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Meta Financial Group, Inc.® Announces Results for 2022 Fiscal Second Quarter

04/28/2022

Fiscal 2022 Second Quarter Net Income of $49.3 million, or $1.66 Per Diluted Share

Announces Name Change to Pathward Financial

Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the “Company”) reported net income of $49.3 million, or $1.66 per share, for the three months ended March 31, 2022, compared to net income of $59.1 million, or $1.84 per share, for the three months ended March 31, 2021. During the quarter the Company recognized $2.8 million of pre-tax expenses related to rebranding efforts. Excluding the impact of the rebranding expenses, net of tax, the Company's adjusted net income for the quarter totaled $51.4 million, or $1.73 per share. See non-GAAP reconciliation table below.

CEO Brett Pharr said, "Although our tax services and renewable energy investment tax credit products produced results below our expectations, the balance of our businesses performed well. Our commercial finance portfolio saw continued healthy loan growth from satisfying small and medium sized businesses’ robust demand for credit, and our Banking as a Service pipeline of opportunities remains strong.”

“Last month, we announced our new corporate name, Pathward Financial. Pathward signifies our Company’s purpose to power financial inclusion for all by creating a path forward for individuals and businesses to meet their financial goals. The name reflects our dedication to removing the barriers that prevent millions of Americans from accessing the financial system and will serve as a constant reminder of our mission to meet the needs of the unbanked, underbanked, and underserved to help them achieve economic mobility,” Pharr added.

Tax Season

For the 2022 tax season, MetaBank originated $1.83 billion in refund advance loans compared to $1.79 billion during the 2021 tax season. The Company expects taxpayer advance volumes to return to more normalized levels in the 2023 tax season, absent further stimulus or additional changes to tax credit payments.

During the second quarter of fiscal 2022, total tax services product revenue was $68.3 million, an increase of 2% compared to the second quarter of fiscal 2021. Both total tax services product fee income and total tax services product expense were approximately flat compared to the prior year period. Net interest income on tax services loans increased $1.5 million during the second quarter of fiscal 2022 compared to the second quarter last year.

Total tax services product income, net of losses and direct product expenses, increased 6% to $34.4 million from $32.6 million, when comparing the first six months of fiscal 2022 to the same period of the prior fiscal year.

Business Development Highlights for the 2022 Fiscal Second Quarter

  • On March 29, 2022, the Company announced it is changing its name to Pathward Financial, Inc.™, and its bank subsidiary, MetaBank®, N.A., will be changing its name to Pathward™, N.A. Certain changes will be made immediately, with a full transition to Pathward expected by the end of this calendar year, including the launch of a new brand identity and website. The Company will continue to serve its customers under existing brand names during the transition. The Company recognized $2.8 million of pre-tax expenses related to rebranding efforts during the second quarter of fiscal 2022. The Company continues to estimate total rebranding expenses will range between $15 million to $20 million.
  • On April 27, 2022 Meta published its second annual ESG report. In addition to detailing the Company's community impact program and its diversity, equity, and inclusion initiatives, it contains enhanced quantitative reporting, which will be used to measure progress.

Financial Highlights for the 2022 Fiscal Second Quarter

  • Total revenue for the second quarter was $193.6 million, an increase of $6.2 million, or 3%, compared to the same quarter in fiscal 2021, primarily driven by an increase in interest income, partially offset by a reduction in noninterest income.
  • Net interest income for the second quarter was $83.8 million, an increase of $10.0 million compared to $73.9 million in the second quarter last year.
  • Net interest margin ("NIM") increased to 4.80% for the second quarter from 3.07% during the same period of last year. The prior year period was impacted by excess cash associated with the Company's participation in the U.S. Treasury Department's Economic Impact Program.
  • Total gross loans and leases at March 31, 2022 increased $78.1 million, to $3.73 billion, or 2%,compared to March 31, 2021 and increased $43.5 million, or 1%, when compared to December 31, 2021. The increase compared to the prior year quarter was driven by growth across our loan portfolios, partially offset by the sale of all remaining community banking loans during the fiscal 2022 first quarter.
  • The Company originated$1.3 million in aggregate principal of renewable energy loan financing for the second quarter of fiscal 2022, resulting in $0.3 million in total net investment tax credits.
  • The Company repurchased 736,198 shares of its common stock at an average price of $57.01, in the second fiscal quarter and has 4,868,177 shares available for repurchase under the common stock share repurchase program announced during the fourth quarter of fiscal year 2021.
  • On March 24, 2022, the Company's Board of Directors approved the redemption at par of $75.0 million of the 5.75% fixed to floating rate note due August 15, 2026. The redemption date is set for May 15, 2022.

Net Interest Income

Net interest income for the second quarter of fiscal 2022 was $83.8 million, an increase of 13% from the same quarter in fiscal 2021. The increase was mainly attributable to an improved earning asset mix, together with increased loan balances.

The second quarter average outstanding balance of loans and leases increased $124.1 million compared to the same quarter of the prior year, primarily due to increases in our core loan and lease portfolios, partially offset by the sale of the remaining community bank portfolio. The Company’s average interest-earning assets for the second quarter decreased by $2.69 billion to $7.08 billion compared with the same quarter in fiscal 2021, primarily due to a reduction in cash balances as a result of high cash levels during the prior year period related to the Company's participation in government stimulus programs. The decrease in interest-earnings assets was partially offset by growth in total investments and total loans and leases.

Fiscal 2022 second quarter NIM increased to 4.80% from 3.07% in the second quarter of last year. The overall reported tax-equivalent yield (“TEY”) on average earning asset yields increased 174 basis points to 4.89% compared to the prior year quarter, primarily driven by a decrease in lower-yielding cash balances. Growth in loan and lease and investment securities balances also contributed to the year-over-year TEY increase. The yield on the loan and lease portfolio was 7.22% compared to 6.74% for the comparable period last year and the TEY on the securities portfolio was 1.83% compared to 1.78% over that same period.

The Company's cost of funds for all deposits and borrowings averaged 0.08% during the fiscal 2022 second quarter, the same as the prior year quarter. The Company's overall cost of deposits was 0.01% in the fiscal second quarter of 2022, compared to 0.02% in the same quarter last year.

Noninterest Income

Fiscal 2022 second quarter noninterest income decreased to $109.8 million, compared to $113.5 million for the same period of the prior year. The decrease was driven by a reduction in payments fee income of $3.6 million and a net loss on our MoneyLion investment of $1.3 million, partially offset by an increase in rental income of $1.5 million.

