Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the
“Company”) reported net income of $59.1 million, or $1.84 per
share, for the three months ended March 31, 2021, compared to
net income of $52.3 million, or $1.45 per share, for the three
months ended March 31, 2020.
“Our Tax Services and Payments businesses and
the increased interest income from our Commercial Finance business
combined to produce solid second quarter revenue results,” said
President and CEO Brad Hanson. “We continued to develop our Banking
as a Service franchise, including the launch of a new partnership
with Walgreens. During the quarter, we distributed cards for the
second and third rounds of Economic Impact Payments and further
developed our Environmental, Social and Governance efforts, all of
which helped advance our mission of financial inclusion for
all®.”
“We are pleased with our team’s ability to grow
core revenues, improve efficiency, and manage credit. Excluding
last year’s gain-on-sale from the divestiture of our community
bank, we have seen promising fee income growth driven by both new
and existing partner relationships in our payments and tax
businesses. Our loan and lease portfolios also continued to perform
well, reflecting the strength of our lending and collateral
management programs,” said Executive Vice President and CFO Glen
Herrick.
Business Development Highlights for the
2021 Fiscal Second Quarter
-
Increased revenue included the benefits of H&R Block's suite of
financial services products.
-
Partnered with the U.S. Department of the Treasury’s Bureau of the
Fiscal Service (“Fiscal Service”) to disburse Economic Income
Payment (“EIP”) stimulus payments through the distribution of
prepaid cards. During the quarter, the Company began distributing
cards under the authorizations for the second round on January 4,
2021 and for the third round on March 23, 2021.
-
Selected as the issuing bank for Walgreens’ newly launched
bank-account product with InComm Payments and MasterCard, adding to
MetaBank’s diverse suite of Banking as a Service
relationships.
-
Expanded our solar lending business, increasing our solar lending
originations for the first six months of the fiscal year 2021 by
65% to $58.5 million.
-
Dedicated additional resources to our Environmental, Social, and
Governance (“ESG”) activities to include the hiring of Chief People
and Inclusion Officer, Kia Tang.
Financial Highlights for the 2021 Fiscal Second
Quarter
-
Total revenue for the second quarter was $187.3 million, a slight
decrease compared to $188.3 million for the same quarter in fiscal
2020, which benefited from the one-time $19.3 million gain on sale
from the divestiture of our former Community Bank division.
-
Operating efficiency ratio was 63.1% at March 31, 2021,
compared to 62.9% at March 31, 2020, which benefited from the
aforementioned gain on sale of divestiture of the Community Bank
division. See non-GAAP reconciliation table below.
-
Net interest income for the second quarter was $73.9 million,
compared to $67.7 million in the comparable quarter last year.
-
Net interest margin (“NIM”) decreased to 3.07% for the second
quarter from 4.78% during the same period of last year, chiefly
reflecting excess cash associated with the Company’s participation
in the EIP program, as described further below.
-
Total gross loans and leases at March 31, 2021 increased $37.2
million, or 1%, to $3.65 billion, compared to March 31, 2020
and increased $208.5 million, or 6%, when compared to December 31,
2020.
-
Average deposits from the payments division for the fiscal 2021
second quarter increased nearly 181% to $9.29 billion when compared
to the prior year quarter. 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 734,984 shares during the second quarter at an average
price of $40.78.
Tax Season For the 2021 tax
season, MetaBank originated $1.79 billion in refund advance loans
compared to $1.33 billion during the 2020 tax season.
During the second quarter of the fiscal 2021,
total tax services product revenue was $67.0 million, an increase
of 17% compared to the second quarter of fiscal 2020.
While the 2021 tax services results have thus
far been favorable compared to the prior year’s tax season, it has
been below the Company’s expectations as a result of reduced
overall demand for refund advances due to consumers having access
to EIP stimulus funds, which have been partially offset by higher
payments fee income. We do expect overall tax season refund
transfer volumes and revenue to be similar to last year. We believe
the impacts to the tax advance product are unique to this tax
season and the Company anticipates more normalized results from its
H&R Block and Jackson Hewitt relationships will be achieved in
the 2022 tax season and beyond. Despite these stimulus-related
impacts, total tax services product income, net of losses and
direct product expenses, increased 14% when comparing the first six
months of fiscal 2021 to the same period of the prior fiscal
year.
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 an ongoing role in providing a safe and secure
mechanism for individuals, including the underbanked, to receive
their stimulus payments. In 2020, the Bank dispensed approximately
$6.42 billion of the first round of EIP payments under the
Coronavirus Aid, Relief, and Economic Security Act through the
distribution of 3.6 million Bank-issued prepaid cards, and earlier
this year dispensed approximately $7.10 billion of the second round
of EIP payments under the Consolidated Appropriations Act of 2021
through the distribution of 8.1 million Bank-issued prepaid
cards.
On March 11, 2021, the U.S. Congress, through
the American Rescue Plan Act of 2021, directed the Internal Revenue
Service (“IRS”), to distribute a third round of EIP via the U.S.
Treasury to persons in the U.S. eligible to receive them. The Bank
has entered into an amendment of its existing agreement with the
Fiscal Service under which the Bank acts as its Financial Agent 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. Through this third round, the Bank
disbursed approximately $10.64 billion of EIP payments through the
distribution of 4.7 million Bank-issued prepaid cards.
Through March 31, 2021 the Bank has issued a
combined total of 16.5 million prepaid cards totaling approximately
$24.15 billion related to three stimulus programs, of which $11.64
billion is still outstanding as of March 31, 2021. Of that balance,
only $869.2 million remained on Meta’s balance sheet, as MetaBank
has been working with other banks to transfer these temporary
deposits off the balance sheet. As of April 21st, 2021 the Bank had
$131.0 million in EIP deposit balances outstanding on its balance
sheet.
The Company anticipates that participating in
the EIP card distribution program will continue to have a slightly
positive impact on earnings and it does not expect any material
impact on its risk-based capital ratios due to the participation in
the card distribution program. Additionally, the Company does not
expect these conditions will be sustained over the long-term.
COVID-19 Business Update
As of March 31, 2021, the Company had 576
loans outstanding with total loan balances of $208.6 million
originated as part of the Paycheck Protection Program (“PPP”),
compared with 612 loans outstanding with total loan balances of
$194.3 million for the quarter ended December 31, 2020.
As of March 31, 2021, $66.5 million of the
loans and leases that were granted deferral payments by the Company
were still in their deferment period. As of December 31, 2020,
loans and leases totaling $84.2 million were within their deferment
period.
The Company’s capital position remained in good
standing as of March 31, 2021, even while continuing to absorb
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.
