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EX-31.1 - EX-31.1 - BBX CAPITAL CORPbbx-20160930xex31_1.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, 2016

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 [    ]

Non-accelerated filer [   ]

Smaller reporting company [ X   ]



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, 2016

Class A Common Stock, par value $0.01 per share

16,483,866

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

3-29 



 

 



Condensed Consolidated Statements of Financial Condition - September  30, 2016 and December 31,



    2015 – Unaudited

 



 

 



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



  and Nine Months Ended September  30, 2016 and 2015 - Unaudited

 



 

 



Condensed Consolidated Statements of Total Equity - For the Nine Months Ended September 30, 2016 



  and 2015 - Unaudited

 



 

 



Condensed Consolidated Statements of Cash Flows - For the Nine Months Ended September  30, 2016



 and 2015 - Unaudited

 



 

 



Notes to Condensed Consolidated Financial Statements - Unaudited

7-29 



 

 

Item 2.

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

30-40 



 

 

Item 4.

Controls and Procedures

40 



 

 

Part II.

OTHER INFORMATION

 



 

 

Item 1.

Legal Proceedings

41 



 

 

Item 1A.

Risk Factors

42 



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

42 



 

 

 

 

Item 6.

Exhibits

43 



 

 



Signatures

44 



 



 

 


 

 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION-UNAUDITED 





 

 

 

 



 

 

 

 



 

September 30,

 

December 31,

(In thousands, except share data)

 

2016

 

2015

ASSETS

 

 

 

 

Cash and cash equivalents

$

120,266 

 

69,040 

Restricted cash and time deposits

 

350 

 

2,651 

Loans held-for-sale

 

 -

 

21,354 

Loans receivable, net

 

28,616 

 

34,035 

Trade receivables, net of allowance for bad debts of $190 in 2016 and $404 in 2015

 

14,823 

 

13,732 

Real estate held-for-investment

 

21,720 

 

31,290 

Real estate held-for-sale

 

35,729 

 

46,338 

Investments in unconsolidated real estate joint ventures

 

43,318 

 

42,962 

Investment in Woodbridge Holdings, LLC

 

78,152 

 

75,545 

Properties and equipment

 

24,523 

 

18,083 

Inventories

 

18,189 

 

16,347 

Goodwill

 

7,601 

 

7,601 

Other intangible assets

 

7,823 

 

8,211 

Other assets

 

6,102 

 

6,316 

Total assets

$

407,212 

 

393,505 

LIABILITIES AND EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable

$

9,739 

 

11,059 

Notes payable, net of debt issuance costs 

 

15,547 

 

21,385 

Principal and interest advances on residential loans

 

8,255 

 

10,356 

Other liabilities

 

15,716 

 

14,726 

Total liabilities

 

49,257 

 

57,526 

Commitments and contingencies (Note 10)

 

 

 

 

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 16,422,743 and 16,199,145 shares

 

164 

 

162 

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

 

352,584 

 

350,878 

Accumulated earnings (deficit)

 

2,578 

 

(16,622)

Accumulated other comprehensive income

 

737 

 

384 

Total BBX Capital Corporation shareholders' equity

 

356,065 

 

334,804 

Noncontrolling interest

 

1,890 

 

1,175 

Total equity

 

357,955 

 

335,979 

Total liabilities and equity

$

407,212 

 

393,505 



 

 

 

 

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)

 

2016

 

2015

 

2016

 

2015

Revenues:

 

 

 

 

 

 

 

 

Trade sales

$

22,078 

 

21,537 

 

64,290 

 

60,655 

Interest income

 

1,321 

 

2,720 

 

3,301 

 

5,628 

Net gains (losses) on the sales of assets

 

5,034 

 

(145)

 

5,326 

 

15,296 

Income from real estate operations

 

312 

 

851 

 

2,278 

 

2,790 

Other

 

959 

 

572 

 

2,220 

 

1,490 

     Total revenues

 

29,704 

 

25,535 

 

77,415 

 

85,859 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of goods sold

 

16,674 

 

16,186 

 

50,680 

 

44,216 

Interest expense

 

(128)

 

 

 -

 

193 

Real estate operating expenses

 

484 

 

1,003 

 

2,323 

 

3,048 

Recoveries from loan losses, net

 

(10,944)

 

(4,427)

 

(18,979)

 

(14,856)

Asset (recoveries) impairments, net

 

(30)

 

274 

 

1,692 

 

(1,599)

Selling, general and administrative expenses

 

16,837 

 

19,398 

 

50,699 

 

49,424 

      Total costs and expenses

 

22,893 

 

32,439 

 

86,415 

 

80,426 

Equity in earnings of Woodbridge Holdings, LLC

 

