Rialto Investments Segment (Tables) (Rialto Investments [Member])
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6 Months Ended |
May 31, 2014
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Rialto Investments [Member]
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Segment Reporting Information [Line Items] |
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Schedule Of Assets and Liabilities By Segment |
The assets and liabilities related to the Rialto segment were as follows: | | | | | | | | (In thousands) | May 31, 2014 | | November 30, 2013 | Assets: | | | | Cash and cash equivalents | $ | 244,675 |
| | 201,496 |
| Restricted cash (1) | 34,890 |
| | 2,593 |
| Receivables, net (2) | 125,746 |
| | 111,833 |
| Loans receivable, net | 203,190 |
| | 278,392 |
| Loans held-for-sale (3) | 45,065 |
| | 44,228 |
| Real estate owned - held-for-sale | 192,829 |
| | 197,851 |
| Real estate owned - held-and-used, net | 379,069 |
| | 428,989 |
| Investments in unconsolidated entities | 157,693 |
| | 154,573 |
| Investments held-to-maturity | 16,658 |
| | 16,070 |
| Other (4) | 73,601 |
| | 43,288 |
| | $ | 1,473,416 |
| | 1,479,313 |
| Liabilities: | | | | Notes and other debts payable (5) | $ | 577,916 |
| | 441,883 |
| Other (6) | 80,868 |
| | 55,125 |
| | $ | 658,784 |
| | 497,008 |
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| | (1) | Restricted cash primarily consists of cash held in escrow by the Company's loan servicer provider on behalf of customers and lenders and is disbursed in accordance with agreements between the transacting parties. |
| | (2) | Receivables, net primarily relate to loans sold but not settled as of May 31, 2014 and November 30, 2013, respectively. |
| | (3) | Loans held-for-sale relate to unsold loans originated by RMF carried at fair value. |
| | (4) | Other assets include credit default swaps carried at fair value of $1.2 million and $0.8 million as of May 31, 2014 and November 30, 2013, respectively. |
| | (5) | Notes and other debts payable include $352.1 million and $250.0 million related to the 7.00% Senior Notes due 2018 ("7.00% Senior Notes") as of May 31, 2014 and November 30, 2013, respectively, and also include $44.4 million and $76.0 million as of May 31, 2014 and November 30, 2013, respectively, related to the RMF warehouse repurchase financing agreements. As of May 31, 2014, notes and other debts payable also include $73.8 million related to notes issued through a structured note offering. |
| | (6) | Other liabilities include interest rate swaps and swap futures carried at fair value of $0.4 million as of May 31, 2014 and credit default swaps carried at fair value of $0.6 million and $0.3 million as of May 31, 2014 and November 30, 2013, respectively. |
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Operating Earnings By Segment |
Rialto’s operating earnings were as follows: | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | Revenues | $ | 54,393 |
| | 25,684 |
| | 101,348 |
| | 51,306 |
| Costs and expenses (1) | 79,604 |
| | 28,305 |
| | 127,180 |
| | 60,076 |
| Rialto Investments equity in earnings from unconsolidated entities | 17,939 |
| | 4,505 |
| | 23,293 |
| | 10,678 |
| Rialto Investments other income, net | 3,595 |
| | 6,646 |
| | 2,366 |
| | 7,973 |
| Operating earnings (loss) (2) | $ | (3,677 | ) | | 8,530 |
| | (173 | ) | | 9,881 |
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| | (1) | Costs and expenses for the three and six months ended May 31, 2014 include loan impairments of $33.9 million and $40.6 million, respectively, primarily associated with the segment's FDIC loans portfolio (before noncontrolling interests). For the three and six months ended May 31, 2013 costs and expenses include loan impairments of $3.5 million and $10.6 million, respectively, primarily associated with the segment's FDIC loans portfolio (before noncontrolling interests). |
