Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the
“Company”) reported net income of $28.0 million, or $0.84 per
share, for the three months ended December 31, 2020, compared
to net income of $21.1 million, or $0.56 per share, for the three
months ended December 31, 2019.
“Solid revenues, lower expenses, and better
efficiency ratios combined to deliver excellent results in the
first quarter of fiscal year 2021. I am extremely proud of my
team's ability to persevere during the pandemic, delivering
significant value to customers and shareholders from a remote
working environment," said President and CEO Brad Hanson. "During
the quarter, we spent time getting ready for the upcoming tax
season, implementing H&R Block, and preparing for the
distribution of the second round of Economic Impact Payments while
advancing our long-standing mission of Financial Inclusion for
All®, with increased resources and prioritization of Environmental,
Social and Governance initiatives."
"Our quarterly results demonstrate ongoing
progress in optimizing our business platforms, enabling us to
improve our efficiency ratio by over 600 basis points compared with
the prior year. Our loan portfolios continue to perform well, as
our credit metrics demonstrate the Company's ability to weather the
worst of the pandemic, leaving us well-positioned to continue to
remix our balance sheet with higher yield and return earning
assets," said Executive Vice President and CFO Glen Herrick.
Business Development Highlights for the
2021 Fiscal First Quarter
-
Began our new three-year program with Emerald Financial Services,
LLC, a wholly-owned indirect subsidiary of H&R Block, Inc.,
which we announced in the fourth quarter of fiscal 2020. Have
already moved more than $150 million in deposits and began issuing
Emerald Prepaid Mastercard® to applicants.
-
Completed negotiations with the U.S. Department of the Treasury's
Bureau of the Fiscal Service ("Fiscal Service") to disperse a
second round of Economic Income Payment ("EIP") stimulus payments
through the distribution of prepaid cards. The Company began
distributing cards under this authorization January 4, 2021.
-
Expanded our solar lending business, increasing our solar credit
balance 29% to $323.9 million.
-
Increased resources dedicated to our Environmental, Social, and
Governance ("ESG") activities by hiring an experienced Vice
President of ESG and Community Impact and forming a Board-level ESG
committee to provide oversight.
Financial Highlights for the 2021 Fiscal First
Quarter
-
Total revenue for the first quarter was $111.5 million, an increase
of 9% compared to $102.1 million for the same quarter in fiscal
2020.
-
Operating efficiency ratio improved to 62.2% at December 31,
2020, compared to 68.2% at December 31, 2019. See non-GAAP
reconciliation table below.
-
Net interest income for the first quarter was $66.0 million,
compared to $64.7 million in the comparable quarter last year.
-
Net interest margin ("NIM") decreased to 4.65% for the first
quarter from 4.94% during the same period of last year, while the
tax-equivalent net interest margin ("NIM, TE") decreased to 4.67%
from 4.99% for that same period in fiscal 2020. The decrease in NIM
during the first quarter was primarily driven by excess cash
associated with the Company's participation in the EIP program, as
described further below.
-
Total gross loans and leases at December 31, 2020 decreased
$143.7 million, or 4%, to $3.44 billion, compared to
December 31, 2019 and increased $125.4 million, or 4% when
compared to September 30, 2020.
-
Average deposits from the payments division for the fiscal 2021
first quarter increased nearly 83% to $5.07 billion when compared
to the same quarter in fiscal 2020. A significant portion of the
year-over-year increase reflected the Company's participation in
the EIP program, as described further below.
- The Company
repurchased 1,864,474 shares during the first quarter at an average
price of $29.46. Through January 20, 2021, the Company repurchased
an additional 300,000 of its shares, at a weighted average price of
$38.73.
COVID-19 Business Update
As of December 31, 2020, the Company had 612
loans outstanding with total loan balances of $194.3 million
originated as part of the Paycheck Protection Program ("PPP"),
compared with 689 loans outstanding with total loan balances of
$219.0 million for the quarter ended September 30, 2020.
As of December 31, 2020, $84.2 million of the
loans and leases that were granted deferral payments by the Company
were still in their deferment period. As of September 30, 2020,
loans and leases totaling $170.0 million were within their
deferment period. In addition, the Company has made other COVID-19
related modifications, of which $1.1 million were still active as
of December 31, 2020 compared to $23.3 million at September 30,
2020. The majority of the other modifications were related to
adjusting the type or amount of the customer's payments.
The Company's capital position remained strong
as of December 31, 2020, even while absorbing the temporary impact
resulting from the receipt of deposits in conjunction with EIP
payments described below. In addition, the Company has options
available that can be used to effectively manage capital levels,
including a strong and flexible balance sheet.
EIP Program Update
The Bank is serving as the sole Financial Agent
for distributing prepaid debit cards used in the EIP program. The
Company's Payments division, in collaboration with Fiserv and Visa,
is proud to have provided a safe and secure mechanism for
individuals, including the underbanked, to receive their stimulus
payments. Under the first round of EIP, approximately $6.42 billion
in stimulus payments on 3.6 million prepaid cards were mailed to
individuals across the United States. The total balances remaining
on the first round of EIP cards were $605.1 million as of December
31, 2020 and $569.2 million as of January 20, 2021.
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
EIP via the U.S. Treasury to persons in the U.S. eligible to
receive them. The Bank 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.
Under the second round, the Bank disbursed
approximately $7.10 billion of EIP payments, with initial payments
having begun January 4, 2021. The total balances remaining on the
second round of EIP cards were $5.80 billion as of January 20,
2021.
While the EIP Program's impact to earnings is
expected to be slightly positive, it continues to temporarily have
a significant impact on cash and deposit balances, leading to a
reduced NIM along with a corresponding impact on the Company's
leverage capital ratios. In conjunction with the Program and its
balance sheet impacts, the Bank was granted temporary exemption
from its requirements to maintain minimum regulatory capital
leverage ratios by the Officer of the Comptroller of the Currency
due to deposits received as part of the EIP program. The influx of
EIP deposits is not expected to have any material impact on the
Company's risk-weighted capital ratios.
The Company is working with other banks to transfer deposits
off-balance sheet in an effort to relieve the impact of the
substantial influx of deposits related to the second round of
EIP.
Net Interest IncomeNet interest
income for the fiscal 2021 first quarter was $66.0 million, an
increase of 2% from the same quarter in fiscal 2020. The increase
was primarily driven by a reduction in total interest expense,
partially offset by lower overall balances and yields realized on
interest earning assets.
During the first fiscal quarter of 2021, loan
and lease interest income decreased $7.0 million and investment
securities interest income decreased $2.4 million, compared to the
prior year quarter, while interest expense decreased $10.8 million
over the same period. The quarterly average outstanding balance of
loans and leases as a percentage of interest-earning assets for the
first quarter decreased to 62%, from 72% for the comparable quarter
last year, while the quarterly average balance of total investments
as a percentage of interest-earning assets decreased to 23% from
26% over the same period. These decreases were primarily due to the
increase in interest-earning cash balances related to the EIP
program. The Company’s average interest-earning assets for the
fiscal 2021 first quarter increased by $432.9 million, to $5.64
billion compared with the first quarter in fiscal 2020, primarily
due to the effects of the EIP program.
NIM decreased to 4.65% for the fiscal 2021 first
quarter from 4.94% for the comparable quarter last year, primarily
due to the effects of the EIP program.
