Meta Payment Systems(R) division achieves record annual earnings of
$4.1 million Highlights for the fiscal year and fourth quarter
ended September 30, 2009 -- Meta Financial Group (MFG) fiscal 2009
net loss was $1.5 million while the fourth quarter net loss was
$0.7 million -- Meta Payment Systems (MPS) fiscal 2009 non-interest
income was $77.4 million, up 122% over 2008 -- Traditional Bank
segment showed fourth quarter net income of $0.9 million --
Non-performing loan and asset ratios improved from prior quarter
end -- Low and no-cost MPS deposits grew by $137.3 million over
prior year -- MetaBank remained well-capitalized including an
improvement of risk-based capital ratio from the prior quarter
STORM LAKE, Iowa, Dec. 10 /PRNewswire-FirstCall/ -- Meta Financial
Group (Nasdaq: CASH; the Company) reported a loss for the 2009
fourth quarter of $0.7 million or 28 cents per diluted share
compared to a loss of $1.8 million or 68 cents per diluted share
for the 2008 fourth quarter. The current quarter was primarily
impacted by goodwill and related charges of $0.6 million and a
write down of loan collateral acquired in previous quarters of $0.8
million. The prior year's fourth quarter loss was primarily due to
additional loan loss provision expense of $1.8 million and the
previously disclosed settlement of litigation commenced in 2006.
The net loss for the fiscal year ended September 30, 2009 was $1.5
million or 56 cents per diluted share compared to a net loss of
$1.0 million or 38 cents per share for the same period in 2008. The
net loss for the current year was primarily a result of
substantially increased loan loss provision expense due to the
effects of a weaker economy. President and Chief Executive Officer
J. Tyler Haahr commented, "As was true for many banks across the
country, 2009 was a pivotal repositioning year for Meta Financial
Group, as we adjusted strategically to contend with a persistently
difficult economy and prepared our businesses to take advantage in
a slowly emerging recovery. We believe we have succeeded in that
dual process. Our balance sheet reflects a conservative approach to
valuing problem assets and related collateral and we have changed
the mix of our earning assets to be more heavily weighted towards
zero-risk government-backed securities. We have also worked
diligently to remove costs from our various product and service
delivery mechanisms and expect to continue that effort. From a
strength and stability standpoint, we remain well above the
regulatory requirements to be considered well-capitalized;
nevertheless, we are concentrating on activities that will further
capital accretion and enhance shareholder value in the long term."
Summary Financial Data * Three Months Ended Year Ended
------------------ ---------- 9/30/09 6/30/09 9/30/08 9/30/09
9/30/08 ------- ------- ------- ------- ------- Net Interest Income
- millions $7.1 $6.3 $6.5 $27.8 $24.0 Non Interest Income -
millions 13.9 16.9 10.8 80.0 37.7 Net (Loss) - millions (0.7) (2.6)
(1.8) (1.5) (1.0) Diluted (loss) per share (0.28) (0.99) (0.68)
(0.56) (0.38) Net interest margin 3.52% 3.19% 3.70% 3.50% 3.51%
Non-performing assets - % of total assets 1.76% 2.41% 1.06% MPS
active cards - millions 18.5 20.0 14.2 MPS transaction volume -
billions $3.0 $2.6 $2.2 $11.9 $8.2 * See a more detailed Financial
Highlights table at the end of this document. Financial Summary
Revenue Total revenue (interest income plus non-interest income)
for the 2009 fourth quarter reached $22.9 million compared to $20.2
million for the same quarter last year. The growth for the quarter
was driven primarily by increased MPS fee revenue of $3.6 million.
Interest income decreased by $0.5 million or 5%. Total revenue for
fiscal 2009 was $116.7 million compared to $75.1 million in 2008,
an increase of $41.6 million or 55% and was driven by MPS fee
income. Interest income decreased slightly, $0.7 million or 2%
related to the lower interest rate environment this year. Net
Interest Income Net interest income for the 2009 fourth quarter was
$7.1 million, up $0.6 million or 8% from the same quarter last
year. Net interest margin decreased to 3.52% for the fourth quarter
of 2009 as compared to 3.70% for the same quarter last year.
