MuniMae Announces Second Quarter 2014 Financial Results, Business Update and Investor Conference Call

EXHIBIT A

Municipal Mortgage & Equity, LLC

Adjusted Balance Sheets

(unaudited)

(in thousands, except per share data)

Adjusted
Balance Sheet
June 30, 2014

Adjusted
Balance Sheet
December 31, 2013

ASSETS

1

Cash and cash equivalents

$

43,659

$

66,794

2

Adjusted restricted cash ⁽¹⁾

40,839

35,006

3

Adjusted bonds available-for-sale ⁽¹⁾

239,612

243,077

4

Adjusted investment in SA Fund and SA Partnership ⁽¹⁾

4,939

4,821

5

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

25,036

24,532

6

Real estate held-for-sale, net

20,783

24,090

7

Investment in preferred stock

31,371

31,371

8

Adjusted other assets ⁽¹⁾

24,296

18,111

9

Total assets

$

430,535

$

447,802

LIABILITIES AND EQUITY

10

Adjusted debt ⁽¹⁾       

$

328,818

$

350,361

11

Accounts payable and accrued expenses

4,539

8,723

12

Adjusted deferred revenue ⁽¹⁾

16,423

18,846

13

Adjusted other liabilities ⁽¹⁾

7,709

6,174

14

Total liabilities

$

357,489

$

384,104

Equity:

15

Adjusted noncontrolling interests in CFVs and IHS ⁽¹⁾

$

(397)

$

(1,648)

Common shareholders' equity:

16

    Common shares, no par value

32,296

28,687

17

    Accumulated other comprehensive income

41,147

36,659

18

        Total common shareholders' equity

73,443

65,346

19

            Total equity

73,046

63,698

20

            Total liabilities and equity

$

430,535

$

447,802

Common shareholders' equity per share

21

Total common shareholders' equity

$

73,443

$

65,346

22

Common shares outstanding ⁽²⁾

37,915

40,561

23

Common shareholders' equity per common share

$

1.94

$

1.61

Fully diluted common shareholders' equity per share

24

Diluted common shareholders' equity ⁽³⁾

$

76,374

$

67,046

25

Diluted common shares outstanding ⁽⁴⁾

39,506

42,062

26

Fully diluted common shareholders' equity per common share

$

1.93

$

1.59

⁽¹⁾

Indicates a non-GAAP financial measure. See Exhibit C for a reconciliation between the Adjusted Balance Sheet at June 30, 2014 and December 31, 2013, as presented above, and the Consolidated Balance Sheets included with the Company's Second Quarter 2014 Report.  Rows not indicated by the footnote reflect amounts as presented on the Company's Consolidated Balance Sheets included with the Company's Second Quarter 2014 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 unless they are contingent upon a certain share price that has not yet been achieved ($2.8 million and $1.6 million at June 30, 2014 and December 31, 2013, respectively) and unvested time based deferred shares of $0.1 million at June 30, 2014 and December 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 (1.9 million) and 1.5 million (2.0 million) at June 30, 2014 and December 31, 2013, respectively.

EXHIBIT B

Municipal Mortgage & Equity, LLC
Adjusted Income Statement

For the three months ended 
June 30,

For the six months ended
June 30,

(in thousands, unaudited)

2014

2013

2014

2013

1

Adjusted bond interest income ⁽¹⁾

$

3,212

$

15,985

$

8,900

$

33,080

2

Income on preferred stock investment

1,312

1,312

2,609

2,609

3

Adjusted asset management fees ⁽¹⁾

1,100

1,084

2,533

2,132

4

Adjusted interest income on total return swap derivatives ⁽¹⁾

624

−

624

−

5

Adjusted other income ⁽¹⁾

848

508

1,255

1,001

6

Total income

7,096

18,889

15,921

38,822

7

Adjusted interest expense ⁽¹⁾

(4,511)

(19,297)

(9,365)

(32,016)

8

Adjusted operating expenses ⁽¹⁾

(5,729)

(8,318)

(12,037)

(17,302)

9

Total expense

(10,240)