Net Interest IncomeNet interest
income for the fiscal 2021 second quarter was $73.9 million, an
increase of 9% 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.
During the second fiscal quarter of 2021,
interest expense decreased $9.8 million, which was partially offset
by decreases in loan and lease interest income of $2.0 million and
investment securities and cash interest income of $1.7 million,
when comparing to the prior year quarter. The quarterly average
outstanding balance of loans and leases increased by 8% on a linked
quarter basis primarily due to seasonal tax services loans with
growth from Term Lending, Asset Based Lending, and SBA/USDA,
partially offset by lower community bank loan balances. The
Company’s average interest-earning assets for the fiscal 2021
second quarter increased by $4.07 billion, to $9.77 billion
compared with the second quarter in fiscal 2020, primarily due to
the effects of the EIP program.
NIM decreased to 3.07% for the fiscal 2021
second quarter from 4.78% for the comparable quarter last year. The
overall reported tax-equivalent yield (“TEY”) on average earning
asset yields decreased by 249 basis points to 3.15% for the fiscal
2021 second 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
second quarter TEY on the securities portfolio was 1.78% compared
to 2.68% for the comparable period last year.
The Company’s cost of funds for all deposits and
borrowings averaged 0.08% during the fiscal 2021 second quarter,
compared to 0.83% during the prior year quarter. This reflected
primarily 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 0.02% in the
fiscal second quarter of 2021, compared to 0.66% in the same
quarter last year.
Noninterest IncomeFiscal 2021
second quarter noninterest income decreased to $113.5 million,
compared with $120.5 million for the same period of the prior year.
This decrease was primarily due to the $19.3 million gain on
divestiture of the Community Bank division, which was recognized
during the fiscal 2020 second quarter. Partially offsetting the
decrease were increases in total tax product fee income and payment
card and deposit fee income.
Noninterest ExpenseNoninterest
expense increased 5% to $96.0 million for the fiscal 2021 second
quarter, from $91.7 million for the same quarter of last year,
primarily driven by increases in compensation and benefits due to a
return to more normalized incentive accruals and additional
employees to support growth.
Income Tax ExpenseThe Company
recorded income tax expense of $1.1 million, representing an
effective tax rate of 1.9%, for the fiscal 2021 second quarter,
compared to an income tax expense of $5.6 million, representing an
effective tax rate of 9.5%, for the second quarter last year.
The Company originated $20.0 million in solar
leases during the fiscal 2021 second quarter, compared to $17.6
million during last year’s second quarter. The investment tax
credit for the second quarter reflected an adjustment to the full
fiscal year’s projected investment tax credit volumes, which
contributed to the overall reduction in income tax expense compared
to the prior year. Investment tax credits related to solar leases
are recognized ratably based on income throughout each fiscal year.
The timing and impact of future solar tax credits are expected to
vary from period to period, and Meta intends to undertake only
those tax credit opportunities that meet the Company’s underwriting
and return criteria.
Investments, Loans and Leases
| |
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
June 30, 2020 |
|
March 31, 2020 |
|
Total investments |
$ |
1,552,892 |
|
|
$ |
1,309,452 |
|
|
$ |
1,360,712 |
|
|
$ |
1,268,416 |
|
|
$ |
1,310,476 |
|
| |
|
|
|
|
|
|
|
|
|
| Loans held for
sale |
|
|
|
|
|
|
|
|
|
|
Consumer credit products |
6,233 |
|
|
234 |
|
|
962 |
|
|
391 |
|
|
— |
|
|
SBA/USDA |
61,402 |
|
|
32,983 |
|
|
52,542 |
|
|
31,438 |
|
|
13,610 |
|
|
Community Bank |
— |
|
|
100,442 |
|
|
130,073 |
|
|
48,076 |
|
|
— |
|
| Total loans held for
sale |
67,635 |
|
|
133,659 |
|
|
183,577 |
|
|
79,905 |
|
|
13,610 |
|
| |
|
|
|
|
|
|
|
|
|
| National
Lending |
|
|
|
|
|
|
|
|
|
|
Term lending |
891,414 |
|
|
881,306 |
|
|
805,323 |
|
|
738,454 |
|
|
725,581 |
|
|
Asset based lending |
248,735 |
|
|
242,298 |
|
|
182,419 |
|
|
181,130 |
|
|
250,211 |
|
|
Factoring |
277,612 |
|
|
275,650 |
|
|
281,173 |
|
|
206,361 |
|
|
285,495 |
|
|
Lease financing |
308,169 |
|
|
283,722 |
|
|
281,084 |
|
|
264,988 |
|
|
238,788 |
|
|
Insurance premium finance |
344,841 |
|
|
338,227 |
|
|
337,940 |
|
|
359,147 |
|
|
332,800 |
|
|
SBA/USDA |
331,917 |
|
|
300,707 |
|
|
318,387 |
|
|
308,611 |
|
|
92,000 |
|
|
Other commercial finance |
103,234 |
|
|
101,209 |
|
|
101,658 |
|
|
100,214 |
|
|
101,472 |
|
| Commercial
Finance |
2,505,922 |
|
|
2,423,119 |
|
|
2,307,984 |
|
|
2,158,905 |
|
|
2,026,347 |
|
|
Consumer credit products |
104,842 |
|
|
88,595 |
|
|
89,809 |
|
|
102,808 |
|
|
113,544 |
|
|
Other consumer finance |
130,822 |
|
|
162,423 |
|
|
134,342 |
|
|
138,777 |
|
|
144,895 |
|
| Consumer
Finance |
235,664 |
|
|
251,018 |
|
|
224,151 |
|
|
241,585 |
|
|
258,439 |
|
| Tax
Services |
225,921 |
|
|
92,548 |
|
|
3,066 |
|
|
19,168 |
|
|
95,936 |
|
| Warehouse
Finance |
332,456 |
|
|
318,937 |
|
|
293,375 |
|
|
277,614 |
|
|
333,829 |
|
|
Total National Lending loans and leases |
3,299,963 |
|
|
3,085,622 |
|
|
2,828,576 |
|
|
2,697,272 |
|
|
2,714,551 |
|
| Community
Banking |
|
|
|
|
|
|
|
|
|
| Commercial real estate and
operating |
335,587 |
|
|
339,141 |
|
|
457,371 |
|
|
608,303 |
|
|
654,429 |
|
| Consumer one-to-four family
real estate and other |
4,567 |
|
|
5,077 |
|
|
16,486 |
|
|
166,479 |
|
|
205,046 |
|
| Agricultural real estate and
operating |
7,911 |
|
|
9,724 |
|
|
11,707 |
|
|
24,655 |
|
|
36,759 |
|
|
Total Community Banking loans |
348,065 |
|
|
353,942 |
|
|
485,564 |
|
|
799,437 |
|
|
896,234 |
|
| Total gross loans and
leases |
3,648,028 |
|
|
3,439,564 |
|
|
3,314,140 |
|
|
3,496,709 |
|
|
3,610,785 |
|
|
Allowance for credit losses |
(98,892 |
) |
|
(72,389 |
) |
|
(56,188 |
) |
|
(65,747 |
) |
|
(65,355 |
) |
|
Net deferred loan and lease origination fees |
9,503 |
|
|
9,111 |
|
|
8,625 |
|
|
5,937 |
|
|
8,139 |
|
| Total loans and
leases, net of allowance |
$ |
3,558,639 |
|
|
$ |
3,376,286 |
|
|
$ |
3,266,577 |
|
|
$ |
3,436,899 |
|
|
$ |
3,553,569 |
|
The Company’s investment security balances at
March 31, 2021 totaled $1.55 billion, as compared to
$1.31 billion at December 31, 2020 and $1.31 billion at
March 31, 2020.
