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EX-31.2 - EX-31.2 - BBX CAPITAL CORPbbx-20150930xex312.htm
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EX-31.1 - EX-31.1 - BBX CAPITAL CORPbbx-20150930xex311.htm
EX-32.2 - EX-32.2 - BBX CAPITAL CORPbbx-20150930xex322.htm

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

 

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission files number     001-13133

BBX CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Florida

(State or other jurisdiction of

incorporation or organization)

65-0507804

(I.R.S. Employer

Identification No.)

 

401 East Las Olas Boulevard Suite 800

Fort Lauderdale, Florida

(Address of principal executive offices)

33301

(Zip Code)

 

(954) 940-4000

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.   [X] YES   [   ] NO

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   [X] YES   [   ] NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

 

 

Large accelerated filer [  ]

Accelerated filer [ X  ]

Non-accelerated filer [   ]

Small reporting company [      ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   [   ] YES   [X] NO

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

 

 

Title of Each Class

Outstanding at November 3, 2015

Class A Common Stock, par value $0.01 per share

16,199,145

Class B Common Stock, par value $0.01 per share

    195,045

 

 


 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

Page

Part I.

FINANCIAL INFORMATION

 

 

 

 

Reference

 

 

 

 

 

Item 1.

Financial Statements

3-31

 

 

 

 

Condensed Consolidated Statements of Financial Condition - September 30, 2015 and December 31,

 

    2014 – Unaudited

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income- For the Three and Nine 

 

  Nine Months Ended September 30, 2015 and 2014 - Unaudited

 

 

 

 

 

Condensed Consolidated Statements of Total Equity - For the Nine Months Ended September 30, 2015 

 

  and 2014 - Unaudited

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows - For the Nine Months Ended September 30, 2015

 

 and 2014 - Unaudited

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements - Unaudited

7-31

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

32-48

 

 

 

Item 4.

Controls and Procedures

48-49

 

 

 

Part II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

50 

 

 

 

Item 1A.

Risk Factors

50 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51-52

 

 

 

Item 6.

Exhibits

52 

 

 

 

 

Signatures

53 

 

 

 

 

 


 

 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION-UNAUDITED 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

(In thousands, except share data)

 

2015

 

2014

ASSETS

 

 

 

 

Cash and cash equivalents  ($98 and $4,993 in Variable Interest Entities ("VIEs"))

$

55,871 

 

58,819 

Restricted cash and time deposits 

 

2,649 

 

 -

Loans held-for-sale ($0 and $35,423 in VIEs)

 

22,126 

 

35,423 

Loans receivable, net of allowance for loan losses of $0 and $977  ($0 and $18,972, net of allowance of $0 and $977 in VIEs)

 

27,700 

 

26,844 

Trade receivables, net of allowance for bad debts of $242 and $148

 

12,891 

 

13,416 

Real estate held-for-investment ($0 and $19,945 in VIEs)

 

53,500 

 

76,552 

Real estate held-for-sale ($0 and $13,745 in VIEs), net

 

72,639 

 

41,733 

Investments in unconsolidated real estate joint ventures

 

17,237 

 

16,065 

Investment in Woodbridge Holdings, LLC

 

69,630 

 

73,026 

Properties and equipment, net of accumulated depreciation of $2,600 and $1,571  ($0 and $7,561 in VIEs)

 

17,383 

 

16,717 

Inventories

 

18,599 

 

14,505 

Goodwill

 

8,386 

 

8,440 

Other intangible assets, net of amortization of $848 and $374

 

7,601 

 

7,377 

Other assets ($13 and $1,017 in VIEs)

 

4,443 

 

4,019 

        Total assets

$

390,655 

 

392,936 

LIABILITIES AND EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable

$

13,865 

 

9,603 

BB&T preferred interest in FAR, LLC ($0 and $12,348 in VIEs)

 

 -

 

12,348 

Note payable to Woodbridge

 

 -

 

11,750 

Notes payable

 

23,932 

 

17,923 

Principal and interest advances on residential loans ($0 and $11,171 in VIEs)

 

11,042 

 

11,171 

Other liabilities ($7 and $1,431 in VIEs)

 

21,046 

 

18,861 

        Total liabilities

 

69,885 

 

81,656 

Commitments and contingencies (Note 13)

 

 

 

 

Equity:

 

 

 

 

 Preferred stock, $.01 par value, 10,000,000 shares authorized;

 

 

 

 

   none issued and outstanding    

 

 -

 

 -

 Class A common stock, $.01 par value, authorized 25,000,000

 

 

 

 

   shares; issued and outstanding 16,199,145 and 15,977,324 shares

 

162 

 

160 

 Class B common stock, $.01 par value, authorized 1,800,000

 

 

 

 

   shares; issued and outstanding 195,045 and 195,045 shares

 

 

 Additional paid-in capital

 

349,237 

 

347,937 

 Accumulated deficit

 

(30,108)

 

(38,396)

 Accumulated other comprehensive income

 

263 

 

85 

Total BBX Capital Corporation shareholders' equity

 

319,556 

 

309,788 

Noncontrolling interest

 

1,214 

 

1,492 

Total equity

 

320,770 

 

311,280 

        Total liabilities and equity

$

390,655 

 

392,936 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements - Unaudited

 

 

 

 

3


 

 

 

 

 

 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - UNAUDITED 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months

 

For the Nine Months

 

 

Ended September 30,

 

Ended September 30,

(In thousands, except share and per share data)

 

2015

 

2014

 

2015

 

2014

Revenues:

 

 

 

 

 

 

 

 

Trade sales

$

21,537 

 

17,858 

 

60,655 

 

49,934 

Interest income

 

2,720 

 

