Meta Financial Group, Inc.® Announces Results for 2021 Fiscal Second Quarter

SIOUX FALLS, S.D., April 27, 2021 (GLOBE NEWSWIRE) -- 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 Income
Net 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 Income
Fiscal 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 Expense
Noninterest 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 Expense
The 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 products6,233  234  962  391   
SBA/USDA61,402  32,983  52,542  31,438  13,610 
Community Bank  100,442  130,073  48,076   
Total loans held for sale67,635  133,659  183,577  79,905  13,610 
National Lending         
Term lending891,414  881,306  805,323  738,454  725,581 
Asset based lending248,735  242,298  182,419  181,130  250,211 
Factoring277,612  275,650  281,173  206,361  285,495 
Lease financing308,169  283,722  281,084  264,988  238,788 
Insurance premium finance344,841  338,227  337,940  359,147  332,800 
SBA/USDA331,917  300,707  318,387  308,611  92,000 
Other commercial finance103,234  101,209  101,658  100,214  101,472 
Commercial Finance2,505,922  2,423,119  2,307,984  2,158,905  2,026,347 
Consumer credit products104,842  88,595  89,809  102,808  113,544 
Other consumer finance130,822  162,423  134,342  138,777  144,895 
Consumer Finance235,664  251,018  224,151  241,585  258,439 
Tax Services225,921  92,548  3,066  19,168  95,936 
Warehouse Finance332,456  318,937  293,375  277,614  333,829 
Total National Lending loans and leases3,299,963  3,085,622  2,828,576  2,697,272  2,714,551 
Community Banking         
Commercial real estate and operating335,587  339,141  457,371  608,303  654,429 
Consumer one-to-four family real estate and other4,567  5,077  16,486  166,479  205,046 
Agricultural real estate and operating7,911  9,724  11,707  24,655  36,759 
Total Community Banking loans348,065  353,942  485,564  799,437  896,234 
Total gross loans and leases3,648,028  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 fees9,503  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 Quality
The 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, 2021December 31, 2020October 1, 2020(1)September 30, 2020June 30, 2020March 31, 2020
Commercial finance1.77%1.88%1.85%1.30%1.36%1.28%
Consumer finance4.70%4.39%4.31%1.64%1.75%1.74%
Tax services12.90%1.53%0.06%0.06%59.67%22.22%
Warehouse finance0.10%0.10%0.10%0.10%0.10%0.10%
National Lending2.57%1.89%1.86%1.20%1.68%1.92%
Community Bank4.03%4.01%3.37%4.59%2.55%1.49%
Total loans and leases2.71%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 EndedSix Months Ended
 March 31, 2021December 31, 2020March 31, 2020March 31, 2021March 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 loans27,680  454  19,596  28,134  20,507  
Provision - all other loans and leases2,519  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 loans54  956  74  1,010  813  
Recoveries - all other loans and leases498  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, 2021Accruing 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
 Current Total Loans
and Leases

