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EX-32.2 - EXHIBIT 32.2 - Exantas Capital Corp.exh32_2.htm
EX-32.1 - EXHIBIT 32.1 - Exantas Capital Corp.exh32_1.htm
EX-31.2 - EXHIBIT 31.2 - Exantas Capital Corp.exh31_2.htm
EX-31.1 - EXHIBIT 31.1 - Exantas Capital Corp.exh31_1.htm
EX-10.6(A) - EXHIBIT 10.6(A) - PURCHASE AGRMT, DATED 2/11/11 - Exantas Capital Corp.exh10_6a.htm
EX-10.6(B) - EXHIBIT 10.6(B) - GUARANTY, DATED 2/11/11 - Exantas Capital Corp.exh10_6b.htm
 


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
þ           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2011
 
OR
 
¨           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________ to __________
 
Commission file number: 1-32733
 
RESOURCE CAPITAL CORP.
(Exact name of registrant as specified in its charter)

Maryland
 
20-2287134
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)

712 5th Avenue, 12th Floor
New York, New York 10019
(Address of principal executive offices) (Zip code)
(212) 506-3870
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. R Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
¨
 
Accelerated filer
R
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
Smaller reporting company
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨ Yes R No
 
The number of outstanding shares of the registrant’s common stock on May 5, 2011 was 71,220,614 shares.



RESOURCE CAPITAL CORP. AND SUBSIDIARIES
ON FORM 10-Q


   
PAGE
PART I
FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
 
     
 
 3
     
 
 4
     
 
 5
     
 
 6
     
 
8
     
Item 2.
 38
     
Item 3.
 63
     
Item 4.
 64
     
PART II
OTHER INFORMATION
 
     
Item 2.
65
     
Item 5.
65
   
67


PART I.                      FINANCIAL INFORMATION
 

ITEM 1.
FINANCIAL STATEMENTS

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
(in thousands, except share and per share data)

   
March 31,
   
December 31,
 
   
2011
   
2010
 
     (unaudited)        
ASSETS
           
Cash and cash equivalents
  $ 61,499     $ 29,488  
Restricted cash
    159,639       168,192  
Investment securities, trading
    31,270       17,723  
Investment securities available-for-sale, pledged as collateral, at fair value
    84,733       57,998  
Investment securities available-for-sale, at fair value
    37,569       5,962  
Investment securities held-to-maturity, pledged as collateral
    29,206       29,036  
Property available-for-sale
    4,444       4,444  
Loans, pledged as collateral and net of allowances of $27.7 million and
$34.2 million
    1,435,945       1,443,271  
Loans held for sale
    42,844       28,593  
Lease receivables, pledged as collateral, net of allowances of $0 and
$70,000 and net of unearned income
          109,612  
Loans receivable–related party
    9,689       9,927  
Investments in unconsolidated entities
    6,789       6,791  
Dividend reinvestment plan proceeds receivable
          10,000  
Interest receivable
    5,555       6,330  
Deferred tax asset
    4,401       4,401  
Intangible assets
    20,960        
Other assets
    3,093       2,432  
Total assets
  $ 1,937,636     $ 1,934,200  
LIABILITIES
               
Borrowings
  $ 1,463,701     $ 1,543,251  
Distribution payable
    17,590       14,555  
Accrued interest expense
    1,506       1,618  
Derivatives, at fair value
    12,009       13,292  
Deferred tax liability
    9,798       9,798  
Accounts payable and other liabilities
    5,829       3,360  
Total liabilities
    1,510,433       1,585,874  
STOCKHOLDERS’ EQUITY
               
Preferred stock, par value $0.001:  100,000,000 shares authorized;
no shares issued and outstanding
           
Common stock, par value $0.001:  500,000,000 shares authorized;
70,320,966 and 58,183,425 shares issues and outstanding
(including 1,158,875 and 534,957 unvested restricted shares)
    70       58  
Additional paid-in capital
    605,474       528,373  
Accumulated other comprehensive loss
    (27,706 )     (33,918 )
Distributions in excess of earnings
    (150,635 )     (146,187 )
Total stockholders’ equity
    427,203       348,326  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 1,937,636     $ 1,934,200  

 
The accompanying notes are an integral part of these statements


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
(in thousands, except share and per share data)
(Unaudited)
   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
REVENUES
           
Net interest income:
           
Loans
  $ 20,148     $ 18,385  
Securities
    2,604       2,874  
Leases
          235  
Interest income − other
    2,477       215  
Total interest income
    25,229       21,709  
Interest expense
    6,933       7,937  
Net interest income
    18,296       13,772  
Dividend income
    661        
Fee income
    1,646        
Total revenues
    20,603       13,772  
OPERATING EXPENSES
               
Management fees − related party
    2,338       1,152  
Equity compensation − related party
    460       722  
Professional services
    919       819  
Insurance
    177       212  
General and administrative
    945       647  
Amortization of intangible assets
    253        
Income tax expense
    1,809       105  
Total expenses
    6,901       3,657  
NET OPERATING INCOME
    13,702       10,115  
                 
OTHER INCOME (EXPENSE)
               
Impairment losses on investment securities
    (665 )     (2,665 )
Recognized in other comprehensive loss
    (665 )     (2,665 )
Net impairment losses recognized in earnings
           
Net realized gain on investment securities available-for-sale
and loans
    35       146  
Net realized gain on investment securities, trading
    2,263        
Net unrealized loss on investment securities, trading
    (336 )      
Provision for loan and lease losses
    (2,606 )     (15,371 )
Gain on the extinguishment of debt
          6,628  
Other income (expense)
    84       (112 )
Total other expenses
    (560 )     (8,709 )
                 