The overall reported tax-equivalent yield
(“TEY”) on average earning asset yields decreased by 116 basis
points to 4.82% for the fiscal 2021 first quarter compared to the
prior year quarter, driven primarily by excess low-yielding cash
held at the Federal Reserve, as well as the lower interest rate
environment. The fiscal 2021 first quarter TEY on the securities
portfolio was 1.79% compared to 2.65% for the comparable period
last year.
The Company's cost of funds for all deposits and
borrowings averaged 0.15% during the fiscal 2021 first quarter,
compared to 1.01% during the prior year quarter. This reflected
primarily a decrease in overnight borrowings rates as well as an
increase in the average balance of the Company's
noninterest-bearing deposits, mainly due to the EIP program noted
above. The Company's overall cost of deposits was 0.06% in the
fiscal first quarter of 2021, compared to 0.81% in the same quarter
last year.
Noninterest IncomeFiscal 2021
first quarter noninterest income increased to $45.5 million,
compared with $37.5 million for the same period of the prior year.
This was due primarily to an increase within gain on sale of other,
an increase in other income, and an increase in payments cards and
deposit fees, partially offset by a decrease in rental income. The
increase within gain on sale of other was primarily due to a loss
on sale of foreclosed and repossessed assets recognized during the
first quarter of fiscal year 2020. The increase within other income
was primarily due to the receipt of a portion of the Company’s
liquidation insurance claims of unearned premiums on the ReliaMax
estate related to the Company’s student loan portfolio. The amount
received in the first quarter of fiscal 2021 was $3.5 million.
Noninterest ExpenseNoninterest
expense decreased 4% to $72.6 million for the fiscal 2021 first
quarter, from $75.8 million for the same quarter of last year,
primarily driven by decreases in compensation and benefits, other
expense, tax product expense, operating lease depreciation, and
amortization expense, partially offset by increases within
impairment expense, legal and consulting expense, and card
processing expense.
Income Tax ExpenseThe Company
recorded income tax expense of $3.5 million, representing an
effective tax rate of 10.8%, for the fiscal 2021 first quarter,
compared to an income tax expense of $0.7 million, representing an
effective tax rate of 3.0%, for the first quarter last year.
The Company originated $38.5 million in solar
leases during the fiscal 2021 first quarter, compared to $17.9
million during last year's first 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
|
December 31, 2020 |
|
September 30, 2020 |
|
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
Total
investments |
$ |
1,309,452 |
|
|
|
$ |
1,360,712 |
|
|
|
$ |
1,268,416 |
|
|
|
$ |
1,310,476 |
|
|
|
$ |
1,337,840 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
sale |
|
|
|
|
|
|
|
|
|
Consumer credit products |
234 |
|
|
|
962 |
|
|
|
391 |
|
|
|
— |
|
|
|
— |
|
|
SBA/USDA |
32,983 |
|
|
|
52,542 |
|
|
|
31,438 |
|
|
|
13,610 |
|
|
|
13,883 |
|
|
Community Bank(1) |
100,442 |
|
|
|
130,073 |
|
|
|
48,076 |
|
|
|
— |
|
|
|
250,383 |
|
|
Total loans held for
sale |
133,659 |
|
|
|
183,577 |
|
|
|
79,905 |
|
|
|
13,610 |
|
|
|
264,266 |
|
|
|
|
|
|
|
|
|
|
|
|
National
Lending |
|
|
|
|
|
|
|
|
|
Term lending |
881,306 |
|
|
|
805,323 |
|
|
|
738,454 |
|
|
|
725,581 |
|
|
|
695,347 |
|
|
Asset based lending |
242,298 |
|
|
|
182,419 |
|
|
|
181,130 |
|
|
|
250,211 |
|
|
|
250,633 |
|
|
Factoring |
275,650 |
|
|
|
281,173 |
|
|
|
206,361 |
|
|
|
285,495 |
|
|
|
285,776 |
|
|
Lease financing |
283,722 |
|
|
|
281,084 |
|
|
|
264,988 |
|
|
|
238,788 |
|
|
|
223,715 |
|
|
Insurance premium finance |
338,227 |
|
|
|
337,940 |
|
|
|
359,147 |
|
|
|
332,800 |
|
|
|
349,299 |
|
|
SBA/USDA |
300,707 |
|
|
|
318,387 |
|
|
|
308,611 |
|
|
|
92,000 |
|
|
|
90,269 |
|
|
Other commercial finance |
101,209 |
|
|
|
101,658 |
|
|
|
100,214 |
|
|
|
101,472 |
|
|
|
99,617 |
|
|
Commercial
Finance |
2,423,119 |
|
|
|
2,307,984 |
|
|
|
2,158,905 |
|
|
|
2,026,347 |
|
|
|
1,994,656 |
|
|
Consumer credit products |
88,595 |
|
|
|
89,809 |
|
|
|
102,808 |
|
|
|
113,544 |
|
|
|
115,843 |
|
|
Other consumer finance |
162,423 |
|
|
|
134,342 |
|
|
|
138,777 |
|
|
|
144,895 |
|
|
|
154,772 |
|
|
Consumer
Finance |
251,018 |
|
|
|
224,151 |
|
|
|
241,585 |
|
|
|
258,439 |
|
|
|
270,615 |
|
|
Tax
Services |
92,548 |
|
|
|
3,066 |
|
|
|
19,168 |
|
|
|
95,936 |
|
|
|
101,739 |
|
|
Warehouse
Finance |
318,937 |
|
|
|
293,375 |
|
|
|
277,614 |
|
|
|
333,829 |
|
|
|
272,522 |
|
|
Total National Lending loans and leases |
3,085,622 |
|
|
|
2,828,576 |
|
|
|
2,697,272 |
|
|
|
2,714,551 |
|
|
|
2,639,532 |
|
|
Community
Banking |
|
|
|
|
|
|
|
|
|
Commercial real estate and
operating |
339,141 |
|
|
|
457,371 |
|
|
|
608,303 |
|
|
|
654,429 |
|
|
|
682,399 |
|
|
Consumer one-to-four family
real estate and other |
5,077 |
|
|
|
16,486 |
|
|
|
166,479 |
|
|
|
205,046 |
|
|
|
220,588 |
|
|
Agricultural real estate and
operating |
9,724 |
|
|
|
11,707 |
|
|
|
24,655 |
|
|
|
36,759 |
|
|
|
40,778 |
|
|
Total Community Banking loans |
353,942 |
|
|
|
485,564 |
|
|
|
799,437 |
|
|
|
896,234 |
|
|
|
943,765 |
|
|
Total gross loans and
leases |
3,439,564 |
|
|
|
3,314,140 |
|
|
|
3,496,709 |
|
|
|
3,610,785 |
|
|
|
3,583,297 |
|
|
Allowance for credit losses |
(72,389 |
) |
|
|
(56,188 |
) |
|
|
(65,747 |
) |
|
|
(65,355 |
) |
|
|
(30,176 |
) |
|
Net deferred loan and lease origination fees |
9,111 |
|
|
|
8,625 |
|
|
|
5,937 |
|
|
|
8,139 |
|
|
|
7,177 |
|
|
Total loans and
leases, net of allowance |
$ |
3,376,286 |
|
|
|
$ |
3,266,577 |
|
|
|
$ |
3,436,899 |
|
|
|
$ |
3,553,569 |
|
|
|
$ |
3,560,298 |
|
|
(1) The December 31, 2020 balance included
approximately $95.5 million of commercial real estate and operating
loans, $3.5 million of consumer one-to-four family real estate and
other loans, and $1.4 million of agricultural real estate and
operating loans. The September 30, 2020 balance included
approximately $77.5 million of commercial real estate and operating
loans, $50.1 million of consumer one-to-four family real estate and
other loans, and $2.5 million of agricultural real estate and
operating loans. The June 30, 2020 balance included approximately
$28.7 million of commercial real estate and operating loans, $11.3
million of consumer one-to-four family real estate and other loans,
and $8.1 million of agricultural real estate and operating loans.
