Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the
“Company”) reported net income of $38.7 million, or $1.21 per
share, for the three months ended June 30, 2021, compared to
net income of $18.2 million, or $0.53 per share, for the three
months ended June 30, 2020.
“MetaBank performed well during the third
quarter, more than doubling earnings per share, as various timing
items including tax season delays, additional card fee income from
government stimulus programs, and reduced provision helped enhance
performance year-over-year. Our results demonstrate how MetaBank’s
mission of financial inclusion for all® is creating value for all
our stakeholders, including our customers, employees and
shareholders,” said President and CEO Brad Hanson.
Business Development Highlights for the
2021 Fiscal Third Quarter
-
Published our inaugural 2020 Environmental, Social and Governance
("ESG") Report, building on the Company's vision, culture, and
mission of financial inclusion for all®. The Company's 2020 ESG
report can be downloaded at
https://www.metafinancialgroup.com/environmental-social-governance.
-
Launched the Company's Community Impact Program, focused on
financial inclusion, personal and family financial empowerment,
educational support, and disaster relief. Concentrating on these
four areas positions MetaBank to encourage long-lasting positive
impact in our communities.
-
Expanded our renewable energy investment tax credit financing,
originating $72.0 million for the first nine months of the fiscal
year 2021, resulting in $18.9 million in total net ITC.
-
Entered into a new Banking as a Service ("BaaS") partnership with
Clair, a social impact embedded fintech startup. The Company will
act as both the issuing bank and bank services provider, offering
digital banking services for users of Clair.
Financial Highlights for the 2021 Fiscal Third
Quarter
-
Total revenue for the third quarter was $130.9 million, an increase
of $27.7 million compared to $103.2 million for the same quarter in
fiscal 2020 primarily driven by a timing shift of refund transfer
product fees and additional payments card fee income from
government stimulus programs.
-
Operating efficiency ratio improved 185 basis points to 61.75% at
June 30, 2021 compared to 63.60% at June 30, 2020. See
non-GAAP reconciliation table below.
-
Net interest income for the third quarter was $68.5 million, an
increase of $6.4 million compared to $62.1 million in the third
quarter last year, reflecting a decrease in deposit interest
expense.
-
Net interest margin ("NIM") improved to 3.75% for the third quarter
from 3.28% during the same period of last year, chiefly due to the
decrease of cash associated with the Company's participation in the
EIP program and an increase in national lending loans and
leases.
-
Total gross loans and leases at June 30, 2021 decreased $1.5
million, to $3.50 billion, compared to June 30, 2020 and
decreased $152.8 million, or 4%, when compared to March 31, 2021.
The decrease was primarily driven due to the seasonal nature of the
taxpayer advance loans.
-
Average deposits from the Payments businesses for the fiscal 2021
third quarter increased nearly 8% to $6.79 billion when compared to
the prior year quarter largely driven by excess cash on consumer
cards related to government stimulus programs.
Tax Season RecapDuring the
third quarter of the fiscal 2021, total tax services product
revenue was $13.6 million compared to $4.6 million in the prior
year quarter. The significant increase for the quarter was mostly
related to delayed timing of refund-transfers income due to the
extension of the tax filing deadline by the IRS. Total tax services
product income, net of losses and direct product expenses,
increased 19% when comparing the first nine months of fiscal 2021
to the prior year period. The 2021 tax season benefited by the
addition of the H&R Block relationship and has been successful
despite the challenges caused by an increase in consumer liquidity
due to stimulus payments throughout the 2021 tax season.
Economic Impact Program ("EIP")
UpdateOf the 16.5 million prepaid cards issued in
conjunction with the three EIP stimulus programs, totaling
approximately $24.15 billion, $2.81 billion were outstanding as of
June 30, 2021, of which only $98.1 million was on Meta’s balance
sheet with the remainder being held at other banks.
Net Interest IncomeNet interest
income for the third quarter of fiscal 2021 was $68.5 million, an
increase of 10% from the same quarter in fiscal 2020. The increase
was primarily driven by a reduction in total interest expense,
partially offset by lower overall yields realized on investments
and loan and leases.
Interest expense during the third quarter
decreased $3.8 million, and loan and lease interest income
increased $2.4 million. The third quarter average outstanding
balance of loans and leases decreased by $4.2 million compared to
the prior year quarter, primarily due to the decrease in community
bank and healthcare receivable loan portfolios offset by growth of
the remaining commercial loan portfolios. The Company’s average
interest-earning assets for the third quarter decreased by $291.8
million to $7.32 billion compared with the prior year quarter,
primarily due to the decrease in cash and fed funds sold, total
investments, and community bank loans offset by growth of the
national lending loans and leases.
Fiscal 2021 third quarter NIM increased to 3.75%
from 3.28% for the third quarter last year. The overall reported
tax-equivalent yield (“TEY”) on average earning asset yields
increased 26 basis points to 3.85% compared to the prior year
quarter, primarily driven by a reduction in low-yielding cash held
at the Federal Reserve. The TEY on the securities portfolio was
1.62% compared to 2.22% for the comparable period last year.
The Company's cost of funds for all deposits and
borrowings averaged 0.09% during the fiscal 2021 third quarter,
compared to 0.28% during the prior year quarter, primarily driven
by a reduction in wholesale deposit balances. The Company's overall
cost of deposits was 0.01% in the fiscal third quarter of 2021,
compared to 0.17% in the same quarter last year.
Noninterest IncomeFiscal 2021
third quarter noninterest income increased to $62.5 million,
compared to $41.0 million for the same period of the prior year.
This increase was primarily related to card fee income and refund
transfer fee income. Card fees benefited from increased card
balances related to stimulus programs. Refund transfer fee income
was higher compared to last year due to refund transfer volume
shift from the second fiscal quarter because of the delay in the
2021 tax season.
Noninterest ExpenseNoninterest
expense increased 14% to $81.5 million for the fiscal 2021 third
quarter, from $71.2 million for the same quarter last year,
primarily driven by increases in compensation due to a return to
more normalized incentive accruals in fiscal year 2021 and
additional employees to support growth. Refund transfer product
expense was also higher than the same quarter last year, due
largely to a shift in volume into the fiscal 2021 third quarter as
a result of the delayed IRS filing date.
Income Tax ExpenseThe Company
recorded income tax expense of $4.9 million, representing an
effective tax rate of 11.0%, for the fiscal 2021 third quarter,
compared to an income tax benefit of $2.4 million, representing an
effective tax rate of (14.4)%, for the third quarter last year. The
increase in the recorded income tax expense reflected an increase
in fiscal 2021 third quarter earnings, whereas the prior year’s
income tax benefit was chiefly the result of adjustments needed for
the ratably recognized investment tax credits and lower earnings
forecast at that time due to COVID-19.
