The Company performed a strategic evaluation of its businesses in the third quarter of 2014 and decided to discontinue its Philadelphia commercial lending operations to focus on its specialty finance lending. The Company has since disposed of the vast majority of related loans and other real estate owned. While in the process of disposition, financial results of the commercial lending operations were presented as separate from continuing operations on the consolidated statements of operations and assets of the commercial lending operations to be disposed of were presented as assets held-for-sale on the consolidated balance sheets. As disposition efforts were winding down, discontinued loans of $61.6 million were reclassified to loans held for investment in the first quarter of 2022. These loans will accordingly be accounted for as such, and included in related tables as management continues related collections. Discontinued other real estate owned of $17.3 million which constituted the remainder of discontinued assets was reclassified to the other real estate owned caption on the balance sheet.

The following table presents financial results of the commercial lending business included in net loss from discontinued operations for the three months ended September 30, 2022 and 2021 (in thousands):



	For the three months ended September 30,				For the nine months ended September 30,
	2022		2021		2022		2021
Interest income	$	—	$	754	$	—	$	2,388
Interest expense		—		—		—		—
Net interest income		—		754		—		2,388

Non-interest income		—		48		—		51
Non-interest expense		—		715		—		2,115

Income before taxes		—		87		—		324
Income tax expense		—		21		—		76
Net income	$	—	$	66	$	—	$	248

The following table presents assets held-for-sale from discontinued operations at September 30, 2022 and December 31, 2021 (in thousands):


	September 30,		December 31,
	2022		2021
Commercial loans, at fair value	$	—	$	2,907
Other real estate owned		—		361
Total assets	$	—	$	3,268

Non-interest expense for the three and nine months ended September 30, 2021 reflected $384,000 and $1.5 million of recoveries of prior losses on loans. It also reflected respective expenses and losses of $745,000 and $2.3 million for the three and nine month periods ended September 30, 2021, respectively, related to other real estate owned. Discontinued operations loans are recorded at the lower of their cost or fair value. Fair value is determined using a discontinued cash flow analysis where projections of cash flows are developed in consideration of internal loan review analysis and default/prepayment assumptions for smaller pools of loans. These credit and collateral related assumptions are subject to uncertainty.