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.
The Company's investment security balances at
December 31, 2020 totaled $1.31 billion, as compared to $1.36
billion at September 30, 2020 and $1.34 billion at
December 31, 2019.
Total gross loans and leases decreased $143.7
million, or 4%, to $3.44 billion at December 31, 2020, from
$3.58 billion at December 31, 2019, with most of the decline
attributable to the sale of community bank loan balances during the
second and fourth quarters of fiscal 2020 and first quarter of
fiscal 2021, along with a decrease in the consumer finance
portfolio, partially offset by growth in the commercial finance and
warehouse finance portfolios.
At December 31, 2020, commercial finance
loans, which comprised 70% of the Company's gross loan and lease
portfolio, totaled $2.42 billion, reflecting growth of $115.1
million, or 5%, from September 30, 2020. The increase in commercial
finance loans was primarily due to increases in term lending and
asset based lending loans of $76.0 million and $59.9 million,
respectively, partially offset by a $17.7 million decrease in
SBA/USDA loans.
Consumer finance loans totaled $251.0 million at
December 31, 2020, increasing from $224.2 million at September 30,
2020. This increase was primarily driven by seasonal lending
products for tax customers associated with the aforementioned
three-year program with Emerald Financial Services.
Tax services loans totaled $92.5 million at
December 31, 2020, increasing from $3.1 million at September
30, 2020, as the Company began originating taxpayer advances and
ERO loans in preparation of the 2020 tax season during the fiscal
2021 first quarter. Warehouse finance loans totaled $318.9 million
at December 31, 2020, a 9% increase from September 30,
2020.
Community bank loans held for investment totaled
$353.9 million as of December 31, 2020, as compared to $485.6
million at September 30, 2020 and $943.8 million at December 31,
2019. On November 18, 2020, the Company sold an additional $129.8
million of the retained Community Bank portfolio to Central Bank.
The sale did not result in any material gain to the Company. As of
December 31, 2020, the Company had $100.4 million of community
bank loans classified as held for sale and expects to sell those
loans during the second quarter of fiscal year 2021.
Asset QualityAdoption of
Current Expected Credit Losses ("CECL") Accounting StandardThe
Company adopted CECL effective October 1, 2020, and its day one
entry to increase the allowance for credit losses was $12.8
million. Aside from the loan and lease portfolio, management does
not expect any other meaningful impacts on the balance sheet or
regulatory capital ratios in the near term based on the election of
the two-year delay and the five-year total transition period as
allowed by the Office of the Comptroller of the Currency and the
Federal Reserve.
Of the total $12.8 million CECL impact to the
Company's allowance, $12.7 million and $6.0 million were within the
commercial and consumer finance portfolios, respectively. These
increases were partially offset by a reduction in retained
community bank's allowance of $5.9 million.
The Company’s allowance for credit losses was
$72.4 million at December 31, 2020, compared to $56.2 million
at September 30, 2020 and $30.2 million at December 31, 2019.
The increase in the allowance at December 31, 2020 when compared to
September 30, 2020, was primarily due to the adoption of the CECL
accounting standard noted above, as well as additional increases
during the fiscal 2021 first quarter in the commercial finance
portfolio of $2.8 million, tax services portfolio of $1.4 million,
and consumer finance portfolio of $1.4 million, partially offset by
an additional decrease within the retained community bank portfolio
of $2.2 million.
The year over year increase in the allowance was
primarily driven by a $29.6 million increase within the commercial
finance portfolio, $7.8 million increase within the retained
community banking portfolio, and an increase in the consumer
lending portfolio of $5.0 million.
The following table presents the Company's
allowance for credit losses as a percentage of its total loans and
leases.
|
As of the Period Ended |
(Unaudited) |
December 31, 2020 |
October 1, 2020(1) |
September 30, 2020 |
December 31, 2019 |
|
|
|
|
|
Commercial finance |
1.88 |
% |
1.85 |
% |
1.30 |
% |
0.80 |
% |
Consumer finance |
4.39 |
% |
4.31 |
% |
1.64 |
% |
2.22 |
% |
Tax services |
1.53 |
% |
0.06 |
% |
0.06 |
% |
1.62 |
% |
Warehouse finance |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
National Lending |
1.89 |
% |
1.86 |
% |
1.20 |
% |
0.90 |
% |
Community Bank |
4.01 |
% |
3.37 |
% |
4.59 |
% |
0.68 |
% |
Total loans and
leases |
2.10 |
% |
2.08 |
% |
1.70 |
% |
0.84 |
% |
(1) Represents the Company's allowance coverage
ratio upon the adoption of the Accounting Standards Update 2016-13
using September 30, 2020 loan and lease and allowance balances plus
the CECL allowance adjustment.
The Company's allowance for credit losses as a
percentage of total loans and leases increased to 2.10% at December
31, 2020 from 1.70% at September 30, 2020. The increase in the
coverage ratio was primarily related to the CECL adoption, along
with the Company's continued assessment of the risks associated
with the ongoing COVID-19 pandemic. Warehouse finance remained
largely unchanged due in part to the structure of the credit
protections in place. The Company expects to continue to diligently
monitor the allowance for credit losses and adjust as necessary in
future periods to maintain an appropriate and supportable
level.
Activity in the allowance for credit losses for
the periods presented was as follows.
(Unaudited) |
Three Months Ended |
|
December 31, 2020 |
|
September 30, 2020 |
|
December 31, 2019 |
(Dollars in thousands) |
|
|
|
|
|
Beginning
balance |
$ |
56,188 |
|
|
|
$ |
65,747 |
|
|
|
$ |
29,149 |
|
|
Adoption of CECL accounting standard |
12,773 |
|
|
|
— |
|
|
|
— |
|
|
Provision - tax services loans |
454 |
|
|
|
1,599 |
|
|
|
911 |
|
|
Provision - all other loans and leases |
5,810 |
|
|
|
7,381 |
|
|
|
2,496 |
|
|
Charge-offs - tax services loans |
— |
|
|
|
(13,037 |
) |
|
|
— |
|
|
Charge-offs - all other loans and leases |
(5,675 |
) |
|
|
(6,015 |
) |
|
|
(3,918 |
) |
|
Recoveries - tax services loans |
956 |
|
|
|
3 |
|
|
|
739 |
|
|
Recoveries - all other loans and leases |
1,883 |
|
|
|
510 |
|
|
|
799 |
|
|
Ending
balance |
$ |
72,389 |
|
|
|
$ |
56,188 |
|
|
|
$ |
30,176 |
|
|
Provision for credit losses was $6.1 million for
the quarter ended December 31, 2020, compared to $3.4 million
for the comparable period in the prior fiscal year. The increase in
provision was primarily within the commercial finance and consumer
finance portfolios, partially offset by a decrease within the
retained community bank portfolio. Net charge-offs were $2.8
million for the quarter ended December 31, 2020 compared to
$2.4 million for the quarter ended December 31, 2019.
