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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 2—Summary of Significant Accounting Policies (continued)
63
Regulatory Matters and Capital Adequacy
We became a bank holding company on December 8, 2011. As a bank holding company, we are subject to
comprehensive supervision and examination by the Federal Reserve Board and must comply with applicable
regulations, including minimum capital and leverage requirements. If we fail to comply with any of these requirements,
we may become subject to formal or informal enforcement actions, proceedings, or investigations, which could result
in regulatory orders, restrictions on our business operations or requirements to take corrective actions, which may,
individually or in the aggregate, affect our results of operations and restrict our ability to grow. If we fail to comply with
the applicable capital and leverage requirements, or if our subsidiary bank fails to comply with its applicable capital
and leverage requirements, the Federal Reserve Board may limit our or Green Dot Bank's ability to pay dividends. In
addition, as a bank holding company and a financial holding company, we are generally prohibited from engaging,
directly or indirectly, in any activities other than those permissible for bank holding companies and financial holding
companies. This restriction might limit our ability to pursue future business opportunities which we might otherwise
consider but which might fall outside the scope of permissible activities. We may also be required to serve as a “source
of strength” to Green Dot Bank if it becomes less than adequately capitalized.
Recent Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update,
or ASU, 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out
of Accumulated Other Comprehensive Income. In June 2011, the FASB issued ASU 2011-05, Comprehensive Income:
Presentation of Comprehensive Income, which requires an entity to present the total of comprehensive income, the
components of net income, and the components of other comprehensive income either in a single continuous statement
of comprehensive income or in two separate but consecutive statements. It eliminates the option to present components
of other comprehensive income as part of the statement of changes in stockholders' equity. ASU 2011-05 does not
change the items which must be reported in other comprehensive income, how such items are measured or when
they must be reclassified to net income. ASU 2011-12 only defers those changes in ASU 2011-05 that relate to the
presentation of reclassification adjustments. Both ASUs are effective for interim and annual periods beginning after
December 15, 2011. Our adoption of this ASU is not expected to have a material impact on our consolidated financial
statements.
In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment, which provides entities
testing goodwill for impairment to now have an option of performing a qualitative assessment before having to calculate
the fair value of a reporting unit. If an entity determines, on the basis of qualitative factors, that the fair value of the
reporting unit is more-likely-than-not less than the carrying amount, the existing quantitative impairment test is required.
Otherwise, no further impairment testing is required. This ASU is effective for fiscal years beginning after December
15, 2011. Our adoption of this ASU is not expected to have a material impact on our consolidated financial statements.
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which converges common fair value
measurement and disclosure requirements in accordance with GAAP and International Financial Reporting Standards,
or IFRS. This ASU is effective for interim and annual periods beginning after December 15, 2011. Our adoption of this
ASU is not expected to have a material impact on our consolidated financial statements.
In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which
requires additional information in the roll-forward of Level 3 assets and liabilities, including the presentation of purchases,
sales, issuances and settlements on a gross basis. This ASU impacts disclosures only. We adopted this ASU in the
first quarter of 2011.
Note 3—Investment Securities
We classify our investment securities as available-for-sale and report them at fair value with the related unrealized
gains and losses, net of tax, included in accumulated other comprehensive income, a component of stockholders’
equity. We classify investment securities with original maturities greater than 90 days, but less than or equal to 365 days
as current assets.