantially all SBLOCs have full recourse to the borrower. The underlying securities collateral for SBLOC loans is monitored on a daily basis to confirm the composition of the client portfolio and its daily market value. The primary qualitative factor in the SBLOC analysis is the ratio of loans outstanding to market value. This factor has been maintained at low levels, which has remained appropriate as losses have not materialized despite the historic declines in the equity markets during 2020, during which there were no losses. Significant losses have not been incurred since inception of this line of business. Additionally, the advance rates noted above were established to provide the Company with protection from declines in market conditions from the origination date of the lines of credit.

IBLOC. IBLOC loans are collateralized by the cash surrender value of eligible insurance policies. Should a loan default, the primary risks for IBLOCs are if the insurance company issuing the policy were to become insolvent, or if that company would fail to recognize the Bank’s assignment of policy proceeds. To mitigate these risks, insurance company ratings are periodically evaluated for compliance with Bank standards. Additionally, the Bank utilizes assignments of cash surrender value, which legal counsel has concluded are enforceable. The qualitative factors for IBLOC primarily focus on the concentration risk with insurance companies, while significant IBLOC losses have not been incurred.

Investment advisor financing. In 2020, the Company began originating loans to investment advisors for purposes of debt refinancing, acquisition of another firm or internal succession. Maximum loan amounts are subject to 70% of the estimated business enterprise value, based on a third-party valuation, but may be increased depending upon the debt service coverage ratio. Personal guarantees and blanket business liens are obtained as appropriate. Loan repayment is highly dependent on fee streams from advisor clientele. Accordingly, loss of fee-based investment advisory clients or negative market performance may reduce fees and pose a risk to these credits. As credit losses have not been experienced, the ACL is determined by qualitative factors. The qualitative factors for investment advisor financing focus on historical industry losses, changes in lending policies and procedures, portfolio performance and economic conditions.

Real estate bridge lending. Real estate bridge loans are transitional commercial mortgage loans which are made to improve and rehabilitate existing properties. The portfolio is comprised primarily of apartment buildings. Prior to 2020, a year in which the Company generally suspended such lending, loans originated for securitization but not securitized were retained and continue to be accounted for at fair value in “Commercial loans, at fair value”, on the balance sheet. In 2021, originations resumed and are being held for investment in “Loans, net of deferred fees and costs”, on the balance sheet. As limited credit losses have been experienced for multi-family (apartment building) loans, which comprise the REBL portfolio, the ACL is determined by qualitative factors. Qualitative factors focus on historical industry losses, changes in economic conditions, underlying collateral and portfolio performance.

Other loans. Other loans include commercial and consumer loans including HELOC which the Company generally no longer offers. Qualitative factors focus on changes in the underlying collateral for collateral dependent loans, portfolio loan performance, loan concentrations and changes in economic conditions.

Expected credit losses are estimated over the estimated remaining lives of loans. The estimate excludes possible extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation that a loan will be restructured, or the extension or renewal options are included in the borrower contract and are not unconditionally cancellable by us.

The Company does not measure an ACL on accrued interest receivable balances, because these balances are written off in a timely manner as a reduction to interest income when loans are placed on non-accrual status. The Company does not expect material amounts of accrued interest receivable for prior year periods to be reversed. Material reversals, should they occur, would be charged against the allowance.

ACL on off-balance sheet credit exposures. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on off-balance sheet credit exposures is adjusted through the provision for credit losses. The estimate considers the likelihood that funding will occur over the estimated life of the commitment. The amount of the ACL in the liability account as of December 31, 2023 was $2.6 million.

A detail of the changes in the ACL by loan category and summary of loans evaluated individually and collectively for credit deterioration is as follows (in thousands):

‎


	December 31, 2023
	SBL non-real estate		SBL commercial mortgage		SBL construction		Direct lease financing		SBLOC / IBLOC		Advisor financing		Real estate bridge lending		Other loans		Deferred fees and costs		Total
Beginning balance 1/1/2023	$	5,028	$	2,585	$	565	$	7,972	$	1,167	$	1,293	$	3,121	$	643	$	—	$	22,374
Charge-offs		(871)		(76)		—		(3,666)		(24)		—		—		(3)		—		(4,640)
Recoveries		475		75		—		330		—		—		—		299		—		1,179
Provision (credit)⁽¹⁾		1,427		236		(280)		5,818		(330)		369		1,619		(394)		—		8,465
Ending balance	$	6,059	$	2,820	$	285	$	10,454	$	813	$	1,662	$	4,740	$	545	$	—	$	27,378

Ending balance: Individually evaluated for expected credit loss	$	670	$	343	$	44	$	1,827	$	—	$	—	$	—	$	4	$	—	$	2,888

Ending balance: Collectively evaluated for expected credit loss	$	5,389	$	2,477	$	241	$	8,627	$	813	$	1,662	$	4,740	$	541	$	—	$	24,490

Loans:
Ending balance	$	137,752	$	606,986	$	22,627	$	685,657	$	1,627,285	$	221,612	$	1,999,782	$	50,638	$	8,800	$	5,361,139

