Meta Financial Group, Inc.® Announces Results For 2021 Fiscal Third Quarter

SIOUX FALLS, S.D., July 28, 2021 (GLOBE NEWSWIRE) -- Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the “Company”) reported net income of $38.7 million, or $1.21 per share, for the three months ended June 30, 2021, compared to net income of $18.2 million, or $0.53 per share, for the three months ended June 30, 2020.

“MetaBank performed well during the third quarter, more than doubling earnings per share, as various timing items including tax season delays, additional card fee income from government stimulus programs, and reduced provision helped enhance performance year-over-year. Our results demonstrate how MetaBank’s mission of financial inclusion for all® is creating value for all our stakeholders, including our customers, employees and shareholders,” said President and CEO Brad Hanson.

Business Development Highlights for the 2021 Fiscal Third Quarter

  • Published our inaugural 2020 Environmental, Social and Governance ("ESG") Report, building on the Company's vision, culture, and mission of financial inclusion for all®. The Company's 2020 ESG report can be downloaded at https://www.metafinancialgroup.com/environmental-social-governance.
  • Launched the Company's Community Impact Program, focused on financial inclusion, personal and family financial empowerment, educational support, and disaster relief. Concentrating on these four areas positions MetaBank to encourage long-lasting positive impact in our communities.
  • Expanded our renewable energy investment tax credit financing, originating $72.0 million for the first nine months of the fiscal year 2021, resulting in $18.9 million in total net ITC.
  • Entered into a new Banking as a Service ("BaaS") partnership with Clair, a social impact embedded fintech startup. The Company will act as both the issuing bank and bank services provider, offering digital banking services for users of Clair.

Financial Highlights for the 2021 Fiscal Third Quarter

  • Total revenue for the third quarter was $130.9 million, an increase of $27.7 million compared to $103.2 million for the same quarter in fiscal 2020 primarily driven by a timing shift of refund transfer product fees and additional payments card fee income from government stimulus programs.
  • Operating efficiency ratio improved 185 basis points to 61.75% at June 30, 2021 compared to 63.60% at June 30, 2020. See non-GAAP reconciliation table below.
  • Net interest income for the third quarter was $68.5 million, an increase of $6.4 million compared to $62.1 million in the third quarter last year, reflecting a decrease in deposit interest expense.
  • Net interest margin ("NIM") improved to 3.75% for the third quarter from 3.28% during the same period of last year, chiefly due to the decrease of cash associated with the Company's participation in the EIP program and an increase in national lending loans and leases.
  • Total gross loans and leases at June 30, 2021 decreased $1.5 million, to $3.50 billion, compared to June 30, 2020 and decreased $152.8 million, or 4%, when compared to March 31, 2021. The decrease was primarily driven due to the seasonal nature of the taxpayer advance loans.
  • Average deposits from the Payments businesses for the fiscal 2021 third quarter increased nearly 8% to $6.79 billion when compared to the prior year quarter largely driven by excess cash on consumer cards related to government stimulus programs.

Tax Season Recap
During the third quarter of the fiscal 2021, total tax services product revenue was $13.6 million compared to $4.6 million in the prior year quarter. The significant increase for the quarter was mostly related to delayed timing of refund-transfers income due to the extension of the tax filing deadline by the IRS. Total tax services product income, net of losses and direct product expenses, increased 19% when comparing the first nine months of fiscal 2021 to the prior year period. The 2021 tax season benefited by the addition of the H&R Block relationship and has been successful despite the challenges caused by an increase in consumer liquidity due to stimulus payments throughout the 2021 tax season.

Economic Impact Program ("EIP") Update
Of the 16.5 million prepaid cards issued in conjunction with the three EIP stimulus programs, totaling approximately $24.15 billion, $2.81 billion were outstanding as of June 30, 2021, of which only $98.1 million was on Meta’s balance sheet with the remainder being held at other banks.

Net Interest Income
Net interest income for the third quarter of fiscal 2021 was $68.5 million, an increase of 10% from the same quarter in fiscal 2020. The increase was primarily driven by a reduction in total interest expense, partially offset by lower overall yields realized on investments and loan and leases.

Interest expense during the third quarter decreased $3.8 million, and loan and lease interest income increased $2.4 million. The third quarter average outstanding balance of loans and leases decreased by $4.2 million compared to the prior year quarter, primarily due to the decrease in community bank and healthcare receivable loan portfolios offset by growth of the remaining commercial loan portfolios. The Company’s average interest-earning assets for the third quarter decreased by $291.8 million to $7.32 billion compared with the prior year quarter, primarily due to the decrease in cash and fed funds sold, total investments, and community bank loans offset by growth of the national lending loans and leases.

Fiscal 2021 third quarter NIM increased to 3.75% from 3.28% for the third quarter last year. The overall reported tax-equivalent yield (“TEY”) on average earning asset yields increased 26 basis points to 3.85% compared to the prior year quarter, primarily driven by a reduction in low-yielding cash held at the Federal Reserve. The TEY on the securities portfolio was 1.62% compared to 2.22% for the comparable period last year.