 > 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 finance2,033  4,162  2,294  8,489  227,175  235,664  517    517 
Tax services507      507  225,414  225,921       
Warehouse finance        332,456  332,456       
Total National Lending37,215  12,892  11,782  61,889  3,238,074  3,299,963  5,327  18,305  23,632 
Total Community Banking12    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, 2020Accruing 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
 Current Total Loans
and 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 finance1,415  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 Lending24,863  7,762  16,032  48,657  3,036,965  3,085,622  3,224  18,707  21,931 
Total Community Banking13    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 Liabilities
Total 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 Capital
The 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 indicatedMarch 31,
 December 31,
 September 30,
 June 30,
 March 31,
Tier 1 leverage capital ratio4.75% 7.39% 6.58% 5.91% 7.28%
Common equity Tier 1 capital ratio11.24% 10.72% 11.78% 11.51% 10.27%
Tier 1 capital ratio11.58% 11.07% 12.18% 11.90% 10.63%
Total capital ratio14.59% 14.14% 15.30% 14.99% 13.61%
Tier 1 leverage capital ratio5.47% 8.60% 7.56% 6.89% 8.52%
Common equity Tier 1 capital ratio13.32% 12.87% 13.96% 13.82% 12.39%
Tier 1 capital ratio13.33% 12.89% 14.00% 13.86% 12.44%
Total capital ratio14.60% 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,
 December 31,
 September 30,
 June 30,
 March 31,
(Dollars in Thousands)         
Total stockholders’ equity$835,258  $813,210  $847,308  $829,909  $805,074 
LESS: Goodwill, net of associated deferred tax liabilities301,602  301,999  302,396  302,814  303,625 
LESS: Certain other intangible assets36,779  39,403  40,964  42,865  44,909 
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards19,306  24,105  18,361  10,360  11,589 
LESS: Net unrealized gains (losses) on available-for-sale securities12,458  19,894  17,762  8,382  2,337 
LESS: Non-controlling interest1,092  1,536  3,603  3,787  3,762 
ADD: Adoption of Accounting Standards Update 2016-1310,439  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 113,661  13,661  13,661  13,661  13,661 
Tier 1 minority interest not included in common equity tier 1 capital690  749  1,894  1,894  2,036 
Total Tier 1 Capital488,811  451,122  479,777  477,256  454,549 
Allowance for credit losses53,232  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,
 December 31,
 September 30,
 June 30,
 March 31,
(Dollars in Thousands)         
Total Stockholders’ Equity$835,258  $813,210  $847,308  $829,909  $805,074 
Less: Goodwill309,505  309,505  309,505  309,505  309,505 
Less: Intangible assets36,903  39,660  41,692  43,974  46,766 
Tangible common equity488,850  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 Call
The 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 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 for one year.

Upcoming Investor Events

  • Piper Sandler Fintech and Payments Conference, June 10, 2021 | Virtual

Forward-Looking Statements
The Company and MetaBank may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the SEC, the Company’s reports to stockholders, and in other communications by the Company and MetaBank, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company’s control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results; expectations in connection with the impact of the ongoing COVID-19 pandemic and related government actions on our business, our industry and the capital markets; customer retention; loan and other product demand; expectations concerning acquisitions and divestitures; new products and services, including those offered by Meta Payment Systems, Refund Advantage, EPS Financial and Specialty Consumer Services divisions; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; technology; and the Company’s employees. The following factors, among others, could cause the Company’s financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto including the deployment and efficacy of the COVID-19 vaccines, or other unusual and infrequently occurring events; actual changes in interest rates and the Fed Funds rate; additional changes in tax laws; the strength of the United States’ economy, in general, and the strength of the local economies in which the Company operates; changes in trade, monetary, and fiscal policies and laws, including interest rate policies of the Federal Reserve; inflation, market, and monetary fluctuations; the timely and efficient development of, and acceptance of, new products and services offered by the Company or its strategic partners, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value of these products and services by users; the risks of dealing with or utilizing third parties, including, in connection with the Company’s refund advance business, the risk of reduced volume of refund advance loans as a result of reduced customer demand for or usage of Meta’s strategic partners’ refund advance products; our relationship with, and any actions which may be initiated by, our regulators; the impact of changes in financial services laws and regulations, including, but not limited to, laws and regulations relating to the tax refund industry and the insurance premium finance industry and recent and potential changes in response to the COVID-19 pandemic such as the CARES Act and the rules and regulations that may be promulgated thereunder; technological changes, including, but not limited to, the protection of our electronic systems and information; the impact of acquisitions and divestitures; litigation risk; the growth of the Company’s business, as well as expenses related thereto; continued maintenance by MetaBank of its status as a well-capitalized institution; 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)