During the second quarter of fiscal year 2022, the Company sold the entirety of its equity investment in MoneyLion, recognizing a net loss of $1.3 million during the current period. Following the completion of MoneyLion's de-SPAC process and listing on the New York Stock Exchange on September 22, 2021, the Company recognized a cumulative loss of approximately $0.4 million on the investment dating back to the fourth quarter of fiscal year 2021. The Company continues to be a strategic BaaS provider to MoneyLion.

Noninterest Expense

Noninterest expense increased 7% to $103.2 million for the fiscal 2022 second quarter, from $96.0 million for the same quarter last year. The increase in expense was primarily driven by an increase in consulting expense, software expense, operating lease equipment depreciation and compensation expense. Compensation expense for the second quarter of fiscal 2022 includes $0.9 million of separation-related expenses. When comparing the fiscal 2022 second quarter to the first quarter of 2022, noninterest expense increased by $20.7 million.

Of the $2.8 million in rebranding expenses the Company incurred during the quarter, $2.0 million is recognized in other expense and $0.8 million is related to legal and consulting expense.

Income Tax Expense

The Company recorded income tax expense of $8.0 million, representing an effective tax rate of 13.8%, for the fiscal 2022 second quarter, compared to $1.1 million, representing an effective tax rate of 1.9%, for the second quarter last year. The current quarter increase in income tax expense was primarily due to a reduction in renewable energy investment tax credit lending volume compared to the prior year period.

The Company originated $1.3 million in solar leases during the fiscal 2022 second quarter, compared to $20.0 million in last year's second quarter. Investment tax credits related to solar leases are recognized ratably based on income throughout each fiscal year. For the six months ended March 31, 2022, the Company originated $22.5 million in solar leases, compared to $58.5 million for the comparable prior year period. 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

(dollars in thousands)

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

Total investments

$

2,090,765

 

 

$

1,833,733

 

 

$

1,921,568

 

 

$

1,981,852

 

 

$

1,552,892

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

 

 

 

 

 

 

 

Consumer credit products

 

23,670

 

 

 

20,728

 

 

 

23,111

 

 

 

12,582

 

 

 

6,233

 

SBA/USDA

 

7,740

 

 

 

15,454

 

 

 

33,083

 

 

 

57,208

 

 

 

61,402

 

Community bank

 

 

 

 

 

 

 

 

 

 

18,115

 

 

 

 

Total loans held for sale

 

31,410

 

 

 

36,182

 

 

 

56,194

 

 

 

87,905

 

 

 

67,635

 

 

 

 

 

 

 

 

 

 

 

Term lending

 

1,111,076

 

 

 

1,038,378

 

 

 

961,019

 

 

 

920,279

 

 

 

891,414

 

Asset based lending

 

382,355

 

 

 

337,236

 

 

 

300,225

 

 

 

263,237

 

 

 

248,735

 

Factoring

 

394,865

 

 

 

402,972

 

 

 

363,670

 

 

 

320,629

 

 

 

277,612

 

Lease financing

 

235,397

 

 

 

245,315

 

 

 

266,050

 

 

 

282,940

 

 

 

308,169

 

Insurance premium finance

 

403,681

 

 

 

385,473

 

 

 

428,867

 

 

 

417,652

 

 

 

344,841

 

SBA/USDA

 

214,195

 

 

 

209,521

 

 

 

247,756

 

 

 

263,709

 

 

 

331,917

 

Other commercial finance

 

173,260

 

 

 

178,853

 

 

 

157,908

 

 

 

118,081

 

 

 

103,234

 

Commercial finance

 

2,914,829

 

 

 

2,797,748

 

 

 

2,725,495

 

 

 

2,586,527

 

 

 

2,505,922

 

Consumer credit products

 

171,847

 

 

 

173,343

 

 

 

129,251

 

 

 

105,440

 

 

 

104,842

 

Other consumer finance

 

111,922

 

 

 

144,412

 

 

 

123,606

 

 

 

122,316

 

 

 

130,822

 

Consumer finance

 

283,769

 

 

 

317,755

 

 

 

252,857

 

 

 

227,756

 

 

 

235,664

 

Tax services

 

85,999

 

 

 

100,272

 

 

 

10,405

 

 

 

41,268

 

 

 

225,921

 

Warehouse finance

 

441,496

 

 

 

466,831

 

 

 

419,926

 

 

 

335,704

 

 

 

332,456

 

Community banking

 

 

 

 

 

 

 

199,132

 

 

 

303,984

 

 

 

348,065

 

Total loans and leases

 

3,726,093

 

 

 

3,682,606

 

 

 

3,607,815

 

 

 

3,495,239

 

 

 

3,648,028

 

Net deferred loan origination costs

 

4,097

 

 

 

1,655

 

 

 

1,748

 

 

 

1,431

 

 

 

9,503

 

Total gross loans and leases

 

3,730,190

 

 

 

3,684,261

 

 

 

3,609,563

 

 

 

3,496,670

 

 

 

3,657,531

 

Allowance for credit losses

 

(88,552

)

 

 

(67,623

)

 

 

(68,281

)

 

 

(91,208

)

 

 

(98,892

)

Total loans and leases, net

$

3,641,638

 

 

$

3,616,638

 

 

$

3,541,282

 

 

$

3,405,462

 

 

$

3,558,639

 

The Company's investment security balances at March 31, 2022 totaled $2.09 billion, as compared to $1.83 billion at December 31, 2021 and $1.55 billion at March 31, 2021.

Total gross loans and leases totaled $3.73 billion at March 31, 2022, as compared to $3.68 billion at December 31, 2021 and $3.66 billion at March 31, 2021. The primary driver for the increase on a linked quarter basis was commercial finance loans. The year-over-year increase was primarily driven by increases within commercial finance, warehouse finance, and consumer finance, partially offset by a reduction in tax services loans and the sale of all remaining community bank loans.

Commercial finance loans, which comprised 78% of the Company's gross loan and lease portfolio, totaled $2.91 billion at March 31, 2022, reflecting growth of $117.1 million, or 4%, from December 31, 2021 and $408.9 million, or 16%, from March 31, 2021.

As of March 31, 2022, the Company had 164 loans outstanding with total loan balances of $43.0 million originated as part of the Paycheck Protection Program ("PPP"), compared with 275 loans outstanding with total loan balances of $63.8 million for the quarter ended December 31, 2021. In total, approximately 85% of the PPP loan balances were forgiven through March 31, 2022.