Total gross loans and leases increased $37.2
million, or 1%, to $3.65 billion at March 31, 2021, from $3.61
billion at March 31, 2020. The increase was primarily driven
by growth in the commercial finance and tax services portfolios
partially offset by the continued decrease in community bank loan
balances.
At March 31, 2021, commercial finance
loans, which comprised 69% of the Company’s gross loan and lease
portfolio, totaled $2.51 billion, reflecting growth of $82.8
million, or 3%, from December 31, 2020. The increase in
commercial finance loans was primarily due to increases in SBA/USDA
loans and lease financing of $31.2 million and $24.4 million,
respectively, along with slight increases spread across several of
the other commercial finance categories.
Consumer finance loans totaled $235.7 million as
of March 31, 2021, decreasing as compared to $251.0 million at
December 31, 2020 and $258.4 million at March 31, 2020.
This decrease was primarily driven by other consumer finance, which
includes student loans and the seasonal lending products for tax
customers associated with Emerald Financial Services.
Tax services loans totaled $225.9 million as of
March 31, 2021, increasing as compared to $92.5 million at
December 31, 2020 and $95.9 million at March 31, 2020, as
the Company originated seasonal taxpayer advances and electronic
return originator (“ERO”) loans during the fiscal 2021 second
quarter. Warehouse finance loans totaled $332.5 million at
March 31, 2021, a 4% increase from December 31, 2020.
Community bank loans held for investment totaled
$348.1 million as of March 31, 2021, decreasing as compared to
$353.9 million at December 31, 2020 and $896.2 million at
March 31, 2020. As of March 31, 2021, the Company had no
community bank loans classified as held for sale.
Asset QualityThe Company’s
allowance for credit losses totaled $98.9 million at March 31,
2021, increasing compared to $72.4 million at December 31,
2020 and $65.4 million at March 31, 2020. The increase in the
allowance at March 31, 2021 when compared to December 31,
2020, was primarily due to the seasonal tax services loan
portfolio, which increased $27.7 million during the fiscal 2021
second quarter.
The year-over-year increase in the allowance was
primarily driven by a $18.5 million increase within the commercial
finance portfolio, a $7.8 million increase in tax services, a $6.6
million increase in the consumer finance portfolio and a $0.7
million increase within the retained community banking portfolio.
These increases were primarily driven by a combination of
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 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) |
March 31, 2021 |
December 31, 2020 |
October 1, 2020(1) |
September 30, 2020 |
June 30, 2020 |
March 31, 2020 |
| |
|
|
|
|
|
|
|
Commercial finance |
1.77 |
% |
1.88 |
% |
1.85 |
% |
1.30 |
% |
1.36 |
% |
1.28 |
% |
|
Consumer finance |
4.70 |
% |
4.39 |
% |
4.31 |
% |
1.64 |
% |
1.75 |
% |
1.74 |
% |
|
Tax services |
12.90 |
% |
1.53 |
% |
0.06 |
% |
0.06 |
% |
59.67 |
% |
22.22 |
% |
|
Warehouse finance |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
0.10 |
% |
|
National Lending |
2.57 |
% |
1.89 |
% |
1.86 |
% |
1.20 |
% |
1.68 |
% |
1.92 |
% |
|
Community Bank |
4.03 |
% |
4.01 |
% |
3.37 |
% |
4.59 |
% |
2.55 |
% |
1.49 |
% |
| Total loans and
leases |
2.71 |
% |
2.10 |
% |
2.08 |
% |
1.70 |
% |
1.88 |
% |
1.81 |
% |
(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 2.71% at
March 31, 2021 from 2.10% at December 31, 2020. The
increase in the total loans and leases coverage ratio was primarily
driven by the seasonal tax services loan portfolio. The coverage
ratios for the other non-tax-related loan categories remained
relatively similar to the December 31, 2020 quarter. The
change in the year-over-year tax services coverage ratio is
primarily due to higher outstanding principal balances as of March
31, 2021 due in large part to the delayed start to the 2021 tax
season. 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 |
Six Months Ended |
| |
March 31, 2021 |
December 31, 2020 |
March 31, 2020 |
March 31, 2021 |
March 31, 2020 |
| (Dollars in thousands) |
|
|
|
|
|
|
Beginning balance |
$ |
72,389 |
|
|
$ |
56,188 |
|
|
$ |
30,176 |
|
|
$ |
56,188 |
|
|
$ |
29,149 |
|
|
|
Adoption of CECL accounting standard |
— |
|
|
12,773 |
|
|
— |
|
|
12,773 |
|
|
— |
|
|
|
Provision - tax services loans |
27,680 |
|
|
454 |
|
|
19,596 |
|
|
28,134 |
|
|
20,507 |
|
|
|
Provision - all other loans and leases |
2,519 |
|
|
5,810 |
|
|
17,700 |
|
|
8,329 |
|
|
20,196 |
|
|
|
Charge-offs - tax services loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
Charge-offs - all other loans and leases |
(4,248 |
) |
|
(5,675 |
) |
|
(3,187 |
) |
|
(9,923 |
) |
|
(7,105 |
) |
|
|
Recoveries - tax services loans |
54 |
|
|
956 |
|
|
74 |
|
|
1,010 |
|
|
813 |
|
|
|
Recoveries - all other loans and leases |
498 |
|
|
1,883 |
|
|
996 |
|
|
2,381 |
|
|
1,795 |
|
|
| Ending
balance |
$ |
98,892 |
|
|
$ |
72,389 |
|
|
$ |
65,355 |
|
|
$ |
98,892 |
|
|
$ |
65,355 |
|
|
Provision for credit losses was $30.3 million
for the quarter ended March 31, 2021, compared to $37.3
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
second quarter of fiscal 2020. Partially offsetting that decrease
was an increase in provision expense related to originating higher
volumes of tax services loans for the second quarter of fiscal
2021, compared to the comparable quarter of the prior year. Net
charge-offs were $3.7 million for the quarter ended March 31,
2021, compared to $2.1 million for the quarter ended March 31,
2020. The majority of the net charge-offs for the quarter were in
the commercial finance portfolio.