The Company's cost of funds for all deposits and borrowings averaged 0.09% during the fiscal 2021 third quarter, compared to 0.28% during the prior year quarter, primarily driven by a reduction in wholesale deposit balances. The Company's overall cost of deposits was 0.01% in the fiscal third quarter of 2021, compared to 0.17% in the same quarter last year.

Noninterest Income
Fiscal 2021 third quarter noninterest income increased to $62.5 million, compared to $41.0 million for the same period of the prior year. This increase was primarily related to card fee income and refund transfer fee income. Card fees benefited from increased card balances related to stimulus programs. Refund transfer fee income was higher compared to last year due to refund transfer volume shift from the second fiscal quarter because of the delay in the 2021 tax season.

Noninterest Expense
Noninterest expense increased 14% to $81.5 million for the fiscal 2021 third quarter, from $71.2 million for the same quarter last year, primarily driven by increases in compensation due to a return to more normalized incentive accruals in fiscal year 2021 and additional employees to support growth. Refund transfer product expense was also higher than the same quarter last year, due largely to a shift in volume into the fiscal 2021 third quarter as a result of the delayed IRS filing date.

Income Tax Expense
The Company recorded income tax expense of $4.9 million, representing an effective tax rate of 11.0%, for the fiscal 2021 third quarter, compared to an income tax benefit of $2.4 million, representing an effective tax rate of (14.4)%, for the third quarter last year. The increase in the recorded income tax expense reflected an increase in fiscal 2021 third quarter earnings, whereas the prior year’s income tax benefit was chiefly the result of adjustments needed for the ratably recognized investment tax credits and lower earnings forecast at that time due to COVID-19.

The Company originated $13.5 million in solar leases during the fiscal 2021 third quarter, compared to $1.3 million in last year's third quarter. Investment tax credits related to solar leases are recognized ratably based on income throughout each fiscal year. The timing and impact of future solar tax credits are expected to vary from period to period, and Meta intends to undertake only those tax credit opportunities that meet the Company's underwriting and return criteria.

Investments, Loans and Leases

 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
Total investments$1,981,852  $1,552,892  $1,309,452  $1,360,712  $1,268,416 
          
Loans held for sale         
Consumer credit products12,582  6,233  234  962  391 
SBA/USDA57,208  61,402  32,983  52,542  31,438 
Community Bank18,115    100,442  130,073  48,076 
Total loans held for sale87,905  67,635  133,659  183,577  79,905 
          
National Lending         
Term lending920,279  891,414  881,306  805,323  738,454 
Asset based lending263,237  248,735  242,298  182,419  181,130 
Factoring320,629  277,612  275,650  281,173  206,361 
Lease financing282,940  308,169  283,722  281,084  264,988 
Insurance premium finance417,652  344,841  338,227  337,940  359,147 
SBA/USDA263,709  331,917  300,707  318,387  308,611 
Other commercial finance118,081  103,234  101,209  101,658  100,214 
Commercial Finance2,586,527  2,505,922  2,423,119  2,307,984  2,158,905 
Consumer credit products105,440  104,842  88,595  89,809  102,808 
Other consumer finance122,316  130,822  162,423  134,342  138,777 
Consumer Finance227,756  235,664  251,018  224,151  241,585 
Tax Services41,268  225,921  92,548  3,066  19,168 
Warehouse Finance335,704  332,456  318,937  293,375  277,614 
Total National Lending loans and leases3,191,255  3,299,963  3,085,622  2,828,576  2,697,272 
Community Banking         
Commercial real estate and operating294,810  335,587  339,141  457,371  608,303 
Consumer one-to-four family real estate and other1,349  4,567  5,077  16,486  166,479 
Agricultural real estate and operating7,825  7,911  9,724  11,707  24,655 
Total Community Banking loans303,984  348,065  353,942  485,564  799,437 
Total gross loans and leases3,495,239  3,648,028  3,439,564  3,314,140  3,496,709 
Allowance for credit losses(91,208) (98,892) (72,389) (56,188) (65,747)
Net deferred loan and lease origination fees1,431  9,503  9,111  8,625  5,937 
Total loans and leases, net of allowance$3,405,462  $3,558,639  $3,376,286  $3,266,577  $3,436,899 

The Company's investment security balances at June 30, 2021 totaled $1.98 billion, as compared to $1.55 billion at March 31, 2021 and $1.27 billion at June 30, 2020.

Total gross loans and leases totaled $3.50 billion at June 30, 2021, as compared to $3.65 billion at March 31, 2021 and $3.50 billion and as compared to June 30, 2020. The primary driver for the decrease on a linked quarter basis was the pay down of seasonal tax service loans.

