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Loans and Allowance for Loan Losses | 12 Months Ended
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Dec. 31, 2020
Text Block [Abstract] |
Loans and Allowance for Loan Losses | (4) LOANS AND ALLOWANCE FOR LOAN LOSSES The following table shows the major classification of loans, inclusive of capitalized loan origination costs, at December 31, 2020 and 2019.
|  | As of December 31, 2020 |  |  | As of December 31, 2019 |
(Dollars in thousands) |  | Amount |  |  | As a Percent of Gross Loans |  |  | Amount |  |  | As a Percent of Gross Loans |
Recreation |  | $ | 792,686 |  |  |  | 65 | % |  | $ | 713,332 |  |  |  | 62 | %
Home improvement |  |  | 334,033 |  |  |  | 27 |  |  |  | 247,324 |  |  |  | 21 |
Commercial |  |  | 65,327 |  |  |  | 5 |  |  |  | 69,767 |  |  |  | 6 |
Medallion |  |  | 37,768 |  |  |  | 3 |  |  |  | 130,432 |  |  |  | 11 |
Strategic partnership |  |  | 24 |  |  |  | — |  |  |  | — |  |  |  | — |
Total gross loans |  |  | 1,229,838 |  |  |  | 100 | % |  |  | 1,160,855 |  |  |  | 100 | %
Allowance for loan losses |  |  | (57,548 | ) |  |  |  |  |  |  | (46,093 | ) |  |  |  |
Total net loans |  | $ | 1,172,290 |  |  |  |  |  |  | $ | 1,114,762 |  |  |  |  |
The following tables show the activity of the gross loans for the twelve months ended December 31, 2020 and 2019.
Twelve Months Ended December 31, 2020 (Dollars in thousands) |  | Recreation |  |  | Home Improvement |  |  | Commercial |  |  | Medallion |  |  | Strategic Partnership |  |  | Total |
Gross loans – December 31, 2019 |  | $ | 713,332 |  |  | $ | 247,324 |  |  | $ | 69,767 |  |  | $ | 130,432 |  |  | $ | — |  |  | $ | 1,160,855 |
Loan originations |  |  | 294,885 |  |  |  | 193,098 |  |  |  | 7,575 |  |  |  | — |  |  |  | 1,663 |  |  |  | 497,221 |
Principal payments, sales, and maturities |  |  | (187,989 | ) |  |  | (105,813 | ) |  |  | (13,183 | ) |  |  | (13,207 | ) |  |  | (1,639 | ) |  |  | (321,831 | )
Charge-offs, net |  |  | (14,457 | ) |  |  | (1,229 | ) |  |  | (28 | ) |  |  | (42,648 | ) |  |  | — |  |  |  | (58,362 | )
Transfer to loan collateral in process of foreclosure, net |  |  | (14,871 | ) |  |  | — |  |  |  | — |  |  |  | (32,383 | ) |  |  | — |  |  |  | (47,254 | )
Amortization of origination costs |  |  | (7,809 | ) |  |  | 1,910 |  |  |  | 8 |  |  |  | (131 | ) |  |  | — |  |  |  | (6,022 | )
Amortization of loan premium |  |  | (191 | ) |  |  | (320 | ) |  |  | — |  |  |  | (2,531 | ) |  |  | — |  |  |  | (3,042 | )
FASB origination costs, net |  |  | 9,786 |  |  |  | (937 | ) |  |  | — |  |  |  | 36 |  |  |  | — |  |  |  | 8,885 |
Paid-in-kind interest |  |  | — |  |  |  | — |  |  |  | 1,188 |  |  |  | — |  |  |  | — |  |  |  | 1,188 |
Transfer to other foreclosed property |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,800 | ) |  |  | — |  |  |  | (1,800 | )
Gross loans – December 31, 2020 |  | $ | 792,686 |  |  | $ | 334,033 |  |  | $ | 65,327 |  |  | $ | 37,768 |  |  | $ | 24 |  |  | $ | 1,229,838 |