The Company's past due loans and leases were as follows for the
periods presented.
As of December 31,
2020 |
Accruing and Nonaccruing Loans and Leases |
|
Nonperforming Loans and Leases |
(Dollars in Thousands) |
30-59 DaysPast Due |
|
60-89 DaysPast Due |
|
> 89 Days Past Due |
|
Total PastDue |
|
Current |
|
Total Loans and
LeasesReceivable |
|
> 89 Days Past Due and Accruing |
|
Non-accrual balance |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial finance |
$ |
23,448 |
|
|
$ |
7,358 |
|
|
$ |
14,900 |
|
|
$ |
45,706 |
|
|
$ |
2,377,413 |
|
|
$ |
2,423,119 |
|
|
$ |
2,092 |
|
|
$ |
18,707 |
|
|
$ |
20,799 |
|
Consumer finance |
1,415 |
|
|
404 |
|
|
1,132 |
|
|
2,951 |
|
|
248,067 |
|
|
251,018 |
|
|
1,132 |
|
|
— |
|
|
1,132 |
|
Tax services |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
92,548 |
|
|
92,548 |
|
|
— |
|
|
— |
|
|
— |
|
Warehouse finance |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
318,937 |
|
|
318,937 |
|
|
— |
|
|
— |
|
|
— |
|
Total National
Lending |
24,863 |
|
|
7,762 |
|
|
16,032 |
|
|
48,657 |
|
|
3,036,965 |
|
|
3,085,622 |
|
|
3,224 |
|
|
18,707 |
|
|
21,931 |
|
Total Community
Banking |
13 |
|
|
— |
|
|
2,379 |
|
|
2,392 |
|
|
351,550 |
|
|
353,942 |
|
|
— |
|
|
20,389 |
|
|
20,389 |
|
Total loans and leases
held for investment |
$ |
24,876 |
|
|
$ |
7,762 |
|
|
$ |
18,411 |
|
|
$ |
51,049 |
|
|
$ |
3,388,515 |
|
|
$ |
3,439,564 |
|
|
$ |
3,224 |
|
|
$ |
39,096 |
|
|
$ |
42,320 |
|
As of September 30,
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 |
$ |
13,338 |
|
|
$ |
14,345 |
|
|
$ |
16,663 |
|
|
$ |
44,346 |
|
|
$ |
2,263,638 |
|
|
$ |
2,307,984 |
|
|
$ |
7,400 |
|
|
$ |
21,553 |
|
|
$ |
28,953 |
|
Consumer finance |
977 |
|
|
894 |
|
|
872 |
|
|
2,743 |
|
|
221,408 |
|
|
224,151 |
|
|
872 |
|
|
— |
|
|
872 |
|
Tax services |
— |
|
|
— |
|
|
1,743 |
|
|
1,743 |
|
|
1,323 |
|
|
3,066 |
|
|
1,744 |
|
|
— |
|
|
1,744 |
|
Warehouse finance |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
293,375 |
|
|
293,375 |
|
|
— |
|
|
— |
|
|
— |
|
Total National
Lending |
14,315 |
|
|
15,239 |
|
|
19,278 |
|
|
48,832 |
|
|
2,779,744 |
|
|
2,828,576 |
|
|
10,016 |
|
|
21,553 |
|
|
31,569 |
|
Total Community
Banking |
905 |
|
|
114 |
|
|
2,449 |
|
|
3,468 |
|
|
482,096 |
|
|
485,564 |
|
|
50 |
|
|
2,399 |
|
|
2,449 |
|
Total loans and leases
held for investment |
$ |
15,220 |
|
|
$ |
15,353 |
|
|
$ |
21,727 |
|
|
$ |
52,300 |
|
|
$ |
3,261,840 |
|
|
$ |
3,314,140 |
|
|
$ |
10,066 |
|
|
$ |
23,952 |
|
|
$ |
34,018 |
|
The Company's nonperforming assets at
December 31, 2020, were $53.2 million, representing 0.73% of
total assets, compared to $48.0 million, or 0.79% of total assets
at September 30, 2020 and $29.8 million, or 0.48% of total assets
at December 31, 2019. The increase in nonperforming assets on
a linked quarter basis was primarily driven by an increase in
community bank nonperforming loans, partially offset by decreases
in commercial finance and tax services nonperforming loans and
leases, and a decrease in nonperforming operating leases. The
year-over-year increase in nonperforming assets was primarily
within the community bank portfolio, as well as an increase in
foreclosed and repossessed assets, partially offset by a reduction
within the commercial and consumer finance portfolios. The increase
in nonaccrual balances was driven by one Community Bank
relationship operating in the movie theater industry that moved to
nonaccrual status in the fiscal 2021 first quarter. The overall
decrease in nonperforming assets as a percentage of total assets at
December 31, 2020 was primarily due to higher period-end assets,
when compared to September 30, 2020.
The Company's nonperforming loans and leases at
December 31, 2020, were $42.3 million, representing 1.18% of
total gross loans and leases, compared to $34.0 million, or 0.97%
of total gross loans and leases at September 30, 2020 and $24.0
million, or 0.62% of total gross loans and leases at
December 31, 2019.
At December 31, 2020, the balance of the
Company's loans and leases past due 30 days or greater decreased 2%
to $51.0 million when compared to September 30, 2020. When
excluding tax services loans, the balance of loans and leases past
due 30 days or greater increased to $51.0 million at
December 31, 2020 from $50.6 million at September 30, 2020.
Loan and lease balances that were within their active deferment
period decreased to $84.2 million at December 31, 2020 from
$170.0 million at September 30, 2020.
Deposits, Borrowings and Other
LiabilitiesTotal average deposits for the fiscal 2021
first quarter increased by $813.6 million to $5.43 billion compared
to the same period in fiscal 2020, primarily due to the effects of
the EIP program. Average noninterest-bearing deposits increased
$2.15 billion, or 79%, for the fiscal 2021 first quarter when
compared to the same period in fiscal 2020, while average wholesale
deposits decreased $1.21 billion, or 82%. Average deposits from the
payments division increased 83% to $5.07 billion for the fiscal
2021 first quarter when compared to the same period in fiscal 2020.
Excluding the balances on the EIP cards, average payments deposits
for the fiscal 2021 first quarter were $4.32 billion, representing
an increase of 55% compared to the same period of the prior year,
which was largely driven by stimulus payments loaded on various
partner cards along with lower levels of consumer spending.
The average balance of total deposits and
interest-bearing liabilities was $5.52 billion for the three-month
period ended December 31, 2020, compared to $5.13 billion for
the same period in the prior fiscal year, representing an increase
of 8%.
