Note 17—segment Information

The Company currently operates through two reportable segments: US Operations and International Operations.

US Operations

The Company owns and manages tax-exempt bonds, a substantial majority of which are backed by affordable multifamily rental properties. The Company also manages low income housing tax credit equity funds for third party investors which invest in similar affordable multifamily rental properties.

International Operations

Outside of the US, our strategy is to raise, invest in and manage private real estate funds which invest in affordable for-sale and rental housing in South Africa and, to a lesser extent, Sub-Saharan Africa. The Company’s International Operations take place through a subsidiary, IHS.

The following tables reflect the results of the business segments for the three months and six months ended June 30, 2013 and 2012. The segment results have been adjusted to include revenues and expenses related to transactions between CFVs and the two reportable segments that are eliminated in consolidation and are provided for through an allocation of income.

Consolidated Funds and Ventures

CFVs ventures are entities for which the Company is deemed to be the primary beneficiary. The Company earns revenue from these CFVs mainly through asset management fees, interest income (mostly relating to interest on bonds) and guarantee fees.

	For the three months ended June 30, 2013
(in thousands)	US Operations		International Operations		CFVs		Income Allocation Reclasses		Note Ref.	CFVs Adjustments		MMA Consolidated
Total interest income	$	16,168	$	8	$	3,784	$	(1,318)	A	$	(3,784)	$	14,858
Total interest expense		13,726		-		1,795		(1,318)	A		(477)		13,726
Net interest income		2,442		8		1,989		-			(3,307)		1,132

Total fee and other income		2,338		706		6,366		(1,215)	B		(6,366)		1,829
Revenue from CFVs		-		-		-		-			10,150		10,150
Total non-interest revenue		2,338		706		6,366		(1,215)			3,784		11,979
Total revenues, net of interest expense		4,780		714		8,355		(1,215)			477		13,111
Operating and other expenses:
Interest expense		3,583		33		-		-			-		3,616
Operating expenses		5,825		1,627		6,193		(1,215)	B		(4,978)		7,452
Impairment on bonds and provision for loan losses		480		-		-		-			-		480
Other expenses		2,515		137		11,095		(796)	C, D		(11,095)		1,856
Expenses from CFVs		-		-		-		-			16,550		16,550
Total operating and other expenses		12,403		1,797		17,288		(2,011)			477		29,954
Net gains on assets, derivatives and extinguishment of liabilities		921		-		8,933		-			(8,933)		921
Net gains due to real estate consolidation and foreclosure		8,484		-		-		-			-		8,484
Net gains related to CFVs		-		-		-		-			8,933		8,933
Equity in losses from Lower Tier Property Partnerships		-		-		(6,637)		(731)	C		-		(7,368)
Income (loss) from continuing operations before income taxes		1,782		(1,083)		(6,637)		65			-		(5,873)
Income tax benefit		(95)		-		-		-			-		(95)
Income from discontinued operations, net of tax		418		-		-		-			-		418
Net income (loss)		2,105		(1,083)		(6,637)		65			-		(5,550)
Income allocable to noncontrolling interests:
Income allocable to perpetual preferred shareholders of a subsidiary company		(1,673)		-		-		-			-		(1,673)
Net losses (income) allocable to noncontrolling interests in CFVs:
Related to continuing operations		-		200		6,637		(65)	D		-		6,772
Related to discontinued operations		-		-		-		-			-		-
Net income (loss) to common shareholders	$	432	$	(883)	$	-	$	-		$	-	$	(451)

	For the three months ended June 30, 2012
(in thousands)	US Operations		International Operations		CFVs		Income Allocation Reclasses		Note Ref.	CFVs Adjustments		MMA Consolidated
Total interest income	$	17,777	$	9	$	2,380	$	(907)	A	$	(2,380)	$	16,879
Total interest expense		6,675		-		1,305		(907)	A		(398)		6,675
Net interest income		11,102		9		1,075		-			(1,982)		10,204

