Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the
“Company”) reported net income of $52.3 million, or $1.45 per
diluted share, for the three months ended March 31, 2020,
compared to net income of $32.1 million, or $0.81 per diluted
share, for the three months ended March 31, 2019.
“Our fiscal second quarter, which has in the
past been driven by our high volume tax businesses, was met with
unprecedented uncertainty and market volatility associated with the
spread of COVID-19. Our priorities are the health and safety of our
employees and preserving access to the financial products our
customers need to make it through these difficult times,” said
President and CEO Brad Hanson. “Meta proactively implemented its
Pandemic Plan under its Business Continuity Program with minimal
business disruption and a near seamless transition to a work from
home environment. Our COVID-19 Crisis Command Center consisting of
leadership and business continuity planning resources throughout
the organization is coordinating extensive scenario planning
focused on credit quality, regulatory capital, expense management,
and viability of our partners and customers to ensure continuity of
our business and financial stability under extreme circumstances
related to COVID-19. Finally, I am thrilled with the engagement and
productivity exhibited by our staff resulting in strong performance
for the quarter and the ability to manage our businesses through
and beyond this crisis.”
Business Developments
- Through April 20, 2020, the Company authorized 502
applications, totaling $189.5 million in loan requests for the
Paycheck Protection Program.
- Effective April 1, 2020, MetaBank, N.A. ("MetaBank" or the
"Bank") converted from a federal thrift charter to a national bank
charter, and the Company converted from a savings and loan holding
company to a bank holding company that has elected treatment as a
financial holding company. The Bank now operates under the name
"MetaBank, National Association." The Company and the Bank effected
these conversions in order to more closely align the Bank's
regulatory charter to its current and future strategy with respect
to becoming a national business that provides innovative financial
solutions to consumers and businesses in niche markets often
overlooked by traditional banks. As a result of the bank
conversion, the Bank is no longer subject to qualified thrift
lending requirements.
- The sale of MetaBank's Community Bank division to Central Bank
closed on February 29, 2020 and included all of the Community
Bank's deposits, branch locations, fixed assets, employees, and a
portion of the Community Bank’s loan portfolio. The final deposit
and loan balances included in the transaction totaled $290.5
million and $268.8 million, respectively. The remaining Community
Bank loans not sold to Central Bank, which totaled $896.2 million
at March 31, 2020, have been retained by the Company under a
servicing agreement with Central Bank.
- MetaBank expanded its faster payments platform to include Visa
Direct, Visa’s real-time push payments solution. Visa clients can
use Visa Direct to enable businesses and payment service providers
to make payments, disbursements and remittances rapidly,
conveniently and cost-effectively, to more than a billion eligible
debit and prepaid cards worldwide. As a leading issuer of payments
services, the addition of Visa Direct builds on MetaBank’s faster
payments platform that also includes MasterCard Send, ACH
origination, wire transfers and more.
Financial Highlights for the 2020 Fiscal
Second Quarter Ended March 31, 2020
- During the fiscal 2020 second quarter, the Company recognized a
$19.3 million gain on divestiture of the Community Bank division,
partially offset by one-time expenses related to the transaction of
$1.0 million resulting in a pre-tax net gain from the transaction
of $18.3 million, or $0.51 per share.
- Total gross loans and leases at March 31, 2020 increased
$175.8 million, or 5%, to $3.61 billion, compared to March 31,
2019 and increased $27.5 million, or 1% when compared to December
31, 2019.
- Average deposits from the payments divisions for the fiscal
2020 second quarter increased nearly 11% to $3.31 billion when
compared to the same quarter in fiscal 2019.
- Total revenue for the fiscal 2020 second quarter was $188.3
million, compared to $176.4 million for the same quarter in fiscal
2019, representing a 7% increase.
- Net interest income for the fiscal 2020 second quarter was
$67.7 million, compared to $71.4 million in the comparable quarter
in fiscal 2019.
- Net interest margin ("NIM") decreased to 4.78% for the fiscal
2020 second quarter from 5.06% over the same period of the prior
fiscal year, while the tax-equivalent net interest margin ("NIM,
TE") decreased to 4.82% from 5.18% for that same period in fiscal
2019.
- During the quarter ended March 31, 2020, the Company
repurchased 2,592,381 of its shares, at a weighted average price of
$31.78, under its share repurchase program, which is authorized
through December 31, 2022. The Company suspended repurchase
activity under its share repurchase program in March. The Company
had 34,607,962 shares outstanding at March 31, 2020.
COVID-19 Business Update
First and foremost, the Company is focused on
the well-being of its employees, partners and customers.
Preventative health measures were recently put in place to protect
employees and customers including mandating remote work options and
social distancing measures where possible, restricting
non-essential business travel and enhancing preventative cleaning
services at all office locations. The Company also enacted a
COVID-19 Crisis Command Center consisting of leadership and
business continuity planning resources throughout the organization
to effectively monitor possible interruptions related to the
pandemic and to ensure business continuity.
The Company's loan and lease portfolio is
diversified by geography and industry. While asset quality remains
strong at this time, the Company's focus is on actively monitoring
and assisting customers. The following actions have been
implemented:
- tighter underwriting standards;
- monitoring and placing limits on originations to industries and
customers most adversely impacted by the COVID-19 pandemic,
including, but not limited to transportation, travel,
entertainment, and retail;
- contacting customers in order to assess their credit situations
and needs;
- offering flexible repayment options to current customers, when
appropriate; and
- utilizing CARES Act, SBA and USDA programs and loan products to
help our small business clients.
The Company increased its allowance for loan and
lease losses during the fiscal second quarter as a result of the
emerging COVID-19 pandemic. The Company will continue to diligently
monitor the allowance for loan and lease losses and adjust as
necessary in future periods to maintain an appropriate and
supportable level.
The Company's capital position remained strong
as of March 31, 2020. As of March 31, 2020, the Bank's capital
leverage ratio based on average assets was 8.52%, which is
seasonally low due to higher asset levels driven by the tax
services business. In addition, the Company has options available
that can be used to effectively manage capital levels through these
turbulent times, including a very strong and flexible balance
sheet.
2020 Tax Season Update
For the 2020 tax season, MetaBank originated
$1.33 billion in refund advance loans compared to $1.49 billion
during the 2019 tax season. Additionally, the Company expects to
process approximately 2.1 million in refund transfers through its
tax services division for the 2020 tax season, compared to the over
2.4 million in refund transfers processed during the prior year’s
tax season. These decreases can primarily be attributed to the exit
of non-strategic partners for the 2020 tax season.
During the second quarter of fiscal 2020, total
tax services product revenue was $57.1 million, a decrease of 11%
compared to the second quarter of fiscal 2019. The Company recorded
$19.6 million in loan loss provision expense related to $1.26
billion in tax services loans originated during the fiscal second
quarter of 2020. The Company recorded $22.5 million in loan loss
provision expense related to $1.43 billion in tax services loans
originated during the fiscal second quarter of 2019.
Tax services product income, net of losses and
direct product expenses, increased 1% when comparing the first six
months of fiscal 2020 to the same period of the prior fiscal
year.
Net Interest IncomeNet interest
income for the fiscal 2020 second quarter was $67.7 million, a
decrease of 5%, from the same quarter in fiscal 2019. The decrease
was driven primarily by a decrease in investment securities
balances along with lower yields realized on the loan and lease
portfolios, partially offset by a reduction in total interest
expense.
During the second quarter of fiscal year 2020,
investment securities interest income decreased $5.7 million and
loan and lease interest income decreased $3.2 million, when
compared to the same quarter in fiscal 2019, while interest expense
decreased $5.3 million over that same period. The quarterly average
outstanding balance of loans and leases as a percentage of
interest-earning assets for the quarter ended March 31, 2020
increased to 74%, from 65% for the quarter ended March 31,
2019, while the quarterly average balance of total investments as a
percentage of interest-earning assets decreased to 23% from 30%
over that same period. The Company’s average interest-earning
assets for the fiscal 2020 second quarter decreased by $17.5
million, to $5.70 billion from the comparable quarter in fiscal
2019.