Total end-of-period deposits increased 37% to
$6.21 billion at December 31, 2020, compared to $4.52 billion
at December 31, 2019. The increase in end-of-period deposits
was primarily driven by an increase in noninterest-bearing deposits
of $2.65 billion, of which $605.1 million was attributable to the
balances on the EIP cards. The increase in total end-of-period
deposits was partially offset by a decrease of $1.21 billion in
wholesale deposits, as well as the 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
December 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 |
December 31, 2020(1) |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
December 31,2019 |
Company |
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
7.40 |
% |
|
6.58 |
% |
|
5.91 |
% |
|
7.28 |
% |
|
8.28 |
% |
Common equity Tier 1 capital ratio |
10.76 |
% |
|
11.78 |
% |
|
11.51 |
% |
|
10.27 |
% |
|
10.10 |
% |
Tier 1 capital ratio |
11.11 |
% |
|
12.18 |
% |
|
11.90 |
% |
|
10.63 |
% |
|
10.46 |
% |
Total capital ratio |
14.18 |
% |
|
15.30 |
% |
|
14.99 |
% |
|
13.61 |
% |
|
12.74 |
% |
MetaBank |
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
8.62 |
% |
|
7.56 |
% |
|
6.89 |
% |
|
8.52 |
% |
|
9.70 |
% |
Common equity Tier 1 capital ratio |
12.91 |
% |
|
13.96 |
% |
|
13.82 |
% |
|
12.39 |
% |
|
12.18 |
% |
Tier 1 capital ratio |
12.93 |
% |
|
14.00 |
% |
|
13.86 |
% |
|
12.44 |
% |
|
12.24 |
% |
Total capital ratio |
14.19 |
% |
|
15.26 |
% |
|
15.12 |
% |
|
13.69 |
% |
|
12.90 |
% |
(1) December 31, 2020 amounts are preliminary
pending completion and filing of the Company's regulatory reports.
Regulatory capital presented for periods in fiscal year 2021
reflect the Company's election of the five-year CECL transition for
regulatory capital purposes.
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) |
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
December 31,2019 |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Total stockholders'
equity |
$ |
813,210 |
|
|
$ |
847,308 |
|
|
$ |
829,909 |
|
|
$ |
805,074 |
|
|
$ |
837,068 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
LESS: Goodwill, net of associated deferred tax liabilities |
301,999 |
|
|
302,396 |
|
|
302,814 |
|
|
303,625 |
|
|
304,020 |
|
LESS: Certain other intangible assets |
39,403 |
|
|
40,964 |
|
|
42,865 |
|
|
44,909 |
|
|
47,855 |
|
LESS: Net deferred tax assets from operating loss and tax credit
carry-forwards |
24,105 |
|
|
18,361 |
|
|
10,360 |
|
|
11,589 |
|
|
16,876 |
|
LESS: Net unrealized gains (losses) on available-for-sale
securities |
19,894 |
|
|
17,762 |
|
|
8,382 |
|
|
2,337 |
|
|
3,897 |
|
LESS: Non-controlling interest |
1,536 |
|
|
3,603 |
|
|
3,787 |
|
|
3,762 |
|
|
4,305 |
|
ADD: Adoption of Accounting Standards Update 2016-13 |
10,804 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Common Equity Tier 1(1) |
437,077 |
|
|
464,222 |
|
|
461,701 |
|
|
438,852 |
|
|
460,115 |
|
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 |
749 |
|
|
1,894 |
|
|
1,894 |
|
|
2,036 |
|
|
2,372 |
|
Total Tier 1 Capital |
451,487 |
|
|
479,777 |
|
|
477,256 |
|
|
454,549 |
|
|
476,148 |
|
Allowance for credit losses |
51,070 |
|
|
49,343 |
|
|
50,338 |
|
|
53,580 |
|
|
30,239 |
|
Subordinated debentures (net of issuance costs) |
73,850 |
|
|
73,807 |
|
|
73,765 |
|
|
73,724 |
|
|
73,684 |
|
Total qualifying capital |
$ |
576,407 |
|
|
$ |
602,927 |
|
|
$ |
601,359 |
|
|
$ |
581,853 |
|
|
$ |
580,071 |
|
(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.
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
December 31,2019 |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity |
$ |
813,210 |
|
|
$ |
847,308 |
|
|
$ |
829,909 |
|
|
$ |
805,074 |
|
|
$ |
837,068 |
|
Less: Goodwill |
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
Less: Intangible assets |
39,660 |
|
|
41,692 |
|
|
43,974 |
|
|
46,766 |
|
|
50,151 |
|
Tangible common equity |
464,045 |
|
|
496,111 |
|
|
476,430 |
|
|
448,803 |
|
|
477,412 |
|
Less: Accumulated other
comprehensive income (loss) ("AOCI") |
20,119 |
|
|
17,542 |
|
|
7,995 |
|
|
1,654 |
|
|
3,895 |
|
Tangible common equity excluding AOCI |
$ |
443,926 |
|
|
$ |
478,569 |
|
|
$ |
468,435 |
|
|
$ |
447,149 |
|
|
$ |
473,517 |
|
Conference Call
The Company will host a conference call and
earnings webcast at 4:00 p.m. Central Standard Time (5:00 p.m.
Eastern Time) on Wednesday, January 27, 2021. 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
1904899 upon request. International callers should dial (636)
812-6634. A webcast replay will also be archived at
www.metafinancialgroup.com for one year.
Annual Meeting of Shareholders
The Annual Meeting of Shareholders will convene
at 9:00 a.m. Central Standard Time on Tuesday, February 23, 2021.
The meeting will be held virtually via the internet for the safety
of the Company's directors, employees, and stockholders in light of
the COVID-19 pandemic. Further information with regard to this
meeting can be found in the proxy statement filed with the
Securities and Exchange Commission (the "SEC") on January 14, 2021.
Copies of the Company's Annual Report on Form 10-K for the year
ended September 30, 2020 (excluding exhibits thereto) may be
obtained from www.metafinancialgroup.com.
Upcoming Investor Events
- KBW Winter
Financial Services Symposium, February 10 - February 12, 2021 |
Virtual
- KBW Fintech
Payments Conference, February 23 - February 25, 2021 | Virtual
- Piper Sandler Western Financial
Services Conference, March 2, 2021 | Virtual
Forward-Looking Statements
The Company and 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 our business, our industry and the capital markets;
customer retention; loan and other product demand; expectations
