Annual report pursuant to Section 13 and 15(d)

Notes Receivable

v3.10.0.1
Notes Receivable
12 Months Ended
Dec. 31, 2018
Notes Receivable [Abstract]  
Notes Receivable

4.  Notes Receivable



The table below provides information relating to our notes receivable and our allowance for loan losses (dollars in thousands):





 

 

 

 

 

 



 

 

 

 

 

 



 

As of December 31,



 

2018

 

2017

Notes receivable secured by VOIs:

 

 

 

 

 

 

VOI notes receivable - non-securitized

 

$

124,642 

 

$

184,971 

VOI notes receivable - securitized

 

 

447,850 

 

 

364,349 



 

 

572,492 

 

 

549,320 

Allowance for loan losses - non-securitized

 

 

(28,258)

 

 

(38,497)

Allowance for loan losses - securitized

 

 

(105,875)

 

 

(85,161)

VOI notes receivable, net

 

$

438,359 

 

$

425,662 

Allowance as a % of VOI notes receivable

 

 

23% 

 

 

23% 



 

 

 

 

 

 

Notes receivable secured by homesites: (1)

 

 

 

 

 

 

Homesite notes receivable

 

 

898 

 

 

1,329 

Allowance for loan losses

 

 

(90)

 

 

(133)

Homesite notes receivable, net

 

$

808 

 

$

1,196 

Allowance as a % of homesite notes receivable

 

 

10% 

 

 

10% 

Total notes receivable:

 

 

 

 

 

 

Gross notes receivable

 

$

573,390 

 

$

550,649 

Allowance for loan losses

 

 

(134,223)

 

 

(123,791)

Notes receivable, net

 

$

439,167 

 

$

426,858 

Allowance as a % of gross notes receivable

 

 

23% 

 

 

22% 



(1)

Notes receivable secured by homesites were originated through a business, substantially all the assets of which were sold by us in 2012.    



The weighted-average interest rate on our notes receivable was 15.1% and 15.3% at December 31, 2018 and 2017, respectively.  All of our VOI loans bear interest at fixed rates.  The weighted-average interest rate charged on notes receivable secured by VOIs was 15.1% and 15.3% at December 31, 2018 and 2017 respectively.  Our VOI notes receivable are generally secured by property located in Florida, Missouri, Nevada, South Carolina, Tennessee, and Wisconsin



Future principal payments due on our notes receivable (including our homesite notes receivable) as of December 31, 2018 are as follows (in thousands):







 

 

 



 

 

 

2019

 

$

61,093 

2020

 

 

59,746 

2021

 

 

63,759 

2022

 

 

68,046 

2023

 

 

70,472 

Thereafter

 

 

250,274 

Total

 

$

573,390 



Credit Quality for Financed Receivables and the Provision for Loan Losses



The activity in our allowance for loan losses (including with respect to our homesite notes receivable) was as follows (in thousands):    





 

 

 

 

 

 



 

 

 

 

 

 



 

For the Year Ended
December 31,



 

2018

 

2017

Balance, beginning of year

 

$

123,791 

 

$

120,270 

Provision for loan losses

 

 

51,236 

 

 

46,412 

Less: Write-offs of uncollectible receivables 

 

 

(40,804)

 

 

(42,891)

Balance, end of year

 

$

134,223 

 

$

123,791 



We monitor the credit quality of our receivables on an ongoing basis. We hold large amounts of homogeneous VOI notes receivable and assess uncollectibility based on pools of receivables as we don’t believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties.  In estimating loan losses, we do not use a single primary indicator of credit quality but instead we evaluate our VOI notes receivable based upon a static pool analysis that incorporates the aging of the respective receivables, default trends and prepayment rates by origination year, as well as the FICO scores of the borrowers.



The percentage of gross notes receivable outstanding by FICO score at origination were as follows:







 

 

 

 

 



As of



December 31,

 

December 31,



2018

 

2017

FICO Score

 

 

 

 

 

700+

57 

%

 

54 

%

600-699

39 

 

 

41 

 

<600

 

 

 

No Score (1)

 

 

 

Total

100 

%

 

100 

%



(1)

VOI notes receivable without a FICO score are primarily related to foreign borrowers.



The following table shows the delinquency status of our VOI notes receivable (in thousands):





 

 

 

 

 

 



 

 

 

 

 

 



 

As of December 31,



 

2018

 

2017

Current

 

$

541,783 

 

$

525,482 

31-60 days

 

 

5,783 

 

 

6,088 

61-90 days

 

 

4,516 

 

 

4,897 

Over 91 days (1)

 

 

20,410 

 

 

12,853 

Total

 

$

572,492 

 

$

549,320 



 

 

 

 

 

 

(1)

Includes $14.3 million and $7.6 million as of December 31, 2018 and 2017, respectively, related to VOI notes receivable that, as of such date, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of our receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.