Asset Quality

The Company’s allowance for credit losses ("ACL") totaled $88.6 million at March 31, 2022, an increase compared to $67.6 million at December 31, 2021 and a decrease from $98.9 million at March 31, 2021. The increase in the ACL at March 31, 2022, when compared to December 31, 2021, was primarily due to the seasonal tax services loan portfolio, which increased $29.2 million during the fiscal 2022 second quarter.

The $10.3 million year-over-year decrease in the ACL was primarily driven by a $14.0 million decrease attributable to the disposition of the community banking portfolio, along with a $2.1 million decrease in the consumer finance portfolio. These decreases were partially offset by a $4.0 million increase within the commercial finance portfolio and a $1.6 million increase within the tax services portfolio.

The following table presents the Company's ACL as a percentage of its total loans and leases.

 

As of the Period Ended

(Unaudited)

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

Commercial finance

1.66

%

 

2.04

%

 

1.77

%

 

1.73

%

 

1.77

%

Consumer finance

3.18

%

 

2.70

%

 

2.91

%

 

3.80

%

 

4.70

%

Tax services

35.76

%

 

1.60

%

 

0.02

%

 

58.99

%

 

12.90

%

Warehouse finance

0.10

%

 

0.10

%

 

0.10

%

 

0.10

%

 

0.10

%

Community banking

%

 

%

 

6.16

%

 

4.36

%

 

4.03

%

Total loans and leases

2.38

%

 

1.84

%

 

1.89

%

 

2.61

%

 

2.71

%

Total loans and leases excluding tax services

1.59

%

 

1.84

%

 

1.90

%

 

1.94

%

 

2.04

%

The Company's ACL as a percentage of total loans and leases increased to 2.38% at March 31, 2022 from 1.84% at December 31, 2021. The increase in the total loans and leases coverage ratio was primarily driven by the seasonal tax services loan portfolio. The coverage ratio for the commercial finance portfolio decreased compared to the December 31, 2021 quarter due to reduction of specific reserves on two individually evaluated loan relationships. The Company expects to continue to diligently monitor the ACL and adjust as necessary in future periods to maintain an appropriate and supportable level.

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

(Unaudited)

Three Months Ended

 

Six Months Ended

(Dollars in thousands)

March 31, 2022

 

December 31, 2021

 

March 31, 2021

 

March 31, 2022

 

March 31, 2021

Beginning balance

$

67,623

 

 

$

68,281

 

 

$

72,389

 

 

$

68,281

 

 

$

56,188

 

Adoption of CECL accounting standard

 

 

 

 

 

 

 

 

 

 

 

 

 

12,773

 

Provision (reversal of) - tax services loans

 

28,972

 

 

 

(714

)

 

 

27,680

 

 

 

28,259

 

 

 

28,134

 

Provision - all other loans and leases

 

3,183

 

 

 

1,184

 

 

 

2,519

 

 

 

4,368

 

 

 

8,329

 

Charge-offs - tax services loans

 

 

 

 

(254

)

 

 

 

 

 

(254

)

 

 

 

Charge-offs - all other loans and leases

 

(12,415

)

 

 

(4,605

)

 

 

(4,248

)

 

 

(17,021

)

 

 

(9,923

)

Recoveries - tax services loans

 

184

 

 

 

2,567

 

 

 

54

 

 

 

2,750

 

 

 

1,010

 

Recoveries - all other loans and leases

 

1,005

 

 

 

1,164

 

 

 

498

 

 

 

2,169

 

 

 

2,381

 

Ending balance

$

88,552

 

 

$

67,623

 

 

$

98,892

 

 

$

88,552

 

 

$

98,892

 

The Company recognized a provision for credit losses of $32.3 million for the quarter ended March 31, 2022, compared to $30.3 million for the comparable period in the prior fiscal year. Net charge-offs were $11.2 million for the quarter ended March 31, 2022, compared to $3.7 million for the quarter ended March 31, 2021. Net charge-offs attributable to the commercial finance portfolio for the quarter were $10.7 million and net charge-offs attributable to the consumer finance portfolio were $0.7 million.

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

As of March 31, 2022

Accruing and Nonaccruing Loans and Leases

 

Nonperforming Loans and Leases

(Dollars in thousands)

30-59 Days Past Due

 

60-89 Days Past Due

 

> 89 Days Past Due

 

Total Past Due

 

Current

 

Total Loans and Leases Receivable

 

> 89 Days Past Due and Accruing

 

Nonaccrual Balance

 

Total

Loans held for sale

$

 

$

 

$

 

$

 

$

31,410

 

$

31,410

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial finance

 

24,631

 

 

2,574

 

 

11,994

 

 

39,199

 

 

2,875,630

 

 

2,914,829

 

 

5,701

 

 

25,327

 

 

31,028

Consumer finance

 

5,829

 

 

5,475

 

 

4,814

 

 

16,118

 

 

267,651

 

 

283,769

 

 

4,814

 

 

 

 

4,814

Tax services

 

830

 

 

 

 

 

 

830

 

 

85,169

 

 

85,999

 

 

 

 

 

 

Warehouse finance

 

 

 

 

 

 

 

 

 

441,496

 

 

441,496

 

 

 

 

 

 

Total loans and leases held for investment

 

31,290

 

 

8,049

 

 

16,808

 

 

56,147

 

 

3,669,946

 

 

3,726,093

 

 

10,515

 

 

25,327

 

 

35,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases

$

31,290

 

$

8,049

 

$

16,808

 

$

56,147

 

$

3,701,356

 

$

3,757,503

 

$

10,515

 

$

25,327

 

$

35,842

As of December 31, 2021

Accruing and Nonaccruing Loans and Leases

 

Nonperforming Loans and Leases

(Dollars in thousands)

30-59 Days Past Due

 

60-89 Days Past Due

 

> 89 Days Past Due

 

Total Past Due

 

Current

 

Total Loans and Leases Receivable

 

> 89 Days Past Due and Accruing

 

Nonaccrual Balance

 

Total

Loans held for sale

$

9

 

$

2

 

$

 

$

11

 

$

36,171

 

$

36,182

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial finance

 

41,473

 

 

8,539

 

 

7,568

 

 

57,580

 

 

2,740,168

 

 

2,797,748

 

 

3,896

 

 

37,760

 

 

41,656

Consumer finance

 

4,880

 

 

2,277

 

 

1,534

 

 

8,691

 

 

309,064

 

 

317,755

 

 

1,534

 

 

 

 

1,534

Tax services

 

 

 

 

 

 

 

 

 

100,272

 

 

100,272

 