(27,615)

(21,402)

(49,318)

10

Adjusted net gains on assets and derivatives ⁽¹⁾

604

1,203

317

2,683

11

Net gains on early extinguishment of liabilities

402

−

402

36,263

12

Adjusted net gains on sale of real estate ⁽¹⁾

268

311

15,310

3,960

13

Net gains due to real estate consolidation and foreclosure

−

8,484

2,003

8,484

14

Adjusted other net losses ⁽¹⁾

(798)

(1,628)

(1,662)

(3,501)

15

Adjusted income tax benefit (expense) ⁽¹⁾

250

(95)

300

1,432

16

Net (loss) income to common shareholders

$

(2,418)

$

(451)

$

11,189

$

38,825

17

Total other comprehensive income (loss) to common shareholders      

1,712

(30,768)

4,488

(19,781)

18

Comprehensive (loss) income to common shareholders

$

(706)

$

(31,219)

$

15,677

$

19,044

⁽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 Second Quarter 2014 Report.

EXHIBIT C

Municipal Mortgage & Equity, LLC
Reconciliation of Adjusted Balance Sheet

June 30, 2014

December 31, 2013

(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

$

43,659

$

−

$

43,659

$

66,794

$

−

$

66,794

2

Adjusted restricted cash

87,080

(46,241)

⁽¹⁾

40,839

87,903

(52,897)

⁽¹⁾

35,006

3

Adjusted bonds available-for-sale

181,710

57,902

⁽²⁾

239,612

195,332

47,745

⁽²⁾

243,077

4

Adjusted investments in Lower Tier Property Partnerships related to CFVs

260,793

(260,793)

⁽¹⁾

−

286,007

(286,007)

⁽¹⁾

−

5

Adjusted SA Fund investments

163,458

(163,458)

⁽¹⁾

−

158,325

(158,325)

⁽¹⁾

−

6

Adjusted investment in SA Fund and SA

   Partnership

−

4,939

⁽³⁾

4,939

−

4,821

⁽³⁾

4,821

7

Adjusted real estate held-for-use, net

108,660

(83,624)

⁽⁴⁾

25,036

120,576

(96,044)

⁽⁴⁾

24,532

8

Real estate held-for-sale, net

20,783

−

20,783

24,090

−

24,090

9

Investment in preferred stock

31,371

−

31,371

31,371

−

31,371

10

Adjusted other assets

50,890

(26,594)

⁽⁵⁾

24,296

44,960

(26,849)

⁽⁵⁾

18,111

11

Total assets

$

948,404

$

(517,869)

$

430,535

$

1,015,358

$

(567,556)

$

447,802

LIABILITIES AND EQUITY

12

Adjusted debt         

$

398,491

$

(69,673)

⁽¹⁾

$

328,818

$

441,963

$

(91,602)

⁽¹⁾

$

350,361

13

Accounts payable and accrued expenses

4,539

−

4,539

8,723

−

8,723

14

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

9,597

(9,597)

⁽¹⁾

−

13,461

(13,461)

⁽¹⁾

−

15

Adjusted deferred revenue

−

16,423

⁽⁶⁾

16,423

−

18,846

⁽⁶⁾

18,846

16

Adjusted other liabilities

14,089

(6,380)

⁽⁷⁾

7,709

12,352

(6,178)

⁽⁷⁾

6,174

17

Total liabilities

$

426,716

$

(69,227)

$

357,489

$

476,499

$

(92,395)

$

384,104

Equity:

18

Adjusted noncontrolling interests in CFVs and IHS

$

448,245

$

(448,642)

⁽⁸⁾

$

(397)

$

473,513

$

(475,161)

⁽⁸⁾

$

(1,648)

Common shareholders' equity:

19

    Common shares, no par value

32,296

−

32,296

28,687

−

28,687

20

    Accumulated other comprehensive income

41,147

−

41,147

36,659

−

36,659

21

        Total common shareholders' equity

73,443

−

73,443

65,346

−

65,346

22

            Total equity

521,688

(448,642)

73,046

538,859

(475,161)

63,698

23

            Total liabilities and equity

$

948,404

$

(517,869)

$

430,535

$

1,015,358

$

(567,556)

$

447,802

⁽¹⁾

Each of these adjustments are reflected on the Company's Consolidated Balance Sheets included with the Second Quarter 2014 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 ($2.8 million and $2.5 million at June 30, 2014 and December 31, 2013, respectively).