10,307 

 

10,306 

 

22,101 

 

5,941 

Equity in net earnings (losses) of unconsolidated real estate joint ventures

 

4,480 

 

(158)

 

5,793 

 

(753)

Foreign exchange gain (loss)

 

 

(236)

 

325 

 

(635)

Income before income taxes

 

21,603 

 

3,008 

 

19,219 

 

9,986 

Provision (benefit) for income taxes

 

 

(31)

 

 

(250)

Net income

 

21,598 

 

3,039 

 

19,214 

 

10,236 

Net loss (earnings) attributable to noncontrolling interest

 

101 

 

77 

 

(14)

 

(1,948)

Net income attributable to BBX Capital Corporation

$

21,699 

 

3,116 

 

19,200 

 

8,288 



 

 

 

 

 

 

 

 

Basic earnings per share

$

1.32 

 

0.19 

 

1.17 

 

0.51 

Diluted earnings per share

$

1.26 

 

0.18 

 

1.12 

 

0.50 



 

 

 

 

 

 

 

 

Basic weighted average number of common shares outstanding

 

16,397 

 

16,175 

 

16,395 

 

16,173 



 

 

 

 

 

 

 

 

Diluted weighted average number of common and common

 

 

 

 

 

 

 

 

 equivalent shares outstanding

 

17,270 

 

16,852 

 

17,067 

 

16,692 



 

 

 

 

 

 

 

 

Net income

$

21,598 

 

3,039 

 

19,214 

 

10,236 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

568 

 

121 

 

378 

 

220 

Unrealized (losses) gains on securities available for sale

 

(9)

 

 -

 

47 

 

 -

Other comprehensive income, net of tax

 

559 

 

121 

 

425 

 

220 

Comprehensive income

 

22,157 

 

3,160 

 

19,639 

 

10,456 

Net losses (earnings) attributable to noncontrolling interest

 

101 

 

77 

 

(14)

 

(1,948)

Foreign currency translation adjustments attributable

 

 

 

 

 

 

 

 

to noncontrolling interest

 

108 

 

(23)

 

72 

 

(42)

Total comprehensive income attributable to BBX

 

 

 

 

 

 

 

 

 Capital Corporation

$

22,366 

 

3,214 

 

19,697 

 

8,466 





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, 2016 AND 2015 - UNAUDITED 







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



Shares of

 

 

 

 

 

 

 

 



Class A

 

 

 

 

Accumulated

 

 

 



Common

 

 

Additional

Accumulated

Other

BBX Capital

Non-

 



Stock

 

Common

Paid-in

Earnings

Comprehensive

Corporation

Controlling

Total

(In thousands)

Outstanding

 

Stock

Capital

(Deficit)

Income

Equity

Interest

Equity

Balance, December 31, 2014

15,977 

$

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 contributions

 -

 

 -

 -

 -

 -

 -

(2,268) (2,268)

Repurchase and retirement of Class A common shares

(160)

 

(2) (2,527)

 -

 -

(2,529)

 -

(2,529)

Share based compensation expense

382 

 

3,827 

 -

 -

3,831 

 -

3,831 

Balance, September 30, 2015

16,199 

$

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



 

 

 

 

 

 

 

 

 

Balance, December 31, 2015

16,199 

$

164  350,878  (16,622) 384  334,804  1,175  335,979 

Net income

 -

 

 -

 -

19,200 

 -

19,200  14  19,214 

Other comprehensive income

 -

 

 -

 -

 -

353  353  72  425 

Noncontrolling interest contributions

 -

 

 -

 -

 -

 -

 -

664  664 

Transfer of interest in subsidiary

 -

 

 -

35 

 -

 -

35  (35)

 -

Repurchase and retirement of Class A common shares

(158)

 

(2) (3,246)

 

 -

(3,248)

 -

(3,248)

Share based compensation expense

382 

 

4,917 

 -

 -

4,921 

 -

4,921 

Balance, September 30, 2016

16,423 

$

166  352,584  2,578  737  356,065  1,890  357,955 



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)

 

2016

 

2015

Net cash used in operating activities

$

(5,666)

 

(13,211)

Investing activities:

 

 

 

 

Proceeds from redemptions and maturities of tax certificates

 

347 

 

188 

Decrease (increase) in restricted cash and time deposits

 

1,306 

 

(2,649)

Investments in securities

 

(571)

 

 -

Net repayments of loans receivable

 

42,025 

 

27,035 

Proceeds from the sale of loans receivable

 

 -

 

89 

Additions to real estate held-for-investment

 

(2,042)

 

(15,692)

Additions to real estate held-for-sale

 

(277)

 

 -

Purchases of real estate held-for-sale

 