 

 

 

 

 

Warehouse finance

 

 

 

 

 

 

 

 

 

466,831

 

 

466,831

 

 

 

 

 

 

Total loans and leases held for investment

 

46,353

 

 

10,816

 

 

9,102

 

 

66,271

 

 

3,616,335

 

 

3,682,606

 

 

5,430

 

 

37,760

 

 

43,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases

$

46,362

 

$

10,818

 

$

9,102

 

$

66,282

 

$

3,652,506

 

$

3,718,788

 

$

5,430

 

$

37,760

 

$

43,190

The Company's nonperforming assets at March 31, 2022 were $38.3 million, representing 0.56% of total assets, compared to $44.3 million, or 0.58% of total assets at December 31, 2021 and $46.7 million, or 0.48% of total assets at March 31, 2021. The decrease in the nonperforming assets as a percentage of total assets at March 31, 2022 compared to December 31, 2021, was primarily driven by a decrease in nonperforming assets in the commercial finance portfolio, partially offset by an increase within the consumer finance portfolio. When comparing the current period to the same period of the prior year, the decrease in nonperforming assets was due to a decrease in nonperforming assets in the community bank portfolio, partially offset by an increase in nonperforming assets in the commercial and consumer finance portfolios.

The Company's nonperforming loans and leases at March 31, 2022, were $35.8 million, representing 0.95% of total gross loans and leases, compared to $43.2 million, or 1.16% of total gross loans and leases at December 31, 2021 and $43.5 million, or 1.17% of total gross loans and leases at March 31, 2021. The decreases are related to the aforementioned decrease in nonperforming assets in the community bank portfolio, partially offset by an increase in nonperforming assets in the commercial and consumer finance portfolios.

The Company has various portfolios of consumer lending and tax services loans that present unique risks that are statistically managed. 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 held for investment by asset classification were as follows for the periods presented.

 

Asset Classification

(Dollars in thousands)

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Total

As of March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

Commercial finance

$

2,171,206

 

$

430,240

 

$

141,497

 

$

167,882

 

$

4,004

 

$

2,914,829

Warehouse finance

 

441,496

 

 

 

 

 

 

 

 

 

 

441,496

Total loans and leases

$

2,612,702

 

$

430,240

 

$

141,497

 

$

167,882

 

$

4,004

 

$

3,356,325

 

Asset Classification

(Dollars in thousands)

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Total

As of December 31, 2021

 

Commercial finance

$

2,084,835

 

$

355,431

 

$

161,301

 

$

176,258

 

$

19,923

 

$

2,797,748

Warehouse finance

 

466,831

 

 

 

 

 

 

 

 

 

 

466,831

Total loans and leases

$

2,551,666

 

$

355,431

 

$

161,301

 

$

176,258

 

$

19,923

 

$

3,264,579

Deposits, Borrowings and Other Liabilities

Total average deposits for the fiscal 2022 second quarter decreased by $2.89 billion to $6.68 billion compared to the same period in fiscal 2021. The decrease in average deposits was primarily due to a decrease in noninterest-bearing deposits of $2.66 billion, and to a lesser extent decreases within time and wholesale deposits, partially offset by increases in money market and savings deposits.

The average balance of total deposits and interest-bearing liabilities was $6.87 billion for the three-month period ended March 31, 2022, compared to $9.66 billion for the same period in the prior fiscal year, representing a decrease of 29%.

Total end-of-period deposits decreased 33% to $5.83 billion at March 31, 2022, compared to $8.64 billion at March 31, 2021. The decrease in end-of-period deposits was primarily driven by a decrease in noninterest-bearing deposits of $2.32 billion and a decrease in wholesale deposits of $94.1 million. The decrease in noninterest-bearing deposits was driven by government stimulus-related dollars loaded on various partner cards during the prior year period.

As of March 31, 2022, the Company managed $1.85 billion of customer deposits at other banks in its capacity as custodian.

Regulatory Capital

The Company and MetaBank remained above the federal regulatory minimum capital requirements at March 31, 2022, continued to be classified as well-capitalized, and in good standing with the regulatory agencies. Regulatory capital ratios of the Company and the Bank are stated in the table below. The decrease in Tier 1 leverage capital ratio for the period is the result of higher quarterly average assets related to its seasonal tax business. The MetaBank Tier 1 leverage capital ratio using end of period assets of 8.94% better reflects the expected capital position post tax season. See non-GAAP reconciliation table below. Regulatory Capital is not affected by the unrealized loss on accumulated other comprehensive income (“AOCI”). The securities portfolio is made up of nearly all amortizing securities that should provide consistent cash flow and is not expected to require sales to realize the losses to fund future loan growth.

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 Periods Indicated

March 31,
2022(1)

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

Company

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital ratio

6.80

%

 

7.39

%

 

7.67

%

 

6.85

%

 

4.75

%

Common equity Tier 1 capital ratio

11.26

%

 

10.88

%

 

12.12

%

 

12.76

%

 

11.29

%

Tier 1 capital ratio

11.58

%

 

11.20

%

 

12.46

%

 

13.11

%

 

11.63

%

Total capital ratio

14.16

%

 

13.80

%

 

15.45

%

 

16.18

%

 

14.65

%

MetaBank

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

7.79

%

 

8.52

%

 

8.69

%

 

7.83

%

 

5.47

%

Common equity Tier 1 capital ratio

13.26

%

 

12.90

%

 

14.11

%

 

14.94

%

 

13.39

%

Tier 1 capital ratio

13.26

%

 

12.91

%

 

14.13

%

 

14.96

%

 

13.40

%

Total capital ratio

14.52

%

 

14.16

%

 

15.38

%

 

16.22

%

 

14.66

%

(1)

March 31, 2022 percentages are preliminary pending completion and filing of the Company's regulatory reports. Regulatory capital ratios for periods presented 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)

(Dollars in thousands)

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

Total stockholders' equity

$

763,406

 

 

$

826,157

 

$

871,884

 

$

876,633

 

$

835,258

Adjustments:

 

 

 

 

 

 

 

 

 

LESS: Goodwill, net of associated deferred tax liabilities

 

299,983

 

 

 

300,382

 

 

300,780

 

 

301,179

 

 

301,602

LESS: Certain other intangible assets

 

30,007

 

 

 

32,294

 

 

33,572

 

 

35,100

 

 

36,779

LESS: Net deferred tax assets from operating loss and tax credit carry-forwards

 

13,404

 

 

 

19,805

 

 

22,801

 

 

17,753

 

 

