LOANS HELD FOR SALE

9 Months Ended

Sep. 30, 2022

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				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Balance, beginning of period	$	17,459	$	13,020	$	19,747	$	3,298
Origination of consumer loans held for sale		85,172		67,526		280,608		136,222
Proceeds from the sale of consumer loans held for sale		(96,169)		(71,427)		(297,253)		(132,330)
Net gain on sale of consumer loans held for sale		2,334		1,660		5,694		3,589
Balance, end of period	$	8,796	$	10,779	$	8,796	$	10,779

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

RCS originates for sale 90% to 95% of the balances from its line-of-credit products and 100% for some of its healthcare receivables products. 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				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Balance, beginning of period	$	13,777	$	11,412	$	2,937	$	1,478
Origination of consumer loans held for sale		206,959		189,492		539,519		424,840
Proceeds from the sale of consumer loans held for sale		(209,924)		(199,036)		(534,549)		(426,642)
Net gain on sale of consumer loans held for sale		1,867		2,108		4,772		4,300
Balance, end of period	$	12,679	$	3,976	$	12,679	$	3,976