 -

 

(10,667)

Proceeds from sales of real estate held-for-sale

 

20,788 

 

35,770 

Purchases of properties and equipment

 

(1,916)

 

(2,292)

Proceeds from sales of properties and equipment

 

 -

 

314 

Investment in unconsolidated real estate joint ventures

 

(2,353)

 

(2,690)

Investment in Woodbridge Holdings, LLC

 

 -

 

(11,385)

Return of Woodbridge Holdings, LLC investment

 

 -

 

14,781 

Return of unconsolidated real estate joint ventures investment

 

4,388 

 

 -

Increase in other intangible assets

 

(540)

 

 -

Acquisitions of businesses, net of cash acquired

 

 -

 

(10)

Net cash provided by investing activities

 

61,155 

 

32,792 

Financing activities:

 

 

 

 

Repayment of BB&T preferred interest in FAR, LLC

 

 -

 

(12,348)

Proceeds from notes payable 

 

327 

 

4,997 

Repayment of notes payable to related parties

 

 -

 

(11,750)

Repayment of notes payable

 

(5,254)

 

(1,112)

Payments for debt issuance costs

 

 -

 

(48)

Noncontrolling interest contributions

 

664 

 

 -

Noncontrolling interest distributions

 

 -

 

(2,268)

Net cash used in financing activities

 

(4,263)

 

(22,529)

Increase (decrease) in cash and cash equivalents

 

51,226 

 

(2,948)

Cash and cash equivalents at the beginning of period

 

69,040 

 

58,819 

Cash and cash equivalents at the end of period

$

120,266 

 

55,871 



 

 

 

 

Cash paid for:

 

 

 

 

Interest on borrowings

$

365 

 

915 

Income taxes payments, net

 

 -

 

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

 

3,248 

 

2,529 

Loans receivable transferred to real estate

 

 

 

 

held-for-sale or real estate held-for-investment

 

4,612 

 

2,987 

Change in accumulated other comprehensive income

 

425 

 

220 

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

 

11,582 

 

38,707 

Transfer of real estate-held-for-sale to properties and equipment

 

6,557 

 

 -

Transfer of loans held-for-sale to loans receivable, net

 

16,078 

 

7,365 

Repayment of note payable with restricted time deposit

 

995 

 

 -

Fair value of net assets acquired in connection with business acquisitions

 

 -

 

1,683 

Issuance of notes payable to acquire businesses

 

 -

 

(1,389)





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 together with its subsidiaries is referred to herein as “BBX Capital”, “we”, “us,” or “our” and is referred to herein without its subsidiaries as “BBX Capital Corporation”. BBX Capital is a Florida-based company involved in the acquisition, development, ownership and management of and investments in real estate and real estate development projects as well as operating businesses.  Prior to the sale of BankAtlantic to BB&T Corporation (“BB&T”) on July 31, 2012, BBX Capital Corporation was a bank holding company and its principal asset was the ownership of BankAtlantic.  The principal assets of BBX Capital currently consist of its 46% equity interest in Woodbridge Holdings, LLC (“Woodbridge”), investments in real estate joint ventures and operating businesses,  and legacy loans and real estate assets transferred to BBX Capital in connection with the sale of BankAtlantic.  

In April 2013, BBX Capital acquired a 46% equity interest in 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 BBX Capital, 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.

In December 2013, a wholly-owned subsidiary of BBX Capital, BBX Sweet Holdings, LLC, acquired Hoffman’s Chocolates (“Hoffman’s”).  Hoffman’s is a manufacturer of gourmet chocolates, with retail locations in South Florida.   



Subsequent to January 2014, BBX Sweet Holdings acquired manufacturers in the chocolate and candy industries serving wholesalers, boutique retailers, big box chains, department stores, national resort properties, corporate customers and private label brands.  The companies acquired were Williams and Bennett, Helen Grace Chocolates (“Helen Grace”), Jer’s Chocolates (“Jer’s”), Anastasia Confections (“Anastasia”) and Kencraft Confections, LLC (“Kencraft”).  In May 2015, BBX Sweet Holdings acquired a controlling interest in Droga Chocolates, LLC.  BBX Sweet Holdings has a 75% equity interest in Droga and Droga products are manufactured at the Kencraft facility.



In September 2016, BBX Capital entered into an area development agreement with MOD Super Fast Pizza, LLC with a goal of opening 50 MOD Super Fast Pizza franchise locations throughout Florida over the next seven years.  

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, 2016.  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.