Overall, asset yields declined by 88 basis points due to a lower
average yield in the loan and investment portfolio as a result of
the lower rate environment and a change in the asset mix to more
heavily weight low-risk investments. Rates paid on deposits and
interest-bearing liabilities decreased by 65 basis points from
1.61% in the 2008 quarter to 0.96% in 2009. As of September 30,
2009, low- and no-cost checking deposits represented 76% of total
deposits compared to 73% one year earlier. The increase was driven
by growth of $137.3 million in MPS deposits, as of the end of the
quarter, as compared to one year earlier, a 48% increase. Net
interest income for fiscal 2009 was $27.8 million, up $3.8 million
or 16% from 2008. Net interest margin remained stable at 3.50% in
fiscal 2009 as compared to 3.51% in fiscal 2008. Overall, for
fiscal 2009, asset yields declined by 85 basis points due to lower
average rates and a change in the asset mix to more low-risk
investments. The Company's average earning assets increased $111.6
million, or 16.3%, to $795.1 million during fiscal 2009 from $683.5
million during fiscal 2008. The increase is primarily the result of
the increase in the Company's mortgage-backed securities portfolio.
The Company's average total deposits and interest-bearing
liabilities increased $107.1 million, or 15.5%, to $800.1 million
during fiscal 2009 from $693.0 million during fiscal 2008. The
increase resulted mainly from an increase in the Company's
non-interest bearing deposits. The Company's cost of total deposits
and interest-bearing liabilities declined 83 basis points to 1.11%
during fiscal 2009 from 1.94% during fiscal 2008 primarily due to
continued migration to no-cost deposits provided by MPS.
Non-Interest Income 2009 fourth quarter non-interest income of
$13.9 million increased $3.1 million, or 29%, over the same quarter
for 2008. MPS fee income grew by $3.6 million or 35% due to the
expansion of existing prepaid card and credit programs.
Non-interest income for fiscal 2009 increased $42.3 million, or
112%, over the same period in the prior year. MPS fee income
accounts for $42.9 million of the comparable period growth and
relates to the factors mentioned above and the successful tax
preparation partner program. Non-Interest Expense Non-interest
expense grew $4.4 million, or 25%, to $21.9 million for the 2009
fourth quarter as compared to the same period in fiscal 2008. The
bulk of the increase occurred in card processing and
personnel-related expense and primarily was the result of continued
growth in MPS. These costs primarily are variable in nature and
will continue to increase as MPS introduces more programs and
issues more cards, albeit at a slowing rate as compared to the
associated revenues. Card Processing expense for the 2009 fourth
quarter was $6.3 million, or 60%, higher than the same period in
2008, primarily due to increased sales and transaction volumes from
the expansion of existing programs at MPS. Processing expense
increases are attributable to settlement functions for value
loading and card sales. Compensation expense was $8.7 million for
the 2009 fourth quarter, up $1.8 million or 26% from the same
period in 2008. While staff was added to support and develop new
business opportunities as well as the expansion of current, proven
client programs within MPS, management has focused on leveraging
existing resources wherever feasible. As a point of comparison,
fourth quarter 2008 compensation expense increased by 36% over the
same period in 2007. Fiscal 2009 non-interest expense increased by
$29.3 million, or 47%, to $91.1 million. Card processing expenses
increased 115% to $33.5 million and personnel costs increased by
27% to $32.7 million, primarily related to MPS growth. Again, the
rate of increase is slowing as 2008 was 67% higher than 2007. While
expense growth is easing, non-interest income growth has
accelerated as noted above, increasing 112% and 72% in 2009 and
2008, respectively. Credit Quality 30+ day loan delinquencies at