Ending balance: Individually evaluated for expected credit loss	$	1,919	$	2,381	$	3,385	$	3,785	$	—	$	—	$	—	$	362	$	—	$	11,832

Ending balance: Collectively evaluated for expected credit loss	$	135,833	$	604,605	$	19,242	$	681,872	$	1,627,285	$	221,612	$	1,999,782	$	50,276	$	8,800	$	5,349,307


	December 31, 2022
	SBL non-real estate		SBL commercial mortgage		SBL construction		Direct lease financing		SBLOC / IBLOC		Advisor financing		Real estate bridge lending		Other loans		Deferred fees and costs		Total
Beginning balance 1/1/2022	$	5,415	$	2,952	$	432	$	5,817	$	964	$	868	$	1,181	$	177	$	—	$	17,806
Charge-offs		(885)		—		—		(576)		—		—		—		—		—		(1,461)
Recoveries		140		—		—		124		—		—		—		24		—		288
Provision (credit)⁽¹⁾		358		(367)		133		2,607		203		425		1,940		442		—		5,741
Ending balance	$	5,028	$	2,585	$	565	$	7,972	$	1,167	$	1,293	$	3,121	$	643	$	—	$	22,374

Ending balance: Individually evaluated for expected credit loss	$	525	$	441	$	153	$	933	$	—	$	—	$	—	$	15	$	—	$	2,067

Ending balance: Collectively evaluated for expected credit loss	$	4,503	$	2,144	$	412	$	7,039	$	1,167	$	1,293	$	3,121	$	628	$	—	$	20,307

Loans:
Ending balance	$	108,954	$	474,496	$	30,864	$	632,160	$	2,332,469	$	172,468	$	1,669,031	$	61,679	$	4,732	$	5,486,853

Ending balance: Individually evaluated for expected credit loss	$	1,374	$	1,423	$	3,386	$	3,550	$	—	$	—	$	—	$	4,539	$	—	$	14,272

Ending balance: Collectively evaluated for expected credit loss	$	107,580	$	473,073	$	27,478	$	628,610	$	2,332,469	$	172,468	$	1,669,031	$	57,140	$	4,732	$	5,472,581

⁽¹⁾The amount shown as the provision for credit losses for the period reflects the provision on credit losses for loans, while the consolidated statements of operations provision for credit losses includes the provision for unfunded commitments of $135,000 (credit) and $1.4 million for the years ended December 31, 2023, and 2022, respectively.

A summary of the Company’s 2023 net charge-offs, classified by the year of the related loan origination, is as follows (in thousands):


As of December 31, 2023		2023		2022		2021		2020		2019		Prior		Total
SBL non-real estate
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	(871)	$	(871)
Current period recoveries		—		—		—		—		—		475		475
Current period SBL non-real estate net charge-offs		—		—		—		—		—		(396)		(396)

SBL commercial mortgage
Current period charge-offs		—		—		—		—		—		(76)		(76)
Current period recoveries		—		—		—		—		—		75		75
Current period SBL commercial mortgage net charge-offs		—		—		—		—		—		(1)		(1)

SBL construction
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period SBL construction net charge-offs		—		—		—		—		—		—		—

Direct lease financing
Current period charge-offs		(138)		(2,138)		(1,117)		(234)		(39)		—		(3,666)
Current period recoveries		—		48		168		96		—		18		330
Current period direct lease financing net charge-offs		(138)		(2,090)		(949)		(138)		(39)		18		(3,336)

SBLOC
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period SBLOC net charge-offs		—		—		—		—		—		—		—

IBLOC
Current period charge-offs		—		(12)		(12)		—		—		—		(24)
Current period recoveries		—		—		—		—		—		—		—
Current period IBLOC net charge-offs		—		(12)		(12)		—		—		—		(24)

Advisor financing
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period advisor financing net charge-offs		—		—		—		—		—		—		—

Real estate bridge loans
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period real estate bridge loans net charge-offs		—		—		—		—		—		—		—

Other loans
Current period charge-offs		—		—		—		—		—		(3)		(3)
Current period recoveries		—		—		—		—		—		299		299
Current period other loans net charge-offs		—		—		—		—		—		296		296

Total
Current period charge-offs		(138)		(2,150)		(1,129)		(234)		(39)		(950)		(4,640)
Current period recoveries		—		48		168		96		—		867		1,179
Current period net charge-offs	$	(138)	$	(2,102)	$	(961)	$	(138)	$	(39)	$	(83)	$	(3,461)

A summary of the Company’s 2022 net charge-offs, classified by the year of the related loan origination, is as follows (in thousands):


As of December 31, 2022		2022		2021		2020		2019		2018		Prior		Total
SBL non-real estate
Current period charge-offs	$	—	$	—	$	(17)	$	—	$	—	$	(868)	$	(885)
Current period recoveries		—		—		2		—		8		130		140
Current period SBL non-real estate net charge-offs		—		—		(15)		—		8		(738)		(745)

SBL commercial mortgage
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period SBL commercial mortgage net charge-offs		—		—		—		—		—		—		—

SBL construction
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period SBL construction net charge-offs		—		—		—		—		—		—		—

