Meta Financial Group, Inc.® (Nasdaq:CASH) (“Meta” or the “Company”)
Highlights for the 2018 Fiscal Second Quarter Ended
March 31, 2018
- The Company recorded net income of $31.4 million, or $3.23 per
diluted share, for the three months ended March 31, 2018,
compared to net income of $32.1 million, or $3.42 per diluted
share, for the three months ended March 31, 2017, a decrease
of 2%. The 2018 fiscal second quarter pre-tax results
included $2.2 million of merger and acquisition related expenses,
$0.5 million payout of severance costs related to synergy efforts
in the Company's tax divisions, and a $0.2 million loss on sale of
investments. The 2018 fiscal second quarter pre-tax results also
included $2.7 million in amortization of intangible assets and $1.3
million in non-cash stock-related compensation associated with
executive officer employment agreements (see Select Quarterly
Expenses table).
- Net interest income was $27.4 million in the 2018 fiscal second
quarter, an increase of $3.4 million, or 14%, compared to $24.0
million in the second quarter of fiscal 2017. This increase
was largely driven by increased loan balances, primarily in the
portfolios of community banking, purchased student loans, and
commercial insurance premium finance loans. A rise in interest
expense, largely due to an increase in short-term funding rates and
an increase in wholesale funding balances due to retaining more tax
services loans on the Company's balance sheet, partially offset the
increase in interest income.
- Card fee income increased $0.3 million, or 1%, to $26.9 million
for the 2018 fiscal second quarter when compared to the same
quarter in 2017. Card fee growth with respect to the 2018 fiscal
second quarter compared to the same period of the prior year was
negatively affected by a promotional campaign during the second
quarter of fiscal 2017 that has since expired as expected.
Excluding the year over year change for the promotional campaign's
partner, card fee income would have been up $1.3 million, or 5%,
when comparing the 2018 fiscal second quarter to the same period of
the prior year. The Company expects fiscal year 2018 total card fee
income to be between $95.0 million and $101.0 million and expects
total card processing expense to be between $23.0 million and $27.0
million.
- For the three months ended March 31, 2018, compared to the same
period of the prior year, tax product fee income increased $4.0
million, or 6%, from $63.6 million to $67.6 million, tax product
expense decreased $2.0 million, or 15%, from $13.3 million to $11.3
million and provision for loan losses related to tax services loans
increased $10.2 million, or 130%, from $7.9 million to $18.1
million. The increase in tax product fee income and provision for
loan losses was primarily due to retaining all tax advance loans
originated during the 2018 tax season, as opposed to the previous
year when a majority of these loans were sold. When comparing
pre-tax income for the tax services business, the 2018 fiscal first
quarter was higher than the same period of the prior year, while
the 2018 fiscal second quarter was lower than the same period of
the prior year. The Company expects 2018 fiscal third quarter
pre-tax income to be higher than the same period of the prior year
and now expects total fiscal 2018 pre-tax income for our tax
services business to be approximately $1 million to $3 million
lower than for total fiscal 2017.
- The Company's 2018 fiscal second quarter average assets grew to
$4.70 billion, compared to $4.41 billion in the 2017 fiscal second
quarter, an increase of 7%, primarily driven by growth in loan
balances.
- Total loans receivable, net of allowance for loan losses,
increased $353.9 million, or 31%, at March 31, 2018, compared
to March 31, 2017. This increase was primarily related to
growth in commercial real estate loans, consumer loans, due to the
purchased student loan portfolios and tax advance loans, and
commercial insurance premium finance loans.
- Payments division average deposits increased $190.9 million, or
8%, for the 2018 fiscal second quarter when compared to the same
quarter of 2017.
- Non-performing assets (“NPAs”) were 0.84% of total assets at
March 31, 2018, compared to 0.12% at March 31, 2017. See
Credit Quality section below for further detail.
Business Updates
- On April 30, 2018, Meta announced an expanded, four-year
agreement with AAA. Together, Meta and AAA anticipate bringing
robust payments solutions to US-based AAA Clubs. Under this new
agreement, MetaBank and AAA will expand distribution of the
payments products, as well as enhancing them based on member
feedback and consumer preference, adding features like mobile
applications for card management and additional load
capabilities.
- On April 30, 2018, Meta announced an agreement with CURO Group
Holdings Corp ("CURO"), a leader in providing short-term credit to
underbanked consumers. Together, the organizations will launch a
new line of credit product that the parties believe will be more
flexible and transparent than others in the market, and well-suited
for US-based underbanked consumers. CURO and Meta expect to unveil
the new, joint brand and a timeline for the pilot launch later this
year. In the first three years of the agreement with CURO, Meta
expects to hold up to $350 million in product receivables on its
balance sheet.
- On April 3, 2018, Meta announced it entered into a three-year
agreement with Health Credit Services ("HCS"), a technology-driven,
patient financing company. MetaBank will approve and originate
loans for elective procedures for select HCS provider offices
throughout the country. During the three-year agreement, MetaBank
expects to originate at least several hundred million dollars in
personal loans.
- On March 12, 2018, Meta announced a 10-year renewal of a
relationship with Money Network Financial, LLC ("Money Network"), a
wholly-owned subsidiary of First Data (NYSE:FDC). MetaBank supports
a range of Money Network payments programs, most notably the Money
Network® Electronic Payment Delivery Service, which large
organizations use to provide employees the option of receiving
wages electronically.
"We are excited to announce that we have delivered strong
quarterly earnings of $31.4 million," said Chairman and CEO J.
Tyler Haahr. “The production and results of the 2018 tax season and
the effectiveness of our processing standards and partner
relationships aided in our outstanding performance. Our tax season
infrastructure has once again performed very well and we believe we
are well positioned to continue to deliver positive results into
the future.
"Adding to a very active quarter, we renewed multi-year
agreements with two of our largest prepaid partners, Money Network
Financial and AAA, and added relationships in our national consumer
lending business. Meta will originate and provide consumer lending
opportunities to the customers of Liberty Lending, LLC, Health
Credit Services, and CURO. We expect that these renewed and new
relationships will provide us continued momentum and allow us to
further diversify our financing products.
"Work towards the integration of the anticipated Crestmark
acquisition is continuing behind the scenes, and we expect the
acquisition to be completed by June 30. While we are earnestly
engaged with acquisition details, we are actively making
investments in people and systems to build out our platforms for
our consumer credit business and to enhance growth for Crestmark
and our other current business initiatives. We anticipate
making significant investments in the next twelve months to lay the
groundwork for what we believe will be good growth in fiscal 2019
and significantly more meaningful drivers for earnings performance
in 2020 and beyond."
Financial Summary
Revenue
Total revenue for the fiscal 2018 second quarter was $124.8
million, compared to $116.1 million for the same quarter in 2017,
an increase of $8.7 million, or 7%. This increase was primarily due
to growth in interest income from community banking loans, as well
as the purchased student loans and income from tax-exempt
securities (included in other investment securities), and growth in
tax product fee income.
