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SALES OF BRANCH, SUBSIDIARY AND BUSINESS UNITS | 12 Months Ended
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Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract] |
SALES OF BRANCH, SUBSIDIARY AND BUSINESS UNITS | SALES OF BRANCH, SUBSIDIARY AND BUSINESS UNITS Banc Home Loans Sale On March 30, 2017, we completed the sale of specific assets and activities related to our Banc Home Loans division to Caliber Home Loans, Inc. (Caliber). The Banc Home Loans division largely represented our Mortgage Banking segment, the activities of which related to originating, servicing, underwriting, funding and selling single family residential (SFR) mortgage loans. Assets sold to Caliber included mortgage servicing rights (MSRs) on certain conventional agency SFR mortgage loans. The Banc Home Loans division, along with certain other mortgage banking related assets and liabilities that were sold or settled separately within one year, were classified as discontinued operations in the accompanying consolidated financial statements. Certain components of our Mortgage Banking segment, including MSRs on certain conventional agency SFR mortgage loans that were not sold as part of the Banc Home Loans sale and repurchase reserves related to previously sold loans, have been classified as continuing operations in the consolidated financial statements as they remain part of our ongoing operations. The specific assets acquired by Caliber include, among other things, the leases relating to our dedicated mortgage loan origination offices and rights to certain portions of our unlocked pipeline of residential mortgage loan applications. Caliber has assumed certain obligations and liabilities of the Company under the acquired leases, and with respect to the employment of transferred employees. We received a $25.0 million cash premium payment, in addition to the net book value of certain assets acquired by Caliber, totaling $2.5 million, upon the closing of the transaction. Additionally, we are entitled to receive an earn-out, payable quarterly, based on future performance over the 38 months following completion of the transaction. Caliber retains an option to buy out the future earn-out payable to us for cash consideration of $35.0 million, less the aggregate amount of all earn-out payments made prior to the date on which Caliber pays the buyout amount. Caliber also purchased the MSRs of $37.8 million on approximately $3.86 billion in unpaid balances of conventional agency mortgage loans, subject to adjustment under certain circumstances. During the years ended December 31, 2019, 2018 and 2017, we recorded $0, $1.4 million and $13.8 million to net gain on disposal of discontinued operations. Net gain on disposal of discontinued operations recognized in the first half of 2018 was primarily the result of the release of $1.0 million in liability for estimated discretionary incentive compensation payments to certain employees transferred to Caliber as the amount paid was less than the accrued liability. Since the completion of the transaction, we have recognized a net gain on disposal of $15.2 million. The Banc Home Loans division originated conforming SFR mortgage loans and sold these loans in the secondary market. The amount of net revenue on mortgage banking activities was a function of mortgage loans originated for sale and the fair values of these loans and related derivatives. Net revenue on mortgage banking activities included mark to market pricing adjustments on loan commitments and forward sales contracts, and initial capitalized value of MSRs. The following table summarizes the calculation of the net gain on disposal of discontinued operations:
|  | Year Ended December, 31 |  |
($ in thousands) |  | 2019 |  | 2018 |  | 2017 |  | Total Net Gain on Disposal After Completion of Sale
Proceeds from the transaction |  | $ | — |  |  | $ | — |  |  | $ | 63,054 |  |  | $ | 63,054 |
Compensation expense related to the transaction |  | — |  |  | 1,003 |  |  | (3,500 | ) |  | (2,497 | )
Other transaction costs |  | — |  |  | 436 |  |  | (3,431 | ) |  | (2,995 | )
Net cash proceeds |  | — |  |  | 1,439 |  |  | 56,123 |  |  | 57,562 |
Book value of certain assets sold |  | — |  |  | — |  |  | (2,455 | ) |  | (2,455 | )
Book value of MSRs sold |  | — |  |  | — |  |  | (37,772 | ) |  | (37,772 | )
Goodwill |  | — |  |  | — |  |  | (2,100 | ) |  | (2,100 | )
Net gain on disposal |  | $ | — |  |  | $ | 1,439 |  |  | $ | 13,796 |  |  | $ | 15,235 |
The following tables present the financial information of discontinued operations as of the dates and for the periods indicated: Statements of Financial Condition of Discontinued Operations
|  | December 31,
($ in thousands) |  | 2019 |  | 2018
ASSETS |  |  |  |
Loans held-for-sale, carried at fair value |  | $ | — |  |  | $ | 19,490 |
Assets of discontinued operations |  | $ | — |  |  | $ | 19,490 |
LIABILITIES |  |  |  |
Liabilities of discontinued operations |  | $ | — |  |  | $ | — |
Statements of Operations of Discontinued Operations
|  | Year Ended December 31,
($ in thousands) |  | 2019 |  | 2018 |  | 2017
Interest income |  |  |  |  |  |
Loans, including fees |  | $ | — |  |  | $ | 665 |  |  | $ | 7,052 |
Total interest income |  | — |  |  | 665 |  |  | 7,052 |
Noninterest income |  |  |  |  |  |
Net gain on disposal |  | — |  |  | 1,439 |  |  | 13,796 |
Loan servicing income |  | — |  |  | — |  |  | 1,551 |
Net revenue on mortgage banking activities |  | — |  |  | 428 |  |  | 42,889 |
All other income |  | — |  |  | 2,200 |  |  | 1,871 |
Total noninterest income |  | — |  |  | 4,067 |  |  | 60,107 |
Noninterest expense |  |  |  |  |  |
Salaries and employee benefits |  | — |  |  | 20 |  |  | 38,374 |
Occupancy and equipment |  | — |  |  | — |  |  | 3,964 |
Professional fees |  | — |  |  | — |  |  | 2,546 |
Outside Service Fees |  | — |  |  | — |  |  | 5,625 |
Data processing |  | — |  |  | 8 |  |  | 687 |
Advertising |  | — |  |  | — |  |  | 1,357 |
Restructuring expense |  | — |  |  | — |  |  | 3,794 |
All other expenses |  | — |  |  | 108 |  |  | 3,648 |
Total noninterest expense |  | — |  |  | 136 |  |  | 59,995 |
Income from discontinued operations before income taxes |  | — |  |  | 4,596 |  |  | 7,164 |
Income tax expense |  | — |  |  | 1,271 |  |  | 2,929 |
Income from discontinued operations |  | $ | — |  |  | $ | 3,325 |  |  | $ | 4,235 |
Statements of Cash Flows of Discontinued Operations
|  | Year Ended December 31,
($ in thousands) |  | 2019 |  | 2018 |  | 2017
Net cash provided by operating activities |  | $ | — |  |  | $ | 14,916 |  |  | $ | 365,045 |
Net cash provided by investing activities |  | — |  |  | — |  |  | 56,123 |
Net cash provided by discontinued operations |  | $ | — |  |  | $ | 14,916 |  |  | $ | 421,168 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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