concerning acquisitions and divestitures; new products and
services, including those offered by Meta Payment Systems, Refund
Advantage, EPS Financial and Specialty Consumer Services divisions;
credit quality; the level of net charge-offs and the adequacy of
the allowance for credit losses; 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 including the deployment
and efficacy of the COVID-19 vaccines, or other unusual and
infrequently occurring events; 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 operates; changes in trade,
monetary, and fiscal policies and laws, including interest rate
policies of the Federal Reserve; 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
usage of Meta’s strategic partners’ refund advance products; our
relationship with, and any actions which may be initiated by, our
regulators; 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 CARES Act and the rules and
regulations that may be promulgated thereunder; technological
changes, including, but not limited to, the protection of our
electronic systems and information; the impact of 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; the impact of our participation as
prepaid card issuer for the EIP program and potentially similar
programs in the future; losses from fraudulent or illegal activity;
technological risks and developments and cyber threats, attacks, or
events; 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, 2020, 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 |
December 31, 2020 |
|
September 30, 2020 |
|
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
Cash and cash equivalents |
$ |
1,586,451 |
|
|
|
$ |
427,367 |
|
|
|
$ |
3,108,141 |
|
|
|
$ |
108,733 |
|
|
|
$ |
152,189 |
|
|
Investment securities
available for sale, at fair value |
797,363 |
|
|
|
814,495 |
|
|
|
825,579 |
|
|
|
840,525 |
|
|
|
852,603 |
|
|
Mortgage-backed securities
available for sale, at fair value |
430,761 |
|
|
|
453,607 |
|
|
|
338,250 |
|
|
|
355,094 |
|
|
|
362,120 |
|
|
Investment securities held to
maturity, at cost |
76,176 |
|
|
|
87,183 |
|
|
|
98,205 |
|
|
|
108,105 |
|
|
|
116,313 |
|
|
Mortgage-backed securities
held to maturity, at cost |
5,152 |
|
|
|
5,427 |
|
|
|
6,382 |
|
|
|
6,752 |
|
|
|
6,804 |
|
|
Loans held for sale |
133,659 |
|
|
|
183,577 |
|
|
|
79,905 |
|
|
|
13,610 |
|
|
|
264,266 |
|
|
Loans and leases |
3,448,675 |
|
|
|
3,322,765 |
|
|
|
3,502,646 |
|
|
|
3,618,924 |
|
|
|
3,590,474 |
|
|
Allowance for credit
losses |
(72,389 |
) |
|
|
(56,188 |
) |
|
|
(65,747 |
) |
|
|
(65,355 |
) |
|
|
(30,176 |
) |
|
Federal Reserve Bank and
Federal Home Loan Bank stocks, at cost |
27,138 |
|
|
|
27,138 |
|
|
|
31,836 |
|
|
|
29,944 |
|
|
|
13,796 |
|
|
Accrued interest
receivable |
17,133 |
|
|
|
16,628 |
|
|
|
17,545 |
|
|
|
16,958 |
|
|
|
18,687 |
|
|
Premises, furniture, and
equipment, net |
39,932 |
|
|
|
41,608 |
|
|
|
40,361 |
|
|
|
38,871 |
|
|
|
38,671 |
|
|
Rental equipment, net |
206,732 |
|
|
|
205,964 |
|
|
|
216,336 |
|
|
|
200,837 |
|
|
|
211,673 |
|
|
Bank-owned life insurance |
92,937 |
|
|
|
92,315 |
|
|
|
91,697 |
|
|
|
91,081 |
|
|
|
90,458 |
|
|
Foreclosed real estate and
repossessed assets |
7,186 |
|
|
|
9,957 |
|
|
|
6,784 |
|
|
|
7,249 |
|
|
|
1,328 |
|
|
Goodwill |
309,505 |
|
|
|
309,505 |
|
|
|
309,505 |
|
|
|
309,505 |
|
|
|
309,505 |
|
|
Intangible assets |
39,660 |
|
|
|
41,692 |
|
|
|
43,974 |
|
|
|
46,766 |
|
|
|
50,151 |
|
|
Prepaid assets |
11,270 |
|
|
|
8,328 |
|
|
|
6,806 |
|
|
|
9,727 |
|
|
|
14,813 |
|
|
Deferred taxes |
24,411 |
|
|
|
17,723 |
|
|
|
15,944 |
|
|
|
20,887 |
|
|
|
19,752 |
|
|
Other assets |
82,763 |
|
|
|
82,983 |
|
|
|
104,877 |
|
|
|
85,652 |
|
|
|
97,499 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
7,264,515 |
|
|
|
$ |
6,092,074 |
|
|
|
$ |
8,779,026 |
|
|
|
$ |
5,843,865 |
|
|
|
$ |
6,180,926 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Deposits held for sale |
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
288,975 |
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
Noninterest-bearing checking |
5,581,597 |
|
|
|
4,356,630 |
|
|
|
6,537,809 |
|
|
|
2,900,484 |
|
|
|
2,927,967 |
|
|
Interest-bearing checking |
274,504 |
|
|
|
157,571 |
|
|
|
187,003 |
|
|
|
152,504 |
|
|
|
67,642 |
|
|
Savings deposits |
54,080 |
|
|
|
47,866 |
|
|
|
55,896 |
|
|
|
37,615 |
|
|
|
17,436 |
|
|
Money market deposits |
56,440 |
|
|
|
48,494 |
|
|
|
40,811 |
|
|
|
37,266 |
|
|
|
42,286 |
|
|
Time certificates of deposit |
13,522 |
|
|
|
20,223 |
|
|
|
25,000 |
|
|
|
25,492 |
|
|
|
23,454 |
|
|
Wholesale deposits |
227,648 |
|
|
|
348,416 |
|
|
|
743,806 |
|
|
|
809,043 |
|
|
|
1,438,820 |
|
|
Total deposits |
6,207,791 |
|
|
|
4,979,200 |
|
|
|
7,590,325 |
|
|
|
3,962,404 |
|
|
|
4,517,605 |
|
|
Short-term borrowings |
— |
|
|
|
— |
|
|
|
— |
|
|
|
717,000 |
|
|
|
194,000 |
|
|
Long-term borrowings |
96,760 |
|
|
|
98,224 |
|
|
|
209,781 |
|
|
|
211,353 |
|
|
|
213,070 |
|
|
Accrued interest payable |
2,068 |
|
|
|
1,923 |
|
|
|
4,332 |
|
|
|
3,607 |
|
|
|
6,620 |
|
|
Accrued expenses and other
liabilities |
144,686 |
|
|
|
165,419 |
|
|
|
144,679 |
|
|
|
144,427 |
|
|
|
123,588 |
|
|
Total liabilities |
6,451,305 |
|
|
|
5,244,766 |
|
|
|
7,949,117 |
|
|
|
5,038,791 |
|
|
|
5,343,858 |
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
Preferred stock |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Common stock, $.01 par
value |
326 |
|
|
|
344 |
|
|
|
346 |
|
|
|
346 |
|
|
|
372 |
|
|
Common stock, Nonvoting, $.01
par value |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Additional paid-in
capital |
598,669 |
|
|
|
594,569 |
|
|
|
592,693 |
|
|
|
590,682 |
|
|
|
587,678 |