Direct lease financing
Current period charge-offs		(93)		(308)		(150)		(25)		—		—		(576)
Current period recoveries		—		1		117		6		—		—		124
Current period direct lease financing net charge-offs		(93)		(307)		(33)		(19)		—		—		(452)

SBLOC
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period SBLOC net charge-offs		—		—		—		—		—		—		—

IBLOC
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period IBLOC net charge-offs		—		—		—		—		—		—		—

Advisor financing
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period advisor financing net charge-offs		—		—		—		—		—		—		—

Real estate bridge loans
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		—		—
Current period real estate bridge loans net charge-offs		—		—		—		—		—		—		—

Other loans
Current period charge-offs		—		—		—		—		—		—		—
Current period recoveries		—		—		—		—		—		24		24
Current period other loans net charge-offs		—		—		—		—		—		24		24

Total
Current period charge-offs		(93)		(308)		(167)		(25)		—		(868)		(1,461)
Current period recoveries		—		1		119		6		8		154		288
Current period net charge-offs	$	(93)	$	(307)	$	(48)	$	(19)	$	8	$	(714)	$	(1,173)

The Company did not have loans acquired with deteriorated credit quality at either December 31, 2023, or December 31, 2022. In 2023, the Company purchased $2.0 million of lease receivables and $54.8 million of SBLs, none of which were credit deteriorated. Additionally, in 2023 the Company participated in SBLs with other institutions in the amount of $4.0 million.

The scheduled undiscounted cash flows of the direct financing leases reconciled to the total lease receivables in the consolidated balance sheet, are as follows (in thousands):


2024	$	189,806
2025		148,522
2026		126,348
2027		61,938
2028		22,547
2029 and thereafter		2,857
Total undiscounted cash flows		552,018
Residual value⁽¹⁾		210,319
Difference between undiscounted cash flows and discounted cash flows		(76,680)
Present value of lease payments recorded as lease receivables	$	685,657

⁽¹⁾Of the $210,319,000, $39,197,000 is not guaranteed by the lessee or other guarantors.

The delinquent loans in the following table are treated as collateral dependent to the extent they have resulted from borrower financial difficulties (as opposed to administrative delays or other mitigating factors), and are not brought current. For loans 90 days or more delinquent and non-accrual loans, the Company establishes a reserve in the ACL for deficiencies between estimated collateral and loan carrying values. During the twelve months ended December 31, 2023, the Company did not have any significant changes to the extent to which collateral secures its collateral dependent loans due to general collateral deterioration or from other factors. SBL non-real estate are collateralized by business assets, which may include certain real estate. SBL commercial mortgage and construction are collateralized by real estate for small businesses, while real estate bridge lending is primarily collateralized by apartment buildings, or other commercial real estate. SBLOC is collateralized by marketable investment securities while IBLOC is collateralized by the cash value of life insurance. Advisor financing is collateralized by investment advisors’ business franchises. Direct lease financing is collateralized primarily by vehicles, or equipment.

A detail of the Company’s delinquent loans by loan category is as follows (in thousands):


	December 31, 2023
	30-59 Days		60-89 Days		90+ Days				Total				Total
	past due		past due		still accruing		Non-accrual		past due		Current		loans
SBL non-real estate	$	84	$	333	$	336	$	1,842	$	2,595	$	135,157	$	137,752
SBL commercial mortgage		2,183		—		—		2,381		4,564		602,422		606,986
SBL construction		—		—		—		3,385		3,385		19,242		22,627
Direct lease financing		5,163		1,209		485		3,785		10,642		675,015		685,657
SBLOC / IBLOC		21,934		3,607		745		—		26,286		1,600,999		1,627,285
Advisor financing		—		—		—		—		—		221,612		221,612
Real estate bridge lending		—		—		—		—		—		1,999,782		1,999,782
Other loans		853		76		178		132		1,239		49,399		50,638
Unamortized loan fees and costs		—		—		—		—		—		8,800		8,800
	$	30,217	$	5,225	$	1,744	$	11,525	$	48,711	$	5,312,428	$	5,361,139

	December 31, 2022
	30-59 Days		60-89 Days		90+ Days				Total				Total
	past due		past due		still accruing		Non-accrual		past due		Current		loans
SBL non-real estate	$	1,312	$	543	$	346	$	1,249	$	3,450	$	105,504	$	108,954
SBL commercial mortgage		1,853		5		297		1,423		3,578		470,918		474,496
SBL construction		—		—		—		3,386		3,386		27,478		30,864
Direct lease financing		4,035		2,053		539		3,550		10,177		621,983		632,160
SBLOC / IBLOC		14,782		343		2,869		—		17,994		2,314,475		2,332,469
Advisor financing		—		—		—		—		—		172,468		172,468
Real estate bridge lending		—		—		—		—		—		1,669,031		1,669,031
Other loans		330		90		3,724		748		4,892		56,787		61,679
Unamortized loan fees and costs		—		—		—		—		—		4,732		4,732
	$	22,312	$	3,034	$	7,775	$	10,356	$	43,477	$	5,443,376	$	5,486,853

December 31, 2023

Pre-modification recorded investment

SBL non-real estate

Legacy commercial real estate