The Company’s past due loans and leases were as follows for the
periods presented.
| As of March 31,
2021 |
Accruing and Nonaccruing Loans and Leases |
|
Nonperforming Loans and Leases |
| (Dollars in Thousands) |
30-59 DaysPast Due |
|
60-89 DaysPast Due |
|
> 89 DaysPast Due |
|
Total PastDue |
|
Current |
|
Total Loansand
LeasesReceivable |
|
> 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 |
|
| 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 DaysPast Due |
|
Total PastDue |
|
Current |
|
Total Loansand Leases Receivable |
|
> 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 |
|
The Company’s nonperforming assets at
March 31, 2021 were $46.7 million, representing 0.48% of total
assets, compared to $53.2 million, or 0.73% of total assets at
December 31, 2020 and $39.4 million, or 0.67% of total assets
at March 31, 2020. The decrease in nonperforming assets on a
linked quarter basis was primarily driven by a $5.7 million
reduction in commercial finance repossessed and foreclosed assets
and a $1.9 million decrease in nonperforming operating leases,
which were partially offset by a $2.3 million increase in the
commercial finance nonperforming loans and leases when compared to
December 31, 2020. The improvement in nonperforming assets as
a percentage of total assets at March 31, 2021 was due to a
combination of the lower nonperforming assets along with higher
period-end assets, when compared to December 31, 2020.
The Company’s nonperforming loans and leases at
March 31, 2021, were $43.5 million, representing 1.17% of
total gross loans and leases, compared to $42.3 million, or 1.18%
of total gross loans and leases at December 31, 2020 and $31.5
million, or 0.87% of total gross loans and leases at March 31,
2020.
Loan and lease balances that were within their
active deferment period decreased to $66.5 million at
March 31, 2021 from $84.2 million at December 31,
2020.
Deposits, Borrowings and Other
LiabilitiesTotal average deposits for the fiscal 2021
second quarter increased by $4.51 billion to $9.57 billion compared
to the same period in fiscal 2020, primarily due to the EIP
program. Average noninterest-bearing deposits increased $5.77
billion, or 180%, for the fiscal 2021 second quarter when compared
to the same period in fiscal 2020, while average wholesale deposits
decreased $1.30 billion, or 88%. Average deposits from the payments
division increased 181% to $9.29 billion for the fiscal 2021 second
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 $6.43 billion, representing an
increase of 100% compared to the same period of the prior year,
which was largely driven by other stimulus payments loaded on
various partner cards.
The average balance of total deposits and
interest-bearing liabilities was $9.66 billion for the three-month
period ended March 31, 2021, compared to $5.64 billion for the
same period in the prior fiscal year, representing an increase of
71%.
Total end-of-period deposits increased 118% to
$8.64 billion at March 31, 2021, compared to $3.96 billion at
March 31, 2020. The increase in end-of-period deposits was
primarily driven by an increase in noninterest-bearing deposits of
$5.03 billion, of which $869.2 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 $705.5 million in
wholesale deposits.
Regulatory CapitalThe Company and MetaBank
remained above the federal regulatory minimum capital requirements
at March 31, 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 |
March 31,2021(1) |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
Company |
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
4.75 |
% |
|
7.39 |
% |
|
6.58 |
% |
|
5.91 |
% |
|
7.28 |
% |
|
Common equity Tier 1 capital ratio |
11.24 |
% |
|
10.72 |
% |
|
11.78 |
% |
|
11.51 |
% |
|
10.27 |
% |
|
Tier 1 capital ratio |
11.58 |
% |
|
11.07 |
% |
|
12.18 |
% |
|
11.90 |
% |
|
10.63 |
% |
|
Total capital ratio |
14.59 |
% |
|
14.14 |
% |
|
15.30 |
% |
|
14.99 |
% |
|
13.61 |
% |
|
MetaBank |
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
5.47 |
% |
|
8.60 |
% |
|
7.56 |
% |
|
6.89 |
% |
|
8.52 |
% |
|
Common equity Tier 1 capital ratio |
13.32 |
% |
|
12.87 |
% |
|
13.96 |
% |
|
13.82 |
% |
|
12.39 |
% |
|
Tier 1 capital ratio |
13.33 |
% |
|
12.89 |
% |
|
14.00 |
% |
|
13.86 |
% |
|
12.44 |
% |
|
Total capital ratio |
14.60 |
% |
|
14.14 |
% |
|
15.26 |
% |
|
15.12 |
% |
|
13.69 |
% |
(1) March 31, 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) |
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
| (Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
$ |
835,258 |
|
|
$ |
813,210 |
|
|
$ |
847,308 |
|
|
$ |
829,909 |
|
|
$ |
805,074 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
LESS: Goodwill, net of associated deferred tax liabilities |
301,602 |
|
|
301,999 |
|
|
302,396 |
|
|
302,814 |
|
|
303,625 |
|
|
LESS: Certain other intangible assets |
36,779 |
|
|
39,403 |
|
|
40,964 |
|
|
42,865 |
|
|
44,909 |
|
|
LESS: Net deferred tax assets from operating loss and tax credit
carry-forwards |
19,306 |
|
|
24,105 |
|
|
18,361 |
|
|
10,360 |
|
|
11,589 |
|
|
LESS: Net unrealized gains (losses) on available-for-sale
securities |
12,458 |
|
|
19,894 |
|
|
17,762 |
|
|
8,382 |
|
|
2,337 |
|
|
LESS: Non-controlling interest |
1,092 |
|
|
1,536 |
|
|
3,603 |
|
|
3,787 |
|
|
3,762 |
|
|
ADD: Adoption of Accounting Standards Update 2016-13 |
10,439 |
|
|
10,439 |
|
|
— |
|
|
— |
|
|
— |
|
| Common Equity Tier 1(1) |
474,460 |
|
|
436,712 |
|
|
464,222 |
|
|
461,701 |
|
|
438,852 |
|
|
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 |
690 |
|
|
749 |
|
|
1,894 |
|
|
1,894 |
|
|
2,036 |
|
| Total Tier 1 Capital |
488,811 |
|
|
451,122 |
|
|
479,777 |
|
|
477,256 |
|
|
454,549 |
|
|
Allowance for credit losses |
53,232 |
|
|
51,070 |
|
|
49,343 |
|
|
50,338 |
|
|
53,580 |
|
|
Subordinated debentures (net of issuance costs) |
73,892 |
|
|
73,850 |
|
|
73,807 |
|
|
73,765 |
|
|
73,724 |
|
| Total qualifying capital |
$ |
615,935 |
|
|
$ |
576,042 |
|
|
$ |
602,927 |
|
|
$ |
601,359 |
|
|
$ |
581,853 |
|
(1) Capital ratios were determined using the
Basel III capital rules that became effective on January 1, 2015.
