INVESTMENTS IN DEBT SECURITIES

6 Months Ended

Jun. 30, 2020

INVESTMENTS IN DEBT SECURITIES [Abstract]

Note 2—Investments in Debt Securities

At June 30, 2020 and December 31, 2019, the Company’s investments in debt securities consist of one subordinated multifamily tax-exempt mortgage revenue bond and one tax-exempt infrastructure bond. These investments are classified as available-for-sale for reporting purposes and are measured on a fair value basis in our Consolidated Balance Sheets.

Multifamily tax-exempt bonds are issued by state and local governments or their agencies or authorities to finance affordable multifamily rental housing. Generally, the only source of security on these bonds is a mortgage on the underlying property. The Company’s non-amortizing subordinated cash flow bond principal is due in full in November 2044.

The Company’s infrastructure bond financed the development of infrastructure for a mixed-use town center development in Spanish Fort, Alabama and is secured by incremental tax revenues generated from the development and its landowners (this investment is hereinafter referred to as our “Infrastructure Bond”). At June 30, 2020, the Company’s Infrastructure Bond amortizes on a scheduled basis and has a stated maturity date of December 2048.

The following tables provide information about the unpaid principal balance (“UPB”), amortized cost, gross unrealized gains and fair value (“FV”) associated with the Company’s investments in bonds that are classified as available-for-sale:


	At
	June 30, 2020
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost ⁽¹⁾		Gains		FV		of UPB
Infrastructure Bond	$	26,715	$	20,716	$	3,158	$	23,874		89%
Multifamily tax-exempt bond		4,000		—		6,114		6,114		153%
Total	$	30,715	$	20,716	$	9,272	$	29,988		98%


	At
	December 31, 2019
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost ⁽¹⁾		Gains		FV		of UPB
Infrastructure Bond	$	26,885	$	20,797	$	4,542	$	25,339	94%
Multifamily tax-exempt bond		4,000		—		6,026		6,026	151%
Total	$	30,885	$	20,797	$	10,568	$	31,365	102%

(1)	Amortized cost consists of the UPB, unamortized premiums, discounts and other cost basis adjustments, as well as other-than-temporary-impairment (“OTTI”) recognized in “Impairments” in our Consolidated Statements of Operations.

See Note 8, “Fair Value,” which describes factors that contributed to the $1.4 million decrease in the reported fair value of the Company’s investments in debt securities for the six months ended June 30, 2020.

Nonaccrual Bonds

At June 30, 2020 and December 31, 2019, the Company had no bonds that were on nonaccrual status.

Interest income on bonds that was recognized on a cash basis was de minimis for the three months ended June 30, 2019 and $0.1 million for the six months ended June 30, 2019.

Interest income not recognized on bond investments that were on nonaccrual status for the three months and six months ended June 30, 2019 was de minimis.

Bond Sales and Redemptions

There were no sales or redemption in full of investments in bonds during the three months and six months ended June 30, 2020.

The Company received cash proceeds in connection with the sale or redemption in full of investments in bonds of $15.5 million and $24.1 million for the three months and six months ended June 30, 2019.

The following table provides information about gains or losses that were recognized in the Company’s Consolidated Statements of Operations in connection with the Company’s investments in bonds:


	For the three months ended				For the six months ended
	June 30,				June 30,
(in thousands)	2020		2019		2020		2019
Gains recognized at time of sale or redemption	$	—	$	20,693	$	—	$	24,264