1,120 

 

5,628 

 

4,178 

Net (losses) gains on the sales of assets

 

(145)

 

1,031 

 

15,296 

 

4,908 

Income from real estate operations

 

851 

 

1,509 

 

2,790 

 

4,475 

Other

 

572 

 

388 

 

1,490 

 

1,877 

     Total revenues

 

25,535 

 

21,906 

 

85,859 

 

65,372 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of goods sold

 

16,186 

 

13,060 

 

44,216 

 

36,606 

BB&T's priority return in FAR distributions

 

 -

 

105 

 

68 

 

658 

Interest expense

 

 

238 

 

125 

 

1,197 

Real estate operating expenses

 

1,003 

 

1,436 

 

3,048 

 

4,927 

Selling, general and administrative expenses

 

19,398 

 

9,560 

 

49,424 

 

32,224 

       Total costs and expenses

 

36,592 

 

24,399 

 

96,881 

 

75,612 

Equity earnings in Woodbridge Holdings, LLC

 

10,306 

 

7,635 

 

5,941 

 

21,965 

Equity losses in unconsolidated real estate joint ventures

 

(158)

 

(205)

 

(753)

 

(237)

Foreign currency exchange loss

 

(236)

 

(319)

 

(635)

 

(485)

Recoveries from (provision for) loan losses

 

4,427 

 

(656)

 

14,856 

 

2,638 

Asset (impairments) recoveries, net

 

(274)

 

(5,926)

 

1,599 

 

(7,151)

Income (loss) before income taxes

 

3,008 

 

(1,964)

 

9,986 

 

6,490 

(Benefit) provision for income taxes

 

(31)

 

 -

 

(250)

 

Net income (loss) 

 

3,039 

 

(1,964)

 

10,236 

 

6,484 

Less: net loss (earnings) attributable to noncontrolling interest

 

77 

 

66 

 

(1,948)

 

267 

Net income (loss) attributable to BBX Capital Corporation

$

3,116 

 

(1,898)

 

8,288 

 

6,751 

Basic earnings (loss) per share

$

0.19 

 

(0.12)

 

0.51 

 

0.42 

Diluted earnings (loss) per share

$

0.18 

 

(0.12)

 

0.50 

 

0.40 

Basic weighted average number of common

 

 

 

 

 

 

 

 

 shares outstanding

 

16,174,780 

 

16,007,445 

 

16,173,181 

 

15,999,696 

Diluted weighted average number of common and

 

 

 

 

 

 

 

 

common equivalent shares outstanding

 

16,852,269 

 

16,007,445 

 

16,692,062 

 

16,773,270 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

3,039 

 

(1,964)

 

10,236 

 

6,484 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

121 

 

14 

 

220 

 

56 

Comprehensive income (loss)

 

3,160 

 

(1,950)

 

10,456 

 

6,540 

Less: net (gain) loss attributable to noncontrolling interest

 

77 

 

66 

 

(1,948)

 

267 

 Foreign currency translation adjustments attributable to noncontrolling interest

 

(23)

 

(2)

 

(42)

 

(10)

Total comprehensive income (loss) attributable to BBX Capital Corporation

$

3,214 

 

(1,886)

 

8,466 

 

6,797 

 

 

See Notes to Condensed Consolidated Financial Statements - Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

4


 

 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF TOTAL EQUITY 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014 - UNAUDITED 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Additional

 

Other

BBX Capital

Non-

 

 

 

Common

Paid-in

(Accumulated

Comprehensive

Corporation

Controlling

Total

(In thousands)

 

Stock

Capital

Deficit)

Income

Equity

Interest

Equity

BALANCE, DECEMBER 31, 2013

$

160 
345,300 
(43,091)
13 
302,382 
1,184 
303,566 

Net income

 

 -

 -

6,751 

 -

6,751 
(267)
6,484 

Noncontrolling interest distributions

 

 -

 -

 -

 -

 -

(157)
(157)

Noncontrolling interest contributions

 

 -

 -

 -

 -

 -

574 
574 

Other comprehensive income

 

 -

 -

 -

46 
46 
10 
56 

Repurchase and retirement of Class A

 

 

 

 

 

 

 

 

  common shares

 

(1)
(2,020)

 -

 -

(2,021)

 -

(2,021)

Share-based compensation expense

 

2,495 

 -

 -

2,498 

 -

2,498 

BALANCE, SEPTEMBER 30, 2014

$

162 
345,775 
(36,340)
59 
309,656 
1,344 
311,000 

 

 

 

 

 

 

 

 

 

BALANCE, DECEMBER 31, 2014

$

162 
347,937 
(38,396)
85 
309,788 
1,492 
311,280 

Net income

 

 -

 -

8,288 

 -

8,288 
1,948 
10,236 

Other comprehensive income

 

 -

 -

 -

178 
178 
42 
220 

Noncontrolling interest distributions

 

 -

 -

 -

 -

 -

(2,268)
(2,268)

Repurchase and retirement of Class A

 

 

 

 

 

 

 

 

  common shares

 

(2)
(2,527)

 -

 -

(2,529)

 -

(2,529)

Share based compensation expense

 

3,827 

 -

 -

3,831 

 -

3,831 

BALANCE, SEPTEMBER 30, 2015

$

164 
349,237 
(30,108)
263 
319,556 
1,214 
320,770 

 

See Notes to Condensed Consolidated Financial Statements - Unaudited

 

5


 

 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months

 

 

Ended September 30,

(In thousands)

 

2015

 

2014

Net cash (used in) provided by operating activities

$

(13,211)

 

6,543 

Investing activities:

 

 

 

 

Proceeds from redemption and maturities of tax certificates

 

188 

 