The Company originated $13.5 million in solar
leases during the fiscal 2021 third quarter, compared to $1.3
million in last year's third 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
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
June 30, 2020 |
Total investments |
$ |
1,981,852 |
|
|
$ |
1,552,892 |
|
|
$ |
1,309,452 |
|
|
$ |
1,360,712 |
|
|
$ |
1,268,416 |
|
|
|
|
|
|
|
|
|
|
|
Loans held for
sale |
|
|
|
|
|
|
|
|
|
Consumer credit products |
12,582 |
|
|
6,233 |
|
|
234 |
|
|
962 |
|
|
391 |
|
SBA/USDA |
57,208 |
|
|
61,402 |
|
|
32,983 |
|
|
52,542 |
|
|
31,438 |
|
Community Bank |
18,115 |
|
|
— |
|
|
100,442 |
|
|
130,073 |
|
|
48,076 |
|
Total loans held for
sale |
87,905 |
|
|
67,635 |
|
|
133,659 |
|
|
183,577 |
|
|
79,905 |
|
|
|
|
|
|
|
|
|
|
|
National
Lending |
|
|
|
|
|
|
|
|
|
Term lending |
920,279 |
|
|
891,414 |
|
|
881,306 |
|
|
805,323 |
|
|
738,454 |
|
Asset based lending |
263,237 |
|
|
248,735 |
|
|
242,298 |
|
|
182,419 |
|
|
181,130 |
|
Factoring |
320,629 |
|
|
277,612 |
|
|
275,650 |
|
|
281,173 |
|
|
206,361 |
|
Lease financing |
282,940 |
|
|
308,169 |
|
|
283,722 |
|
|
281,084 |
|
|
264,988 |
|
Insurance premium finance |
417,652 |
|
|
344,841 |
|
|
338,227 |
|
|
337,940 |
|
|
359,147 |
|
SBA/USDA |
263,709 |
|
|
331,917 |
|
|
300,707 |
|
|
318,387 |
|
|
308,611 |
|
Other commercial finance |
118,081 |
|
|
103,234 |
|
|
101,209 |
|
|
101,658 |
|
|
100,214 |
|
Commercial
Finance |
2,586,527 |
|
|
2,505,922 |
|
|
2,423,119 |
|
|
2,307,984 |
|
|
2,158,905 |
|
Consumer credit products |
105,440 |
|
|
104,842 |
|
|
88,595 |
|
|
89,809 |
|
|
102,808 |
|
Other consumer finance |
122,316 |
|
|
130,822 |
|
|
162,423 |
|
|
134,342 |
|
|
138,777 |
|
Consumer
Finance |
227,756 |
|
|
235,664 |
|
|
251,018 |
|
|
224,151 |
|
|
241,585 |
|
Tax
Services |
41,268 |
|
|
225,921 |
|
|
92,548 |
|
|
3,066 |
|
|
19,168 |
|
Warehouse
Finance |
335,704 |
|
|
332,456 |
|
|
318,937 |
|
|
293,375 |
|
|
277,614 |
|
Total National Lending loans and leases |
3,191,255 |
|
|
3,299,963 |
|
|
3,085,622 |
|
|
2,828,576 |
|
|
2,697,272 |
|
Community
Banking |
|
|
|
|
|
|
|
|
|
Commercial real estate and
operating |
294,810 |
|
|
335,587 |
|
|
339,141 |
|
|
457,371 |
|
|
608,303 |
|
Consumer one-to-four family
real estate and other |
1,349 |
|
|
4,567 |
|
|
5,077 |
|
|
16,486 |
|
|
166,479 |
|
Agricultural real estate and
operating |
7,825 |
|
|
7,911 |
|
|
9,724 |
|
|
11,707 |
|
|
24,655 |
|
Total Community Banking loans |
303,984 |
|
|
348,065 |
|
|
353,942 |
|
|
485,564 |
|
|
799,437 |
|
Total gross loans and
leases |
3,495,239 |
|
|
3,648,028 |
|
|
3,439,564 |
|
|
3,314,140 |
|
|
3,496,709 |
|
Allowance for credit losses |
(91,208 |
) |
|
(98,892 |
) |
|
(72,389 |
) |
|
(56,188 |
) |
|
(65,747 |
) |
Net deferred loan and lease origination fees |
1,431 |
|
|
9,503 |
|
|
9,111 |
|
|
8,625 |
|
|
5,937 |
|
Total loans and
leases, net of allowance |
$ |
3,405,462 |
|
|
$ |
3,558,639 |
|
|
$ |
3,376,286 |
|
|
$ |
3,266,577 |
|
|
$ |
3,436,899 |
|
The Company's investment security balances at
June 30, 2021 totaled $1.98 billion, as compared to $1.55
billion at March 31, 2021 and $1.27 billion at June 30,
2020.
Total gross loans and leases totaled $3.50
billion at June 30, 2021, as compared to $3.65 billion at
March 31, 2021 and $3.50 billion and as compared to
June 30, 2020. The primary driver for the decrease on a linked
quarter basis was the pay down of seasonal tax service loans.
At June 30, 2021, commercial finance loans,
which comprised 74% of the Company's gross loan and lease
portfolio, totaled $2.59 billion, reflecting growth of $80.6
million, or 3%, from March 31, 2021. The increase in
commercial finance loans was primarily due to increases in
insurance premium finance by $72.8 million and factoring by $43.0
million, partially offset by decreases in lease financing by $25.2
million and SBA/USDA loans by $68.2 million, respectively, along
with slight increases spread across several of the other commercial
finance categories.
As of June 30, 2021, the Company had 458
loans outstanding with total loan balances of $143.3 million
originated as part of the Paycheck Protection Program ("PPP"),
compared with 576 loans outstanding with total loan balances of
$208.6 million for the quarter ended March 31, 2021. In total, 53%
of the PPP loan balances were forgiven through June 30,
2021.
Consumer finance loans totaled $227.8 million as
of June 30, 2021, a decrease compared to $235.7 million at
March 31, 2021 and $241.6 million at June 30, 2020. This
reduction was primarily driven by other consumer finance, which
includes student loans and certain seasonal lending products for
tax customers.
Tax services loans totaled $41.3 million as of
June 30, 2021, a seasonal decrease as compared to $225.9
million for March 31, 2021 and an increase as compared to
$19.2 million at June 30, 2020. Warehouse finance loans
totaled $335.7 million at June 30, 2021, a 1% increase from
March 31, 2021.
Community bank loans held for investment totaled
$304.0 million as of June 30, 2021, decreasing as compared to
$348.1 million at March 31, 2021 and $799.4 million at
June 30, 2020. As of June 30, 2021, the Company had $18.1
million in community bank loans classified as held for sale.
Asset QualityThe Company’s
allowance for credit losses totaled $91.2 million at June 30,
2021, a decrease compared to $98.9 million at March 31, 2021
and an increase compared to $65.7 million at June 30, 2020.
The decrease in the allowance at June 30, 2021 when compared
to March 31, 2021, was primarily due to the seasonal tax
services loan portfolio, which decreased $4.8 million and consumer
finance, which decreased $2.4 million during the fiscal 2021 third
quarter.
