Green Dot 2014 Annual Report Download - page 73

Note 2—Summary of Significant Accounting Policies (continued)
We divide adjusted net income for each class of common stock by the respective weighted-average number of
the common shares issued and outstanding for each period plus amounts representing the dilutive effect of outstanding
stock options, restricted stock units, outstanding warrants, shares to be purchased under our employee stock purchase
plan and the dilution resulting from the conversion of convertible securities, if applicable. We exclude the effects of
convertible securities, outstanding warrants and stock options from the computation of diluted EPS in periods in which
the effect would be anti-dilutive. We calculate dilutive potential common shares using the treasury stock method, if-
converted method and the two-class method, as applicable.
Regulatory Matters and Capital Adequacy
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 January 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2014-04, Receivables - Troubled Debt Restructurings by Creditors ("ASU 2014-04"), which intends to clarify when
a creditor should be considered to have received physical possession of residential real estate property collateralizing
a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. ASU 2014-04
is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2014.
We will adopt this standard effective January 1, 2015. Our adoption of ASU 2014-14 is not expected to have a material
impact on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which
supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to
recognize revenues when promised goods or services are transferred to customers in an amount that reflects the
consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step
process to achieve this core principle and, in doing so, more judgment and estimates may be required within the
revenue recognition process than are required under existing GAAP.
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using
either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in
each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with
the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional
footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our
consolidated financial statements and have not yet determined the method by which we will adopt the standard in
2017.
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
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Note 3—Business Acquisitions
SBBT Holdings, LLC
On October„23, 2014, we completed our acquisition of SBBT Holdings, LLC ("TPG"), „a provider of integrated tax
refund processing services. TPG's services are integrated into the offerings of the nation's leading tax software
companies, which enables TPG to serve approximately 25,000 independent tax preparers and accountants nationwide.
This transaction, which was accounted for as a business combination, will allow us to expand into TPG's core customer
segment by adding tax refund processing services for millions of tax filers through distribution partnerships with many
of America’s largest and best known tax preparation companies and thousands of independent tax preparers.