Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations [Abstract]

Discontinued Operations

7.  Discontinued Operations

BankAtlantic had five reporting units which each reflected a component of the BankAtlantic entity and was the lowest level for which cash flows could be clearly distinguished, operationally and for financial reporting purposes.  These five components were Community Banking, Commercial Lending, Tax Certificates, Investments, and Capital Services.   Based on the Agreement with BB&T, the Company determined that the Community Banking, Investments, Capital Services and Tax Certificates reporting units should be treated as discontinued operations.  The Company sold all operations and the majority of the assets and liabilities of these discontinued reporting units to BB&T upon consummation of the BB&T Transaction on July 31, 2012.  The Company did not continue in any material respect any activities of or have any continuing involvement with these reporting units.  Although certain assets of the Commercial Lending reporting unit were sold to BB&T, the Company continued certain Commercial Lending reporting unit activities resulting in the Company including the Commercial Lending reporting unit in continuing operations in the Company’s Statements of Operations.

Pursuant to the Agreement with BB&T, in addition to certain assets associated with the Company’s continuing Commercial Lending reporting unit, FAR retained certain assets and liabilities that were associated with the Company’s disposed reporting units (Community Banking, Tax Certificates, Investments, and Capital Services reporting units). The Company determined that the ongoing cash flows of the disposed reporting units were not significant relative to the historical cash flows from the activities of each reporting unit; therefore, the income and expenses associated with the disposed reporting units are reported in discontinued operations for the year ended December 31, 2012.  The carrying value of the disposed reporting units’ net assets transferred to FAR were $112 million as of July 31, 2012.  The results of operations and cash flows associated with the retained assets associated with the disposed reporting units were included in continuing operations for the five months ended December 31, 2012 and for the years ended December 31, 2014 and 2013.  The assets held by FAR are expected to be monetized in accordance with the terms of such assets or through orderly transactions over a seven year period or longer provided BB&T’s preferred interest is repaid within such seven-year period.  Ninety-five percent of the cash flows from these assets, net of operating expenses and a stated preferred return, will be applied toward the ongoing repayment of BB&T’s preferred interest in FAR. 

The gain on the sale of BankAtlantic to BB&T, which is included in the Company’s Consolidated Statements of Operations in “Discontinued operations” for the year ended December 31, 2012, was as follows (in thousands):

Investment in BankAtlantic (1)	$	306,302
Reduction in other comprehensive loss		(18,124)
Carrying amount of BankAtlantic's net assets		288,178
Stay bonuses		1,300
Transaction costs		(5,000)
Cash consideration		6,433
Other		(269)
Gain on sale of BankAtlantic	$	290,642

(1)  The investment in BankAtlantic represents BankAtlantic’s stockholder’s deficit as of July 31, 2012 after giving effect to the transfer of CAM and FAR to BBX Capital.

Included in the carrying amount of BankAtlantic was $2.0 million of unrealized gains on securities available for sale and $20.2 million of defined benefit pension plan losses deferred in BankAtlantic’s other comprehensive income.  Also included in the gain on the sale of BankAtlantic was approximately $1.0 million of stay bonuses paid by BBX Capital and reimbursed by BB&T to key employees of BankAtlantic associated with pre-acquisition services and $0.3 million of stay bonuses paid by BBX Capital and reimbursed by BB&T to employees of BankAtlantic associated with post acquisition services.

The cash consideration received by BBX Capital for the sale of BankAtlantic’s stock upon the consummation of the BB&T Transaction as of July 31, 2012 was as follows (in thousands):

Deposit premium	$	315,900
BankAtlantic net asset value:
BankAtlantic stockholder's equity
before distribution of FAR and CAM		280,058
Distribution of FAR		(384,140)
Distribution of CAM		(205,385)
BankAtlantic net asset value (1)		(309,467)
Cash consideration	$	6,433
Pre-acquisition stay bonuses reimbursed by BB&T	$	983

(1)  BankAtlantic net asset value was calculated as of June 30, 2012 (which pursuant to the terms of the Agreement with BB&T was the date used for the calculations of the cash consideration payable upon consummation of the BB&T Transaction) after giving effect to the contribution to BankAtlantic of small business loans with a carrying value of $10.7 million in exchange for commercial loans with a carrying value of $7.5 million which were initially designated to be contributed to BankAtlantic and were instead retained by FAR. 

The consolidated net cash outflows associated with the sale of BankAtlantic were as follows (in thousands):

BankAtlantic assets sold:
Tax certificates	$	16,630
Loans receivable		1,792,026
Securities available for sale		29,781
Properties and equipment		129,025
Other assets		60,113
Total assets sold		2,027,575
BankAtlantic liabilities assumed:
Deposits		(3,458,914)
Subordinated debentures		(22,000)
Other liabilities		(28,920)
Total liabilities assumed		(3,509,834)
Gain on sale of BankAtlantic		290,642
Net cash outflows from sale of BankAtlantic	$	(1,191,617)

The income from Community Banking, Investments, Capital Services and Tax Certificates reporting units included in discontinued operations and the gain on the sale of BankAtlantic in the Company’s Statement of Operations was as follows (in thousands):

		For the Year
		Ended December 31,
		2012
Net interest income	$	37,384
Provision for loan losses		18,383
Net interest income after
provision for loan losses		19,001
Gain on sale of BankAtlantic		290,642
Total non-interest income		37,234
Total non-interest expense (1)		61,634
Income from discontinued operations
before provision for income taxes		285,243
Provision for income taxes		21,005
Income from discontinued operations	$	264,238

(1) General corporate overhead was allocated to continuing operations.