SEGMENT REPORTING

6 Months Ended

Jun. 30, 2014

SEGMENT REPORTING

SEGMENT REPORTING

18. SEGMENT REPORTING

The Company has determined that it has three reportable segments based on how management reviews and manages its business.  These reportable segments include Loans, Securities, and Real Estate.  The Loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans).  The Securities segment is composed of all of the Company’s activities related to commercial real estate securities, which include investments in CMBS and U.S. Agency Securities.  The Real Estate segment includes selected net lease and other real estate assets.  Corporate/Other includes the Company’s investments in joint ventures, other asset management activities and operating expenses.

The Company evaluates performance based on the following financial measures for each segment ($ in thousands):

	Loans			Securities			Real Estate			Corporate/Other(1)			Company Total
Three months ended June 30, 2014
Interest income	$	27,731		$	17,363		$	—		$	18		$	45,112
Interest expense	(3,596		)	(1,538		)	(3,783		)	(7,835		)	(16,752		)
Net interest income (expense)	24,135			15,825			(3,783		)	(7,817		)	28,360
Provision for loan losses	(150		)	—			—			—			(150		)
Net interest income (expense) after provision for loan losses	23,985			15,825			(3,783		)	(7,817		)	28,210
Operating lease income	—			—			12,803			—			12,803
Tenant recoveries	—			—			2,142			—			2,142
Sale of loans, net	45,419			—			—			—			45,419
Gain on securities	—			5,376			—			—			5,376
Sale of real estate, net	435			—			8,625			—			9,060
Fee income	688			5			—			1,499			2,192
Net result from derivative transactions	(9,126		)	(16,147		)	—			—			(25,273		)
Earnings from investment in unconsolidated joint ventures	—			—			987			—			987
Unrealized gain (loss) on Agency interest-only securities, net	—			2,782			—			—			2,782
Total other income	37,416			(7,984		)	24,557			1,499			55,488
Salaries and employee benefits	(8,200		)	—			—			(18,283		)	(26,483		)
Operating expenses	48			—			—			(3,712		)	(3,664		)
Real estate operating expenses	—			—			(7,380		)	—			(7,380		)
Fee expense	(420		)	(17		)	(23		)	(253		)	(713		)
Depreciation and amortization	—			—			(6,881		)	(137		)	(7,018		)
Total costs and expenses	(8,572		)	(17		)	(14,284		)	(22,385		)	(45,258		)
Tax expense	—			—			—			(8,199		)	(8,199		)
Segment profit (loss)	$	52,829		$	7,824		$	6,490		$	(36,902	)	$	30,241
Total assets as of June 30, 2014	$	1,129,837		$	1,834,488		$	561,177		$	298,582		$	3,824,084
Three months ended June 30, 2013
Interest income	$	14,078		$	14,056		$	—		$	2,034		$	30,168
Interest expense	(1,217		)	(717		)	(2,920		)	(7,088		)	(11,942		)
Net interest income (expense)	12,861			13,339			(2,920		)	(5,054		)	18,226
Provision for loan losses	(150		)	—			—			—			(150		)
Net interest income (expense) after provision for loan losses	12,711			13,339			(2,920		)	(5,054		)	18,076
Operating lease income	—			—			8,906			—			8,906
Tenant recoveries	—			—			—			—			—
Sale of loans, net	35,814			—			—			—			35,814
Gain on securities	—			3,311			—			—			3,311
Sale of real estate, net	186			—			3,479			—			3,665
Fee income	332			8			46			1,779			2,165
Net result from derivative transactions	14,230			6,449			—			—			20,679
Earnings from investment in unconsolidated joint ventures	—			—			—			595			595
Unrealized gain (loss) on Agency interest-only securities, net	—			(4,789		)	—			—			(4,789		)
Total other income	50,562			4,979			12,431			2,374			70,346
Salaries and employee benefits	(5,000		)	—			—			(8,882		)	(13,882		)
Operating expenses	53			—			—			(2,789		)	(2,736		)
Real estate operating expenses	—			—			(3,545		)	—			(3,545		)
Fee expense	(716		)	(340		)	(2,606		)	(127		)	(3,789		)
Depreciation and amortization	—			—			(2,938		)	(137		)	(3,075		)
Total costs and expenses	(5,663		)	(340		)	(9,089		)	(11,935		)	(27,027		)
Tax expense	—			—			(242		)	(1,374		)	(1,616		)
Segment profit (loss)	$	57,610		$	17,978		$	180		$	(15,989	)	$	59,779
Total assets as of June 30, 2013	$	911,295		$	887,523		$	521,369		$	178,077		$	2,498,264