Twelve Months Ended December 31, 2019 (Dollars in thousands) |  | Recreation |  |  | Home Improvement |  |  | Commercial |  |  | Medallion |  |  | Total |
Gross loans – December 31, 2018 |  | $ | 587,038 |  |  | $ | 183,155 |  |  | $ | 64,083 |  |  | $ | 183,606 |  |  | $ | 1,017,882 |
Loan originations |  |  | 301,403 |  |  |  | 142,112 |  |  |  | 18,578 |  |  |  | — |  |  |  | 462,093 |
Principal payments, sales, and maturities |  |  | (146,873 | ) |  |  | (76,157 | ) |  |  | (13,553 | ) |  |  | (15,070 | ) |  |  | (251,653 | )
Charge-offs, net |  |  | (17,419 | ) |  |  | (786 | ) |  |  | (819 | ) |  |  | (18,664 | ) |  |  | (37,688 | )
Transfer to loan collateral in process of foreclosure, net |  |  | (14,512 | ) |  |  | — |  |  |  | — |  |  |  | (16,836 | ) |  |  | (31,348 | )
Amortization of origination costs |  |  | (6,428 | ) |  |  | 1,561 |  |  |  | 34 |  |  |  | (119 | ) |  |  | (4,952 | )
Amortization of loan premium |  |  | (247 | ) |  |  | (416 | ) |  |  | — |  |  |  | (2,626 | ) |  |  | (3,289 | )
FASB origination costs, net |  |  | 10,370 |  |  |  | (2,145 | ) |  |  | 610 |  |  |  | 141 |  |  |  | 8,976 |
Paid-in-kind interest |  |  | — |  |  |  | — |  |  |  | 834 |  |  |  | — |  |  |  | 834 |
Gross loans – December 31, 2019 |  | $ | 713,332 |  |  | $ | 247,324 |  |  | $ | 69,767 |  |  | $ | 130,432 |  |  | $ | 1,160,855 |
The following table sets forth the activity in the allowance for loan losses for the twelve months ended December 31, 2020 and 2019.
|  | Twelve Months Ended |
(Dollars in thousands) |  | December 31, 2020 |  |  | December 31, 2019 |
Allowance for loan losses – beginning balance |  | $ | 46,093 |  |  | $ | 36,395 |
Charge-offs |  |  |  |  |  |  |  |
Recreation |  |  | (23,543 | ) |  |  | (24,433 | )
Home improvement |  |  | (2,909 | ) |  |  | (2,504 | )
Commercial |  |  | (31 | ) |  |  | (819 | )
Medallion |  |  | (49,361 | ) |  |  | (22,205 | )
Total charge-offs |  |  | (75,844 | ) |  |  | (49,961 | )
Recoveries |  |  |  |  |  |  |  |
Recreation |  |  | 9,086 |  |  |  | 7,014 |
Home improvement |  |  | 1,680 |  |  |  | 1,718 |
Commercial |  |  | 3 |  |  |  | — |
Medallion |  |  | 6,713 |  |  |  | 3,541 |
Total recoveries |  |  | 17,482 |  |  |  | 12,273 |
Net charge-offs (1) |  |  | (58,362 | ) |  |  | (37,688 | )
Provision for loan losses |  |  | 69,817 |  |  |  | 47,386 |
Allowance for loan losses – ending balance (2) (3) |  | $ | 57,548 |  |  | $ | 46,093 |
(1) | As of December 31, 2020, cumulative charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $279,188, some of which represents collection opportunities for the Company.
(2) | As of December 31, 2020, the general reserves previously recorded for the Company’s medallion loan portfolio had been reversed as all loans had been deemed impaired and written down to collateral value.
(3) | As of December 31, 2020, there was no allowance for loan losses and net charge-offs related to the strategic partnership loans.
The following tables set forth the allowance for loan losses by type as of December 31, 2020 and 2019.