549 

Repayments of loans receivable, net

 

27,035 

 

34,942 

Proceeds from the sales of loans receivable

 

89 

 

9,497 

Improvements to real estate held-for-investment

 

(15,692)

 

(1,128)

Purchases of real estate held-for-sale

 

(10,667)

 

 -

Proceeds from sales of real estate held-for-sale

 

35,770 

 

21,662 

Proceeds from the contribution of real estate to unconsolidated real estate joint ventures

 

 -

 

6,966 

Purchases of properties and equipment

 

(2,292)

 

(525)

Proceeds from sales of properties and equipment

 

314 

 

53 

Investments in unconsolidated real estate joint ventures

 

(2,690)

 

(4,431)

Increase in restricted cash and time deposits at financial institutions

 

(2,649)

 

 -

Investment in Woodbridge Holdings, LLC

 

(11,385)

 

 -

Return of Woodbridge Holdings, LLC investment

 

14,781 

 

1,359 

Acquisitions of businesses, net of cash acquired

 

(10)

 

(4,499)

Net cash provided by investing activities

 

32,792 

 

64,445 

Financing activities:

 

 

 

 

Repayment of BB&T preferred interest in FAR, LLC

 

(12,348)

 

(54,346)

Proceeds from notes payable to related parties

 

 -

 

859 

Repayments of notes payable to related parties

 

(11,750)

 

(3,267)

Proceeds from notes payable 

 

4,997 

 

 -

Repayment of notes payable

 

(1,112)

 

(849)

Payments for debt issuance costs

 

(48)

 

(316)

Noncontrolling interest contributions

 

 -

 

574 

Noncontrolling interest distributions

 

(2,268)

 

(157)

Net cash used in financing activities

 

(22,529)

 

(57,502)

(Decrease)increase in cash and cash equivalents

 

(2,948)

 

13,486 

Cash and cash equivalents at the beginning of period

 

58,819 

 

43,138 

Cash and cash equivalents at end of period

$

55,871 

 

56,624 

Cash paid for:

 

 

 

 

Interest paid

$

915 

 

1,739 

Income taxes

 

49 

 

 -

Supplementary disclosure of non-cash investing and

 

 

 

 

 financing activities:

 

 

 

 

Retirement of Class A Common Stock in connection with share based compensation withholding tax obligation

 

2,529 

 

2,021 

Loans and tax certificates transferred to real estate held-for-investment or real estate held-for-sale

 

2,987 

 

20,450 

Refinance of notes payable to related parties

 

 -

 

(7,475)

Increase in notes payable associated with refinance of notes payable to related parties

 

 -

 

7,475 

Issuance of notes payable to purchase properties and equipment

 

 -

 

21 

Real estate held-for-investment transferred to investment in real estate joint ventures

 

 -

 

1,920 

Transfer from real estate-held-for-investment to real estate-held-for-sale

 

38,707 

 

26,730 

Loans receivable transferred to loans held-for-sale

 

 -

 

2,299 

Fair value of net assets acquired in connection with business acquisitions

 

1,683 

 

7,045 

Issuance of notes payable to acquire businesses

 

(1,389)

 

(714)

Change in accumulated other comprehensive income

 

220 

 

56 

 

 

 

 

 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements - Unaudited

 

 

 

 

6


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

 

1.  Presentation of Interim Financial Statements

Basis of Financial Statement Presentation  BBX Capital Corporation (formerly BankAtlantic Bancorp, Inc.) together with its subsidiaries is referred to herein as “the Company”, “we”, “us,” or “our” and is referred to herein without its subsidiaries as “BBX Capital”. BBX Capital was organized under the laws of the State of Florida in 1994. We are involved in the ownership, financing, acquisition, development and management of real estate and real estate related assets, and we are also involved in the investment in or acquisition of operating businesses. 

BBX Capital’s principal asset until July 31, 2012 was its ownership of BankAtlantic and its subsidiaries (“BankAtlantic”).  BankAtlantic was a federal savings bank headquartered in Fort Lauderdale, Florida.  On July 31, 2012, BBX Capital completed the sale to BB&T Corporation (“BB&T”) of all of the issued and outstanding shares of capital stock of BankAtlantic (the stock sale and related transactions described herein are collectively referred to as the “BB&T Transaction”).  Prior to the closing of the BB&T Transaction, BankAtlantic formed two wholly-owned subsidiaries, BBX Capital Asset Management, LLC (“CAM”) and Florida Asset Resolution Group, LLC (“FAR”). 

 

Prior to the closing of the BB&T Transaction, BankAtlantic contributed approximately $82 million in cash to CAM and certain non-performing commercial loans, commercial real estate and previously written-off assets that had an aggregate carrying value on BankAtlantic’s balance sheet of $125 million as of July 31, 2012.  CAM assumed all liabilities related to these assets.  Prior to the closing of the BB&T Transaction, BankAtlantic distributed all of the membership interests in CAM to the Company. CAM remains a wholly-owned subsidiary of the Company. 

 

BankAtlantic also contributed to FAR certain performing and non-performing loans, tax certificates and real estate that had an aggregate carrying value on BankAtlantic’s balance sheet of approximately $346 million as of July 31, 2012.  FAR assumed all liabilities related to these assets.  BankAtlantic also contributed approximately $50 million in cash to FAR on July 31, 2012 and thereafter distributed all of the membership interests in FAR to the Company.  At the closing of the BB&T Transaction, the Company transferred to BB&T 95% of the outstanding preferred membership interests in FAR in connection with BB&T’s assumption of the Company’s $285.4 million in principal amount of outstanding trust preferred securities (“TruPS”) obligations. The Company retained the remaining 5% of FAR’s preferred membership interests. Under the terms of the Amended and Restated Limited Liability Company agreement of FAR entered into by the Company and BB&T at the closing, BB&T was entitled to hold its 95% preferred interest in the net cash flows of FAR until it recovered $285 million in preference amount plus a priority return of LIBOR + 200 basis points per annum on any unpaid preference amount.  On May 6, 2015, BB&T’s preferred interest in FAR was repaid in full and redeemed and FAR became a wholly-owned subsidiary of the Company.