| | (2) | Operating loss for the three and six months ended May 31, 2014 include net loss attributable to noncontrolling interests of $17.1 million and $16.1 million, respectively. Operating earnings for the three and six months ended May 31, 2013 include net earnings attributable to noncontrolling interests of $5.7 million and $5.4 million, respectively. |
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Other Income (Expense), Net Related By Segment |
The following is a detail of Rialto Investments other income, net for the periods indicated: | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | Realized gains on REO sales, net | $ | 14,234 |
| | 18,535 |
| | 23,743 |
| | 27,206 |
| Unrealized losses on transfer of loans receivable to REO and impairments, net | (8,274 | ) | | (6,980 | ) | | (10,651 | ) | | (6,310 | ) | REO and other expenses (1) | (12,411 | ) | | (10,348 | ) | | (30,950 | ) | | (22,904 | ) | Rental and other income (1) | 10,046 |
| | 5,439 |
| | 20,224 |
| | 9,981 |
| Rialto Investments other income, net | $ | 3,595 |
| | 6,646 |
| | 2,366 |
| | 7,973 |
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| | (1) | For the six months ended May 31, 2014, a $12.6 million allowance was reclassified from REO and other expenses to rental and other income, which did not impact Rialto Investments other income, net. |
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Loans Receivable By Aggregate Collateral Type |
The following table displays the loans receivable by aggregate collateral type: | | | | | | | | (In thousands) | May 31, 2014 | | November 30, 2013 | Land | $ | 105,202 |
| | 166,950 |
| Single family homes | 49,808 |
| | 59,647 |
| Commercial properties | 32,501 |
| | 38,060 |
| Other | 15,679 |
| | 13,735 |
| Loans receivable, net | $ | 203,190 |
| | 278,392 |
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Outstanding Balance And Carrying Value Of Loans |
The outstanding balance and carrying value of loans accounted for under ASC 310-30 were as follows: | | | | | | | | (In thousands) | May 31, 2014 | | November 30, 2013 | Outstanding principal balance | $ | 496,641 |
| | 586,901 |
| Carrying value | $ | 197,992 |
| | 270,075 |
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Accretable Yield For The FDIC Portfolios And Bank Portfolios |
The activity in the accretable yield for the FDIC Portfolios and Bank Portfolios during the six months ended May 31, 2014 and 2013 was as follows: | | | | | | | | | May 31, | (In thousands) | 2014 | | 2013 | Accretable yield, beginning of period | $ | 73,144 |
| | 112,899 |
| Additions | 6,431 |
| | 40,879 |
| Deletions | (22,078 | ) | | (22,463 | ) | Accretions | (18,927 | ) | | (26,596 | ) | Accretable yield, end of period | $ | 38,570 |
| | 104,719 |
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Nonaccrual Loans |
The following tables represent nonaccrual loans in the FDIC Portfolios and Bank Portfolios accounted for under ASC 310-10 aggregated by collateral type: May 31, 2014 | | | | | | | | | | | | | | | | | Recorded Investment | | | (In thousands) | Unpaid Principal Balance | | With Allowance | | Without Allowance | | Total Recorded Investment | Land | $ | 5,218 |
| | — |
| | 2,106 |
| | 2,106 |
| Single family homes | 9,166 |
| | 502 |
| | 1,983 |
| | 2,485 |
| Commercial properties | 1,500 |
| | — |
| | 607 |
| | 607 |
| Loans receivable | $ | 15,884 |
| | 502 |
| | 4,696 |
| | 5,198 |
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November 30, 2013 | | | | | | | | | | | | | | | | | Recorded Investment | | | (In thousands) | Unpaid Principal Balance | | With Allowance | | Without Allowance | | Total Recorded Investment | Land | $ | 6,791 |
| | 249 |
| | 2,304 |
| | 2,553 |
| Single family homes | 15,125 |
| | 519 |
| | 4,119 |
| | 4,638 |
| Commercial properties | 3,400 |
| | 498 |
| | 628 |
| | 1,126 |
| Loans receivable | $ | 25,316 |
| | 1,266 |
| | 7,051 |
| | 8,317 |
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Allowance for Credit Losses on Financing Receivables [Table Text Block] |