Net
Income
The Company recorded net income of $31.4 million, or $3.23 per
diluted share, for the three months ended March 31, 2018,
compared to net income of $32.1 million, or $3.42 per diluted
share, for the three months ended March 31, 2017. The decrease
in net income was due to an increase of $9.7 million in provision
for loan losses, primarily related to the Company holding all tax
services loans on the balance sheet, and a $1.6 million increase in
non-interest expense, partially offset by increases of $5.2 million
in non-interest income and $3.4 million in net interest income
along with a decrease in income tax expense of $1.9 million,
primarily due to the adoption of the Tax Cuts and Jobs Act (the
"Tax Act").
The 2018 fiscal second quarter pre-tax results included $2.7
million of amortization of intangible assets, $2.2 million of
acquisition expenses, $0.5 million payout of severance costs
related to ongoing synergy efforts in the Company's tax divisions,
and a $0.2 million loss on sale of investments. In addition,
pre-tax results included $1.3 million in non-cash stock-related
compensation in connection with three executive officers signing
long-term employment agreements in the first and second quarters of
fiscal 2017. These stock awards vest over eight years but the
associated expense is heavily front loaded (see Select Quarterly
Expenses table).
Net Interest Income
Net interest income for the fiscal 2018 second quarter was $27.4
million, up $3.4 million, or 14%, from the same quarter in 2017,
due to an enhanced interest-earning asset mix primarily due to
increases in the community banking loan portfolio, the purchased
student loan portfolios, and commercial insurance premium finance
loans. Excluding the additional borrowing costs related to
retaining all tax services loans, net interest income for the
fiscal 2018 second quarter would have been approximately $28.4
million, or an increase of 18% compared to the fiscal 2017 second
quarter. The quarterly average outstanding balance of loans from
all sources as a percentage of interest-earning assets increased
from 33% as of the end of the second fiscal quarter of 2017 to 44%
as of the end of the second fiscal quarter of 2018. In addition,
lower-yielding agency Mortgage-Backed Securities ("MBS") decreased
from 19% of interest-earning assets in the fiscal second quarter of
2017 to 15% of interest-earning assets for the same quarter in
2018. Net interest income for the fiscal 2018 second quarter was up
$1.2 million from the Company's fiscal 2018 first quarter,
primarily due to a combination of increased loan balances and
yields and higher investment yields on mortgage and asset backed
securities, offset in part by higher short-term funding costs.
Net Interest Margin
Net interest margin, tax equivalent ("NIM") was 2.89% in the
fiscal 2018 second quarter, a decrease of two basis points from
2.91% in the fiscal 2017 second quarter. The decrease was primarily
related to the increase in non-interest bearing tax-related loans
retained on the Company's balance sheet in the current year's tax
quarter when compared to the previous year, as well as the change
in the corporate tax rate. Had corporate tax rates remained at
previous rates, excluding changes resulting from the adoption of
the Tax Act, the reported NIM of 2.89% would have been 3.08%. If
the average balance of tax services loans for the second quarter of
fiscal 2018 had been at similar levels to the same period of fiscal
2017, NIM would have been another seven basis points higher.
The Company estimates, when adjusting for certain seasonal tax
program related items as discussed below, a normalized NIM for the
2018 fiscal second quarter would have been between 3.30% and 3.33%,
which also reflects the adjusted tax rate due to the adoption of
the Tax Act. These adjustments include removing the impact of tax
related lending, normalizing cash balances, and making borrowing
adjustments by removing borrowing expense if cash balances were
available. This Company estimate of normalized NIM would compare
favorably to a similarly adjusted fiscal first quarter of 2018 NIM
of 3.14%. The quarter to quarter estimated improvement primarily
relates to improving earning asset yields and an increase in
average non-interest bearing deposits in the current quarter.
The overall reported tax equivalent yield (“TEY”) on average
earning asset yields increased by 16 basis points to 3.46% when
comparing the fiscal 2018 second quarter to the 2017 second
quarter, which was driven primarily by the Company's improved
earning asset mix, with increased exposure to its high-quality
commercial insurance premium finance, student, and community
banking loan portfolios. The reported 3.46% TEY on earning assets
reflects the lowered corporate prorated tax rate of the Company's
tax-exempt securities portfolio. Had corporate tax rates remained
at previous rates, excluding changes resulting from the adoption of
the Tax Act, reported TEY on earning assets would have been
3.65%.
The fiscal 2018 second quarter TEY on the securities portfolio
decreased by six basis points to 3.18% compared to the same period
of the prior year TEY of 3.24%, primarily due to the adoption of
the Tax Act, which lowered the TEY on tax-exempt securities. Had
corporate tax rates not changed due to the Tax Act, reported
securities portfolio TEY yield would have been increased to 3.52%
due to new investments being made in higher-yielding investment
securities and MBS.
The Company’s average interest-earning assets for the fiscal
2018 second quarter grew by $289.0 million, or 7%, to $4.25
billion, from the comparable quarter in 2017, primarily from growth
in the loan portfolio of $552.4 million, of which $239.4 million
was attributable to an increase in volume of tax services loans.
This increase was partially offset by decreases in cash and fed
funds sold and total investment securities of $170.5 million and
$92.8 million, respectively. The Company's management believes it
has the flexibility to reasonably manage total balance sheet growth
moving forward, if needed.
Overall, the Company's cost of funds for all deposits and
borrowings averaged 0.58% during the fiscal 2018 second quarter,
compared to 0.39% for the 2017 second quarter. This increase was
primarily due to an increase in short-term funding rates and higher
average overall funding balances due to the Company's utilization
of more of its capital during non-tax season with higher investment
balances and funding, and in preparation to hold more tax loans on
the Company's balance sheet. The Company's overall cost of deposits
was 0.33% in the fiscal second quarter of 2018, compared to 0.24%
in the same quarter of 2017. When excluding wholesale deposits, the
Company's cost of deposits for the second quarter of fiscal 2018
would have been 0.06%.
Non-Interest Income
Fiscal 2018 second quarter non-interest income of $97.4 million
increased $5.2 million, or 6%, from $92.2 million in the same
quarter of 2017, largely due to an increase in tax product fee
income of $4.0 million, or a 6% increase, when comparing the
current quarter to the same period of the prior year. The increase
in tax product fee income was primarily due to retaining all tax
advance loans originated during the 2018 tax season, as opposed to
the previous year when most of those loans were sold.
Non-Interest Expense
Non-interest expense increased $1.6 million, or 2%, to $68.5
million for the 2018 fiscal second quarter, compared to the same
quarter in 2017. This increase was primarily caused by increases of
$5.4 million in compensation expense and $1.7 million in legal and
consulting expense, offset in part by decreases of $4.4 million in
amortization expense and $2.0 million in total tax product expense.
