The remaining half of the interest income not sold is considered an interest-only strip
receivable that Entity A classifies as an available-for-sale security.
For example, a servicing asset can be considered to reflect two values: a financial instrument that is similar to an interest-only strip
and an intangible value reflecting the contractual right to perform services over time in exchange for a fee.
2012 and 2011 Second Quarter Net Income Included Pre-Tax Gains on Sale of SBA Interest-Only Strip
Securities of $2.
3m gain on the sale of an SBA interest-only strip
Owners of the interest-only strip
have claims to the interest from the mortgage payments.
On Monday, PacificAmerica announced that Fremont changed the terms of its agreement, making it possible to reduce the purchase price to $6 a share in cash if certain standards related to the sale of interest-only strip
receivables were met by the time the deal closes in the first quarter of next year.
Some of the interest retained by the seller may represent a fee for normal loan servicing and some may represent an excess servicing receivable, such as the right to receive cash flows that exceed normal servicing fees, which is equivalent to an interest-only strip
on the portion of the loan sold.
3 Million Pre-Tax Gain on Sale of an SBA Interest-Only Strip
But if the sale of PacificAmerica's interest-only strip
receivables are less than the amount they both agreed upon, then the difference will be subtracted from the $6 a share purchase price.
The principal part of a mortgage security that has been stripped into two parts; the other part is the interest-only strip
Management believes that the presentation of the Bank's tangible common equity ratio and net income and diluted earnings per share excluding the after-tax effect of gains from the sales of SBA interest-only strip
securities, which are non-GAAP financial measures, assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results.
Management believes that the presentation of net income and diluted earnings per share excluding the after tax effect of a net gain from the sale of an SBA interest-only strip
security, which are non-GAAP financial measures, assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results.