MuniMae Announces Third Quarter 2013 Results and Investor Conference Call

MMAB

BALTIMORE, Nov. 14, 2013 /PRNewswire/ -- Municipal Mortgage & Equity, LLC (OTC: MMAB) ("MuniMae" or "the Company,") filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (the "Third Quarter 2013 Report") with the SEC on November 14, 2013. 

The Company reported common shareholders' equity of $51.6 million at September 30, 2013 ($1.22 per common share), representing a decline of $13.0 million from common shareholders' equity of $64.6 million at June 30, 2013 ($1.53 per common share) and an increase of $6.7 million from common shareholders' equity of $44.9 million at December 31, 2012 ($1.06 per common share).  

The Company reported comprehensive losses to common shareholders of $9.7 million for the quarter ended September 30, 2013 and comprehensive income to common shareholders of $9.3 million for the nine months ended September 30, 2013.

The Company's comprehensive loss to common shareholders for the quarter ended September 30, 2013 was comprised of net income allocable to common shareholders of $73.3 million which was more than offset by other comprehensive losses allocable to common shareholders of $83.0 million.  On July 3, 2013, the Company sold its common shares in MuniMae TE Bond Subsidiary, LLC ("TEB") to Merrill Lynch Portfolio Management, Inc ("Purchaser") which resulted in a transfer of $75.7 million in unrealized bond gains, that had been recorded in periods prior to the sale, from "accumulated other comprehensive income" to net income allocable to common shareholders resulting in no change to overall common shareholders' equity.  

Total comprehensive loss to common shareholders of $9.7 million was primarily attributable to $4.1 million of net core expense (lines 5 and 8 on Attachment B) as well as $5.3 million of unrealized bond losses arising during the third quarter on bonds held at September 30, 2013 that are included in the $83.0 million of losses referred to above, but were not transferred to net income during the period.  Common shareholders' equity declined by $13.0 million for the third quarter.  This decline included a $3.0 million reduction to common equity as a result of the transfer of perpetual preferred shares to the Purchaser and a $0.3 million reduction to common equity on common share repurchases in addition to the $9.7 million of comprehensive losses.

Additional Financial Information

Additional financial information is reflected on Exhibits A and B and will be used during the Company's upcoming conference call.  Exhibit A is a non-GAAP presentation that provides an Adjusted Balance Sheet showing on a deconsolidated basis the Company's assets and liabilities that underlie the Company's reported common shareholders' equity at September 30, 2013 and December 31, 2012.   Exhibit B is a non-GAAP presentation that provides an Adjusted Income Statement that is a direct attribution of the Company's operating activities that are reported through the collection of the following line items within the Company's GAAP financial statements including: Revenue from consolidated funds and ventures ("CFVs"); Expenses from CFVs; Net gains related to CFVs; Equity in losses from Lower Tier Property Partnerships ("LTPPs") of CFVs; Net losses (income) allocable to noncontrolling interests in CFVs and International Housing Solutions ("IHS"), and Income from discontinued operations, net of tax. 

These non-GAAP measures are used by management and are disclosed supplementally to provide investors a tool to more easily understand the Company's operating results and financial position.  Exhibit C reconciles the non-GAAP historical presentation contained in Exhibit A to the Company's GAAP Consolidated Balance Sheets contained in the Company's Third Quarter 2013 Report.  Exhibit D reconciles the non-GAAP presentation contained in Exhibit B to the Company's Consolidated Statements of Operations contained in the Company's Third Quarter 2013 Report.

Share Buyback Plan

As of November 8, 2013, we have repurchased 1.1 million shares of the Company's stock at an average price of $1.34 per share resulting in a reduction to common equity of $1.5 million.  This reduction includes $0.5 million which was recorded for the first nine months of 2013 and $1.0 million that will be recorded during the fourth quarter of 2013 on shares repurchased between October 1, 2013 and November 8, 2013.   For purposes of the buyback program, the common equity per share of $1.22 reported with the filing of this Form 10-Q represents the new price limit for our share buyback. This price limit will remain in effect until we file our 2013 Form 10-K, which we expect to file on or before March 31, 2014.

Conference Call Information

The Company plans to host a conference call on Wednesday, November 20, 2013 at 4:30 p.m. ET to provide a business update and review financial results for the quarter. The conference call will be webcast.  All interested parties are welcome to join the live webcast, which can be accessed through the Company's web site at www.munimae.com, under Investor Relations. Participants may also join the conference call by dialing toll free 1-877-870-4263 or 1-412-317-0790 for international participants and 1-855-669-9657 for Canadian participants.

An archived replay of the event will be available one hour after the event through 9:00 a.m. on December 4, 2013, toll free at 1-877-344-7529, or 1-412-317-0088 for international participants (Passcode: 10037187).

The Form 10-Q is posted to MuniMae's web site at www.munimae.com, under Investor Relations, and is available at the Securities and Exchange Commission's web site at www.sec.gov.

Cautionary Statement Regarding Forward-Looking Statements

This Release contains forward-looking statements intended to qualify for the safe harbor contained in Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements often include words such as "may," "will," "should," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "seek," "would," "could," and similar words or are made in connection with discussions of future operating or financial performance.

Forward-looking statements reflect our management's expectations at the date of this Release regarding future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. Our actual results and financial condition may differ materially from what is anticipated in the forward-looking statements. There are many factors that could cause actual conditions, events or results to differ from those anticipated by the forward-looking statements contained in this Release. These factors include changes in market conditions that affect the willingness of potential investors or lenders to provide us with debt or equity, changes in market conditions that affect the value or marketability of assets we own, changes in market conditions or other factors that affect our access to cash that we may need to meet our commitments to other persons, changes in interest rates or other conditions that affect the value of mortgage loans we have made, changes in interest rates that affect our cost of funds, tax laws, environmental laws or other conditions that affect the value of the real estate underlying mortgage loans we own, and changes in tax laws or other things beyond our control that affect the tax benefits available to us and our investors. Readers are cautioned not to place undue reliance on forward-looking statements. We have not undertaken to update any forward-looking statements in this Release.

MUNIMAE: INTEGRITY. INNOVATION. SERVICE.
www.MuniMae.com

 






Municipal Mortgage & Equity, LLC

Adjusted Balance Sheets

(unaudited)








(in thousands, except per share data)


Adjusted

Balance Sheet

September 30, 2013



Adjusted

Balance Sheet

December 31, 2012



ASSETS







1

Cash and cash equivalents

$

45,605


$

50,857


2

Adjusted restricted cash(1)


35,004



1,356


3

Adjusted bonds available–for-sale(1)


288,914



1,083,200


4

Adjusted investment in SA Fund(1)


3,608



3,389


5

Adjusted real estate held-for-use, net(1)


24,302



24,022


6

Investment in preferred stock


31,371



31,371


7

Adjusted other assets(1)


19,031



36,152


8

Total assets

$

447,835


$

1,230,347



LIABILITIES AND EQUITY







9

Adjusted debt(1)       

$

364,984


$

987,526


10

Derivative liabilities


662



3,544


11

Accounts payable and accrued expenses


7,833



12,498


12

Adjusted deferred revenue(1)


19,252



17,848


13

Adjusted other liabilities(1)


4,958



10,031


14

Total liabilities

$

397,689


$

1,031,447



Equity:







15

Perpetual preferred shareholders' equity in a subsidiary company

$

-


$

155,033


16

Adjusted noncontrolling interests in CFVs and IHS(1)(2)   


(1,451)



(1,034)



Common shareholders' equity:







17

    Common shares, no par value


15,741



(93,786)


18

    Accumulated other comprehensive income


35,856



138,687


19

        Total common shareholders' equity


51,597



44,901


20

            Total equity


50,146



198,900


21

            Total liabilities and equity

$

447,835


$

1,230,347



Common shareholders' equity per share







22

Total common shareholders' equity

$

51,597


$

44,901


23

Common shares outstanding(2)


42,213



42,512


24

Common shareholders' equity per common share

$

1.22


$

1.06



Fully diluted common shareholders' equity per share







25

Diluted common shareholders' equity(3)

$

53,922


$

45,270


26

Diluted common shares outstanding(4)


43,787



42,921


27

Fully diluted common shareholders' equity per common share

$

1.23


$

1.05











(1)   

 Indicates a non-GAAP financial measure. See Exhibit C for a reconciliation between the Adjusted Balance Sheet at September 30, 2013 and December 31, 2012, as presented above, and the Consolidated Balance Sheets included with the Company's Third Quarter 2013 Report.  Rows not indicated by the footnote reflect amounts as presented on the Company's Consolidated Balance Sheets included with the Company's Third Quarter 2013 Report. 

(2)     

Includes shares issued and outstanding as well as non-employee directors' and employee vested deferred shares.

(3)   

Excludes the Company's liability for options held by employees ($2.1 million and $0.4 million at September 30, 2013 and December 31, 2012, respectively) and unvested time based deferred shares of $0.2 million at September 31, 2013.

(4)   

Includes the common stock equivalents associated with unvested share awards as well as in-the-money option awards unless they are contingent upon a certain share price that has not yet been achieved.  The common stock equivalents (and gross share awards outstanding) were 1.6 million (2.0 million) and 0.4 million (1.7 million) at September 30, 2013 and December 31, 2012, respectively.

 

Municipal Mortgage & Equity, LLC
Adjusted Income Statement







For the three months ended
Sept 30,



For the nine months ended
Sept 30,



(in thousands, unaudited)


2013



2012



2013



2012


1

Adjusted bond interest income(1)

$

4,488


$

17,932


$

37,564


$

53,605


2

Income on preferred stock investment


1,326



1,340



3,935



4,429


3

Adjusted asset management fees (1)


1,079



1,147



3,211



4,193


4

Adjusted other income(1)


784



506



1,784



1,710


5

Total income


7,677



20,925



46,494



63,937
















6

Adjusted interest expense(1)


(6,009)



(14,520)



(38,012)



(44,366)


7

Adjusted operating expenses(1)


(5,805)



(5,893)



(22,746)



(18,736)


8

Total expense


(11,814)



(20,413)



(60,758)



(63,102)
















9

Net gains (losses) on assets and derivatives


76,404



(633)



78,509



(1,768)


10

Net (losses) gains on early extinguishment of liabilities


(84)



132



36,179



601


11

Net gains due to real estate consolidation and foreclosure


2,411



2,853



10,895



5,404


12

Adjusted other net (losses) gains (1)


(1,155)



(2,122)



(486)



1,967


13

Income tax (expense) benefit


(123)



(24)



1,309



(65)


14

Net income to common shareholders

$

73,316


$

718


$

112,142


$

6,974
















15

Total other comprehensive (loss) income to common shareholders     


(83,050)



12,208



(102,831)



26,499


16

Comprehensive (loss) income to common shareholders

$

(9,734)


$

12,926


$

$    9,311


$

33,473


















(1)     

Indicates a non-GAAP financial measure.  See Exhibit D for a reconciliation between the adjusted measures presented above and the Consolidated Statements of Operations included with the Company's Third Quarter 2013 Report.

 


 





Municipal Mortgage & Equity, LLC
Reconciliation of Adjusted Balance Sheet



September 30, 2013



December 31, 2012


(in thousands, unaudited)


GAAP

Balance Sheet



Consolidation Adjustments




Adjusted

Balance Sheet



GAAP

Balance Sheet



Consolidation Adjustments




Adjusted

Balance Sheet



ASSETS





















1

Cash and cash equivalents

$

45,605


$



$

45,605


$

50,857


$



$

50,857


2

Adjusted restricted cash


90,949



(55,945)


(1)


35,004



55,313



(53,957)


(1)


1,356


3

Adjusted bonds available-for-sale


196,485



92,429


(2)


288,914



969,394



113,806


(2)


1,083,200


4

Adjusted investments in Lower Tier Property Partnerships related to CFVs


299,730



(299,730)


(1)




333,335



(333,335)


(1)



5

Adjusted SA Fund investments


157,791



(157,791)


(1)




161,433



(161,433)


(1)



6

Adjusted investment in SA Fund




3,608


(3)


3,608





3,389


(3)


3,389


7

Adjusted real estate held-for-use, net


121,863



(97,561)


(4)


24,302



129,687



(105,665)


(4)


24,022


8

Adjusted real estate held-for-sale related to

   CFVs


51,836



(51,836)


(1)




15,338



(15,338)


(1)



9

Investment in preferred stock


31,371






31,371



31,371






31,371


10

Adjusted other assets


44,226



(25,195)


(5)


19,031



55,024



(18,872)


(5)


36,152


11

Total assets

$

1,039,856


$

(592,021)



$

447,835


$

1,801,752


$

(571,405)



$

1,230,347



LIABILITIES AND EQUITY





















12

Adjusted debt         

$

461,126


$

(96,142)


(1)

$

364,984


$

1,042,959


$

(55,433)


(1)

$

987,526


13

Derivative liabilities


662






662



3,544






3,544


14

Accounts payable and accrued expenses


7,833






7,833



12,498






12,498


15

 

Adjusted unfunded equity commitments to Lower Tier Property Partnerships related to CFVs  


13,461



(13,461)


(1)




15,881



(15,881)


(1)



16

Adjusted deferred revenue




19,252


(6)


19,252





17,848


(6)