NIM decreased to 4.78% for the fiscal 2020
second quarter from 5.06% for the comparable quarter in fiscal
2019. The net effect of purchase accounting accretion contributed
three basis points to NIM for the fiscal 2020 second quarter as
compared to six basis points and 18 basis points for the quarters
ended December 31, 2019 and March 31, 2019, respectively.
The overall reported tax-equivalent yield
(“TEY”) on average earning asset yields decreased by 74 basis
points to 5.64% for the fiscal 2020 second quarter compared to the
fiscal 2019 second quarter, driven primarily by a lower interest
rate environment. The fiscal 2020 second quarter TEY on the
securities portfolio was 2.68% compared to 3.36% for the same
period of the prior fiscal year.
The Company's cost of funds for all deposits and
borrowings averaged 0.83% during the fiscal 2020 second quarter,
compared to 1.17% for the fiscal 2019 second quarter. This decrease
was primarily due to a decrease in overnight borrowings rates as
well as an increase in the average balance of the Company's
noninterest-bearing deposits. The Company's overall cost of
deposits was 0.66% in the fiscal second quarter of 2020, compared
to 1.06% in the same quarter of fiscal 2019.
Noninterest IncomeFiscal 2020
second quarter noninterest income was $120.5 million, compared to
$105.0 million for the same period of the prior year. This increase
was primarily due to a $19.3 million gain on divestiture of the
Community Bank division during the fiscal 2020 second quarter.
Increases in other income and rental income, partially offset by
decreases in total tax product fee income and payments card and
deposit fees, also contributed to the increase when comparing the
fiscal 2020 second quarter to the same period of the prior
year.
Noninterest ExpenseNoninterest
expense decreased 17% to $91.7 million for the fiscal 2020 second
quarter, from $110.3 million for the same quarter of fiscal 2019.
The decrease in noninterest expense when comparing the fiscal 2020
second quarter to the same period of the prior fiscal year was
primarily driven by decreases in compensation and benefits expense,
impairment expense, and intangible amortization expense, partially
offset by increases in operating lease equipment depreciation,
legal and consulting expense, and other expense. The Company
recognized $1.0 million of one-time noninterest expenses related to
the Community Bank division divestiture during the fiscal second
quarter of 2020. These expenses were primarily within legal and
consulting expense and other expense.
Income Tax ExpenseThe Company
recorded income tax expense of $5.6 million, representing an
effective tax rate of 9.48%, for the fiscal 2020 second quarter,
compared to an income tax benefit of $0.4 million, representing an
effective tax rate of (1.20)%, for the fiscal 2019 second quarter.
The recorded income tax expense during the current quarter was due
to an increase in net income before tax, as well as less investment
tax credits recognized ratably when compared to the prior year
quarter.
The Company originated $17.6 million in solar
leases during the fiscal 2020 second quarter and did not originate
any solar leases during the fiscal 2019 second quarter. Investment
tax credits related to solar leases are recognized ratably based on
income throughout each fiscal year. The timing and impact of future
solar tax credits are expected to vary from period to period, and
Meta intends to undertake only those tax credit opportunities that
meet the Company's underwriting and return criteria.
Investments, Loans and Leases
|
March 31,
2020 |
|
December 31,
2019 |
|
September
30, 2019 |
|
June 30,
2019 |
|
March 31,
2019 |
Total investments |
$ |
1,310,476 |
|
|
$ |
1,337,840 |
|
|
$ |
1,407,257 |
|
|
$ |
1,502,640 |
|
|
$ |
1,649,754 |
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale |
|
|
|
|
|
|
|
|
|
Consumer credit products |
— |
|
|
— |
|
|
122,299 |
|
|
45,582 |
|
|
42,342 |
|
SBA/USDA |
13,610 |
|
|
13,883 |
|
|
26,478 |
|
|
17,257 |
|
|
17,403 |
|
Community Bank(1) |
— |
|
|
250,383 |
|
|
— |
|
|
— |
|
|
— |
|
Total loans held for sale |
13,610 |
|
|
264,266 |
|
|
148,777 |
|
|
62,839 |
|
|
59,745 |
|
|
|
|
|
|
|
|
|
|
|
National Lending |
|
|
|
|
|
|
|
|
|
Term lending(2) |
725,581 |
|
|
695,347 |
|
|
641,742 |
|
|
562,557 |
|
|
507,886 |
|
Asset based lending(2) |
250,211 |
|
|
250,633 |
|
|
250,465 |
|
|
229,573 |
|
|
230,557 |
|
Factoring |
285,495 |
|
|
285,776 |
|
|
296,507 |
|
|
320,344 |
|
|
287,955 |
|
Lease financing(2) |
238,788 |
|
|
223,715 |
|
|
177,915 |
|
|
165,136 |
|
|
155,181 |
|
Insurance premium finance |
332,800 |
|
|
349,299 |
|
|
361,105 |
|
|
358,772 |
|
|
307,875 |
|
SBA/USDA |
92,000 |
|
|
90,269 |
|
|
88,831 |
|
|
99,791 |
|
|
77,481 |
|
Other commercial finance |
101,472 |
|
|
99,617 |
|
|
99,665 |
|
|
99,677 |
|
|
98,956 |
|
Commercial Finance |
2,026,347 |
|
|
1,994,656 |
|
|
1,916,230 |
|
|
1,835,850 |
|
|
1,665,891 |
|
Consumer credit products |
113,544 |
|
|
115,843 |
|
|
106,794 |
|
|
155,539 |
|
|
139,617 |
|
Other consumer finance |
144,895 |
|
|
154,772 |
|
|
161,404 |
|
|
164,727 |
|
|
170,824 |
|
Consumer Finance |
258,439 |
|
|
270,615 |
|
|
268,198 |
|
|
320,266 |
|
|
310,441 |
|
Tax Services |
95,936 |
|
|
101,739 |
|
|
2,240 |
|
|
24,410 |
|
|
84,824 |
|
Warehouse Finance |
333,829 |
|
|
272,522 |
|
|
262,924 |
|
|
250,003 |
|
|
186,697 |
|
Total National Lending loans and leases |
2,714,551 |
|
|
2,639,532 |
|
|
2,449,592 |
|
|
2,430,529 |
|
|
2,247,853 |
|
Community Banking |
|
|
|
|
|
|
|
|
|
Commercial real estate and
operating |
654,429 |
|
|
682,399 |
|
|
883,932 |
|
|
877,412 |
|
|
869,917 |
|
Consumer one-to-four family
real estate and other |
205,046 |
|
|
220,588 |
|
|
259,425 |
|
|
256,853 |
|
|
257,079 |
|
Agricultural real estate and
operating |
36,759 |
|
|
40,778 |
|
|
58,464 |
|
|
61,169 |
|
|
60,167 |
|
Total Community Banking loans |
896,234 |
|
|
943,765 |
|
|
1,201,821 |
|
|
1,195,434 |
|
|
1,187,163 |
|
Total gross loans and
leases |
3,610,785 |
|
|
3,583,297 |
|
|
3,651,413 |
|
|
3,625,963 |
|
|
3,435,016 |
|
Allowance for loan and lease losses |
(65,355 |
) |
|
(30,176 |
) |
|
(29,149 |
) |
|
(43,505 |
) |
|
(48,672 |
) |
Net deferred loan and lease origination fees |
8,139 |
|
|
7,177 |
|
|
7,434 |
|
|
5,068 |
|
|
2,964 |
|
Total loans and leases, net of
allowance(3) |
$ |
3,553,569 |
|
|
$ |
3,560,298 |
|
|
$ |
3,629,698 |
|
|
$ |
3,587,526 |
|
|
$ |
3,389,308 |
|
|
(1) The December
31, 2019 balance included approximately $197.5 million of
commercial real estate and operating loans, $40.4 million of
consumer one-to-four family real estate and other loans, and $12.7
million of agricultural real estate and operating loans. |
(2) The Company
updated the presentation of its loan and lease table beginning in
the fiscal 2020 first quarter. The new presentation included a new
category called term lending. Certain balances previously included
in the asset based lending and lease financing categories were
reclassified into the new term lending category during the fiscal
2020 first quarter. Prior period balances have been conformed to
the new presentation. |
(3) As of March
31, 2020, the remaining balance of acquired loans and leases from
the acquisition of Crestmark Bancorp, Inc. ("Crestmark") and its
bank subsidiary, Crestmark Bank (the "Crestmark Acquisition") was
$236.6 million and the remaining balances of the credit and
interest rate mark discounts related to the acquired loans and
leases held for investment were $4.3 million and $2.7 million,
respectively, while the remaining balance of the interest rate mark
premium related to the acquired loans held for sale was $0.4
million. On August 1, 2018, the Company acquired loans and leases
from the Crestmark Acquisition totaling $1.06 billion and recorded
related credit and interest rate mark discounts of $12.3 million
and $6.0 million, respectively. |
|
The Company continued to utilize cash flow from
its amortizing securities portfolio to fund loan and lease growth.
