SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | MMA Capital Management, LLC NOTES TO CONSOLIDA T ED FINANCIAL STATEMENTS NOTE 1— S UMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization MMA Capital Management, LLC, the registrant, was organized in 1996 as a Delaware limited liability company. Unless the context otherwise requires, w hen used in this report , the “ Company, ” “ MMA, ” “ we, ” “ our ” or “ us ” refer s to MMA Capital Management, LLC and its subsidiaries . The Company partners with institutional capital to create and manage investments in affordable housing and renewable energy. The Company operates through three reportable segments – United States (“ U . S . ”) Operations, International Operations and Corporate Operations. U.S. Operations Our U.S. Operations segment consists of three business lines: Leveraged Bonds, Low-Income Housing Tax Credits (“ LIHTC ”) and Energy Capital and Other Investments (previously referred to as “Other Investments and Obligations” in the Company’s 2015 Quarterly Reports on Form 10-Q). In our Leveraged Bonds business line , we primarily own and manage bonds that financ e affordable housing and infrastructure in the U . S. Within this business line, we manage most of the Company’s bonds and associated financings. The bond portfolio is comprised primarily of multifamily tax-exempt bonds, but also includes other real estate related bond investments. In our LIHTC business line, we primarily own and manage limited partner (“ LP ”) and general partner (“ GP ”) investments in affordable housing communities in the U.S. We provide asset management and administrative services to a limited liability company formed by the Company and a commercial bank (“ TC Fund I ”) and have provided a limited guarantee of the tax credits expected to be generated by TC Fund I’s portfolio of investments. As part of this business line, we have made other guarantees to third parties related to the receipt of tax credits and the performance of the underlying assets and we have loan receivables from, and an option to purchase, a tax credit asset manager . In our Energy Capital and Other Investments business line, our wholly owned subsidiary MMA Energy Capital (“ MEC ”) provides project capital to develop and build renewable energy systems through a joint venture that we have with an alternative asset manager (our “ Solar Joint Venture ”). These financing solutions include debt investments to be used as late stage development capital to bring projects through the development phase and into construction, as well as capital to construct these projects and place them in operation. Within this business line, we also manage our solar and non-solar legacy assets. International Operations We manage our International Operations segment through our wholly owned subsidiary, International Housing Solutions S.à r.l. (“ IHS ”). IHS’s strategy is to raise, invest in and manage private real estate funds that invest in residential real estate. IHS currently manages three funds: the South Africa Workforce Housing Fund SA I (“ SAWHF ”), which is a multi-investor fund and is fully invested; International Housing Solutions Residential Partners Partnership 1 (“ IHS Residential Partners I ”) , which is a single-investor fund targeted at the emerging middle class in South Africa; and IHS Fund II SA Collector, L.P. and IHS Fund II SSA Collector, L.P. (collectively, “ IHS Fund II ”), which are multi-investor funds targeting investments in affordable housing, including green housing projects, within South Africa and Sub-Saharan Africa, respectively. During the second quarter of 2015, the Company and a South African property management company formed a company in South Africa, IHS Property Management Proprietary Limited (“ IHS PM ”), to provide property management services to the properties of IHS-managed funds. MMA own s 60% of IHS PM and the third party property manager owns the remaining 40% . Corporate Operations Our Corporate Operations segment is responsible for accounting, reporting, compliance and planning, which are fundamental to our success as a global fund manager and publicly traded company in the U.S. Basis of Presentation and Significant Accounting Policies The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) in the U.S. To conform to our current period presentation, we have reclassified certain amounts reported in our prior periods’ consolidated financial statements. The consolidated financial statements include the accounts of the Company and of entities that are considered to be variable interest entities (“ VIEs ”) in which the Company is the primary beneficiary, as well as those entities in which the Company has a controlling financial interest, including wholly owned subsidiaries of the Company. All intercompany transactions and balances have been eliminated in consolidation. Equity investments in unconsolidated entities where the Company has the ability to exercise significant influence over the operations of the entity, but is not considered the primary beneficiary, are accounted for using the equity method of accounting. The unaudited interim consolidated financial statements as of, and for the three months ended March 31 2016, should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 (“ 2015 Form 10-K ”). The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The Company evaluates subsequent events through the date of filing with the Securities and Exchange Commission (“ SEC ”). Use of Estimates The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, commitments and contingencies, and revenues and expenses. Management has made significant estimates in certain areas, including the determination of fair values for bonds, derivative instruments, guarantee obligations, and certain assets and liabilities of CFVs. Management has also made significant estimates in the