The increase in compensation expense was primarily due to increased
staffing to support the Company's growing business initiatives in
consumer credit, the business to be conducted following the
proposed acquisition of Crestmark, and other business units, along
with the aforementioned payout of severance costs. The integration
of EPS Financial and Specialty Consumer Services allowed the
Company to gain some scale and cost savings in the tax services
divisions this year, and the Company expects to gain further
efficiencies during fiscal 2018. During the fiscal 2018 second
quarter, the Company had $2.2 million of merger and acquisition
related expenses. The Company expects additional intangible
amortization expense of between $6 million and $10 million for
fiscal year 2019, attributable to the proposed Crestmark
acquisition, which is subject to regulatory and shareholder
approval. The Company will provide an update after further analysis
and valuation is completed. See Select Quarterly Expenses table for
a breakdown of current anticipated select expenses for future
quarters.
Income tax expense for the fiscal 2018 second quarter was $6.5
million, resulting in an effective tax rate of 17.2%, compared to
$8.4 million, or an effective tax rate of 20.7%, for the 2017
fiscal second quarter. Although net income before tax was $2.6
million lower in the second quarter of fiscal year 2018 than the
second quarter of fiscal year 2017, the income tax expense and
effective tax rate decreased primarily due to the provisions of the
Tax Act, which lowered Meta’s statutory federal corporate tax rate
from 35% in fiscal year 2017 to 24.53% in fiscal year 2018.
Loans
Total loans receivable, net of allowance for loan losses,
increased $353.9 million, or 31%, from $1.14 billion at
March 31, 2017, to $1.49 billion at March 31, 2018.
Among lending categories, this included a $212.4 million, or 45%,
increase in commercial real estate loans from $473.1 million at
March 31, 2017, to $685.5 million at March 31, 2018. Also
contributing to the loan growth was a $99.2 million, or 54%,
increase in consumer loans, $53.1 million of which was attributable
to the purchased student loan portfolios and $43.9 million of which
was attributable to refund advance loans, an increase in commercial
insurance premium finance loans of $53.6 million, or 29%, from
$187.0 million at March 31, 2017, to $240.6 million at
March 31, 2018, and an increase in residential mortgage loans
of $27.7 million, or 16%, from $178.3 million at March 31, 2017, to
$206.0 million at March 31, 2018. The growth in net loans
receivable from March 31, 2017, to March 31, 2018, was
partially offset by a decrease of $39.1 million, or 40%, from $97.9
million to $58.8 million in total agricultural loans, which made up
only 1.37% of total assets at March 31, 2018. Excluding the
purchased student loan portfolios and refund advance loans, total
loans receivable, net of allowance for loan losses, at
March 31, 2018, would have increased $267.3 million, or 27%,
compared to March 31, 2017. Community banking loans
increased $208.2 million, or 26%, from $802.0 million at
March 31, 2017, to $1.01 billion at March 31, 2018, even
with the reduction in total agricultural loans of $39.1
million.
The Company recorded a provision for loan losses of $18.3
million during the three months ended March 31, 2018, compared
to a provision for loan losses of $8.6 million for the three months
ended March 31, 2017. The provision was predominantly driven
by an $18.1 million reserve related to tax services loans, which is
higher than the previous year because the Company retained all tax
advance loans originated during the 2018 tax season, as opposed to
the previous year when most of those loans were sold.
The Company’s allowance for loan losses was $27.1 million, or
1.8% of total loans, at March 31, 2018, compared to an
allowance of $14.6 million, or 1.3% of total loans, at
March 31, 2017. This increase was primarily due to the
additional provision expense related to tax services loans.
Credit Quality
MetaBank’s NPAs at March 31, 2018, were $36.1 million,
representing 0.84% of total assets, compared to $5.0 million and
0.12% of total assets at March 31, 2017, and $37.9 million and
0.72% at September 30, 2017. The increase in NPAs from the
comparable previous year period was primarily related to a large,
well-collateralized agricultural loan relationship, with respect to
which the Company took ownership of the properties serving as
collateral upon execution of a deed in lieu of foreclosure and
transferred the loans to foreclosed real estate and repossessed
assets on January 2, 2018. If the properties are sold prior
to the end of the agreed-upon receivership period set forth in the
settlement agreement, as expected, the Company will be entitled to
all principal, note interest, legal and other fees and
expenses. After the receivership period ends, if the
properties are not sold, the Company will be entitled to the fair
value of the properties, which the Company believes to be
significantly in excess of all principal, note interest, legal and
other fees and expenses. The increase in NPAs as a percentage of
total assets from September 30, 2017 to March 31, 2018 was
primarily due to a decrease in total assets of $926.6 million,
offset in part by the payment in full of a previously disclosed
$7.0 million nonperforming agricultural loan relationship during
the first quarter of fiscal 2018. The Payments segment had no NPAs
at March 31, 2018, March 31, 2017, or September 30,
2017.
Investments
Investment securities and MBS decreased by $115.3 million, or
5%, to $2.31 billion at March 31, 2018, as compared to $2.42
billion at March 31, 2017. This included a decrease of $102.0
million in MBS and $13.3 million in investment securities.
Average TEY on the securities portfolio decreased six basis
points to 3.18% in the second quarter of fiscal 2018 from 3.24% in
the same quarter of 2017. Overall TEY of other investment
securities decreased by 23 basis points from 3.65% to 3.42% in the
second quarter of 2018 compared to the same period of 2017
primarily due to the effects of the Tax Act and a reduction of TEY
due to the reduced overall tax rate. Average yields increased
within MBS by 18 basis points to 2.56% in the second quarter of
2018 from 2.38% in the same quarter of 2017.
Average yields on asset backed securities increased to 4.41% in
the second quarter of 2018 from 2.49% in the same quarter of
2017.
The TEY on the securities portfolio of 3.18% for the second
fiscal quarter of 2018 reflects the lowered corporate prorated tax
rate on the Company's tax-exempt municipal portfolio. Had corporate
tax rates not changed due to the Tax Act, reported securities
portfolio yield would have been 3.52%, and the TEY of investment
securities would have been 3.90% at the previous corporate rate.
The 3.42% overall TEY of other investment securities reflects the
lowered corporate prorated tax rate.
When comparing the second quarter of fiscal 2018 to the first
quarter of fiscal 2018, average TEY on the securities portfolio
increased by 25 basis points to 3.18% from 2.93%, investment
securities TEY increased 19 basis points to 3.42% from 3.23%, and
MBS increased 35 basis points to 2.56% from 2.21%.
During the 2018 second fiscal quarter, the Company continued to
execute its investment strategy of primarily purchasing U.S.
Government-related securities and U.S. Government-related MBS, as
well as AAA and AA rated non-bank qualified (NBQ) municipal bonds;
however, the Company also continues to review opportunities to add
other diverse, high-quality securities at attractive relative rates
when opportunities arise. With the Company’s funding base being
comprised of a large percentage of non-interest-bearing deposits,
and even with the lower corporate tax rate, the TEY for these NBQ
bonds is higher than a similar term investment in other investment
categories of similar risk and higher than many other banks can
realize on the same instruments due to the Company’s current cost
of funds and its projected cost of funds if interest rates
rise.