Investment securities totaled $1.31 billion at March 31, 2020,
as compared to $1.65 billion at March 31, 2019.
On February 29, 2019, the Company sold $268.8
million of community bank loan balances, as part of the Community
Bank division sale to Central Bank, reducing the outstanding
balance to $896.2 million as of March 31, 2020.
Total gross loans and leases increased $175.8
million, or 5%, to $3.61 billion at March 31, 2020, from $3.44
billion at March 31, 2019, which was primarily attributable to
growth in the commercial finance and warehouse finance portfolios,
partially offset by the aforementioned sale of community bank loan
balances.
At March 31, 2020, commercial finance
loans, which comprised 56% of the Company's gross loan and lease
portfolio, totaled $2.03 billion, reflecting growth of $31.7
million, or 2%, from December 31, 2019. Warehouse finance loans
totaled $333.8 million at March 31, 2020, a 22% increase from
December 31, 2019.
Asset QualityThe Company’s
allowance for loan and lease losses was $65.4 million at
March 31, 2020, compared to $48.7 million at March 31,
2019, driven primarily by increases in the allowance of $16.7
million in commercial finance and $4.6 million in the community
banking portfolio, partially offset by decreases in the tax
services and consumer lending portfolios of $2.8 million and $1.9
million, respectively.
The following table presents the Company's
allowance for loan and lease losses as a percentage of its total
loans and leases.
|
|
|
As of the Period Ended |
(Unaudited) |
March 31, 2020 |
|
December 31, 2019 |
March 31, 2019 |
|
|
|
|
|
Commercial finance |
1.28 |
% |
|
0.80 |
% |
0.55 |
% |
Consumer finance |
1.74 |
% |
|
2.22 |
% |
2.08 |
% |
Tax services |
22.22 |
% |
|
1.62 |
% |
28.42 |
% |
Warehouse finance |
0.10 |
% |
|
0.10 |
% |
0.10 |
% |
National Lending |
1.92 |
% |
|
0.90 |
% |
1.77 |
% |
Community Bank |
1.49 |
% |
|
0.68 |
% |
0.74 |
% |
Total loans and
leases |
1.81 |
% |
|
0.84 |
% |
1.42 |
% |
|
The Company assessed each of its loan and lease
portfolios during the fiscal second quarter and increased its
allowance for loan and lease losses as a percentage of total loans
and leases in the commercial finance and community bank portfolios
as a result of the emerging COVID-19 pandemic. The reduction in
consumer finance was largely driven by lower trending charge-off
rates on student loans mainly serving students in the medical
community. Tax services coverage rates were driven only by typical
seasonal activity and are not expected to be materially impacted by
COVID-19 as the tax lending season is substantially complete.
Warehouse finance remained largely unchanged due to the structure
of the credit protections in place. The Company expects to continue
to diligently monitor the allowance for loan and lease losses and
adjust as necessary in future periods to maintain an appropriate
and supportable level. When adding the $4.3 million balance of the
credit mark to the allowance for loan and lease losses, the
commercial finance coverage ratio increases to 1.49% and the total
loans and leases coverage ratio increases to 1.93%, as of March 31,
2020.
Activity in the allowance for loan and lease
losses for the periods presented were as follows.
|
|
|
|
(Unaudited) |
Three Months Ended |
|
Six Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
March 31, 2020 |
|
March 31, 2019 |
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
30,176 |
|
|
$ |
29,149 |
|
|
$ |
21,290 |
|
|
$ |
29,149 |
|
|
$ |
13,040 |
|
Provision - tax services loans |
19,596 |
|
|
911 |
|
|
22,473 |
|
|
20,507 |
|
|
23,969 |
|
Provision - all other loans and leases |
17,700 |
|
|
2,496 |
|
|
10,845 |
|
|
20,196 |
|
|
18,448 |
|
Charge-offs - tax services loans |
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
|
(43 |
) |
Charge-offs - all other loans and leases |
(3,187 |
) |
|
(3,918 |
) |
|
(6,522 |
) |
|
(7,105 |
) |
|
(9,283 |
) |
Recoveries - tax services loans |
74 |
|
|
739 |
|
|
84 |
|
|
813 |
|
|
176 |
|
Recoveries - all other loans and leases |
996 |
|
|
799 |
|
|
503 |
|
|
1,795 |
|
|
2,365 |
|
Ending
balance |
$ |
65,355 |
|
|
$ |
30,176 |
|
|
$ |
48,672 |
|
|
$ |
65,355 |
|
|
$ |
48,672 |
|
|
Provision for loan and lease losses was $37.3
million for the quarter ended March 31, 2020, compared to
$33.3 million for the comparable period in the prior fiscal year.
The increase in provision was primarily due to $15.8 million in
additional allowance for the Company's loan and lease portfolio,
specifically for the commercial finance portfolio and the remaining
community bank portfolio, associated with the emerging COVID-19
pandemic. Management believes that given the structure of the
credit protections put in place for the consumer and warehouse
finance lending lines, the coverage ratio for those loan portfolios
was adequate as of March 31, 2020. Net charge-offs were $2.1
million for the quarter ended March 31, 2020 compared to $5.9
million for the quarter ended March 31, 2019. The overall
decrease in total net charge-offs from the comparable quarter of
the prior fiscal year was primarily within the commercial finance
and consumer finance portfolios.
The Company's past due loans and leases were as
follows for the periods presented.
