Quarterly report pursuant to Section 13 or 15(d)

Notes Receivable

v3.22.1
Notes Receivable
3 Months Ended
Mar. 31, 2022
Notes Receivable [Abstract]  
Notes Receivable 4. Notes Receivable

The table below provides information relating to the Company’s notes receivable and its allowance for loan losses (dollars in thousands):

As of

March 31,

December 31,

2022

2021

Notes receivable secured by VOIs:

VOI notes receivable - non-securitized

$

294,661

$

275,163

VOI notes receivable - securitized

326,359

334,266

Gross VOI notes receivable

621,020

609,429

Allowance for loan losses - non-securitized

(82,504)

(77,714)

Allowance for loan losses - securitized

(84,899)

(85,393)

Allowance for loan losses

(167,403)

(163,107)

VOI notes receivable, net

$

453,617

$

446,322

Allowance as a % of Gross VOI notes receivable

27%

27%

The weighted-average interest rate charged on the Company’s notes receivable secured by VOIs was 15.3% at both March 31, 2022 and December 31, 2021. All of Company’s VOI loans bear interest at fixed rates. The Company’s VOI notes receivable are primarily secured by VOI inventory located in Florida, Missouri, South Carolina, Tennessee, Nevada and Virginia.

Allowance for Loan Losses

The activity in the Company’s allowance for loan losses was as follows (in thousands):

For the Three Months Ended

March 31,

2022

2021

Balance, beginning of period

$

163,107

$

142,044

Provision for loan losses

16,579

12,319

Less: Write-offs of uncollectible receivables

(12,283)

(11,121)

Balance, end of period

$

167,403

$

143,242

The Company monitors the credit quality of its receivables on an ongoing basis. The Company holds large amounts of homogeneous VOI notes receivable and assess uncollectibility based on pools of receivables as it does not believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating loan losses, the Company does not use a single primary indicator of credit quality but instead evaluates its 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 Company records the difference between its VOI notes receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for loan losses and records the VOI notes receivables net of the allowance.

The COVID-19 pandemic or adverse changes in economic conditions, including recent inflationary trends may have an adverse impact on the collectability of our VOI notes receivable and we continue to evaluate the impact on on our default or and delinquency rates. Our estimates may not prove to be correct and our allowance for loan losses may not prove to be adequate.

Additional information about the Company’s VOI notes receivable by year of origination is as follows as of March 31, 2022 (in thousands):

Year of Origination

2022

2021

2020

2019

2018

2017 and Prior

Total

701+

$

39,722 

$

117,094 

$

44,535 

$

55,081 

$

36,536 

$

60,572 

$

353,540 

601-700

18,111 

81,328 

31,597 

31,779 

23,900 

50,505 

237,220 

<601 (1)

1,453 

4,056 

2,912 

3,464 

2,274 

5,095 

19,254 

Other (2)

491 

2,668 

1,234 

1,017 

1,596 

4,000 

11,006 

Total by FICO score

$

59,777 

$

205,146 

$

80,278 

$

91,341 

$

64,306 

$

120,172 

$

621,020 

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

(2)Includes $7.0 million related to VOI notes receivable that, as of March 31, 2022, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

Additional information about the Company’s VOI notes receivable by year of origination is as follows as of December 31, 2021 (in thousands):

Year of Origination

2021

2020

2019

2018

2017

2016 and Prior

Total

701+

$

129,960 

$

49,102 

$

60,037 

$

39,760 

$

26,711 

$

40,872 

$

346,442 

601-700

82,664 

34,185 

34,072 

25,732 

18,132 

37,777 

232,562 

<601 (1)

4,623 

3,149 

3,690 

2,473 

1,551 

4,175 

19,661 

Other (2)

2,279 

996 

1,201 

1,876 

1,429 

2,983 

10,764 

Total by FICO score

$

219,526 

$

87,432 

$

99,000 

$

69,841 

$

47,823 

$

85,807 

$

609,429 

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

(2)Includes $7.0 million related to VOI notes receivable that, as of December 31, 2021, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

The percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination were as follows:

As of

March 31,

December 31,

2022

2021

FICO Score

700+

58

%

58

%

601-699

39

39

<600

2

2

No Score (1)

1

1

Total

100

%

100

%

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

The Company’s notes receivable are carried at amortized cost less an allowance for loan losses. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of March 31, 2022 and December 31, 2021, $17.3 million and $16.3 million, respectively, of our VOI notes receivable were more than 90 days past due, and accordingly, consistent with our policy, were not accruing interest income. After approximately 127 days, VOI notes receivable are generally written off against the allowance for loan loss. Accrued interest was $4.4 million as of both March 31, 2022 and December 31, 2021, and is included within other assets in the Company’s unaudited consolidated balance sheets herein.

The following table shows the delinquency status of the Company’s VOI notes receivable as of March 31, 2022 and December 31, 2021 (in thousands):

As of

March 31,

December 31,

2022

2021

Current

$

592,907

$

581,719

31-60 days

6,429

6,290

61-90 days

4,372

5,084

Over 91 days (1)

17,312

16,336

Total

$

621,020

$

609,429

(1)Includes $7.0 million related to VOI notes receivable that, as of both March 31, 2022 and December 31, 2021 had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.