Deposits, Other Borrowings and Other
Liabilities
Total end-of-period deposits increased $468.3 million, or 16%,
to $3.34 billion at March 31, 2018, compared to $2.87 billion
at March 31, 2017. The increase in end-of-period deposits was
primarily a result of increases in non-interest-bearing deposits of
$213.7 million, or 8%, wholesale deposits of $159.2 million, or
726%, interest-bearing checking of $79.1 million, or 179%, and
certificates of deposits of $10.5 million, or 17%.
The increase in wholesale deposits at March 31, 2018 compared to
the same period of the prior year was primarily due to the Company
utilizing those funds at advantageous rates when compared to the
overnight borrowing rates, thereby lowering funding costs. During
the second quarter of fiscal 2017, wholesale deposits were
primarily used to target strategic maturities related to our
seasonal tax advance lending, and many of those deposits had
matured by March 31, 2017.
Total average deposits for the fiscal 2018 second quarter
decreased by $78.8 million, or 2%, compared to the same period in
2017. Average non-interest-bearing deposits for the 2018 fiscal
second quarter were up $143.6 million, or 6%, compared to the same
period in 2017.
The average balance of total deposits and interest-bearing
liabilities was $4.17 billion for the three-month period ended
March 31, 2018, compared to $3.92 billion for the same period
in the prior year, representing an increase of 7%. This increase
was primarily due to an increase in total borrowings of $335.9
million and an increase in non-interest-bearing deposits of $143.6
million, partially offset by a decrease in wholesale deposits of
$301.9 million.
Capital Ratios
The Company and MetaBank remain above the federal regulatory
minimum capital requirements to remain classified as
well-capitalized institutions. Regulatory capital ratios at
March 31, 2018 are stated in the table below.
The tables below also 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.
Regulatory Capital Data (1)
|
|
|
|
|
|
|
Minimum |
|
|
|
|
|
|
|
Requirement to Be |
|
|
|
|
|
Minimum |
|
Well Capitalized |
|
|
|
|
|
Requirement For |
|
Under Prompt |
|
|
|
|
|
Capital Adequacy |
|
Corrective Action |
At March 31, 2018 |
Company |
|
MetaBank |
|
Purposes |
|
Provisions |
|
|
|
|
|
|
|
|
Tier 1 leverage ratio |
7.26 |
% |
|
8.93 |
% |
|
4.00 |
% |
|
5.00 |
% |
Common equity Tier 1 capital ratio |
13.74 |
|
|
17.43 |
|
|
4.50 |
|
|
6.50 |
|
Tier 1 capital ratio |
14.18 |
|
|
17.43 |
|
|
6.00 |
|
|
8.00 |
|
Total qualifying capital ratio |
18.48 |
|
|
18.59 |
|
|
8.00 |
|
|
10.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Regulatory ratios are estimated.
The following table provides certain non-GAAP financial measures
used to compute certain of the ratios included in the table above,
as well as a reconciliation of such non-GAAP financial measures to
the most directly comparable financial measure in accordance with
GAAP:
|
Standardized Approach (1) |
|
March 31, 2018 |
|
(Dollars in Thousands) |
Total equity |
|
Adjustments: |
$ |
443,703 |
|
LESS: Goodwill, net of associated deferred tax liabilities |
95,262 |
|
LESS: Certain other intangible assets |
47,724 |
|
LESS: Net deferred tax assets from operating loss and tax credit
carry-forwards |
— |
|
LESS: Net unrealized gains (losses) on available-for-sale
securities |
(21,166 |
) |
Common Equity Tier 1 (1) |
321,882 |
|
Long-term debt and other instruments qualifying as Tier 1 |
10,310 |
|
LESS: Additional Tier 1 capital deductions |
— |
|
Total Tier 1 capital |
332,192 |
|
Allowance for loan losses |
27,285 |
|
Subordinated debentures (net of issuance costs) |
73,418 |
|
Total qualifying capital |
432,896 |
|
|
|
|
(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 used in calculating tangible book value data.
|
March 31, 2018 |
|
(Dollars in Thousands) |
Total Stockholders' Equity |
$ |
443,703 |
|
Less: Goodwill |
98,723 |
|
Less: Intangible assets |
47,724 |
|
Tangible common equity |
297,256 |
|
Less: AOCI |
(21,166 |
) |
Tangible common equity excluding AOCI |
318,422 |
|
|
|
Due to the predictable, quarterly cyclicality of non-interest
bearing deposits in connection with tax season business activity,
management believes that a six-month capital calculation is a
useful metric to monitor the Company’s overall capital management
process. As such, MetaBank’s six-month average Tier 1 leverage
ratio, Common equity Tier 1 capital ratio, Tier 1 capital ratio,
and Total qualifying capital ratio as of March 31, 2018, were
9.58%, 16.72%, 16.72%, and 17.84%, respectively.
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 Securities
and Exchange Commission (“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: statements regarding the potential benefits
of, and other expectations for the combined company giving effect
to, the proposed merger transaction with Crestmark; the anticipated
timing for closing the proposed merger transaction with Crestmark;
future operating results; customer retention; loan and other
product demand; important components of the Company’s statements of
financial condition and operations; growth and expansion; new
products and services, such as those offered by MetaBank or MPS, a
division of MetaBank; credit quality and adequacy of reserves;
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: the risk that the transaction with Crestmark may not
occur on a timely basis or at all; the parties’ ability to obtain
regulatory approvals and approval of their respective shareholders,
and otherwise satisfy the other conditions to closing, on a timely
basis or at all; the risk that the businesses of Meta and MetaBank,