|
|
|
|
As of March
31, 2020 |
Accruing and Nonaccruing Loans and Leases |
|
Nonperforming Loans and Leases |
(Dollars in Thousands) |
30-59 Days Past Due |
|
60-89 Days Past Due |
|
> 89 Days Past Due |
|
Total Past Due |
|
Current |
|
Total Loans and Leases
Receivable |
|
> 89 Days Past Due and Accruing |
|
Non-accrual balance |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance |
$ |
35,810 |
|
|
$ |
7,487 |
|
|
$ |
18,721 |
|
|
$ |
62,018 |
|
|
$ |
1,964,329 |
|
|
$ |
2,026,347 |
|
|
$ |
9,372 |
|
|
$ |
16,024 |
|
|
$ |
25,396 |
|
Consumer finance |
1,781 |
|
|
1,078 |
|
|
1,345 |
|
|
4,204 |
|
|
254,235 |
|
|
258,439 |
|
|
1,345 |
|
|
— |
|
|
1,345 |
|
Tax services |
668 |
|
|
— |
|
|
— |
|
|
668 |
|
|
95,268 |
|
|
95,936 |
|
|
— |
|
|
— |
|
|
— |
|
Warehouse finance |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
333,829 |
|
|
333,829 |
|
|
— |
|
|
— |
|
|
— |
|
Total National Lending |
38,259 |
|
|
8,565 |
|
|
20,066 |
|
|
66,890 |
|
|
2,647,661 |
|
|
2,714,551 |
|
|
10,717 |
|
|
16,024 |
|
|
26,741 |
|
Total Community Banking |
1,012 |
|
|
2,735 |
|
|
4,723 |
|
|
8,470 |
|
|
887,764 |
|
|
896,234 |
|
|
2,905 |
|
|
1,818 |
|
|
4,723 |
|
Total loans and leases held
for investment |
$ |
39,271 |
|
|
$ |
11,300 |
|
|
$ |
24,789 |
|
|
$ |
75,360 |
|
|
$ |
3,535,425 |
|
|
$ |
3,610,785 |
|
|
$ |
13,622 |
|
|
$ |
17,842 |
|
|
$ |
31,464 |
|
|
|
|
|
|
As of December
31, 2019 |
Accruing and Nonaccruing Loans and Leases |
|
Nonperforming Loans and Leases |
(Dollars in Thousands) |
30-59 Days Past Due |
|
60-89 Days Past Due |
|
> 89 Days Past Due |
|
Total Past Due |
|
Current |
|
Total Loans and Leases Receivable |
|
> 89 Days Past Due and Accruing |
|
Non-accrual balance |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance |
$ |
24,127 |
|
|
$ |
4,642 |
|
|
$ |
17,732 |
|
|
$ |
46,501 |
|
|
$ |
1,948,155 |
|
|
$ |
1,994,656 |
|
|
$ |
5,733 |
|
|
$ |
16,593 |
|
|
$ |
22,326 |
|
Consumer finance |
2,295 |
|
|
1,234 |
|
|
1,648 |
|
|
5,177 |
|
|
265,438 |
|
|
270,615 |
|
|
1,648 |
|
|
— |
|
|
1,648 |
|
Tax services |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
101,739 |
|
|
101,739 |
|
|
— |
|
|
— |
|
|
— |
|
Warehouse finance |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
272,522 |
|
|
272,522 |
|
|
— |
|
|
— |
|
|
— |
|
Total National
Lending |
26,422 |
|
|
5,876 |
|
|
19,380 |
|
|
51,678 |
|
|
2,587,854 |
|
|
2,639,532 |
|
|
7,381 |
|
|
16,593 |
|
|
23,974 |
|
Total Community
Banking |
376 |
|
|
1,612 |
|
|
9 |
|
|
1,997 |
|
|
941,768 |
|
|
943,765 |
|
|
— |
|
|
9 |
|
|
9 |
|
Total loans and leases
held for investment |
$ |
26,798 |
|
|
$ |
7,488 |
|
|
$ |
19,389 |
|
|
$ |
53,675 |
|
|
$ |
3,529,622 |
|
|
$ |
3,583,297 |
|
|
$ |
7,381 |
|
|
$ |
16,602 |
|
|
$ |
23,983 |
|
|
The Company had not experienced significant
asset deterioration as of March 31, 2020, but has made short term
deferments of payments on $9.5 million of loan balances as a result
of interagency guidance issued on March 22, 2020 encouraging
companies to work with customers impacted by COVID-19. Short term
payment deferral modifications of $152.0 million and $62.4 million
in other COVID-19 related modifications were completed by the
Company as of April 19, 2020.
The Company's nonperforming assets at
March 31, 2020, were $39.4 million, representing 0.67% of
total assets, compared to $29.8 million, or 0.48% of total assets
at December 31, 2019 and $40.9 million, or 0.68% of total assets at
March 31, 2019. The increase in nonperforming assets on a
linked quarter basis was primarily driven by an increase in
foreclosed and repossessed assets, two nonperforming agricultural
loan relationships in the community bank portfolio, and an increase
in term lending nonperforming loans. The year-over-year decrease in
nonperforming assets was primarily driven by a reduction in
foreclosed and repossessed assets, mostly offset by an increase in
commercial finance nonperforming loans and leases.
The Company's nonperforming loans and leases at
March 31, 2020, were $31.5 million, representing 0.87% of
total gross loans and leases, compared to $24.0 million, or 0.62%
of total gross loans and leases at December 31, 2019 and $9.6
million, or 0.28% of total gross loans and leases at March 31,
2019.
Deposits, Borrowings and Other
LiabilitiesTotal average deposits for the fiscal 2020
second quarter decreased by $590.0 million to $5.06 billion
compared to the same period in fiscal 2019. Average wholesale
deposits decreased $807.0 million, or 35%, while average
noninterest-bearing deposits increased $245.9 million, or 8%, for
the fiscal 2020 second quarter when compared to the same period in
fiscal 2019. Average deposits from the payments divisions increased
11% to $3.31 billion for the fiscal 2020 second quarter when
compared to the same period in fiscal 2019.
The average balance of total deposits and
interest-bearing liabilities was $5.64 billion for the three-month
period ended March 31, 2020, compared to $5.86 billion for the
same period in the prior fiscal year, representing a decrease of
4%.
Total end-of-period deposits decreased 20% to
$3.96 billion at March 31, 2020, compared to $4.97 billion at
March 31, 2019. The decrease in end-of-period deposits was
primarily driven by a decrease of $672.4 million in wholesale
deposits, as well as the aforementioned sale of $290.5 million of
community bank deposits during the second quarter of fiscal
2020.
Regulatory Capital
The Company and MetaBank remained above the
federal regulatory minimum capital requirements at March 31,
2020 and continued to be classified as well-capitalized
institutions. Regulatory capital ratios of the Company and the Bank
are stated in the table below.
The tables below include certain non-GAAP
financial measures that are used by investors, analysts and bank
regulatory agencies to assess the capital position of financial
services companies. Management reviews these measures along with
other measures of capital as part of its financial analysis.
|
|
|
|
|
|
|
|
|
|
As of the dates
indicated |
March 31, 2020 |
|
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
Company |
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
7.28 |
% |
|
8.28 |
% |
|
8.33 |
% |
|
8.05 |
% |
|
7.45 |
% |
Common equity Tier 1 capital ratio |
10.24 |
% |
|
10.10 |
% |
|
10.35 |
% |
|
10.19 |
% |
|
10.94 |
% |
Tier 1 capital ratio |
10.60 |
% |
|
10.46 |
% |
|
10.71 |
% |
|
10.55 |
% |
|
11.31 |
% |
Total capital ratio |
13.57 |
% |
|
12.74 |
% |
|
13.01 |
% |
|
13.22 |
% |
|
14.20 |
% |
MetaBank |
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
8.52 |
% |
|
9.70 |
% |
|
9.65 |
% |
|
9.37 |
% |
|
8.42 |
% |
Common equity Tier 1 capital ratio |
12.36 |
% |
|
12.18 |
% |
|
12.31 |
% |
|
12.22 |
% |
|
12.72 |
% |
Tier 1 capital ratio |
12.41 |
% |
|
12.24 |
% |
|
12.37 |
% |
|
12.27 |
% |
|
12.76 |
% |
Total capital ratio |
13.66 |
% |
|
12.90 |
% |
|
13.02 |
% |
|
13.26 |
% |
|
13.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides the non-GAAP
financial measures used to compute certain of the ratios included
in the table above, as well as a reconciliation of such non-GAAP
financial measures to the most directly comparable financial
measure in accordance with GAAP:
|
|
|
|
|
|
|
|
|
|
Standardized
Approach(1) |
March 31, 2020 |
|
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Total stockholders' equity |
$ |
805,074 |
|
$ |
837,068 |
|
$ |
843,958 |
|
$ |
822,901 |
|
$ |
823,709 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
LESS: Goodwill, net of associated deferred tax liabilities |
303,625 |
|
304,020 |
|
304,020 |
|
302,850 |
|
302,768 |
|
LESS: Certain other intangible assets |
44,909 |
|
47,855 |
|
50,501 |
|
53,249 |
|
56,456 |
|
LESS: Net deferred tax assets from operating loss and tax credit
carry-forwards |
11,589 |
|
16,876 |
|
15,569 |
|
13,858 |
|
7,381 |
|
LESS: Net unrealized gains (losses) on available-for-sale
securities |
2,337 |
|
3,897 |
|
6,458 |
|
2,329 |
|
(10,022 |
) |
LESS: Non-controlling interest |
3,762 |
|
4,305 |
|
4,047 |
|
3,508 |
|
3,528 |
|
LESS: Unrealized currency gains (losses) |
— |
|
— |
|
— |
|
— |
|
(242 |
) |
Common Equity Tier 1(1) |
438,852 |
|
460,115 |
|
463,363 |
|
447,107 |
|
463,840 |
|
Long-term borrowings and other instruments qualifying as Tier
1 |
13,661 |
|
13,661 |
|
13,661 |
|
13,661 |
|
13,661 |
|
Tier 1 minority interest not included in common equity tier 1
capital |
2,036 |
|
2,372 |
|
2,350 |
|
2,119 |
|
2,064 |
|
Total Tier 1 Capital |
454,549 |
|
476,148 |
|
479,374 |
|
462,887 |
|
479,565 |
|
Allowance for loan and lease losses |
53,580 |
|
30,239 |
|
29,272 |
|
43,641 |
|
48,812 |
|
Subordinated debentures (net of issuance costs) |
73,724 |
|
73,684 |
|
73,644 |
|
73,605 |
|
73,566 |
|
Total qualifying capital |
$ |
581,853 |
|
$ |
580,071 |
|
$ |
582,290 |
|
$ |
580,133 |
|
$ |
601,963 |
|
|
(1) Capital
ratios were determined using the Basel III capital rules that
became effective on January 1, 2015. Basel III revised the
definition of capital, increased minimum capital ratios, and
introduced a minimum CET1 ratio; those changes are being fully
phased in through the end of 2021. |
|
The following table provides a reconciliation of tangible common
equity and tangible common equity excluding accumulated other
comprehensive income ("AOCI"), each of which is used in calculating
tangible book value data, to Total Stockholders' Equity. Each of
tangible common equity and tangible common equity excluding AOCI is
a non-GAAP financial measure that is commonly used within the
banking industry.