Basel III revised the definition of capital, increased minimum
capital ratios, and introduced a minimum CET1 ratio; those changes
are being fully phased in through the end of 2021.
The following table provides a reconciliation of
tangible common equity and tangible common equity excluding
accumulated other comprehensive income (“AOCI”), each of which is
used in calculating tangible book value data, to Total
Stockholders’ Equity. Each of tangible common equity and tangible
common equity excluding AOCI is a non-GAAP financial measure that
is commonly used within the banking industry.
| |
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
| (Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity |
$ |
835,258 |
|
|
$ |
813,210 |
|
|
$ |
847,308 |
|
|
$ |
829,909 |
|
|
$ |
805,074 |
|
| Less: Goodwill |
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
| Less: Intangible assets |
36,903 |
|
|
39,660 |
|
|
41,692 |
|
|
43,974 |
|
|
46,766 |
|
|
Tangible common equity |
488,850 |
|
|
464,045 |
|
|
496,111 |
|
|
476,430 |
|
|
448,803 |
|
| Less: Accumulated other
comprehensive income (loss) (“AOCI”) |
12,809 |
|
|
20,119 |
|
|
17,542 |
|
|
7,995 |
|
|
1,654 |
|
|
Tangible common equity excluding AOCI |
$ |
476,041 |
|
|
$ |
443,926 |
|
|
$ |
478,569 |
|
|
$ |
468,435 |
|
|
$ |
447,149 |
|
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 Tuesday, April 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 6896972 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
- Piper Sandler Fintech and Payments
Conference, June 10, 2021 | Virtual
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 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; 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 |
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
Cash and cash equivalents |
$ |
3,724,242 |
|
|
$ |
1,586,451 |
|
|
$ |
427,367 |
|
|
$ |
3,108,141 |
|
|
$ |
108,733 |
|
| Investment securities
available for sale, at fair value |
921,947 |
|
|
797,363 |
|
|
814,495 |
|
|
825,579 |
|
|
840,525 |
|
| Mortgage-backed securities
available for sale, at fair value |
558,833 |
|
|
430,761 |
|
|
453,607 |
|
|
338,250 |
|
|
355,094 |
|
| Investment securities held to
maturity, at cost |
67,709 |
|
|
76,176 |
|
|
87,183 |
|
|
98,205 |
|
|
108,105 |
|
| Mortgage-backed securities
held to maturity, at cost |
4,403 |
|
|
5,152 |
|
|
5,427 |
|
|
6,382 |
|
|
6,752 |
|
| Loans held for sale |
67,635 |
|
|
133,659 |
|
|
183,577 |
|
|
79,905 |
|
|
13,610 |
|
| Loans and leases |
3,657,531 |
|
|
3,448,675 |
|
|
3,322,765 |
|
|
3,502,646 |
|
|
3,618,924 |
|
| Allowance for credit
losses |
(98,892 |
) |
|
(72,389 |
) |
|
(56,188 |
) |
|
(65,747 |
) |
|
(65,355 |
) |
| Federal Reserve Bank and
Federal Home Loan Bank stocks, at cost |
28,433 |
|
|
27,138 |
|
|
27,138 |
|
|
31,836 |
|
|
29,944 |
|
| Accrued interest
receivable |
17,429 |
|
|
17,133 |
|
|
16,628 |
|
|
17,545 |
|
|
16,958 |
|
| Premises, furniture, and
equipment, net |
41,510 |
|
|
39,932 |
|
|
41,608 |
|
|
40,361 |
|
|
38,871 |
|
| Rental equipment, net |
211,397 |
|
|
206,732 |
|
|
205,964 |
|
|
216,336 |
|
|
200,837 |
|
| Bank-owned life insurance |
93,542 |
|
|
92,937 |
|
|
92,315 |
|
|
91,697 |
|
|
91,081 |
|
| Foreclosed real estate and
repossessed assets |
1,483 |
|
|
7,186 |
|
|
9,957 |
|
|
6,784 |
|
|
7,249 |
|
| Goodwill |
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
|
309,505 |
|
| Intangible assets |
36,903 |
|
|
39,660 |
|
|
41,692 |
|
|
43,974 |
|
|
46,766 |
|
| Prepaid assets |
10,201 |
|
|
11,270 |
|
|
8,328 |
|
|
6,806 |
|
|
9,727 |
|
| Deferred taxes |
25,435 |
|
|
24,411 |
|
|
17,723 |
|
|
15,944 |
|
|
20,887 |
|
| Other assets |
110,877 |
|
|
82,763 |
|
|
82,983 |
|
|
104,877 |
|
|
85,652 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
9,790,123 |
|
|
$ |
7,264,515 |
|
|
$ |
6,092,074 |
|
|
$ |
8,779,026 |
|
|
$ |
5,843,865 |
|
| |
|
|
|
|
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing checking |
7,928,235 |
|
|
5,581,597 |
|
|
4,356,630 |
|
|
6,537,809 |
|
|
2,900,484 |
|
|
Interest-bearing checking |
416,164 |
|
|
274,504 |
|
|
157,571 |
|
|
187,003 |
|
|
152,504 |
|
|
Savings deposits |
126,834 |
|
|
54,080 |
|
|
47,866 |
|
|
55,896 |
|
|
37,615 |
|
|
Money market deposits |
55,045 |
|
|
56,440 |
|
|
48,494 |
|
|
40,811 |
|
|
37,266 |
|
|
Time certificates of deposit |
