4.LOANS HELD FOR SALE 

 

In the ordinary course of business, the Bank originates for sale mortgage loans and short-term, consumer loans.  Mortgage loans originated for sale are primarily originated and sold into the secondary market through the Bank’s Mortgage Banking operations, while short-term, consumer loans originated for sale are originated and sold through the RCS division of the Company’s RPG segment.

 

Mortgage Loans Held for Sale, at Fair Value

 

See additional detail regarding mortgage loans originated for sale, at fair value under Footnote 16 “Mortgage Banking Activities” of this section of the filing.

 

Consumer Loans Held for Sale, at Fair Value

 

During the first quarter of 2016, RCS initiated a short-term installment loan program, in which the Company sells 100% of the receivables approximately 21 days after origination.  The Company carries these loans at fair value, with the loans marked to market on a monthly basis, with changes in their fair value reported as a component of “Program fees.”

 

Activity for consumer loans held for sale and carried at fair value was as follows:

 

 

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

 

RCS originates, primarily for sale, both a short-term, line-of-credit product and a credit card product. The Bank sells 90% of the balances maintained through these two products within two days of loan origination and retains a 10% interest. The Company carries such loans at the lower of cost or fair value. The short-term, line-of-credit product represented the substantial majority of RCS activity during the years ended December 31, 2016 and 2015, as RCS moved beyond the pilot phase for this product in June 2015. In December 2015, RCS began piloting its credit card product. Any gains or losses on sale of such 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: