Annual report pursuant to Section 13 and 15(d)

Notes Receivable

v3.20.1
Notes Receivable
12 Months Ended
Dec. 31, 2019
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,

2019

2018

Notes receivable secured by VOIs:

VOI notes receivable - non-securitized

$

203,872

$

124,642

VOI notes receivable - securitized

385,326

447,850

589,198

572,492

Allowance for loan losses - non-securitized

(47,894)

(28,258)

Allowance for loan losses - securitized

(92,736)

(105,875)

VOI notes receivable, net

$

448,568

$

438,359

Allowance as a % of VOI notes receivable

24%

23%

Notes receivable secured by homesites: (1)

Homesite notes receivable

659

898

Allowance for loan losses

(65)

(90)

Homesite notes receivable, net

$

594

$

808

Allowance as a % of homesite notes receivable

10%

10%

Total notes receivable:

Gross notes receivable

$

589,857

$

573,390

Allowance for loan losses

(140,695)

(134,223)

Notes receivable, net

$

449,162

$

439,167

Allowance as a % of gross notes receivable

24%

23%

(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 14.9% and 15.1% at December 31, 2019 and 2018, respectively. All of our VOI loans bear interest at fixed rates. 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, 2019 are as follows (in thousands):

2020

$

62,808

2021

62,320

2022

67,086

2023

70,589

2024

72,559

Thereafter

254,495

Total

$

589,857

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,

2019

2018

Balance, beginning of year

$

134,223

$

123,791

Provision for loan losses

55,677

51,236

Less: Write-offs of uncollectible receivables

(49,205)

(40,804)

Balance, end of year

$

140,695

$

134,223

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,

2019

2018

FICO Score

700+

59

%

57

%

600-699

37

39

<600

3

3

No Score (1)

1

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,

2019

2018

Current

$

557,849

$

541,783

31-60 days

6,794

5,783

61-90 days

5,288

4,516

Over 91 days (1)

19,267

20,410

Total

$

589,198

$

572,492

(1)Includes $10.6 million and $14.3 million as of December 31, 2019 and 2018, 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.