On September 30, 2016, 381,622 shares of restricted Class A common stock units granted to executive officers in September 2012 and September 2014 vested.  BBX Capital repurchased and retired an aggregate of 158,024 shares of the executive officers’ Class A common stock to satisfy the $3.2 million withholding tax obligations associated with the vesting of these shares. Between October 1, 2016 and October 5, 2016 104,872 shares of restricted Class A common stock units granted to executive officers in September 2015 vested.  BBX Capital repurchased and retired an aggregate of 43,749 shares of the executive officers’ Class A common stock to satisfy the $0.9 million withholding tax obligations associated with the vesting of these shares.

   

BBX Capital entered into a definitive merger agreement (the “Merger Agreement”) with BFC and BBX Merger Subsidiary LLC, a newly formed wholly owned subsidiary of BFC (“Merger Sub”) on July 27, 2016 and amended on October 20, 2016. The Merger Agreement provides for BBX Capital Corporation to merge with and into Merger Sub (the “Merger”), with Merger Sub continuing as the surviving company of the Merger and a wholly owned subsidiary of BFC. Under the terms of the Merger Agreement, which has been approved by a special committee comprised of BBX Capital Corporation’s independent directors as well as the full boards of directors of both BFC and BBX Capital Corporation, each share of BBX Capital’s Class A Common Stock outstanding immediately prior to the effective time of the Merger (other than shares of BBX Capital’s Class A Common Stock held by BFC and shares of BBX Capital’s Class A Common Stock as

7


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

to which appraisal rights are exercised and perfected in accordance with Florida law) will be converted into the right to receive, at the election of the holder, 5.4 shares of BFC’s Class A Common Stock or $20.00 in cash for each share of BBX Class A Common Stock held by them.  BBX Capital’s shareholders will have the right to elect to receive all cash, all stock, or a combination of cash and stock in exchange for their shares. Each option to acquire shares of BBX Capital’s Class A Common Stock that is outstanding at the effective time of the Merger, whether or not then exercisable, will be converted into an option to acquire shares of BFC’s Class A Common Stock and be subject to the same terms and conditions as in effect at the effective time of the Merger, except that the number of shares which may be acquired upon exercise of the option will be multiplied by the exchange ratio of 5.4 shares of BFC’s Class A Common Stock for each share of BBX Capital’s Class A Common Stock subject to the option and the exercise price of the option will be divided by 5.4. In addition, each share of BBX Capital’s Class A Common Stock subject to a restricted stock award outstanding at the effective time of the Merger will be converted into a restricted share of BFC’s Class A Common Stock and be subject to the same terms and conditions as in effect at the effective time of the Merger, except that the number of shares subject to the award will be multiplied by the exchange ratio of 5.4 shares of BFC’s Class A Common Stock for each share of BBX Capital’s Class A Common Stock subject to the award.  Consummation of the Merger is subject to certain closing conditions, including, without limitation, (i) the approval of the Merger Agreement by (a) holders of shares of BBX Capital’s Class A Common Stock and Class B Common Stock representing a majority of the votes entitled to be cast on the Merger Agreement, and  (b) holders of a majority of the shares of BBX Capital’s Class A Common Stock voted on the Merger Agreement other than shares held by BFC and its affiliates and (ii) unless waived by BFC and BBX Capital, any litigation or threatened litigation against BFC or BBX Capital Corporation or their affiliates relating to the Merger shall be resolved to the satisfaction of BFC and BBX Capital Corporation or the holders of at least 2,250,000 shares of BBX Capital’s Class A Common Stock shall execute a waiver and release irrevocably waiving the right to participate in, or receive any proceeds from, any shareholder class action lawsuit relating to the Merger and releasing BFC, BBX Capital and their affiliates from any claims arising out of the Merger Agreement other than with respect to appraisal rights or the right to receive the Merger consideration. Pursuant to the Merger Agreement, BFC has agreed to vote all of BBX Capital’s Class A Common Stock and Class B Common Stock owned by it in favor of the Merger Agreement. Accordingly, approval of the Merger Agreement with respect to the combined vote of the holders of BBX Capital’s Class A Common Stock and Class B Common Stock described under clause (i)(a) above is assured. There is no assurance that the approval of the unaffiliated shareholders will be received. The Merger is also conditioned, unless waived, on holders of not more than 150,000 shares of BBX Capital’s Class A Common Stock exercising appraisal rights and the absence of any “Material Adverse Effect” (as defined in the Merger Agreement)  with respect to either BFC or BBX Capital. The Merger is not subject to a financing condition. There is no assurance that the conditions to completing the Merger will be satisfied or waived, or that the Merger will be otherwise consummated in the anticipated time frame, on the proposed terms, or at all.