The year-over-year increase in the allowance was
primarily driven by a $16.0 million increase within the commercial
finance portfolio, a $12.9 million increase in tax services, and a
$4.4 million increase in the consumer finance portfolio. These
increases were primarily driven by impacts from the pandemic,
year-over-year loan growth and the adoption of the current expected
credit losses ("CECL") accounting standard, which required a day
one entry to increase the allowance for credit losses in the amount
of $12.8 million effective October 1, 2020. The increases noted
above were partially offset by a $7.2 million decrease within the
retained community banking portfolio, which has decreased along
with the reduction in year-over-year loan balances.
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) |
June 30, 2021 |
March 31, 2021 |
December 31, 2020 |
October 1, 2020(1) |
September 30, 2020 |
June 30, 2020 |
|
|
|
|
|
|
|
Commercial finance |
1.73 |
% |
1.77 |
% |
1.88 |
% |
1.85 |
% |
1.30 |
% |
1.36 |
% |
Consumer finance |
3.80 |
% |
4.70 |
% |
4.39 |
% |
4.31 |
% |
1.64 |
% |
1.75 |
% |
Tax services |
58.99 |
% |
12.90 |
% |
1.53 |
% |
0.06 |
% |
0.06 |
% |
59.67 |
% |
Warehouse finance |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
National Lending |
2.44 |
% |
2.57 |
% |
1.89 |
% |
1.86 |
% |
1.20 |
% |
1.68 |
% |
Community Bank |
4.36 |
% |
4.03 |
% |
4.01 |
% |
3.37 |
% |
4.59 |
% |
2.55 |
% |
Total loans and
leases |
2.61 |
% |
2.71 |
% |
2.10 |
% |
2.08 |
% |
1.70 |
% |
1.88 |
% |
(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 decreased to 2.61% at
June 30, 2021 from 2.71% at March 31, 2021. The decrease
in the total loans and leases coverage ratio reflected a seasonal
reduction in the allowance of the tax services loan portfolios. The
coverage ratios for the other non-tax-related loan categories
remained relatively similar to the March 31, 2021 quarter. 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 |
Nine Months Ended |
|
June 30, 2021 |
March 31, 2021 |
June 30, 2020 |
June 30, 2021 |
June 30, 2020 |
(Dollars in thousands) |
|
|
|
|
|
Beginning balance |
$ |
98,892 |
|
$ |
72,389 |
|
$ |
65,355 |
|
$ |
56,188 |
|
$ |
29,149 |
|
Adoption of CECL accounting standard |
— |
|
— |
|
— |
|
12,773 |
|
— |
|
Provision - tax services loans |
4,685 |
|
27,680 |
|
(100 |
) |
32,819 |
|
20,407 |
|
Provision - all other loans and leases |
(36 |
) |
2,519 |
|
15,193 |
|
8,294 |
|
35,390 |
|
Charge-offs - tax services loans |
(9,505 |
) |
— |
|
(9,797 |
) |
(9,505 |
) |
(9,797 |
) |
Charge-offs - all other loans and leases |
(5,360 |
) |
(4,248 |
) |
(5,808 |
) |
(15,284 |
) |
(12,912 |
) |
Recoveries - tax services loans |
17 |
|
54 |
|
15 |
|
1,027 |
|
827 |
|
Recoveries - all other loans and leases |
2,515 |
|
498 |
|
889 |
|
4,896 |
|
2,684 |
|
Ending
balance |
$ |
91,208 |
|
$ |
98,892 |
|
$ |
65,747 |
|
$ |
91,208 |
|
$ |
65,747 |
|
Provision for credit losses was $4.6 million for
the quarter ended June 30, 2021, compared to $15.1 million for
the comparable period in the prior fiscal year. The decrease in the
overall provision compared to the prior year was due in large part
to the increase in the allowance as part of the Company's response
to the emerging COVID-19 pandemic during the third quarter of
fiscal 2020. Net charge-offs were $12.3 million for the quarter
ended June 30, 2021, compared to $14.7 million for the quarter
ended June 30, 2020. The majority of the net charge-offs for
the quarter were attributable to seasonal tax-related loan
products.
The Company's past due loans and leases were as follows for the
periods presented.
As of June 30,
2021 |
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 |
$ |
22,117 |
|
|
$ |
10,650 |
|
|
$ |
8,844 |
|
|
$ |
41,611 |
|
|
$ |
2,544,916 |
|
|
$ |
2,586,527 |
|
|
$ |
4,350 |
|
|
$ |
17,315 |
|
|
$ |
21,665 |
|
Consumer finance |
843 |
|
|
1,009 |
|
|
525 |
|
|
2,377 |
|
|
225,379 |
|
|
227,756 |
|
|
469 |
|
|
— |
|
|
469 |
|
Tax services |
— |
|
|
40,958 |
|
|
— |
|
|
40,958 |
|
|
310 |
|
|
41,268 |
|
|
— |
|
|
— |
|
|
— |
|
Warehouse finance |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
335,704 |
|
|
335,704 |
|
|
— |
|
|
— |
|
|
— |
|
Total National
Lending |
22,960 |
|
|
52,617 |
|
|
9,369 |
|
|
84,946 |
|
|
3,106,309 |
|
|
3,191,255 |
|
|
4,819 |
|
|
17,315 |
|
|
22,134 |
|
Total Community
Banking |
62 |
|
|
— |
|
|
1,769 |
|
|
1,831 |
|
|
302,153 |
|
|
303,984 |
|
|
— |
|
|
19,773 |
|
|
19,773 |
|
Total loans and leases
held for investment |
$ |
23,022 |
|
|
$ |
52,617 |
|
|
$ |
11,138 |
|
|
$ |
86,777 |
|
|
$ |
3,408,462 |
|
|
$ |
3,495,239 |
|
|
$ |
4,819 |
|
|
$ |
37,088 |
|
|
$ |
41,907 |
|
As of March 31,
2021 |
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 |
$ |
34,675 |
|
|
$ |
8,730 |
|
|
$ |
9,488 |
|
|
$ |
52,893 |
|
|
$ |
2,453,029 |
|
|
$ |
2,505,922 |
|
|
$ |
4,810 |
|
|
$ |
18,305 |
|
|
$ |
23,115 |
|
Consumer finance |
2,033 |
|
|
4,162 |
|
|
2,294 |
|
|
8,489 |
|
|
227,175 |
|
|
235,664 |
|
|
517 |
|
|
— |
|
|
517 |
|
Tax services |
507 |
|
|
— |
|
|
— |
|
|
507 |
|
|
225,414 |
|
|
225,921 |
|
|
— |
|
|
— |
|
|
— |
|
Warehouse finance |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
332,456 |
|
|
332,456 |
|
|
— |
|
|
— |
|
|
— |
|
Total National
Lending |
37,215 |
|
|
12,892 |
|
|
11,782 |
|
|
61,889 |
|
|
3,238,074 |
|
|
3,299,963 |
|
|
5,327 |
|
|
18,305 |
|
|
23,632 |
|
Total Community
Banking |
12 |
|
|
— |
|
|
1,818 |
|
|
1,830 |
|
|
346,235 |
|
|
348,065 |
|
|
— |
|
|
19,824 |
|
|
19,824 |
|
Total loans and leases
held for investment |
$ |
37,227 |
|
|
$ |
12,892 |
|
|
$ |
13,600 |
|
|
$ |
63,719 |
|
|
$ |
3,584,309 |
|
|
$ |
3,648,028 |
|
|
$ |
5,327 |
|
|
$ |
38,129 |
|
|
$ |
43,456 |
|
The Company's nonperforming assets at
June 30, 2021 were $45.1 million, representing 0.64% of total
assets, compared to $46.7 million, or 0.48% of total assets at
March 31, 2021 and $56.1 million, or 0.64% of total assets at
June 30, 2020. The changes in the nonperforming assets as a
percentage of total assets at June 30, 2021 were driven in
large part by a significant reduction in period-end total assets as
the total nonperforming assets for June 30, 2021 decreased
when compared to both the linked-quarter and the prior year.