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020 |
|
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
$ |
805,074 |
|
$ |
837,068 |
|
$ |
843,958 |
|
$ |
822,901 |
|
$ |
823,709 |
|
Less: Goodwill |
309,505 |
|
309,505 |
|
309,505 |
|
307,941 |
|
307,464 |
|
Less: Intangible assets |
46,766 |
|
50,151 |
|
52,810 |
|
56,153 |
|
60,506 |
|
Tangible common equity |
448,803 |
|
477,412 |
|
481,643 |
|
458,807 |
|
455,739 |
|
Less: Accumulated other
comprehensive income (loss) ("AOCI") |
1,654 |
|
3,895 |
|
6,339 |
|
2,308 |
|
(10,264 |
) |
Tangible common equity excluding AOCI |
$ |
447,149 |
|
$ |
473,517 |
|
$ |
475,304 |
|
$ |
456,499 |
|
$ |
466,003 |
|
|
OutlookGiven the deteriorating economic
environment and the uncertainty of the impact on the business
following the emergence of the COVID-19 pandemic, the Company is
suspending fiscal 2020 earnings per share guidance.
Conference CallThe Company will host a
conference call and earnings webcast at 4:00 p.m. Central Time
(5:00 p.m. Eastern Time) on Wednesday, April 22, 2020. The
live webcast of the call can be accessed from Meta’s Investor
Relations website at www.metafinancialgroup.com. Telephone
participants may access the live conference call by dialing (844)
461-9934 beginning approximately 10 minutes prior to start time.
Please ask to join the Meta Financial conference call, and provide
conference ID 4942497 upon request. International callers should
dial (636) 812-6634. A webcast replay will also be archived at
www.metafinancialgroup.com for one year.
Forward-Looking StatementsThe Company and
MetaBank, N.A. ("MetaBank") may from time to time make written or
oral “forward-looking statements,” including statements contained
in this press release, the Company’s filings with the SEC, the
Company’s reports to stockholders, and in other communications by
the Company and MetaBank, which are made in good faith by the
Company pursuant to the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995.
You can identify forward-looking statements by
words such as “may,” “hope,” “will,” “should,” “expect,” “plan,”
“anticipate,” “intend,” “believe,” “estimate,” “predict,”
“potential,” “continue,” “could,” “future,” or the negative of
those terms, or other words of similar meaning or similar
expressions. You should carefully read statements that contain
these words because they discuss our future expectations or state
other “forward-looking” information. These forward-looking
statements are based on information currently available to us and
assumptions about future events, and include statements with
respect to the Company’s beliefs, expectations, estimates, and
intentions, which are subject to significant risks and
uncertainties, and are subject to change based on various factors,
some of which are beyond the Company’s control. Such risks,
uncertainties and other factors may cause our actual growth,
results of operations, financial condition, cash flows, performance
and business prospects and opportunities to differ materially from
those expressed in, or implied by, these forward-looking
statements. Such statements address, among others, the
following subjects: future operating results; expectations in
connection with the impact of the ongoing COVID-19 pandemic and
related government actions on the Company and MetaBank; the extent
in which the COVID-19 pandemic and measures taken in response
thereto impact our business, our industry and the capital markets;
customer retention; loan and other product demand; important
components of the Company's statements of financial condition and
operations; growth and expansion; expectations concerning the
Company's acquisitions and divestitures, including potential
benefits of, and other expectations for the Company in connection
with, such transactions; new products and services, such as those
offered by MetaBank or the Company's Payments divisions (which
include Meta Payment Systems, Refund Advantage, EPS Financial and
Specialty Consumer Services); credit quality and adequacy of
reserves; technology; and the Company's employees. The following
factors, among others, could cause the Company's financial
performance and results of operations to differ materially from the
expectations, estimates, and intentions expressed in such
forward-looking statements: maintaining our executive management
team; expected growth opportunities may not be realized or may take
longer to realize than expected; the potential adverse effects of
the ongoing COVID-19 pandemic and any governmental or societal
responses thereto, or other unusual and infrequently occurring
events; factors relating to the Company’s share repurchase program;
actual changes in interest rates and the Fed Funds rate; additional
changes in tax laws; the strength of the United States' economy, in
general, and the strength of the local economies in which the
Company conducts operations; the effects of, and changes in, trade,
monetary, and fiscal policies and laws, including interest rate
policies of the Board of Governors of the Federal Reserve System
(the “Federal Reserve”), as well as efforts of the United States
Congress and the United States Treasury in conjunction with bank
regulatory agencies to stimulate the economy and protect the
financial system; inflation, market, and monetary fluctuations; the
timely and efficient development of, and acceptance of, new
products and services offered by the Company or its strategic
partners, as well as risks (including reputational and litigation)
attendant thereto, and the perceived overall value of these
products and services by users; the risks of dealing with or
utilizing third parties, including, in connection with the
Company’s refund advance business, the risk of reduced volume of
refund advance loans as a result of reduced customer demand for or
acceptance of usage of Meta’s strategic partners’ refund advance
products; any actions which may be initiated by our regulators in
the future; the impact of changes in financial services laws and
regulations, including, but not limited to, laws and regulations
relating to the tax refund industry and the insurance premium
finance industry and recent and potential changes in response to
the COVID-19 pandemic such as the Coronavirus Aid, Relief, and
Economic Security Act ("CARES Act") and the rules and regulations
that may be promulgated thereunder; our relationship with our
primary regulators, the Office of the Comptroller of the Currency
and the Federal Reserve, as well as the Federal Deposit Insurance
Corporation, which insures MetaBank’s deposit accounts up to
applicable limits; technological changes, including, but not
limited to, the protection of electronic files or databases;
acquisitions and divestitures; litigation risk; the growth of the
Company’s business, as well as expenses related thereto; continued
maintenance by MetaBank of its status as a well-capitalized
institution, particularly in light of our deposit base, a portion
of which has been characterized as “brokered;” changes in consumer
spending and saving habits; and the success of the Company at
maintaining its high quality asset level and managing and
collecting assets of borrowers in default should problem assets
increase.
The foregoing list of factors is not exclusive.
We caution you not to place undue reliance on these forward-looking
statements. The forward-looking statements included in this press
release speak only as of the date hereof. Additional discussions of
factors affecting the Company’s business and prospects are
reflected under the caption “Risk Factors” and in other sections of
the Company’s Annual Report on Form 10-K for the Company’s fiscal
year ended September 30, 2019, and in other filings made with the
SEC. The Company expressly disclaims any intent or obligation to
update any forward-looking statements, whether written or oral,
that may be made from time to time by or on behalf of the Company
or its subsidiaries, whether as a result of new information,
changed circumstances, or future events or for any other
reason.