At June 30, 2021, commercial finance loans, which comprised 74% of the Company's gross loan and lease portfolio, totaled $2.59 billion, reflecting growth of $80.6 million, or 3%, from March 31, 2021. The increase in commercial finance loans was primarily due to increases in insurance premium finance by $72.8 million and factoring by $43.0 million, partially offset by decreases in lease financing by $25.2 million and SBA/USDA loans by $68.2 million, respectively, along with slight increases spread across several of the other commercial finance categories.

As of June 30, 2021, the Company had 458 loans outstanding with total loan balances of $143.3 million originated as part of the Paycheck Protection Program ("PPP"), compared with 576 loans outstanding with total loan balances of $208.6 million for the quarter ended March 31, 2021. In total, 53% of the PPP loan balances were forgiven through June 30, 2021.

Consumer finance loans totaled $227.8 million as of June 30, 2021, a decrease compared to $235.7 million at March 31, 2021 and $241.6 million at June 30, 2020. This reduction was primarily driven by other consumer finance, which includes student loans and certain seasonal lending products for tax customers.

Tax services loans totaled $41.3 million as of June 30, 2021, a seasonal decrease as compared to $225.9 million for March 31, 2021 and an increase as compared to $19.2 million at June 30, 2020. Warehouse finance loans totaled $335.7 million at June 30, 2021, a 1% increase from March 31, 2021.

Community bank loans held for investment totaled $304.0 million as of June 30, 2021, decreasing as compared to $348.1 million at March 31, 2021 and $799.4 million at June 30, 2020. As of June 30, 2021, the Company had $18.1 million in community bank loans classified as held for sale.

Asset Quality
The Company’s allowance for credit losses totaled $91.2 million at June 30, 2021, a decrease compared to $98.9 million at March 31, 2021 and an increase compared to $65.7 million at June 30, 2020. The decrease in the allowance at June 30, 2021 when compared to March 31, 2021, was primarily due to the seasonal tax services loan portfolio, which decreased $4.8 million and consumer finance, which decreased $2.4 million during the fiscal 2021 third quarter.

The year-over-year increase in the allowance was primarily driven by a $16.0 million increase within the commercial finance portfolio, a $12.9 million increase in tax services, and a $4.4 million increase in the consumer finance portfolio. These increases were primarily driven by impacts from the pandemic, year-over-year loan growth and the adoption of the current expected credit losses ("CECL") accounting standard, which required a day one entry to increase the allowance for credit losses in the amount of $12.8 million effective October 1, 2020. The increases noted above were partially offset by a $7.2 million decrease within the retained community banking portfolio, which has decreased along with the reduction in year-over-year loan balances.

The following table presents the Company's allowance for credit losses as a percentage of its total loans and leases.

 As of the Period Ended
(Unaudited)June 30, 2021March 31, 2021December 31, 2020October 1, 2020(1)September 30, 2020June 30, 2020
       
Commercial finance1.73%1.77%1.88%1.85%1.30%1.36%
Consumer finance3.80%4.70%4.39%4.31%1.64%1.75%
Tax services58.99%12.90%1.53%0.06%0.06%59.67%
Warehouse finance0.10%0.10%0.10%0.10%0.10%0.10%
National Lending2.44%2.57%1.89%1.86%1.20%1.68%
Community Bank4.36%4.03%4.01%3.37%4.59%2.55%
Total loans and leases2.61%2.71%2.10%2.08%1.70%1.88%

(1) Represents the Company's allowance coverage ratio upon the adoption of the Accounting Standards Update 2016-13 using September 30, 2020 loan and lease and allowance balances plus the CECL allowance adjustment.

The Company's allowance for credit losses as a percentage of total loans and leases decreased to 2.61% at June 30, 2021 from 2.71% at March 31, 2021. The decrease in the total loans and leases coverage ratio reflected a seasonal reduction in the allowance of the tax services loan portfolios. The coverage ratios for the other non-tax-related loan categories remained relatively similar to the March 31, 2021 quarter. The Company expects to continue to diligently monitor the allowance for credit losses and adjust as necessary in future periods to maintain an appropriate and supportable level.

Activity in the allowance for credit losses for the periods presented was as follows.

(Unaudited)Three Months EndedNine Months Ended
 June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
(Dollars in thousands)     
Beginning balance$98,892 $72,389 $65,355 $56,188 $29,149 
Adoption of CECL accounting standard   12,773  
Provision - tax services loans4,685 27,680 (100)32,819 20,407 
Provision - all other loans and leases(36)2,519 15,193 8,294 35,390 
Charge-offs - tax services loans(9,505) (9,797)(9,505)(9,797)
Charge-offs - all other loans and leases(5,360)(4,248)(5,808)(15,284)(12,912)
Recoveries - tax services loans17 54 15 1,027 827 
Recoveries - all other loans and leases2,515 498 889 4,896 2,684 
Ending balance$91,208 $98,892 $65,747 $91,208 $65,747 

Provision for credit losses was $4.6 million for the quarter ended June 30, 2021, compared to $15.1 million for the comparable period in the prior fiscal year. The decrease in the overall provision compared to the prior year was due in large part to the increase in the allowance as part of the Company's response to the emerging COVID-19 pandemic during the third quarter of fiscal 2020. Net charge-offs were $12.3 million for the quarter ended June 30, 2021, compared to $14.7 million for the quarter ended June 30, 2020. The majority of the net charge-offs for the quarter were attributable to seasonal tax-related loan products.