12,614 |
|
|
13,522 |
|
|
20,223 |
|
|
25,000 |
|
|
25,492 |
|
|
Wholesale deposits |
103,521 |
|
|
227,648 |
|
|
348,416 |
|
|
743,806 |
|
|
809,043 |
|
| Total deposits |
8,642,413 |
|
|
6,207,791 |
|
|
4,979,200 |
|
|
7,590,325 |
|
|
3,962,404 |
|
| Short-term borrowings |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
717,000 |
|
| Long-term borrowings |
95,336 |
|
|
96,760 |
|
|
98,224 |
|
|
209,781 |
|
|
211,353 |
|
| Accrued interest payable |
679 |
|
|
2,068 |
|
|
1,923 |
|
|
4,332 |
|
|
3,607 |
|
| Accrued expenses and other
liabilities |
216,437 |
|
|
144,686 |
|
|
165,419 |
|
|
144,679 |
|
|
144,427 |
|
|
Total liabilities |
8,954,865 |
|
|
6,451,305 |
|
|
5,244,766 |
|
|
7,949,117 |
|
|
5,038,791 |
|
| |
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
| Preferred stock |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Common stock, $.01 par
value |
319 |
|
|
326 |
|
|
344 |
|
|
346 |
|
|
346 |
|
| Common stock, Nonvoting, $.01
par value |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Additional paid-in
capital |
601,222 |
|
|
598,669 |
|
|
594,569 |
|
|
592,693 |
|
|
590,682 |
|
| Retained earnings |
225,471 |
|
|
198,000 |
|
|
234,927 |
|
|
228,500 |
|
|
212,027 |
|
| Accumulated other
comprehensive income |
12,809 |
|
|
20,119 |
|
|
17,542 |
|
|
7,995 |
|
|
1,654 |
|
| Treasury stock, at cost |
(5,655 |
) |
|
(5,440 |
) |
|
(3,677 |
) |
|
(3,412 |
) |
|
(3,397 |
) |
|
Total equity attributable to parent |
834,166 |
|
|
811,674 |
|
|
843,705 |
|
|
826,122 |
|
|
801,312 |
|
| Noncontrolling interest |
1,092 |
|
|
1,536 |
|
|
3,603 |
|
|
3,787 |
|
|
3,762 |
|
|
Total stockholders’ equity |
835,258 |
|
|
813,210 |
|
|
847,308 |
|
|
829,909 |
|
|
805,074 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
9,790,123 |
|
|
$ |
7,264,515 |
|
|
$ |
6,092,074 |
|
|
$ |
8,779,026 |
|
|
$ |
5,843,865 |
|
Consolidated Statements of Operations
(Unaudited)(Dollars in Thousands, Except Share and Per
Share Data)
| |
Three Months Ended |
|
Year Ended |
| |
March 31,2021 |
|
December 31,2020 |
|
March 31,2020 |
|
March 31,2021 |
|
March 31,2020 |
| Interest and dividend
income: |
|
|
|
|
|
|
|
|
|
|
Loans and leases, including fees |
$ |
68,472 |
|
|
$ |
61,655 |
|
|
$ |
70,493 |
|
|
$ |
130,128 |
|
|
$ |
139,195 |
|
|
Mortgage-backed securities |
2,608 |
|
|
2,123 |
|
|
2,493 |
|
|
4,730 |
|
|
4,882 |
|
|
Other investments |
4,589 |
|
|
4,368 |
|
|
6,417 |
|
|
8,956 |
|
|
12,952 |
|
| |
75,669 |
|
|
68,146 |
|
|
79,403 |
|
|
143,814 |
|
|
157,029 |
|
| Interest expense: |
|
|
|
|
|
|
|
|
|
|
Deposits |
445 |
|
|
797 |
|
|
8,242 |
|
|
1,241 |
|
|
17,583 |
|
|
FHLB advances and other borrowings |
1,374 |
|
|
1,350 |
|
|
3,424 |
|
|
2,724 |
|
|
7,058 |
|
| |
1,819 |
|
|
2,147 |
|
|
11,666 |
|
|
3,965 |
|
|
24,641 |
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest income |
73,850 |
|
|
65,999 |
|
|
67,737 |
|
|
139,849 |
|
|
132,388 |
|
| |
|
|
|
|
|
|
|
|
|
| Provision for credit
losses |
30,290 |
|
|
6,089 |
|
|
37,296 |
|
|
36,379 |
|
|
40,703 |
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan and lease
losses |
43,560 |
|
|
59,910 |
|
|
30,441 |
|
|
103,470 |
|
|
91,685 |
|
| |
|
|
|
|
|
|
|
|
|
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
Refund transfer product fees |
22,680 |
|
|
647 |
|
|
28,939 |
|
|
23,327 |
|
|
29,131 |
|
|
Tax advance product fees |
44,562 |
|
|
1,960 |
|
|
29,536 |
|
|
46,522 |
|
|
31,812 |
|
|
Payments card and deposit fees |
29,875 |
|
|
22,564 |
|
|
23,156 |
|
|
52,439 |
|
|
44,655 |
|
|
Other bank and deposit fees |
133 |
|
|
237 |
|
|
381 |
|
|
370 |
|
|
868 |
|
|
Rental income |
9,846 |
|
|
9,885 |
|
|
11,100 |
|
|
19,731 |
|
|
23,451 |
|
|
Gain on sale of securities available-for-sale, net |
6 |
|
|
— |
|
|
— |
|
|
6 |
|
|
— |
|
|
Gain on divestitures |
— |
|
|
— |
|
|
19,275 |
|
|
— |
|
|
19,275 |
|
|
Gain (loss) on sale of other |
2,133 |
|
|
2,847 |
|
|
2,325 |
|
|
4,981 |
|
|
(244 |
) |
|
Other income |
4,218 |
|
|
7,315 |
|
|
5,801 |
|
|
11,532 |
|
|
9,047 |
|
|
Total noninterest income |
113,453 |
|
|
45,455 |
|
|
120,513 |
|
|
158,908 |
|
|
157,995 |
|
| |
|
|
|
|
|
|
|
|
|
| Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
43,932 |
|
|
32,331 |
|
|
34,260 |
|
|
76,263 |
|
|
68,529 |
|
|
Refund transfer product expense |
6,146 |
|
|
61 |
|
|
7,449 |
|
|
6,207 |
|
|