NET INCOME
  $ 13,142     $ 1,406  
NET INCOME PER SHARE – BASIC
  $ 0.22     $ 0.04  
NET INCOME PER SHARE – DILUTED
  $ 0.22     $ 0.04  
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING − BASIC
    60,147,820       37,987,192  
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING − DILUTED
    60,397,630       38,150,605  
DIVIDENDS DECLARED PER SHARE
  $ 0.25     $ 0.25  
 
The accompanying notes are an integral part of these statements


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 2011
(in thousands, except share and per share data)
(Unaudited)

   
Common Stock
                                           
   
Shares
   
Amount
   
Additional
Paid-In
Capital
   
Accumulated Other Comprehensive Loss
   
Retained Earnings
   
Distributions
in Excess of Earnings
   
Treasury
Shares
   
Total Stockholders’ Equity
   
Comprehensive Income
 
Balance, January 1, 2011
    58,183,425     $ 58     $ 528,373     $ (33,918 )   $     $ (146,187 )   $     $ 348,326        
Proceeds from common
   stock offering
    6,900,000       7       47,603                               47,610        
Proceeds from dividend
reinvestment and stock
purchase plan
    4,306,694       4       30,156                               30,160        
Offering costs
                (1,151 )                             (1,151 )      
Stock based
   compensation
    930,847       1       33                               34        
Amortization of stock
   based compensation
                460                               460        
Net income
                            13,142                   13,142     $ 13,142  
Securities available-
   for-sale, fair value
   adjustment, net
                      4,874                         4,874       4,874  
Designated derivatives,
   fair value adjustment
                      1,338                         1,338       1,338  
Distributions on common
stock
                            (13,142 )     (4,448 )           (17,590 )        
Comprehensive
   income
                                                  $ 19,354  
Balance, March 31, 2011
    70,320,966     $ 70     $ 605,474     $ (27,706 )   $     $ (150,635 )   $     $ 427,203          

The accompanying notes are an integral part of this statement

 


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
(in thousands)
(Unaudited)

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 13,142     $ 1,406  
Adjustments to reconcile net income to net cash provided by
operating activities:
               
Provision for loan and lease losses
    2,606       15,371  
Depreciation and amortization of term facilities
    121       181  
Accretion of net discounts on loans held for investment
    (5,050 )     (2,896 )
Accretion of net discounts on securities available-for-sale
    (1,016 )     (1,052 )
Accretion of net discounts on securities held-to-maturity
    (118 )     (96 )
Amortization of discount on notes of CDOs
    13       13  
Amortization of debt issuance costs on notes of CDOs
    760       1,067  
Amortization of stock-based compensation
    460       724  
Amortization of terminated derivative instruments
    55       133  
Amortization of intangible assets
    253        
Purchase of investment securities, trading
    (17,951 )      
Principal payments on investment securities, trading
    41        
Proceeds from sales of investment securities, trading
    6,164        
Net unrealized loss on investment securities, trading
    336        
Net realized gain on investments securities, trading
    (2,263 )      
Unrealized losses on non-designated derivative instruments
          36  
Net realized gains on investments
    (35 )     (146 )
Gain on the extinguishment of debt
          (6,628 )
Changes in operating assets and liabilities
    17,815       (1,556 )
Net cash provided by operating activities
    15,333       6,557  
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Decrease in restricted cash
    (4,053 )     (5,002 )
Purchase of securities available-for-sale
    (33,010 )     (4,923 )
Principal payments on securities available-for-sale
    1,515        
Proceeds from sale of securities available-for-sale
           
Investment in unconsolidated entity
    2       (435 )
Purchase of loans
    (180,877 )     (69,825 )
Principal payments received on loans
    143,917       55,592  
Proceeds from sale of loans
    33,648       17,988  
Purchase of lease receivables
          (10,333 )
Payments received on lease receivables
          397  
Proceeds from sale of lease receivables
          465  
Purchase of intangible asset
    (21,213 )      
Investment in loans – related parties
          (10,000 )
Payments received on loans – related parties
    238        
Net cash used in investing activities
    (59,833 )     (26,076 )
 

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(in thousands)
(Unaudited)

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
CASH FLOWS FROM FINANCING ACTIVITIES:
           
Net proceeds from issuance of common stock (net of offering costs of
$1,151 and $64)
    46,459       (64 )
Net proceeds from dividend reinvestment and stock purchase plan (net of
offering costs of $0 and $0)
    30,160       18,035  
Proceeds from borrowings:
               
Repurchase agreements
    15,109        
Payments on borrowings:
               
Retirement of debt
          (13,623 )
Payment of debt issuance costs
    (662 )      
Distributions paid on common stock
    (14,555 )     (9,170 )
Net cash provided by (used in) financing activities
    76,511       (4,822 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    32,011       (24,341 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    29,488       51,991  
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 61,499     $ 27,650  
NON-CASH INVESTING AND FINANCING ACTIVITIES:
               
Distributions on common stock declared but not paid
  $ 17,590     $ 10,053  
Issuance of restricted stock
  $ 6,697     $ 333  
Contribution of lease receivables and other assets
  $ 117,840     $  
Contribution of equipment-backed securitized notes and other liabilities
  $ (96,840 )   $  
Conversion of equity in LEAF Funding 3 to preferred stock and warrants
  $ (21,000 )   $  
SUPPLEMENTAL DISCLOSURE:
               
Interest expense paid in cash
  $ 8,228     $ 7,978  
Income taxes paid in cash
  $     $  
 

The accompanying notes are an integral part of these financial statements

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
MARCH 31, 2011
(Unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF QUARTERLY PRESENTATION