The Company's past due loans and leases were as follows for the periods presented.

As of June 30, 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
Due
 Current Total Loans and Leases
Receivable
 > 89 Days Past Due and Accruing Non-accrual balance Total
                  
Commercial finance$22,117  $10,650  $8,844  $41,611  $2,544,916  $2,586,527  $4,350  $17,315  $21,665 
Consumer finance843  1,009  525  2,377  225,379  227,756  469    469 
Tax services  40,958    40,958  310  41,268       
Warehouse finance        335,704  335,704       
Total National Lending22,960  52,617  9,369  84,946  3,106,309  3,191,255  4,819  17,315  22,134 
Total Community Banking62    1,769  1,831  302,153  303,984    19,773  19,773 
Total loans and leases held for investment$23,022  $52,617  $11,138  $86,777  $3,408,462  $3,495,239  $4,819  $37,088  $41,907 


As of March 31, 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 Due Current Total Loans and Leases Receivable > 89 Days Past Due and Accruing Non-accrual balance Total
                  
Commercial finance$34,675   $8,730   $9,488   $52,893   $2,453,029   $2,505,922   $4,810   $18,305   $23,115  
Consumer 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  

The Company's nonperforming assets at June 30, 2021 were $45.1 million, representing 0.64% of total assets, compared to $46.7 million, or 0.48% of total assets at March 31, 2021 and $56.1 million, or 0.64% of total assets at June 30, 2020. The changes in the nonperforming assets as a percentage of total assets at June 30, 2021 were driven in large part by a significant reduction in period-end total assets as the total nonperforming assets for June 30, 2021 decreased when compared to both the linked-quarter and the prior year.

The Company's nonperforming loans and leases at June 30, 2021, were $41.9 million, representing 1.17% of total gross loans and leases, compared to $43.5 million, or 1.17% of total gross loans and leases at March 31, 2021 and $39.3 million, or 1.10% of total gross loans and leases at June 30, 2020.

Loan and lease balances that were within their active deferment period decreased to $41.5 million at June 30, 2021 from $66.5 million at March 31, 2021.

Meta is now revising its credit administration policies and reviewing its loan portfolio to better align with OCC guidance for national banks, a process that began during the quarter ending June 30, 2021 and is expected to be completed by September 30, 2021. We expect these credit policy revisions will have an impact on our loan and lease risk ratings, resulting in downgrades of certain credits in several categories. Our loan and collateral management practices have proven effective in managing losses during previous economic cycles; and while we expect this process will result in setting a new baseline for portfolio metrics going forward, it does not indicate a deterioration in our portfolio's expected performance. Further, these changes do not reflect an increase in credit risk for past or future periods and thus we do not anticipate any increase in losses as a result of these one-time administrative adjustments to these credits' risk ratings.

The Company has various portfolios of consumer finance and tax services loans that present unique risks. Due to the unique risks associated with these portfolios, the Company monitors other credit quality indicators in their evaluation of the appropriateness of the allowance for credit losses on these portfolios, and as such, these loans are not included in the asset classification table below. The Company's loans and leases by asset classification were as follows for the periods presented.

Asset ClassificationPassWatchSpecial MentionSubstandardDoubtfulTotal
As of June 30, 2021(Dollars in Thousands)
Commercial finance$2,370,132 $135,691 $55,805 $74,941 $7,166 $2,643,735 
Warehouse finance335,704     335,704 
Total National Lending2,705,836 135,691 55,805 74,941 7,166 2,979,439 
Total Community Banking212,283 33,494 16,126 60,196  322,099 
Total Loans and Leases$2,918,119 $169,185 $71,931 $135,137 $7,166 $3,301,538 


Asset ClassificationPassWatchSpecial MentionSubstandardDoubtfulTotal
As of March 31, 2021(Dollars in Thousands)
Commercial finance$2,310,043 $142,506 $59,904 $52,492 $2,378 $2,567,323 
Warehouse finance332,456     332,456 
Total National Lending2,642,499 142,506 59,904 52,492 2,378 2,899,779 
Total Community Banking239,650 84,107 684 23,625  348,066 
Total Loans and Leases$2,882,149 $226,613 $60,588 $76,117 $2,378 $3,247,845 

Deposits, Borrowings and Other Liabilities
Total average deposits for the fiscal 2021 third quarter decreased by $240.7 million to $6.98 billion compared to the same period in fiscal 2020, due to a reduction in wholesale deposits partially offset by increases in all other non-maturity deposit categories. Average wholesale deposits decreased $731.1 million, or 89%, while noninterest-bearing deposits increased $323.1 million, or 5%, for the fiscal 2021 third quarter when compared to the same period in fiscal 2020. Average deposits from the Payments division increased nearly 8% to $6.79 billion for the fiscal 2021 third quarter when compared to the same period in fiscal 2020. Excluding the balances on the EIP cards, average payments deposits for the fiscal 2021 second quarter were $6.67 billion, representing an increase of 42% compared to the same period of the prior year, which continues to be largely driven by other stimulus-related dollars loaded on various partner cards.