The Company's nonperforming loans and leases at
June 30, 2021, were $41.9 million, representing 1.17% of total
gross loans and leases, compared to $43.5 million, or 1.17% of
total gross loans and leases at March 31, 2021 and $39.3
million, or 1.10% of total gross loans and leases at June 30,
2020.
Loan and lease balances that were within their
active deferment period decreased to $41.5 million at June 30,
2021 from $66.5 million at March 31, 2021.
Meta is now revising its credit administration
policies and reviewing its loan portfolio to better align with OCC
guidance for national banks, a process that began during the
quarter ending June 30, 2021 and is expected to be completed by
September 30, 2021. We expect these credit policy revisions will
have an impact on our loan and lease risk ratings, resulting in
downgrades of certain credits in several categories. Our loan and
collateral management practices have proven effective in managing
losses during previous economic cycles; and while we expect this
process will result in setting a new baseline for portfolio metrics
going forward, it does not indicate a deterioration in our
portfolio's expected performance. Further, these changes do not
reflect an increase in credit risk for past or future periods and
thus we do not anticipate any increase in losses as a result of
these one-time administrative adjustments to these credits' risk
ratings.
The Company has various portfolios of consumer
finance and tax services loans that present unique risks. Due to
the unique risks associated with these portfolios, the Company
monitors other credit quality indicators in their evaluation of the
appropriateness of the allowance for credit losses on these
portfolios, and as such, these loans are not included in the asset
classification table below. The Company's loans and leases by asset
classification were as follows for the periods presented.
Asset Classification |
Pass |
Watch |
Special Mention |
Substandard |
Doubtful |
Total |
As of June 30,
2021 |
(Dollars in Thousands) |
Commercial finance |
$ |
2,370,132 |
|
$ |
135,691 |
|
$ |
55,805 |
|
$ |
74,941 |
|
$ |
7,166 |
|
$ |
2,643,735 |
|
Warehouse finance |
335,704 |
|
— |
|
— |
|
— |
|
— |
|
335,704 |
|
Total National
Lending |
2,705,836 |
|
135,691 |
|
55,805 |
|
74,941 |
|
7,166 |
|
2,979,439 |
|
Total Community
Banking |
212,283 |
|
33,494 |
|
16,126 |
|
60,196 |
|
— |
|
322,099 |
|
Total Loans and
Leases |
$ |
2,918,119 |
|
$ |
169,185 |
|
$ |
71,931 |
|
$ |
135,137 |
|
$ |
7,166 |
|
$ |
3,301,538 |
|
Asset Classification |
Pass |
Watch |
Special Mention |
Substandard |
Doubtful |
Total |
As of March 31,
2021 |
(Dollars in Thousands) |
Commercial finance |
$ |
2,310,043 |
|
$ |
142,506 |
|
$ |
59,904 |
|
$ |
52,492 |
|
$ |
2,378 |
|
$ |
2,567,323 |
|
Warehouse finance |
332,456 |
|
— |
|
— |
|
— |
|
— |
|
332,456 |
|
Total National
Lending |
2,642,499 |
|
142,506 |
|
59,904 |
|
52,492 |
|
2,378 |
|
2,899,779 |
|
Total Community
Banking |
239,650 |
|
84,107 |
|
684 |
|
23,625 |
|
— |
|
348,066 |
|
Total Loans and
Leases |
$ |
2,882,149 |
|
$ |
226,613 |
|
$ |
60,588 |
|
$ |
76,117 |
|
$ |
2,378 |
|
$ |
3,247,845 |
|
Deposits, Borrowings and Other
LiabilitiesTotal average deposits for the fiscal 2021
third quarter decreased by $240.7 million to $6.98 billion compared
to the same period in fiscal 2020, due to a reduction in wholesale
deposits partially offset by increases in all other non-maturity
deposit categories. Average wholesale deposits decreased $731.1
million, or 89%, while noninterest-bearing deposits increased
$323.1 million, or 5%, for the fiscal 2021 third quarter when
compared to the same period in fiscal 2020. Average deposits from
the Payments division increased nearly 8% to $6.79 billion for the
fiscal 2021 third quarter when compared to the same period in
fiscal 2020. Excluding the balances on the EIP cards, average
payments deposits for the fiscal 2021 second quarter were $6.67
billion, representing an increase of 42% compared to the same
period of the prior year, which continues to be largely driven by
other stimulus-related dollars loaded on various partner cards.
The average balance of total deposits and
interest-bearing liabilities was $7.08 billion for the three-month
period ended June 30, 2021, compared to $7.49 billion for the
same period in the prior fiscal year, representing a decrease of
6%.
Total end-of-period deposits decreased 22% to
$5.89 billion at June 30, 2021, compared to $7.59 billion at
June 30, 2020. The reduction in end-of-period deposits was
primarily driven by decreases in noninterest-bearing deposits of
$1.15 billion and wholesale deposits of $665.0 million. The
decrease in noninterest-bearing deposits was driven by a $2.58
billion reduction in EIP program card balances from June 30,
2020 to June 30, 2021 as Meta was able to shift most of the
remaining EIP program card balances from its balance sheet to other
banks. That decrease in EIP balances was partially offset by growth
in payments deposits that has been largely driven by excess cash on
consumer cards related to government stimulus programs.
Regulatory CapitalThe Company
and MetaBank remained above the federal regulatory minimum capital
requirements at June 30, 2021, continued to be classified as
well-capitalized, and in good standing with the regulatory
agencies. A temporary exemption was granted by the Office of the
Comptroller of the Currency related to the financial impacts of
distributing prepaid debit cards as part of the EIP program.