Resource Capital Corp. and subsidiaries’ (collectively the ‘‘Company’’) principal business activity is to purchase and manage a diversified portfolio of commercial real estate-related assets and commercial finance assets.  The Company’s investment activities are managed by Resource Capital Manager, Inc. (‘‘Manager’’) pursuant to a management agreement (the ‘‘Management Agreement’’).  The Manager is a wholly-owned indirect subsidiary of Resource America, Inc. (“Resource America”) (NASDAQ: REXI).  The following subsidiaries are consolidated in the Company’s financial statements:
 
 
RCC Real Estate, Inc. (“RCC Real Estate”) holds real estate investments, including commercial real estate loans and commercial real estate-related securities.  RCC Real Estate owns 100% of the equity of the following variable interest entities (“VIEs”):
 
 
Resource Real Estate Funding CDO 2006-1 (“RREF CDO 2006-1”), a Cayman Islands limited liability company and qualified real estate investment trust (“REIT”) subsidiary (“QRS”).  RREF CDO 2006-1 was established to complete a collateralized debt obligation (“CDO”) issuance secured by a portfolio of commercial real estate loans and commercial mortgage-backed securities (“CMBS”).
 
 
Resource Real Estate Funding CDO 2007-1 (“RREF CDO 2007-1”), a Cayman Islands limited liability company and QRS.  RREF CDO 2007-1 was established to complete a CDO issuance secured by a portfolio of commercial real estate loans, commercial mortgage-backed securities and property available-for-sale.
 
 
RCC Commercial, Inc. (“RCC Commercial”) holds bank loan investments and commercial real estate-related securities.  RCC Commercial owns 100% of the equity of the following VIEs:
 
 
Apidos CDO I, Ltd. (“Apidos CDO I”), a Cayman Islands limited liability company and taxable REIT subsidiary (“TRS”).  Apidos CDO I was established to complete a CDO secured by a portfolio of bank loans.
 
 
Apidos CDO III, Ltd. (“Apidos CDO III”), a Cayman Islands limited liability company and TRS.  Apidos CDO III was established to complete a CDO secured by a portfolio of bank loans.
 
 
Apidos Cinco CDO, Ltd. (“Apidos Cinco CDO”), a Cayman Islands limited liability company and TRS.  Apidos Cinco CDO was established to complete a CDO secured by a portfolio of bank loans.
 
 
Resource TRS, Inc. (“Resource TRS”), the Company’s directly-owned TRS, holds the Company’s equity investment in a leasing company and holds all of its structured notes.
 
 
Resource TRS II, Inc. (“Resource TRS II”), the Company’s directly-owned TRS, holds the Company’s interests in bank loan CDOs not originated by the Company.  Resource TRS II owns 100% of the equity of the following VIE:
 
 
Resource Capital Asset Management (“RCAM”), a domestic limited liability company, is entitled to collect senior, subordinated, and incentive fees related to five CDOs it acquired and provides management services through Apidos Capital Management, a subsidiary or Resource America.

The consolidated financial statements and the information and tables contained in the notes to the consolidated financial statements are unaudited.  However, in the opinion of management, these interim financial statements include all adjustments necessary to fairly present the results of the interim periods presented.  The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.  The results of operations for the three months ended March 31, 2011 may not necessarily be indicative of the results of operations for the full year ending December 31, 2011.

NOTE 2 − SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).  The consolidated financial statements include the accounts of the Company.



RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)
 
 
NOTE 2 − SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)
 
The Company has a 100% interest valued at $1.5 million in the common shares (three percent of the total equity) in two trusts, Resource Capital Trust I (“RCT I”) and RCC Trust II (“RCT II”).  The Company completed a qualitative analysis to determine whether or not it is the primary beneficiary of each of the trusts.  The Company does not have the power to direct the activities of either trust, nor does it have the obligation to absorb losses or the right to receive benefits that could potentially be significant to these trusts.  Therefore, the Company is not deemed to be the primary beneficiary of either trust and they are not consolidated into the Company’s consolidated financial statements.  The Company records its investments in RCT I and RCT II’s common shares of $774,000 each as investments in unconsolidated trusts at cost and records dividend income upon declaration by RCT I and RCT II.  For the three months ended March 31, 2011 and 2010, the Company recognized $882,000 and $875,000, respectively, of interest expense with respect to the subordinated debentures it issued to RCT I and RCT II which included $77,000 and $74,000, respectively, of amortization of deferred debt issuance costs.  The Company will do a continuous reassessment as to whether it should be deemed to be the primary beneficiary of the trusts.  

All inter-company transactions and balances have been eliminated.

Investment Securities

The Company classifies its investment portfolio as trading, available-for-sale or held-to-maturity.  The Company, from time to time, may sell any of its investments due to changes in market conditions or in accordance with its investment strategy.

The Company’s investment securities, trading are reported at fair value.  To determine fair value, the Company uses dealer quotes or bids which are validated using an income approach utilizing appropriate prepayment, default, and recovery rates.  Any changes in fair value are recorded in the Company’s results of operations as net unrealized income (loss) on investment securities, trading.

The Company’s investment securities available-for-sale are reported at fair value (see Note 16).  To determine fair value, the Company uses two methods, either a dealer quote or an internal valuation model, depending upon the current level of market activity.