In April 2013, BBX Capital acquired a 46% equity interest in Woodbridge Holdings, LLC (“Woodbridge”).  Woodbridge’s principal asset is its ownership of Bluegreen Corporation and its subsidiaries (“Bluegreen”). Bluegreen manages, markets and sells the Bluegreen Vacation Club, a points-based, deeded vacation ownership plan with more than 190,000 owners.  BFC Financial Corporation (“BFC”), the controlling shareholder of the Company, owns the remaining 54% of Woodbridge (see Note 2  - Investment in Woodbridge Holdings, LLC). 

In October 2013, Renin Holdings, LLC (“Renin”), a joint venture owned 81% by BBX Capital and 19% by BFC, acquired substantially all of the assets and certain liabilities of Renin Corp. (“the Renin Transaction”).  Renin manufactures interior closet doors, wall décor, hardware and fabricated glass products. Renin is headquartered in Canada and has two manufacturing, assembly and distribution facilities in Canada and the United States and a distribution facility in the United Kingdom.

In December 2013, BBX Sweet Holdings, LLC (“BBX Sweet Holdings”), a wholly-owned subsidiary of BBX Capital, acquired the outstanding equity interests in Hoffman’s Chocolates and its subsidiaries Boca Bons, LLC and S&F Good Fortunes, LLC (collectively, “Hoffman’s”).  Hoffman’s is a manufacturer of gourmet chocolates, with retail locations in South Florida. In January 2014, BBX Sweet Holdings acquired Williams and Bennett, a Florida based manufacturer of quality chocolate products.  In July 2014, BBX Sweet Holdings acquired Jer’s Chocolates, a California based distributor of peanut butter chocolate products, and Helen Grace Chocolates, a California based manufacturer of premium chocolate confections, chocolate bars, chocolate candies and truffles.  In October 2014, BBX Sweet Holdings acquired Anastasia Confections Inc. (“Anastasia”), an Orlando, Florida based manufacturer of gourmet candy and chocolate gift products.  In April 2015, BBX Sweet Holdings acquired the assets of Kencraft Confections, LLC (“Kencraft”).  Kencraft is a Utah based manufacturer of hard candies, including lollipops, candy cones, sugar Easter eggs, and icing decorations.  Business combination disclosures required by Topic 805-10-50 for the Kencraft asset acquisition were not included in the Company’s notes to the consolidated financial statements as the Kencraft asset acquisition was not considered material to the Company’s Consolidated Financial Statements.  The Company recognized a $284,000 bargain gain from the acquisition of Kencraft and incurred $159,000 of acquisition related costs.  Additionally, the Company recognized net taxable temporary

7


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

differences from the Kencraft acquisition resulting from the recording for financial statement purposes of identifiable intangible assets in excess of amounts recognized for tax purposes.  As a consequence of recognizing net taxable temporary differences from the Kencraft acquisition, the Company reduced its deferred tax valuation allowance and recognized a $75,000 benefit for income taxes.

The Company obtained additional information in connection with the BBX Sweet Holdings 2014 acquisitions resulting in an increase in taxable temporary differences.  As a consequence, the Company reduced its deferred tax asset valuation allowance recognizing a $224,000 benefit for income taxes during the nine months ended September 30, 2015 with a corresponding increase in goodwill.

On April 30, 2015, BFC purchased 4,771,221 shares of BBX Capital’s Class A common stock through a tender offer and in September 2015, BFC purchased an additional 221,821 shares of BBX Capital’s Class A common stock from its executive officers upon the vesting of restricted stock units.  These share acquisitions increased BFC’s ownership percentage at September 30, 2015 to approximately 81% of the issued and outstanding shares of BBX Capital’s Class A common stock, which together with the shares of BBX Capital’s Class B common stock owned by BFC, represented an approximate 81% equity interest and 90% voting interest in BBX Capital.

BBX Capital has two classes of common stock. Holders of the Class A common stock are entitled to one vote per share, which in the aggregate represents 53% of the combined voting power of the Class A common stock and the Class B common stock. Class B common stock represents the remaining 47% of the combined vote. The percentage of total common equity represented by Class A and Class B common stock was 99% and 1%, respectively, at September  30, 2015.  The fixed voting percentages will be eliminated, and shares of Class B common stock will be entitled to only one vote per share from and after the date that BFC or its affiliates no longer own in the aggregate at least 97,523 shares of Class B common stock (which is one-half of the number of shares it now owns). Class B common stock is convertible into Class A common stock on a share for share basis at any time at BFC’s discretion.  

In September 2015, the Company’s Compensation Committee of the Board of Directors’ granted 419,492 of restricted Class A common stock units to its executive officers under the Company’s 2014 Stock Incentive Plan.  These restricted Class A common shares had a $6.5 million fair value on the grant date and vest ratably in annual installments over 4 years beginning in October.  The Company recognizes the compensation costs based on the straight-line method over the vesting period. 

On September 30, 2015, 381,622 shares of restricted Class A common stock units granted to executive officers in September 2012 and September 2014 vested.  The Company repurchased and retired 159,801 shares of the executive officers’ Class A common stock to satisfy the $2.5 million withholding tax obligations associated with the vesting of these shares in connection with these grants.  

