HR Block 2012 Annual Report Download - page 46

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LOAN PORTFOLIO AND SUMMARY OF LOAN LOSS EXPERIENCE – The following table shows the
composition of HRB Bank’s mortgage loan portfolio as of April 30, 2012, 2011, 2010, 2009 and 2008, and
information on delinquent loans:
(in 000s)
As of April 30, 2012 2011 2010 2009 2008
Residential real estate mortgages $ 428,568 $ 569,610 $ 683,452 $ 821,583 $ 1,004,283
Home equity lines of credit 174 183 232 254 357
$ 428,742 $ 569,793 $ 683,684 $ 821,837 $ 1,004,640
Loans and TDRs on non–accrual $ 108,839 $ 155,645 $ 185,209 $ 222,382 $ 110,759
Loans past due 90 days or more 99,044 149,501 153,703 121,685 73,600
Total TDRs 71,949 106,328 144,977 160,741 37,159
Interest income recorded on non–accrual
loans 5,682 6,311 7,452 4,927 585
Concentrations of loans to borrowers located in a single state 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. The table below presents outstanding loans by state, for states with a concentration of 5%
or greater, for our portfolio of mortgage loans held for investment as of April 30, 2012:
(dollars in 000s)
Loans
Purchased
from SCC
Loans
Purchased
from Other
Parties Total
Percent
of Total
Delinquency
Rate (30+ Days)
Florida $ 23,534 $ 56,058 $ 79,592 19% 18%
New York 68,680 8,530 77,210 18% 48%
California 45,976 9,764 55,740 13% 30%
Wisconsin 1,566 34,627 36,193 8% 6%
All others 111,667 68,340 180,007 42% 21%
Total $ 251,423 $ 177,319 $ 428,742 100%
A rollforward of HRB Bank’s allowance for loss on mortgage loans is as follows:
(dollars in 000s)
Year ended April 30, 2012 2011 2010 2009 2008
Balance at beginning of the year $ 90,487 $ 93,535 $ 84,073 $ 45,401 $ 3,448
Provision 23,875 35,200 47,750 63,897 42,004
Recoveries 252 272 88 54 999
Charge-offs and transfers (88,170) (38,520) (38,376) (25,279) (1,050)
Balance at end of the year $ 26,444 $ 90,487 $ 93,535 $ 84,073 $45,401
Ratio of net charge-offs to average loans
outstanding during the year 19.61% 5.96% 4.95% 2.80% 0.09%
The increase in charge-offs during fiscal year 2012 was a result of the charge-off of $64.1 million in mortgage
loans more than 180 days past due in accordance with OCC regulations, as discussed in Item 8, note 1 to the
consolidated financial statements.
32
H&R BLOCK 2012 Form 10K