Total fee and other income		2,805		883		4,188		(1,521)	B		(4,188)		2,167
Revenue from CFVs		-		-		-		-			6,568		6,568
Total non-interest revenue		2,805		883		4,188		(1,521)			2,380		8,735
Total revenues, net of interest expense		13,907		892		5,263		(1,521)			398		18,939
Operating and other expenses:
Interest expense		4,669		34		-		-			-		4,703
Operating expenses		3,504		1,561		5,136		(1,521)	B		(3,615)		5,065
Impairment on bonds and provision for loan losses		(23)		-		-		-			-		(23)
Other expenses		2,479		(29)		4,681		(840)	C,D		(4,681)		1,610
Expenses from CFVs		-		-		-		-			8,694		8,694
Total operating and other expenses		10,629		1,566		9,817		(2,361)			398		20,049
Net gains on assets, derivatives and extinguishment of liabilities		(899)		-		5,290		-			(5,290)		(899)
Net gains due to real estate consolidation and foreclosure		2,550		-		-		-			-		2,550
Net gains related to CFVs		-		-		-		-			5,290		5,290
Equity in losses from Lower Tier Property Partnerships		-		-		(6,119)		(776)	C		-		(6,895)
Income (loss) from continuing operations before income taxes		4,929		(674)		(5,383)		64			-		(1,064)
Income tax expense		(23)		-		-		-			-		(23)
Income from discontinued operations, net of tax		322		-		(653)		-			-		(331)
Net income (loss)		5,228		(674)		(6,036)		64			-		(1,418)
Income allocable to noncontrolling interests:
Income allocable to perpetual preferred shareholders of a subsidiary company		(2,284)		-		-		-			-		(2,284)
Net losses (income) allocable to noncontrolling interests in CFVs:
Related to continuing operations		-		144		5,383		(64)	D		-		5,463
Related to discontinued operations		-		-		653		-			-		653
Net income (loss) to common shareholders	$	2,944	$	(530)	$	-	$	-		$	-	$	2,414

	For the six months ended June 30, 2013
(in thousands)	US Operations		International Operations		CFVs		Income Allocation Reclasses		Note Ref.	CFVs Adjustments		MMA Consolidated
Total interest income	$	33,298	$	15	$	4,744	$	(2,517)	A	$	(4,744)	$	30,796
Total interest expense		20,015		-		3,492		(2,517)	A		(975)		20,015
Net interest income		13,283		15		1,252		-			(3,769)		10,781

Total fee and other income		4,553		1,517		11,653		(2,403)	B		(11,653)		3,667
Revenue from CFVs		-		-		-		-			16,397		16,397
Total non-interest revenue		4,553		1,517		11,653		(2,403)			4,744		20,064
Total revenues, net of interest expense		17,836		1,532		12,905		(2,403)			975		30,845
Operating and other expenses:
Interest expense		7,679		66		-		-			-		7,745
Operating expenses		11,827		3,151		11,740		(2,403)	B		(9,337)		14,978
Impairment on bonds and provision for loan losses		833		-		-		-			-		833
Other expenses		5,819		68		20,784		(2,098)	C, D		(20,784)		3,789
Expenses from CFVs		-		-		-		-			31,096		31,096
Total operating and other expenses		26,158		3,285		32,524		(4,501)			975		58,441
Net gains on assets, derivatives and extinguishment of liabilities		38,368		-		23,920		-			(23,920)		38,368
Net gains due to real estate consolidation and foreclosure		8,484		-		-		-			-		8,484
Net gains related to CFVs		-		-		-		-			23,920		23,920
Equity in losses from Lower Tier Property Partnerships		-		-		(11,840)		(1,946)	C		-		(13,786)
Income (loss) from continuing operations before income taxes		38,530		(1,753)		(7,539)		152			-		29,390
Income tax benefit		1,432		-		-		-			-		1,432
Income from discontinued operations, net of tax		3,945		-		1,190		-			-		5,135
Net income (loss)		43,907		(1,753)		(6,349)		152			-		35,957
Income allocable to noncontrolling interests:
Income allocable to perpetual preferred shareholders of a subsidiary company		(3,678)		-		-		-			-		(3,678)
Net losses (income) allocable to noncontrolling interests in CFVs:
Related to continuing operations		-		349		7,539		(152)	D		-		7,736
Related to discontinued operations		-		-		(1,190)		-			-		(1,190)
Net income (loss) to common shareholders	$	40,229	$	(1,404)	$	-	$	-		$	-	$	38,825