7,621 |
|
|
Tax advance product expense |
2,189 |
|
|
370 |
|
|
1,698 |
|
|
2,559 |
|
|
2,830 |
|
|
Card processing |
7,212 |
|
|
6,117 |
|
|
6,696 |
|
|
13,329 |
|
|
12,303 |
|
|
Occupancy and equipment expense |
6,748 |
|
|
6,888 |
|
|
7,013 |
|
|
13,636 |
|
|
13,668 |
|
|
Operating lease equipment depreciation |
7,419 |
|
|
7,581 |
|
|
8,421 |
|
|
15,000 |
|
|
16,701 |
|
|
Legal and consulting |
6,045 |
|
|
5,247 |
|
|
5,909 |
|
|
11,292 |
|
|
10,583 |
|
|
Intangible amortization |
2,757 |
|
|
2,013 |
|
|
3,402 |
|
|
4,770 |
|
|
6,077 |
|
|
Impairment expense |
554 |
|
|
1,159 |
|
|
507 |
|
|
1,713 |
|
|
750 |
|
|
Other expense |
12,969 |
|
|
10,808 |
|
|
16,374 |
|
|
23,777 |
|
|
28,464 |
|
|
Total noninterest expense |
95,971 |
|
|
72,575 |
|
|
91,729 |
|
|
168,546 |
|
|
167,526 |
|
| |
|
|
|
|
|
|
|
|
|
|
Income before income tax expense |
61,042 |
|
|
32,790 |
|
|
59,225 |
|
|
93,832 |
|
|
82,154 |
|
| |
|
|
|
|
|
|
|
|
|
|
Income tax expense |
1,133 |
|
|
3,533 |
|
|
5,617 |
|
|
4,665 |
|
|
6,297 |
|
| |
|
|
|
|
|
|
|
|
|
| Net income before
noncontrolling interest |
59,909 |
|
|
29,257 |
|
|
53,608 |
|
|
89,167 |
|
|
75,857 |
|
|
Net income attributable to noncontrolling interest |
843 |
|
|
1,220 |
|
|
1,304 |
|
|
2,064 |
|
|
2,485 |
|
| Net income
attributable to parent |
$ |
59,066 |
|
|
$ |
28,037 |
|
|
$ |
52,304 |
|
|
$ |
87,103 |
|
|
$ |
73,372 |
|
| |
|
|
|
|
|
|
|
|
|
| Less: Allocation of
Earnings to participating
securities(1) |
1,113 |
|
|
554 |
|
|
1,215 |
|
|
1,683 |
|
|
1,652 |
|
| Net income
attributable to common
shareholders(1) |
57,953 |
|
|
27,483 |
|
|
51,089 |
|
|
85,420 |
|
|
71,720 |
|
| Earnings per common
share |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.84 |
|
|
$ |
0.84 |
|
|
$ |
1.45 |
|
|
$ |
2.66 |
|
|
$ |
2.00 |
|
|
Diluted |
$ |
1.84 |
|
|
$ |
0.84 |
|
|
$ |
1.45 |
|
|
$ |
2.65 |
|
|
$ |
2.00 |
|
| Shares used in
computing earnings per common share |
|
|
|
|
|
|
|
|
|
|
Basic |
31,520,505 |
|
|
32,782,285 |
|
|
35,114,053 |
|
|
32,158,994 |
|
|
35,865,443 |
|
|
Diluted |
31,535,022 |
|
|
32,790,895 |
|
|
35,135,550 |
|
|
32,175,484 |
|
|
35,887,077 |
|
(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
March 31, |
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 |
$ |
4,187,558 |
|
|
$ |
1,090 |
|
|
0.11 |
% |
|
$ |
196,754 |
|
|
$ |
739 |
|
|
1.51 |
% |
|
Mortgage-backed securities |
543,256 |
|
|
2,607 |
|
|
1.95 |
% |
|
358,103 |
|
|
2,493 |
|
|
2.80 |
% |
|
Tax exempt investment securities |
297,299 |
|
|
1,132 |
|
|
1.96 |
% |
|
454,177 |
|
|
2,132 |
|
|
2.39 |
% |
|
Asset-backed securities |
389,406 |
|
|
1,290 |
|
|
1.34 |
% |
|
304,674 |
|
|
2,271 |
|
|
3.00 |
% |
|
Other investment securities |
230,168 |
|
|
1,077 |
|
|
1.90 |
% |
|
192,379 |
|
|
1,275 |
|
|
2.67 |
% |
|
Total investments |
1,460,129 |
|
|
6,106 |
|
|
1.78 |
% |
|
1,309,333 |
|
|
8,171 |
|
|
2.68 |
% |
|
Commercial finance loans and leases |
2,471,694 |
|
|
46,299 |
|
|
7.60 |
% |
|
2,020,358 |
|
|
41,643 |
|
|
8.29 |
% |
|
Consumer finance loans |
255,625 |
|
|
6,968 |
|
|
11.06 |
% |
|
264,307 |
|
|
5,386 |
|
|
8.20 |
% |
|
Tax services loans |
714,789 |
|
|
6,544 |
|
|
3.71 |
% |
|
516,491 |
|
|
6,351 |
|
|
4.95 |
% |
|
Warehouse finance loans |
315,162 |
|
|
4,845 |
|
|
6.23 |
% |
|
314,474 |
|
|
4,785 |
|
|
6.12 |
% |
|
National lending loans and leases |
3,757,270 |
|
|
64,656 |
|
|
6.98 |
% |
|
3,115,630 |
|
|
58,165 |
|
|
7.51 |
% |
|
Community banking loans |
363,285 |
|
|
3,817 |
|
|
4.26 |
% |
|
1,080,142 |
|
|
12,328 |
|
|
4.59 |
% |
|
Total loans and leases |
4,120,555 |
|
|
68,473 |
|
|
6.74 |
% |
|
4,195,772 |
|
|
70,493 |
|
|
6.76 |
% |
| Total interest-earning
assets |
$ |
9,768,242 |
|
|
$ |
75,669 |
|
|
3.15 |
% |
|
$ |
5,701,859 |
|
|
$ |
79,403 |
|
|
5.64 |
% |
|
Non-interest-earning assets |
887,610 |
|
|
|
|
|
|
909,040 |
|
|
|
|
|
| Total
assets |
$ |
10,655,852 |
|
|
|
|
|
|
$ |
6,610,899 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking(2) |
$ |
275,982 |
|
|
$ |
— |
|
|
— |
% |
|
$ |
182,107 |
|
|
$ |
105 |
|
|
0.23 |
% |
|
Savings deposits |
77,562 |
|
|
4 |
|
|
0.02 |
% |
|
46,592 |
|
|
6 |
|
|
0.05 |
% |
|
Money market deposits |
56,352 |
|
|
42 |
|
|
0.30 |
% |
|
68,421 |
|
|
153 |
|
|
0.90 |
% |
|
Time certificates of deposit |
12,820 |
|
|
34 |
|
|
1.07 |
% |
|
84,940 |
|
|
427 |
