3.LOANS HELD FOR SALE

In the ordinary course of business, the Bank originates for sale mortgage loans and consumer loans. Mortgage loans originated for sale are primarily originated and sold into the secondary market through the Bank’s Mortgage Banking segment, while consumer loans originated for sale are originated and sold through the RCS segment.

Mortgage Loans Held for Sale, at Fair Value

See additional detail regarding mortgage loans originated for sale, at fair value under Footnote 16 “Mortgage Banking Activities” of this section of the filing.

Consumer Loans Held for Sale, at Fair Value

In December 2019, the Bank began offering RCS installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. Balances originated under this RCS installment loan program are carried as “held for sale” on the Bank’s balance sheet, with the intent to sell sixteen days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly.

Due to its initiation in December 2019, activity for this RCS installment loan program was considered immaterial for the year ended December 31, 2019, with $598,000 in balances held for sale as of December 31, 2019.

Consumer Loans Held for Sale, at Lower of Cost or Fair Value

RCS originates for sale 90% of the balances from its line-of-credit product and a portion of its hospital receivables product. Ordinary gains or losses on the sale of these RCS products are reported as a component of “Program fees.”

Activity for consumer loans held for sale and carried at the lower of cost or market value was as follows:


Years Ended December 31, (in thousands)	2019		2018		2017

Balance, beginning of period	$	12,838	$	8,551	$	1,310
Origination of consumer loans held for sale		709,768		761,491		603,704
Loans transferred to held for investment		—		1,392		—
Proceeds from the sale of consumer loans held for sale		(716,062)		(764,929)		(601,718)
Net gain on sale of consumer loans held for sale		5,102		6,333		5,255
Balance, end of period	$	11,646	$	12,838	$	8,551