For securities with higher levels of market activity, the Company obtains a quote from a dealer, which typically will be the dealer who sold the Company the security.  The Company has been advised that, in formulating their quotes, dealers may use recent trades in the particular security, if any, market activity in similar securities, if any, or internal valuation models.  These quotes are non-binding.  As a result of how the dealers develop their quotes, the market illiquidity and low levels of trading in the past, the Company had categorized all of these investment securities available-for-sale in Level 3 in the fair value hierarchy.  Due to the increased level of trading activity in 2010 and 2011, the Company moved some of these securities into Level 2 in the fair value hierarchy at September 30, 2010 and March 31, 2011.  The Company evaluates the reasonableness of the quotes it receives by applying its own valuation models.  If there is a material difference between a quote the Company receives and the value indicated by its valuation models, the Company will evaluate the difference.  As part of that evaluation, the Company will discuss the difference with the dealer, who may revise its quote based upon these discussions.  Alternatively, the Company may revise its valuation models.

For investment securities available-for-sale with lower levels of market activity, the Company determines fair value based on taking a weighted average of the following three measures:
 
 
dealer quotes, as described above;
 
 
quotes on more actively-traded, higher-rated securities issued in a similar time period, adjusted for differences in rating and seniority; and
 
 
the value resulting from an internal valuation model using an income approach based upon an appropriate risk-adjusted yield, time value and projected losses using default assumptions based upon an historical analysis of underlying loan performance.



RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 2 − SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Investment Securities – (Continued)

On a quarterly basis, the Company evaluates its available-for-sale investments for other-than-temporary impairment.  An available-for-sale investment is impaired when its fair value has declined below its amortized cost basis.  An impairment is considered other-than-temporary when the amortized cost basis of the investment will not be recovered over its remaining life.  In addition, the Company’s intent to sell as well as the likelihood that the Company will be required to sell the security before the recovery of the amortized cost basis is considered.  Where credit quality is believed to be the cause of the other-than-temporary impairment, that component of the impairment is recognized as an impairment loss in the statement of income.  Where other market components are believed to be the cause of the impairment, that component of the impairment is recognized on the balance sheet as other comprehensive loss.

Investment securities transactions are recorded on the trade date.  Realized gains and losses on investment securities are determined on the specific identification method.

Allowance for Loan and Lease Losses

The Company maintains an allowance for loan losses.  Loans held for investment are first individually evaluated for impairment so specific reserves can be applied.  Loans for which a specific reserve is not applicable are then evaluated for impairment as a homogeneous pool of loans with substantially similar characteristics so that a general reserve can be established, if needed.  The reviews are performed at least quarterly.

The Company considers a loan to be impaired if one of two conditions exists.  The first condition is if based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  The second condition is if the loan is deemed to be a troubled debt restructuring (“TDR”) where a concession has been given to the borrower.  These TDRs may not have an associated specific loan loss allowance if the principal and interest amount is considered recoverable based on current market conditions, expected collateral performance and / or guarantees made by the borrowers.
 
When a loan is impaired under either of these two conditions, the allowance for loan losses is increased by the amount of the excess of the amortized cost basis of the loan over its fair value.  Fair value may be determined based on the present value of estimated cash flows; on market price, if available; or on the fair value of the collateral less estimated disposition costs.  When a loan, or a portion thereof, is considered uncollectible and pursuit of collection is not warranted, the Company will record a charge-off or write-down of the loan against the allowance for loan losses.

An impaired loan or lease may remain on accrual status during the period in which the Company is pursuing repayment of the loan or lease; however, the loan or lease is placed on non-accrual status at such time as (i) management believes that scheduled debt service payments will not be met within the coming 12 months; (ii) the loan or lease becomes 90 days delinquent; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the impairment; or (iv) the net realizable value of the loan’s underlying collateral approximates the Company’s carrying value of such loan.  While on non-accrual status, the Company recognizes interest income only when an actual payment is received.


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 2 − SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)
 
In April 2011, the Financial Accounting Standards Board (“FASB”) issued guidance which revises the criteria for assessing effective control for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.  The determination of whether the transfer of a financial asset subject to a repurchase agreement is a sale is based, in part, on whether the entity maintains effective control over the financial asset.  The amendments in this guidance will be effective for interim and annual reporting periods beginning on or after December 15, 2011 and will be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date.  Early adoption is not permitted.  The Company is currently evaluating the effect of the adoption on our consolidated financial statements.

In April 2011, the FASB issued guidance to clarify the disclosures regarding troubled debt restructurings originally effective as of December 15, 2010.  The new guidance surrounding troubled debt restructuring will now be effective for interim and annual periods beginning after June 15, 2011.  The Company expects that adoption will require additional disclosures in the notes to the Company’s consolidated financial statements.

In January 2010, the FASB issued guidance that required new disclosures and clarified some existing disclosure requirements about fair value measurements.  The new pronouncement requires a reporting entity: (1) to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (2) to present separately information about purchases, sales, issuances and settlements in the reconciliation of fair value measurements using significant unobservable inputs.  In addition, it clarified the requirements of the following existing disclosures: (1) for purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities, and (2) a reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements.  The new guidance was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the rollforward of activity in Level 3 fair value measurements which became effective for the Company in fiscal 2011.

Reclassifications

Certain reclassifications have been made to the 2010 consolidated financial statements to conform to the 2011 presentation.

NOTE 3 – INVESTMENT SECURITIES, TRADING
 
The following table summarizes the Company's structured notes, which are classified as investment securities, trading, which are carried at fair value (in thousands):

   
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair
Value
 
March 31, 2011:
                       
Structured notes
  $ 21,989     $ 9,403     $ (122 )   $ 31,270  
Total
  $ 21,989     $ 9,403     $ (122 )   $ 31,270  
                                 
December 31, 2010:
                               
Structured notes
  $ 7,984     $ 9,739     $     $ 17,723  
Total
  $ 7,984     $ 9,739     $     $ 17,723  

The Company purchased 18 securities and sold 8 securities during the three months ended March 31, 2011, for a gain of $2.3 million.  The Company held 23 investment securities, trading as of March 31, 2011.  The Company owned no such securities as of March 31, 2010.