19,306

LESS: Net unrealized gains (losses) on available for sale securities

 

(69,838

)

 

 

403

 

 

7,344

 

 

14,750

 

 

12,458

LESS: Noncontrolling interest

 

322

 

 

 

642

 

 

1,155

 

 

1,490

 

 

1,092

ADD: Adoption of Accounting Standards Update 2016-13

 

13,387

 

 

 

6,527

 

 

8,202

 

 

13,913

 

 

10,439

Common Equity Tier 1(1)

 

502,915

 

 

 

479,158

 

 

514,434

 

 

520,274

 

 

474,460

Long-term borrowings and other instruments qualifying as Tier 1

 

13,661

 

 

 

13,661

 

 

13,661

 

 

13,661

 

 

13,661

Tier 1 minority interest not included in common equity Tier 1 capital

 

208

 

 

 

444

 

 

747

 

 

932

 

 

690

Total Tier 1 capital

 

516,784

 

 

 

493,263

 

 

528,842

 

 

534,867

 

 

488,811

Allowance for credit losses

 

56,051

 

 

 

55,125

 

 

53,159

 

 

51,317

 

 

53,232

Subordinated debentures (net of issuance costs)

 

59,256

 

 

 

59,220

 

 

73,980

 

 

73,936

 

 

73,892

Total capital

$

632,091

 

 

$

607,608

 

$

655,981

 

$

660,119

 

$

615,935

(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 were fully phased in through the end of calendar year 2021.

The following table provides a reconciliation of tangible common equity and tangible common equity excluding 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,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

Total stockholders' equity

$

763,406

 

 

$

826,157

 

$

871,884

 

$

876,633

 

$

835,258

Less: Goodwill

 

309,505

 

 

 

309,505

 

 

309,505

 

 

309,505

 

 

309,505

Less: Intangible assets

 

29,290

 

 

 

31,661

 

 

33,148

 

 

34,898

 

 

36,903

Tangible common equity

 

424,611

 

 

 

484,991

 

 

529,231

 

 

532,230

 

 

488,850

Less: AOCI

 

(69,374

)

 

 

724

 

 

7,599

 

 

15,222

 

 

12,809

Tangible common equity excluding AOCI

$

493,985

 

 

$

484,267

 

$

521,632

 

$

517,008

 

$

476,041

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 Thursday, April 28, 2022. The live webcast of the call can be accessed from Meta’s Investor Relations website at www.metafinancialgroup.com. Telephone participants may access the conference call by dialing 1-844-200-6205 (International: +1-929-526-1599) approximately 10 minutes prior to start time and reference access code 247026. A webcast replay will also be archived at www.metafinancialgroup.com for one year.

Upcoming Investor Events

  • B. Riley Institutional Investors Conference, May 25, 2022 | Los Angeles, CA

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, or other unusual and infrequently occurring events, including the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine; successfully completing our announced rebranding and our ability to achieve brand recognition for Pathward equal to or greater than we currently enjoy for MetaBank; changes in trade, monetary, and fiscal policies and laws, including actual changes in interest rates and the Fed Funds rate; changes in tax laws; the strength of the United States' economy, and the local economies in which the Company operates; inflation, market, and monetary fluctuations; the timely and efficient development 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; MetaBank's ability to maintain its Durbin Amendment exemption; the risks of dealing with or utilizing third parties, including, in connection with the Company’s prepaid card and tax refund advance businesses, 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; changes in financial services laws and regulations, including 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; 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, 2021, 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)

 

 

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

237,680

 

 

$

1,230,100

 

 

$

314,019

 

 

$

720,243

 

 

$

3,724,242

 

Securities available for sale, at fair value

 

2,043,478

 

 

 

1,782,739

 

 

 

1,864,899

 

 

 

1,917,605

 

 

 

1,480,780

 

Securities held to maturity, at amortized cost

 

47,287

 

 

 

50,994

 

 

 

56,669

 

 

 

64,247

 

 

 

72,112

 

Federal Reserve Bank and Federal Home Loan Bank Stock, at cost

 

28,812

 

 

 

28,400

 

 

 

28,400

 

 

 

28,433

 

 

 

28,433

 

Loans held for sale

 

31,410

 

 

 

36,182

 

 

 

56,194

 

 

 

87,905

 

 

 

67,635

 

Loans and leases

 

3,730,190

 

 

 

3,684,261

 

 

 

3,609,563

 

 

 

3,496,670

 

 

 

3,657,531

 

Allowance for credit losses

 

(88,552

)

 

 

(67,623

)

 

 

(68,281

)

 

 

(91,208

)

 

 

(98,892

)

Accrued interest receivable

 

19,115

 

 

 

17,240

 

 

 

16,254

 

 

 

16,230

 

 

 

17,429

 

Premises, furniture, and equipment, net

 

43,167

 

 

 

44,130

 

 

 

44,888

 

 

 

44,107

 

 

 

41,510

 

Rental equipment, net

 

213,033

 

 

 

234,693

 

 

 

213,116

 

 

 

211,368

 

 

 

211,397

 

Foreclosed real estate and repossessed assets, net

 

112

 

 

 

298

 

 

 

2,077

 

 

 

1,204

 

 

 

1,483

 

Goodwill and intangible assets

 

338,795

 

 

 

341,166

 

 

 

342,653

 

 

 

344,403

 

 

 

346,408

 

Prepaid assets

 

15,264

 

 

 

17,007

 

 

 

10,513

 

 

 

7,482

 

 

 

10,201

 

Other assets

 

227,448

 

 

 

210,071

 

 

 

199,686

 

 

 

203,123

 

 

 

229,854

 

Total assets

$

6,887,239

 

 

$

7,609,658

 

 

$

6,690,650

 

 

$

7,051,812

 

 

$

9,790,123

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits

 

5,829,886

 

 

 

6,525,569

 

 

 

5,514,971

 

 

 

5,888,871

 

 

 

8,642,413

 

Long-term borrowings

 

91,386

 

 

 

92,274

 

 

 

92,834

 

 

 

93,634

 

 

 

95,336

 

Accrued expenses and other liabilities

 

202,561

 

 

 

165,658

 

 

 

210,961

 

 

 

192,674

 

 

 

217,116

 

Total liabilities

 

6,123,833

 

 

 

6,783,501

 

 

 

5,818,766

 

 

 

6,175,179

 

 

 

8,954,865

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $.01 par value

 

294

 

 

 

301

 

 

 

317

 

 

 

319

 

 

 

319

 

Common stock, Nonvoting, $.01 par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