ASSETSMarch 31,
 December 31,
 September 30,
 June 30,
 March 31,
Cash and cash equivalents$3,724,242  $1,586,451  $427,367  $3,108,141  $108,733 
Investment securities available for sale, at fair value921,947  797,363  814,495  825,579  840,525 
Mortgage-backed securities available for sale, at fair value558,833  430,761  453,607  338,250  355,094 
Investment securities held to maturity, at cost67,709  76,176  87,183  98,205  108,105 
Mortgage-backed securities held to maturity, at cost4,403  5,152  5,427  6,382  6,752 
Loans held for sale67,635  133,659  183,577  79,905  13,610 
Loans and leases3,657,531  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 cost28,433  27,138  27,138  31,836  29,944 
Accrued interest receivable17,429  17,133  16,628  17,545  16,958 
Premises, furniture, and equipment, net41,510  39,932  41,608  40,361  38,871 
Rental equipment, net211,397  206,732  205,964  216,336  200,837 
Bank-owned life insurance93,542  92,937  92,315  91,697  91,081 
Foreclosed real estate and repossessed assets1,483  7,186  9,957  6,784  7,249 
Goodwill309,505  309,505  309,505  309,505  309,505 
Intangible assets36,903  39,660  41,692  43,974  46,766 
Prepaid assets10,201  11,270  8,328  6,806  9,727 
Deferred taxes25,435  24,411  17,723  15,944  20,887 
Other assets110,877  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 
Noninterest-bearing checking7,928,235  5,581,597  4,356,630  6,537,809  2,900,484 
Interest-bearing checking416,164  274,504  157,571  187,003  152,504 
Savings deposits126,834  54,080  47,866  55,896  37,615 
Money market deposits55,045  56,440  48,494  40,811  37,266 
Time certificates of deposit12,614  13,522  20,223  25,000  25,492 
Wholesale deposits103,521  227,648  348,416  743,806  809,043 
Total deposits8,642,413  6,207,791  4,979,200  7,590,325  3,962,404 
Short-term borrowings        717,000 
Long-term borrowings95,336  96,760  98,224  209,781  211,353 
Accrued interest payable679  2,068  1,923  4,332  3,607 
Accrued expenses and other liabilities216,437  144,686  165,419  144,679  144,427 
Total liabilities8,954,865  6,451,305  5,244,766  7,949,117  5,038,791 
Preferred stock         
Common stock, $.01 par value319  326  344  346  346 
Common stock, Nonvoting, $.01 par value         
Additional paid-in capital601,222  598,669  594,569  592,693  590,682 
Retained earnings225,471  198,000  234,927  228,500  212,027 
Accumulated other comprehensive income12,809  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 parent834,166  811,674  843,705  826,122  801,312 
Noncontrolling interest1,092  1,536  3,603  3,787  3,762 
Total stockholders’ equity835,258  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,
 December 31,
 March 31,
 March 31,
 March 31,
Interest and dividend income:         
Loans and leases, including fees$68,472  $61,655  $70,493  $130,128  $139,195 
Mortgage-backed securities2,608  2,123  2,493  4,730  4,882 
Other investments4,589  4,368  6,417  8,956  12,952 
 75,669  68,146  79,403  143,814  157,029 
Interest expense:         
Deposits445  797  8,242  1,241  17,583 
FHLB advances and other borrowings1,374  1,350  3,424  2,724  7,058 
 1,819  2,147  11,666  3,965  24,641 
Net interest income73,850  65,999  67,737  139,849  132,388 
Provision for credit losses30,290  6,089  37,296  36,379  40,703 
Net interest income after provision for loan and lease losses43,560  59,910  30,441  103,470  91,685 
Noninterest income:         
Refund transfer product fees22,680  647  28,939  23,327  29,131 
Tax advance product fees44,562  1,960  29,536  46,522  31,812 
Payments card and deposit fees29,875  22,564  23,156  52,439  44,655 
Other bank and deposit fees133  237  381  370  868 
Rental income9,846  9,885  11,100  19,731  23,451 
Gain on sale of securities available-for-sale, net6      6   
Gain on divestitures    19,275    19,275 
Gain (loss) on sale of other2,133  2,847  2,325  4,981  (244)
Other income4,218  7,315  5,801  11,532  9,047 
Total noninterest income113,453  45,455  120,513  158,908  157,995 
Noninterest expense:         
Compensation and benefits43,932  32,331  34,260  76,263  68,529 
Refund transfer product expense6,146  61  7,449  6,207  7,621 
