NOTE 5: MORTGAGE LOANS HELD FOR INVESTMENT

The composition of our mortgage loan portfolio is as follows:



(dollars in 000s)
As of	July 31, 2014					July 31, 2013					April 30, 2014
	Amount			% of Total		Amount			% of Total		Amount			% of Total
Adjustable-rate loans	$	144,096		54	%	$	174,481		54	%	$	149,480		54	%
Fixed-rate loans	123,991			46	%	147,973			46	%	127,943			46	%
	268,087			100	%	322,454			100	%	277,423			100	%
Unamortized deferred fees and costs	2,206					2,741					2,277
Less: Allowance for loan losses	(10,561		)			(15,514		)			(11,272		)
	$	259,732				$	309,681				$	268,428

Our loan loss allowance as a percent of mortgage loans was 3.9% as of July 31, 2014, compared to 4.8% as of July 31, 2013 and 4.1% as of April 30, 2014.

Activity in the allowance for loan losses for the three months ended July 31, 2014 and 2013 is as follows:



(in 000s)
Three months ended July 31,	2014			2013
Balance at beginning of the period	$	11,272		$	14,314
Provision	725			7,603
Recoveries	679			767
Charge-offs	(2,115		)	(7,170		)
Balance at end of the period	$	10,561		$	15,514

When determining our allowance for loan losses, we evaluate loans less than 60 days past due on a pooled basis, while loans we consider impaired, including those loans more than 60 days past due or modified as a troubled debt restructuring (TDR), are evaluated individually. The balance of these loans and the related allowance is as follows:



(in 000s)
As of	July 31, 2014				July 31, 2013				April 30, 2014
	Portfolio Balance		Related Allowance		Portfolio Balance		Related Allowance		Portfolio Balance		Related Allowance
Pooled (less than 60 days past due)	$	152,427	$	4,242	$	186,082	$	5,734	$	158,496	$	4,508
Impaired:
Individually (TDRs)	41,649		4,070		50,136		4,866		43,865		4,346
Individually (60 days or more past due)	74,011		2,249		86,236		4,914		75,062		2,418
	$	268,087	$	10,561	$	322,454	$	15,514	$	277,423	$	11,272

Detail of our mortgage loans held for investment and the related allowance as of July 31, 2014 is as follows:



(dollars in 000s)
	Outstanding Principal Balance		Loan Loss Allowance				% 30+ Days Past Due
	Outstanding Principal Balance		Amount		% of Principal		% 30+ Days Past Due
Purchased from SCC	$	154,176	$	8,420	5.5	%	26.6	%
All other	113,911		2,141		1.9	%	7.3	%
	$	268,087	$	10,561	3.9	%	18.4	%

Credit quality indicators as of July 31, 2014 include the following:



(in 000s)
Credit Quality Indicators	Purchased from SCC		All Other		Total Portfolio
Occupancy status:
Owner occupied	$	113,361	$	75,436	$	188,797
Non-owner occupied	40,815		38,475		79,290
	$	154,176	$	113,911	$	268,087
Documentation level:
Full documentation	$	51,544	$	81,354	$	132,898
Limited documentation	4,789		12,459		17,248
Stated income	85,256		12,480		97,736
No documentation	12,587		7,618		20,205
	$	154,176	$	113,911	$	268,087
Internal risk rating:
High	$	43,423	$	—	$	43,423
Medium	110,753		—		110,753
Low	—		113,911		113,911
	$	154,176	$	113,911	$	268,087

Loans given our internal risk rating of "high" generally had no documentation or were based on stated income. Loans given our internal risk rating of "medium" generally had full documentation or were based on stated income, with loan-to-value ratios at origination of more than 80%, and were made to borrowers with credit scores below 700 at origination. Loans given our internal risk rating of "low" generally had loan-to-value ratios at origination of less than 80% and were made to borrowers with credit scores greater than 700 at origination.

Our mortgage loans held for investment include concentrations of loans to borrowers in certain states, which may result in increased exposure to loss as a result of changes in real estate values and underlying economic or market conditions related to a particular geographical location. Approximately 51% of our mortgage loan portfolio consists of loans to borrowers located in the states of Florida, California and New York.

Detail of the aging of the mortgage loans in our portfolio as of July 31, 2014 is as follows:



(in 000s)
	Less than 60 Days Past Due		60 – 89 Days Past Due		90+ Days Past Due⁽¹⁾		Total Past Due		Current		Total
Purchased from SCC	$	9,245	$	1,623	$	50,524	$	61,392	$	92,784	$	154,176
All other	6,489		195		8,334		15,018		98,893		113,911
	$	15,734	$	1,818	$	58,858	$	76,410	$	191,677	$	268,087


⁽¹⁾	We do not accrue interest on loans past due 90 days or more.

Information related to our non-accrual loans is as follows:



(in 000s)
As of	July 31, 2014		July 31, 2013		April 30, 2014
Loans:
Purchased from SCC	$	62,389	$	68,740	$	61,767
Other	12,017		14,860		12,528
	74,406		83,600		74,295
TDRs:
Purchased from SCC	4,394		3,247		4,648
Other	828		500		951
	5,222		3,747		5,599
Total non-accrual loans	$	79,628	$	87,347	$	79,894

Information related to impaired loans is as follows:



(in 000s)
	Balance With Allowance		Balance With No Allowance		Total Impaired Loans		Related Allowance
As of July 31, 2014:
Purchased from SCC	$	28,239	$	68,507	$	96,746	$	5,211
Other	4,359		14,555		18,914		1,108
	$	32,598	$	83,062	$	115,660	$	6,319
As of July 31, 2013:
Purchased from SCC	$	33,088	$	80,132	$	113,220	$	7,396
Other	6,603		16,549		23,152		2,384
	$	39,691	$	96,681	$	136,372	$	9,780
As of April 30, 2014:
Purchased from SCC	$	27,924	$	71,075	$	98,999	$	3,239
Other	5,176		14,752		19,928		3,525
	$	33,100	$	85,827	$	118,927	$	6,764

Information related to the allowance for impaired loans is as follows:



(in 000s)
As of	July 31, 2014		July 31, 2013		April 30, 2014
Portion of total allowance for loan losses allocated to impaired loans and TDR loans:
Based on collateral value method	$	2,249	$	4,914	$	2,418
Based on discounted cash flow method	4,070		4,866		4,346
	$	6,319	$	9,780	$	6,764

Information related to activities of our non-performing assets is as follows:



(in 000s)
Three months ended July 31,	2014		2013
Average impaired loans:
Purchased from SCC	$	105,682	$	130,287
All other	20,691		25,328
	$	126,373	$	155,615