The average balance of total deposits and interest-bearing liabilities was $7.08 billion for the three-month period ended June 30, 2021, compared to $7.49 billion for the same period in the prior fiscal year, representing a decrease of 6%.

Total end-of-period deposits decreased 22% to $5.89 billion at June 30, 2021, compared to $7.59 billion at June 30, 2020. The reduction in end-of-period deposits was primarily driven by decreases in noninterest-bearing deposits of $1.15 billion and wholesale deposits of $665.0 million. The decrease in noninterest-bearing deposits was driven by a $2.58 billion reduction in EIP program card balances from June 30, 2020 to June 30, 2021 as Meta was able to shift most of the remaining EIP program card balances from its balance sheet to other banks. That decrease in EIP balances was partially offset by growth in payments deposits that has been largely driven by excess cash on consumer cards related to government stimulus programs.

Regulatory Capital
The Company and MetaBank remained above the federal regulatory minimum capital requirements at June 30, 2021, continued to be classified as well-capitalized, and in good standing with the regulatory agencies. A temporary exemption was granted by the Office of the Comptroller of the Currency related to the financial impacts of distributing prepaid debit cards as part of the EIP program. Regulatory capital ratios of the Company and the Bank are stated in the table below.

The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analysis.

As of the dates indicatedJune 30,
2021
(1)
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
Company         
Tier 1 leverage capital ratio6.85% 4.75% 7.39% 6.58% 5.91%
Common equity Tier 1 capital ratio12.76% 11.29% 10.72% 11.78% 11.51%
Tier 1 capital ratio13.11% 11.63% 11.07% 12.18% 11.90%
Total capital ratio16.18% 14.65% 14.14% 15.30% 14.99%
MetaBank         
Tier 1 leverage capital ratio7.83% 5.47% 8.60% 7.56% 6.89%
Common equity Tier 1 capital ratio14.94% 13.39% 12.87% 13.96% 13.82%
Tier 1 capital ratio14.96% 13.40% 12.89% 14.00% 13.86%
Total capital ratio16.22% 14.66% 14.14% 15.26% 15.12%

(1) June 30, 2021 amounts are preliminary pending completion and filing of the Company's regulatory reports. Regulatory capital presented for periods in fiscal year 2021 reflect the Company's election of the five-year CECL transition for regulatory capital purposes.

The following table provides the non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP:

Standardized Approach(1) June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
(Dollars in Thousands)         
Total stockholders' equity$876,633  $835,258  $813,210  $847,308  $829,909 
Adjustments:         
LESS: Goodwill, net of associated deferred tax liabilities301,179  301,602  301,999  302,396  302,814 
LESS: Certain other intangible assets35,100  36,779  39,403  40,964  42,865 
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards17,753  19,306  24,105  18,361  10,360 
LESS: Net unrealized gains (losses) on available-for-sale securities14,750  12,458  19,894  17,762  8,382 
LESS: Non-controlling interest1,490  1,092  1,536  3,603  3,787 
ADD: Adoption of Accounting Standards Update 2016-1313,913  10,439  10,439     
Common Equity Tier 1(1)520,274  474,460  436,712  464,222  461,701 
Long-term borrowings and other instruments qualifying as Tier 113,661  13,661  13,661  13,661  13,661 
Tier 1 minority interest not included in common equity tier 1 capital932  690  749  1,894  1,894 
Total Tier 1 Capital534,867  488,811  451,122  479,777  477,256 
Allowance for credit losses51,317  53,232  51,070  49,343  50,338 
Subordinated debentures (net of issuance costs)73,936  73,892  73,850  73,807  73,765 
Total qualifying capital$660,119  $615,935  $576,042  $602,927  $601,359 

(1) Capital ratios were determined using the Basel III capital rules that became effective on January 1, 2015. Basel III revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio; those changes are being fully phased in through the end of 2021.

The following table provides a reconciliation of tangible common equity and tangible common equity excluding accumulated other comprehensive income ("AOCI"), each of which is used in calculating tangible book value data, to Total Stockholders' Equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.

