Investments in Non-Performing Loan Portfolios and Foreclosed Real Estate

3 Months Ended

Jan. 31, 2012

Investments in Non-Performing Loan Portfolios and Foreclosed Real Estate [Abstract]

Investments in Non-Performing Loan Portfolios and Foreclosed Real Estate

5. Investments in Non-Performing Loan Portfolios and Foreclosed Real Estate

In December 2011, Gibraltar acquired a portfolio of non-performing loans consisting of 11 loans with an unpaid principal balance of approximately $51.4 million. The portfolio includes non-performing loans secured primarily by commercial land and buildings in various stages of completion.

The following table summarizes for the portfolios acquired the accretable yield and the nonaccretable difference on our investments in those non-performing loans portfolios as of their acquisition dates (amounts in thousands).

		September 30,
	Three months ended January 31, 2012
Contractually required payments, including interest	$	52,524
Nonaccretable difference		(5,125	)
Cash flows expected to be collected		47,399
Accretable difference		(20,514	)
Non-performing loans carrying amount	$	26,885

The Company’s investment in non-performing loan portfolios consisted of the following as of the dates indicated (amounts in thousands):

		September 30,			September 30,
	January 31, 2012			October 31, 2011
Unpaid principal balance	$	216,620		$	171,559
Discount on acquired loans		(126,286	)		(108,325	)
Carrying value	$	90,334		$	63,234

The Company’s earnings from the portfolios and management fees earned are included in interest and other income in its condensed consolidated statements of operations. In the three-month period ended January 31, 2012, the Company recognized $2.1 million of earnings from its investments in the loan portfolios.

The activity in the accretable yield for the Company’s investment in the non-performing loan portfolios for the three months ended January 31, 2012 was as follows (amounts in thousands):

		September 30,
Balance at October 31, 2011	$	42,326
Additions		20,514
Accretion		(3,228	)
Reductions from foreclosures and other dispositions		(1,648	)
Other		(120	)
Balance at January 31, 2012	$	57,844

The additions to accretable yield and the accretion of interest income are based on various estimates regarding loan performance and the value of the underlying real estate securing the loans. As the Company continues to obtain updated information regarding the loans and the underlying collateral, the accretable yield may change. Therefore, the amount of accretable income recorded in the three month period ended January 31, 2012 is not necessarily indicative of expected future results.