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 4 – INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The following table summarizes the Company's investment securities including those pledged as collateral and classified as available-for-sale, which are carried at fair value (in thousands):
 
   
Amortized
Cost (2)
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair
Value (1)
 
March 31, 2011:
                       
CMBS
  $ 105,478     $ 10,350     $ (24,762 )   $ 91,066  
Preferred stock and warrants
    31,213                   31,213  
Other asset-backed
          23             23  
Total
  $ 136,691     $ 10,373     $ (24,762 )   $ 122,302  
December 31, 2010:
                               
CMBS
  $ 83,223     $ 7,292     $ (26,578 )   $ 63,937  
Other asset-backed
          23             23  
Total
  $ 83,223     $ 7,315     $ (26,578 )   $ 63,960  

(1)
As of March 31, 2011 and December 31, 2010, $84.7 million and $58.0 million, respectively, of securities were pledged as collateral security under related financings.
 
(2)
As of March 31, 2011 and December 31, 2010, other asset-backed securities are carried at fair value, $23,000 and $23,000, respectively, due to prior other-than-temporary impairment taken.
 
On January 4, 2011, our wholly-owned subsidiary, Resource TRS, made an investment in LEAF Commercial Capital, Inc. (“LCC”), a newly-formed equipment financing subsidiary of LEAF Financial Corporation (“LEAF Financial”), a subsidiary of Resource America (see Note 13).  The Company’s preferred stock and warrant investment is carried at cost.  It is not practicable for the Company to estimate the fair value of its investment in the preferred stock and warrants of LCC.  LCC’s assets are comprised of a large number of transactions with commercial customers in different businesses, may be secured by liens on various types of equipment and may be guaranteed by third parties and cross-collateralized. Any difference between the carrying value and fair value of each transaction would be affected by a potential buyer’s assessment of the transaction’s credit quality, collateral value, guarantees, payment history, yield, term, documents and other legal matters, and other subjective considerations. Value received in a fair market sale of a transaction would be based on the terms of the sale, LCC’s and the buyer’s views of economic and industry conditions, LCC’s and the buyer’s tax considerations, and other factors.  There were no events or changes in circumstances that would significantly affect the fair value of this investment.  The preferred stock carries a coupon of 10%, of which 2% is received in cash and 8% is paid in-kind.

The following table summarizes the estimated maturities of the Company’s CMBS and other asset-backed securities (“ABS”) according to their estimated weighted average life classifications (in thousands, except percentages):
 
Weighted Average Life
 
Fair Value
   
Amortized Cost
 
Weighted Average Coupon
 
March 31, 2011:
               
Less than one year
  $ 15,590 (1)   $ 18,743     4.33%  
Greater than one year and less than five years
    42,541       56,084     3.96%  
Greater than five years
    32,958       30,651     5.82%  
Total
  $ 91,089     $ 105,478     4.93%  
                       
December 31, 2010:
                     
Less than one year
  $ 3,264 (1)   $ 6,911     1.51%  
Greater than one year and less than five years
    29,004       46,138     3.45%  
Greater than five years
    31,692       30,174     5.64%  
Total
  $ 63,960     $ 83,223     4.08%  

(1)
$3.0 million of CMBS, maturing in this category are collateralized by floating-rate loans and, as permitted under the CMBS terms, are expected to extend their respective maturity dates until at least November 2011 as the debtors in the floating-rate structures have a contractual right to extend with options ranging from two one-year options to three one-year options.  Beyond the contractual extensions, the servicer may allow further extensions of the underlying floating rate loans.

 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 4 – INVESTMENT SECURITIES AVAILABLE-FOR-SALE – (Continued)

The contractual maturities of the investment securities available-for-sale range from August 2011 to June 2022.

The following table shows the fair value and gross unrealized losses, aggregated by investment category and length of time, of those individual investment securities that have been in a continuous unrealized loss position (in thousands):
   
Less than 12 Months
   
More than 12 Months
   
Total
 
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
 
March 31, 2011:
                                   
CMBS
  $ 27,533     $ (3,837 )   $ 9,156     $ (20,925 )   $ 36,689     $ (24,762 )
Total temporarily
impaired securities
  $ 27,533     $ (3,837 )   $ 9,156     $ (20,925 )   $ 36,689     $ (24,762 )
                                                 
December 31, 2010:
                                               
CMBS
  $ 10,134     $ (4,383 )   $ 8,302     $ (22,195 )   $ 18,436     $ (26,578 )
Total temporarily
impaired securities
  $ 10,134     $ (4,383 )   $ 8,302     $ (22,195 )   $ 18,436     $ (26,578 )

The Company holds seven investment securities available-for-sale that have been in a loss position for more than 12 months as of March 31, 2011 and December 31, 2010.  The unrealized losses in the above table are considered to be temporary impairments due to market factors and are not reflective of credit deterioration.

The determination of other-than-temporary impairment is a subjective process, and different judgments and assumptions could affect the timing of loss realization.  The Company reviews its portfolios and makes other-than-temporary impairment determinations at least quarterly.  The Company considers the following factors when determining if there is an other-than-temporary impairment on a security:
 
 
the length of time the market value has been less than amortized cost;
 
 
the severity of the impairment;
 
 
the expected loss with respect to the security as generated by third party software;
 
 
credit ratings from the rating agencies;
 
 
underlying credit fundamentals of the collateral backing the securities; and
 
 
whether, based upon the Company’s intent, it is more likely than not that the Company will sell the security before the recovery of the amortized cost basis.

