Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3.    Discontinued operations

OMHHF historically was engaged in the business of originating and servicing FHA-insured multifamily and healthcare facility loans and securitizing these loans into GNMA mortgage backed securities. OMHHF offered mortgage services to developers of commercial properties including apartments, elderly housing and nursing homes that satisfy FHA criteria. OMHHF maintained a mortgage servicing portfolio for which it provided a full array of services, including the collection of mortgage payments from mortgagors which were passed on to the mortgage holders, construction loan management and asset management.

The Company owns an 83.68% controlling interest in OMHHF. The 16.32% noncontrolling interest belongs to one related party who is the President and Chief Executive Officer of OMHHF.

On June 2, 2016, OMHHF entered into a definitive agreement to sell OMHHF's entire portfolio of permanent mortgage loans (consisting of over 480 permanent loans insured by the U.S. Department of Housing and Urban Development), including the associated mortgage servicing rights. On June 20, 2016, OMHHF completed the transaction for cash consideration of approximately $45.0 million. An amount equal to $1.4 million was withheld from the purchase price until such time as one loan in the mortgage loan portfolio becomes current or is modified. The Company recorded a net gain of $14.9 million related to this transaction which was included in discontinued operations in the consolidated statement of operations during the second quarter of 2016. During the second quarter of 2016, OMHHF also sold its business pipeline of mortgage loans for approximately $1.5 million.

During the third quarter of 2016, the Company recognized the $1.4 million that was withheld from the purchase price of the permanent mortgage loans as a result of the loan being modified as a gain. Also, OMHHF sold its construction loan portfolio and the associated mortgage servicing rights for approximately $3.8 million.

OMHHF made a dividend distribution to the noncontrolling interest in the amount of $5.7 million during the three month period ended September 30, 2016.

The Company determined that the sale of the assets of OMHHF met the criteria to be classified within discontinued operations, and the results of OMHHF are reported as discontinued operations in the consolidated statement of operations. Prior-period amounts have been recast for discontinued operations.

The following is a summary of the assets and liabilities held for sale of OMHHF as of December 31, 2016 and December 31, 2015:

(Expressed in thousands)
	December 31, 2016		December 31, 2015
ASSETS
Securities owned	$	3,560	$	562
Loans held for sale	—		60,234
Mortgage servicing rights	—		28,168
Other assets	1,628		10,917
Total assets	$	5,188	$	99,881
LIABILITIES
Accounts payable and other liabilities	$	1,217	$	64,124
Deferred tax liability	—		10,556
Total liabilities	$	1,217	$	74,680

The following is a summary of revenue and expenses of OMHHF for the years ended December 31, 2016, 2015 and 2014:

(Expressed in thousands)
	For the Years Ended December 31,
	2016			2015		2014
REVENUE
Interest	$	943		$	1,999	$	1,739
Principal transactions, net	(9,022		)	5,323		2,184
Gain on sale of assets	16,475			—		—
Other	16,917			23,262		19,406
Total revenue	25,313			30,584		23,329
EXPENSES
Compensation and related expenses	4,311			12,406		10,245
Communications and technology	221			361		420
Occupancy and equipment costs	415			302		341
Interest	408			994		845
Other	2,619			7,382		2,932
Total expenses	7,974			21,445		14,783
Income before income taxes	$	17,339		$	9,139	$	8,546
Income attributable to noncontrolling interest before income taxes	$	2,830		$	1,491	$	1,395

The following is a summary of cash flows of OMHHF for the years ended December 31, 2016, 2015 and 2014:

(Expressed in thousands)
	For the Years Ended December 31,
	2016			2015			2014
Cash (used in) provided by operating activities	$	(14,097	)	$	3,322		$	6,877
Cash provided by investing activities	45,448			—			—
Cash used in financing activities (1)	(35,421		)	(249		)	(251		)
Net (decrease) increase in cash and cash equivalents	$	(4,070	)	$	3,073		$	6,626

(1)    Includes cash dividends paid to its parent (E.A. Viner International Co.) and noncontrolling interest of $29.4 million and $5.7 million, respectively, for the year ended December 31, 2016.

Intraperiod U.S. GAAP tax allocation rules require that the Company allocates its provision for income taxes between continuing operations and other categories of earnings, such as discontinued operations. The tax effect related to categories other than continuing operations is generally their incremental tax effect. As a result, since the Company has a loss before income taxes from continuing operations and income from discontinued operations, the Company must first allocate an income tax benefit for the loss in continuing operations and then the incremental tax effect in discontinued operations.