on the one hand, and Crestmark and Crestmark Bank, on the other
hand, may not be combined successfully, or such combination may
take longer, be more difficult, time-consuming or costly to
accomplish than expected; the expected growth opportunities,
beneficial synergies and/or operating efficiencies from the
proposed transaction may not be fully realized or may take longer
to realize than expected; customer losses and business disruption
following the announcement or consummation of the proposed
transaction; potential litigation or regulatory actions relating to
the proposed merger transaction; the risk that the Company may
incur unanticipated or unknown losses or liabilities if it
completes the proposed transaction with Crestmark and Crestmark
Bank; additional changes in tax laws; maintaining our executive
management team; the strength of the United States’ economy, in
general, and the strength of the local economies in which the
Company conducts operations; the effects of, and changes in, trade,
monetary, and fiscal policies and laws, including interest rate
policies of the Board of Governors of the Federal Reserve System
(the “Federal Reserve”), as well as efforts of the United States
Treasury in conjunction with bank regulatory agencies to stimulate
the economy and protect the financial system; inflation, interest
rate, market, and monetary fluctuations; the timely development 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; any actions which may be initiated by
our regulators in the future; 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; our relationship with our
primary regulators, the Office of the Comptroller of the Currency
and the Federal Reserve, as well as the Federal Deposit Insurance
Corporation, which insures MetaBank’s deposit accounts up to
applicable limits; technological changes, including, but not
limited to, the protection of electronic files or databases;
acquisitions; litigation risk, in general, including, but not
limited to, those risks involving MetaBank’s divisions; 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, particularly in light of our growing
deposit base, a portion of which has been characterized as
“brokered”; changes in consumer spending and saving habits; 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, 2017, 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
Operations (Unaudited)(Dollars in Thousands, Except Share
and Per Share Data)
ASSETS |
March 31, 2018 |
|
December 31, 2017 |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
Cash and cash
equivalents |
$ |
107,563 |
|
|
$ |
1,300,409 |
|
|
$ |
1,267,586 |
|
|
$ |
65,630 |
|
|
$ |
67,293 |
|
Investment securities
available for sale |
1,418,862 |
|
|
1,392,240 |
|
|
1,106,977 |
|
|
1,141,684 |
|
|
1,184,440 |
|
Mortgage-backed
securities available for sale |
654,890 |
|
|
600,112 |
|
|
586,454 |
|
|
666,424 |
|
|
642,833 |
|
Investment securities
held to maturity |
226,618 |
|
|
235,024 |
|
|
449,840 |
|
|
464,729 |
|
|
474,306 |
|
Mortgage-backed
securities held to maturity |
8,393 |
|
|
8,468 |
|
|
113,689 |
|
|
117,399 |
|
|
122,497 |
|
Loans receivable |
1,517,616 |
|
|
1,509,140 |
|
|
1,325,371 |
|
|
1,224,359 |
|
|
1,151,192 |
|
Allowance for loan
loss |
(27,078 |
) |
|
(8,862 |
) |
|
(7,534 |
) |
|
(14,968 |
) |
|
(14,602 |
) |
Federal Home Loan Bank
Stock, at cost |
17,846 |
|
|
57,443 |
|
|
61,123 |
|
|
16,323 |
|
|
25,043 |
|
Accrued interest
receivable |
17,604 |
|
|
21,089 |
|
|
19,380 |
|
|
21,831 |
|
|
20,902 |
|
Premises, furniture,
and equipment, net |
20,278 |
|
|
20,571 |
|
|
19,320 |
|
|
20,107 |
|
|
20,019 |
|
Bank-owned life
insurance |
86,021 |
|
|
85,371 |
|
|
84,702 |
|
|
84,035 |
|
|
58,378 |
|
Foreclosed real estate
and repossessed assets |
30,050 |
|
|
128 |
|
|
292 |
|
|
364 |
|
|
|
— |
|
Goodwill |
98,723 |
|
|
98,723 |
|
|
98,723 |
|
|
98,723 |
|
|
98,723 |
|
Intangible assets |
47,724 |
|
|
50,521 |
|
|
52,178 |
|
|
64,798 |
|
|
66,633 |
|
Prepaid assets |
26,342 |
|
|
29,758 |
|
|
28,392 |
|
|
31,265 |
|
|
34,596 |
|
Deferred taxes |
20,939 |
|
|
5,379 |
|
|
9,101 |
|
|
6,858 |
|
|
10,589 |
|
Other assets |
29,302 |
|
|
12,449 |
|
|
12,738 |
|
|
10,132 |
|
|
22,754 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
4,301,693 |
|
|
$ |
5,417,963 |
|
|
$ |
5,228,332 |
|
|
$ |
4,019,693 |
|
|
$ |
3,985,596 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Non-interest-bearing
checking |
$ |
2,850,886 |
|
|
$ |
2,779,645 |
|
|
$ |
2,454,057 |
|
|
$ |
2,481,673 |
|
|
$ |
2,637,167 |
|
Interest-bearing
checking |
123,397 |
|
|
84,390 |
|
|
67,294 |
|
|
40,928 |
|
|
44,264 |
|
Savings deposits |
65,345 |
|
|
53,535 |
|
|
53,505 |
|
|
55,292 |
|
|
65,367 |
|
Money market
deposits |
48,070 |
|
|
47,451 |
|
|
48,758 |
|
|
46,709 |
|
|
42,340 |
|
Time certificates of
deposit |
71,712 |
|
|
128,220 |
|
|
123,637 |
|
|
83,760 |
|
|
61,170 |
|
Wholesale deposits |
181,087 |
|
|
420,404 |
|
|
476,173 |
|
|
444,857 |
|
|
21,923 |
|
Total deposits |
3,340,497 |
|
|
3,513,645 |
|
|
3,223,424 |
|
|
3,153,219 |
|
|
2,872,231 |
|
Short-term debt |
315,777 |
|
|
1,313,401 |
|
|
1,404,534 |
|
|
277,166 |
|
|
494,919 |
|
Long-term debt |
85,572 |
|
|
85,552 |
|
|
85,533 |
|
|
92,514 |
|
|
92,497 |
|
Accrued interest
payable |
1,315 |
|
|
4,065 |
|
|
2,280 |
|
|
2,463 |
|
|
722 |
|
Accrued expenses and
other liabilities |
114,829 |
|
|
63,595 |
|
|
78,065 |
|
|
64,118 |
|
|
113,479 |
|
Total liabilities |
3,857,990 |
|
|
4,980,258 |
|
|
4,793,836 |
|
|
3,589,480 |
|
|
3,573,848 |
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
Preferred stock,
3,000,000 shares authorized, no shares issued or outstanding at
March 31, 2018, December 31, 2017, September 30, 2017, June 30,