   

All significant inter-company balances and transactions have been eliminated in consolidation.  As used in each case in this document, the term “fair value” is an estimate of fair value as discussed herein.

 

In management's opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) as are necessary for a fair statement of the Company's condensed consolidated statement of financial condition at September  30, 2015, the condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three and nine months ended September  30, 2015 and 2014, and the condensed consolidated statements of total equity and statements of cash flows for the nine months ended September  30, 2015 and 2014.  The results of operations for the three and nine months ended September  30, 2015 are not necessarily indicative of results of operations that may be expected for the subsequent interim period during 2015 or for the year ended December 31, 2015.  The condensed consolidated financial statements and related notes are presented as permitted by Form 10-Q and should be read in conjunction with the consolidated financial statements appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2014.

Certain amounts for prior periods have been reclassified to conform to the revised financial statement presentation for 2015.

Basic earnings per share excludes dilution and is computed by dividing net income attributable to the Company by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if options to issue common shares were exercised or restricted stock units of the Company were to vest. In calculating diluted earnings per share, net income attributable to the Company is divided by the weighted average number of common shares. Options and restricted stock units are included in the weighted average number of common shares outstanding based on the treasury stock method, if dilutive, respectively.  During the three and nine months ended September  30, 2015, options to acquire 10,323 shares of Class A common stock were anti-dilutive.  During each of the three

8


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

and nine months ended September  30, 2014, options to acquire 15,481 shares of Class A common stock were anti-dilutive.  During the three months ended September 30, 2014 995,202 outstanding restricted Class A common stock were anti-dilutive.

 

New Accounting Pronouncements:

 

The FASB has issued the following accounting pronouncements and guidance relevant to the Company’s operations during 2015 (See the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for accounting pronouncements issued prior to March 16, 2015 relevant to the Company’s operations):

 

Accounting Standards Update Number 2015-16 –– Business Combinations (Topic 805) – Simplifying the Accounting Measurement-Period Adjustments.  This update requires an acquirer in a business combination to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.  The acquirer is required to record, in the same period’s financial statements, the effect on earnings, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  The update requires that the acquirer disclose in the notes or on the face of the income statement the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.  The amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years.  This update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued.  The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update Number 2015-15 –– Interest – Imputation of Interest (Topic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.  This update amends ASU 2015-03 and permits presentation of debt issuance costs on line-of-credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  This update was effective upon the issuance of the standard and may be applied prospectively.  The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update Number 2015-11 –– Inventory (Topic 330) – Simplifying the Measurement of Inventory. This update requires that an entity should measure inventory at the lower of cost and net realizable value.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.   The update was intended to more clearly articulate the requirements for the measurement and disclosure of inventory and not to change current practices.   The update is effective for annual and interim reporting periods beginning after December 15, 2016The update should be applied prospectively with early application permitted at the beginning of an interim or annual reporting period.  The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update Number 2015-05 –– Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.  This update provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract.    The standard is effective for annual and interim reporting periods beginning after December 15, 2015.  Early application is permitted.  The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update Number 2015-03 –– Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  This update requires that debt issuance costs related to a recognized debt liability be presented in the Statement of Financial Condition as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The standard is effective for annual and interim reporting periods beginning after December 15, 2015.  Early application is permitted.  The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update Number 2014-09 – Revenue from Contracts with Customers – (Topic 606).  Accounting Standards Update Number 2014-09 –  Revenue Recognition (Topic 606): Revenue from Contracts with Customers. This guidance is intended to improve the financial reporting requirements for revenue from contracts with customers by providing a principle based approach.  It also requires disclosures designed to enable readers of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. 

9


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

This accounting guidance update will replace most existing revenue recognition guidance in GAAP.  The standard was effective for annual and interim reporting periods beginning after December 15, 2016.  AU 2015-14 deferred the effective date of this update for all entities by one year.   Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  The Company is currently evaluating the requirements of this update and has not yet determined the impact it may have on the Company's consolidated financial statements.

 

 

 

2.    Investment in Woodbridge Holdings, LLC

 

On April 2, 2013, BBX Capital invested $71.75 million in Woodbridge in exchange for a 46% equity interest in Woodbridge. The investment was made in connection with Woodbridge’s acquisition on April 2, 2013 of the publicly held shares of Bluegreen. BFC holds the remaining 54% of Woodbridge’s outstanding equity interests and is the majority member of Woodbridge. Since BFC is the majority owner of Woodbridge, the Company’s investment in Woodbridge is accounted for under the equity method.  The Company’s investment in Woodbridge consisted of $60.4 million in cash (including $0.4 million in transaction costs) and a promissory note in Woodbridge’s favor in the principal amount of $11.75 million. In connection with the Company’s investment in Woodbridge, the Company and BFC entered into an Amended and Restated Operating Agreement of Woodbridge, which sets forth the Company’s and BFC’s respective rights as members of Woodbridge and provides, among other things, for unanimity on certain specified “major decisions” and for distributions to be made on a pro rata basis in accordance with the Company’s and BFC’s percentage equity interests in Woodbridge.  

 

On June 5, 2015, the parties in the action brought by Bluegreen’s former public shareholders against Bluegreen, the directors of Bluegreen, BFC, Woodbridge, certain directors and officers of BFC and others, challenging the terms of the merger pursuant to which Bluegreen merged into a wholly owned subsidiary of Woodbridge and Bluegreen’s shareholders (other than Woodbridge) were paid $10.00 in cash for each share of Bluegreen’s common stock that they held immediately prior to the effective time of the merger, agreed to a settlement of the litigation.  Pursuant to the settlement, which was finalized during September 2015, Woodbridge paid $36.5 million into a settlement fund for the benefit of former shareholders of Bluegreen whose shares were acquired in connection with the transaction.  BBX Capital repaid in full its $11.75 million promissory note to Woodbridge and BFC and BBX Capital made additional capital contributions to Woodbridge of $13.4 million and $11.4 million, respectively (based on their respective 54% and 46% ownership interests in Woodbridge), to fund the settlement payment. 

