Note 5 - Investment in Limited Partnership

12 Months Ended

Dec. 31, 2011

Equity Method Investments Disclosure [Text Block]

5.  Investment in Limited Partnership

The Company has a non-controlling, unconsolidated limited partnership interest in an entity that is accounted for using the equity method of accounting.  Capital contributions, distributions, and profits and losses of the entity are allocated in accordance with the terms of the limited partnership agreement. The Company owns 100% of the equity of the limited partnership, but has no decision-making powers, and therefore does not consolidate the limited partnership. Our maximum exposure to loss in this variable interest entity is $8.5 million and $18.7 million at December 31, 2011 and 2010, respectively. During the third and fourth quarters of 2010, HC invested, in exchange for limited partnership interests, $19.4 million in this limited partnership that was formed for the purpose of acquiring, servicing, selling or otherwise disposing of first-lien residential mortgage loans.  The pool of mortgage loans was acquired by the partnership at a significant discount to the loans’ unpaid principal balance.

At December 31, 2011 and 2010, the Company had an investment in this limited partnership of $8.5 million and $18.7 million, respectively.  For the years ended December 31, 2011 and 2010, the Company recognized income from the investment in limited partnership of $1.8 million and $0.5 million, respectively.  For the years ended December 31, 2011 and 2010, the Company received distributions from the investment in limited partnership of $11.8 million and $1.2 million, respectively.

The balance sheet of the investment in limited partnership at December 31, 2011 and 2010, respectively, is as follows (dollar amounts in thousands):

	December 31,
Assets	2011		2010
Cash	$	1,154	$	152
Mortgage loans held for sale (net)		6,918		18,072
Other assets		661		478
Total Assets	$	8,733	$	18,702
Liabilities & Partners’ Equity
Other liabilities	$	206	$	37
Partners’ equity		8,527		18,665
Total Liabilities & Partners’ Equity	$	8,733	$	18,702

The statement of operations of the investment in limited partnership for the years ended December 31, 2011 and 2010, respectively, is as follows (dollar amounts in thousands):

	Years ended December 31,
Statement of Operations	2011			2010
Interest income	$	1,267		$	489
Realized gain		1,107			164
Total Income		2,374			653
Other expenses		(536	)		(157	)
Net Income	$	1,838		$	496

During the second quarter of 2011, RBCM invested $5.3 million in a limited liability company that was formed for the purpose of investing in two tranches of securities. For the year ended December 31, 2011, the Company recognized income from the investment in limited liability company of $0.3 million, which was accounted for using the equity method of accounting. For the year ended December 31, 2011, the Company received distributions from the investment in this limited liability company of $0.2 million. The limited liability company was dissolved on December 30, 2011 and the two tranches of securities transferred to the Company at carrying value as directly owned securities accounted for as investment securities available for sale.