Green Dot 2012 Annual Report Download - page 68

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
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Note 2—Summary of Significant Accounting Policies (continued)
We consider an operating segment to be any component of our business whose operating results are regularly
reviewed by our chief operating decision-maker to make decisions about resources to be allocated to the segment
and assess its performance based on discrete financial information. Only those operating segments that meet certain
quantitative and qualitative criteria are reportable segments. Our Chief Executive Officer, our chief operating decision-
maker, reviews our operating results on an aggregate basis and manages our operations and the allocation of resources
as a single operating segment — prepaid cards and related services.
Changes in Presentation
Certain prior period amounts have been reclassified to conform to the current period presentation. Intangible
assets of $0.7 million as of December 31, 2011 have been reclassified from prepaid expenses and other assets to
goodwill and intangible assets in the consolidated balance sheets.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements, including the accompanying notes. We base
our estimates and assumptions on historical factors, current circumstances, and the experience and judgment of
management. We evaluate our estimates and assumptions on an ongoing basis. Actual results could differ from those
estimates.
Unrestricted Cash and Cash Equivalents and Federal Funds Sold
We consider all unrestricted highly liquid investments with an original maturity of three months or less to be
unrestricted cash and cash equivalents. Federal funds sold consist of unsecured overnight advances of excess balances
in our bank reserve account and are included in unrestricted cash and cash equivalents on our statements of cash
flows.
Investment Securities
Our investment portfolio is primarily comprised of fixed income securities. We classify these 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.
We regularly evaluate each fixed income security where the value has declined below amortized cost to assess
whether the decline in fair value is other-than-temporary. In determining whether an impairment is other-than-temporary,
we consider the severity and duration of the decline in fair value, the length of time expected for recovery, the financial
condition of the issuer, and other qualitative factors, as well as whether we either plan to sell the security or it is more-
likely-than-not that we will be required to sell the security before recovery of its amortized cost. If the impairment of
the investment security is credit-related, an other-than-temporary impairment is recorded in earnings. We recognize
non-credit-related impairment in accumulated other comprehensive income. If we intend to sell an investment security
or believe we will more-likely-than-not be required to sell a security, we record the full amount of the impairment as an
other-than-temporary impairment.
Interest on fixed income securities, including amortization of premiums and accretion of discounts, is included in
interest income.
Obligations to Customers and Settlement Assets and Obligations
Our retail distributors collect customer funds for purchases of new cards and reloads at the point of sale and then
remit these funds directly to bank accounts established for the benefit of these customers by the banks that issue our
cards. During the third quarter of 2012, our retail distributors began remitting these funds to our subsidiary bank as
we transitioned our card issuing program with Synovus Bank to our subsidiary bank. Our retail distributors’ remittance
of these funds takes an average of two business days.
Settlement assets represent the amounts due from our retail distributors for customer funds collected at the point
of sale that have not yet been received by our subsidiary bank. Obligations to customers represent customer funds
collected from or to be remitted by our retail distributors for which the underlying products have not been activated.
Settlement obligations represent the customer funds received by our subsidiary bank that are due to third-party card
issuing banks upon activation.