 

10


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

The following is activity related to BBX Capital’s investment in Woodbridge, which is accounted for under the equity method, for the three and nine months ended September 30, 2015 and September 30, 2014, respectively (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

Investment in Woodbridge - beginning of period

$

62,496 

 

78,057 

 

73,026 

 

78,573 

Additional investment in Woodbridge

 

11,385 

 

 -

 

11,385 

 

 -

Equity earnings in Woodbridge

 

10,306 

 

7,635 

 

5,941 

 

21,965 

Dividends received from Woodbridge

 

(14,557)

 

(8,478)

 

(20,722)

 

(23,324)

Investment in Woodbridge - end of period

$

69,630 

 

77,214 

 

69,630 

 

77,214 

 

The condensed Statements of Financial Condition as of the dates indicated of Woodbridge were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2015

 

2014

Assets

 

 

 

 

Cash and restricted cash

$

170,291 

 

240,427 

Notes receivable, net

 

416,292 

 

424,267 

Notes receivable from related parties

 

80,000 

 

11,750 

Inventory of real estate

 

214,912 

 

194,713 

Properties and equipment, net

 

71,578 

 

72,319 

Intangible assets

 

62,034 

 

63,913 

Other assets

 

75,080 

 

53,158 

  Total assets

$

1,090,187 

 

1,060,547 

Liabilities and Equity

 

 

 

 

Accounts payable, accrued liabilities and other

$

118,179 

 

114,263 

Deferred tax liabilities, net

 

126,185 

 

92,609 

Notes payable

 

494,865 

 

502,465 

Junior subordinated debentures

 

151,747 

 

150,038 

  Total liabilities

 

890,976 

 

859,375 

  Total Woodbridge members' equity

 

150,536 

 

157,920 

Noncontrolling interest

 

48,675 

 

43,252 

  Total equity

 

199,211 

 

201,172 

  Total liabilities and equity

$

1,090,187 

 

1,060,547 

 

 

11


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

The condensed Statements of Operations of Woodbridge were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2015

 

2014

 

2015

 

2014

Total revenues

$

175,861 

 

163,273 

 

458,365 

 

443,810 

Total costs and expenses (1)

 

135,766 

 

132,263 

 

405,811 

 

357,401 

Other income

 

1,089 

 

483 

 

3,278 

 

1,860 

Income from continuing operations before taxes

 

41,184 

 

31,493 

 

55,832 

 

88,269 

Less: Provision for income taxes

 

15,048 

 

11,136 

 

33,575 

 

31,722 

Net income

 

26,136 

 

20,357 

 

22,257 

 

56,547 

Net income attributable to noncontrolling interest

 

(3,732)

 

(3,759)

 

(9,343)

 

(8,797)

Net income attributable to Woodbridge

 

22,404 

 

16,598 

 

12,914 

 

47,750 

BBX Capital 46% equity earnings in Woodbridge

$

10,306 

 

7,635 

 

5,941 

 

21,965 

 

(1) Included in costs and expenses for the nine months ended September 30, 2015 was a $36.5 million settlement of the Bluegreen shareholder litigation associated with Woodbridge’s acquisition of Bluegreen’s publicly held shares in April 2013.

 

 

 

3.  Consolidated Variable Interest Entities

 

FAR

 

BB&T’s preferred equity interest in FAR, which was represented by FAR’s Class A units, entitled it to a $285.0 million preference amount plus the related priority return. Based on FAR’s amended and restated limited liability company agreement, FAR was required to make distributions quarterly or more frequently as approved by FAR’s Board of Managers, of excess cash flows from its operations and the orderly disposition of its assets to redeem the preferred membership interests. As such, the Class A units previously were considered mandatorily redeemable and were reflected as debt obligations in the Company’s Consolidated Statement of Financial Condition at December 31, 2014 and the priority return was considered interest expense in the Company’s Consolidated Statements of Operations.  

 

The activities of FAR are governed by an amended and restated limited liability company agreement which grants the Board of Managers decision-making authority over FAR.  Prior to May 6, 2015, the Board had four members, two members elected by the Company and two members elected by BB&T.  Upon redemption of BB&T’s preferred interest in FAR on May 6, 2015, FAR became a wholly-owned subsidiary of BBX Capital and the two Board members designated by BB&T resigned.  FAR was no longer a variable interest entity as of May 6, 2015.

 

 

12


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

The carrying amount of the assets and liabilities of FAR and the classification of these assets and liabilities in the Company’s Statement of Financial Condition at December 31, 2014 was as follows (in thousands):

 

 

 

 

 

 

 

 

December 31,

 

 

2014

Cash and cash equivalents

 $

4,976 

Restricted cash

 

 -

Loans held-for-sale

 

35,423 

Loans receivable, net

 

18,972 

Real estate held-for-investment

 

19,129 

Real estate held-for-sale

 

13,745 

Properties and equipment, net

 

7,561 

Other assets

 

638 

        Total assets

 $

100,444 

BB&T preferred interest in FAR, LLC

 $

12,348 

Principal and interest advances on residential loans

 

11,171 

Other liabilities

 

1,315 

       Total liabilities

 $

24,834 

 

JRG/BBX Development, LLC (“North Flagler”)

 

In October 2013, an indirect wholly-owned subsidiary of BBX Capital entered into the North Flagler joint venture with JRG USA, and in connection with the formation of the joint venture JRG USA assigned to the joint venture a contract to purchase for $10.8 million a 4.5 acre real estate parcel overlooking the Intracoastal Waterway in West Palm Beach Florida.  BBX Capital is entitled to receive 80% of any joint venture distributions to the extent of our capital investment and 70% of any joint venture distributions thereafter. We are the managing member and have control of all aspects of the operations of the joint venture. 