Condensed Consolidated Statements of
Financial Condition (Unaudited)(Dollars in Thousands,
Except Share Data)
|
|
|
|
|
|
|
|
|
|
ASSETS |
March 31,
2020 |
|
December 31,
2019 |
|
September
30, 2019 |
|
June 30,
2019 |
|
March 31,
2019 |
Cash and cash
equivalents |
$ |
108,733 |
|
|
$ |
152,189 |
|
|
$ |
126,545 |
|
|
$ |
100,732 |
|
|
$ |
156,461 |
|
Investment securities available for sale, at fair value |
840,525 |
|
|
852,603 |
|
|
889,947 |
|
|
961,897 |
|
|
1,081,663 |
|
Mortgage-backed securities available for sale, at fair
value |
355,094 |
|
|
362,120 |
|
|
382,546 |
|
|
395,201 |
|
|
413,493 |
|
Investment securities held to maturity, at cost |
108,105 |
|
|
116,313 |
|
|
127,582 |
|
|
138,128 |
|
|
146,992 |
|
Mortgage-backed securities held to maturity, at cost |
6,752 |
|
|
6,804 |
|
|
7,182 |
|
|
7,414 |
|
|
7,606 |
|
Loans held for sale |
13,610 |
|
|
264,266 |
|
|
148,777 |
|
|
62,839 |
|
|
59,745 |
|
Loans and leases |
3,618,924 |
|
|
3,590,474 |
|
|
3,658,847 |
|
|
3,631,031 |
|
|
3,437,980 |
|
Allowance for loan and lease losses |
(65,355 |
) |
|
(30,176 |
) |
|
(29,149 |
) |
|
(43,505 |
) |
|
(48,672 |
) |
Federal Home Loan Bank Stock, at cost |
29,944 |
|
|
13,796 |
|
|
30,916 |
|
|
17,236 |
|
|
7,436 |
|
Accrued interest receivable |
16,958 |
|
|
18,687 |
|
|
20,400 |
|
|
19,722 |
|
|
20,281 |
|
Premises, furniture, and equipment, net |
38,871 |
|
|
38,671 |
|
|
45,932 |
|
|
46,360 |
|
|
45,457 |
|
Rental equipment, net |
200,837 |
|
|
211,673 |
|
|
208,537 |
|
|
184,732 |
|
|
140,087 |
|
Bank-owned life insurance |
91,081 |
|
|
90,458 |
|
|
89,827 |
|
|
89,193 |
|
|
88,565 |
|
Foreclosed real estate and repossessed assets |
7,249 |
|
|
1,328 |
|
|
29,494 |
|
|
29,514 |
|
|
29,548 |
|
Goodwill |
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
307,941 |
|
|
307,464 |
|
Intangible assets |
46,766 |
|
|
50,151 |
|
|
52,810 |
|
|
56,153 |
|
|
60,506 |
|
Prepaid assets |
9,727 |
|
|
14,813 |
|
|
9,476 |
|
|
22,023 |
|
|
26,597 |
|
Deferred taxes |
20,887 |
|
|
19,752 |
|
|
18,884 |
|
|
21,630 |
|
|
19,079 |
|
Other assets |
85,652 |
|
|
97,499 |
|
|
54,832 |
|
|
52,831 |
|
|
49,754 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
5,843,865 |
|
|
$ |
6,180,926 |
|
|
6,182,890 |
|
|
$ |
6,101,072 |
|
|
$ |
6,050,042 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Deposits held for sale |
$ |
— |
|
|
$ |
288,975 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Deposits: |
|
|
|
|
|
|
|
|
|
Noninterest-bearing checking |
2,900,484 |
|
|
2,927,967 |
|
|
2,358,010 |
|
|
2,751,931 |
|
|
3,034,428 |
|
Interest-bearing checking |
152,504 |
|
|
67,642 |
|
|
185,768 |
|
|
157,802 |
|
|
183,492 |
|
Savings deposits |
37,615 |
|
|
17,436 |
|
|
49,773 |
|
|
52,179 |
|
|
59,978 |
|
Money market deposits |
37,266 |
|
|
42,286 |
|
|
76,911 |
|
|
68,604 |
|
|
56,563 |
|
Time certificates of deposit |
25,492 |
|
|
23,454 |
|
|
109,275 |
|
|
116,698 |
|
|
154,401 |
|
Wholesale deposits |
809,043 |
|
|
1,438,820 |
|
|
1,557,268 |
|
|
1,628,000 |
|
|
1,481,445 |
|
Total deposits |
3,962,404 |
|
|
4,517,605 |
|
|
4,337,005 |
|
|
4,775,214 |
|
|
4,970,307 |
|
Short-term borrowings |
717,000 |
|
|
194,000 |
|
|
646,019 |
|
|
146,613 |
|
|
11,583 |
|
Long-term borrowings |
211,353 |
|
|
213,070 |
|
|
215,838 |
|
|
209,765 |
|
|
99,800 |
|
Accrued interest payable |
3,607 |
|
|
6,620 |
|
|
9,414 |
|
|
12,350 |
|
|
9,239 |
|
Accrued expenses and other liabilities |
144,427 |
|
|
123,588 |
|
|
130,656 |
|
|
134,229 |
|
|
135,404 |
|
Total liabilities |
5,038,791 |
|
|
5,343,858 |
|
|
5,338,932 |
|
|
5,278,171 |
|
|
5,226,333 |
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Preferred stock |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Common stock, $.01 par value |
346 |
|
|
372 |
|
|
378 |
|
|
379 |
|
|
395 |
|
Common stock, Nonvoting, $.01 par value |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Additional paid-in capital |
590,682 |
|
|
587,678 |
|
|
580,826 |
|
|
578,715 |
|
|
576,406 |
|
Retained earnings |
212,027 |
|
|
244,005 |
|
|
252,813 |
|
|
238,004 |
|
|
258,600 |
|
Accumulated other comprehensive income (loss) |
1,654 |
|
|
3,895 |
|
|
6,339 |
|
|
2,308 |
|
|
(10,264 |
) |
Treasury stock, at cost |
(3,397 |
) |
|
(3,187 |
) |
|
(445 |
) |
|
(13 |
) |
|
(4,956 |
) |
Total equity attributable to parent |
801,312 |
|
|
832,763 |
|
|
839,911 |
|
|
819,393 |
|
|
820,181 |
|
Noncontrolling interest |
3,762 |
|
|
4,305 |
|
|
4,047 |
|
|
3,508 |
|
|
3,528 |
|
Total stockholders’ equity |
805,074 |
|
|
837,068 |
|
|
843,958 |
|
|
822,901 |
|
|
823,709 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
5,843,865 |
|
|
$ |
6,180,926 |
|
|
$ |
6,182,890 |
|
|
$ |
6,101,072 |
|
|
$ |
6,050,042 |
|
|
Consolidated Statements of
Operations (Unaudited)(Dollars in Thousands, Except Share
and Per Share Data)
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
March 31, 2020 |
|
March 31, 2019 |
Interest and dividend income: |
|
|
|
|
|
|
|
|
|
Loans and leases, including fees |
$ |
70,493 |
|
$ |
68,702 |
|
|
$ |
73,670 |
|
|
$ |
139,195 |
|
|
$ |
134,168 |
|
Mortgage-backed securities |
2,493 |
|
2,389 |
|
|
2,861 |
|
|
4,882 |
|
|
5,559 |
|
Other investments |
6,417 |
|
6,534 |
|
|
11,763 |
|
|
12,952 |
|
|
23,543 |
|
|
79,403 |
|
77,625 |
|
|
88,294 |
|
|
157,029 |
|
|
163,270 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
Deposits |
8,242 |
|
9,340 |
|
|
14,740 |
|
|
17,583 |
|
|
25,336 |
|
FHLB advances and other borrowings |
3,424 |
|
3,634 |
|
|
2,204 |
|
|
7,058 |
|
|
6,312 |
|
|
11,666 |
|
12,974 |
|
|
16,944 |
|
|
24,641 |
|
|
31,648 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
67,737 |
|
64,651 |
|
|
71,350 |
|
|
132,388 |
|
|
131,622 |
|
|
|
|
|
|
|
|
|
|
|
Provision for loan for lease losses |
37,296 |
|
3,407 |
|
|
33,318 |
|
|
40,703 |