⁽³⁾

Represents the Company's equity investment in the SA Fund that it manages that was eliminated in consolidation ($3.7 million and $3.6 million at June 30, 2014 and December 31, 2013, respectively) and the Company's equity investment in the SA Partnership which was included within other assets on the Company's Consolidated Balance Sheets ($1.2 million at June 30, 2014 and December 31, 2013).

⁽⁴⁾

Represents the removal of real estate related to CFVs as denoted on the Company's Consolidated Balance Sheets ($90.0 million and $102.3 million at June 30, 2014 and December 31, 2013, respectively). This amount was offset by the addition of two investments in real estate partnerships which were included within other assets on the Company's Consolidated Balance Sheets ($6.4 million and $6.3 million at June 30, 2014 and December 31, 2013, respectively).

⁽⁵⁾

Represents the removal of other assets related to CFVs as denoted on the Company's Consolidated Balance Sheets ($22.2 million and $23.7 million at June 30, 2014 and December 31, 2013, respectively) as well as the reclassifications of the Company's investment in SA Partnership from other assets to Investment in SA Fund and SA Partnership (as discussed in note 3 above) and two investments in real estate partnerships 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 $3.2 million and $4.4 million at June 30, 2014 and December 31, 2013, respectively.

⁽⁶⁾

Represents deferred revenue attributable to the Company that was eliminated in consolidation of $14.4 million and $16.7 million at June 30, 2014 and December 31, 2013, respectively (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 $2.0 million and $2.1 million at June 30, 2014 and December 31, 2013, respectively, 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 ($4.4 million and $4.0 million at June 30, 2014 and December 31, 2013, respectively) as well as the reclassification of deferred revenue (as discussed in note 6 above).

⁽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.

EXHIBIT D

Municipal Mortgage & Equity, LLC
Reconciliation of Adjusted Income Statement

(in thousands, unaudited)

For the three months ended
June 30,

For the six months ended
June 30,

Adjusted Bond Interest Income

2014

2013

2014

2013

1

Interest on bonds on the Consolidated Statements of Operations ("Income
   Statement")

$

2,629

$

14,667

$

7,789

$

30,462

2

Note 14 - Discontinued Operations - Interest income

−

^(b)

498

^(b)

185

^(b)

1,097

^(b)

3

Note 15 - CFVs - Interest income

583

^(a)

820

^(a)

926

^(a)

1,521

^(a)

4

Total             

$

3,212

$

15,985

$

8,900

$

33,080

Adjusted Asset Management Fees

5

Note 15 - CFVs - Asset management fees

$

828

^(a)

$

884

^(a)

$

1,670

^(a)

$

1,741

^(a)

