v2.3.0.11
Automobile Loan Receivables
 6 Months Ended
Jun. 30, 2011
Loans Receivable, Net [Abstract]  
Automobile Loan Receivables
Note 3 - Automobile Loan Receivables
Automobile Loan Receivables consists of sub-prime loans, which are secured by automobiles, to residents of California and other western and midwestern states. Automobile Loan Receivables is stated net of unearned discount, loan fees and reserve for loan losses. The maximum original term for Sales Contracts and Loans at June 30, 2011 is approximately 72 months. The maximum remaining term of Sales Contracts and Loans at June 30, 2011 is approximately 47 months. There were no sales contracts originated in 2011 or 2010.
The components of Automobile Loan Receivables at June 30, 2011 and December 31, 2010 were:
(Dollars in Millions)
 
Jun 30,

2011
 
Dec 31,

2010
Sales Contracts and Loans Receivable
 
$
255.7


 
$
382.9


Unearned Discounts and Deferred Fees
 
(0.8
)
 
(1.6
)
Net Automobile Loan Receivables Outstanding
 
254.9


 
381.3


Reserve for Loan Losses
 
(22.3
)
 
(43.7
)
Automobile Loan Receivables
 
$
232.6


 
$
337.6






Note 3 - Automobile Loan Receivables (continued)


Activity in the Reserve for Loan Losses for the six and three months ended June 30, 2011 and 2010 was:
 
 
Six Months Ended
 
Three Months Ended
(Dollars in Millions)
 
Jun 30,

2011
 
Jun 30,

2010
 
Jun 30,

2011
 
Jun 30,

2010
Reserve for Loan Losses at Beginning of Period
 
$
43.7


 
$
83.3


 
$
32.1


 
$
74.7


Provision for Loan Losses
 
(28.2
)
 
2.9


 
(14.4
)
 
—


Net Recovery (Charge-off):
 
 
 
 
 
 
 
 
Automobile Loan Receivables Charged Off
 
(14.5
)
 
(31.5
)
 
(4.7
)
 
(9.1
)
Automobile Loan Receivables Recovered
 
21.3


 
20.1


 
9.3


 
9.2


Net Recovery (Charge-off)
 
6.8


 
(11.4
)
 
4.6


 
0.1


Reserve for Loan Losses at End of Period
 
$
22.3


 
$
74.8


 
$
22.3


 
$
74.8






The Company used several quality indicators, including, but not limited to, Fair Isaac Corporation (“FICO”) credit scores, loan-to-value (“LTV”) ratios and residency of customers to underwrite its automobile loans and uses these indicators to monitor its automobile loan portfolio. The FICO score is a measure of the creditworthiness of a borrower. A lower FICO score, compared to a higher FICO score, represents a higher likelihood of default. The LTV ratio is a measure of the value of a loan to the value of the collateral at the time a loan is originated. In the event of default, loans with higher initial LTV ratios are more likely to result in greater charge-off, compared to loans with lower initial LTV ratios, because a greater portion of the loan is unsecured. Economic conditions may vary by state and impact the ability of borrowers to repay their loans. For example, the unemployment rate in the state of California has been higher than the national average for the past several years. The Company does not update the initial quality indicators, but rather monitors changes in the mix of its automobile loan portfolio by such quality indicators to assess whether or not its historical charge-off and recovery patterns used to estimate future charge-offs and recoveries should be adjusted.
Automobile Loan Receivables outstanding at June 30, 2011 and December 31, 2010 by initial FICO score were:
 
 
Jun 30,

2011
 
Dec 31,

2010
Initial FICO Score Lower than 580
 
38.4
%
 
38.9
%
Initial FICO Score Greater than or Equal to 580 and Lower than 620
 
30.0


 
29.6


Initial FICO Score Greater than or Equal to 620
 
31.6


 
31.5


Total
 
100.0
%
 
100.0
%




Automobile Loan Receivables outstanding at June 30, 2011 and December 31, 2010 by initial LTV ratio were:
 
 
Jun 30,

2011
 
Dec 31,

2010
Initial LTV Ratio Lower than 100%
 
21.7
%
 
21.4
%
Initial LTV Ratio Greater than or Equal to 100% and Lower than 120%
 
47.7


 
47.7


Initial LTV Ratio Greater than or Equal to 120%
 
30.6


 
30.9


Total
 
100.0
%
 
100.0
%




At both June 30, 2011 and December 31, 2010, approximately two-thirds of Fireside Bank’s automobile loan portfolio was concentrated in loans to borrowers residing in California.