 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
(Dollars in Thousands)         
Total Stockholders' Equity$876,633  $835,258  $813,210  $847,308  $829,909 
Less: Goodwill309,505  309,505  309,505  309,505  309,505 
Less: Intangible assets34,898  36,903  39,660  41,692  43,974 
Tangible common equity532,230  488,850  464,045  496,111  476,430 
Less: Accumulated other comprehensive income (loss) ("AOCI")15,222  12,809  20,119  17,542  7,995 
Tangible common equity excluding AOCI$517,008  $476,041  $443,926  $478,569  $468,435 

Conference 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 Wednesday, July 28, 2021. The live webcast of the call can be accessed from Meta’s Investor Relations website at www.metafinancialgroup.com. Telephone participants may access the live conference call by dialing (844) 461-9934 beginning approximately 10 minutes prior to start time. Please ask to join the Meta Financial conference call, and provide conference ID 5084665 upon request. International callers should dial (636) 812-6634. A webcast replay will also be archived at www.metafinancialgroup.com for one year.

Upcoming Investor Events

  • Raymond James U.S. Bank Conference, September 8, 2021 | Chicago, IL

Forward-Looking 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; technological changes, including, but not limited to, the protection of our electronic systems and information; the impact of acquisitions and divestitures; litigation risk; the growth of the Company’s business, as well as expenses related thereto; continued maintenance by MetaBank of its status as a well-capitalized institution; changes in consumer spending and saving habits; the impact of our participation as prepaid card issuer for the EIP program and similar programs in the future; losses from fraudulent or illegal activity; technological risks and developments and cyber threats, attacks, or events; and the success of the Company at maintaining its high quality asset level and managing and collecting assets of borrowers in default should problem assets increase.

The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2020, and in other filings made with the SEC. The Company expressly disclaims any intent or obligation to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changed circumstances, or future events or for any other reason.

Condensed Consolidated Statements of Financial Condition (Unaudited)

(Dollars in Thousands, Except Share Data)

ASSETSJune 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
Cash and cash equivalents$720,243  $3,724,242  $1,586,451  $427,367  $3,108,141 
Investment securities available for sale, at fair value854,023  921,947  797,363  814,495  825,579 
Mortgage-backed securities available for sale, at fair value1,063,582  558,833  430,761  453,607  338,250 
Investment securities held to maturity, at cost60,228  67,709  76,176  87,183  98,205 
Mortgage-backed securities held to maturity, at cost4,019  4,403  5,152  5,427  6,382 
Loans held for sale87,905  67,635  133,659  183,577  79,905 
Loans and leases3,496,670  3,657,531  3,448,675  3,322,765  3,502,646 
Allowance for credit losses(91,208) (98,892) (72,389) (56,188) (65,747)
Federal Reserve Bank and Federal Home Loan Bank stocks, at cost28,433  28,433  27,138  27,138  31,836 
Accrued interest receivable16,230  17,429  17,133  16,628  17,545 
Premises, furniture, and equipment, net44,107  41,510  39,932  41,608  40,361 
Rental equipment, net211,368  211,397  206,732  205,964  216,336 
Bank-owned life insurance94,142  93,542  92,937  92,315  91,697 
Foreclosed real estate and repossessed assets, net1,204  1,483  7,186  9,957  6,784 
Goodwill309,505  309,505  309,505  309,505  309,505 
Intangible assets34,898  36,903  39,660  41,692  43,974 
Prepaid assets7,482  10,201  11,270  8,328  6,806 
Deferred taxes20,072  25,435  24,411  17,723  15,944 
Other assets88,909  110,877  82,763  82,983  104,877 
          
Total assets$7,051,812  $9,790,123  $7,264,515  $6,092,074  $8,779,026 
          
LIABILITIES AND STOCKHOLDERS’ EQUITY         
          
LIABILITIES         
Deposits:         
Noninterest-bearing checking5,385,569  7,928,235  5,581,597  4,356,630  6,537,809 
Interest-bearing checking255,509  416,164  274,504  157,571  187,003 
Savings deposits93,608  126,834  54,080  47,866  55,896 
Money market deposits63,920  55,045  56,440  48,494  40,811 
Time certificates of deposit11,425  12,614  13,522  20,223  25,000 
Wholesale deposits78,840  103,521  227,648  348,416  743,806 
Total deposits5,888,871  8,642,413  6,207,791  4,979,200  7,590,325 
Short-term borrowings         
Long-term borrowings93,634  95,336  96,760  98,224  209,781 
Accrued interest payable1,853  679  2,068  1,923  4,332 
Accrued expenses and other liabilities190,821  216,437  144,686  165,419  144,679 
Total liabilities6,175,179  8,954,865  6,451,305  5,244,766  7,949,117 
          
STOCKHOLDERS’ EQUITY         
Preferred stock         
Common stock, $.01 par value319  319  326  344  346 
Common stock, Nonvoting, $.01 par value         
Additional paid-in capital602,720  601,222  598,669  594,569  592,693 
Retained earnings262,578  225,471  198,000  234,927  228,500 
Accumulated other comprehensive income15,222  12,809  20,119  17,542  7,995 
Treasury stock, at cost(5,696) (5,655) (5,440) (3,677) (3,412)
Total equity attributable to parent875,143  834,166  811,674  843,705  826,122 
Noncontrolling interest1,490  1,092  1,536  3,603  3,787 
Total stockholders’ equity876,633  835,258  813,210  847,308  829,909 
          