|
|
2.02 |
% |
|
Wholesale deposits |
175,777 |
|
|
365 |
|
|
0.84 |
% |
|
1,476,085 |
|
|
7,551 |
|
|
2.06 |
% |
|
Total interest-bearing deposits |
598,493 |
|
|
445 |
|
|
0.30 |
% |
|
1,858,145 |
|
|
8,242 |
|
|
1.78 |
% |
|
Overnight fed funds purchased |
— |
|
|
— |
|
|
— |
% |
|
372,596 |
|
|
1,307 |
|
|
1.41 |
% |
|
FHLB advances |
— |
|
|
— |
|
|
— |
% |
|
110,000 |
|
|
670 |
|
|
2.45 |
% |
|
Subordinated debentures |
73,864 |
|
|
1,147 |
|
|
6.30 |
% |
|
73,698 |
|
|
1,158 |
|
|
6.32 |
% |
|
Other borrowings |
22,377 |
|
|
227 |
|
|
4.12 |
% |
|
28,714 |
|
|
289 |
|
|
4.04 |
% |
|
Total borrowings |
96,241 |
|
|
1,374 |
|
|
5.79 |
% |
|
585,008 |
|
|
3,424 |
|
|
2.35 |
% |
| Total interest-bearing
liabilities |
694,734 |
|
|
1,819 |
|
|
1.06 |
% |
|
2,443,153 |
|
|
11,666 |
|
|
1.92 |
% |
|
Noninterest-bearing deposits |
8,967,067 |
|
|
— |
|
|
— |
% |
|
3,199,148 |
|
|
— |
|
|
— |
% |
| Total deposits and
interest-bearing liabilities |
$ |
9,661,801 |
|
|
$ |
1,819 |
|
|
0.08 |
% |
|
$ |
5,642,301 |
|
|
$ |
11,666 |
|
|
0.83 |
% |
|
Other noninterest-bearing liabilities |
177,372 |
|
|
|
|
|
|
136,759 |
|
|
|
|
|
| Total
liabilities |
9,839,173 |
|
|
|
|
|
|
5,779,060 |
|
|
|
|
|
|
Shareholders’ equity |
816,679 |
|
|
|
|
|
|
831,839 |
|
|
|
|
|
| Total liabilities and
shareholders’ equity |
$ |
10,655,852 |
|
|
|
|
|
|
$ |
6,610,899 |
|
|
|
|
|
| Net interest income and net
interest rate spread including noninterest-bearing deposits |
|
|
$ |
73,850 |
|
|
3.08 |
% |
|
|
|
$ |
67,737 |
|
|
4.81 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net interest
margin |
|
|
|
|
3.07 |
% |
|
|
|
|
|
4.78 |
% |
| Tax-equivalent
effect |
|
|
|
|
0.01 |
% |
|
|
|
|
|
0.04 |
% |
| Net interest margin,
tax-equivalent(3) |
|
|
|
|
3.08 |
% |
|
|
|
|
|
4.82 |
% |
(1) Tax rate used to arrive at the TEY for the three months
ended March 31, 2021 and 2020 was 21%.(2) Of the total balance,
$275.7 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 |
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
| Equity to total assets |
8.53 |
% |
|
11.19 |
% |
|
13.91 |
% |
|
9.45 |
% |
|
13.78 |
% |
|
Book value per common share outstanding |
$ |
26.16 |
|
|
$ |
24.93 |
|
|
$ |
24.66 |
|
|
$ |
23.96 |
|
|
$ |
23.26 |
|
| Tangible book value per common
share outstanding |
$ |
15.31 |
|
|
$ |
14.23 |
|
|
$ |
14.44 |
|
|
$ |
13.76 |
|
|
$ |
12.97 |
|
| Tangible book value per common
share outstanding excluding AOCI |
$ |
14.91 |
|
|
$ |
13.61 |
|
|
$ |
13.93 |
|
|
$ |
13.53 |
|
|
$ |
12.92 |
|
| Common shares outstanding |
31,926,008 |
|
|
32,620,251 |
|
|
34,360,890 |
|
|
34,631,160 |
|
|
34,607,962 |
|
| Nonperforming assets to total
assets |
0.48 |
% |
|
0.73 |
% |
|
0.79 |
% |
|
0.64 |
% |
|
0.67 |
% |
| Nonperforming loans and leases
to total loans and leases |
1.17 |
% |
|
1.18 |
% |
|
0.97 |
% |
|
1.10 |
% |
|
0.87 |
% |
| Net interest margin |
3.07 |
% |
|
4.65 |
% |
|
3.77 |
% |
|
3.28 |
% |
|
4.78 |
% |
| Net interest margin,
tax-equivalent |
3.08 |
% |
|
4.67 |
% |
|
3.79 |
% |
|
3.31 |
% |
|
4.82 |
% |
| Return on average assets |
2.22 |
% |
|
1.73 |
% |
|
0.69 |
% |
|
0.86 |
% |
|
3.16 |
% |
| Return on average equity |
28.93 |
% |
|
13.91 |
% |
|
6.21 |
% |
|
8.83 |
% |
|
25.15 |
% |
| Full-time equivalent
employees |
1,075 |
|
|
1,038 |
|
|
1,015 |
|
|
999 |
|
|
992 |
|
Non-GAAP Reconciliation
| Efficiency
Ratio |
For the last twelve months ended |
|
(Dollars in Thousands) |
March 31,2021 |
|
December 31,2020 |
|
September 30,2020 |
|
June 30,2020 |
|
March 31,2020 |
|
Noninterest Expense - GAAP |
$ |
320,070 |
|
|
$ |
315,828 |
|
|
$ |
319,051 |
|
|
$ |
314,911 |
|
|
$ |
316,138 |
|
|
Net Interest Income |
266,499 |
|
|
260,386 |
|
|
259,038 |
|
|
260,142 |
|
|
264,973 |
|
|
Noninterest Income |
240,706 |
|
|
247,766 |
|
|
239,794 |
|
|
235,024 |
|
|
237,766 |
|
|
Total Revenue: GAAP |
$ |
507,205 |
|
|
$ |
508,152 |
|
|
$ |
498,832 |
|
|
$ |
495,166 |
|
|
$ |
502,739 |
|
|
Efficiency Ratio, last twelve months |
63.10 |
% |
|
62.15 |
% |
|
63.96 |
% |
|
63.60 |
% |
|
62.88 |
% |
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 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 |
|
| 605-362-2423 |
|
| bkelley@metabank.com |
|
| |
|
| Media Relations
Contact |
|
|
mediarelations@metabank.com |
|
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