A lawsuit seeking to establish a class of BBX Capital’s shareholders and challenging the Merger is pending in the 17th Judicial Circuit in and for Broward County, Florida. The lawsuit alleges, among other things, that the proposed Merger consideration undervalues BBX Capital and is unfair to BBX Capital’s public shareholders and that BBX Capital’s directors and BFC breached certain fiduciary duties to BBX Capital’s public shareholders. The lawsuit seeks to enjoin the Merger or, if it is completed, to rescind the Merger or recover relief as determined by the court. BFC and BBX Capital believe that the lawsuit is without merit and intend to vigorously defend the action. See Note 10 and “Part II, Item 1 – Legal Proceedings” of this report for additional information regarding this lawsuit.  BFC and BBX Capital have also received letters threatening additional litigation relating to the Merger.



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.



The accompanying unaudited condensed consolidated financial statements of BBX Capital have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. 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 BBX Capital's condensed consolidated statement of financial condition at September 30, 2016, the condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2016 and 2015, and the condensed consolidated statements of total equity and statements of cash flows for the nine months ended September 30, 2016 and 2015. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of results of operations that may be expected for the subsequent interim period during 2016 or for the year ended December 31, 2016.  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, 2015.

Basic earnings per share excludes dilution and is computed by dividing net income attributable to BBX Capital by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential

8


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

dilution that could occur if options to issue common shares were exercised or restricted stock units of BBX Capital were to vest. In calculating diluted earnings per share, net income attributable to BBX Capital 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.  During the three and nine months ended September  30, 2016, options to acquire 6,614 shares of Class A common stock were anti-dilutive and excluded from diluted earnings per share.  During the three and nine months ended September 30, 2015, options to acquire 10,323 shares of Class A common stock were anti-dilutive and excluded from diluted earnings per share.



Recently Adopted Accounting Pronouncements



As of January 1, 2016, BBX Capital adopted Accounting Standards Update (“ASU”) Number 2015-03 –– Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs as amended by ASU 2015-15.  ASU 2015-03 requires debt issuance costs related to recognized debt liabilities to be presented in the statement of financial condition as a direct deduction from the debt liability rather than an asset. However, ASU 2015-03 also permits presentation of debt issuance costs on line-of-credit arrangements as assets. Accordingly, as of September 30, 2016, approximately $23,000 of deferred debt issuance costs was presented as a direct deduction within Notes Payable on BBX Capital's Condensed Consolidated Statement of Financial Condition. Additionally, BBX Capital reclassified $36,000 of deferred debt issuance costs from Other Assets to Notes Payable as of December 31, 2015. Debt issuance costs for line-of-credit arrangements of $257,000 and $306,000 were included in other assets in BBX Capital’s Condensed Consolidated Statement of Financial Condition as of September 30, 2016 and December 31, 2015, respectively.



As of January 1, 2016, BBX Capital adopted ASU 2015-02 – Amendments to the Consolidation Analysis (Topic 810). ASU 2015-02 changed the manner in which a reporting entity assesses one of the five characteristics that determines if an entity is a variable interest entity.  In particular, when decision-making over the entity’s most significant activities has been outsourced, the update changes how a reporting entity assesses if the equity holders at risk lack decision making rights. The update also introduces a separate analysis specific to limited partnerships and similar entities for assessing if the equity holders at risk lack decision making rights.  The adoption of this update on January 1, 2016 did not have a material impact on BBX Capital’s consolidated financial statements.



New Accounting Pronouncements:



The FASB has recently issued the following accounting pronouncements and guidance relevant to the preparation of BBX Capital’s financial statements. (See BBX Capital’s Annual Report on Form 10-K for the year ended December 31, 2015 for accounting pronouncements issued prior to March 31, 2016 relevant to BBX Capital’s operations):



Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. This ASU presents guidance on the classification of certain cash receipts and payments with the objective of reducing the existing diversity in current practice. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted in any interim or annual period.  BBX Capital is currently evaluating the requirements of this update and has not yet determined its impact on BBX Capital’s consolidated financial statements.



Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. The ASU changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.  The ASU sets forth a “current expected credit loss” (CECL) model which requires BBX Capital to measure expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years BBX Capital is currently evaluating the requirements of this update and has not yet determined the impact it may have on its consolidated financial statements.



Accounting Standards Update (ASU) No. 2016-09 – Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting.  This update simplifies various aspects related to how share-based payments are accounted for and presented in the financial statements including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. The amendments in this update are effective for annual reporting periods beginning after December 15, 2016 and interim periods within the reporting period.  Early adoption is permitted in any interim or annual period.  The adoption of this update is not expected to have a material impact on BBX Capital’s consolidated financial statements.