17,848


17

Adjusted other liabilities


17,281



(12,323)


(7)


4,958



15,145



(5,114)


(7)


10,031


18

Total liabilities

$

500,363


$

(102,674)



$

397,689


$

1,090,027


$

(58,580)



$

1,031,447



Equity:





















19

 

Perpetual preferred shareholders' equity in a subsidiary company

$


$



$


$

155,033


$



$

155,033


20

Adjusted noncontrolling interests in CFVs and IHS


487,896



(489,347)


(8)


(1,451)



511,791



(512,825)


(8)


(1,034)



Common shareholders' equity:





















21

    Common shares, no par value


15,741






15,741



(93,786)






(93,786)


22

    Accumulated other comprehensive income


35,856






35,856



138,687






138,687


23

        Total common shareholders' equity


51,597






51,597



44,901






44,901


24

            Total equity


539,493



(489,347)




50,146



711,725



(512,825)




198,900


25

            Total liabilities and equity

$

1,039,856


$

(592,021)



$

447,835


$

1,801,752


$

(571,405)



$

1,230,347



























(1)    

Each of these adjustments are reflected on the Company's Consolidated Balance Sheets included with the Third Quarter 2013 Report and denoted as balances related to CFVs.

(2)    

Represents the carrying basis of the bonds eliminated in consolidation.  This amount excludes net unrealized gains occurring since consolidation that have not been reflected in the Company's common shareholders' equity given that the Company is required to consolidate and account for the real estate, which prohibits an increase in value from its original cost basis until the real estate is sold ($32.5 million at September 30, 2013 and $10.7 million at December 31, 2012).

(3)     

Represents the Company's equity investment in the SA Fund that it manages that was eliminated in consolidation.

(4)     

Represents the removal of real estate related to CFVs as denoted on the Company's Consolidated Balance Sheets ($103.6 million at September 30, 2013 and $111.9 million at December 31, 2012).  This amount was offset by the addition of an investment in a real estate partnership which was included within other assets on the Company's Consolidated Balance Sheets ($6.0 million at September 30, 2013 and $6.2 million at December 31, 2012).

(5)     

Represents the removal of other assets related to CFVs as denoted on the Company's Consolidated Balance Sheets ($23.7 million at September 30, 2013 and $17.6 million at December 31, 2012) as well as the reclassification of an investment in a real estate partnership from other assets to real estate held-for-use, net (as discussed in note 4 above).  These amounts were offset by other assets attributable to the Company that were eliminated in consolidation of $4.5 million at September 30, 2013 and $4.9 million at December 31, 2012.

(6)     

Represents deferred revenue attributable to the Company that was eliminated in consolidation of $17.1 million at September 30, 2013 and $15.5 million at December 31, 2012 (primarily related to unamortized guarantee fees that the Company received in connection with its low income housing tax credit funds ("LIHTC Funds")).  This amount also includes deferred revenue of $2.2 million at September 30, 2013 and $2.3 million at December 31, 2012 which was included within other liabilities on the Company's Consolidated Balance Sheets.

(7)     

Represents the removal of other liabilities related to CFVs as denoted on the Company's Consolidated Balance Sheets ($10.2 million at September 30, 2013 and $6.2 million at December 31, 2012) as well as the reclassification of deferred revenue (as discussed in note 6 above).  These amounts were offset by the addition of other liabilities of $3.4 million at December 31, 2012 attributable to the Company that were eliminated in consolidation.

(8)     

Represents the amount of noncontrolling interest attributable to the Company's consolidated LIHTC Funds, SA Fund and Lower Tier Property Partnerships.  It does not include the noncontrolling interest attributable to IHS.

 


 

Municipal Mortgage & Equity, LLC
Reconciliation of Adjusted Income Statement


(in thousands, unaudited)


For the three months ended

September 30,




For the nine months ended
September 30,




Adjusted Bond Interest Income


2013




2012




2013




2012



1

Interest on bonds on the Consolidated Statements of Operations ("Income
    Statement" or "I/S")

$

4,214



$

15,998



$

34,677



$

49,467



2

Note 15 - Discontinued Operations - Interest income



(b)


765


(b)


1,108


(b)


2,349


(b)

3

Note 16 - CFVs - Interest income


274


(a)


1,169


(a)


1,779


(a)


1,789


(a)

4

Total              

$

4,488



$

17,932



$

37,564



$

53,605




Adjusted Asset Management Fees

















5

Note 16 - CFVs - Asset management fees

$

888


(a)

$

937


(a)

$

2,629


(a)

$

3,521


(a)

