19. SEGMENT REPORTING

The Company has determined that it has three reportable segments based on how the chief operating decision maker reviews and manages the 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 net leased properties, office buildings, a mobile home community, a warehouse, a shopping center and condominium units. 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(1)			Corporate/Other(2)			Company Total

Year ended December 31, 2017
Interest income	$	219,892		$	43,542		$	15		$	218		$	263,667
Interest expense	(39,530		)	(5,800		)	(28,679		)	(72,109		)	(146,118		)
Net interest income (expense)	180,362			37,742			(28,664		)	(71,891		)	117,549
Provision for loan losses	—			—			—			—			—
Net interest income (expense) after provision for loan losses	180,362			37,742			(28,664		)	(71,891		)	117,549

Operating lease income	—			—			89,492			—			89,492
Tenant recoveries	—			—			7,179			—			7,179
Sale of loans, net	54,046			—			—			—			54,046
Realized gain on securities	—			17,209			—			—			17,209
Unrealized gain (loss) on Agency interest-only securities	—			1,405			—			—			1,405
Realized gain (loss) on sale of real estate, net	—			—			11,423			—			11,423
Fee and other income	6,859			—			7,865			3,617			18,341
Net result from derivative transactions	(8,425		)	(4,216		)	—			—			(12,641		)
Earnings from investment in unconsolidated joint ventures	—			—			89			—			89
Gain (loss) on extinguishment of debt	(19		)	—			—			(54		)	(73		)
Total other income (expense)	52,461			14,398			116,048			3,563			186,470

Salaries and employee benefits	—			—			—			(70,463		)	(70,463		)
Operating expenses	302			—			—			(21,723		)	(21,421		)
Real estate operating expenses	—			—			(33,216		)				(33,216		)
Fee expense	(3,649		)	(280		)	(1,067		)	—			(4,996		)
Depreciation and amortization	—			—			(40,239		)	(93		)	(40,332		)
Total costs and expenses	(3,347		)	(280		)	(74,522		)	(92,279		)	(170,428		)

Tax (expense) benefit	—			—			—			(7,712		)	(7,712		)
Segment profit (loss)	$	229,476		$	51,860		$	12,862		$	(168,319	)	$	125,879

Total assets as of December 31, 2017	$	3,508,642		$	1,106,517		$	1,067,482		$	342,974		$	6,025,615



	Loans			Securities			Real Estate(1)			Corporate/Other(2)			Company Total

Year ended December 31, 2016
Interest income	$	161,315		$	74,987		$	10		$	60		$	236,372
Interest expense	(25,531		)	(9,740		)	(25,333		)	(60,223		)	(120,827		)
Net interest income (expense)	135,784			65,247			(25,323		)	(60,163		)	115,545
Provision for loan losses	(300		)	—			—			—			(300		)
Net interest income (expense) after provision for loan losses	135,484			65,247			(25,323		)	(60,163		)	115,245

Operating lease income	—			—			77,277			—			77,277
Tenant recoveries	—			—			5,958			—			5,958
Sale of loans, net	26,009			—			—			—			26,009
Realized gain on securities	—			7,724			—			—			7,724
Unrealized gain (loss) on Agency interest-only securities	—			(56		)	—			—			(56		)
Realized gain on sale of real estate, net	—			—			20,636			—			20,636
Fee and other income	7,547			—			7,253			6,565			21,365
Net result from derivative transactions	8,371			(9,780		)	—			—			(1,409		)
Earnings from investment in unconsolidated joint ventures	—			—			(466		)	892			426
Loss on extinguishment of debt	—			—			—			5,382			5,382
Total other income	41,927			(2,112		)	110,658			12,839			163,312

Salaries and employee benefits	(11,000		)	—			—			(53,270		)	(64,270		)
Operating expenses	—			—			—			(20,552		)	(20,552		)
Real estate operating expenses	—			—			(30,545		)	—			(30,545		)
Fee expense	(2,343		)	(166		)	(618		)	(576		)	(3,703		)
Depreciation and amortization	—			—			(39,354		)	(93		)	(39,447		)
Total costs and expenses	(13,343		)	(166		)	(70,517		)	(74,491		)	(158,517		)

Income tax (expense) benefit	—			—			—			(6,320		)	(6,320		)
Segment profit (loss)	$	164,068		$	62,969		$	14,818		$	(128,135	)	$	113,720

Total assets as of December 31, 2016	$	2,353,977		$	2,100,947		$	856,363		$	267,050		$	5,578,337



	Loans			Securities			Real Estate(1)			Corporate/Other(2)			Company Total

Year ended December 31, 2015
Interest income	$	165,403		$	76,083		$	—		$	53		$	241,539
Interest expense	(24,039		)	(7,256		)	(23,873		)	(58,135		)	(113,303		)
Net interest income (expense)	141,364			68,827			(23,873		)	(58,082		)	128,236
Provision for loan losses	(600		)	—			—			—			(600		)
Net interest income (expense) after provision for loan losses	140,764			68,827			(23,873		)	(58,082		)	127,636

Operating lease income	—			—			80,465			—			80,465
Tenant recoveries	—			—			9,907			—			9,907
Sale of loans, net	71,066			—			—			—			71,066
Gain on securities	—			24,007			—			—			24,007
Unrealized gain (loss) on Agency interest-only securities	—			(1,249		)	—			—			(1,249		)
Sale of real estate, net	2,346			—			38,040			—			40,386
Fee and other income	5,999			230			5,989			2,987			15,205
Net result from derivative transactions	(12,609		)	(26,328		)	—			—			(38,937		)
Earnings from investment in unconsolidated joint ventures	—			—			255			116			371
Total other income	66,802			(3,340		)	134,656			3,103			201,221

Salaries and employee benefits	(16,531		)	—			—			(45,081		)	(61,612		)
Operating expenses	381			—			—			(25,484		)	(25,103		)
Real estate operating expenses	—			—			(37,868		)	(1		)	(37,869		)
Fee expense	(1,693		)	(40		)	(470		)	(2,318		)	(4,521		)
Depreciation and amortization	—			—			(38,953		)	(108		)	(39,061		)
Total costs and expenses	(17,843		)	(40		)	(77,291		)	(72,992		)	(168,166		)

Tax (expense) benefit	—			—			—			(14,557		)	(14,557		)
Segment profit (loss)	$	189,723		$	65,447		$	33,492		$	(142,528	)	$	146,134

Total assets as of December 31, 2015	$	2,310,409		$	2,407,217		$	868,528		$	309,058		$	5,895,212


(1)	Includes the Company’s investment in unconsolidated joint ventures that held real estate of $35.4 million and $34.0 million as of December 31, 2017 and 2016, respectively.

(2)

Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to 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 $77.9 million as of December 31, 2017 and 2016, the Company’s deferred tax asset (liability) of $(5.7) million and $2.1 million as of December 31, 2017 and 2016, respectively and the Company’s senior unsecured notes of $1.2 billion and $559.8 million as of December 31, 2017 and 2016, respectively.