 

During 2015, the zoning district surrounding this property was changed to permit up to 15 stories in building height from 4 stories in building height.  In May 2015, the North Flagler joint venture purchased the 4.5 acre parcel for $10.8 million and on the same day sold the property to a third party developer for $20.0 million.  Included in the Company’s Statements of Operation in net gains on sales of assets for the nine months ended September 30, 2015 was a $7.8 million gain on the property sale.  Net sales proceeds in the amount of $2.3 million were distributed to the noncontrolling member.  In October 2015, the JRG/BBX Development joint venture was liquidated and the remaining net assets were distributed to the members.

 

The carrying amount of the remaining assets and liabilities of North Flagler and the classification of these assets and liabilities in the Company’s Statements of Financial Condition was as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2015

 

2014

Cash and cash equivalents

$

98 

 

17 

Real estate held-for-investment

 

 -

 

816 

Other assets

 

13 

 

379 

Total assets

$

111 

 

1,212 

Other liabilities

$

 

116 

Noncontrolling interest

$

16 

 

132 

 

 

 

13


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

4.  Investments in Unconsolidated Real Estate Joint Ventures

 

The Company had the following investments in unconsolidated real estate joint ventures (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2015

 

2014

Altis at Kendall Square, LLC

$

1,247 

 

1,264 

Altis at Lakeline - Austin Investors LLC

 

5,151 

 

5,000 

New Urban/BBX Development, LLC

 

930 

 

996 

Sunrise and Bayview Partners, LLC

 

1,602 

 

1,723 

Hialeah Communities, LLC

 

4,793 

 

5,091 

PGA Design Center Holdings, LLC

 

1,900 

 

1,991 

CCB Miramar, LLC

 

875 

 

 -

BBX Centra, LLC

 

739 

 

 -

Investments in unconsolidated real estate joint ventures

$

17,237 

 

16,065 

 

The amount of interest capitalized in investments in unconsolidated real estate joint ventures associated with joint venture real estate development activities for the three and nine months ended September 30, 2015 was $131,000 and $359,000, respectively.  There was no interest capitalized in investments in unconsolidated real estate joint ventures for the three and nine months ended September 30, 2014.

 

The condensed Statements of Operations for the three and nine months ended September 30, 2015 and 2014 for all the above listed equity method joint ventures in the aggregate was as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2015

 

2014

 

2015

 

2014

Total revenues

$

1,051 

 

254 

 

2,088 

 

481 

Total costs and expenses

 

(1,075)

 

(758)

 

(3,463)

 

(1,128)

Net loss

$

(24)

 

(504)

 

(1,375)

 

(647)

 

Information regarding the Company’s investments in unconsolidated real estate joint ventures entered into during the nine months ended September 30, 2015 are listed below.  See Note 5 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for information on investments in the Company’s other unconsolidated real estate joint ventures entered into before December 31, 2014.

 

CCB Miramar, LLC

 

In May 2015, the Company entered into a joint venture agreement with two separate unaffiliated developers for the acquisition of real estate in Miramar, Florida to construct single-family homes.  BBX Capital contributed $875,000 for a 35% interest in the joint venture and one of the developers contributed to the joint venture a contract to purchase the real estate. The purchase of the real estate is subject to certain closing conditions, including receipt of all necessary entitlements and completion of due diligence by the joint venture.

 

BBX Centra, LLC

In August 2015, BBX Capital and other investors invested in a joint venture with a developer for the development and sale of 89 townhomes in Pembroke Pines, Florida.  BBX Capital contributed $750,000 and is entitled to receive 7.143% of the joint venture distributions until a 12% return on its investment has been attained and then BBX Capital will be entitled to 3.175% of the joint venture distributions thereafter.    

 

 

14


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

5.  Loans Held-for-Sale

 

Loans held-for-sale were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2015

 

2014

Residential 

$

22,126 

 

27,331 

Second-lien consumer

 

 -

 

2,351 

Small business

 

 -

 

5,741 

Total loans held-for-sale

$

22,126 

 

35,423 

 

Loans held-for-sale are reported at the lower of cost or fair value.  The Company transfers loans to held-for-sale when, based on the current economic environment and related market conditions, it does not have the intent to hold those loans for the foreseeable future.  The Company transfers loans previously held-for-sale to loans held-for-investment at the lower of cost or fair value on the transfer date.  In June 2015, the Company transferred its small business, residential and second-lien consumer loans from loans held-for-sale to loans held-for-investment based on its decision to hold these loans for the foreseeable future as a result of the recent appreciation of real estate values and the forecasted improving economic environment.  As a consequence, $2.4 million, $70,000 and $4.9 million of second-lien consumer, residential and small business loans, respectively, were transferred from loans held-for-sale to loans receivable measured at the lower of cost or fair value on the transfer date.  Any difference between the carrying amount of the loan and its outstanding principal balance was recognized as a discount. Such loans are included in loans receivable, net of the discount on the statement of financial condition as of September 30, 2015. 

 

As of September 30, 2015, foreclosure proceedings were in-process on $14.3 million of residential loans held for sale.