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 |
June 30,2021(1) |
|
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
Company |
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
6.85 |
% |
|
4.75 |
% |
|
7.39 |
% |
|
6.58 |
% |
|
5.91 |
% |
Common equity Tier 1 capital ratio |
12.76 |
% |
|
11.29 |
% |
|
10.72 |
% |
|
11.78 |
% |
|
11.51 |
% |
Tier 1 capital ratio |
13.11 |
% |
|
11.63 |
% |
|
11.07 |
% |
|
12.18 |
% |
|
11.90 |
% |
Total capital ratio |
16.18 |
% |
|
14.65 |
% |
|
14.14 |
% |
|
15.30 |
% |
|
14.99 |
% |
MetaBank |
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
7.83 |
% |
|
5.47 |
% |
|
8.60 |
% |
|
7.56 |
% |
|
6.89 |
% |
Common equity Tier 1 capital ratio |
14.94 |
% |
|
13.39 |
% |
|
12.87 |
% |
|
13.96 |
% |
|
13.82 |
% |
Tier 1 capital ratio |
14.96 |
% |
|
13.40 |
% |
|
12.89 |
% |
|
14.00 |
% |
|
13.86 |
% |
Total capital ratio |
16.22 |
% |
|
14.66 |
% |
|
14.14 |
% |
|
15.26 |
% |
|
15.12 |
% |
(1) June 30, 2021 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) |
June 30,2021 |
|
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Total stockholders' equity |
$ |
876,633 |
|
|
$ |
835,258 |
|
|
$ |
813,210 |
|
|
$ |
847,308 |
|
|
$ |
829,909 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
LESS: Goodwill, net of associated deferred tax liabilities |
301,179 |
|
|
301,602 |
|
|
301,999 |
|
|
302,396 |
|
|
302,814 |
|
LESS: Certain other intangible assets |
35,100 |
|
|
36,779 |
|
|
39,403 |
|
|
40,964 |
|
|
42,865 |
|
LESS: Net deferred tax assets from operating loss and tax credit
carry-forwards |
17,753 |
|
|
19,306 |
|
|
24,105 |
|
|
18,361 |
|
|
10,360 |
|
LESS: Net unrealized gains (losses) on available-for-sale
securities |
14,750 |
|
|
12,458 |
|
|
19,894 |
|
|
17,762 |
|
|
8,382 |
|
LESS: Non-controlling interest |
1,490 |
|
|
1,092 |
|
|
1,536 |
|
|
3,603 |
|
|
3,787 |
|
ADD: Adoption of Accounting Standards Update 2016-13 |
13,913 |
|
|
10,439 |
|
|
10,439 |
|
|
— |
|
|
— |
|
Common Equity Tier 1(1) |
520,274 |
|
|
474,460 |
|
|
436,712 |
|
|
464,222 |
|
|
461,701 |
|
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 |
932 |
|
|
690 |
|
|
749 |
|
|
1,894 |
|
|
1,894 |
|
Total Tier 1 Capital |
534,867 |
|
|
488,811 |
|
|
451,122 |
|
|
479,777 |
|
|
477,256 |
|
Allowance for credit losses |
51,317 |
|
|
53,232 |
|
|
51,070 |
|
|
49,343 |
|
|
50,338 |
|
Subordinated debentures (net of issuance costs) |
73,936 |
|
|
73,892 |
|
|
73,850 |
|
|
73,807 |
|
|
73,765 |
|
Total qualifying capital |
$ |
660,119 |
|
|
$ |
615,935 |
|
|
$ |
576,042 |
|
|
$ |
602,927 |
|
|
$ |
601,359 |
|
(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.
|
June 30,2021 |
|
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
$ |
876,633 |
|
|
$ |
835,258 |
|
|
$ |
813,210 |
|
|
$ |
847,308 |
|
|
$ |
829,909 |
|
Less: Goodwill |
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
Less: Intangible assets |
34,898 |
|
|
36,903 |
|
|
39,660 |
|
|
41,692 |
|
|
43,974 |
|
Tangible common equity |
532,230 |
|
|
488,850 |
|
|
464,045 |
|
|
496,111 |
|
|
476,430 |
|
Less: Accumulated other
comprehensive income (loss) ("AOCI") |
15,222 |
|
|
12,809 |
|
|
20,119 |
|
|
17,542 |
|
|
7,995 |
|
Tangible common equity excluding AOCI |
$ |
517,008 |
|
|
$ |
476,041 |
|
|
$ |
443,926 |
|
|
$ |
478,569 |
|
|
$ |
468,435 |
|
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, July 28, 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 5084665 upon request. International callers should
dial (636) 812-6634. A webcast replay will also be archived at
www.metafinancialgroup.com for one year.
Upcoming Investor Events
- Raymond James U.S. Bank Conference,
September 8, 2021 | Chicago, IL
Forward-Looking StatementsThe
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; 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; changes in consumer spending and
saving habits; the impact of our participation as prepaid card
issuer for the EIP program and 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 |
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
June 30, 2020 |
Cash and cash equivalents |
$ |
720,243 |
|
|
$ |
3,724,242 |
|
|
$ |
1,586,451 |
|
|
$ |
427,367 |
|
|
$ |
3,108,141 |
|
Investment securities available for sale, at fair value |
854,023 |
|
|
921,947 |
|
|
797,363 |
|
|
814,495 |
|
|
825,579 |
|
Mortgage-backed securities available for sale, at fair value |
1,063,582 |
|
|
558,833 |
|
|
430,761 |
|
|
453,607 |
|
|
338,250 |
|
Investment securities held to maturity, at cost |
60,228 |
|
|
67,709 |
|
|
76,176 |
|
|
87,183 |
|
|
98,205 |
|
Mortgage-backed securities held to maturity, at cost |
4,019 |
|
|
4,403 |
|
|
5,152 |
|
|
5,427 |
|
|
6,382 |
|
Loans
held for sale |
87,905 |
|
|
67,635 |
|
|
133,659 |
|
|
183,577 |
|
|
79,905 |
|
Loans
and leases |
3,496,670 |
|
|
3,657,531 |
|
|
3,448,675 |
|
|
3,322,765 |
|
|
3,502,646 |
|
Allowance for credit losses |
(91,208 |
) |
|
(98,892 |
) |
|
(72,389 |
) |
|
(56,188 |
) |
|
(65,747 |
) |
Federal Reserve Bank and Federal Home Loan Bank stocks, at