6

Reported through Other income on the Income Statement


191




210




582




672



7

Total            

$

1,079



$

1,147



$

3,211



$

4,193




Adjusted Other Income

















8

Interest on loans and short-term investments on the I/S

$

166



$

227



$

500



$

720



9

Reported through Other income on the Income Statement


618




279




1,284




990



10

Total

$

784



$

506



$

1,784



$

1,710




Adjusted Interest Expense

















11

Total interest expense on the Income Statement

$

2,199



$

6,547



$

22,213



$

20,090



12

Interest expense on the Income Statement (reported through operating and other expenses)


3,628




4,639




11,374




14,179



13

Income allocable to perpetual preferred shareholders on the Income Statement


36




2,284




3,714




6,852



14

Reported through Net gains (losses ) on assets and derivatives on the Income Statement


146




1,050




711




3,245



15

Total

$

6,009



$

14,520



$

38,012



$

44,366




Adjusted Operating Expenses

















16

Salaries and benefits on the Income Statement

$

2,895



$

2,457



$

10,045



$

7,757



17

General and administrative on the Income Statement


1,102




1,286




3,528




3,814



18

Professional fees on the Income Statement


1,375




1,525




6,777




5,163



19

Reported through Other expenses on the Income Statement


433




625




2,396




2,002



20

Total

$

5,805



$

5,893



$

22,746



$

18,736







(in thousands, unaudited)


For the three months ended

September 30,




For the nine months ended
September 30,



Adjusted Other Net Gains (Losses)

















21

Reported through Other expense on the Income Statement

$

(745)



$

(330)



$

(2,569)



$

(948)



22

Reported through Net gains (losses) on assets and derivatives on the Income Statement


145




1,050




711




3,245



23

Reported through Impairment on bonds on the Income Statement


(939)




(2,282)




(1,772)




(3,369)



24

Reported through Net loan loss (recovery) on the Income Statement


(5)




1,363




(5)




5,647



25

Note 15 - Discontinued Operations - Other income


399


(b)


478


(b)


1,268


(b)


1,476

(b)


26

Note 15 - Discontinued Operations – Other expense


(245)


(b)


(1,636)


(b)


(1,161)


(b)


(2,483)

(b)


27

Note 15 - Discontinued Operations – Net gains on disposal of REO


95


(b)



(b)


95


(b)


(b)


28

Note 15 - Discontinued Operations - Net gains on redemption of bonds


25


(b)



(b)


3,905


(b)


(b)


29

Note 16 - CFVs - Guarantee fees


331


(a)


331


(a)


993


(a)


1,042

(a)


30

Note 16 - CFVs -  Equity in losses from LTPPs


(383)


(a)


(1,092)


(a)


(2,821)


(a)


(3,031)

(a)


31

Note 16 - CFVs -  Equity in income from SA Fund


151


(a)


(99)


(a)


643


(a)


165

(a)


32

Note 16 - CFVs -  Other expenses


(125)


(a)


(44)


(a)


(262)


(a)


(135)

(a)


33

Equity in income from IHS reported through an allocation of income


140


(a)


139


(a)


489


(a)


358

(a)


34

Total

$

(1,155)



$

(2,122)



$

(486)



$

1,967




Activity Related to CFVs

















35

Revenue from CFVs on the Income Statement

$

7,475



$

4,067



$

16,880



$

8,458



36

Expense from CFVs on the Income Statement


(14,854)




(9,039)




(39,948)




(21,123)



37

Net gains (losses) related to CFVs on the Income Statement


3,812




(4,608)




27,732




5,407



38

Equity in losses from LTPPs of CFVs on the Income Statement


(6,343)




(6,486)




(20,129)




(25,917)



39

Net losses allocable to noncontrolling interest in CFVs and IHS - continuing
    perations on the Income Statement           


11,186




17,407




18,915




36,884



40

Total

$

1,276



$

1,341



$

3,450



$

3,709



41

Sum of note (a) line items

$

1,276



$

1,341



$

3,450



$

3,709




Discontinued operations

















42

Income from discontinued operations, net of tax on the Income Statement

$

403



$

602



$

6,527



$

694



43

Net (income) losses allocable to noncontrolling interest in CFVs and IHS -
    discontinued operations on the Income Statement         


(129)




(995)




(1,312)




648



44

Total

$

274



$

(393)



$

5,215



$

1,342



45

Sum of note (b) line items

$

274



$

(393)



$

5,215



$

1,342












































 

SOURCE Municipal Mortgage & Equity, LLC


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