612,917

 

 

 

610,816

 

 

 

604,484

 

 

 

602,720

 

 

 

601,222

 

Retained earnings

 

223,760

 

 

 

217,992

 

 

 

259,189

 

 

 

262,578

 

 

 

225,471

 

Accumulated other comprehensive income (loss)

 

(69,374

)

 

 

724

 

 

 

7,599

 

 

 

15,222

 

 

 

12,809

 

Treasury stock, at cost

 

(4,513

)

 

 

(4,318

)

 

 

(860

)

 

 

(5,696

)

 

 

(5,655

)

Total equity attributable to parent

 

763,084

 

 

 

825,515

 

 

 

870,729

 

 

 

875,143

 

 

 

834,166

 

Noncontrolling interest

 

322

 

 

 

642

 

 

 

1,155

 

 

 

1,490

 

 

 

1,092

 

Total stockholders’ equity

 

763,406

 

 

 

826,157

 

 

 

871,884

 

 

 

876,633

 

 

 

835,258

 

Total liabilities and stockholders’ equity

$

6,887,239

 

 

$

7,609,658

 

 

$

6,690,650

 

 

$

7,051,812

 

 

$

9,790,123

 

Condensed Consolidated Statements of Operations (Unaudited)

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

 

 

Three Months Ended

 

Six Months Ended

 

March 31,
2022

 

December 31,
2021

 

March 31,
2021

 

March 31,
2022

 

March 31,
2021

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Loans and leases, including fees

$

75,540

 

$

65,035

 

 

$

68,472

 

$

140,575

 

 

$

130,128

Mortgage-backed securities

 

5,446

 

 

3,864

 

 

 

2,608

 

 

9,310

 

 

 

4,730

Other investments

 

4,191

 

 

3,992

 

 

 

4,589

 

 

8,183

 

 

 

8,956

 

 

85,177

 

 

72,891

 

 

 

75,669

 

 

158,068

 

 

 

143,814

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

165

 

 

141

 

 

 

445

 

 

306

 

 

 

1,241

FHLB advances and other borrowings

 

1,212

 

 

1,137

 

 

 

1,374

 

 

2,349

 

 

 

2,724

 

 

1,377

 

 

1,278

 

 

 

1,819

 

 

2,655

 

 

 

3,965

 

 

 

 

 

 

 

 

 

 

Net interest income

 

83,800

 

 

71,613

 

 

 

73,850

 

 

155,413

 

 

 

139,849

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

32,302

 

 

186

 

 

 

30,290

 

 

32,488

 

 

 

36,379

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for credit losses

 

51,498

 

 

71,427

 

 

 

43,560

 

 

122,925

 

 

 

103,470

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Refund transfer product fees

 

27,805

 

 

579

 

 

 

22,680

 

 

28,384

 

 

 

23,327

Tax advance product fees

 

39,299

 

 

1,233

 

 

 

44,562

 

 

40,532

 

 

 

46,522

Payments card and deposit fees

 

26,270

 

 

25,132

 

 

 

29,875

 

 

51,402

 

 

 

52,439

Other bank and deposit fees

 

250

 

 

237

 

 

 

133

 

 

487

 

 

 

370

Rental income

 

11,375

 

 

11,077

 

 

 

9,846

 

 

22,452

 

 

 

19,731

Gain on sale of securities

 

260

 

 

137

 

 

 

6

 

 

397

 

 

 

6

Gain on sale of trademarks

 

 

 

50,000

 

 

 

 

 

50,000

 

 

 

Gain (loss) on sale of other

 

626

 

 

(3,465

)

 

 

2,133

 

 

(2,839

)

 

 

4,981

Other income

 

3,881

 

 

1,661

 

 

 

4,218

 

 

5,542

 

 

 

11,532

Total noninterest income

 

109,766

 

 

86,591

 

 

 

113,453

 

 

196,357

 

 

 

158,908

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

45,047

 

 

38,225

 

 

 

43,932

 

 

83,272

 

 

 

76,263

Refund transfer product expense

 

6,260

 

 

138

 

 

 

6,146

 

 

6,398

 

 

 

6,207

Tax advance product expense

 

2,002

 

 

183

 

 

 

2,189

 

 

2,185

 

 

 

2,559

Card processing

 

7,457

 

 

7,172

 

 

 

7,212

 

 

14,629

 

 

 

13,329

Occupancy and equipment expense

 

8,500

 

 

8,349

 

 

 

6,748

 

 

16,849

 

 

 

13,636

Operating lease equipment depreciation

 

8,737

 

 

8,449

 

 

 

7,419

 

 

17,185

 

 

 

15,000

Legal and consulting

 

9,347

 

 

6,208

 

 

 

6,045

 

 

15,555

 

 

 

11,292

Intangible amortization

 

2,169

 

 

1,488

 

 

 

2,757

 

 

3,657

 

 

 

4,770

Impairment expense

 

 

 

 

 

 

554

 

 

 

 

 

1,713

Other expense

 

13,641

 

 

12,224

 

 

 

12,969

 

 

25,866

 

 

 

23,777

Total noninterest expense

 

103,160

 

 

82,436

 

 

 

95,971

 

 

185,596

 

 

 

168,546

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

58,104

 

 

75,582

 

 

 

61,042

 

 

133,686

 

 

 

93,832

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

8,002

 

 

14,276

 

 

 

1,133

 

 

22,278

 

 

 

4,665

 

 

 

 

 

 

 

 

 

 

Net income before noncontrolling interest

 

50,102

 

 

61,306

 

 

 

59,909

 

 

111,408

 

 

 

89,167

Net income attributable to noncontrolling interest

 

851

 

 

(18

)

 

 

843

 

 

833

 

 

 

2,064

Net income attributable to parent

$

49,251

 

$

61,324

 

 

$

59,066

 

$

110,575

 

 

$

87,103

 

 

 

 

 

 

 

 

 

 

Less: Allocation of Earnings to participating securities(1)

 

815

 

 

953

 

 

 

1,113

 

 

1,773

 

 

 

1,683

Net income attributable to common shareholders(1)

 

48,436

 

 

60,371

 

 

 

57,953

 

 

108,802

 

 

 

85,420

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

$

1.66

 

$

2.00

 

 

$

1.84

 

$

3.66

 

 

$

2.66

Diluted

$

1.66

 

$

2.00

 

 

$

1.84

 

$

3.66

 

 

$

2.65

Shares used in computing earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

29,212,301

 

 

30,238,621

 

 

 

31,520,505

 

