Item 8.01 Other Events.
On December 27, 2020, the U.S. Congress, through the Consolidated Appropriations Act of 2021 (“CAA”), directed the Internal Revenue Service (“IRS”), to distribute a second round of Economic Impact Payments (“EIP”) via the U.S. Treasury to persons in the U.S. eligible to receive them. MetaBank, National Association (the “Bank”), a wholly-owned subsidiary of Meta Financial Group, Inc. (the “Company”), has entered into an amendment of its existing agreement with the U.S. Department of the Treasury’s Bureau of the Fiscal Service (“Fiscal Service”) under which the Bank will act as a Financial Agent to Fiscal Service in connection with the provision of prepaid debit card services to disburse a portion of the EIP payments to eligible recipients via Bank-issued prepaid cards.
Earlier this year, the Bank dispensed $6.4 billion of the first round of EIP payments under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) through the distribution of 3.6 million Bank-issued prepaid cards. In furtherance of the Company’s mission of enabling financial inclusion, the Bank expects it will disburse approximately $7 billion of EIP payments in the second round, with initial payments beginning after January 4, 2021.
The Company anticipates that while the EIP program will have a minimal impact on earnings, the balance sheet impact will be significant due to the large amount of cash on deposit balances during its fiscal second quarter, resulting in a significant but temporary reduction of net interest margin, return on assets and the Company’s leverage capital ratios until funds are spent by consumers. The Bank does not expect these conditions will be sustained over the long-term and does not expect any material impact on its risk-based capital ratios.
The Bank is coordinating with the Office of the Comptroller of the Currency (the “OCC”) and the Federal Reserve and has been granted temporary exemption from its requirement to maintain minimum regulatory capital leverage ratios by the OCC due to deposits received as part of the EIP program. The Bank expects to remain in good standing with regulatory agencies, will not be deemed as undercapitalized, and will not be under any regulatory restrictions due to participation in this program.
A copy of the related press release is furnished as Exhibit 99.1 hereto.
Forward Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events, including those relating to the disbursement of EIP funds. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements as a result of various risks, uncertainties and other factors. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission filings, including, but not limited to, our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. 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.