December 31, 2020 (Dollars in thousands) |  | Amount |  |  | Percentage of Allowance |  |  | Allowance as a Percent of Loan Category |  |  | Allowance as a Percent of Nonaccrual |
Recreation |  | $ | 27,348 |  |  |  | 48 | % |  |  | 3.45 | % |  |  | 378.20 | %
Home improvement |  |  | 5,157 |  |  |  | 9 |  |  |  | 1.54 |  |  | NM |
Commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Medallion |  |  | 25,043 |  |  |  | 43 |  |  |  | 66.31 |  |  |  | 68.01 |
Total |  | $ | 57,548 |  |  |  | 100 | % |  |  | 4.68 | % |  |  | 93.17 | %
December 31, 2019 (Dollars in thousands) |  | Amount |  |  | Percentage of Allowance |  |  | Allowance as a Percent of Loan Category |  |  | Allowance as a Percent of Nonaccrual |
Recreation |  | $ | 18,075 |  |  |  | 39 | % |  |  | 2.53 | % |  |  | 228.25 | %
Home improvement |  |  | 2,608 |  |  |  | 6 |  |  |  | 1.05 |  |  | NM |
Commercial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Medallion |  |  | 25,410 |  |  |  | 55 |  |  |  | 19.48 |  |  |  | 389.84 |
Total |  | $ | 46,093 |  |  |  | 100 | % |  |  | 3.97 | % |  |  | 174.04 | %
The following table presents total nonaccrual loans and foregone interest, substantially all of which is in the medallion portfolio. The fluctuation in nonaccrual interest foregone is due to past due loans and market conditions.
|  | December 31, |
(Dollars in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Total nonaccrual loans |  | $ | 61,767 |  |  | $ | 26,484 |  |  | $ | 34,877 |
Interest foregone for the year |  |  | 3,311 |  |  |  | 2,152 |  |  |  | 1,153 |
Amount of foregone interest applied to principal for the year |  |  | 602 |  |  |  | 254 |  |  |  | 535 |
Interest foregone life-to-date |  |  | 5,252 |  |  |  | 2,744 |  |  |  | 1,952 |
Amount of foregone interest applied to principal life-to-date |  |  | 792 |  |  |  | 471 |  |  |  | 1,214 |
Percentage of nonaccrual loans to gross loan portfolio |  |  | 5 | % |  |  | 2 | % |  |  | 3 | %
Percentage of allowance for loan losses to nonaccrual loans |  |  | 93 |  |  |  | 174 |  |  |  | 104 |
The following tables present the performance status of loans as of December 31, 2020 and 2019.
December 31, 2020 (Dollars in thousands) |  | Performing |  |  | Nonperforming |  |  | Total |  |  | Percentage of Nonperforming to Total |
Recreation |  | $ | 785,047 |  |  | $ | 7,639 |  |  | $ | 792,686 |  |  |  | 0.96 | %
Home improvement |  |  | 333,862 |  |  |  | 171 |  |  |  | 334,033 |  |  |  | 0.05 |
Commercial |  |  | 48,731 |  |  |  | 16,596 |  |  |  | 65,327 |  |  |  | 25.40 |
Medallion |  |  | — |  |  |  | 37,768 |  | (1) |  | 37,768 |  |  |  | 100.00 |
Strategic partnership |  |  | 24 |  |  |  | — |  |  |  | 24 |  |  |  | 0.00 |
Total |  | $ | 1,167,664 |  |  | $ | 62,174 |  | (2) | $ | 1,229,838 |  |  |  | 5.06 | %
December 31, 2019 (Dollars in thousands) |  | Performing |  |  | Nonperforming |  |  | Total |  |  | Percentage of Nonperforming to Total |
Recreation |  | $ | 705,070 |  |  | $ | 8,262 |  |  | $ | 713,332 |  |  |  | 1.16 | %
Home improvement |  |  | 247,139 |  |  |  | 185 |  |  |  | 247,324 |  |  |  | 0.07 |
Commercial |  |  | 57,905 |  |  |  | 11,862 |  |  |  | 69,767 |  |  |  | 17.00 |
Medallion |  |  | 88,248 |  |  |  | 42,184 |  |  |  | 130,432 |  |  |  | 32.34 |
Total |  | $ | 1,098,362 |  |  | $ | 62,493 |  | (2) | $ | 1,160,855 |  |  |  | 5.38 | %
| (1) | Includes medallion loan premiums of $1,615 as of December 31, 2020.
| (2) | Includes $408 and $36,009 of TDRs as of December 31, 2020 and 2019, which are accruing and paying currently, but which are considered nonperforming loans under GAAP.
