Loans Held for Investment and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2017

Loans Held for Investment and Allowance for Loan Losses

Loans held for investment consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017		December 31, 2016
Term loans	$	903,763	$	864,066
Lines of credit	122,395		116,385
Total unpaid principal balance	1,026,158		980,451
Net deferred origination costs	20,426		19,994
Total loans held for investment	$	1,046,584	$	1,000,445

In the first quarter of 2017, we paid $13.5 million to purchase term loans that we previously sold to a third party which are included in the unpaid principal balance of loans held for investment.

We include both loans we originate and loans funded by our issuing bank partners and later purchased by us as part of our originations. During the three months ended March 31, 2017 and 2016, we purchased such loans from our issuing bank partner in the amount of $145.0 million and $103.6 million, respectively.

The activity in the allowance for loan losses for the three months ended March 31, 2017 and 2016 consisted of the following (in thousands):



	Three Months Ended March 31,
	2017			2016
Balance at beginning of period	$	110,162		$	53,311
Provision for loan losses	46,180			25,437
Loans charged off	(40,884		)	(18,518		)
Recoveries of loans previously charged off	2,617			1,477
Allowance for loan losses at end of period	$	118,075		$	61,707

When loans are charged-off, we may continue to attempt to recover amounts from the respective borrowers and guarantors, or pursue our rights through formal legal action. Alternatively, we may sell such previously charged-off loans to a third-party debt collector. The proceeds from these sales are recorded as a component of the recoveries of loans previously charged off. For the three months ended March 31, 2017 and 2016, previously charged-off loans sold accounted for $1.9 million and $1.0 million, respectively, of recoveries of loans previously charged off.

As of March 31, 2017 and December 31, 2016, our credit exposure related to the undrawn line of credit balances was $176.7 million and $164.5 million, respectively. The related reserve on unfunded loan commitments was $4.0 million and $3.9 million as of March 31, 2017 and December 31, 2016, respectively. Net adjustments to the accrual for unfunded loan commitments are included in general and administrative expenses.

The following table contains information, on a combined basis, regarding the unpaid principal balance of loans we originated and the amortized cost of loans purchased from third parties other than our issuing bank partner related to non-delinquent, paying and non-paying delinquent loans as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017		December 31, 2016
Non-delinquent loans	$	922,921	$	890,297
Delinquent: paying (accrual status)	56,657		36,073
Delinquent: non-paying (non-accrual status)	46,580		54,081
Total	$	1,026,158	$	980,451

The portion of the allowance for loan losses attributable to non-delinquent loans was $64.9 million and $59.5 million as of March 31, 2017 and December 31, 2016, respectively, while the portion of the allowance for loan losses attributable to delinquent loans was $53.2 million and $50.7 million as of March 31, 2017 and December 31, 2016, respectively.

The following table shows an aging analysis of the unpaid principal balance related to loans held for investment by delinquency status as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017		December 31, 2016
By delinquency status:
Non-delinquent loans	$	922,921	$	890,297
1-14 calendar days past due	23,340		25,899
15-29 calendar days past due	17,568		15,990
30-59 calendar days past due	28,503		22,677
60-89 calendar days past due	20,676		13,952
90 + calendar days past due	13,150		11,636
Total unpaid principal balance	$	1,026,158	$	980,451