NOTE 5: MORTGAGE LOANS HELD FOR INVESTMENT

The composition of our mortgage loan portfolio is as follows:



(dollars in 000s)
As of	October 31, 2014					October 31, 2013					April 30, 2014
	Amount			% of Total		Amount			% of Total		Amount			% of Total
Adjustable-rate loans	$	138,808		54	%	$	165,289		54	%	$	149,480		54	%
Fixed-rate loans	119,920			46	%	140,814			46	%	127,943			46	%
	258,728			100	%	306,103			100	%	277,423			100	%
Unamortized deferred fees and costs	2,125					2,508					2,277
Less: Allowance for loan losses	(9,761		)			(12,704		)			(11,272		)
	$	251,092				$	295,907				$	268,428

Our loan loss allowance as a percent of mortgage loans was 3.8% as of October 31, 2014, compared to 4.2% as of October 31, 2013 and 4.1% as of April 30, 2014.

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



(in 000s)
Six months ended October 31,	2014			2013
Balance at beginning of the period	$	11,272		$	14,314
Provision	735			7,224
Recoveries	911			2,409
Charge-offs	(3,157		)	(11,243		)
Balance at end of the period	$	9,761		$	12,704

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	October 31, 2014				October 31, 2013				April 30, 2014
	Portfolio Balance		Related Allowance		Portfolio Balance		Related Allowance		Portfolio Balance		Related Allowance
Pooled (less than 60 days past due)	$	147,614	$	3,768	$	178,497	$	5,523	$	158,496	$	4,508
Impaired:
Individually (TDRs)	40,201		4,237		47,011		4,598		43,865		4,346
Individually (60 days or more past due)	70,913		1,756		80,595		2,583		75,062		2,418
	$	258,728	$	9,761	$	306,103	$	12,704	$	277,423	$	11,272

Detail of our mortgage loans held for investment and the related allowance as of October 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	$	148,833	$	7,847	5.3	%	27.9	%
All other	109,895		1,914		1.7	%	6.9	%
	$	258,728	$	9,761	3.8	%	19.0	%

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



(in 000s)
Credit Quality Indicators	Purchased from SCC		All Other		Total Portfolio
Occupancy status:
Owner occupied	$	109,069	$	72,767	$	181,836
Non-owner occupied	39,764		37,128		76,892
	$	148,833	$	109,895	$	258,728
Documentation level:
Full documentation	$	49,157	$	77,974	$	127,131
Limited documentation	4,676		12,114		16,790
Stated income	83,074		12,305		95,379
No documentation	11,926		7,502		19,428
	$	148,833	$	109,895	$	258,728
Internal risk rating:
High	$	41,758	$	—	$	41,758
Medium	107,075		—		107,075
Low	—		109,895		109,895
	$	148,833	$	109,895	$	258,728

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 52% 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 October 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	$	11,199	$	324	$	47,514	$	59,037	$	89,796	$	148,833
All other	4,613		78		7,530		12,221		97,674		109,895
	$	15,812	$	402	$	55,044	$	71,258	$	187,470	$	258,728


⁽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	October 31, 2014		October 31, 2013		April 30, 2014
Loans:
Purchased from SCC	$	60,254	$	67,641	$	61,767
Other	11,439		12,723		12,528
	71,693		80,364		74,295
TDRs:
Purchased from SCC	5,059		3,832		4,648
Other	940		881		951
	5,999		4,713		5,599
Total non-accrual loans	$	77,692	$	85,077	$	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 October 31, 2014:
Purchased from SCC	$	25,494	$	68,138	$	93,632	$	4,984
Other	3,732		13,750		17,482		1,009
	$	29,226	$	81,888	$	111,114	$	5,993
As of October 31, 2013:
Purchased from SCC	$	30,100	$	77,052	$	107,152	$	5,762
Other	5,196		15,258		20,454		1,419
	$	35,296	$	92,310	$	127,606	$	7,181
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	October 31, 2014		October 31, 2013		April 30, 2014
Portion of total allowance for loan losses allocated to impaired loans and TDR loans:
Based on collateral value method	$	1,756	$	2,583	$	2,418
Based on discounted cash flow method	4,237		4,598		4,346
	$	5,993	$	7,181	$	6,764

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



(in 000s)
Six months ended October 31,	2014		2013
Average impaired loans:
Purchased from SCC	$	99,706	$	121,532
All other	19,404		23,646
	$	119,110	$	145,178