LOANS HELD FOR SALE

6 Months Ended

Jun. 30, 2020

LOANS HELD FOR SALE.

LOANS HELD FOR SALE

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 11 “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 generally within 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.

Activity for consumer loans held for sale and carried at fair value was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2020		2019		2020		2019
Balance, beginning of period	$	3,431	$	—	$	598	$	—
Origination of consumer loans held for sale		555		—		47,741		—
Proceeds from the sale of consumer loans held for sale		(3,963)		—		(49,691)		—
Net gain (loss) recognized on consumer loans held for sale		141		—		1,516		—
Balance, end of period	$	164	$	—	$	164	$	—

Consumer Loans Held for Sale, at the 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:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2020		2019		2020		2019
Balance, beginning of period	$	12,089	$	12,864	$	11,646	$	12,838
Origination of consumer loans held for sale		86,936		200,327		234,871		346,413
Proceeds from the sale of consumer loans held for sale		(86,796)		(176,759)		(235,207)		(324,260)
Net gain on sale of consumer loans held for sale		571		1,177		1,490		2,618
Balance, end of period	$	12,800	$	37,609	$	12,800	$	37,609