At March 31, 2011 and December 31, 2010, the Company held $91.1 million and $63.9 million, respectively, (net of net unrealized losses of $14.4 million and $19.3 million, respectively) of CMBS recorded at fair value.  To determine fair value, the Company uses two methods, either a dealer quote or an internal valuation model, depending upon the current level of market activity.  As of March 31, 2011 and December 31, 2010, $80.1 million and $53.7 million, respectively, of investment securities available-for-sale were valued using dealer quotes and $11.0 million and $10.3 million, respectively, were valued using a weighted average of three measures (see Note 2).

During the three months ended March 31, 2011 and 2010, the Company did not recognize any other-than-temporary impairment on positions that supported the Company’s CMBS investment.  While the Company’s securities classified as available-for-sale have declined in fair value on a net basis, the Company concluded that the decline continues to be temporary and does not believe that any of its securities classified as available-for-sale were other-than-temporarily impaired as of March 31, 2011 or 2010 that had not been previously classified as such.  The Company performs an on-going review of third-party reports and updated financial data on the underlying properties to analyze current and projected security performance.  Rating agency downgrades are considered with respect to the Company’s income approach when determining other-than-temporary impairment and, when inputs are stressed, the resulting projected cash flows reflect a full recovery of principal and interest indicating no impairment.


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 4 – INVESTMENT SECURITIES AVAILABLE-FOR-SALE – (Continued)

Changes in interest rates may also have an effect on the rate of mortgage principal prepayments and, as a result, prepayments on CMBS in the Company’s investment portfolio.  At March 31, 2011, the aggregate discount exceeded the aggregate premium on the Company’s CMBS by approximately $15.3 million.  At December 31, 2010, the aggregate discount exceeded the aggregate premium on the Company’s CMBS by approximately $16.6 million.

NOTE 5 – INVESTMENT SECURITIES HELD-TO-MATURITY

The following table summarizes the Company's securities held-to-maturity which are carried at amortized cost (in thousands):
 
   
Amortized Cost
   
Unrealized Gains
   
Unrealized Losses
   
Fair Value
 
March 31, 2011:
                       
ABS
  $ 29,206     $ 754     $ (3,057 )   $ 26,903  
Total
  $ 29,206     $ 754     $ (3,057 )   $ 26,903  
                                 
December 31, 2010:
                               
ABS
  $ 29,036     $ 752     $ (3,847 )   $ 25,941  
Total
  $ 29,036     $ 752     $ (3,847 )   $ 25,941  
 
 
The following table summarizes the estimated maturities of the Company’s securities held-to-maturity according to their contractual lives (in thousands):
 
Contractual Life
 
Amortized
Cost
   
Fair Value
   
Weighted
Average
Coupon
 
March 31, 2011:
                 
Greater than one year and less than five years
  $ 5,000     $ 5,037       6.15%  
Greater than five years and less than ten years
    15,897       15,566       1.98%  
Greater than ten years
    8,309       6,300       4.13%  
Total
  $ 29,206     $ 26,903          
                         
December 31, 2010:
                       
Greater than one year and less than five years
  $ 5,000     $ 4,830       6.14%  
Greater than five years and less than ten years
    15,891       15,073       1.97%  
Greater than ten years
    8,145       6,038       4.11%  
Total
  $ 29,036     $ 25,941          
 
The following table shows the fair value and gross unrealized losses, aggregated by investment category and length of time, of those individual investment securities that have been in a continuous unrealized loss position (in thousands):
 
   
Less than 12 Months
   
More than 12 Months
   
Total
 
   
Fair Value
   
Gross
Unrealized
 Losses
   
Fair Value
   
Gross
Unrealized
Losses
   
Fair Value
   
Gross
Unrealized
Losses
 
March 31, 2011:
                                   
ABS
  $     $     $ 10,111     $ (3,057 )   $ 10,111     $ (3,057 )
Total temporarily
impaired securities
  $     $     $ 10,111     $ (3,057 )   $ 10,111     $ (3,057 )
                                                 
December 31, 2010:
                                               
ABS
  $ 1,038     $ (1 )   $ 11,923     $ (3,846 )   $ 12,961     $ (3,847 )
Total temporarily
impaired securities
  $ 1,038     $ (1 )   $ 11,923     $ (3,846 )   $ 12,961     $ (3,847 )


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 5 – INVESTMENT SECURITIES HELD-TO-MATURITY

The Company holds 10 and 12 investment securities held-to-maturity that have been in a loss position for more than 12 months as of March 31, 2011 and December 31, 2010, respectively.  The unrealized losses in the above table are considered to be temporary impairments due to market factors and are not reflective of credit deterioration.  The Company does not believe that any of its investments classified as held-to-maturity were other-than-temporarily impaired as of March 31, 2011.

The determination of other-than-temporary impairment is a subjective process, and different judgments and assumptions could affect the timing of loss realization.  The Company reviews its portfolios and makes other-than-temporary impairment determinations at least quarterly.  The Company considers the following factors when determining if there is an other-than-temporary impairment on a security:
 
 
the severity of the impairment;
 
 
the expected loss of the security as generated by third party software;
 
 
original and current credit ratings from the rating agencies;
 
 
underlying credit fundamentals of the collateral backing the securities; and
 
 
third-party support for default, recovery, prepayment speed and reinvestment price assumptions.