The activity in the Company's allowance rollforward related to accrual loans was as follows: | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | Allowance on accrual loans, beginning of period | $ | 24,922 |
| | 16,851 |
| | $ | 18,952 |
| | $ | 12,178 |
| Provision for loan losses, net of recoveries | 33,851 |
| | 3,453 |
| | 40,488 |
| | 9,530 |
| Charge-offs | (3,115 | ) | | (1,588 | ) | | (3,782 | ) | | (2,992 | ) | Allowance on accrual loans, end of period | $ | 55,658 |
| | 18,716 |
| | 55,658 |
| | 18,716 |
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Nonaccrual — Loans in which forecasted principal and interest could not be reasonably estimated at the date of acquisition. The risk of nonaccrual loans relates to a decline in the value of the collateral securing the outstanding obligation and the recognition of an impairment through an allowance for loan losses if the recorded investment in the loan exceeds the fair value of the collateral less estimated cost to sell. The activity in the Company's allowance rollforward related to nonaccrual loans was as follows: | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | Allowance on nonaccrual loans, beginning of period | $ | 424 |
| | 1,710 |
| | $ | 1,213 |
| | $ | 3,722 |
| Provision for loan losses | 15 |
| | 67 |
| | 94 |
| | 1,080 |
| Charge-offs | (153 | ) | | (5 | ) | | (1,021 | ) | | (3,030 | ) | Allowance on nonaccrual loans, end of period | $ | 286 |
| | 1,772 |
| | 286 |
| | 1,772 |
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Risk Indicators |
Accrual and nonaccrual loans receivable by risk categories were as follows: May 31, 2014 | | | | | | | | | | | (In thousands) | Accrual | | Nonaccrual | | Total | Land | $ | 103,096 |
| | 2,106 |
| | 105,202 |
| Single family homes | 47,323 |
| | 2,485 |
| | 49,808 |
| Commercial properties | 31,894 |
| | 607 |
| | 32,501 |
| Other | 15,679 |
| | — |
| | 15,679 |
| Loans receivable | $ | 197,992 |
| | 5,198 |
| | 203,190 |
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November 30, 2013 | | | | | | | | | | | (In thousands) | Accrual | | Nonaccrual | | Total | Land | $ | 164,397 |
| | 2,553 |
| | 166,950 |
| Single family homes | 55,009 |
| | 4,638 |
| | 59,647 |
| Commercial properties | 36,934 |
| | 1,126 |
| | 38,060 |
| Other | 13,735 |
| | — |
| | 13,735 |
| Loans receivable | $ | 270,075 |
| | 8,317 |
| | 278,392 |
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Changes In Real Estate Owned |
The following tables represent the activity in REO: | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | REO - held-for-sale, beginning of period | $ | 186,234 |
| | 178,678 |
| | 197,851 |
| | 134,161 |
| Additions | — |
| | 739 |
| | — |
| | 1,333 |
| Improvements | 1,130 |
| | 1,501 |
| | 2,723 |
| | 2,517 |
| Sales | (47,433 | ) | | (51,496 | ) | | (88,666 | ) | | (77,276 | ) | Impairments and unrealized losses | (1,032 | ) | | (3,485 | ) | | (2,823 | ) | | (4,184 | ) | Transfers from held-and-used, net (1) | 53,930 |
| | 78,448 |
| | 83,744 |
| | 147,834 |
| REO - held-for-sale, end of period | $ | 192,829 |
| | 204,385 |
| | 192,829 |
| | 204,385 |
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| | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | REO - held-and-used, net, beginning of period | $ | 405,675 |
| | 547,273 |
| | 428,989 |
| | 601,022 |
| Additions | 26,093 |
| | 8,536 |
| | 34,127 |
| | 24,728 |
| Improvements | 2,708 |
| | 2,179 |
| | 3,471 |
| | 2,879 |
| Impairments | (599 | ) | | (307 | ) | | (1,503 | ) | | (403 | ) | Depreciation | (878 | ) | | (919 | ) | | (2,271 | ) | | (2,078 | ) | Transfers to held-for-sale (1) | (53,930 | ) | | (78,448 | ) | | (83,744 | ) | | (147,834 | ) | REO - held-and-used, net, end of period | $ | 379,069 |
| | 478,314 |
| | 379,069 |
| | 478,314 |