2017, and March 31, 2017. |
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
Common stock, $.01 par
value; 15,000,000 shares authorized, 9,699,591, 9,664,846, and
9,622,595 shares outstanding and 9,720,536, 9,685,398, and
9,626,431 shares issued at March 31, 2018, December 31, 2017, and
September 30, 2017. 9,349,989, and 9,349,989 shares issued and
outstanding at June 30, 2017 and March 31, 2017, respectively. |
97 |
|
|
96 |
|
|
96 |
|
|
94 |
|
|
94 |
|
Common stock,
Nonvoting, $.01 par value; 3,000,000 shares authorized, no shares
issued or outstanding at March 31, 2018, December 31, 2017,
September 30, 2016, June 30, 2017, and March 31, 2017. |
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
Additional paid-in
capital |
265,685 |
|
|
262,872 |
|
|
258,336 |
|
|
256,088 |
|
|
253,473 |
|
Retained earnings |
200,753 |
|
|
170,578 |
|
|
167,164 |
|
|
166,634 |
|
|
158,167 |
|
Accumulated other
comprehensive (loss) income |
(21,166 |
) |
|
5,782 |
|
|
9,166 |
|
|
7,397 |
|
|
14 |
|
Treasury stock, at
cost, 20,945, 20,552, and 3,836 common shares at March 31, 2018,
December 31, 2017, and September 30, 2017, none at June 30, 2017
and March 31, 2017. |
(1,666 |
) |
|
(1,623 |
) |
|
(266 |
) |
|
— |
|
— |
Total stockholders’ equity |
443,703 |
|
|
437,705 |
|
|
434,496 |
|
|
430,213 |
|
|
411,748 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
4,301,693 |
|
|
$ |
5,417,963 |
|
|
$ |
5,228,332 |
|
|
$ |
4,019,693 |
|
|
$ |
3,985,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements
of Operations (Unaudited)(Dollars in Thousands, Except
Share and Per Share Data)
|
Three Months Ended |
|
Six Months Ended |
|
3/31/2018 |
|
12/31/2017 |
|
3/31/2017 |
|
3/31/2018 |
|
3/31/2017 |
Interest and dividend
income: |
|
|
|
|
|
|
|
|
|
Loans
receivable, including fees |
$ |
17,844 |
|
|
$ |
16,443 |
|
|
$ |
12,773 |
|
|
$ |
34,287 |
|
|
$ |
23,451 |
|
Mortgage-backed securities |
4,047 |
|
|
3,758 |
|
|
4,481 |
|
|
7,805 |
|
|
7,801 |
|
Other
investments |
11,480 |
|
|
10,656 |
|
|
10,464 |
|
|
22,136 |
|
|
19,041 |
|
|
33,371 |
|
|
30,857 |
|
|
27,718 |
|
|
64,228 |
|
|
50,293 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
Deposits |
2,957 |
|
|
1,885 |
|
|
2,184 |
|
|
4,842 |
|
|
3,122 |
|
FHLB
advances and other borrowings |
3,009 |
|
|
2,776 |
|
|
1,568 |
|
|
5,785 |
|
|
3,372 |
|
|
5,966 |
|
|
4,661 |
|
|
3,752 |
|
|
10,627 |
|
|
6,494 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
27,405 |
|
|
26,196 |
|
|
23,966 |
|
|
53,601 |
|
|
43,799 |
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses |
18,343 |
|
|
1,068 |
|
|
8,649 |
|
|
19,411 |
|
|
9,492 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan
losses |
9,062 |
|
|
25,128 |
|
|
15,317 |
|
|
34,190 |
|
|
34,307 |
|
|
|
|
|
|
|
|
|
|
|
Non-interest
income: |
|
|
|
|
|
|
|
|
|
Refund
transfer product fees |
33,803 |
|
|
192 |
|
|
32,487 |
|
|
33,995 |
|
|
32,663 |
|
Tax
advance product fees |
33,838 |
|
|
1,947 |
|
|
31,119 |
|
|
35,785 |
|
|
31,568 |
|
Card
fees |
26,856 |
|
|
25,247 |
|
|
26,547 |
|
|
52,103 |
|
|
44,961 |
|
Loan
fees |
1,042 |
|
|
1,292 |
|
|
1,182 |
|
|
2,334 |
|
|
2,052 |
|
Bank-owned life insurance |
650 |
|
|
669 |
|
|
444 |
|
|
1,319 |
|
|
892 |
|
Deposit
fees |
982 |
|
|
848 |
|
|
168 |
|
|
1,830 |
|
|
318 |
|
Loss on
sale of securities |
(166 |
) |
|
(1,010 |
) |
|
(144 |
) |
|
(1,176 |
) |
|
(1,378 |
) |
Gain
(loss) on foreclosed real estate |
— |
|
|
(19 |
) |
|
7 |
|
|
(19 |
) |
|
7 |
|
Other
income |
414 |
|
|
102 |
|
|
360 |
|
|
516 |
|
|
436 |
|
Total non-interest income |
97,419 |
|
|
29,268 |
|
|
92,170 |
|
|
126,687 |
|
|
111,519 |
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expense: |
|
|
|
|
|
|
|
|
|
Compensation and benefits |
32,172 |
|
|
22,340 |
|
|
26,766 |
|
|
54,512 |
|
|
44,616 |
|
Refund
transfer product expense |
9,871 |
|
|
101 |
|
|
10,178 |
|
|
9,972 |
|
|
9,969 |
|
Tax
advance product expense |
1,474 |
|
|
280 |
|
|
3,140 |
|
|
1,754 |
|
|
3,427 |
|
Card
processing |
7,190 |
|
|
6,540 |
|
|
7,043 |
|
|
13,730 |
|
|
12,622 |
|
Occupancy
and equipment |
4,477 |
|
|
4,890 |
|
|
4,191 |
|
|
9,367 |
|
|
8,168 |
|
Legal and
consulting |
3,239 |
|
|
2,416 |
|
|
1,505 |
|
|
5,655 |
|
|
4,228 |
|
Marketing |
668 |
|
|
553 |
|
|
610 |
|
|
1,221 |
|
|
1,080 |
|
Data
processing |
243 |
|
|
414 |
|
|
392 |
|
|
657 |
|
|
755 |
|
Intangible amortization expense |
2,731 |
|
|
1,681 |
|
|
7,082 |
|
|
4,412 |
|
|
8,607 |
|
Other
expense |
6,432 |
|
|
4,827 |
|
|
6,039 |
|
|
11,259 |
|
|
10,227 |
|
Total non-interest expense |
68,497 |
|
|
44,042 |
|
|
66,946 |
|
|
112,539 |
|
|
103,699 |
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense |
37,984 |
|
|
10,354 |
|
|
40,541 |
|
|
48,338 |
|
|
42,127 |
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense |
6,548 |
|
|
5,684 |
|
|
8,399 |
|
|
12,232 |
|
|
8,741 |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
31,436 |
|
|
4,670 |
|
|
$ |
32,142 |
|
|
$ |
36,106 |
|
|
$ |
33,386 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share |
|
|
|
|
|
|
|
|
|
Basic |
$ |
3.25 |
|
|
0.48 |
|
|
$ |
3.44 |
|
|
$ |
3.73 |
|
|
$ |
3.65 |
|
Diluted |
$ |
3.23 |
|
|
0.48 |
|
|
$ |
3.42 |
|
|
$ |
3.72 |
|
|
$ |
3.63 |
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing earnings per share |
|
|
|
|
|
|
|
|
|
Basic |
9,687,060 |
|
|
9,656,778 |
|
|
9,345,277 |
|
|
9,671,792 |
|
|
9,138,692 |
|
Diluted |
9,726,712 |
|
|
9,712,841 |
|
|
9,399,951 |
|
|
9,710,138 |
|
|
9,192,482 |
|
|
|
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 rates. Only the yield/rate has tax-equivalent
adjustments. Non-accruing loans have been included in the table as
loans carrying a zero yield.