September 30, 2009 were improved from September 30, 2008, 3.6% of
total loans compared to 4.1%. Non-performing loans at September 30,
2009 were $12.6 million representing 3.2% of total loans compared
to $7.5 million, or 1.8% at September 30, 2008. The September 30,
2009 level represents an improvement from the prior quarter end of
$17.2 million and 4.2%. Non-performing assets at September 30, 2009
were $14.7 million representing 1.8% of total assets compared to
$7.5 million, or 1.1% at September 30, 2008 and $19.7 million, or
2.4% at the prior quarter end. Loans Total loans, net of allowance
for loan losses, decreased $36.3 million, or 9%, to $391.6 million
at September 30, 2009 as compared to a year earlier. This decrease
primarily relates to a decrease of $21.4 million in commercial and
agricultural operating loans, a $13.3 million reduction in the MPS
consumer portfolio, and an increase in the allowance for loan
losses of $1.3 million. Overall, real estate loans decreased by
$0.8 million. Net loan growth is expected to continue to be
relatively flat during the near term. Deposits and Other
Liabilities The Company continues to expand its low- and no-cost
deposit portfolio as a result of growth in new and existing
programs at MPS. Total MPS deposits were up $137.3 million, or 48%,
at September 30, 2009, as compared to September 30, 2008. This
increase results from prepaid card organic growth across several
product verticals. The Company reduced its short-term borrowings by
$30.9 million during the fiscal year ended September 30, 2009,
primarily due to the growth of deposits. Business Segment
Performance Meta Payment Systems For fiscal 2009, MPS recorded its
highest ever net income of $4.1 million, or $1.58 per diluted
share, as compared to net income of $3.3 million, or $1.54 per
diluted share for fiscal 2008. MPS net loss for the 2009 fourth
quarter was $1.3 million, or 51 cents per diluted share. This
compared to a net loss of $1.4 million, or 53 cents per diluted
share, for the same period last year. Included in the quarterly
results were charges of $0.9 million relating to research costs and
associated severance. MPS 2009 fourth quarter revenue grew by 15%,
from $13.1 million in fiscal 2008 to $15.1 million in 2009,
notwithstanding a 196 basis point reduction in the average transfer
pricing yield received for its deposits from 3.11% in 2008 to 1.15%
in the 2009 period. The interest income effect of this rate
decrease was $2.3 million and was partially offset by a $1.3
million increase due to higher deposit balances. MPS fiscal year
revenue increased from $47.4 million in fiscal 2008 to $86.8
million in fiscal 2009, an increase of $39.4 million or 83%.
Non-interest income for the quarter increased from $10.2 million in
fiscal 2008 to $13.6 million, or 33%, in 2009. The growth was
spread among prepaid and credit programs. Non-interest income for
fiscal year 2009 increased from $34.8 million in fiscal 2008 to
$77.4 million, or 122%, in fiscal 2009. Current 2009 fourth quarter
non-interest expenses increased by $6.0 million, or 55%, due to
volume-driven increases in program support costs and investments in
operational infrastructure, over the previous year fourth quarter.
Non-interest expense increased by $29.6 million, or 72%, from $41.4
million in fiscal 2008 to $71.0 million in fiscal 2009 compared to
fiscal 2008. The division also continued to demonstrate its
expertise in product innovation, filing new patent applications
while maintaining favorable existing applications. Traditional
Banking The Traditional Banking segment recorded net income from
continuing operations of $0.9 million, or 33 cents per diluted
share, for the fourth quarter of fiscal year 2009, compared to a
net loss from continuing operations of $2.9 million, or 77 cents
per diluted share for the same period last year. 2009 fourth
quarter results benefited from an increase in net interest income
from continuing operations of $1.7 million from the prior year
period and a $2.6 million decrease in loan loss provision expense.