9


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

Accounting Standards Update (ASU) No.  2016-07 –– Investments – Equity Method and Joint Ventures (Topic 323) – Simplifying the Transition to the Equity Method of Accounting. This update eliminates retroactive adjustments for an investment that qualifies for the use of the equity method as a result of an increase in the level of ownership interest associated with an existing investment.  The amendment requires that the equity method investor add the cost of acquiring the additional interest to the current investment and adopt the equity method on the date that the investment becomes qualified for equity method accounting. The amendments in this update are effective for fiscal years beginning after December 15, 2016.  Early adoption is permitted.  The adoption of this update is not expected to have a material impact on BBX Capital’s consolidated financial statements.



Accounting Standards Update (ASU) No. 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 better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Further, in March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in April and May 2016, the FASB issued ASU 2016-10 and 2016-12, respectively, Revenue from Contracts with Customers (Topic 606) and also in May 2016 the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivative and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-19. These updates clarify implementation guidance on the related topic. The accounting guidance updates will replace most existing revenue recognition guidance in GAAP. The standard is effective for annual and interim reporting periods beginning after December 15, 2017.  Earlier adoption is permitted only for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  BBX Capital is currently evaluating the requirements of these updates and has not yet determined their impact on its 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, BBX Capital’s investment in Woodbridge is accounted for under the equity method. In connection with BBX Capital’s investment in Woodbridge, BBX Capital and BFC entered into an Amended and Restated Operating Agreement of Woodbridge, which sets forth BBX Capital’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 BBX Capital’s and BFC’s percentage equity interests in Woodbridge.



The following is activity related to BBX Capital’s investment in Woodbridge, which is accounted for under the equity method (in thousands):









 

 

 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2016

 

2015

 

2016

 

2015



 

 

 

 

 

 

 

 

Investment in Woodbridge - beginning of period

$

76,631 

 

62,496 

 

75,545 

 

73,026 

Additional investment in Woodbridge

 

 -

 

11,385 

 

 -

 

11,385 

Equity in earnings of Woodbridge

 

10,307 

 

10,306 

 

22,101 

 

5,941 

Dividends received from Woodbridge

 

(8,786)

 

(14,557)

 

(19,494)

 

(20,722)

Investment in Woodbridge - end of period

$

78,152 

 

69,630 

 

78,152 

 

69,630 



10


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

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









 

 

 

 



 

 

 

 



 

As of



 

September 30,

 

December 31,



 

2016

 

2015

Assets

 

 

 

 

Cash and restricted cash

$

182,831 

 

172,758 

Notes receivable, net

 

424,533 

 

415,598 

Notes receivable from related parties

 

80,000 

 

80,000 

Inventory of real estate

 

227,688 

 

220,211 

Properties and equipment, net

 

71,815 

 

71,937 

Intangible assets, net

 

61,806 

 

61,977 

Other assets

 

66,976 

 

61,794 

  Total assets

$

1,115,649 

 

1,084,275 

Liabilities and Equity

 

 

 

 

Accounts payable, accrued liabilities and other

$

123,679 

 

113,473 

Deferred tax liabilities, net

 

140,261 

 

110,202 

Notes payable

 

488,245 

 

503,521 

Junior subordinated debentures

 

151,976 

 

150,485 

  Total liabilities

 

904,161 

 

877,681 

  Total Woodbridge members' equity

 

169,063 

 

163,397 

Noncontrolling interest

 

42,425 

 

43,197 

  Total equity

 

211,488 

 

206,594 

  Total liabilities and equity

$

1,115,649 

 

1,084,275 





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











 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2016

 

2015

 

2016

 

2015

Total revenues

$

180,633 

 

175,861 

 

495,724 

 

458,365 

Total costs and expenses

 

143,009 

 

135,766 

 

411,703 

 

405,811 

Other income

 

926 

 

1,089 

 

1,075 

 

3,278 

Income before taxes

 

38,550 

 

41,184 

 

85,096 

 

55,832 

Provision for income taxes

 

14,369 

 

15,048 

 

30,473 

 

33,575 

Net income

 

24,181 

 

26,136 

 

54,623 

 

22,257 

Net income attributable to noncontrolling interest

 

(1,775)

 

(3,732)

 

(6,578)

 

(9,343)

Net income attributable to Woodbridge

 

22,406 

 

22,404 

 

48,045 

 

12,914 

BBX Capital 46% equity in earnings of Woodbridge

$

10,307 

 

10,306 

 

22,101 

 

5,941 









 





11


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

3.  Investments in Unconsolidated Real Estate Joint Ventures



BBX Capital had the following investments in unconsolidated real estate joint ventures (in thousands):





 

 

 

 



 

 

 

 



 

September 30,

 

December 31,

Investment in unconsolidated real estate joint ventures

 

2016

 

2015

Altis at Kendall Square, LLC

$

705 

 