|
|
Retained earnings |
198,000 |
|
|
|
234,927 |
|
|
|
228,500 |
|
|
|
212,027 |
|
|
|
244,005 |
|
|
Accumulated other
comprehensive income |
20,119 |
|
|
|
17,542 |
|
|
|
7,995 |
|
|
|
1,654 |
|
|
|
3,895 |
|
|
Treasury stock, at cost |
(5,440 |
) |
|
|
(3,677 |
) |
|
|
(3,412 |
) |
|
|
(3,397 |
) |
|
|
(3,187 |
) |
|
Total equity attributable to parent |
811,674 |
|
|
|
843,705 |
|
|
|
826,122 |
|
|
|
801,312 |
|
|
|
832,763 |
|
|
Noncontrolling interest |
1,536 |
|
|
|
3,603 |
|
|
|
3,787 |
|
|
|
3,762 |
|
|
|
4,305 |
|
|
Total stockholders’ equity |
813,210 |
|
|
|
847,308 |
|
|
|
829,909 |
|
|
|
805,074 |
|
|
|
837,068 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
7,264,515 |
|
|
|
$ |
6,092,074 |
|
|
|
$ |
8,779,026 |
|
|
|
$ |
5,843,865 |
|
|
|
$ |
6,180,926 |
|
|
Consolidated Statements of Operations
(Unaudited)(Dollars in Thousands, Except Share and Per
Share Data)
|
Three Months Ended |
|
December 31, 2020 |
|
September 30, 2020 |
|
December 31, 2019 |
Interest and dividend
income: |
|
|
|
|
|
Loans and leases, including fees |
$ |
61,655 |
|
|
$ |
62,022 |
|
|
|
$ |
68,702 |
|
|
Mortgage-backed securities |
2,123 |
|
|
1,877 |
|
|
|
2,389 |
|
|
Other investments |
4,368 |
|
|
4,508 |
|
|
|
6,534 |
|
|
|
68,146 |
|
|
68,407 |
|
|
|
77,625 |
|
|
Interest expense: |
|
|
|
|
|
Deposits |
797 |
|
|
1,904 |
|
|
|
9,340 |
|
|
FHLB advances and other borrowings |
1,350 |
|
|
1,990 |
|
|
|
3,634 |
|
|
|
2,147 |
|
|
3,894 |
|
|
|
12,974 |
|
|
|
|
|
|
|
|
Net interest income |
65,999 |
|
|
64,513 |
|
|
|
64,651 |
|
|
|
|
|
|
|
|
Provision for credit
losses |
6,089 |
|
|
8,980 |
|
|
|
3,407 |
|
|
|
|
|
|
|
|
Net interest income after provision for loan and lease
losses |
59,910 |
|
|
55,533 |
|
|
|
61,244 |
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
Refund transfer product fees |
647 |
|
|
2,335 |
|
|
|
192 |
|
|
Tax advance product fees |
1,960 |
|
|
(14 |
) |
|
|
2,276 |
|
|
Payments card and deposit fees |
22,564 |
|
|
21,422 |
|
|
|
21,499 |
|
|
Other bank and deposit fees |
237 |
|
|
228 |
|
|
|
487 |
|
|
Rental income |
9,885 |
|
|
10,144 |
|
|
|
12,351 |
|
|
Gain on sale of securities available-for-sale, net |
— |
|
|
51 |
|
|
|
— |
|
|
Gain (loss) on sale of other |
2,847 |
|
|
3,455 |
|
|
|
(2,568 |
) |
|
Other income |
7,315 |
|
|
3,129 |
|
|
|
3,246 |
|
|
Total noninterest income |
45,455 |
|
|
40,750 |
|
|
|
37,483 |
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
Compensation and benefits |
32,331 |
|
|
35,616 |
|
|
|
34,268 |
|
|
Refund transfer product expense |
61 |
|
|
162 |
|
|
|
173 |
|
|
Tax advance product expense |
370 |
|
|
(97 |
) |
|
|
1,132 |
|
|
Card processing |
6,117 |
|
|
6,524 |
|
|
|
5,607 |
|
|
Occupancy and equipment expense |
6,888 |
|
|
6,826 |
|
|
|
6,655 |
|
|
Operating lease equipment depreciation |
7,581 |
|
|
7,594 |
|
|
|
8,280 |
|
|
Legal and consulting |
5,247 |
|
|
5,615 |
|
|
|
4,674 |
|
|
Intangible amortization |
2,013 |
|
|
2,283 |
|
|
|
2,676 |
|
|
Impairment expense |
1,159 |
|
|
1,232 |
|
|
|
242 |
|
|
Other expense |
10,808 |
|
|
14,528 |
|
|
|
12,091 |
|
|
Total noninterest expense |
72,575 |
|
|
80,283 |
|
|
|
75,798 |
|
|
|
|
|
|
|
|
Income before income tax expense |
32,790 |
|
|
16,000 |
|
|
|
22,929 |
|
|
|
|
|
|
|
|
Income tax expense |
3,533 |
|
|
1,791 |
|
|
|
680 |
|
|
|
|
|
|
|
|
Net income before
noncontrolling interest |
29,257 |
|
|
14,209 |
|
|
|
22,249 |
|
|
Net income attributable to noncontrolling interest |
1,220 |
|
|
1,051 |
|
|
|
1,181 |
|
|
Net income
attributable to parent |
$ |
28,037 |
|
|
$ |
13,158 |
|
|
|
$ |
21,068 |
|
|
|
|
|
|
|
|
Earnings per common
share |
|
|
|
|
|
Basic |
$ |
0.84 |
|
|
$ |
0.38 |
|
|
|
$ |
0.56 |
|
|
Diluted |
$ |
0.84 |
|
|
$ |
0.38 |
|
|
|
$ |
0.56 |
|
|
Shares used in
computing earnings per common share |
|
|
|
|
|
Basic |
32,782,285 |
|
|
33,783,659 |
|
|
|
36,613,699 |
|
|
Diluted |
32,790,895 |
|
|
33,783,659 |
|
|
|
36,647,789 |
|
|
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. Nonaccruing loans and leases have been
included in the table as loans carrying a zero yield.
Three Months Ended
December 31, |
2020 |
|
2019 |
(Dollars in Thousands) |
AverageOutstandingBalance |
|
InterestEarned
/Paid |
|
Yield
/Rate(1) |
|
AverageOutstandingBalance |
|
InterestEarned
/Paid |
|
Yield
/Rate(1) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and fed funds sold |
$ |
820,108 |
|
|
$ |
842 |
|
|
0.41 |
% |
|
$ |
99,597 |
|
|
$ |
412 |
|
|
1.65 |
% |
Mortgage-backed securities |
438,610 |
|
|
2,123 |
|
|
1.92 |
% |
|
376,358 |
|
|
2,389 |
|
|
2.53 |
% |
Tax exempt investment securities |
333,729 |
|
|
1,215 |
|
|
1.83 |
% |
|
490,982 |
|
|
2,339 |
|
|
2.40 |
% |
Asset-backed securities |
326,315 |
|
|
1,200 |
|
|
1.46 |
% |
|
303,885 |
|
|
2,354 |
|
|
3.08 |
% |
Other investment securities |
221,986 |
|
|
1,111 |
|
|
1.98 |
% |
|
197,513 |
|
|
1,429 |
|
|
2.88 |
% |
Total investments |
1,320,640 |
|
|
5,649 |
|
|
1.79 |
% |
|
1,368,738 |
|
|
8,511 |
|
|
2.65 |
% |
Commercial finance loans and leases |
2,417,691 |
|
|
45,630 |
|
|
7.49 |
% |
|
1,980,509 |
|
|
44,781 |
|
|
9.00 |
% |
Consumer finance loans |
239,618 |
|
|
4,748 |
|
|
7.86 |
% |
|
270,612 |
|
|
5,790 |
|
|
8.51 |
% |
Tax services loans |
25,104 |
|
|
8 |
|
|
0.13 |
% |
|
24,429 |
|
|
33 |
|
|
0.54 |
% |
Warehouse finance loans |
284,199 |
|
|
4,933 |
|
|
6.89 |
% |
|
265,564 |
|
|
4,174 |
|
|
6.25 |
% |
National lending loans and leases |
2,966,612 |
|
|
55,319 |
|
|
7.40 |
% |
|
2,541,114 |
|
|
54,778 |
|
|
8.58 |
% |
Community banking loans |
529,085 |
|
|
6,336 |
|
|
4.75 |
% |
|
1,194,082 |
|
|
13,924 |
|
|
4.64 |
% |
Total loans and leases |
3,495,697 |
|
|
61,655 |
|
|
7.00 |
% |
|
3,735,196 |
