Note 11—Equity

Preferred Share Information

On January 1, 2019, as part of the Company’s conversion to a corporation, the Company was authorized to issue 5,000,000 of preferred shares, in one or more series, with no par value. The Board of Directors has not authorized any of these shares to be issued and no rights have been established for any of these shares.

Common Share Information

The following table provides information about net income to common shareholders as well as provides information that pertains to weighted-average share counts that were used in per share calculations as presented on the Consolidated Statements of Operations:


	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Net income from continuing operations	$	5,576	$	8,348	$	31,685	$	7,754
Net income (loss) from discontinued operations		─		276		(8)		21,972
Net income	$	5,576	$	8,624	$	31,677	$	29,726

Basic weighted-average shares (1)		5,887		5,804		5,884		5,717
Common stock equivalents (2)		─		283		─		─
Diluted weighted-average shares		5,887		6,087		5,884		5,717

⁽¹⁾

Includes common shares issued and outstanding, as well as deferred shares of non-employee directors that have vested but are not issued and outstanding.

⁽²⁾

At September 30, 2018, 222,000 stock options were exercisable and in-the-money. The weighted average potential dilutive shares outstanding, inclusive of the options exercised during the year based on the exercise date, had a potential dilutive share impact of 282,597 and 348,403 for the three and nine months ended September 30, 2018, respectively. For the nine months ended September 30, 2018, the adjustment to net income for the awards classified as liabilities caused the common stock equivalents to be anti-dilutive. All stock options were exercised as of December 31, 2018.

Common Shares

On September 12, 2019, the Board authorized a 2019 share repurchase program (“2019 Plan”) for the repurchase of up to 100,000 common shares, at market prices up to the Company’s last reported diluted common shareholders’ equity per share, which was $36.46 as reported within the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2019. The Company then adopted a Rule 10b5-1 plan implementing the Board’s authorization, subject to volume limitations as defined by Rule 10b-18 under the Exchange Act. The 2019 Plan expires upon the earlier of the close of trading on December 31, 2019 or the repurchase of the authorized 100,000 common shares. Between October 1, 2019 and November 1, 2019, the Company repurchased 23,849 common shares at an average price of $31.06.

On March 9, 2018, the Company issued 125,000 common shares to Hunt for $4.1 million, or $33.00 per share. On June 26, 2018, the Company issued an additional 125,000 shares to Hunt for $4.3 million, or $34.00 per share.

Effective May 5, 2015, the Company adopted a Tax Benefits Rights Agreement (the “Rights Plan”) to help preserve the Company’s net operating losses (“NOLs”). In connection with adopting the Rights Plan, the Company declared a distribution of one right per common share to shareholders of record as of May 15, 2015. The rights do not trade apart from the current common shares until the distribution date, as defined in the Rights Plan. Under the Rights Plan, the acquisition by an investor (or group of related investors) of greater than a 4.9% stake in the Company, could result in all existing shareholders other than the new 4.9% holder having the right to acquire new shares for a nominal cost, thereby significantly diluting the ownership interest of the acquiring person. The Rights Plan will remain in effect for five years, until May 15, 2020, or until the Board determines the plan is no longer required, whichever comes first. The Board may also choose to adopt a new plan effective on or after the date the Rights Plan expires.

On January 3, 2018, the Board approved a waiver of the 4.9% ownership limitation for Hunt, increasing such limitation to the acquisition of 9.9% of the Company’s issued and outstanding shares in any rolling 12‑month period without causing a triggering event.

At September 30, 2019, the Company had three shareholders, including one of its executive officers, Michael L. Falcone, who held greater than a 4.9% interest in the Company. In order to facilitate satisfaction of share purchase obligations related to his 2017 bonus award and permitting his stock option awards to be exercised, the Board of Directors named Mr. Falcone an exempted person in accordance with the Rights Plan but only to the extent of settling such share purchase obligations and options. Mr. Falcone satisfied his share purchase obligations and exercised all of his share purchase option awards as of December 31, 2018, and, due to the aforementioned action of the Board of Directors, there was no triggering event for purposes of the Rights Plan.

On November 6, 2019, the Board further named Mr. Falcone an exempted person in accordance with the Rights Plan to the extent of his proposed open-market share purchases of up to an additional 6,000 common shares with the Board reserving all its rights under the Rights Plan for any subsequent purchases. As a result of the Board’s action, there was no triggering event for purposes of the Rights Plan.

Accumulated Other Comprehensive Income

The following table provides information related to the net change in AOCI for the three months ended September 30, 2019:


	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2019	$	13,397	$	17	$	13,414
Net unrealized gains		961		217		1,178
Reclassification of realized gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		─		(1,851)
Net change in AOCI		(890)		217		(673)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

The following table provides information related to the net change in AOCI for the three months ended September 30, 2018:


			Income
	Investments		Tax		Foreign
	in Debt		(Expense)		Currency
(in thousands)	Securities		Benefit		Translation		AOCI
Balance, July 1, 2018	$	54,857	$	(14)	$	(483)	$	54,360
Net unrealized gains		1,025		─		525		1,550
Reclassification of realized gains on sold or redeemed bonds into the Consolidated Statements of Operations		(5,080)		─		─		(5,080)
Reclassification of realized losses to the Consolidated Statements of Operations related to bond investments assessed as OTTI		141		─		─		141
Income tax benefit		─		14		─		14
Net change in AOCI		(3,914)		14		525		(3,375)
Balance, September 30, 2018	$	50,943	$	─	$	42	$	50,985

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2019:


	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2019	$	37,625	$	72	$	37,697
Net unrealized gains		997		162		1,159
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(26,115)		─		(26,115)
Net change in AOCI		(25,118)		162		(24,956)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2018:


	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2018	$	44,459	$	(3,306)	$	41,153
Net unrealized gains		2,143		3,348		5,491
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(5,080)		─		(5,080)
Reclassification of credit-related gains to the Consolidated Statements of Operations related to bond investments assessed as OTTI		6		─		6
Reinstatement of fair value gains related to bond investments due to deconsolidation of consolidated property partnerships		9,415		─		9,415
Income tax expense		─		─		─
Net change in AOCI		6,484		3,348		9,832
Balance, September 30, 2018	$	50,943	$	42	$	50,985