Total liabilities and stockholders’ equity$7,051,812  $9,790,123  $7,264,515  $6,092,074  $8,779,026 

Consolidated Statements of Operations (Unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 Three Months Ended Year Ended
 June 30, 2021 March 31, 2021 June 30, 2020 June 30,
2021
 June 30,
2020
Interest and dividend income:         
Loans and leases, including fees$62,287  $68,472  $59,911  $192,415  $199,107 
Mortgage-backed securities3,446  2,608  2,269  8,176  7,151 
Other investments4,250  4,589  5,226  13,207  18,176 
 69,983  75,669  67,406  213,798  224,434 
Interest expense:         
Deposits188  445  3,130  1,429  20,712 
FHLB advances and other borrowings1,320  1,374  2,139  4,045  9,197 
 1,508  1,819  5,269  5,474  29,909 
          
Net interest income68,475  73,850  62,137  208,324  194,525 
          
Provision for credit losses4,612  30,290  15,093  40,991  55,796 
          
Net interest income after provision for credit losses63,863  43,560  47,044  167,333  138,729 
          
Noninterest income:         
Refund transfer product fees12,073  22,680  4,595  35,400  33,726 
Tax advance product fees891  44,562  28  47,413  31,840 
Payments card and deposit fees29,203  29,875  21,302  81,641  65,957 
Other bank and deposit fees338  133  214  709  1,083 
Rental income9,976  9,846  11,231  29,707  34,682 
Net gain realized on investment securities  6    6   
Gain on divestitures        19,275 
Gain (loss) on sale of other5,955  2,133  1,214  10,935  969 
Other income4,017  4,218  2,464  15,550  11,512 
Total noninterest income62,453  113,453  41,048  221,361  199,044 
          
Noninterest expense:         
Compensation and benefits38,604  43,932  32,102  114,867  100,631 
Refund transfer product expense2,435  6,146  (139) 8,642  7,482 
Tax advance product expense(25) 2,189  (11) 2,534  2,820 
Card processing6,809  7,212  7,128  20,138  19,432 
Occupancy and equipment expense7,381  6,748  6,502  21,017  20,169 
Operating lease equipment depreciation8,122  7,419  8,536  23,122  25,237 
Legal and consulting5,680  6,045  4,660  16,972  15,242 
Intangible amortization2,013  2,757  2,636  6,784  8,714 
Impairment expense505  554    2,217  750 
Other expense9,999  12,969  9,827  33,775  38,291 
Total noninterest expense81,523  95,971  71,241  250,068  238,768 
          
Income before income tax expense44,793  61,042  16,851  138,626  99,005 
          
Income tax expense (benefit)4,934  1,133  (2,426) 9,600  3,870 
          
Net income before noncontrolling interest39,859  59,909  19,277  129,026  95,135 
Net income attributable to noncontrolling interest1,158  843  1,087  3,221  3,573 
Net income attributable to parent$38,701  $59,066  $18,190  $125,805  $91,562 
          
Less: Allocation of Earnings to participating securities(1) 729   1,113   432   2,411   2,097 
Net income attributable to common shareholders(1) 37,972   57,953   17,758   123,394   89,465 
Earnings per common share         
Basic$1.21  $1.84  $0.53  $3.87  $2.54 
Diluted$1.21  $1.84  $0.53  $3.87  $2.54 
Shares used in computing earnings per common share         
Basic31,320,893  31,520,505  33,794,154  31,880,653  35,180,068 
Diluted31,338,947  31,535,022  33,815,651  31,900,597  35,201,702 

(1) Amounts presented are used in the two-class earnings per common share calculation.

Average Balances, Interest Rates and Yields

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and in rates. Only the yield/rate reflects tax-equivalent adjustments. Nonaccruing loans and leases have been included in the table as loans carrying a zero yield.

Three Months Ended June 30,2021 2020
(Dollars in Thousands)Average
Outstanding
Balance
 Interest
Earned /
Paid
 Yield /
Rate(1)
 Average
Outstanding
Balance
 Interest
Earned /
Paid
 Yield /
Rate(1)
Interest-earning assets:           
Cash and fed funds sold$1,867,988  $528  0.11% $2,692,270  $783  0.12%
Mortgage-backed securities882,042  3,446  1.57% 342,174  2,269  2.67%
Tax exempt investment securities263,401  884  1.70% 417,042  1,658  2.02%
Asset-backed securities438,163  1,651  1.51% 336,562  1,770  2.11%
Other investment securities246,493  1,187  1.93% 197,643  1,014  2.06%
Total investments1,830,099  7,168  1.62% 1,293,420  6,711  2.22%
Total commercial finance2,616,942  48,641  7.46% 2,160,175  40,375  7.52%
Total consumer finance241,813  3,916  6.50% 247,824  4,635  7.52%
Total tax services91,804  604  2.64% 39,845    %
Total warehouse finance332,759  5,151  6.21% 304,839  4,582  6.05%
National lending loans and leases3,283,318  58,312  7.12% 2,752,683  49,592  7.25%
Community Banking loans335,415  3,975  4.75% 870,245  10,319  4.77%
Total loans and leases3,618,733  62,287  6.90% 3,622,928  59,911  6.65%
Total interest-earning assets$7,316,820  $69,983  3.85% $7,608,618  $67,406  3.59%
Noninterest-earning assets841,738      830,589     
Total assets$8,158,558      $8,439,206     
            