|
|
68,702 |
|
|
7.32 |
% |
Total interest-earning
assets |
$ |
5,636,445 |
|
|
$ |
68,146 |
|
|
4.82 |
% |
|
$ |
5,203,531 |
|
|
$ |
77,625 |
|
|
5.98 |
% |
Non-interest-earning assets |
845,378 |
|
|
|
|
|
|
918,973 |
|
|
|
|
|
Total
assets |
$ |
6,481,823 |
|
|
|
|
|
|
$ |
6,122,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking(2) |
$ |
162,748 |
|
|
$ |
— |
|
|
— |
% |
|
$ |
163,693 |
|
|
$ |
153 |
|
|
0.37 |
% |
Savings deposits |
52,198 |
|
|
2 |
|
|
0.01 |
% |
|
48,776 |
|
|
9 |
|
|
0.08 |
% |
Money market deposits |
52,620 |
|
|
39 |
|
|
0.30 |
% |
|
80,528 |
|
|
205 |
|
|
1.01 |
% |
Time certificates of deposit |
17,390 |
|
|
57 |
|
|
1.30 |
% |
|
114,924 |
|
|
595 |
|
|
2.06 |
% |
Wholesale deposits |
261,136 |
|
|
699 |
|
|
1.06 |
% |
|
1,472,820 |
|
|
8,378 |
|
|
2.26 |
% |
Total interest-bearing deposits |
546,092 |
|
|
797 |
|
|
0.58 |
% |
|
1,880,741 |
|
|
9,340 |
|
|
1.98 |
% |
Overnight fed funds purchased |
11 |
|
|
— |
|
|
0.25 |
% |
|
302,804 |
|
|
1,450 |
|
|
1.91 |
% |
FHLB advances |
— |
|
|
— |
|
|
— |
% |
|
110,000 |
|
|
678 |
|
|
2.45 |
% |
Subordinated debentures |
73,822 |
|
|
1,147 |
|
|
6.16 |
% |
|
73,658 |
|
|
1,160 |
|
|
6.26 |
% |
Other borrowings |
23,870 |
|
|
203 |
|
|
3.37 |
% |
|
33,589 |
|
|
346 |
|
|
4.10 |
% |
Total borrowings |
97,703 |
|
|
1,350 |
|
|
5.48 |
% |
|
520,051 |
|
|
3,634 |
|
|
2.78 |
% |
Total interest-bearing
liabilities |
643,795 |
|
|
2,147 |
|
|
1.32 |
% |
|
2,400,792 |
|
|
12,974 |
|
|
5.15 |
% |
Noninterest-bearing deposits |
4,880,352 |
|
|
— |
|
|
— |
% |
|
2,732,062 |
|
|
— |
|
|
— |
% |
Total deposits and
interest-bearing liabilities |
$ |
5,524,147 |
|
|
$ |
2,147 |
|
|
0.15 |
% |
|
$ |
5,132,854 |
|
|
$ |
12,974 |
|
|
1.01 |
% |
Other noninterest-bearing liabilities |
151,528 |
|
|
|
|
|
|
150,319 |
|
|
|
|
|
Total
liabilities |
5,675,675 |
|
|
|
|
|
|
5,283,173 |
|
|
|
|
|
Shareholders' equity |
806,148 |
|
|
|
|
|
|
839,331 |
|
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
6,481,823 |
|
|
|
|
|
|
$ |
6,122,504 |
|
|
|
|
|
Net interest income and net
interest rate spread including noninterest-bearing deposits |
|
|
$ |
65,999 |
|
|
4.67 |
% |
|
|
|
$ |
64,651 |
|
|
4.97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin |
|
|
|
|
4.65 |
% |
|
|
|
|
|
4.94 |
% |
Tax-equivalent
effect |
|
|
|
|
0.02 |
% |
|
|
|
|
|
0.05 |
% |
Net interest margin,
tax-equivalent(3) |
|
|
|
|
4.67 |
% |
|
|
|
|
|
4.99 |
% |
(1) Tax rate used to arrive at the TEY for the three months
ended December 31, 2020 and 2019 was 21%.(2) Of the total balance,
$162.5 million are interest-bearing deposits where interest expense
is paid by a third party and not by the Company.
(3) 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 |
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
December 31,2019 |
Equity to total assets |
11.19 |
% |
|
13.91 |
% |
|
9.45 |
% |
|
13.78 |
% |
|
13.54 |
% |
Book value per common share
outstanding |
$ |
24.93 |
|
|
$ |
24.66 |
|
|
$ |
23.96 |
|
|
$ |
23.26 |
|
|
$ |
22.52 |
|
Tangible book value per common
share outstanding |
$ |
14.23 |
|
|
$ |
14.44 |
|
|
$ |
13.76 |
|
|
$ |
12.97 |
|
|
$ |
12.84 |
|
Tangible book value per common
share outstanding excluding AOCI |
$ |
13.61 |
|
|
$ |
13.93 |
|
|
$ |
13.53 |
|
|
$ |
12.92 |
|
|
$ |
12.74 |
|
Common shares outstanding |
32,620,251 |
|
|
34,360,890 |
|
|
34,631,160 |
|
|
34,607,962 |
|
|
37,172,081 |
|
Nonperforming assets to total
assets |
0.73 |
% |
|
0.79 |
% |
|
0.64 |
% |
|
0.67 |
% |
|
0.48 |
% |
Nonperforming loans and leases
to total loans and leases |
1.18 |
% |
|
0.97 |
% |
|
1.10 |
% |
|
0.87 |
% |
|
0.62 |
% |
Net interest margin |
4.65 |
% |
|
3.77 |
% |
|
3.28 |
% |
|
4.78 |
% |
|
4.94 |
% |
Net interest margin,
tax-equivalent |
4.67 |
% |
|
3.79 |
% |
|
3.31 |
% |
|
4.82 |
% |
|
4.99 |
% |
Return on average assets |
1.73 |
% |
|
0.69 |
% |
|
0.86 |
% |
|
3.16 |
% |
|
1.38 |
% |
Return on average equity |
13.91 |
% |
|
6.21 |
% |
|
8.83 |
% |
|
25.15 |
% |
|
10.04 |
% |
Full-time equivalent
employees |
1,038 |
|
|
1,015 |
|
|
999 |
|
|
992 |
|
|
1,088 |
|
Non-GAAP Reconciliation
Efficiency
Ratio |
For the last twelve months ended |
(Dollars in Thousands) |
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
December 31,2019 |
Noninterest Expense - GAAP |
$ |
315,828 |
|
|
$ |
319,051 |
|
|
$ |
314,911 |
|
|
$ |
316,138 |
|
|
$ |
334,663 |
|
Net Interest Income |
260,386 |
|
|
259,038 |
|
|
260,142 |
|
|
264,973 |
|
|
268,586 |
|
Noninterest Income |
247,766 |
|
|
239,794 |
|
|
235,024 |
|
|
237,766 |
|
|
222,278 |
|
Total Revenue: GAAP |
$ |
508,152 |
|
|
$ |
498,832 |
|
|
$ |
495,166 |
|
|
$ |
502,739 |
|
|
$ |
490,864 |
|
Efficiency Ratio, last twelve months |
62.15 |
% |
|
63.96 |
% |
|
63.60 |
% |
|
62.88 |
% |
|
68.18 |
% |
About Meta Financial Group,
Inc.® Meta Financial Group, Inc.®(Nasdaq: CASH) is a South
Dakota-based financial holding company. Meta Financial Group’s
subsidiary, MetaBank®, N.A., is a financial enablement company that
works with innovators to increase financial availability, choice,
and opportunity for all. MetaBank strives to remove barriers that
traditional institutions put in the way of financial access, and
promote economic mobility by providing responsible, secure, high
quality financial products that contribute to individuals and
communities at the core of the real economy. Additional information
can be found by visiting www.metafinancialgroup.com or
www.metabank.com.
Investor Relations
Contact: |
|
Brittany Kelley Elsasser |
|
Director of Investor
Relations |
|
605-362-2423 |
|
bkelley@metabank.com |
|
|
|
Media
Relations: |
|
mediarelations@metabank.com |
|
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