 

 

6.  Loans Receivable

 

The Company’s loans receivable portfolio consisted of the following components (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2015

 

2014

Commercial non-real estate

$

1,270 

 

1,326 

Commercial real estate

 

18,626 

 

24,189 

Small business

 

4,488 

 

 -

Consumer

 

3,247 

 

2,306 

Residential

 

69 

 

 -

         Total loans, net of discount

 

27,700 

 

27,821 

 Allowance for loan  losses

 

 -

 

(977)

         Loans receivable -- net

$

27,700 

 

26,844 

 

As of September  30, 2015, foreclosure proceedings were in-process on $1.2 million of consumer loans.

 

The total discount on loans receivable was $3.5 million and $0 as of September 30, 2015 and December 31, 2014, respectively.

 

15


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

The recorded investment (unpaid principal balance less charge-offs and discounts) of non-accrual loans receivable was (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

Loan Class

 

2015

 

2014

Commercial non-real estate

$

1,270 

 

1,326 

Commercial real estate

11,881 

 

14,464 

Small business

 

4,488 

 

 -

Consumer

 

3,247 

 

1,990 

Residential

 

69 

 

 -

Total nonaccrual loans

$

20,955 

 

17,780 

 

An age analysis of the past due recorded investment in loans receivable as of September 30, 2015 and December 31, 2014 was as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

31-59 Days

 

60-89 Days

 

90 Days

 

Total

 

 

 

Loans

September 30, 2015

 

Past Due

 

Past Due

 

or More (1)

 

Past Due

 

Current

 

Receivable

Commercial non-real estate

$

 -

 

 -

 

330 

 

330 

 

940 

 

1,270 

Commercial real estate

 

 -

 

 -

 

3,986 

 

3,986 

 

14,640 

 

18,626 

Small business

 

26 

 

 -

 

 -

 

26 

 

4,462 

 

4,488 

Consumer

 

13 

 

63 

 

1,298 

 

1,374 

 

1,873 

 

3,247 

Residential

 

24 

 

 -

 

42 

 

66 

 

 

69 

Total

$

63 

 

63 

 

5,656 

 

5,782 

 

21,918 

 

27,700 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

31-59 Days

 

60-89 Days

 

90 Days

 

Total

 

 

 

Loans

December 31, 2014

 

Past Due

 

Past Due

 

or More (1)

 

Past Due

 

Current

 

Receivable

Commercial non-real estate

$

 -

 

 -

 

330 

 

330 

 

996 

 

1,326 

Commercial real estate

 

 -

 

 -

 

5,458 

 

5,458 

 

18,731 

 

24,189 

Consumer

 

 -

 

227 

 

1,703 

 

1,930 

 

376 

 

2,306 

Residential

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

Total

$

 -

 

227 

 

7,491 

 

7,718 

 

20,103 

 

27,821 

 

(1)  The Company had no loans that were 90 days or more past due and still accruing interest as of September  30, 2015 and December 31, 2014.

 

16


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

The activity in the allowance for loan losses for the three and nine months ended September  30, 2015 and 2014 was as follows (in thousands): 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months

 

For the Nine Months

 

 

Ended September 30,

 

Ended September 30,

 

 

2015

2014

 

2015

2014

Allowance for Loan Losses:

 

 

 

 

 

Beginning balance

$

172 
1,881 

 

977 
2,713 

    Charge-offs :

 

(97)
(3,104)

 

(993)
(5,403)

     Recoveries :

 

4,352 
3,199 

 

14,872 
7,960 

     Provision:

 

(4,427)
656 

 

(14,856)
(2,638)

Ending balance

$

 -

2,632 

 

 -

2,632 

Ending balance individually evaluated for impairment

$

 -

1,607 

 

 

 

Ending balance collectively evaluated for impairment

 

 -

1,025 

 

 

 

Total

$

 -

2,632 

 

 

 

Loans receivable:

 

 

 

 

 

 

Ending balance individually evaluated for impairment

$

14,475 
19,302 

 

 

 

Ending balance collectively evaluated for impairment

 

13,225 
11,601 

 

 

 

Total

$

27,700 
30,903 

 

 

 

Proceeds from loan sales

$

 -

9,497 

 

89 
9,497 

Transfer to loans held-for-sale

$

 -

2,299 

 

 -

2,299 

Transfer from loans held-for-sale

$

 -

 -

 

7,365 

 -

 

Impaired Loans -  Loans are considered impaired when, based on current information and events, the Company believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. For a loan that has been restructured, the contractual terms of the loan agreement refer to the contractual terms specified by the original loan agreement, not the contractual terms specified by the restructured agreement.  Impairment is evaluated based on past due status for consumer and residential loans.  Impairment is evaluated for commercial and small business loans based on past payment history, financial strength of the borrower or guarantors, and cash flow associated with the collateral or business.  If a loan is impaired, a specific valuation allowance is established, if necessary, based on the present value of estimated future cash flows using the loan’s existing interest rate or based on the fair value of the loan. Collateral dependent impaired loans are charged down to the fair value of collateral less cost to sell. Interest payments on impaired loans are recognized on a cash basis as interest income. Impaired loans, or portions thereof, are charged off when deemed uncollectible. 

 

Impaired loans as of September 30, 2015 and December 31, 2014 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2015

 

As of December 31, 2014

 

 

 

Unpaid

 

 

 

Unpaid

 

 

 

Recorded

Principal

Related

 

Recorded

Principal

Related

 

 

Investment

Balance

Allowance

 

Investment

Balance

Allowance

 

 

 

 

 

 

 

 

 

Total with allowance recorded

$

 -

 -

 -

 

735 
1,664 
735 

Total with no allowance recorded

 

20,955 
33,617 

 -

 

17,361 
35,812 

 -

Total

$

20,955 
33,617 

 -

 

18,096 
37,476 
735 

 

17


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

Average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2015 were as follows (in thousands):