For those performing loans aged under 90 days past due, there is a possibility that their delinquency status will continue to deteriorate and they will subsequently be placed on nonaccrual status and be reserved for, and as such, deemed nonperforming. The following tables provide additional information on attributes of the nonperforming loan portfolio as of December 31, 2020 and 2019, all of which had an allowance recorded against the principal balance.
|  | December 31, 2020 |  |  | December 31, 2019 |
(Dollars in thousands) |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recreation |  | $ | 7,639 |  |  | $ | 7,639 |  |  | $ | 264 |  |  | $ | 8,262 |  |  | $ | 8,262 |  |  | $ | 329 |
Home improvement |  |  | 171 |  |  |  | 171 |  |  |  | 3 |  |  |  | 185 |  |  |  | 185 |  |  |  | 3 |
Commercial |  |  | 16,596 |  |  |  | 16,600 |  |  |  | — |  |  |  | 11,862 |  |  |  | 11,867 |  |  |  | — |
Medallion |  |  | 37,768 |  |  |  | 38,368 |  |  |  | 25,043 |  |  |  | 42,184 |  |  |  | 42,650 |  |  |  | 14,824 |
Total nonperforming loans with an allowance |  | $ | 62,174 |  |  | $ | 62,778 |  |  | $ | 25,310 |  |  | $ | 62,493 |  |  | $ | 62,964 |  |  | $ | 15,156 |
|  | For the Twelve Months Ended |
|  | December 31, 2020 |  | December 31, 2019 |
(Dollars in thousands) |  | Average Investment Recorded |  |  | Interest Income (Expense) Recognized |  |  |  | Average Investment Recorded |  |  | Interest Income (Expense) Recognized |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recreation |  | $ | 7,949 |  |  | $ | 560 |  |  |  | $ | 8,317 |  |  | $ | 471 |
Home improvement |  |  | 172 |  |  |  | 2 |  |  |  |  | 185 |  |  |  | — |
Commercial |  |  | 16,884 |  |  |  | 123 |  |  |  |  | 7,886 |  |  |  | 392 |
Medallion |  |  | 40,928 |  |  |  | 465 |  |  |  |  | 44,721 |  |  |  | 346 |
Total nonperforming loans with an allowance |  | $ | 65,933 |  |  | $ | 1,150 |  |  |  | $ | 61,109 |  |  | $ | 1,209 |
The following tables show the aging of all loans as of December 31, 2020 and 2019.
|  | Days Past Due |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded Investment |
December 31, 2020 (Dollars in thousands) |  | 30-59 |  |  | 60-89 |  |  | 90 + |  |  | Total |  |  | Current |  |  | Total (1) |  |  | 90 Days and Accruing |
Recreation |  | $ | 22,058 |  |  | $ | 7,582 |  |  | $ | 5,343 |  |  | $ | 34,983 |  |  | $ | 732,391 |  |  | $ | 767,374 |  |  | $ | — |
Home improvement |  |  | 813 |  |  |  | 218 |  |  |  | 170 |  |  |  | 1,201 |  |  |  | 335,684 |  |  |  | 336,885 |  |  |  | — |
Commercial |  |  | — |  |  |  | — |  |  |  | 75 |  |  |  | 75 |  |  |  | 65,265 |  |  |  | 65,340 |  |  |  | — |
Medallion |  |  | 2,019 |  |  |  | 973 |  |  |  | 1,290 |  |  |  | 4,282 |  |  |  | 31,871 |  |  |  | 36,153 |  |  |  | — |
Strategic partnership |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24 |  |  |  | 24 |  |  |  | — |
Total |  | $ | 24,890 |  |  | $ | 8,773 |  |  | $ | 6,878 |  |  | $ | 40,541 |  |  | $ | 1,165,235 |  |  | $ | 1,205,776 |  |  | $ | — |
(1) | Excludes loan premiums of $2,717 resulting from purchase price accounting and $21,345 of capitalized loan origination costs.
|  | Days Past Due |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded Investment |
December 31, 2019 (Dollars in thousands) |  | 30-59 |  |  | 60-89 |  |  | 90 + |  |  | Total |  |  | Current |  |  | Total (1) |  |  | 90 Days and Accruing |
Recreation |  | $ | 27,357 |  |  | $ | 8,426 |  |  | $ | 5,800 |  |  | $ | 41,583 |  |  | $ | 648,227 |  |  | $ | 689,810 |  |  | $ | — |
Home improvement |  | 931 |  |  | 427 |  |  | 184 |  |  |  | 1,542 |  |  |  | 249,288 |  |  |  | 250,830 |  |  |  | — |
Commercial |  |  | — |  |  |  | — |  |  |  | 107 |  |  |  | 107 |  |  |  | 69,660 |  |  |  | 69,767 |  |  |  | — |
Medallion |  |  | 12,491 |  |  |  | 2,118 |  |  |  | 2,572 |  |  |  | 17,181 |  |  |  | 109,106 |  |  |  | 126,287 |  |  |  | — |
Total |  | $ | 40,779 |  |  | $ | 10,971 |  |  | $ | 8,663 |  |  | $ | 60,413 |  |  | $ | 1,076,281 |  |  | $ | 1,136,694 |  |  | $ | — |
(1)Excludes loan premiums of $5,758 resulting from purchase price accounting and $18,403 of capitalized loan origination costs. The Company estimates that the weighted average loan-to-value ratio of the medallion loans was approximately 327% and 190% as of December 31, 2020 and 2019. The following table shows the TDR’s which the Company entered into during the year ended December 31, 2020.