 

29,731,797

 

 

 

32,158,994

Diluted

 

29,224,362

 

 

30,260,655

 

 

 

31,535,022

 

 

29,748,832

 

 

 

32,175,484

(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,

2022

 

2021

(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

$

810,857

 

$

721

 

0.36

%

 

$

4,187,558

 

$

1,090

 

0.11

%

Mortgage-backed securities

 

1,184,377

 

 

5,446

 

1.86

%

 

 

543,256

 

 

2,607

 

1.95

%

Tax exempt investment securities

 

189,213

 

 

903

 

2.45

%

 

 

297,299

 

 

1,132

 

1.96

%

Asset-backed securities

 

370,671

 

 

1,142

 

1.25

%

 

 

389,406

 

 

1,290

 

1.34

%

Other investment securities

 

282,655

 

 

1,425

 

2.05

%

 

 

230,168

 

 

1,077

 

1.90

%

Total investments

 

2,026,916

 

 

8,916

 

1.83

%

 

 

1,460,129

 

 

6,106

 

1.78

%

Commercial finance

 

2,852,147

 

 

48,872

 

6.95

%

 

 

2,471,694

 

 

46,299

 

7.60

%

Consumer finance

 

331,033

 

 

7,892

 

9.67

%

 

 

255,625

 

 

6,968

 

11.06

%

Tax services

 

594,166

 

 

11,599

 

7.92

%

 

 

714,789

 

 

6,544

 

3.71

%

Warehouse finance

 

467,298

 

 

7,177

 

6.23

%

 

 

315,162

 

 

4,845

 

6.23

%

Community banking

 

 

 

 

%

 

 

363,285

 

 

3,817

 

4.26

%

Total loans and leases

 

4,244,644

 

 

75,540

 

7.22

%

 

 

4,120,555

 

 

68,473

 

6.74

%

Total interest-earning assets

$

7,082,417

 

$

85,177

 

4.89

%

 

$

9,768,242

 

$

75,669

 

3.15

%

Noninterest-earning assets

 

814,151

 

 

 

 

 

 

887,610

 

 

 

 

Total assets

$

7,896,568

 

 

 

 

 

$

10,655,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking(2)

$

289

 

$

 

0.32

%

 

$

275,982

 

$

 

%

Savings

 

82,902

 

 

6

 

0.03

%

 

 

77,562

 

 

4

 

0.02

%

Money markets

 

102,473

 

 

53

 

0.21

%

 

 

56,352

 

 

42

 

0.30

%

Time deposits

 

8,682

 

 

10

 

0.49

%

 

 

12,820

 

 

34

 

1.07

%

Wholesale deposits

 

173,493

 

 

96

 

0.22

%

 

 

175,777

 

 

365

 

0.84

%

Total interest-bearing deposits

 

367,839

 

 

165

 

0.18

%

 

 

598,493

 

 

445

 

0.30

%

Overnight fed funds purchased

 

95,700

 

 

62

 

0.26

%

 

 

 

 

 

%

Subordinated debentures

 

74,040

 

 

1,002

 

5.49

%

 

 

73,864

 

 

1,147

 

6.30

%

Other borrowings

 

17,874

 

 

148

 

3.35

%

 

 

22,377

 

 

227

 

4.12

%

Total borrowings

 

187,614

 

 

1,212

 

2.62

%

 

 

96,241

 

 

1,374

 

5.79

%

Total interest-bearing liabilities

 

555,453

 

 

1,377

 

1.01

%

 

 

694,734

 

 

1,819

 

1.06

%

Noninterest-bearing deposits

 

6,311,583

 

 

 

%

 

 

8,967,067

 

 

 

%

Total deposits and interest-bearing liabilities

$

6,867,036

 

$

1,377

 

0.08

%

 

$

9,661,801

 

$

1,819

 

0.08

%

Other noninterest-bearing liabilities

 

213,982

 

 

 

 

 

 

177,372

 

 

 

 

Total liabilities

 

7,081,018

 

 

 

 

 

 

9,839,173

 

 

 

 

Shareholders' equity

 

815,550

 

 

 

 

 

 

816,679

 

 

 

 

Total liabilities and shareholders' equity

$

7,896,568

 

 

 

 

 

$

10,655,852

 

 

 

 

Net interest income and net interest rate spread including noninterest-bearing deposits

 

 

$

83,800

 

4.81

%

 

 

 

$

73,850

 

3.08

%

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 

 

4.80

%

 

 

 

 

 

3.07

%

Tax-equivalent effect

 

 

 

 

0.01

%

 

 

 

 

 

0.01

%

Net interest margin, tax-equivalent(3)

 

 

 

 

4.81

%

 

 

 

 

 

3.08

%

(1)

Tax rate used to arrive at the TEY for the three months ended March 31, 2022 and 2021 was 21%.

(2)

At March 31, 2021, $275.7 million of the total balance were interest-bearing deposits where interest expense was paid by a third party and not by the Company. On October 1, 2021, the Company reclassified the balances related to that program to noninterest bearing checking due to the product moving to noninterest bearing.

(3)

Net interest margin expressed on a fully-taxable-equivalent basis ("net interest margin, tax-equivalent") is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.

Selected Financial Information

 

As of and For the Three Months Ended

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

Equity to total assets

 

11.08

%

 

 

10.86

%

 

 

13.03

%

 

 

12.43

%

 

 

8.53

%

Book value per common share outstanding

$

26.00

 

 

$

27.46

 

 

$

27.53

 

 

$

27.46

 

 

$

26.16

 

Tangible book value per common share outstanding

$

14.46

 

 

$

16.12

 

 

$

16.71

 

 

$

16.67

 

 

$

15.31

 

Tangible book value per common share outstanding excluding AOCI

$

16.82

 

 

$

16.10

 

 

$

16.47

 

 

$

16.20

 

 

$

14.91

 

Common shares outstanding

 

29,362,844

 

 

 

30,080,717

 

 

 

31,669,952

 

 

 

31,919,780

 

 

 

31,926,008

 

Nonperforming assets to total assets

 

0.56

%

 

 

0.58

%

 

 

0.92

%

 

 

0.64

%

 

 

0.48

%

Nonperforming loans and leases to total loans and leases

 

0.95

%

 

 

1.16

%

 

 

1.52

%

 

 

1.17

%

 

 

1.17

%

Net interest margin

 

4.80

%

 

 

4.59

%

 

 

4.35

%

 

 

3.75

%

 

 

3.07

%

Net interest margin, tax-equivalent

 

