10. Loans Receivable

The loan portfolio consisted of the following components (in thousands):



		December 31,
		2014	2013
Commercial non-real estate	$	1,326	3,331
Commercial real estate		24,189	62,937
Consumer		2,306	8,618
Residential		-	53
Total gross loans		27,821	74,939
Allowance for loan losses		(977)	(2,713)
Loans receivable -- net	$	26,844	72,226

The underlying collateral for the Company’s real estate loan portfolio was located in Florida at December 31, 2014 and 2013.

The Company segregates its loan portfolio into five segments. The Company’s loan segments are: residential loans, commercial real estate loans, commercial non-real estate loans, consumer loans, and small business loans. The Company’s loan segments are described below:

Residential – represents loans secured by one to four dwelling units. Residential loans, except two residential loans in foreclosure, were transferred to loans held-for-sale as of December 31, 2013

Commercial real estate - represents loans for acquisition, development and construction of various types of properties including residential, office buildings, retail shopping centers, and other non-residential properties.

Commercial non-real estate loans - generally represent business loans secured by the receivables, inventory, equipment, and/or general corporate assets of the business.

Consumer loans - consists of loans to individuals originated through BankAtlantic’s branch network. Consumer loans are generally home equity lines of credit secured by a second mortgage on the primary residence of the borrower. All collateral secured consumer loans are located in Florida. First-lien consumer loans were transferred to loans held-for-sale as of December 31, 2013 and sold during the year ended December 31, 2014. Current second-lien consumer loans were transferred to loans held-for-sale during the year ended December 31, 2014.

Small business loans – consists of loans originated to businesses in principal amounts that do not generally exceed $2.0 million. The principal source of repayment for these loans is generally from the cash flow of a business. The entire portfolio of small business loans was transferred to loans held-for-sale as of September 30, 2012.

The recorded investment (unpaid principal balance less charge-offs and deferred fees) of non-accrual loans receivable was (in thousands):



		December 31,
Loan Class		2014	2013
Commercial non-real estate	$	1,326	3,331
Commercial real estate		14,464	45,540
Consumer		1,990	2,972
Residential		-	53
Total nonaccrual loans	$	17,780	51,896

An age analysis of the past due recorded investment in loans receivable as of December 31, 2014 and December 31, 2013 was as follows (in thousands):



							Total
		31-59 Days	60-89 Days	90 Days	Total		Loans
December 31, 2014		Past Due	Past Due	or More (1)	Past Due	Current	Receivable
Commercial non-real estate	$	-	-	330	330	996	1,326
Commercial real estate:		-	-	5,458	5,458	18,731	24,189
Consumer		-	227	1,703	1,930	376	2,306
Residential:		-	-	-	-	-	-
Total	$	-	227	7,491	7,718	20,103	27,821


							Total
		31-59 Days	60-89 Days	90 Days	Total		Loans
December 31, 2013		Past Due	Past Due	or More (1)	Past Due	Current	Receivable
Commercial non-real estate	$	-	-	2,269	2,269	1,062	3,331
Commercial real estate:		-	-	22,729	22,729	40,208	62,937
Consumer		317	293	2,480	3,090	5,528	8,618
Residential:		-	-	53	53	-	53
Total	$	317	293	27,531	28,141	46,798	74,939

(1) The Company had no loans that were past due greater than 90 days and still accruing as of December 31, 2014 or 2013.

The activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2014 was as follows (in thousands):



		Commercial	Commercial
		Non-Real	Real	Small
		Estate	Estate	Business	Consumer	Residential	Total
Allowance for Loan Losses:
Beginning balance	$	954	227	-	1,532	-	2,713
Charge-offs :		(1,939)	(1,900)	-	(3,345)	(5)	(7,189)
Recoveries :		294	8,936	321	2,307	750	12,608
Provision :		691	(7,156)	(321)	376	(745)	(7,155)
Ending balance	$	-	107	-	870	-	977
Ending balance individually
evaluated for impairment	$	-	-	-	-	-	-
Ending balance collectively
evaluated for impairment		-	107	-	870	-	977
Total	$	-	107	-	870	-	977
Loans receivable:
Ending balance individually
evaluated for impairment	$	1,326	14,464	-	1,255	-	17,045
Ending balance collectively
evaluated for impairment	$	-	9,725	-	1,051	-	10,776
Total	$	1,326	24,189	-	2,306	-	27,821
Proceeds from loan sales	$	-	-	-	3,239	6,258	9,497
Transfer to loans held-for-sale	$	-	-	-	2,299	-	2,299
Transfer from loans held-for-sale	$	-	-	-	-	-	-

The activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2013 was as follows (in thousands):



		Commercial	Commercial
		Non-Real	Real	Small
		Estate	Estate	Business	Consumer	Residential	Total
Allowance for Loan Losses:
Beginning balance	$	1,735	1,869	-	1,261	446	5,311
Charge-offs:		-	(3,976)	-	(2,516)	(4,375)	(10,867)
Recoveries :		10,241	36,824	257	2,225	2,587	52,134
Provision :		(11,022)	(34,490)	(257)	562	1,342	(43,865)
Ending balance	$	954	227	-	1,532	-	2,713
Ending balance individually
evaluated for impairment	$	954	-	-	-	-	954
Ending balance collectively
evaluated for impairment		-	227	-	1,532	-	1,759
Total	$	954	227	-	1,532	-	2,713
Loans receivable:
Ending balance individually
evaluated for impairment	$	3,331	45,540	-	2,207	53	51,131
Ending balance collectively
evaluated for impairment	$	-	17,397	-	6,411	-	23,808
Total	$	3,331	62,937	-	8,618	53	74,939
Proceeds from loan sales	$	2,390	1,100	-	-	-	3,490
Transfer to loans held-for-sale	$	-	-	-	4,176	38,222	42,398
Transfer from loans held-for-sale	$	-	-	-	-	1,312	1,312

The activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2012 was as follows (in thousands):


		Commercial	Commercial
		Non-Real	Real	Small
		Estate	Estate	Business	Consumer	Residential	Total
Allowance for Loan Losses:
Beginning balance	$	16,407	67,053	7,168	22,554	16,705	129,887
Charge-off :		(19,237)	(55,686)	(3,991)	(9,793)	(14,658)	(103,365)
Recoveries :		893	7,435	487	1,424	2,563	12,802
Provision :		5,569	(7,839)	244	2,778	1,653	2,405
Transfer to held-for-sale
- BB&T Transaction:		(1,897)	(9,164)	(4,454)	(20,639)	(12,491)	(48,645)
Discontinued operations provision		-	70	546	4,937	6,674	12,227
Ending balance	$	1,735	1,869	-	1,261	446	5,311
Ending balance individually
evaluated for impairment	$	784	837	-	-	-	1,621
Ending balance collectively
evaluated for impairment		951	1,032	-	1,261	446	3,690
Total	$	1,735	1,869	-	1,261	446	5,311
Loans receivable:
Ending balance individually
evaluated for impairment	$	3,362	173,917	-	7,859	44,621	229,759
Ending balance collectively
evaluated for impairment	$	8,644	40,130	-	9,048	10,176	67,998
Total	$	12,006	214,047	-	16,907	54,797	297,757
Proceeds from loan sales	$	- -	5,864	- -	-	-	5,864
Transfer to held-for-sale
- BB&T Transaction:	$	60,398	304,668	234,228	502,221	811,060	1,912,575
Transfer to held-for-sale	$	- -	20,722	19,069	- -	-	39,791
Transfer from loans held-for-sale	$	-	-	-	-	14,185	14,185

During the first quarter of 2012, the Company charged down the recorded investment of loans by $66.5 million to the fair value of the collateral less cost to sell based on OCC guidance to thrifts regarding specific valuation allowances on collateral dependent loans. This charge down consisted entirely of the charging off of existing specific valuation allowances. As a specific valuation allowance was previously established for these loans, the charge-offs did not impact the provision for loan losses or the net loss during the year ended December 31, 2012, but did reduce the Company’s allowance for loan losses and recorded investment in the loans.