Interest-bearing liabilities:           
Interest-bearing checking(2)$336,576  $  % $226,382  $  %
Savings107,803  5  0.02% 55,572  1  0.01%
Money markets58,517  66  0.45% 40,091  33  0.33%
Time deposits11,877  27  0.91% 25,392  113  1.78%
Wholesale deposits86,295  90  0.42% 817,414  2,983  1.47%
Total interest-bearing deposits601,068  188  0.13% 1,164,852  3,130  1.08%
Overnight fed funds purchased11    0.25% 59,055  48  0.33%
FHLB advances    % 110,000  670  2.45%
Subordinated debentures73,907  1,148  6.23% 73,738  1,153  6.29%
Other borrowings20,657  172  3.35% 27,032  268  3.98%
Total borrowings94,575  1,320  5.60% 269,825  2,139  3.19%
Total interest-bearing liabilities695,643  1,508  0.87% 1,434,677  5,269  1.48%
Noninterest-bearing deposits6,380,371    % 6,057,314    %
Total deposits and interest-bearing liabilities$7,076,014   $1,508   0.09 % $7,491,991   $5,269   0.28 %
Other noninterest-bearing liabilities225,862      122,940     
Total liabilities7,301,876      7,614,931     
Shareholders' equity856,682      824,276     
Total liabilities and shareholders' equity$8,158,558      $8,439,206     
Net interest income and net interest rate spread including noninterest-bearing deposits  $68,475  3.76%   $62,137  3.30%
            
Net interest margin    3.75%     3.28%
Tax-equivalent effect    0.02%     0.02%
Net interest margin, tax-equivalent(3)    3.77%     3.31%

(1) Tax rate used to arrive at the TEY for the three months ended June 30, 2021 and 2020 was 21%.
(2) Of the total balance, $336.2 million are interest-bearing deposits where interest expense is paid by a third party and not by the Company.
(3) Net interest margin expressed on a fully-taxable-equivalent basis ("net interest margin, tax-equivalent") is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.

Selected Financial Information

As of and For the Three Months EndedJune 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
Equity to total assets12.43% 8.53% 11.19% 13.91% 9.45%
Book value per common share outstanding$27.46  $26.16  $24.93  $24.66  $23.96 
Tangible book value per common share outstanding$16.67  $15.31  $14.23  $14.44  $13.76 
Tangible book value per common share outstanding excluding AOCI$16.20  $14.91  $13.61  $13.93  $13.53 
Common shares outstanding31,919,780  31,926,008  32,620,251  34,360,890  34,631,160 
Nonperforming assets to total assets0.64% 0.48% 0.73% 0.79% 0.64%
Nonperforming loans and leases to total loans and leases1.17% 1.17% 1.18% 0.97% 1.10%
Net interest margin3.75% 3.07% 4.65% 3.77% 3.28%
Net interest margin, tax-equivalent3.77% 3.08% 4.67% 3.79% 3.31%
Return on average assets1.90% 2.22% 1.73% 0.69% 0.86%
Return on average equity18.07% 28.93% 13.91% 6.21% 8.83%
Full-time equivalent employees1,109  1,075  1,038  1,015  999 

Non-GAAP Reconciliation

Efficiency RatioFor the last twelve months ended
(Dollars in Thousands)June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
Noninterest Expense - GAAP$330,352  $320,070  $315,828  $319,051  $314,911 
Net Interest Income272,837  266,499  260,386  259,038  260,142 
Noninterest Income262,111  240,706  247,766  239,794  235,024 
Total Revenue: GAAP$534,948  $507,205  $508,152  $498,832  $495,166 
Efficiency Ratio, last twelve months61.75% 63.10% 62.15% 63.96% 63.60%

About Meta Financial Group, Inc.®

Meta Financial Group, Inc.® ("Meta") (Nasdaq: CASH) is a South Dakota-based financial holding company. At Meta, our mission is financial inclusion for all®. Through our subsidiary, MetaBank®, N.A., we strive to remove barriers to financial access and promote economic mobility by working with third parties to provide responsible, secure, high quality financial products that contribute to the social and economic benefit of communities at the core of the real economy. Meta works to increase financial availability, choice, and opportunity for all. Additional information can be found by visiting www.metafinancialgroup.com.

Investor Relations Contact
Brittany Kelley Elsasser
605-362-2423
bkelley@metabank.com

Media Relations Contact
mediarelations@metabank.com 


Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.