764 

Altis at Lakeline - Austin Investors LLC

 

5,201 

 

5,210 

New Urban/BBX Development, LLC

 

903 

 

864 

Sunrise and Bayview Partners, LLC

 

1,566 

 

1,577 

Hialeah Communities, LLC

 

2,947 

 

4,569 

PGA Design Center Holdings, LLC

 

1,857 

 

1,911 

CCB Miramar, LLC

 

875 

 

875 

Centra Falls, LLC

 

706 

 

727 

The Addison on Millenia Investment, LLC

 

5,868 

 

5,778 

BBX/S Millenia Blvd Investments, LLC

 

4,983 

 

4,905 

Altis at Bonterra - Hialeah, LLC

 

17,375 

 

15,782 

Altis at Shingle Creek Manager, LLC

 

332 

 

 -

Investments in unconsolidated real estate joint ventures

$

43,318 

 

42,962 



BBX Capital’s investments in unconsolidated real estate joint ventures are accounted for as variable interest entities.



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, 2016 was $275,000 and $608,000, respectively, and for the three and nine months ended September 30, 2015 was $131,000 and $359,000, respectively.



BBX Capital received $5.0 million and $6.6 million of distributions from unconsolidated real estate joint ventures for the three and nine months ended September 30, 2016, respectively.



The condensed Statements of Operations for the three and nine months ended September 30, 2016 and 2015 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,



 

2016

 

2015

 

2016

 

2015

Total revenues

$

11,726 

 

1,051 

 

17,980 

 

2,088 

Total costs and expenses

 

(4,109)

 

(1,075)

 

(9,136)

 

(3,463)

Net earnings (loss)

$

7,617 

 

(24)

 

8,844 

 

(1,375)

Equity in net earnings (losses) of unconsolidated real estate joint ventures

$

4,480 

 

(158)

 

5,793 

 

(753)



See Note 6 to the Consolidated Financial Statements included in BBX Capital’s Annual Report on Form 10-K for the year ended December 31, 2015 for information on investments in BBX Capital’s unconsolidated real estate joint ventures.













12


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

4.  Loans Held-for-Sale and Loans Receivable



BBX Capital’s loans held-for-sale and loans receivable portfolios consisted of the following components (in thousands):



 

 

 

 



 

 

 

 



 

September 30,

 

December 31,



 

2016

 

2015



 

 

 

 

Loans held-for-sale

$

 -

 

21,354 



 

 

 

 

Commercial non-real estate

$

1,190 

 

11,250 

Commercial real estate

 

7,879 

 

16,294 

Small business

 

2,645 

 

4,054 

Consumer

 

1,907 

 

2,368 

Residential

 

14,995 

 

69 

         Loans receivable, net

$

28,616 

 

34,035 



As of September 30, 2016, foreclosure proceedings were in-process on $10.2 million of residential loans and $0.3 million of consumer loans.



Loans held-for-sale are reported at the lower of cost or fair value measured on an aggregate basis.  As of December 31, 2015 the lower of cost or fair value adjustment on loans held-for-sale was $1.6 million. BBX Capital transfers loans from held-for-sale to loans receivable when, based on the current economic environment and related market conditions, it has the intent to hold those loans for the foreseeable future. As of June 30, 2016, based on then current market conditions and an evaluation of the residential loan portfolio, BBX Capital transferred residential loans held-for-sale with aggregate unpaid principal balances, net of charge-offs, of $17.3 million from loans held-for-sale to loans receivable. The lower of cost or fair value of the residential loans on the transfer date was $16.1 million. Any difference between the lower of cost or fair value of the loan and the unpaid principal balance net of charge-offs was recognized as a discount.



The total discount on loans receivable was $3.6 million and $3.3 million as of September 30, 2016 and December 31, 2015, respectively.  



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





 

 

 

 



 

 

 

 



 

September 30,

 

December 31,

Loan Class

 

2016

 

2015

Commercial non-real estate

$

1,190 

 

1,250 

Commercial real estate

5,952 

 

9,639 

Small business

 

2,645 

 

4,054 

Consumer

 

1,809 

 

2,368 

Residential

 

13,569 

 

69 

Total nonaccrual loans

$

25,165 

 

17,380 



13


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

An age analysis of the past due recorded investment in loans receivable as of September  30, 2016 and December 31, 2015 was as follows (in thousands):



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Total



 

31-59 Days

 

60-89 Days

 

90 Days

 

Total

 

 

 

Loans

September 30, 2016

 

Past Due

 

Past Due

 

or More (1)

 

Past Due

 

Current

 

Receivable

Commercial non-real estate

$

 -

 

 -

 

330 

 

330 

 

860 

 

1,190 

Commercial real estate

 