Impaired Loans - Loans are considered impaired when, based on current information and events, the Company believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. For a loan that has been restructured, the actual terms of the loan agreement refer to the contractual terms specified by the original loan agreement, not the contractual terms specified by the restructured agreement. Impairment is evaluated based on past due status for consumer and residential loans. Impairment is evaluated as part of the Company’s on-going credit monitoring process for commercial loans. Factors considered in determining if a loan is impaired are past payment history, strength of the borrower or guarantors, and cash flow associated with the collateral or business. If a loan is impaired, a specific valuation allowance is allocated, if necessary, based on the present value of estimated future cash flows using the loan’s existing interest rate or based on the fair value of the loan. Collateral dependent impaired loans are charged down to the fair value of collateral less cost to sell. Interest payments on impaired loans for all loan segments are recognized on a cash basis, unless collectability of the principal and interest amount is probable, in which case interest is recognized on an accrual basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Individually impaired loans as of December 31, 2014 and 2013 were as follows (in thousands):



		As of December 31, 2014			As of December 31, 2013
			Unpaid			Unpaid
		Recorded	Principal	Related	Recorded	Principal	Related
		Investment	Balance	Allowance	Investment	Balance	Allowance
With a related allowance recorded:
Commercial non-real estate	$	-	-	-	3,001	4,472	954
Commercial real estate:		-	-	-	-	-	-
Consumer		735	1,664	735	920	2,228	920
Residential:		-	-	-	-	-	-
Total with allowance recorded	$	735	1,664	735	3,921	6,700	1,874
With no related allowance recorded:
Commercial non-real estate	$	1,326	3,061	-	330	634	-
Commercial real estate:		14,464	30,546	-	45,540	79,186	-
Consumer		1,571	2,205	-	7,165	8,730	-
Residential:		-	-	-	53	189	-
Total with no allowance recorded	$	17,361	35,812	-	53,088	88,739	-
Total:
Commercial non-real estate	$	1,326	3,061	-	3,331	5,106	954
Commercial real estate		14,464	30,546	-	45,540	79,186	-
Consumer		2,306	3,869	735	8,085	10,958	920
Residential		-	-	-	53	189	-
Total	$	18,096	37,476	735	57,009	95,439	1,874

Average recorded investment and interest income recognized on individually impaired loans as of December 31, 2014 and 2013 were (in thousands):



		For the Year Ended
		December 31, 2014		December 31, 2013
		Average Recorded	Interest Income	Average Recorded	Interest Income
		Investment	Recognized	Investment	Recognized
With an allowance recorded:
Commercial non-real estate	$	-	-	3,015	119
Commercial real estate:		-	-	-	2
Consumer		837	7	1,040	-
Residential:		-	-	-	-
Total with allowance recorded	$	837	7	4,055	121
With no related allowance recorded:
Commercial non-real estate	$	1,368	121	330	-
Commercial real estate:		17,575	839	47,524	1,278
Consumer		4,218	151	7,118	200
Residential:		-	-	55	-
Total with no allowance recorded	$	23,161	1,111	55,027	1,478
Total:
Commercial non-real estate	$	1,368	121	3,345	119
Commercial real estate		17,575	839	47,524	1,280
Consumer		5,055	158	8,158	200
Residential		-	-	55	-
Total	$	23,998	1,118	59,082	1,599

Individually impaired loans and the average recorded investment and interest income recognized on impaired loans as of December 31, 2012 (in thousands):



		As of December 31, 2012
			Unpaid		Average
		Recorded	Principal	Related	Recorded	Interest
		Investment	Balance	Allowance	Investment	Income
With a related allowance recorded:
Commercial non-real estate	$	3,032	3,287	784	3,032	137
Commercial real estate:		28,195	41,366	837	28,259	1,068
Consumer		-	-	-	-	-
Residential:		-	-	-	-	-
Total with allowance recorded	$	31,227	44,653	1,621	31,291	1,205
With no related allowance recorded:
Commercial non-real estate	$	330	634	-	330	-
Commercial real estate:		143,388	232,695	-	139,684	4,873
Consumer		16,050	20,501	-	17,887	282
Residential:		48,317	77,628	-	56,776	177
Total with no allowance recorded	$	208,085	331,458	-	214,677	5,332
Total:
Commercial non-real estate	$	3,362	3,921	784	3,362	137
Commercial real estate		171,583	274,061	837	167,943	5,941
Consumer		16,050	20,501	-	17,887	282
Residential		48,317	77,628	-	56,776	177
Total	$	239,312	376,111	1,621	245,968	6,537

Individually impaired loans without specific valuation allowances represent loans that were written-down to the fair value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the carrying value of the loan, loans in which the present value of the cash flows discounted at the loans’ effective interest rate were equal to or greater than the carrying value of the loans, or were collectively measured for impairment.