Tax advance product expense2,189  370  1,698  2,559  2,830 
Card processing7,212  6,117  6,696  13,329  12,303 
Occupancy and equipment expense6,748  6,888  7,013  13,636  13,668 
Operating lease equipment depreciation7,419  7,581  8,421  15,000  16,701 
Legal and consulting6,045  5,247  5,909  11,292  10,583 
Intangible amortization2,757  2,013  3,402  4,770  6,077 
Impairment expense554  1,159  507  1,713  750 
Other expense12,969  10,808  16,374  23,777  28,464 
Total noninterest expense95,971  72,575  91,729  168,546  167,526 
Income before income tax expense61,042  32,790  59,225  93,832  82,154 
Income tax expense1,133  3,533  5,617  4,665  6,297 
Net income before noncontrolling interest59,909  29,257  53,608  89,167  75,857 
Net income attributable to noncontrolling interest843  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         
Basic31,520,505  32,782,285  35,114,053  32,158,994  35,865,443 
Diluted31,535,022  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)Average
Earned /
 Yield /
Earned /
 Yield /
Interest-earning assets:           
Cash and fed funds sold$4,187,558  $1,090  0.11% $196,754  $739  1.51%
Mortgage-backed securities543,256  2,607  1.95% 358,103  2,493  2.80%
Tax exempt investment securities297,299  1,132  1.96% 454,177  2,132  2.39%
Asset-backed securities389,406  1,290  1.34% 304,674  2,271  3.00%
Other investment securities230,168  1,077  1.90% 192,379  1,275  2.67%
Total investments1,460,129  6,106  1.78% 1,309,333  8,171  2.68%
Commercial finance loans and leases2,471,694  46,299  7.60% 2,020,358  41,643  8.29%
Consumer finance loans255,625  6,968  11.06% 264,307  5,386  8.20%
Tax services loans714,789  6,544  3.71% 516,491  6,351  4.95%
Warehouse finance loans315,162  4,845  6.23% 314,474  4,785  6.12%
National lending loans and leases3,757,270  64,656  6.98% 3,115,630  58,165  7.51%
Community banking loans363,285  3,817  4.26% 1,080,142  12,328  4.59%
Total loans and leases4,120,555  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 assets887,610      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 deposits77,562  4  0.02% 46,592  6  0.05%
Money market deposits56,352  42  0.30% 68,421  153  0.90%
Time certificates of deposit12,820  34  1.07% 84,940  427  2.02%
Wholesale deposits175,777  365  0.84% 1,476,085  7,551  2.06%
Total interest-bearing deposits598,493  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 debentures73,864  1,147  6.30% 73,698  1,158  6.32%
Other borrowings22,377  227  4.12% 28,714  289  4.04%
Total borrowings96,241  1,374  5.79% 585,008  3,424  2.35%
Total interest-bearing liabilities694,734  1,819  1.06% 2,443,153  11,666  1.92%
Noninterest-bearing deposits8,967,067    % 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 liabilities177,372      136,759     
Total liabilities9,839,173      5,779,060     
Shareholders’ equity816,679      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 EndedMarch 31,
 December 31,
 September 30,
 June 30,
 March 31,
Equity to total assets8.53% 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 outstanding31,926,008  32,620,251  34,360,890  34,631,160  34,607,962 
Nonperforming assets to total assets0.48% 0.73% 0.79% 0.64% 0.67%
Nonperforming loans and leases to total loans and leases1.17% 1.18% 0.97% 1.10% 0.87%
Net interest margin3.07% 4.65% 3.77% 3.28% 4.78%
Net interest margin, tax-equivalent3.08% 4.67% 3.79% 3.31% 4.82%
Return on average assets2.22% 1.73% 0.69% 0.86% 3.16%
Return on average equity28.93% 13.91% 6.21% 8.83% 25.15%
Full-time equivalent employees1,075  1,038  1,015  999  992 

Non-GAAP Reconciliation

Efficiency RatioFor the last twelve months ended
(Dollars in Thousands)March 31,
 December 31,
 September 30,
 June 30,
 March 31,
Noninterest Expense - GAAP$320,070  $315,828  $319,051  $314,911  $316,138 
Net Interest Income266,499  260,386  259,038  260,142  264,973 
Noninterest Income240,706  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 months63.10% 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 or

Investor Relations Contact 
Brittany Kelley Elsasser 
Media Relations Contact 


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