|
|
42,417 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan and lease
losses |
30,441 |
|
61,244 |
|
|
38,032 |
|
|
91,685 |
|
|
89,205 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
Refund transfer product fees |
28,939 |
|
192 |
|
|
31,601 |
|
|
29,131 |
|
|
31,862 |
|
Tax advance product fees |
29,536 |
|
2,276 |
|
|
33,038 |
|
|
31,812 |
|
|
34,723 |
|
Payments card and deposit fees |
23,156 |
|
21,499 |
|
|
24,671 |
|
|
44,655 |
|
|
45,477 |
|
Other bank and deposit fees |
381 |
|
487 |
|
|
474 |
|
|
868 |
|
|
957 |
|
Rental income |
11,100 |
|
12,351 |
|
|
9,890 |
|
|
23,451 |
|
|
20,780 |
|
Gain on sale of securities available-for-sale, net |
— |
|
— |
|
|
231 |
|
|
— |
|
|
209 |
|
Gain on divestitures |
19,275 |
|
— |
|
|
— |
|
|
19,275 |
|
|
— |
|
Gain (loss) on sale of other |
2,325 |
|
(2,568 |
) |
|
2,230 |
|
|
(244 |
) |
|
3,496 |
|
Other income |
5,801 |
|
3,246 |
|
|
2,890 |
|
|
9,047 |
|
|
5,272 |
|
Total noninterest income |
120,513 |
|
37,483 |
|
|
105,025 |
|
|
157,995 |
|
|
142,776 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
Compensation and benefits |
34,260 |
|
34,268 |
|
|
49,164 |
|
|
68,529 |
|
|
82,174 |
|
Refund transfer product expense |
7,449 |
|
173 |
|
|
7,181 |
|
|
7,621 |
|
|
7,191 |
|
Tax advance product expense |
1,698 |
|
1,132 |
|
|
2,225 |
|
|
2,830 |
|
|
2,677 |
|
Card processing |
6,696 |
|
5,607 |
|
|
6,971 |
|
|
12,303 |
|
|
14,056 |
|
Occupancy and equipment expense |
7,013 |
|
6,655 |
|
|
7,212 |
|
|
13,668 |
|
|
13,670 |
|
Operating lease equipment depreciation |
8,421 |
|
8,280 |
|
|
4,485 |
|
|
16,701 |
|
|
12,251 |
|
Legal and consulting |
5,909 |
|
4,674 |
|
|
4,308 |
|
|
10,583 |
|
|
8,277 |
|
Intangible amortization |
3,402 |
|
2,676 |
|
|
5,596 |
|
|
6,077 |
|
|
9,978 |
|
Impairment expense |
507 |
|
242 |
|
|
9,660 |
|
|
750 |
|
|
9,660 |
|
Other expense |
16,374 |
|
12,091 |
|
|
13,452 |
|
|
28,464 |
|
|
24,615 |
|
Total noninterest expense |
91,729 |
|
75,798 |
|
|
110,254 |
|
|
167,526 |
|
|
184,549 |
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense |
59,225 |
|
22,929 |
|
|
32,803 |
|
|
82,154 |
|
|
47,432 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
5,617 |
|
680 |
|
|
(395 |
) |
|
6,297 |
|
|
(2,086 |
) |
|
|
|
|
|
|
|
|
|
|
Net income before noncontrolling interest |
53,608 |
|
22,249 |
|
|
33,198 |
|
|
75,857 |
|
|
49,518 |
|
Net income attributable to noncontrolling interest |
1,304 |
|
1,181 |
|
|
1,078 |
|
|
2,485 |
|
|
2,000 |
|
Net income attributable to parent |
$ |
52,304 |
|
$ |
21,068 |
|
|
$ |
32,120 |
|
|
$ |
73,372 |
|
|
$ |
47,518 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.45 |
|
$ |
0.56 |
|
|
$ |
0.81 |
|
|
$ |
2.00 |
|
|
$ |
1.21 |
|
Diluted |
$ |
1.45 |
|
$ |
0.56 |
|
|
$ |
0.81 |
|
|
$ |
2.00 |
|
|
$ |
1.20 |
|
Shares used in computing earnings per
share |
|
|
|
|
|
|
|
|
|
Basic |
35,948,799 |
|
37,431,788 |
|
|
39,429,595 |
|
|
36,691,705 |
|
|
39,381,682 |
|
Diluted |
35,970,296 |
|
37,465,878 |
|
|
39,496,832 |
|
|
36,713,339 |
|
|
39,450,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances, Interest Rates and Yields
The following table presents, for the periods
indicated, the total dollar amount of interest income from average
interest-earning assets and the resulting yields, as well as the
interest expense on average interest-bearing liabilities, expressed
both in dollars and in rates. Only the yield/rate reflects
tax-equivalent adjustments. Non-accruing loans and leases have been
included in the table as loans carrying a zero yield.
|
|
|
|
Three Months Ended
March 31, |
2020 |
|
2019 |
(Dollars in Thousands) |
Average Outstanding
Balance |
|
Interest Earned /
Paid |
|
Yield /Rate(1) |
|
Average Outstanding
Balance |
|
Interest Earned /
Paid |
|
Yield /Rate(1) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and fed funds sold |
$ |
196,754 |
|
|
$ |
739 |
|
|
1.51 |
% |
|
$ |
281,069 |
|
|
$ |
1,914 |
|
|
2.76 |
% |
Mortgage-backed securities |
358,103 |
|
|
2,493 |
|
|
2.80 |
% |
|
374,096 |
|
|
2,861 |
|
|
3.10 |
% |
Tax exempt investment securities |
454,177 |
|
|
2,132 |
|
|
2.39 |
% |
|
926,156 |
|
|
6,138 |
|
|
3.40 |
% |
Asset-backed securities |
304,674 |
|
|
2,271 |
|
|
3.00 |
% |
|
285,783 |
|
|
2,677 |
|
|
3.80 |
% |
Other investment securities |
192,379 |
|
|
1,275 |
|
|
2.67 |
% |
|
142,452 |
|
|
1,034 |
|
|
2.95 |
% |
Total investments |
1,309,333 |
|
|
8,171 |
|
|
2.68 |
% |
|
1,728,487 |
|
|
12,710 |
|
|
3.36 |
% |
Commercial finance loans and leases |
2,020,358 |
|
|
41,643 |
|
|
8.29 |
% |
|
1,649,973 |
|
|
41,954 |
|
|
10.31 |
% |
Consumer finance loans |
264,307 |
|
|
5,386 |
|
|
8.20 |
% |
|
327,441 |
|
|
7,289 |
|
|
9.03 |
% |
Tax services loans |
516,491 |
|
|
6,351 |
|
|
4.95 |
% |
|
369,331 |
|
|
8,204 |
|
|
9.01 |
% |
Warehouse finance loans |
314,474 |
|
|
4,785 |
|
|
6.12 |
% |
|
181,781 |
|
|
2,789 |
|
|
6.22 |
% |
National lending loans and leases |
3,115,630 |
|
|
58,165 |
|
|
7.51 |
% |
|
2,528,526 |
|
|
60,236 |
|
|
9.66 |
% |
Community banking loans |
1,080,142 |
|
|
12,328 |
|
|
4.59 |
% |
|
1,181,294 |
|
|
13,434 |
|
|
4.61 |
% |
Total loans and leases |
4,195,772 |
|
|
70,493 |
|
|
6.76 |
% |
|
3,709,820 |
|
|
73,670 |
|
|
8.05 |
% |
Total interest-earning
assets |
$ |
5,701,859 |
|
|
$ |
79,403 |
|
|
5.64 |
% |
|
$ |
5,719,376 |
|
|
$ |
88,294 |
|
|
6.38 |
% |
Non-interest-earning assets |
909,040 |
|
|
|
|
|
|
1,068,318 |
|
|
|
|
|
Total
assets |
$ |
6,610,899 |
|
|
|
|
|
|
$ |
6,787,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking |
$ |
182,107 |
|
|
$ |
105 |
|
|
0.23 |
% |
|
$ |
148,640 |
|
|
$ |
78 |
|
|
0.21 |
% |
Savings |
46,592 |
|
|
6 |
|
|
0.05 |
% |
|
56,048 |
|
|
9 |
|
|
0.07 |
% |
Money markets |
68,421 |
|
|
153 |
|
|
0.90 |
% |
|
57,932 |
|
|
92 |
|
|
0.64 |
% |
Time deposits |
