Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2018

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Summary of Inclusive Capitalized Loans

The following table shows the major classification of loans, inclusive of capitalized loan origination costs, at June 30, 2018 under Bank Holding Company Accounting.

(Dollars in thousands)
Recreation	$	597,348
Home improvement		195,876
Commercial		80,105
Medallion		276,794
Total gross loans		1,150,123
Allowance for loan losses		(21,425	)
Total net loans	$	1,128,698

Summary of Activity in Allowance for Loan Losses

The following table sets forth the activity in the allowance for loan losses for the three months ended June 30, 2018 under Bank Holding Company Accounting.

(Dollars in thousands)
Allowance for loan losses—beginning balance (1)	$	—
Charge-offs:
Recreation		(4,646	)
Home improvement		(561	)
Commercial		—
Medallion		(6,280	)
Total charge-offs		(11,487	)
Recoveries
Recreation		1,899
Home improvement		239
Commercial		4
Medallion		194
Total recoveries		2,336
Net charge-offs		(9,151	)
Provision for loan losses (2)		30,576
Allowance for loan losses—ending balance	$	21,425

(1) Beginning balance reflects the transition to Bank Holding Company Accounting by netting previously established unrealized depreciation against the gross loan balances resulting in a starting point of zero for this table.

(2) Includes $6,663 of unallocated allowance for current and performing medallion loans under 90 days past due, as an additional buffer against future losses, and to conform our methodology to that of Medallion Bank.

Summary of Composition of Allowance for Loan Losses by Type of Loan

The following table sets forth the composition of the allowance for loan losses by type as of June 30, 2018:

	Amount		Percentage of Allowance			Allowance as a Percent of Loan Category
Recreation	$	1,963		9	%		0.33	%
Home Improvement		555		3			0.28
Commercial		175		1			0.22
Medallion		18,732		87			6.77
Total	$	21,425		100	%		1.86	%

Summary of Total Nonaccrual Loans and Foregone Interest

The following table presents total nonaccrual loans and foregone interest, substantially all of which is in the medallion portfolio. The decline reflects the chargeoffs of certain loans and their movement to loan collateral in process of foreclosure. The fluctuation in nonaccrual interest foregone is due to past due loans and market conditions.

	Bank Holding Company Accounting			Investment Company Accounting
(Dollars in thousands)	June 30, 2018			December 31, 2017 (1)			June 30, 2017 (2)
Total nonaccrual loans	$	47,904		$	98,494		$	122,042
Interest foregone quarter to date		770			823			2,248
Amount of foregone interest applied to principal in the quarter		400			52			679
Interest foregone life to date		8,281			12,485			14,934
Amount of foregone interest applied to principal life to date		3,748			3,495			9,711
Percentage of nonaccrual loans to gross loan portfolio		4	%		31	%		34	%

(1) Does not include Medallion Bank: nonaccrual loans of $32,668, $1,487 of interest income foregone and $1,221 of foregone interest paid and applied to principal.

(2) Does not include Medallion Bank: nonaccrual loans of $43,246, $1,379 of interest income foregone and $1,065 of foregone interest paid and applied to principal.

Summary of Performance Status of Loan

The following presents our performance status of loans as of June 30, 2018 under Bank Holding Company Accounting.

(Dollars in  thousands)	Performing		Non- Performing		Total
Recreation	$	593,177	$	4,171	$	597,348
Home improvement		195,759		117		195,876
Commercial		72,664		7,441		80,105
Medallion		238,965		37,829		276,794
Total	$	1,100,565	$	49,558	$	1,150,123

Summary of Attributes of Nonperforming Loan Portfolio

The following table provides additional information on attributes of the nonperforming loan portfolio as of June 30, 2018 under Bank Holding Company Accounting.