cost |
28,433 |
|
|
28,433 |
|
|
27,138 |
|
|
27,138 |
|
|
31,836 |
|
Accrued interest receivable |
16,230 |
|
|
17,429 |
|
|
17,133 |
|
|
16,628 |
|
|
17,545 |
|
Premises, furniture, and equipment, net |
44,107 |
|
|
41,510 |
|
|
39,932 |
|
|
41,608 |
|
|
40,361 |
|
Rental equipment, net |
211,368 |
|
|
211,397 |
|
|
206,732 |
|
|
205,964 |
|
|
216,336 |
|
Bank-owned life insurance |
94,142 |
|
|
93,542 |
|
|
92,937 |
|
|
92,315 |
|
|
91,697 |
|
Foreclosed real estate and repossessed assets, net |
1,204 |
|
|
1,483 |
|
|
7,186 |
|
|
9,957 |
|
|
6,784 |
|
Goodwill |
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
Intangible assets |
34,898 |
|
|
36,903 |
|
|
39,660 |
|
|
41,692 |
|
|
43,974 |
|
Prepaid assets |
7,482 |
|
|
10,201 |
|
|
11,270 |
|
|
8,328 |
|
|
6,806 |
|
Deferred taxes |
20,072 |
|
|
25,435 |
|
|
24,411 |
|
|
17,723 |
|
|
15,944 |
|
Other
assets |
88,909 |
|
|
110,877 |
|
|
82,763 |
|
|
82,983 |
|
|
104,877 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
7,051,812 |
|
|
$ |
9,790,123 |
|
|
$ |
7,264,515 |
|
|
$ |
6,092,074 |
|
|
$ |
8,779,026 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
Noninterest-bearing checking |
5,385,569 |
|
|
7,928,235 |
|
|
5,581,597 |
|
|
4,356,630 |
|
|
6,537,809 |
|
Interest-bearing checking |
255,509 |
|
|
416,164 |
|
|
274,504 |
|
|
157,571 |
|
|
187,003 |
|
Savings deposits |
93,608 |
|
|
126,834 |
|
|
54,080 |
|
|
47,866 |
|
|
55,896 |
|
Money market deposits |
63,920 |
|
|
55,045 |
|
|
56,440 |
|
|
48,494 |
|
|
40,811 |
|
Time certificates of deposit |
11,425 |
|
|
12,614 |
|
|
13,522 |
|
|
20,223 |
|
|
25,000 |
|
Wholesale deposits |
78,840 |
|
|
103,521 |
|
|
227,648 |
|
|
348,416 |
|
|
743,806 |
|
Total
deposits |
5,888,871 |
|
|
8,642,413 |
|
|
6,207,791 |
|
|
4,979,200 |
|
|
7,590,325 |
|
Short-term borrowings |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Long-term borrowings |
93,634 |
|
|
95,336 |
|
|
96,760 |
|
|
98,224 |
|
|
209,781 |
|
Accrued interest payable |
1,853 |
|
|
679 |
|
|
2,068 |
|
|
1,923 |
|
|
4,332 |
|
Accrued expenses and other liabilities |
190,821 |
|
|
216,437 |
|
|
144,686 |
|
|
165,419 |
|
|
144,679 |
|
Total liabilities |
6,175,179 |
|
|
8,954,865 |
|
|
6,451,305 |
|
|
5,244,766 |
|
|
7,949,117 |
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Preferred stock |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Common stock, $.01 par value |
319 |
|
|
319 |
|
|
326 |
|
|
344 |
|
|
346 |
|
Common stock, Nonvoting, $.01 par value |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Additional paid-in capital |
602,720 |
|
|
601,222 |
|
|
598,669 |
|
|
594,569 |
|
|
592,693 |
|
Retained earnings |
262,578 |
|
|
225,471 |
|
|
198,000 |
|
|
234,927 |
|
|
228,500 |
|
Accumulated other comprehensive income |
15,222 |
|
|
12,809 |
|
|
20,119 |
|
|
17,542 |
|
|
7,995 |
|
Treasury stock, at cost |
(5,696 |
) |
|
(5,655 |
) |
|
(5,440 |
) |
|
(3,677 |
) |
|
(3,412 |
) |
Total equity attributable to parent |
875,143 |
|
|
834,166 |
|
|
811,674 |
|
|
843,705 |
|
|
826,122 |
|
Noncontrolling interest |
1,490 |
|
|
1,092 |
|
|
1,536 |
|
|
3,603 |
|
|
3,787 |
|
Total stockholders’ equity |
876,633 |
|
|
835,258 |
|
|
813,210 |
|
|
847,308 |
|
|
829,909 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
7,051,812 |
|
|
$ |
9,790,123 |
|
|
$ |
7,264,515 |
|
|
$ |
6,092,074 |
|
|
$ |
8,779,026 |
|
Consolidated Statements of Operations
(Unaudited)
(Dollars in Thousands, Except Share and Per Share
Data)
|
Three Months Ended |
|
Year Ended |
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
|
June 30,2021 |
|
June 30,2020 |
Interest and dividend
income: |
|
|
|
|
|
|
|
|
|
Loans and leases, including fees |
$ |
62,287 |
|
|
$ |
68,472 |
|
|
$ |
59,911 |
|
|
$ |
192,415 |
|
|
$ |
199,107 |
|
Mortgage-backed securities |
3,446 |
|
|
2,608 |
|
|
2,269 |
|
|
8,176 |
|
|
7,151 |
|
Other investments |
4,250 |
|
|
4,589 |
|
|
5,226 |
|
|
13,207 |
|
|
18,176 |
|
|
69,983 |
|
|
75,669 |
|
|
67,406 |
|
|
213,798 |
|
|
224,434 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
Deposits |
188 |
|
|
445 |
|
|
3,130 |
|
|
1,429 |
|
|
20,712 |
|
FHLB advances and other borrowings |
1,320 |
|
|
1,374 |
|
|
2,139 |
|
|
4,045 |
|
|
9,197 |
|
|
1,508 |
|
|
1,819 |
|
|
5,269 |
|
|
5,474 |
|
|
29,909 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
68,475 |
|
|
73,850 |
|
|
62,137 |
|
|
208,324 |
|
|
194,525 |
|
|
|
|
|
|
|
|
|
|
|
Provision for credit
losses |
4,612 |
|
|
30,290 |
|
|
15,093 |
|
|
40,991 |
|
|
55,796 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for credit
losses |
63,863 |
|
|
43,560 |
|
|
47,044 |
|
|
167,333 |
|
|
138,729 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
Refund transfer product fees |
12,073 |
|
|
22,680 |
|
|
4,595 |
|
|
35,400 |
|
|
33,726 |
|
Tax advance product fees |
891 |
|
|
44,562 |
|
|
28 |
|
|
47,413 |
|
|
31,840 |
|
Payments card and deposit fees |
29,203 |
|
|
29,875 |
|
|
21,302 |
|
|
81,641 |
|
|
65,957 |
|
Other bank and deposit fees |
338 |
|
|
133 |
|
|
214 |
|
|