	Loans			Securities			Real Estate			Corporate/Other(1)			Company Total
Six months ended June 30, 2014
Interest income	$	48,040		$	33,868		$	—		$	26		$	81,934
Interest expense	(5,784		)	(2,803		)	(7,114		)	(15,892		)	(31,593		)
Net interest income (expense)	42,256			31,065			(7,114		)	(15,866		)	50,341
Provision for loan losses	(300		)	—			—			—			(300		)
Net interest income (expense) after provision for loan losses	41,956			31,065			(7,114		)	(15,866		)	50,041
Operating lease income	—			—			26,017			—			26,017
Tenant recoveries	—			—			4,222			—			4,222
Sale of loans, net	86,721			—			—			—			86,721
Gain on securities	—			7,185			—			—			7,185
Sale of real estate, net	782			—			14,971			—			15,753
Fee income	1,353			96			—			3,052			4,501
Net result from derivative transactions	(19,869		)	(31,691		)	—			—			(51,560		)
Earnings from investment in unconsolidated joint ventures	—			—			1,336			—			1,336
Unrealized gain (loss) on Agency interest-only securities, net	—			1,748			—			—			1,748
Total other income	68,987			(22,662		)	46,546			3,052			95,923
Salaries and employee benefits	(14,500		)	—			—			(31,986		)	(46,486		)
Operating expenses	89			—			—			(6,794		)	(6,705		)
Real estate operating expenses	—			—			(14,982		)	—			(14,982		)
Fee expense	(722		)	(39		)	(41		)	(413		)	(1,215		)
Depreciation and amortization	—			—			(14,171		)	(274		)	(14,445		)
Total costs and expenses	(15,133		)	(39		)	(29,194		)	(39,467		)	(83,833		)
Tax expense	—			—			—			(13,488		)	(13,488		)
Segment profit (loss)	$	95,810		$	8,364		$	10,238		$	(65,769	)	$	48,643
Total assets as of June 30, 2014	$	1,129,837		$	1,834,488		$	561,177		$	298,582		$	3,824,084
Six months ended June 30, 2013
Interest income	$	32,789		$	28,611		$	—		$	29		$	61,429
Interest expense	(3,093		)	(2,046		)	(4,000		)	(14,010		)	(23,149		)
Net interest income (expense)	29,696			26,565			(4,000		)	(13,981		)	38,280
Provision for loan losses	(300		)	—			—			—			(300		)
Net interest income (expense) after provision for loan losses	29,396			26,565			(4,000		)	(13,981		)	37,980
Operating lease income	—			—			15,390			—			15,390
Tenant recoveries	—			—			—			—			—
Sale of loans, net	118,681			—			—			140			118,821
Gain on securities	—			5,876			—			—			5,876
Sale of real estate, net	—			—			7,363			—			7,363
Fee income	1,325			8			213			2,057			3,603
Net result from derivative transactions	14,113			8,836			—			—			22,949
Earnings from investment in unconsolidated joint ventures	—			—			—			989			989
Unrealized gain (loss) on Agency interest-only securities, net	—			(5,039		)	—			—			(5,039		)
Total other income	134,119			9,681			22,966			3,186			169,952
Salaries and employee benefits	(16,300		)	—			—			(17,293		)	(33,593		)
Operating expenses	103			—			—			(5,112		)	(5,009		)
Real estate operating expenses	—			—			(6,425		)	—			(6,425		)
Fee expense	(1,562		)	(357		)	(3,057		)	(217		)	(5,193		)
Depreciation and amortization	—			—			(5,925		)	(274		)	(6,199		)
Total costs and expenses	(17,759		)	(357		)	(15,407		)	(22,896		)	(56,419		)
Tax expense	—			—			(474		)	(3,210		)	(3,684		)
Segment profit (loss)	$	145,756		$	35,889		$	3,085		$	(36,901	)	$	147,829
Total assets as of June 30, 2013	$	911,295		$	887,523		$	521,369		$	178,077		$	2,498,264

(1) Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to combined consolidated Company totals.  This caption also includes the Company’s investment in unconsolidated joint ventures and strategic investments that are not related to the other reportable segments above, including the Company’s investment in FHLB stock of $57.2 million as of June 30, 2014.