NOTE 6 – LOANS HELD FOR INVESTMENT

The following is a summary of the Company’s loans (in thousands):
Loan Description
 
Principal
   
Unamortized
(Discount)
Premium (1)
   
Carrying
Value (2)
 
March 31, 2011:
                 
Bank loans (3) 
  $ 899,165     $ (23,365 )   $ 875,800  
Commercial real estate loans:
                       
Whole loans (3) 
    460,539       (458 )     460,081  
B notes (3) 
    55,327       (160 )     55,167  
Mezzanine loans (3) 
    115,326       84       115,410  
Total commercial real estate loans
    631,192       (534 )     630,658  
Subtotal loans before allowances
    1,530,357       (23,899 )     1,506,458  
Allowance for loan loss
    (27,669 )           (27,669 )
Total
  $ 1,502,688     $ (23,899 )   $ 1,478,789  
                         
December 31, 2010:
                       
Bank loans (3) 
  $ 887,667     $ (27,204 )   $ 860,463  
Commercial real estate loans:
                       
Whole loans
    441,706       (334 )     441,372  
B notes
    57,613       (162 )     57,451  
Mezzanine loans (3) 
    146,668       143       146,811  
Total commercial real estate loans
    645,987       (353 )     645,634  
Subtotal loans before allowances
    1,533,654       (27,557 )     1,506,097  
Allowance for loan loss
    (34,233 )           (34,233 )
Total
  $ 1,499,421     $ (27,557 )   $ 1,471,864  

(1)
Amounts include deferred amendment fees of $276,000 and $636,000 being amortized over the life of the bank loans and $79,000 and $681,000 being amortized over the life of the commercial real estate loans as of March 31, 2011 and December 31, 2010, respectively.
 
(2)
Substantially all loans are pledged as collateral under various borrowings at March 31, 2011 and December 31, 2010, respectively.
 
(3)
Amounts include $9.9 million of bank loans, $676,000 of whole loans, $12.8 million of B notes and $19.5 million of mezzanine loans held for sale as of March 31, 2011, and $4.0 million of bank loans and $24.6 million of mezzanine loans held for sale as of December 31, 2010.


RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 6 – LOANS HELD FOR INVESTMENT – (Continued)

As of March 31, 2011 and December 31, 2010, approximately 41.7% and 38.0%, respectively, of the Company’s commercial real estate loan portfolio was concentrated in commercial real estate loans located in California and 9.5% and 10.4%, respectively, were concentrated in New York.  As of March 31, 2011 and December 31, 2010, approximately 11.1% and 10.7%, respectively, of the Company’s bank loan portfolio was concentrated in the collective industry grouping of healthcare, education and childcare.

At March 31, 2011, the Company’s bank loan portfolio consisted of $874.0 million (net of allowance of $1.8 million) of floating rate loans, which bear interest ranging between the London Interbank Offered Rate (“LIBOR”) plus 0.5% and LIBOR plus 9.5% with maturity dates ranging from July 2011 to March 2018.

At December 31, 2010, the Company’s bank loan portfolio consisted of $857.9 million (net of allowance of $2.6 million) of floating rate loans, which bear interest ranging between the LIBOR plus 0.5% and LIBOR plus 9.5% with maturity dates ranging from March 2011 to December 2017.

The following is a summary of the weighted average life of the Company’s bank loans, at amortized cost (in thousands):
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
Less than one year
  $ 7,213     $ 4,245  
Greater than one year and less than five years
    593,136       643,699  
Five years or greater
    275,451       212,519  
    $ 875,800     $ 860,463  

The following is a summary of the Company’s commercial real estate loans (in thousands):

Description
 
Quantity
   
Amortized Cost
 
Contracted
Interest Rates
 
Maturity Dates (4)
March 31, 2011:
                 
Whole loans, floating rate (1)
    27     $ 460,081  
LIBOR plus 1.50% to
LIBOR plus 5.75%
 
May 2011 to
May 2017
B notes, floating rate
    2       24,242  
LIBOR plus 2.50% to
LIBOR plus 3.01%
 
July 2011 to
October 2011
B notes, fixed rate
    2       30,925  
7.00% to 8.68%
 
July 2011 to
April 2016
Mezzanine loans, floating rate
    5       81,878  
LIBOR plus 2.20% to
LIBOR plus 3.00%
 
May 2011 to
January 2013
Mezzanine loans, fixed rate (2)
    4       33,532  
8.65% to 11.00%
 
January 2016 to
September 2016
Total (3) 
    40     $ 630,658        
                       
December 31, 2010:
                     
Whole loans, floating rate  (1)
    25     $ 441,372  
LIBOR plus 1.50% to
LIBOR plus 5.75%
 
May 2011 to
January 2018
B notes, floating rate
    2       26,485  
LIBOR plus 2.50% to
LIBOR plus 3.01%
 
July 2011 to
October 2011
B notes, fixed rate
    2       30,966  
7.00% to 8.68%
 
July 2011 to
April 2016
Mezzanine loans, floating rate
    6       93,266  
LIBOR plus 2.15% to
LIBOR plus 3.00%
 
May 2011 to
January 2013
Mezzanine loans, fixed rate (2)
    5       53,545  
8.14% to 11.00%
 
January 2016 to
September 2016
Total (3) 
    40     $ 645,634        

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 6 – LOANS HELD FOR INVESTMENT – (Continued)

 
(1)
Whole loans had $9.1 million and $5.0 million in unfunded loan commitments as of March 31, 2011 and December 31, 2010, respectively.  These commitments are funded as the borrowers require additional funding and have satisfied the requirements to obtain this additional funding.
 
(2)
Fixed rate mezzanine loan dates exclude a loan that matured in May 2010 and is in default and has been on non-accrual status as of December 31, 2010.  This loan was written-off as of March 31, 2011.
 
(3)
The total does not include an allowance for loan losses of $25.9 million and $31.6 million recorded as of March 31, 2011 and December 31, 2010, respectively.
 
(4)
Maturity dates do not include possible extension options that may be available to the borrowers.
 