6

Reported through Other income on the Income Statement

272

200

863

391

7

Total         

$

1,100

$

1,084

$

2,533

$

2,132

Adjusted Interest Income on Total Return Swap Derivatives

8

Reported through Net gains on assets and derivatives on the Income Statement

$

624

$

−

$

624

$

−

9

Total             

$

624

$

−

$

624

$

−

Adjusted Other Income

10

Interest on loans and short-term investments on the Income Statement

$

216

$

191

$

361

$

334

11

Reported through Other income on the Income Statement

632

317

894

667

12

Total

$

848

$

508

$

1,255

$

1,001

Adjusted Interest Expense

13

Total interest expense on the Income Statement

$

945

$

13,726

$

2,148

$

20,015

14

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

3,489

3,616

7,062

7,745

15

Income allocable to perpetual preferred shareholders on the Income Statement

−

1,673

−

3,678

16

Reported through Net gains on assets and derivatives on the Income Statement

77

282

155

578

17

Total

$

4,511

$

19,297

$

9,365

$

32,016

Adjusted Operating Expenses

18

Salaries and benefits on the Income Statement

$

3,096

$

3,262

$

6,425

$

7,150

19

General and administrative on the Income Statement

894

1,133

1,857

2,426

20

Professional fees on the Income Statement

983

3,057

2,365

5,402

21

Reported through Other expenses on the Income Statement

756

866

1,390

2,324

22

Total             

$

5,729

$

8,318

$

12,037

$

17,302

Adjusted Net Gains on Assets and Derivatives

23

Net gains on assets and derivatives on the Income Statement

$

1,151

$

921

$

786

$

2,105

24

Interest on derivatives reported through Adjusted Interest Income on Total 
   Return Swap Derivatives above   

(624)

−

(624)

−

25

Interest on derivatives reported through Adjusted Interest Expense above

77

282

155

578

26

Total

$

604

$

1,203

$

317

$

2,683

(in thousands, unaudited)

For the three months ended
June 30,

For the six months ended
June 30,

Adjusted Net Gains on Sale of Real Estate

2014

2013

2014

2013

27

Note 14 - Discontinued Operations - Net gains on disposal of REO

$

265

$

81

^(b)

$

15,302

$

81

^(b)

28

Note 14 - Discontinued Operations - Net gains on redemption of bonds

3

^(b)

230

^(b)

8

^(b)

3,879

^(b)

29

Total

$

268

$

311

$

15,310

$

3,960

Adjusted Other Net Losses

30

Reported through Other expenses on the Income Statement

$

(242)

$

(990)

$

(519)

$

(1,465)

31

Impairment on bonds on the Income Statement

−

(480)

−

(833)

32

Note 14 - Discontinued Operations - Other income

931

^(b)

324

^(b)

1,316

^(b)

783

^(b)

33

Note 14 - Discontinued Operations - Other expense

(696)

^(b)

(217)

^(b)

(1,175)

^(b)

(899)

^(b)

34

Note 15 - CFVs - Guarantee fees

331

^(a)

331

^(a)

662

^(a)

662

^(a)

35

Note 15 - CFVs -  Equity in losses from LTPPs

(961)

^(a)

(939)

^(a)

(1,910)

^(a)

(2,437)

^(a)

36

Note 15 - CFVs -  Equity in income from SA Fund

14

^(a)

208

^(a)

142

^(a)

491

^(a)

37

Note 15 - CFVs -  Other expense

(196)

^(a)

(65)

^(a)

(255)

^(a)

(152)

^(a)

38

Equity in income from IHS reported through an allocation of income

21

^(a)

200

^(a)

77

^(a)

349

^(a)

39

Total

$

(798)

$

(1,628)

$

(1,662)

$

(3,501)

Adjusted Income Tax Benefit (Expense)

40

Income tax benefit (expense) on the Income Statement

$

1,194

$

(95)

$

1,748

$

1,432

41

Note 14 - Discontinued Operations - Income tax expense

(944)

^(b)

−

(1,448)

^(b)

−

42

Total

$

250

$

(95)

$

300

$

1,432

Activity Related to CFVs

43

Revenue from CFVs on the Income Statement

$

5,610

$

6,332

$

10,660

$

9,120

44

Expenses from CFVs on the Income Statement

(12,659)

(13,406)

(24,308)

(24,837)

45

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

(657)

8,933

4,152

23,920

46

Equity in losses from LTPPs of CFVs on the Income Statement

(7,038)

(7,368)

(14,466)

(13,786)

47

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

15,364

6,948

25,274

7,758

48

Total

$

620

$

1,439

$

1,312

$

2,175

49

Sum of note (a) line items

$

620

$

1,439

$

1,312

$

2,175

Discontinued operations

50

(Loss) income from discontinued operations, net of tax on the Income Statement

$

(441)

$

1,092

$

14,038

$

6,153

51

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

−

(176)

150

(1,212)

52

Total

$

(441)

$

916

$

14,188

$

4,941

53

Sum of note (b) line items

$

(441)

$

916

$

14,188

$

4,941