84,940 |
|
|
427 |
|
|
2.02 |
% |
|
148,384 |
|
|
715 |
|
|
1.95 |
% |
Wholesale deposits |
1,476,085 |
|
|
7,551 |
|
|
2.06 |
% |
|
2,283,049 |
|
|
13,846 |
|
|
2.46 |
% |
Total interest-bearing deposits |
1,858,145 |
|
|
8,242 |
|
|
1.78 |
% |
|
2,694,053 |
|
|
14,740 |
|
|
2.22 |
% |
Overnight fed funds purchased |
372,596 |
|
|
1,307 |
|
|
1.41 |
% |
|
103,600 |
|
|
637 |
|
|
2.49 |
% |
FHLB advances |
110,000 |
|
|
670 |
|
|
2.45 |
% |
|
— |
|
|
— |
|
|
— |
% |
Subordinated debentures |
73,698 |
|
|
1,158 |
|
|
6.32 |
% |
|
73,542 |
|
|
1,162 |
|
|
6.41 |
% |
Other borrowings |
28,714 |
|
|
289 |
|
|
4.04 |
% |
|
39,610 |
|
|
405 |
|
|
4.14 |
% |
Total borrowings |
585,008 |
|
|
3,424 |
|
|
2.35 |
% |
|
216,752 |
|
|
2,204 |
|
|
4.12 |
% |
Total interest-bearing
liabilities |
2,443,153 |
|
|
11,666 |
|
|
1.92 |
% |
|
2,910,805 |
|
|
16,944 |
|
|
2.36 |
% |
Noninterest-bearing deposits |
3,199,148 |
|
|
— |
|
|
— |
% |
|
2,953,275 |
|
|
— |
|
|
— |
% |
Total deposits and
interest-bearing liabilities |
$ |
5,642,301 |
|
|
$ |
11,666 |
|
|
0.83 |
% |
|
$ |
5,864,080 |
|
|
$ |
16,944 |
|
|
1.17 |
% |
Other noninterest-bearing liabilities |
136,759 |
|
|
|
|
|
|
129,525 |
|
|
|
|
|
Total
liabilities |
5,779,060 |
|
|
|
|
|
|
5,993,605 |
|
|
|
|
|
Shareholders' equity |
831,839 |
|
|
|
|
|
|
794,089 |
|
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
6,610,899 |
|
|
|
|
|
|
$ |
6,787,694 |
|
|
|
|
|
Net interest income and net
interest rate spread including noninterest-bearing deposits |
|
|
$ |
67,737 |
|
|
4.81 |
% |
|
|
|
$ |
71,350 |
|
|
5.21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin |
|
|
|
|
4.78 |
% |
|
|
|
|
|
5.06 |
% |
Tax-equivalent
effect |
|
|
|
|
0.04 |
% |
|
|
|
|
|
0.12 |
% |
Net interest margin,
tax-equivalent(2) |
|
|
|
|
4.82 |
% |
|
|
|
|
|
5.18 |
% |
|
(1) Tax rate used
to arrive at the TEY for the three months ended March 31, 2020 and
2019 was 21%. |
(2) Net interest
margin expressed on a fully-taxable-equivalent basis ("net interest
margin, tax-equivalent") is a non-GAAP financial measure. The
tax-equivalent adjustment to net interest income recognizes the
estimated income tax savings when comparing taxable and tax-exempt
assets and adjusting for federal and state exemption of interest
income. The Company believes that it is a standard practice in the
banking industry to present net interest margin expressed on a
fully taxable equivalent basis and, accordingly, believes the
presentation of this non-GAAP financial measure may be useful for
peer comparison purposes. |
|
Selected Financial
Information
|
|
|
|
|
|
|
|
|
|
As of and For the
Three Months Ended |
March 31, 2020 |
|
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
Equity to total assets |
13.78 |
% |
|
13.54 |
% |
|
13.65 |
% |
|
13.49 |
% |
|
13.61 |
% |
Book value per common share outstanding |
$ |
23.26 |
|
|
$ |
22.52 |
|
|
$ |
22.32 |
|
|
$ |
21.72 |
|
|
$ |
20.88 |
|
Tangible book value per common
share outstanding |
$ |
12.97 |
|
|
$ |
12.84 |
|
|
$ |
12.74 |
|
|
$ |
12.11 |
|
|
$ |
11.55 |
|
Tangible book value per common
share outstanding excluding AOCI |
$ |
12.92 |
|
|
$ |
12.74 |
|
|
$ |
12.57 |
|
|
$ |
12.05 |
|
|
$ |
11.81 |
|
Common shares outstanding |
34,607,962 |
|
|
37,172,081 |
|
|
37,807,064 |
|
|
37,878,205 |
|
|
39,450,938 |
|
Non-performing assets to total
assets |
0.67 |
% |
|
0.48 |
% |
|
0.91 |
% |
|
0.84 |
% |
|
0.68 |
% |
Non-performing loans and
leases to total loans and leases |
0.87 |
% |
|
0.62 |
% |
|
0.70 |
% |
|
0.57 |
% |
|
0.28 |
% |
Net interest margin |
4.78 |
% |
|
4.94 |
% |
|
4.95 |
% |
|
5.07 |
% |
|
5.06 |
% |
Net interest margin,
tax-equivalent |
4.82 |
% |
|
4.99 |
% |
|
5.00 |
% |
|
5.15 |
% |
|
5.18 |
% |
Return on average assets |
3.16 |
% |
|
1.38 |
% |
|
1.32 |
% |
|
1.91 |
% |
|
1.89 |
% |
Return on average equity |
25.15 |
% |
|
10.04 |
% |
|
9.69 |
% |
|
14.17 |
% |
|
16.18 |
% |
Full-time equivalent
employees |
992 |
|
|
1,088 |
|
|
1,186 |
|
|
1,218 |
|
|
1,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Amortization of Intangibles
Expense
(Dollars in Thousands) |
Actual |
Anticipated |
For the Three Months
Ended |
Mar 31, 2020 |
Jun 30, 2020 |
Sep 30, 2020 |
Dec 31, 2020 |
Mar 31, 2021 |
Jun 30, 2021 |
Sep 30, 2021 |
Dec 31, 2021 |
Mar 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles(1) |
$ |
3,402 |
|
$ |
2,637 |
|
$ |
2,282 |
|
$ |
2,013 |
|
$ |
2,757 |
|
$ |
2,013 |
|
$ |
1,761 |
|
$ |
1,488 |
|
$ |
2,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) These amounts
are based upon the current reporting period’s intangible assets
only. This table makes no assumption for expenses related to
future acquired intangible assets. |
|
About Meta Financial
Group® Meta Financial Group, Inc.® (Nasdaq: CASH) is
a South Dakota-based financial holding company. Meta Financial
Group’s banking subsidiary, MetaBank®, N.A., (“Meta”), is a leader
in providing innovative financial solutions to consumers and
businesses in under-served niche markets and believes in financial
inclusion for all. Meta’s commercial lending division works with
high-value niche industries, rapid-growth companies and technology
adopters to grow their businesses and build more profitable
customer relationships nationwide. Meta is one of the largest
issuers of prepaid cards in the U.S., having issued more than a
billion cards in partnership with banks, program managers, payments
providers and other businesses, and offers a total payments
services solution that includes ACH origination, wire transfers,
and more. For more information, visit the Meta Financial Group
website.
Investor Relations and
Media Contact: |
Brittany Kelley Elsasser |
Director of Investor Relations |
605-362-2423 |
bkelley@metabank.com |
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