	June 30, 2018						Three Months Ended June 30, 2018
(Dollars in  thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Investment Recorded		Interest Income Recognized
With no allowance recorded
Recreation	$	—	$	—	$	—	$	—	$	—
Home improvement		—		—		—		—		—
Commercial		—		—		—		—		—
Medallion		—		—				—		—
Total with no allowance	$	—	$	—	$	—	$	—	$	—

	June 30, 2018						Three Months Ended June 30, 2018
(Dollars in  thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Investment Recorded		Interest Income Recognized
With an allowance recorded
Recreation	$	4,171	$	4,171	$	145	$	5,577	$	125
Home improvement		117		117		2		116		—
Commercial		7,441		7,441		175		8,256		70
Medallion		37,829		37,829		12,069		55,213		114
Total with allowance	$	49,558	$	49,558	$	12,391	$	69,162	$	309
Total nonperforming loans	$	49,558	$	49,558	$	12,391	$	69,162	$	309

The following table provides additional information on attributes of the nonperforming loan portfolio as of December 31, 2017 and June 30, 2017.

(Dollars in  thousands)	Recorded Investment (1) (2)		Unpaid Principal Balance		Average Recorded Investment
December 31, 2017
Medallion(3)	$	79,871	$	82,612	$	128,671
Commercial (3)		18,623		20,491		18,792
June 30, 2017
Medallion(3)	$	112,327	$	114,351	$	124,084
Commercial(3)		9,714		17,403		9,904

(1) As of December 31, 2017 and June 30, 2017, $20,851, and $43,486 of unrealized depreciation was recorded as a valuation allowance on these loans.

(2) Interest income of $608 and $1,283 was recognized on loans for the three and six months ended June 30, 2017.

(3) Included in the unpaid principal balance is unearned paid-in-kind interest on nonaccrual loans of $4,609 and $9,712 as of December 31, 2017 and June 30, 2017, which is included in the nonaccrual disclosures on page 24.

Summary of Aging of Loans

The following tables show the aging of all loans as of June 30, 2018 and December 31, 2017:

Bank Holding Company Accounting	Days Past Due												Recorded Investment > 90 Days and Accruing
June 30, 2018 (Dollars in thousands)	31-60		61-90		91 +		Total		Current		Total (1)
Recreation	$	12,981	$	3,242	$	2,402	$	18,625	$	554,995	$	573,620	$	—
Home improvement		391		173		115		679		200,882		201,561		—
Commercial		492		—		215		707		79,398		80,105		—
Medallion		8,517		10,429		12,429		31,375		236,808		268,183		506
Total	$	22,381	$	13,844	$	15,161	$	51,386	$	1,072,083	$	1,123,469	$	506

(1) Excludes loan premiums of $12,378 resulting from purchase price accounting and $14,267 of capitalized loan origination costs.

Investment Company Accounting	Days Past Due												Recorded Investment > 90 Days and Accruing
December 31, 2017 (Dollars in thousands)	31-60		61-90		91 +		Total		Current		Total
Medallion loans	$	16,049	$	12,387	$	59,701	$	88,137	$	140,279	$	228,416	$	265
Commercial loans
Secured mezzanine		—		—		—		—		88,334		88,334		—

Investment Company Accounting	Days Past Due												Recorded Investment > 90 Days and Accruing
December 31, 2017 (Dollars in thousands)	31-60		61-90		91 +		Total		Current		Total (1)
Other secured commercial		—		—		749		749		1,728		2,477		—
Total commercial loans		—		—		749		749		90,062		90,811		—
Total	$	16,049	$	12,387	$	60,450	$	88,886	$	230,341	$	319,227	$	265

Summary of Troubled Debt Restructurings

The following table shows the troubled debt restructurings which the Company entered into during the three and six months ended June 30, 2018.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		7	$	2,695	$	2,695

During the twelve months ended June 30, 2018, five loans modified as troubled debt restructurings were in default and had an investment value of $904,000 as of June 30, 2018.

The following table shows troubled debt restructurings which the Company entered into during the quarter ended June 30, 2017.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		12	$	8,249	$	8,175

The following table shows troubled debt restructurings which the Company entered into during the six months ended June 30, 2017.

(Dollars in  thousands)	Number of Loans		Pre- Modification Investment		Post- Modification Investment
Medallion loans		47	$	31,911	$	31,837
Commercial loans		2		6,547		6,547
Total		49	$	38,458	$	38,384