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19. Premium Finance Placement Fees

12 Months Ended

Dec. 31, 2015

The Company’s wholly owned subsidiary, Payments Inc. (“Payments”), is licensed as a premium finance agency in the state of New York. Prior to February 1, 2008, Payments provided premium financing in connection with the obtaining of insurance policies. Effective February 1, 2008, Payments sold its outstanding premium finance loan portfolio. The purchaser of the portfolio (the “Purchaser”) agreed that, during the five year period ended February 1, 2013 (which period was extended to February 1, 2015), it would purchase, assume and service all eligible premium finance contracts originated by Payments in the state of New York (the “Agreement”). In connection with such purchases, Payments was entitled to receive a fee generally equal to a percentage of the amount financed.

On July 17, 2014, the Purchaser terminated the Agreement effective February 1, 2015. Following any expiration or termination of the obligation of the Purchaser to purchase premium finance contracts, Payments was entitled to receive the fees for an additional two years (“Termination Period”) with regard to contracts for policies from the Company’s producers. On March 26, 2015, the Company and the Purchaser agreed to amend the Termination Period to end as of March 31, 2015 (“Termination Date”). The Company received a one-time payment of $350,000 in exchange for the fees that the Company would have received during the Termination Period. In connection with such agreement, the Company agreed to several restrictive covenants, including that, for a period of eighteen months following the Termination Date, it would not engage in the premium financing business within New York, New Jersey and Pennsylvania. The Company’s premium financing business consisted of the placement fees that Payments earned from placing contracts.

Placement fee revenue included in other income and the related direct expenses included in other operating expenses in the consolidated statements of net income and comprehensive income are as follows:

	For the Year Ended
	December 31,
	2015			2014

Placement fee revenue	$	54,343		$	229,738
Termination fee		350,000			-
Direct expenses		(12,989	)		(62,610	)
Net income before taxes from placement fees	$	391,354		$	167,128