(Dollars in thousands) |  | Number of Loans |  |  | Pre- Modification Investment |  |  | Post- Modification Investment |
Recreation loans |  |  | 77 |  |  |  | 1,053 |  |  |  | 749 |
Commercial loans |  |  | 1 |  |  |  | 1,821 |  |  |  | 1,821 |
Medallion loans |  |  | 59 |  |  |  | 33,505 |  |  |  | 33,505 |
During the twelve months ended December 31, 2020, five medallion loans modified as troubled debt restructurings were in default and had an investment value of $738,000 as of December 31, 2020, net of $331,000 of an allowance for loan loss, 43 recreation loans modified as troubled debt restructuring were in default and had an investment value of $433,000 as of December 31, 2020, net of a $15,000 allowance for loan losses, and no commercial loans modified as trouble debt restructurings were in default. The following table shows the TDR’s which the Company entered into during the year ended December 31, 2019.
(Dollars in thousands) |  | Number of Loans |  |  | Pre- Modification Investment |  |  | Post- Modification Investment |
Recreation loans |  |  | 294 |  |  | $ | 4,433 |  |  | $ | 2,831 |
Medallion loans |  |  | 71 |  |  |  | 31,376 |  |  |  | 31,385 |
During the year ended December 31, 2019, four medallion loans modified as a troubled debt restructurings were in default and had an investment value of $1,023,000 as of December 31, 2019, net of $428,000 of an allowance for loan loss, and 213 recreation loans modified as troubled debt restructurings were in default and had an investment value of $1,905,000 as of December 31, 2019, net of a $76,000 allowance for loan losses. The following tables show the activity of the loan collateral in process of foreclosure, which relates only to the recreation and medallion loans, for the twelve months ended December 31, 2020 and 2019.
Twelve Months Ended December 31, 2020 (Dollars in thousands) |  | Recreation |  |  | Medallion |  |  | Total |
Loan collateral in process of foreclosure – December 31, 2019 |  | $ | 1,476 |  |  | $ | 51,235 |  |  | $ | 52,711 |
Transfer from loans, net |  |  | 14,871 |  |  |  | 32,403 |  |  |  | 47,274 |
Sales |  |  | (7,512 | ) |  |  | (300 | ) |  |  | (7,812 | )
Cash payments received |  |  | — |  |  |  | (5,687 | ) |  |  | (5,687 | )
Collateral valuation adjustments |  |  | (7,403 | ) |  |  | (24,523 | ) |  |  | (31,926 | )
Loan collateral in process of foreclosure – December 31, 2020 |  | $ | 1,432 |  |  | $ | 53,128 |  |  | $ | 54,560 |
Twelve Months Ended December 31, 2019 (Dollars in thousands) |  | Recreation |  |  | Medallion |  |  | Total |
Loan collateral in process of foreclosure – December 31, 2018 |  | $ | 1,503 |  |  | $ | 47,992 |  |  | $ | 49,495 |
Transfer from loans, net |  |  | 14,512 |  |  |  | 16,836 |  |  |  | 31,348 |
Sales |  |  | (7,591 | ) |  |  | (1,515 | ) |  |  | (9,106 | )
Cash payments received |  |  | — |  |  |  | (7,697 | ) |  |  | (7,697 | )
Collateral valuation adjustments |  |  | (6,948 | ) |  |  | (4,381 | ) |  |  | (11,329 | )
Loan collateral in process of foreclosure – December 31, 2019 |  | $ | 1,476 |  |  | $ | 51,235 |  |  | $ | 52,711 |

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