Consumer Loans Receivable

3 Months Ended

Jun. 27, 2020

The following table summarizes consumer loans receivable (in thousands):


	June 27, 2020		March 28, 2020
Loans held for investment (at Acquisition Date, defined below)	$	37,650	$	37,779
Loans held for investment (originated after Acquisition Date)	19,917		20,140
Loans held for sale	25,297		14,671
Construction advances	12,240		13,400
Consumer loans receivable	95,104		85,990
Deferred financing fees and other, net	(2,133)		(1,919)
Allowance for loan losses	(4,012)		(1,767)
	$	88,959	$	82,304

The Company acquired consumer loans receivable as part of its acquisition of Palm Harbor Homes, Inc. in April 2011 ("Acquisition Date"). The allowance for loan losses is developed at the loan level and allocated to specific individual loans or to impaired loans. A range of probable losses is calculated after giving consideration to, among other things, the loan characteristics and historical loss experience. The Company then makes a determination of the best estimate within the range of loan losses. The allowance for loan losses reflects the Company's judgment of the probable loss exposure on its loans held for investment portfolio. On March 29, 2020, the Company adopted ASU 2016-13 using the prospective transition approach for acquired consumer loans receivable assets that were previously accounted for under ASC 310-30. The Company determined that $1.7 million of the existing purchase discount for such consumer loans was related to credit factors and was reclassified to the allowance for loan loss upon adoption. The remaining discount on the acquired consumer loans was determined to be related to non-credit factors and will be accredited into interest income over the life of the loans.

The following table represents changes in the estimated allowance for loan losses, including related additions and deductions to the allowance for loan losses (in thousands):


	Three Months Ended
	June 27, 2020		June 29, 2019
Allowance for loan losses at beginning of period	$	1,767	$	415
Impact of adoption of ASU 2016-13	2,276		—
Provision for loan losses	161		6
Charge-offs	(192)		—
Recoveries	—		—
Allowance for loan losses at end of period	$	4,012	$	421

The consumer loans held for investment had the following characteristics:


	June 27, 2020		March 28, 2020
Weighted average contractual interest rate	8.4	%	8.4	%
Weighted average effective interest rate	9.2	%	9.3	%
Weighted average months to maturity	164		164

The Company's policy is to place loans on non-accrual status when interest is past due and remains unpaid 90 days or more or when there is a clear indication that the borrower is unable or unwilling to make payments as they become due. The Company will resume accrual of interest once these factors have been remedied. Payments received on non-accrual loans are recorded on a cash basis, first to interest and then to principal. Charge-offs occur when it becomes probable that outstanding amounts will not be recovered.

The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands):


	June 27, 2020		March 28, 2020
Current	$	92,390	$	83,861
31-to-60 days	751		547
61-to-90 days	258		307
91+ days	1,705		1,275
	$	95,104	$	85,990

The following tables disaggregate CountryPlace's gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands):


	June 27, 2020
	2021		2020		2019		2018		2017		Prior		Total		March 28, 2020
Prime- FICO score 680 and greater	$	10,464	$	14,349	$	2,761	$	1,693	$	2,105	$	27,404	$	58,776	$	55,513
Near Prime- FICO score 620-679	6,522		10,390		2,300		1,263		667		11,677		32,819		27,767
Sub-Prime- FICO score less than 620	78		90		—		—		86		2,042		2,296		2,142
No FICO score	637		21		29		—		—		526		1,213		568
	$	17,701	$	24,850	$	5,090	$	2,956	$	2,858	$	41,649	$	95,104	$	85,990

Loan contracts secured by geographically concentrated collateral could experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically dispersed. As of June 27, 2020, 36% of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and 17% was concentrated in Florida. As of March 28, 2020, 36% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 16% was concentrated in Florida. Other than Texas and Florida, no state had concentrations in excess of 10% of the principal balance of the consumer loans receivable as of June 27, 2020 or March 28, 2020.

Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell. At repossession, the fair value of the collateral is determined based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is recorded to the allowance for loan losses. On a monthly basis, the fair value of the collateral is adjusted to the lower of the amount recorded at repossession or the estimated sales price less estimated costs to sell, based on current information. Repossessed homes totaled approximately $842,000 and $1.5 million as of June 27, 2020 and March 28, 2020, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately $674,000 and $560,000 as of June 27, 2020 and March 28, 2020, respectively.