Note 16 - Transfer of Financial Assets

6 Months Ended

Jun. 30, 2014

Transfers and Servicing [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

NOTE 16. TRANSFER OF FINANCIAL ASSETS

Transfers of financial assets are accounted for as sales based on the criteria of ASC 860 when control over the assets has been surrendered. Assets obtained are to be initially measured at fair value and reflected as proceeds from the transfer. In addition, the assets transferred (cash) should be derecognized with a corresponding gain or loss recorded. Control over transferred assets is deemed surrendered when:

● The assets have been isolated from the Company,

● The transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets (or beneficial interests), and

● The Company does not maintain effective control over the transferred assets or third party beneficial interests through an agreement to repurchase them before their maturity.

On February 27, 2014, the Company completed a loan purchase transaction which included the purchase of a pool of residential solar panel loans secured by UCC filing with a par value of $12.9 million. The solar panel loans portfolio (“portfolio”) was purchased from an unrelated bank in exchange for cash of $12.7 million. The loans and the related servicing were transferred without recourse. The acquisition of the portfolio was accounted for as a transfer of financial assets. The Company initially measured the acquired loan portfolio at fair value of $12.7 million. The fair value was equal to the price paid to acquire the portfolio as the difference between the par value and cash purchase price represents the fair value adjustment. As a result of this transfer of financial assets, no gain or loss was recorded.

On May 12, 2014, the Company agreed to purchase $40 million of unsecured consumer home improvement loans. The loans will be transferred without recourse or servicing rights. The agreement calls for purchases up to $4 million per month up to a maximum par value of $40 million. As of June 30, 2014 the Company has purchased a total par value of $5.9 million in loans at a net discount of $198 thousand in exchange for cash payments totaling $5.7 million. The acquisition of the portfolio was accounted for as a transfer of financial assets. The Company initially measured the acquired loan portfolio at fair value of $5.7 million. The fair value was equal to the price paid to acquire the portfolio as the difference between the par value and cash purchase price represents the fair value adjustment. As a result of this transfer of financial assets, no gain or loss was recorded.