	For the six months ended June 30, 2012
(in thousands)	US Operations		International Operations		CFVs		Income Allocation Reclasses		Note Ref.	CFVs Adjustments		MMA Consolidated
Total interest income	$	35,617	$	23	$	3,222	$	(1,678)	A	$	(3,222)	$	33,962
Total interest expense		13,532		-		2,474		(1,678)	A		(796)		13,532
Net interest income		22,085		23		748		-			(2,426)		20,430

Total fee and other income		5,374		2,202		7,916		(3,314)	B		(7,916)		4,262
Revenue from CFVs		-		-		-		-			11,138		11,138
Total non-interest revenue		5,374		2,202		7,916		(3,314)			3,222		15,400
Total revenues, net of interest expense		27,459		2,225		8,664		(3,314)			796		35,830
Operating and other expenses:
Interest expense		9,478		73		-		-			-		9,551
Operating expenses		8,225		3,241		10,512		(3,314)	B		(7,198)		11,466
Impairment on bonds and provision for loan losses		(3,197)		-		-		-			-		(3,197)
Other expenses		3,994		(194)		10,154		(1,805)	C,D		(10,154)		1,995
Expenses from CFVs		-		-		-		-			18,148		18,148
Total operating and other expenses		18,500		3,120		20,666		(5,119)			796		37,963
Net gains on assets, derivatives and extinguishment of liabilities		(665)		-		10,015		-			(10,015)		(665)
Net gains due to real estate consolidation and foreclosure		2,550		-		-		-			-		2,550
Net gains related to CFVs		-		-		-		-			10,015		10,015
Equity in losses from Lower Tier Property Partnerships		-		-		(17,756)		(1,675)	C		-		(19,431)
Income (loss) from continuing operations before income taxes		10,844		(895)		(19,743)		130			-		(9,664)
Income tax expense		(41)		-		-		-			-		(41)
Income from discontinued operations, net of tax		698		-		(1,289)		-			-		(591)
Net income (loss)		11,501		(895)		(21,032		130			-		(10,296)
Income allocable to noncontrolling interests:
Income allocable to perpetual preferred shareholders of a subsidiary company		(4,568)		-		-		-			-		(4,568)
Net losses (income) allocable to noncontrolling interests in CFVs:
Related to continuing operations		-		218		19,743		(130)	D		-		19,831
Related to discontinued operations		-		-		1,289		-			-		1,289
Net income (loss) to common shareholders	$	6,933	$	(677)	$	-	$	-		$	-	$	6,256

A. Primarily related to interest on bonds that the Company earned by holding the bond but which is eliminated because the Company consolidates the Lower Tier Property Partnership and its related real estate. These Lower Tier Property Partnerships each have a mortgage debt obligation that collateralizes a bond.

B. Primarily related to asset management fees earned by the Company for asset management services provided to the SA Fund and LIHTC Funds.

C. Primarily relates to equity in losses from the Lower Tier Property Partnerships associated with the Company’s LIHTC Funds for which the Company has provided bond financing to the Lower Tier Property Partnerships.

D. Includes losses recorded by the Company related to guarantees provided by the Company associated with third party debt obligations of certain Lower Tier Property Partnerships.

The total assets by segment at June 30, 2013 and December 31, 2012 are presented in the table below:

(in thousands)	June 30, 2013		December 31, 2012
ASSETS
US Operations	$	1,199,826	$	1,236,288
International Operations		4,743		4,644
Total segment assets		1,204,569		1,240,932
Bonds eliminated in consolidation		(136,552)		(114,529)
Net unrealized mark-to-market gains not recorded in consolidation		(15,284)		(10,585)
Other adjustments		(8,661)		(7,628)
Assets of CFVs		701,741		693,562
Total MMA consolidated assets	$	1,745,813	$	1,801,752