The Company monitors impaired collateral dependent loans and performs an impairment analysis on these loans quarterly. Generally, a full appraisal is obtained when a real estate loan is initially evaluated for impairment and an updated full appraisal is obtained within one year from the prior appraisal date, or earlier if management deems it appropriate based on significant changes in market conditions. In instances where a property is in the process of foreclosure, an updated appraisal may be postponed beyond one year, as an appraisal is required on the date of foreclosure; however, such loans remain subject to quarterly impairment analyses and adjustments. Included in total impaired loans as of December 31, 2014 were $13.7 million of collateral dependent loans of which $9.6 million were measured for impairment using current appraisals and one collateral dependent loan totaling $4.1 million had an appraisal postponed beyond one year pending completion of ongoing renovation on the property collateralizing the loan funded by a surety bond.

The Company had no commitments to lend additional funds on impaired loans as of December 31, 2014.

Credit Quality Information

The Company monitors delinquency trends, net charge-off levels, levels of impaired loans, current loan to value ratios, credit scores and general economic conditions in an effort to assess loan credit quality. The Company assesses commercial loan credit quality through accrual and non-accrual loan classifications. Commercial loans are generally placed on non-accrual status when the full payment of the loan’s principal and interest is in doubt, which may be due to factors including material deterioration of conditions surrounding the principal source of repayment, insufficient borrower capacity to service the debt, significantly delayed property sales or development schedules, declines in the loan-to-value ratio of the loan’s collateral or delinquencies greater than ninety days. Accruing commercial loans are generally loans in which management believes that it is probable that the Company will collect loan payments in accordance with the contractual or modified contractual terms of the loan.

The following table presents the amount of accruing and non-accruing commercial loans by class as of December 31, 2014 (in thousands): (



		Commercial
		Non	Commercial
		Real Estate	Real Estate
Accruing	$	-	9,725
Non-accruing		1,326	14,464
Total	$	1,326	24,189

The following table presents the amount of accruing and non-accruing commercial loans by class as of December 31, 2013 (in thousands):



		Commercial
		Non	Commercial
		Real Estate	Real Estate
Accruing	$	-	17,397
Non-accruing		3,331	45,540
Total	$	3,331	62,937

The Company monitors the credit quality of its portfolio of consumer loans based on past due status. Consumer loans past due 90 days or more are placed on non-accrual. The Company had $2.0 million and $3.0 million of non-accrual consumer loans as of December 31, 2014 and 2013, respectively.

Troubled Debt Restructured Loans

The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions, principal forgiveness, restructuring amortization schedules, extending loan maturities, deferring loan payments until the loan maturity date and other actions intended to minimize potential losses. The majority of concessions for consumer loans have involved changing monthly payments from interest and principal payments to interest only payments or deferring several monthly loan payments until the loan maturity date. Commercial real estate and non-real estate loan concessions were primarily interest rate reductions to below market interest rates and extensions of maturity dates based on the risk profile of the loan. Residential and small business loan concessions primarily have involved reductions of monthly payments through extensions of the amortization period and/or deferral of monthly payments.

Consumer and residential troubled debt restructured loans had no financial statement effect because the affected loans were generally on non-accrual status and measured for impairment before the restructuring. The financial statement effects of commercial and small business troubled debt restructured loans was the establishment of specific valuation allowances, if any, in place of the general allowance for those loans that had not already been placed on nonaccrual status. There was an impact to the allowance for loan losses associated with loans for which concessions were made, as the concessions generally resulted from the expectation of slower future cash flows.

There were no troubled debt restructurings during the years ended December 31, 2014 or 2013. Troubled debt restructurings during the year ended December 31, 2012 were as follows (dollars in thousands):



	For the Year Ended
	December 31, 2012
			Recorded
	Number		Investment
Troubled Debt Restructurings
Commercial non-real estate	-	$	-
Commercial real estate	-		-
Small business	-		-
Consumer	1		47
Residential	1		62
Total Troubled Debt Restructured	2	$	109

There were no loans modified in troubled debt restructurings since January 1, 2012 that experienced a payment default during the years ended December 31, 2014 and 2013. The following table represents the recorded investment of loans that were modified in troubled debt restructurings beginning January 1, 2011 and experienced a payment default during the year ended December 31, 2012 (dollars in thousands):



	For the Year Ended
	December 31, 2012
			Recorded
	Number		Investment
Troubled Debt Restructurings which
have subsequently defaulted:
Commercial non-real estate	-	$	-
Commercial real estate	6		27,377
Small business	-		-
Consumer	-		-
Residential	9		627
Total Troubled Debt Restructured	15	$	28,004