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Mortgage Loans Held For Investment And Related Assets | 9 Months Ended
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Jan. 31, 2013
Mortgage Loans Held For Investment And Related Assets [Abstract] |
Mortgage Loans Held For Investment And Related Assets | 4. Mortgage Loans Held for Investment and Related Assets The composition of our mortgage loan portfolio as of January 31, 2013 and April 30, 2012 is as follows:
|  |  |  |  |  |  |  |  |  | (dollars in 000s)
As of |  |  | January 31, 2013 |  |  | April 30, 2012
|  |  | Amount |  | % of Total |  |  | Amount |  | % of Total
Adjustable-rate loans |  | $ | 203,624 |  | 55% |  | $ | 238,442 |  | 56%
Fixed-rate loans |  |  | 168,515 |  | 45% |  |  | 190,870 |  | 44%
|  |  | 372,139 |  | 100% |  |  | 429,312 |  | 100%
Unamortized deferred fees and costs |  |  | 3,004 |  |  |  |  | 3,429 |  |
Less: Allowance for loan losses |  |  | (17,256) |  |  |  |  | (26,540) |  |
|  | $ | 357,887 |  |  |  | $ | 406,201 |  |
Our loan loss allowance as a percent of mortgage loans was 4.6% at January 31, 2013, compared to 6.2% at April 30, 2012. Activity in the allowance for loan losses for the nine months ended January 31, 2013 and 2012 is as follows:
|  |  |  |  | (in 000s)
Nine months ended January 31, |  | 2013 |  |  | 2012
Balance, beginning of the period | $ | 26,540 |  | $ | 92,087
Provision |  | 10,250 |  |  | 17,275
Recoveries |  | 2,745 |  |  | 160
Charge-offs |  | (22,279) |  |  | (19,573)
Balance, end of the period | $ | 17,256 |  | $ | 89,949
Our allowance decreased significantly from the prior year primarily due to a change in the fourth quarter of fiscal year 2012, whereby we now charge-off loans 180 days past due to the value of the collateral less costs to sell. This change did not have a significant impact on our provision recorded during the nine months ended January 31, 2013. When determining our allowance for loan losses, we evaluate loans less than 60 days past due on a pooled basis, while loans we consider impaired, including those loans more than 60 days past due or modified as troubled debt restructurings (TDRs), are evaluated individually. The balance of these loans and the related allowance is as follows:
|  |  |  |  |  |  |  |  |  |  | (in 000s)
As of |  | January 31, 2013 |  |  | April 30, 2012
|  | Portfolio Balance |  |  | Related Allowance |  |  | Portfolio Balance |  |  | Related Allowance
Pooled | $ | 219,345 |  | $ | 6,670 |  | $ | 248,772 |  | $ | 9,237
Impaired: |  |  |  |  |  |  |  |  |  |  |
Individually (TDRs) |  | 59,295 |  |  | 5,013 |  |  | 71,949 |  |  | 7,752
Individually |  | 93,499 |  |  | 5,573 |  |  | 108,591 |  |  | 9,551
| $ | 372,139 |  | $ | 17,256 |  | $ | 429,312 |  | $ | 26,540
Our portfolio includes loans originated by Sand Canyon Corporation, previously known as Option One Mortgage Corporation, and its subsidiaries (SCC) and purchased by HRB Bank, which constitute 57% of the total loan portfolio at January 31, 2013. We have experienced higher rates of delinquency and believe that we have greater exposure to loss with respect to this segment of our loan portfolio. Our remaining loan portfolio is characteristic of a prime loan portfolio, and we believe therefore subject to a lower loss exposure. Detail of our mortgage loans held for investment and the related allowance at January 31, 2013 is as follows:
|  |  |  |  |  |  |  |  | (dollars in 000s)
|  | Outstanding |  |  | Loan Loss Allowance |  | % 30+ Days
|  | Principal Balance |  |  | Amount |  | % of Principal |  | Past Due
Purchased from SCC | $ | 212,250 |  | $ | 13,596 |  | 6.4% |  | 34.5%
All other |  | 159,889 |  |  | 3,660 |  | 2.3% |  | 9.2%
| $ | 372,139 |  | $ | 17,256 |  | 4.6% |  | 23.6%
Credit quality indicators at January 31, 2013 include the following:
|  |  |  |  |  |  |  | (in 000s)
Credit Quality Indicators |  | Purchased from SCC |  | All Other |  | Total Portfolio
Occupancy status: |  |  |  |  |  |  |  |
Owner occupied | $ | 154,470 |  | $ | 102,180 |  | $ | 256,650
Non-owner occupied |  | 57,780 |  |  | 57,709 |  |  | 115,489
| $ | 212,250 |  | $ | 159,889 |  | $ | 372,139
Documentation level: |  |  |  |  |  |  |  |
Full documentation | $ | 68,413 |  | $ | 116,591 |  | $ | 185,004
Limited documentation |  | 6,889 |  |  | 16,775 |  |  | 23,664
Stated income |  | 118,100 |  |  | 16,385 |  |  | 134,485
No documentation |  | 18,848 |  |  | 10,138 |  |  | 28,986
| $ | 212,250 |  | $ | 159,889 |  | $ | 372,139
Internal risk rating: |  |  |  |  |  |  |  |
High | $ | 68,645 |  | $ | - |  | $ | 68,645
Medium |  | 143,605 |  |  | - |  |  | 143,605
Low |  | - |  |  | 159,889 |  |  | 159,889
| $ | 212,250 |  | $ | 159,889 |  | $ | 372,139