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| | (1) | During the three and six months ended May 31, 2014 and 2013, the Rialto segment transferred certain properties from REO held-and-used, net to REO held-for-sale as a result of changes in the disposition strategy of the real estate assets. |
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Private Equity Funds Related to Rialto Segment |
The following table reflects Rialto's investments in funds that invest in and manage real estate related assets and other investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | May 31, 2014 | | May 31, 2014 | | November 30, 2013 | (Dollars in thousands) | Inception Year | | Equity Commitments | | Equity Commitments Called | | Commitment to fund by the Company | | Funds contributed by the Company | | Investment | Rialto Real Estate Fund, LP | 2010 | | $ | 700,006 |
| | $ | 700,006 |
| | $ | 75,000 |
| | $ | 75,000 |
| | $ | 73,188 |
| | 75,729 |
| Rialto Real Estate Fund II, LP | 2012 | | 1,305,000 |
| | 660,058 |
| | 100,000 |
| | 50,579 |
| | 52,020 |
| | 53,103 |
| Rialto Mezzanine Partners Fund | 2013 | | 125,000 |
| | 81,701 |
| | 27,299 |
| | 17,843 |
| | 17,719 |
| | 16,724 |
| Other Investments | | | | | | | | | | | 14,766 |
| | 9,017 |
| | | | | | | | | | | | $ | 157,693 |
| | 154,573 |
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Equity in Earnings (Loss) on Investments Related to Rialto Segment [Table Text Block] |
Rialto's share of earnings (loss) from unconsolidated entities was as follows: | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | Rialto Real Estate Fund, LP
| $ | 7,174 |
| | 4,769 |
| | 12,233 |
| | 11,142 |
| Rialto Real Estate Fund II, LP | 2,402 |
| | (454 | ) | | 2,440 |
| | (454 | ) | Rialto Mezzanine Partners Fund | 493 |
| | — |
| | 782 |
| | — |
| Other investments | 7,870 |
| | 190 |
| | 7,838 |
| | (10 | ) | Rialto Investments equity in earnings from unconsolidated entities | $ | 17,939 |
| | 4,505 |
| | 23,293 |
| | 10,678 |
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Condensed Financial Information By Equity Method Investment, Balance Sheets |
Balance Sheets | | | | | | | | (In thousands) | May 31, 2014 | | November 30, 2013 | Assets: | | | | Cash and cash equivalents | $ | 262,145 |
| | 332,968 |
| Loans receivable | 561,167 |
| | 523,249 |
| Real estate owned | 318,846 |
| | 285,565 |
| Investment securities | 455,634 |
| | 149,350 |
| Investments in partnerships | 224,605 |
| | 381,555 |
| Other assets | 37,231 |
| | 191,624 |
| | $ | 1,859,628 |
| | 1,864,311 |
| Liabilities and equity: | | | | Accounts payable and other liabilities | $ | 34,141 |
| | 108,514 |
| Notes payable | 344,138 |
| | 398,445 |
| Partner loans | — |
| | 163,940 |
| Equity | 1,481,349 |
| | 1,193,412 |
| | $ | 1,859,628 |
| | 1,864,311 |
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Condensed Financial Information By Equity Method Investment, Statements Of Operations |
Statements of Operations | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | May 31, | | May 31, | (In thousands) | 2014 | | 2013 | | 2014 | | 2013 | Revenues | $ | 33,177 |
| | 65,956 |
| | 64,604 |
| | 119,299 |
| Costs and expenses | 23,304 |
| | 65,595 |
| | 49,413 |
| | 124,709 |
| Other income, net (1) | 104,868 |
| | 38,786 |
| | 153,038 |
| | 94,787 |
| Net earnings of unconsolidated entities | $ | 114,741 |
| | 39,147 |
| | 168,229 |
| | 89,377 |
| Rialto Investments equity in earnings from unconsolidated entities | $ | 17,939 |
| | 4,505 |
| | 23,293 |
| | 10,678 |
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| | (1) | Other income, net, for the three and six months ended May 31, 2014 included Rialto Real Estate Fund, LP, Rialto Real Estate Fund II, LP and other investments realized and unrealized gains on investments. Other income, net, for the three and six months ended May 31, 2013 included Rialto Real Estate Fund, LP and Rialto Real Estate Fund II, LP realized and unrealized gains on investments. |
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