 -

 

 -

 

3,986 

 

3,986 

 

3,893 

 

7,879 

Small business

 

68 

 

 -

 

56 

 

124 

 

2,521 

 

2,645 

Consumer

 

 -

 

12 

 

557 

 

569 

 

1,338 

 

1,907 

Residential

 

520 

 

22 

 

10,302 

 

10,844 

 

4,151 

 

14,995 

Total

$

588 

 

34 

 

15,231 

 

15,853 

 

12,763 

 

28,616 







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Total



 

31-59 Days

 

60-89 Days

 

90 Days

 

Total

 

 

 

Loans

December 31, 2015

 

Past Due

 

Past Due

 

or More (1)

 

Past Due

 

Current

 

Receivable

Commercial non-real estate

$

 -

 

 -

 

329 

 

329 

 

10,921 

 

11,250 

Commercial real estate

 

 -

 

 -

 

3,986 

 

3,986 

 

12,308 

 

16,294 

Small business:

 

 -

 

205 

 

 -

 

205 

 

3,849 

 

4,054 

Consumer

 

316 

 

138 

 

562 

 

1,016 

 

1,352 

 

2,368 

Residential

 

 -

 

24 

 

42 

 

66 

 

 

69 

Total

$

316 

 

367 

 

4,919 

 

5,602 

 

28,433 

 

34,035 



 (1)  BBX Capital had no loans that were 90 days or more past due and still accruing interest as of September 30, 2016 and December 31, 2015.



The activity in the allowance for loan losses for the three and nine months ended September  30, 2016 and 2015 was as follows (in thousands): 



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

For the Three Months

 

For the Nine Months



 

Ended September 30,

 

Ended September 30,

Allowance for Loan Losses:

2016

 

2015

 

2016

 

2015

Beginning balance

$

 -

 

172 

 

 -

 

977 

    Charge-offs :

 

(48)

 

(97)

 

(144)

 

(993)

     Recoveries :

 

10,992 

 

4,352 

 

19,123 

 

14,872 

     Provision :

 

(10,944)

 

(4,427)

 

(18,979)

 

(14,856)

Ending balance

$

 -

 

 -

 

 -

 

 -

Ending balance individually evaluated for impairment

$

 -

 

 -

 

 -

 

 -

Ending balance collectively evaluated for impairment

 

 -

 

 -

 

 -

 

 -

Total

$

 -

 

 -

 

 -

 

 -

Loans receivable:

 

 

 

 

 

 

 

 

Ending balance individually evaluated for impairment

$

22,356 

 

14,475 

 

22,356 

 

14,475 

Ending balance collectively evaluated for impairment

 

6,260 

 

13,225 

 

6,260 

 

13,225 

Total

$

28,616 

 

27,700 

 

28,616 

 

27,700 

Proceeds from loan sales

$

 -

 

 -

 

 -

 

89 

Transfer from loans held-for-sale

$

 -

 

 -

 

16,078 

 

7,365 



Impaired Loans -  Loans are considered impaired when, based on current information and events, BBX Capital believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan 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.  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. 



14


 

BBX CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

 

Impaired loans as of September 30, 2016 and December 31, 2015 were as follows (in thousands):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

As of September 30, 2016

 

As of December 31, 2015



 

 

Unpaid

 

 

 

Unpaid

 



 

Recorded

Principal

Related

 

Recorded

Principal

Related



 

Investment

Balance

Allowance

 

Investment

Balance

Allowance



 

 

 

 

 

 

 

 

Total with allowance recorded

$

 -

 -

 -

 

 -

 -

 -

Total with no allowance recorded

 

25,338  42,086 

 -

 

17,380  30,212 

 -

Total

$

25,338  42,086 

 -

 

17,380  30,212 

 -



Average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2016 were as follows (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30, 2016

 

September 30, 2016



 

Average Recorded

Interest Income

 

Average Recorded

Interest Income



 

Investment

Recognized

 

Investment

Recognized

Total with allowance recorded

$

 -

 -

 

 -

 -

Total with no allowance recorded

 

25,731  189 

 

24,573  566 

Total

$

25,731  189 

 

24,573  566 



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):





 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30, 2015

 

September 30, 2015



 

Average Recorded

Interest Income

 

Average Recorded

Interest Income



 

Investment

Recognized

 

Investment

Recognized

Total with allowance recorded

$

 -

 -

 

45 

Total with no allowance recorded

 

21,015  271 

 

23,367  974 

Total

$

21,015  271 

 

23,412  977 

Impaired loans without valuation allowances represent loans that were written-down to the fair value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the carrying value of the loan, loans in which the present value of the cash flows discounted at the loans’ effective interest rate was