Three Months Ended March 31, |
2018 |
|
2017 |
(Dollars in
Thousands) |
Average |
|
Interest |
|
Yield / |
|
Average |
|
Interest |
|
Yield / |
|
Outstanding |
Earned / |
Rate(1) |
Outstanding |
Earned / |
Rate(2) |
|
Balance |
Paid |
|
Balance |
Paid |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash
& fed funds sold |
$ |
132,355 |
|
|
$ |
722 |
|
|
2.21 |
% |
|
$ |
302,890 |
|
|
$ |
593 |
|
|
0.79 |
% |
Mortgage-backed securities |
642,164 |
|
|
4,047 |
|
|
2.56 |
% |
|
764,742 |
|
|
4,480 |
|
|
2.38 |
% |
Tax
exempt investment securities |
1,431,974 |
|
|
9,001 |
|
|
3.38 |
% |
|
1,349,034 |
|
|
8,325 |
|
|
3.85 |
% |
Asset-backed securities |
112,301 |
|
|
1,220 |
|
|
4.41 |
% |
|
117,940 |
|
|
723 |
|
|
2.49 |
% |
Other
investment securities |
78,272 |
|
|
537 |
|
|
2.78 |
% |
|
125,792 |
|
|
824 |
|
|
2.66 |
% |
Total
investments |
2,264,711 |
|
|
14,805 |
|
|
3.18 |
% |
|
2,357,508 |
|
|
14,352 |
|
|
3.24 |
% |
Community
banking loans(3) |
998,336 |
|
|
10,747 |
|
|
4.37 |
% |
|
798,125 |
|
|
8,287 |
|
|
4.21 |
% |
Tax
services loans |
416,625 |
|
|
833 |
|
|
0.81 |
% |
|
177,193 |
|
|
11 |
|
|
0.02 |
% |
Commercial insurance premium finance loans |
242,305 |
|
|
2,913 |
|
|
4.88 |
% |
|
191,282 |
|
|
2,286 |
|
|
4.85 |
% |
Student
loans and other |
196,902 |
|
|
3,351 |
|
|
6.90 |
% |
|
135,213 |
|
|
2,189 |
|
|
6.57 |
% |
National
lending loans(4) |
439,207 |
|
|
6,264 |
|
|
5.78 |
% |
|
326,495 |
|
|
4,475 |
|
|
5.56 |
% |
Total
loans |
1,854,168 |
|
|
17,844 |
|
|
3.90 |
% |
|
1,301,813 |
|
|
12,773 |
|
|
3.98 |
% |
Total
interest-earning assets |
$ |
4,251,234 |
|
|
$ |
33,371 |
|
|
3.46 |
% |
|
$ |
3,962,211 |
|
|
$ |
27,718 |
|
|
3.30 |
% |
Non-interest-earning assets |
451,568 |
|
|
|
|
|
|
451,508 |
|
|
|
|
|
Total
assets |
$ |
4,702,802 |
|
|
|
|
|
|
$ |
4,413,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking |
$ |
100,804 |
|
|
$ |
51 |
|
|
0.20 |
% |
|
$ |
42,515 |
|
|
$ |
42 |
|
|
0.40 |
% |
Savings |
59,634 |
|
|
9 |
|
|
0.06 |
% |
|
58,718 |
|
|
8 |
|
|
0.06 |
% |
Money
markets |
48,812 |
|
|
27 |
|
|
0.22 |
% |
|
45,913 |
|
|
20 |
|
|
0.17 |
% |
Time
deposits |
118,933 |
|
|
344 |
|
|
1.17 |
% |
|
101,546 |
|
|
172 |
|
|
0.69 |
% |
Wholesale
deposits |
685,025 |
|
|
2,526 |
|
|
1.50 |
% |
|
986,908 |
|
|
1,942 |
|
|
0.80 |
% |
Total
interest-bearing deposits |
1,013,208 |
|
|
2,957 |
|
|
1.18 |
% |
|
1,235,600 |
|
|
2,184 |
|
|
0.72 |
% |
Overnight
fed funds purchased |
407,789 |
|
|
1,679 |
|
|
1.67 |
% |
|
73,033 |
|
|
168 |
|
|
0.93 |
% |
FHLB
advances |
2,333 |
|
|
9 |
|
|
1.56 |
% |
|
7,000 |
|
|
122 |
|
|
7.08 |
% |
Subordinated debentures |
73,395 |
|
|
1,114 |
|
|
6.15 |
% |
|
73,256 |
|
|
1,112 |
|
|
6.16 |
% |
Other
borrowings |
19,602 |
|
|
207 |
|
|
4.29 |
% |
|
13,930 |
|
|
166 |
|
|
4.84 |
% |
Total
borrowings |
503,119 |
|
|
3,009 |
|
|
2.43 |
% |
|
167,219 |
|
|
1,568 |
|
|
3.80 |
% |
Total
interest-bearing liabilities |
1,516,327 |
|
|
5,966 |
|
|
1.60 |
% |
|
1,402,819 |
|
|
3,752 |
|
|
1.08 |
% |
Non-interest bearing deposits |
2,656,516 |
|
|
— |
|
|
0.00 |
% |
|
2,512,934 |
|
|
— |
|
|
0.00 |
% |
Total deposits
and interest-bearing liabilities |
$ |
4,172,843 |
|
|
$ |
5,966 |
|
|
0.58 |
% |
|
$ |
3,915,753 |
|
|
$ |
3,752 |
|
|
0.39 |
% |
Other
non-interest-bearing liabilities |
86,675 |
|
|
|
|
|
|
106,700 |
|
|
|
|
|
Total
liabilities |
4,259,518 |
|
|
|
|
|
|
4,022,453 |
|
|
|
|
|
Shareholders' equity |
443,284 |
|
|
|
|
|
|
391,266 |
|
|
|
|
|
Total
liabilities and shareholders' equity |
$ |
4,702,802 |
|
|
|
|
|
|
$ |
4,413,719 |
|
|
|
|
|
Net interest income and
net interest rate spread including non-interest-bearing
deposits |
|
|
$ |
27,405 |
|
|
2.88 |
% |
|
|
|
$ |
23,966 |
|
|
2.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin |
|
|
|
|
2.61 |
% |
|
|
|
|
|
2.45 |
% |
Tax equivalent
effect |
|
|
|
|
0.28 |
% |
|
|
|
|
|
0.46 |
% |
Net interest
margin, tax equivalent(5) |
|
|
|
|
2.89 |
% |
|
|
|
|
|
2.91 |
% |
|
(1) Tax rate used to arrive at the TEY for the three months
ended March 31, 2018 was 24.53%(2) Tax rate used to arrive at the
TEY for the three months ended March 31, 2017 was 35%(3) Previously
stated Retail Bank loans have been renamed as Community Banking
Loans(4) Previously stated Specialty Finance Loans have been
renamed as National Lending Loans(5) 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. We
believe that it is a standard practice in the banking industry to
present net interest margin expressed on a fully taxable equivalent
basis, and accordingly believe the presentation of this non-GAAP
financial measure may be useful for peer comparison purposes.
The following table presents, for the periods indicated,
allowance for loan loss activity.
