NOTE 4 – SAVINGS BANK SUBSIDIARY.
On May 23, 2013, we entered into an agreement to sell 100% of the capital stock of our savings bank subsidiary to Jacob M. Safra for cash equal to the bank's net book value on the closing date plus $500,000. We completed the sale on December 5, 2013, for proceeds of $23.6 million. The total gain we recognized in non-operating investment income also included $1.0 million of net unrealized holding gains previously recognized on the saving bank's available-for-sale portfolio that were reclassified from accumulated other comprehensive income.
The net revenue (in millions) contributed by our savings bank subsidiary included the following:
|
| | | | | | | | | | | |
| 2011 | | 2012 | | 2013 |
Investment income from debt securities | $ | 5.4 |
| | $ | 4.1 |
| | $ | 2.2 |
|
Interest expense on customer deposits | 3.1 |
| | 2.3 |
| | 1.5 |
|
Net revenue | $ | 2.3 |
| | $ | 1.8 |
| | $ | .7 |
|
The following table summarizes the assets and liabilities (in millions) of our savings bank subsidiary in our consolidated balance sheet at December 31, 2012. |
| | | |
Cash and cash equivalents | $ | 44.3 |
|
Debt securities | 136.0 |
|
Other assets | .4 |
|
Total assets | $ | 180.7 |
|
| |
Accounts payable and accrued expenses | $ | .1 |
|
Income taxes payable | 1.3 |
|
Customer deposits | 154.7 |
|
Total liabilities | $ | 156.1 |
|
The debt securities held by our savings bank subsidiary were marketable debt securities, including mortgage- and other asset-backed securities, which were accounted for as available-for-sale. The following table (in millions) details the components of these investments at December 31, 2012.
|
| | | | | | | |
| Fair
value | | Unrealized
holding
gains
(losses) |
Investments with temporary impairment of | | | |
Less than 12 months | $ | 6.4 |
| | $ | — |
|
12 months or more | 1.0 |
| | — |
|
Total | 7.4 |
| | — |
|
Investments with unrealized holding gains | 128.6 |
| | 3.2 |
|
Total | $ | 136.0 |
| | $ | 3.2 |
|
Aggregate cost | $ | 132.8 |
| | |
The unrealized losses in these investments at December 31, 2012 totaled $35,000 and were generally caused by changes in interest rates and market liquidity, and not by changes in credit quality. We intended to hold these securities to their maturities and believed it was more-likely-than-not that we would not be required to sell any of these securities before recovery of their amortized cost. Accordingly, impairment of these investments was considered temporary at December 31, 2012.
