CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

9 Months Ended

Jun. 30, 2011

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 17 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has ongoing relationships with several related entities.  The following table details the receivables and payables with these related parties (in thousands):

	June 30,		September 30,
	2011		2010
Receivables from managed entities and related parties, net:
Commercial finance investment entities (1)	$	30,874	$	41,722
Real estate investment entities (2)		20,325		18,491
Financial fund management investment entities		2,772		3,065
RCC		2,344		2,811
Other		631		327
Receivables from managed entities and related parties, net	$	56,946	$	66,416
Payables to managed entities and related parties:
Real estate investment entities	$	−	$	122
RCC		204		34
Payables to managed entities and related parties	$	204	$	156

(1) Reflects $7.0 million of reserves for credit losses related to management fees owed from two commercial finance investment entities that, based on projected cash flows, are not expected to be collectible. Also includes a $293,000 discount for management fees and reimbursed expenses that the Company expects to receive in the future.

(2) Reflects $871,000 of reserves for credit losses related to management fees owed from one real estate investment entity that, based on projected cash flows, are not expected to be collectible.

The Company receives fees, dividends and reimbursed expenses from several related/managed entities.  In addition, the Company reimburses another related entity for certain of its operating expenses.  The following table details those activities (in thousands):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Fees from unconsolidated investment entities:
Real estate (1)	$	3,753		$	3,506		$	9,909		$	9,345
Commercial finance (2)		−			2,149			−			9,611
Financial fund management (3)		1,038			826			3,523			2,628
RCC -
Management, incentive, and servicing fees		2,582			4,340			8,880			8,101
Dividends received		612			567			1,835			1,681
Reimbursement of expenses		687			499			1,708			1,353
RRE Opportunity REIT – reimbursement of costs and expenses		473			−			1,441			−
Fees from (payments to) other related parties:
Atlas Energy, L.P.- reimbursement of net costs and expenses		220			182			830			668
The Bancorp, Inc.- reimbursement of rent and related costs		8			−			8			−
1845 Walnut Associates Ltd- payment of rent and operating expenses		(152	)		(154	)		(522	)		(407	)
9 Henmar LLC- payment of broker/consulting fees		(20	)		(21	)		(46	)		(51	)
Ledgewood P.C. - payment for legal services		(357	)		(35	)		(491	)		(277	)

(1) Reflects discounts of $512,000 and $702,000 recorded for the three and nine months ended June 30, 2011, and $116,000 and $345,000 recorded for the three and nine months ended June 30, 2010, respectively, in connection with management fees the Company expects to receive in the future.

(2) During the three and nine months ended June 30, 2011, the Company waived $1.9 million and $6.4 million, respectively, and during the three and nine months ended June 30, 2010, waived $726,000 and $1.1 million, respectively, of its fund management fees from these investment entities.

(3) Excludes a $2.3 million gain on the repurchase of limited partner interests in two of the Trapeza partnerships for the nine months ended June 30, 2010.

Relationship with RCC.   Under our management agreement with RCC, the Company receives a base management fee, incentive compensation, reimbursement for out-of-pocket expenses and property management fees.

LEAF Financial originated and managed commercial finance assets on behalf of RCC prior to the formation of LEAF in January 2011.  During the three and nine months ended June 30, 2011, LEAF Financial sold $0 and $2.3 million, respectively, of commercial finance assets to RCC as compared to $111.0 and $121.3 million for the three and nine months ended June 30, 2010.  In addition, LEAF Financial repurchased $140,000 of leases and loans from RCC as an accommodation under certain circumstances during the nine months ended June 30, 2010.

In February 2011, the Company entered into a services agreement with RCC to provide subadvisory collateral management and administrative services for five CDOs holding approximately $1.9 billion in bank loans.  In connection with the services provided, RCC will pay the Company 10% of all base and additional collateral management fees and 50% of all incentive collateral management fees it collects.

Relationship with The Bancorp, Inc.  Daniel G. Cohen (“D. Cohen”) is the chairman of the board and Betsy Z. Cohen (“B. Cohen”) is the chief executive officer of TBBK and its subsidiary bank.  E. Cohen and B. Cohen are the parents of D. Cohen and Jonathan Z. Cohen, the Company's Chief Executive Officer and President.  Beginning in June 2011, the Company sublet a portion of its New York office to TBBK.  In addition, TBBK provides banking and operational services for one of LEAF Financial's subsidiaries.  For the three and nine months ended June 30, 2011, the Company paid $1,100 and $4,400, respectively, in fees to TBBK.  For the three and nine months ended June 30, 2010, the Company paid $3,000 and $12,000, respectively, in fees to TBBK.  Additionally, the Company had $44,000 and $85,000 in deposit accounts at TBBK at June 30, 2011 and 2010, respectively.  During the three and nine months ended June 30, 2011, the Company sold 20,400 and 65,125 shares respectively, of TBBK common stock held for the SERP for $194,000 and $588,000, respectively, and realized a gain of $57,000 and $153,000, respectively.

Transactions between LEAF Financial and Its Investment Partnerships.  LEAF Financial originates and manages commercial finance assets on behalf of its investment partnerships (collectively, the “LEAF Funds”) for which it also is the general partner.  The leases and loans sold to the LEAF Funds are at fair value plus an origination fee not to exceed 2%.  Sales to the LEAF Funds totaled $0 and $821,000for the three and nine months ended June 30, 2011, as compared to $5.2 million and $65.9 million, respectively, for the three and nine months ended June 30, 2010.  During the three and nine months ended June 30, 2010, LEAF Financial repurchased $2.8 million and $6.0 million of leases and loans as an accommodation to the LEAF Funds.

Short-term loan to RRE Opportunity REIT.  On June 17, 2011, the Company loaned $1.4 million to RRE Opportunity REIT at a rate of interest of 6.5% with a maturity of six months.  The loan was repaid on June 28, 2011 along with related interest.