determination of impairment on bonds and real estate investments. Actual results could differ materially from these estimates. Prior Period Correction of an Immaterial Error In the first quarter of 2016, the Company determined that, in connection with two bond investments that were acquired in 2006 and 2007, it understated the recognition of interest income while overstating the recognition of unrealized holding gains on such investments in other comprehensive income by an equal and offsetting amount. This financial statement error, which had no impact on total common shareholders’ equity or diluted common shareholder’s equity per share, was attributable to the Company’s use of a method to reduce investment-related cost basis adjustments into interest income that was determined to be not compliant with GAAP. We assessed the materiality of the identified error on our financial statements for prior periods in accordance with SEC Staff Accounting Bulletin (“ SAB ”) No. 99, “ Materiality, ” which is codified in Accounting Standards Codification (“ ASC ”) 250, “ Presentation of Financial Statements ,” and concluded it was not material to any prior annual or interim periods. However, the aggregate amount of the prior period corrections of $7.2 million if corrected in the current period would be material to our projected annual results of consolidated operations. Consequently, in accordance with ASC 250 (specifically SAB No. 108, “ Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ”), we have corrected these errors for all prior years and interim periods presented by revising the consolidated financial statements and other financial information included herein. Periods not presented herein will be revised, as applicable, in future filings. The effects of the revisions on our Consolidated Balance Sheet were as follows: As Previously Reported As Revised December 31, December 31, (in thousands) 2015 Adjustment 2015 Common shareholders’ equity: Common shares, no par value (6,404,982 and 6,516,275 shares issued and outstanding and 74,917 and 72,476 non-employee directors' and employee deferred shares issued at March 31, 2016 and December 31, 2015, respectively) $ 47,755 $ 7,206 $ 54,961 Accumulated other comprehensive income (" AOCI ") 68,415 (7,206) 61,209 Total common shareholders’ equity $ 116,170 $ ─ $ 116,170 The effects of the revisions on our Consolidated Statements of Equity were as follows: Common Equity Before (in thousands) AOCI AOCI As previously reported three months ended March 31, 2015 $ 34,125 $ 58,378 Cumulative adjustment at December 31, 2014 6,323 (6,323) Adjustment 483 (483) As revised three months ended March 31, 2015 $ 40,931 $ 51,572 The effects of the revisions on our Consolidated Statements of Operations were as follows: Net income Basic Diluted from income income Income tax discontinued (loss) per (loss) per Interest on benefit operations common common (in thousands, except per share data) Bonds (expense) net of tax share share As previously reported three months ended March 31, 2015 $ 3,332 $ 146 $ 72 $ (0.04) $ (0.04) Adjustment 694 (217) 6 0.06 0.06 As revised three months ended March 31, 2015 $ 4,026 $ (71) $ 78 $ 0.02 $ 0.02 New Accounting Guidance Accounting for Consolidation Effective January 1, 2016, we prospectively adopted guidance issued by the Financial Accounting Standards Board (“ FASB ”) regarding consolidation of legal entities such as limited partnerships, limited liability companies and securitization structures. The guidance removed the specialized consolidation model surrounding limited partnerships and similar entities and amended the requirements that such entities must meet to qualify as voting interest entities. In addition, the guidance eliminated certain of the conditions for evaluating whether fees paid to a decision maker or service provider represented a variable interest. The adoption of this guidance resulted in the Company expanding disclosures for interests we have in various entities that are considered to be variable interest entities; however, it did not impact the number of entities consolidated by the Company. Accounting for Financial Instruments In January 2016, the FASB issued Accounting Standards Update (“ ASU ”) No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This guidance amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (i) the classification and measurement of investments in equity securities and (ii) the presentation of certain fair value changes for financial liabilities measured at fair value. This new guidance, which is effective for us on January 1, 2018, with early adoption permitted, also amends certain disclosure requirements associated with the fair value of financial instruments. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements. Accounting for Leases In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This guidance introduces a lessee model that brings most leases on the balance sheet, as well as aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard. This new guidance, which is effective for us on January 1, 2019, with early adoption permitted, also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements. Accounting for Revenue from Contracts with Customers In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net.” The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expected to be entitled in exchange for those goods or services. This guidance clarifies the implementation of principal versus agent considerations. This new guidance is effective for us on January 1, 2018. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements. Accounting for Stock Compensation In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This guidance simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This new guidance is effective for us on January 1, 2017, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements. |