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
|
Six Months Ended |
Allowance for loan loss activity |
March 31, 2018 |
|
December 31,
2017 |
|
March 31, 2017 |
|
March 31, 2018 |
|
March 31, 2017 |
|
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
8,862 |
|
|
$ |
7,534 |
|
|
$ |
6,415 |
|
|
$ |
7,534 |
|
|
$ |
5,635 |
|
Provision - tax services loans |
18,129 |
|
|
1,017 |
|
|
7,883 |
|
|
19,146 |
|
|
8,214 |
|
Provision - all other loans |
214 |
|
|
51 |
|
|
765 |
|
|
265 |
|
|
1,278 |
|
Charge-offs |
(339 |
) |
|
(160 |
) |
|
(490 |
) |
|
(499 |
) |
|
(609 |
) |
Recoveries |
212 |
|
|
420 |
|
|
29 |
|
|
632 |
|
|
84 |
|
Ending balance |
$ |
27,078 |
|
|
$ |
8,862 |
|
|
$ |
14,602 |
|
|
$ |
27,078 |
|
|
$ |
14,602 |
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
At Period Ended: |
2018 |
2017 |
2017 |
2017 |
2017 |
|
|
|
|
|
|
|
|
|
|
|
Equity to total assets |
|
10.31 |
% |
|
8.08 |
% |
|
8.31 |
% |
|
10.70 |
% |
|
10.33 |
% |
Book value per common share outstanding |
|
$ |
45.74 |
|
|
$ |
45.29 |
|
|
$ |
45.15 |
|
|
$ |
46.01 |
|
|
$ |
44.04 |
|
Tangible book value per common share outstanding |
|
$ |
30.65 |
|
|
$ |
29.85 |
|
|
$ |
29.47 |
|
|
$ |
28.52 |
|
|
$ |
26.35 |
|
Tangible book value per common share outstanding excluding
AOCI |
|
$ |
32.83 |
|
|
$ |
29.25 |
|
|
$ |
28.52 |
|
|
$ |
27.73 |
|
|
$ |
26.35 |
|
Common shares outstanding |
|
9,699,591 |
|
|
9,664,846 |
|
|
9,622,595 |
|
|
9,349,989 |
|
|
9,349,989 |
|
Non-performing assets to total assets |
|
0.84 |
% |
|
0.61 |
% |
|
0.72 |
% |
|
1.17 |
% |
|
0.12 |
% |
Full-time equivalent employees (FTEs) |
|
916 |
|
|
878 |
|
|
827 |
|
|
808 |
|
|
782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
|
|
For the Six Months Ended: |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin, tax equivalent |
|
2.97 |
% |
|
2.91 |
% |
|
|
|
|
|
|
Return on average assets |
|
1.64 |
% |
|
1.69 |
% |
|
|
|
|
|
|
Return on average equity |
|
16.46 |
% |
|
17.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Quarterly Expenses |
(Dollars in Thousands) |
Actual |
Anticipated |
|
Mar 31, |
Jun 30, |
Sep 30, |
Dec 31, |
Mar 31, |
Jun 30, |
Sep 30, |
Dec 31, |
Mar 31, |
For the Three Months Ended |
2018 |
2018 |
2018 |
2018 |
2019 |
2019 |
2019 |
2019 |
2020 |
|
|
|
|
|
|
|
|
|
|
Amortization of Intangibles (1) (2) |
$ |
2,731 |
|
$ |
1,664 |
|
$ |
1,633 |
|
$ |
1,488 |
|
$ |
2,707 |
|
$ |
1,488 |
|
$ |
1,468 |
|
$ |
1,283 |
|
$ |
2,008 |
|
|
|
|
|
|
|
|
|
|
Executive Officer Stock Compensation (3) |
$ |
1,309 |
|
$ |
1,324 |
|
$ |
1,338 |
|
$ |
941 |
|
$ |
917 |
|
$ |
927 |
|
$ |
937 |
|
$ |
679 |
|
$ |
669 |
|
|
|
|
|
|
|
|
|
|
(1) These amounts are based upon the current reporting period’s
intangible assets only. This table makes no assumption for
expenses related to future acquired intangible assets.(2) The
Company expects additional intangible amortization expense of
between $6 million and $10 million for fiscal year 2019,
attributable to the proposed Crestmark acquisition, which is
subject to regulatory and shareholder approval. The Company will
provide an update after further analysis and valuation is
completed.(3) These amounts are based upon the long-term employment
agreements signed in the first and second quarters of fiscal 2017
by the Company’s three highest paid executives. This table
makes no assumption for expenses related to any additional future
agreements.
Conference Call
The Company will host a conference call and earnings webcast at
4:00 p.m. CDT (5:00 p.m. EDT) on Monday, April 30, 2018. 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
approximately 10 minutes prior to start time. Please ask to join
the Meta Financial conference call, and provide conference ID
9166897 upon request. International callers should dial (636)
812-6634. A webcast replay will also be archived at
www.metafinancialgroup.com for one year.
Additional Information About the Proposed Crestmark
Transaction
In connection with the proposed merger transaction, Meta has
filed a registration statement on Form S-4
(file no. 333-223769) with the SEC, which includes a
joint proxy statement of Meta and Crestmark, which also constitutes
a prospectus of Meta, that Meta and Crestmark will send to their
respective shareholders. Before making any voting or investment
decision, investors and security holders of Meta and Crestmark are
urged to carefully read the entire registration statement and proxy
statement/prospectus as well as any amendments or supplements to
these documents and any other relevant materials because they
contain important information about the proposed transaction.
Investors and security holders are able to obtain the registration
statement and the proxy statement/prospectus free of charge from
the SEC’s website at www.sec.gov or from Meta by sending a request
to Meta Financial Group, Inc., 5501 S. Broadband Lane, Sioux Falls,
SD 57108; Attention: Investor Relations. In addition, copies of the
proxy statement/prospectus will be provided free of charge by Meta
to its stockholders.
This communication and the information contained herein does not
and shall not constitute an offer to sell or the solicitation of an
offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
in connection with the proposed merger shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Participants in the Transaction
Meta, Crestmark and certain of their respective directors and
executive officers may be deemed under the rules of the SEC to be
participants in the solicitation of proxies from the respective
shareholders of Meta and Crestmark in connection with the proposed
merger transaction. Certain information regarding the interests of
these participants and a description of their direct and indirect
interests, by security holdings or otherwise, are included in the
joint proxy statement/prospectus regarding the proposed
transaction. Additional information about Meta and its directors
and officers may be found in the definitive proxy statement of Meta
relating to its 2018 Annual Meeting of Stockholders filed with the
SEC on December 4, 2017 and Meta’s annual report on Form 10-K for
the year ended September 30, 2017 filed with the SEC on November
29, 2017. The definitive proxy statement and annual report on Form
10-K can be obtained free of charge from the SEC’s website at
www.sec.gov.
About Meta Financial Group®Meta Financial
Group, Inc. ("Meta") is the holding company for MetaBank®, a
federally chartered savings bank. Meta shares of common stock are
traded on the NASDAQ Global Select Market® under the symbol CASH.
Headquartered in Sioux Falls, S.D., MetaBank operates in both the
Banking and Payments industries through: MetaBank, its community
banking operation; Meta Payment Systems, its electronic payments
division; AFS/IBEX, its commercial insurance premium financing
division; and Refund Advantage, EPS Financial and Specialty
Consumer Services, its tax-related financial solutions divisions.
More information is available at metafinancialgroup.com.
Media
Contact: |
|
Investor
Relations Contact: |
|
Katie LeBrun |
|
Brittany Kelley
Elsasser |
|
Corporate
Communications Director |
|
Director of Investor
Relations |
|
605-362-5140 |
|
605-362-2423 |
|
klebrun@metabank.com |
|
bkelley@metabank.com |
|
First Data (NYSE:FDC)
Historical Stock Chart
From Mar 2024 to Apr 2024
First Data (NYSE:FDC)
Historical Stock Chart
From Apr 2023 to Apr 2024