LOANS HELD FOR SALE

3 Months Ended

Mar. 31, 2025

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 Traditional 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 10 “Mortgage Banking Activities” of this section of the filing.

Consumer Loans Held for Sale, at Fair Value

The Bank offers 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
	March 31,
(in thousands)	2025		2024
Balance, beginning of period	$	5,443	$	7,914
Origination of consumer loans held for sale		34,347		35,159
Proceeds from the sale of consumer loans held for sale		(32,020)		(38,011)
Net gain on sale of consumer loans held for sale		832		1,031
Balance, end of period	$	8,602	$	6,093

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

RCS originates for sale 90% or 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.” During March 2025, Management reached an agreement to sell $5 million of consumer credit cards that were previously classified as held for investment. The sale of these credit cards is expected to be completed during the second quarter of 2025. As a result, the $5 million of consumer loans were transferred from held for investment to held for sale as of March 31, 2025.

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

	Three Months Ended
	March 31,
(in thousands)	2025		2024
Balance, beginning of period	$	18,632	$	16,094
Origination of consumer loans held for sale		232,304		153,188
Transferred from held for investment to held for sale		4,977		—
Proceeds from the sale of consumer loans held for sale		(234,613)		(158,573)
Net gain on sale of consumer loans held for sale		2,223		2,374
Balance, end of period	$	23,523	$	13,083