       Subsequent to March 31, 2011, the Company entered into and completed sale agreements for two commercial real estate loans.  One loan is secured by a hotel portfolio in various locations that the Company sold at 85% of par, resulting in a loss of $2.25 million of which $235,000 had been previously allocated as part of its general reserve.  The second loan is secured by an office tower in New York City that the Company sold at par with transaction costs resulting in a loss of $656,000.  The third loan with a fair value of $676,000 is secured by a pad for retail use in Arizona.  The Company expects a sale to occur during 2011.  The Company classified these loans as loans held for sale as of March 31, 2011.

The following is a summary of the weighted average life of the Company’s commercial real estate loans, at amortized cost (in thousands):
 
Description
 
2011
   
2012
   
2013 and
Thereafter
   
Total
 
March 31, 2011:
                       
B notes
  $ 38,659     $     $ 16,508     $ 55,167  
Mezzanine loans
          23,289       92,121       115,410  
Whole loans
    107,775       87,090       265,216       460,081  
Total (2) 
  $ 146,434     $ 110,379     $ 373,845     $ 630,658  
December 31, 2010:
                               
B notes
  $ 40,913     $     $ 16,538     $ 57,451  
Mezzanine loans (1) 
          34,676       107,135       141,811  
Whole loans
    108,303       87,084       245,985       441,372  
Total (2) 
  $ 149,216     $ 121,760     $ 369,658     $ 640,634  

(1) Mezzanine loans exclude one loan with an amortized cost of $5.0 million which matured in May 2010 and is in default.
 
(2) Weighted average life of commercial real estate loans assumes full exercise of extension options available to borrowers.
 
The following is a summary of the allocation of the allowance for loan loss with respect to the Company’s commercial real estate and bank loans (in thousands, except percentages) by asset class:

Description
 
Allowance for
Loan Loss
   
Percentage of
Total Allowance
 
March 31, 2011:
           
B notes
  $ 621         2.2%  
Mezzanine loans
    3,718       13.5%  
Whole loans
    21,499       77.7%  
Bank loans
    1,831         6.6%  
Total
  $ 27,669          
                 
December 31, 2010:
               
B notes
  $ 899         2.6%  
Mezzanine loans
    8,553       25.0%  
Whole loans
    22,165       64.8%  
Bank loans
    2,616         7.6%  
Total
  $ 34,233          

 

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 6 – LOANS HELD FOR INVESTMENT – (Continued)
 
As of March 31, 2011, the Company had recorded an allowance for loan losses of $27.7 million consisting of a $1.8 million allowance on the Company’s bank loan portfolio and a $25.9 million allowance on the Company’s commercial real estate portfolio as a result of the impairment of one bank loan and eight commercial real estate loans as well as the provision of a general reserve with respect to these portfolios.
 
As of December 31, 2010, the Company had recorded an allowance for loan losses of $34.2 million consisting of a $2.6 million allowance on the Company’s bank loan portfolio and a $31.6 million allowance on the Company’s commercial real estate portfolio as a result of the impairment of one bank loan and eight commercial real estate loans as well as the provision of a general reserve with respect to these portfolios.

NOTE 7 –FINANCING RECEIVABLES

The following tables show the allowance for loan and lease receivable losses and recorded investments in loans and lease receivables (in thousands):
 
   
Commercial
Real Estate
Loans
   
Bank Loans
   
Loans
Receivable-Related Party
   
Total
 
March 31, 2011:
                       
Allowance for losses at
January 1, 2011
  $ 31,617     $ 2,616     $     $ 34,233  
Provision for (reversal of) loan loss
    3,121       (515 )           2,606  
Loans charged-off
    (8,900 )     (270 )           (9,170 )
Recoveries
                       
Allowance for losses at
March 31, 2011
  $ 25,838     $ 1,831     $     $ 27,669  
                                 
Ending balance:
                               
Individually evaluated for
impairment
  $ 15,300     $ 112     $     $ 15,412  
Collectively evaluated for
impairment
  $ 10,538     $ 1,719     $     $ 12,257  
Loans acquired with
deteriorated credit quality
  $     $     $     $  
                                 
Loans:
                               
Ending balance:
                               
Individually evaluated for
impairment
  $ 36,000     $ 362     $     $ 36,362  
Collectively evaluated for
impairment
  $ 594,658     $ 875,438     $ 9,689     $ 1,479,785  
Loans acquired with
deteriorated credit quality
  $     $     $     $  



RESOURCE CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)
MARCH 31, 2011
(Unaudited)

NOTE 7 –FINANCING RECEIVABLES – (Continued)

   
Commercial
Real Estate
Loans
   
Bank Loans
   
Lease
Receivables
   
Loans
Receivable-Related Party
   
Total
 
December 31, 2010:
                             
Allowance for losses at
January 1, 2010
  $ 29,297     $ 17,825     $ 1,140     $     $ 48,262  
Provision for (reversal of)
loan loss
    44,357       (1,348 )     312             43,321  
Loans charged-off
    (42,037 )     (13,861 )     (1,432 )           (57,330 )
Recoveries
                50             50  
Allowance for losses at
December 31, 2010
  $ 31,617     $ 2,616     $ 70     $     $ 34,303  
                                         
Ending balance:
                                       
Individually evaluated for
impairment
  $ 20,844     $ 112     $     $     $ 20,956  
Collectively evaluated for
impairment
  $ 10,773     $ 2,504     $ 70     $     $ 13,347  
Loans acquired with
deteriorated credit quality
  $     $     $     $     $  
                                         
Loans:
                                       
Ending balance:
                                       
Individually evaluated for
impairment
  $ 42,219     $ 362     $ 10,024     $     $ 52,605  
Collectively evaluated for
impairment
  $ 603,415     $ 860,101     $ 99,658     $ 9,927     $ 1,573,101  <