709 |
|
|
1,083 |
|
Rental income |
9,976 |
|
|
9,846 |
|
|
11,231 |
|
|
29,707 |
|
|
34,682 |
|
Net gain realized on investment securities |
— |
|
|
6 |
|
|
— |
|
|
6 |
|
|
— |
|
Gain on divestitures |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
19,275 |
|
Gain (loss) on sale of other |
5,955 |
|
|
2,133 |
|
|
1,214 |
|
|
10,935 |
|
|
969 |
|
Other income |
4,017 |
|
|
4,218 |
|
|
2,464 |
|
|
15,550 |
|
|
11,512 |
|
Total noninterest income |
62,453 |
|
|
113,453 |
|
|
41,048 |
|
|
221,361 |
|
|
199,044 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
Compensation and benefits |
38,604 |
|
|
43,932 |
|
|
32,102 |
|
|
114,867 |
|
|
100,631 |
|
Refund transfer product expense |
2,435 |
|
|
6,146 |
|
|
(139 |
) |
|
8,642 |
|
|
7,482 |
|
Tax advance product expense |
(25 |
) |
|
2,189 |
|
|
(11 |
) |
|
2,534 |
|
|
2,820 |
|
Card processing |
6,809 |
|
|
7,212 |
|
|
7,128 |
|
|
20,138 |
|
|
19,432 |
|
Occupancy and equipment expense |
7,381 |
|
|
6,748 |
|
|
6,502 |
|
|
21,017 |
|
|
20,169 |
|
Operating lease equipment depreciation |
8,122 |
|
|
7,419 |
|
|
8,536 |
|
|
23,122 |
|
|
25,237 |
|
Legal and consulting |
5,680 |
|
|
6,045 |
|
|
4,660 |
|
|
16,972 |
|
|
15,242 |
|
Intangible amortization |
2,013 |
|
|
2,757 |
|
|
2,636 |
|
|
6,784 |
|
|
8,714 |
|
Impairment expense |
505 |
|
|
554 |
|
|
— |
|
|
2,217 |
|
|
750 |
|
Other expense |
9,999 |
|
|
12,969 |
|
|
9,827 |
|
|
33,775 |
|
|
38,291 |
|
Total noninterest expense |
81,523 |
|
|
95,971 |
|
|
71,241 |
|
|
250,068 |
|
|
238,768 |
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense |
44,793 |
|
|
61,042 |
|
|
16,851 |
|
|
138,626 |
|
|
99,005 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
4,934 |
|
|
1,133 |
|
|
(2,426 |
) |
|
9,600 |
|
|
3,870 |
|
|
|
|
|
|
|
|
|
|
|
Net income before
noncontrolling interest |
39,859 |
|
|
59,909 |
|
|
19,277 |
|
|
129,026 |
|
|
95,135 |
|
Net income attributable to noncontrolling interest |
1,158 |
|
|
843 |
|
|
1,087 |
|
|
3,221 |
|
|
3,573 |
|
Net income
attributable to parent |
$ |
38,701 |
|
|
$ |
59,066 |
|
|
$ |
18,190 |
|
|
$ |
125,805 |
|
|
$ |
91,562 |
|
|
|
|
|
|
|
|
|
|
|
Less: Allocation of
Earnings to participating
securities(1) |
|
729 |
|
|
|
1,113 |
|
|
|
432 |
|
|
|
2,411 |
|
|
|
2,097 |
|
Net income
attributable to common
shareholders(1) |
|
37,972 |
|
|
|
57,953 |
|
|
|
17,758 |
|
|
|
123,394 |
|
|
|
89,465 |
|
Earnings per common
share |
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.21 |
|
|
$ |
1.84 |
|
|
$ |
0.53 |
|
|
$ |
3.87 |
|
|
$ |
2.54 |
|
Diluted |
$ |
1.21 |
|
|
$ |
1.84 |
|
|
$ |
0.53 |
|
|
$ |
3.87 |
|
|
$ |
2.54 |
|
Shares used in
computing earnings per common share |
|
|
|
|
|
|
|
|
|
Basic |
31,320,893 |
|
|
31,520,505 |
|
|
33,794,154 |
|
|
31,880,653 |
|
|
35,180,068 |
|
Diluted |
31,338,947 |
|
|
31,535,022 |
|
|
33,815,651 |
|
|
31,900,597 |
|
|
35,201,702 |
|
(1) Amounts presented are used in the two-class earnings per
common share calculation.
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
June 30, |
2021 |
|
2020 |
(Dollars in Thousands) |
AverageOutstandingBalance |
|
InterestEarned
/Paid |
|
Yield
/Rate(1) |
|
AverageOutstandingBalance |
|
InterestEarned
/Paid |
|
Yield
/Rate(1) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and fed funds sold |
$ |
1,867,988 |
|
|
$ |
528 |
|
|
0.11 |
% |
|
$ |
2,692,270 |
|
|
$ |
783 |
|
|
0.12 |
% |
Mortgage-backed securities |
882,042 |
|
|
3,446 |
|
|
1.57 |
% |
|
342,174 |
|
|
2,269 |
|
|
2.67 |
% |
Tax exempt investment securities |
263,401 |
|
|
884 |
|
|
1.70 |
% |
|
417,042 |
|
|
1,658 |
|
|
2.02 |
% |
Asset-backed securities |
438,163 |
|
|
1,651 |
|
|
1.51 |
% |
|
336,562 |
|
|
1,770 |
|
|
2.11 |
% |
Other investment securities |
246,493 |
|
|
1,187 |
|
|
1.93 |
% |
|
197,643 |
|
|
1,014 |
|
|
2.06 |
% |
Total investments |
1,830,099 |
|
|
7,168 |
|
|
1.62 |
% |
|
1,293,420 |
|
|
6,711 |
|
|
2.22 |
% |
Total commercial finance |
2,616,942 |
|
|
48,641 |
|
|
7.46 |
% |
|
2,160,175 |
|
|
40,375 |
|
|
7.52 |
% |
Total consumer finance |
241,813 |
|
|
3,916 |
|
|
6.50 |
% |
|
247,824 |
|
|
4,635 |
|
|
7.52 |
% |
Total tax services |
91,804 |
|
|
604 |
|
|
2.64 |
% |
|
39,845 |
|
|
— |
|
|
— |
% |
Total warehouse finance |
332,759 |
|
|
5,151 |
|
|
6.21 |
% |
|
304,839 |
|
|
4,582 |
|
|
6.05 |
% |
National lending loans and leases |
3,283,318 |
|
|
58,312 |
|
|
7.12 |
% |
|
2,752,683 |
|
|
49,592 |
|
|
7.25 |
% |
Community Banking loans |
335,415 |
|
|
3,975 |
|
|
4.75 |
% |
|
870,245 |
|
|
10,319 |
|
|
4.77 |
% |
Total loans and leases |
3,618,733 |
|
|
62,287 |
|
|
6.90 |
% |
|
3,622,928 |
|
|
59,911 |
|
|
6.65 |
% |
Total interest-earning
assets |
$ |
7,316,820 |
|
|
$ |
69,983 |
|
|
3.85 |
% |
|
$ |
7,608,618 |
|
|
$ |
67,406 |
|
|
3.59 |
% |
Noninterest-earning assets |
841,738 |
|
|
|
|
|
|
830,589 |
|
|
|
|
|
Total
assets |
$ |
8,158,558 |
|
|
|
|
|
|
$ |
8,439,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking(2) |
$ |
336,576 |
|
|
$ |
— |
|
|
— |
% |
|
$ |
226,382 |
|
|
$ |
— |
|
|
— |
% |
Savings |