Loans given our internal risk rating of “high” were originated by SCC, and generally ha d no documentation or we re based on stated income. Loans given our internal risk rating of “medium” were generally full documentation or based on stated income, with loan-to-value ratios at origination of more than 80%, and were made to borrowers with credit scores below 700 at origination. Loans given our internal risk rating of “low” were generally full documentation, with loan-to-value ratios at origination of less than 80% and were made to borrowers with credit scores greater than 700 at origination. Our mortgage loans held for investment include concentrations of loans to borrowers in certain states, which may result in increased exposure to loss as a result of changes in real estate values and underlying economic or market conditions related to a particular geographical location. Approximately 58% of our mortgage loan portfolio consists of loans to borrowers located in the states of Florida, California, New York and Wisconsin. Detail of the aging of the mortgage loans in our portfolio as of January 31, 2013 is as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (in 000s)
|  | Less than 60 |  |  | 60 – 89 Days |  |  | 90+ Days |  |  | Total |  |  |  |  |  |
|  | Days Past Due |  |  | Past Due |  |  | Past Due (1) |  |  | Past Due |  |  | Current |  |  | Total
Purchased from SCC | $ | 16,752 |  | $ | 3,084 |  | $ | 69,905 |  | $ | 89,741 |  | $ | 122,509 |  | $ | 212,250
All other |  | 7,168 |  |  | 1,089 |  |  | 12,931 |  |  | 21,188 |  |  | 138,701 |  |  | 159,889
| $ | 23,920 |  | $ | 4,173 |  | $ | 82,836 |  | $ | 110,929 |  | $ | 261,210 |  | $ | 372,139
(1) We do not accrue interest on loans past due 90 days or more. Information related to our non-accrual loans is as follows:
|  |  |  |  | (in 000s)
As of |  | January 31, 2013 |  |  | April 30, 2012
Loans: |  |  |  |  |
Purchased from SCC | $ | 76,235 |  | $ | 88,347
Other |  | 15,761 |  |  | 16,626
|  | 91,996 |  |  | 104,973
TDRs: |  |  |  |  |
Purchased from SCC |  | 3,460 |  |  | 3,166
Other |  | 504 |  |  | 1,270
|  | 3,964 |  |  | 4,436
Total non-accrual loans | $ | 95,960 |  | $ | 109,409
Information related to impaired loans is as follows:
|  |  |  |  |  |  |  |  |  |  | (in 000s)
|  | Balance |  |  | Balance With |  |  | Total |  |  | Related
|  | With Allowance |  |  | No Allowance |  |  | Impaired Loans |  |  | Allowance
As of January 31, 2013: |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC | $ | 38,938 |  | $ | 88,671 |  | $ | 127,609 |  | $ | 8,470
Other |  | 6,757 |  |  | 18,428 |  |  | 25,185 |  |  | 2,116
| $ | 45,695 |  | $ | 107,099 |  | $ | 152,794 |  | $ | 10,586
As of April 30, 2012: |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC | $ | 56,128 |  | $ | 97,591 |  | $ | 153,719 |  | $ | 14,917
Other |  | 7,137 |  |  | 19,684 |  |  | 26,821 |  |  | 2,386
| $ | 63,265 |  | $ | 117,275 |  | $ | 180,540 |  | $ | 17,303
Information related to the allowance for impaired loans is as follows:
|  |  |  |  | (in 000s)
As of |  | January 31, 2013 |  |  | April 30, 2012
Portion of total allowance for loan losses allocated |  |  |  |  |
to impaired loans and TDR loans: |  |  |  |  |
Based on collateral value method | $ | 5,573 |  | $ | 9,551
Based on discounted cash flow method |  | 5,013 |  |  | 7,752
| $ | 10,586 |  | $ | 17,303
Information related to activities of our non-performing assets is as follows:
|  |  |  |  | (in 000s)
Nine months ended January 31, |  | 2013 |  |  | 2012
Average impaired loans: |  |  |  |  |
Purchased from SCC | $ | 137,703 |  | $ | 224,002
All other |  | 25,879 |  |  | 35,421
| $ | 163,582 |  | $ | 259,423
Interest income on impaired loans: |  |  |  |  |
Purchased from SCC | $ | 2,940 |  | $ | 4,340
All other |  | 232 |  |  | 348
| $ | 3,172 |  | $ | 4,688
Interest income on impaired loans recognized on |  |  |  |  |
a cash basis on non-accrual status: |  |  |  |  |
Purchased from SCC | $ | 2,881 |  | $ | 4,182
All other |  | 214 |  |  | 324
| $ | 3,095 |  | $ | 4,506
Activity related to our real estate owned (REO) is as follows:
|  |  |  |  | (in 000s)
Nine months ended January 31, |  | 2013 |  |  | 2012
Balance, beginning of the period | $ | 14,972 |  | $ | 19,532
Additions |  | 7,208 |  |  | 6,521
Sales |  | (6,652) |  |  | (7,933)
Writedowns |  | (1,676) |  |  | (2,193)
Balance, end of the period | $ | 13,852 |  | $ | 15,927

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- Definition The entire disclosure for mortgage loans on real estate, this includes the supplemental information pertaining to each mortgage loan receivable that equals or exceeds three percent of the carrying amount of mortgages. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 948 -SubTopic 310 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-29) -URI http://asc.fasb.org/extlink&oid=6589523&loc=d3e617274-123014 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04.(c) Schedule IV) -URI http://asc.fasb.org/extlink&oid=6882300&loc=d3e5864-122674 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 29 -Article 12 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule IV -Article 5 + Details
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