4.81

%

 

 

4.61

%

 

 

4.37

%

 

 

3.77

%

 

 

3.08

%

Return on average assets

 

2.49

%

 

 

3.49

%

 

 

0.88

%

 

 

1.90

%

 

 

2.22

%

Return on average equity

 

24.16

%

 

 

29.69

%

 

 

7.18

%

 

 

18.07

%

 

 

28.93

%

Full-time equivalent employees

 

1,167

 

 

 

1,140

 

 

 

1,124

 

 

 

1,109

 

 

 

1,075

 

Non-GAAP Reconciliation

 

Adjusted Net Income and Adjusted Earnings Per Share

At and For the Three Months Ended

 

At and For the Six Months Ended

(Dollars in thousands)

March 31,
2022

 

December 31,
2021

 

March 31,
2021

 

March 31,
2022

 

March 31,
2021

Net Income - GAAP

$

49,251

 

 

$

61,324

 

$

59,066

 

$

110,575

 

$

87,103

Less: Gain on sale of trademarks

 

 

 

 

50,000

 

 

 

 

50,000

 

 

Add: Rebranding expenses

 

2,819

 

 

 

3

 

 

 

 

2,822

 

 

Add: Income tax effect resulting from gain on sale of trademarks and rebranding expenses

 

(711

)

 

 

12,593

 

 

 

 

11,882

 

 

Adjusted net income

$

51,359

 

 

$

23,920

 

$

59,066

 

$

75,279

 

$

87,103

Less: Adjusted allocation of earnings to participating securities

 

850

 

 

 

372

 

 

1,113

 

 

1,207

 

 

1,683

Adjusted Net income attributable to common shareholders

 

50,509

 

 

 

23,548

 

 

57,953

 

 

74,072

 

 

85,420

Weighted average diluted common shares outstanding

 

29,224,362

 

 

 

30,260,655

 

 

31,535,022

 

 

29,748,832

 

 

32,175,484

Adjusted earnings per common share - diluted

$

1.73

 

 

$

0.78

 

$

1.84

 

$

2.49

 

$

2.65

Efficiency Ratio

For the Last Twelve Months Ended

(Dollars in thousands)

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

Noninterest expense: GAAP

$

360,733

 

 

$

353,544

 

 

$

343,683

 

 

$

330,352

 

 

$

320,070

 

Net interest income

 

294,555

 

 

 

284,605

 

 

 

278,991

 

 

 

272,837

 

 

 

266,499

 

Noninterest income

 

308,352

 

 

 

312,039

 

 

 

270,903

 

 

 

262,111

 

 

 

240,706

 

Total revenue: GAAP

$

602,907

 

 

$

596,644

 

 

$

549,894

 

 

$

534,948

 

 

$

507,205

 

Efficiency ratio

 

59.83

%

 

 

59.26

%

 

 

62.50

%

 

 

61.75

%

 

 

63.10

%

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

Noninterest expense: GAAP

$

360,733

 

 

$

353,544

 

 

$

343,683

 

 

$

330,352

 

 

$

320,070

 

Less: Rebranding expenses

 

2,822

 

 

 

3

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense

 

357,911

 

 

 

353,541

 

 

 

343,683

 

 

 

330,352

 

 

 

320,070

 

Net interest income

 

294,555

 

 

 

284,605

 

 

 

278,991

 

 

 

272,837

 

 

 

266,499

 

Noninterest income

 

308,352

 

 

 

312,039

 

 

 

270,903

 

 

 

262,111

 

 

 

240,706

 

Less: Gain on sale of trademarks

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

Total adjusted revenue

$

552,907

 

 

$

546,644

 

 

$

549,984

 

 

$

534,948

 

 

$

507,205

 

Adjusted efficiency ratio

 

64.73

%

 

 

64.67

%

 

 

62.50

%

 

 

61.75

%

 

 

63.10

%

MetaBank Period-end Tier 1 Leverage

 

(Dollars in thousands)

March 31, 2022

Total stockholders' equity

$

853,001

 

Adjustments:

 

LESS: Goodwill, net of associated deferred tax liabilities

 

299,983

 

LESS: Certain other intangible assets

 

30,007

 

LESS: Net deferred tax assets from operating loss and tax credit carry-forwards

 

13,404

 

LESS: Net unrealized gains (losses) on available for sale securities

 

(69,838

)

LESS: Noncontrolling interest

 

322

 

ADD: Adoption of Accounting Standards Update 2016-13

 

13,386

 

Common Equity Tier 1(1)

 

592,509

 

Tier 1 minority interest not included in common equity Tier 1 capital

 

208

 

Total Tier 1 capital

$

592,717

 

 

 

Total Assets (Quarter Average)

$

7,901,915

 

ADD: Available for sale securities amortized cost

 

51,403

 

ADD: Deferred tax

 

(12,948

)

ADD: Adoption of Accounting Standards Updated 2016-13

 

13,386

 

LESS: Deductions from CET1

 

343,394

 

Adjusted total assets

$

7,610,362

 

MetaBank Regulatory Tier 1 Leverage

 

7.79

%

 

 

Total Assets (Period End)

$

6,891,342

 

ADD: Available for sale securities amortized cost

 

93,354

 

ADD: Deferred tax

 

(23,516

)

ADD: Adoption of Accounting Standards Updated 2016-13

 

13,386

 

LESS: Deductions from CET1

 

343,394

 

Adjusted total assets

$

6,631,172

 

MetaBank Period-end Tier 1 Leverage

 

8.94

%

About Meta Financial Group, Inc.®

Meta Financial Group, Inc.® (Nasdaq: CASH) is a U.S.-based financial holding company driven by its purpose to power financial inclusion for all™. Through our subsidiary, MetaBank®, N.A., we strive to increase financial availability, choice, and opportunity across strategic service lines including Payments, Commercial Finance, and Consumer Solutions, which is comprised of tax services and consumer lending. These solutions are seamlessly integrated to provide end-to-end support to the individuals and businesses who are powering the everyone economy. On March 29, 2022, MetaBank announced it is changing its name to Pathward™, N.A., and Meta Financial Group, Inc. is changing its name to Pathward Financial, Inc.™. Meta Financial Group, Inc. will make certain changes immediately and fully transition to Pathward Financial, Inc.™ by the end of this calendar year. Learn more at MetaFinancialGroup.com.

Investor Relations Contact
Justin Schempp
877-497-7497
jschempp@metabank.com

Media Relations Contact
mediarelations@metabank.com

Source: Meta Financial Group, Inc.

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