107,803 |
|
|
5 |
|
|
0.02 |
% |
|
55,572 |
|
|
1 |
|
|
0.01 |
% |
Money markets |
58,517 |
|
|
66 |
|
|
0.45 |
% |
|
40,091 |
|
|
33 |
|
|
0.33 |
% |
Time deposits |
11,877 |
|
|
27 |
|
|
0.91 |
% |
|
25,392 |
|
|
113 |
|
|
1.78 |
% |
Wholesale deposits |
86,295 |
|
|
90 |
|
|
0.42 |
% |
|
817,414 |
|
|
2,983 |
|
|
1.47 |
% |
Total interest-bearing deposits |
601,068 |
|
|
188 |
|
|
0.13 |
% |
|
1,164,852 |
|
|
3,130 |
|
|
1.08 |
% |
Overnight fed funds purchased |
11 |
|
|
— |
|
|
0.25 |
% |
|
59,055 |
|
|
48 |
|
|
0.33 |
% |
FHLB advances |
— |
|
|
— |
|
|
— |
% |
|
110,000 |
|
|
670 |
|
|
2.45 |
% |
Subordinated debentures |
73,907 |
|
|
1,148 |
|
|
6.23 |
% |
|
73,738 |
|
|
1,153 |
|
|
6.29 |
% |
Other borrowings |
20,657 |
|
|
172 |
|
|
3.35 |
% |
|
27,032 |
|
|
268 |
|
|
3.98 |
% |
Total borrowings |
94,575 |
|
|
1,320 |
|
|
5.60 |
% |
|
269,825 |
|
|
2,139 |
|
|
3.19 |
% |
Total interest-bearing
liabilities |
695,643 |
|
|
1,508 |
|
|
0.87 |
% |
|
1,434,677 |
|
|
5,269 |
|
|
1.48 |
% |
Noninterest-bearing deposits |
6,380,371 |
|
|
— |
|
|
— |
% |
|
6,057,314 |
|
|
— |
|
|
— |
% |
Total deposits and
interest-bearing liabilities |
$ |
7,076,014 |
|
|
$ |
1,508 |
|
|
0.09 |
% |
|
$ |
7,491,991 |
|
|
$ |
5,269 |
|
|
0.28 |
% |
Other noninterest-bearing liabilities |
225,862 |
|
|
|
|
|
|
122,940 |
|
|
|
|
|
Total
liabilities |
7,301,876 |
|
|
|
|
|
|
7,614,931 |
|
|
|
|
|
Shareholders' equity |
856,682 |
|
|
|
|
|
|
824,276 |
|
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
8,158,558 |
|
|
|
|
|
|
$ |
8,439,206 |
|
|
|
|
|
Net interest income and net
interest rate spread including noninterest-bearing deposits |
|
|
$ |
68,475 |
|
|
3.76 |
% |
|
|
|
$ |
62,137 |
|
|
3.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin |
|
|
|
|
3.75 |
% |
|
|
|
|
|
3.28 |
% |
Tax-equivalent
effect |
|
|
|
|
0.02 |
% |
|
|
|
|
|
0.02 |
% |
Net interest margin,
tax-equivalent(3) |
|
|
|
|
3.77 |
% |
|
|
|
|
|
3.31 |
% |
(1) Tax rate used to arrive at the TEY for the
three months ended June 30, 2021 and 2020 was 21%.(2) Of the total
balance, $336.2 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 |
June 30,2021 |
|
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
Equity to total assets |
12.43 |
% |
|
8.53 |
% |
|
11.19 |
% |
|
13.91 |
% |
|
9.45 |
% |
Book value per common share outstanding |
$ |
27.46 |
|
|
$ |
26.16 |
|
|
$ |
24.93 |
|
|
$ |
24.66 |
|
|
$ |
23.96 |
|
Tangible book value per common
share outstanding |
$ |
16.67 |
|
|
$ |
15.31 |
|
|
$ |
14.23 |
|
|
$ |
14.44 |
|
|
$ |
13.76 |
|
Tangible book value per common
share outstanding excluding AOCI |
$ |
16.20 |
|
|
$ |
14.91 |
|
|
$ |
13.61 |
|
|
$ |
13.93 |
|
|
$ |
13.53 |
|
Common shares outstanding |
31,919,780 |
|
|
31,926,008 |
|
|
32,620,251 |
|
|
34,360,890 |
|
|
34,631,160 |
|
Nonperforming assets to total
assets |
0.64 |
% |
|
0.48 |
% |
|
0.73 |
% |
|
0.79 |
% |
|
0.64 |
% |
Nonperforming loans and leases
to total loans and leases |
1.17 |
% |
|
1.17 |
% |
|
1.18 |
% |
|
0.97 |
% |
|
1.10 |
% |
Net interest margin |
3.75 |
% |
|
3.07 |
% |
|
4.65 |
% |
|
3.77 |
% |
|
3.28 |
% |
Net interest margin,
tax-equivalent |
3.77 |
% |
|
3.08 |
% |
|
4.67 |
% |
|
3.79 |
% |
|
3.31 |
% |
Return on average assets |
1.90 |
% |
|
2.22 |
% |
|
1.73 |
% |
|
0.69 |
% |
|
0.86 |
% |
Return on average equity |
18.07 |
% |
|
28.93 |
% |
|
13.91 |
% |
|
6.21 |
% |
|
8.83 |
% |
Full-time equivalent
employees |
1,109 |
|
|
1,075 |
|
|
1,038 |
|
|
1,015 |
|
|
999 |
|
Non-GAAP Reconciliation
Efficiency
Ratio |
For the last twelve months ended |
(Dollars in Thousands) |
June 30,2021 |
|
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
Noninterest Expense - GAAP |
$ |
330,352 |
|
|
$ |
320,070 |
|
|
$ |
315,828 |
|
|
$ |
319,051 |
|
|
$ |
314,911 |
|
Net Interest Income |
272,837 |
|
|
266,499 |
|
|
260,386 |
|
|
259,038 |
|
|
260,142 |
|
Noninterest Income |
262,111 |
|
|
240,706 |
|
|
247,766 |
|
|
239,794 |
|
|
235,024 |
|
Total Revenue: GAAP |
$ |
534,948 |
|
|
$ |
507,205 |
|
|
$ |
508,152 |
|
|
$ |
498,832 |
|
|
$ |
495,166 |
|
Efficiency Ratio, last twelve months |
61.75 |
% |
|
63.10 |
% |
|
62.15 |
% |
|
63.96 |
% |
|
63.60 |
% |
About Meta Financial Group,
Inc.®
Meta Financial Group, Inc.® ("Meta")
(Nasdaq: CASH) is a South Dakota-based financial holding company.
At Meta, our mission is financial inclusion for all®. Through our
subsidiary, MetaBank®, N.A., we strive to remove barriers to
financial access and promote economic mobility by working with
third parties to provide responsible, secure, high quality
financial products that contribute to the social and economic
benefit of communities at the core of the real economy. Meta works
to increase financial availability, choice, and opportunity for
all. Additional information can be found by visiting
www.metafinancialgroup.com.
Investor Relations ContactBrittany Kelley
Elsasser605-362-2423bkelley@metabank.com
Media Relations
Contactmediarelations@metabank.com
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