Non-interest income decreased slightly by $0.1 million and
non-interest expense contracted by $1.8 million, or 27.5%,
reflecting previously discussed efficiencies and cost control
efforts. For fiscal 2009, the traditional banking segment recorded
a net loss of $4.5 million, or $1.71 per diluted share, compared to
a net loss of $4.2 million, or $1.29 per diluted share for fiscal
2008. Loan loss provision expense increased by $7.7 million but was
offset by higher non-interest income of $6.6 million and lower
expenses. Other Information Meta Financial Group and MetaBank
continue to meet and exceed federal regulatory requirements for
classification as well-capitalized institutions. This press release
and other important information about the Company are available at
http://www.bankmeta.com/. Corporate Profile: Meta Financial Group,
Inc. ®, (doing business as Meta Financial Group) is the holding
company for MetaBank(TM) and Meta Trust Company®. MetaBank(TM) is a
federally-chartered savings bank with four market areas: Northwest
Iowa Market, Brookings Market, Central Iowa Market, Sioux Empire
Market; and the Meta Payment Systems® prepaid card division. Twelve
retail banking offices and one administrative office support
customers throughout northwest and central Iowa, and in Brookings
and Sioux Falls, South Dakota. The Company, and its wholly-owned
subsidiaries, MetaBank(TM) and Meta Trust®, may from time to time
make written or oral "forward-looking statements," including
statements contained in its filings with the Securities and
Exchange Commission, in its reports to shareholders, and in other
communications by the Company, which are made in good faith by the
Company pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include statements with respect to the Company's
beliefs, expectations, estimates, and intentions that 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 statements address, among others, the following
subjects: future operating results; customer retention; loan and
other product demand; important components of the Company's balance
sheet and income statements; growth and expansion; new products and
services, such as those offered by MPS or MetaBank; credit quality
and adequacy of reserves; technology; and our employees. The
following factors, among others, could cause the Company's
financial performance to differ materially from the expectations,
estimates, and intentions expressed in such forward-looking
statements: 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 Federal Reserve Board, 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 of and acceptance of new products and services
offered by the Company as well as risks (including litigation)
attendant thereto and the perceived overall value of these products
and services by users; the risks of dealing with or utilizing
third-party vendors; the impact of changes in financial services'
laws and regulations; 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 the MPS division; the growth of the
Company's business as well as expenses related thereto; changes in
consumer spending and saving habits; and the success of the Company
at managing and collecting assets of borrowers in default. The
foregoing list of factors is not exclusive. Additional discussions
of factors affecting the Company's business and prospects are
contained in the Company's periodic filings with the SEC. The
Company expressly disclaims any intent or obligation to update any
forward-looking statement, whether written or oral, that may be
made from time to time by or on behalf of the Company or its
subsidiaries. Financial Highlights Consolidated Statements of
Financial Condition (Dollars In Thousands) September 30, September
30, Assets 2009 2008 ------------- ------------- Cash and cash
equivalents $6,177 $8,151 Investments and mortgage- backed
securities 364,838 203,834 Loans receivable, net 391,609 427,928
Other assets 72,153 70,323 ------ ------ Total assets $834,777
$710,236 ======== ======== Liabilities Deposits $653,747 $499,804
Other borrowings 116,796 147,683 Other liabilities 16,889 17,016
------ ------ Total liabilities 787,432 664,503 ------- -------
Shareholders' equity 47,345 45,733 ------ ------ Total liabilities
and shareholders' equity $834,777 $710,236 ======== ========
Consolidated Statements of Income For the 3 Months For the Year
Ended September 30: Ended September 30: -------------------
------------------- (Dollars In Thousands, Except Share and Per
Share Data) 2009 2008 2009 2008 ---- ---- ---- ---- Interest income
$9,001 $9,453 $36,726 $37,418 Interest expense 1,931 2,931 8,907
13,415 ----- ----- ----- ------ Net interest income 7,070 6,522
27,819 24,003 Provision for loan losses 37 2,520 18,713 2,715 --
----- ------ ----- Net interest income after provision for loan
losses 7,033 4,002 9,106 21,288 Non-interest income 13,947 10,752
79,969 37,696 Non-interest expense 21,924 17,539 91,081 61,820
------ ------ ------ ------ (Loss) from continuing operations
before income tax (benefit) (944) (2,785) (2,006) (2,836) Tax
(benefit) from continuing operations (215) (948) (543) (1,002) ----
---- ---- ------ (Loss) from continuing operations (729) (1,837)
(1,463) (1,834) Gain on sale from discontinued operations before
taxes - - - 2,309 Income from discontinued operations before taxes
- - - 76 Income tax expense from discontinued operations - - -
1,574 - - - ----- Income from discontinued operations - - - 811 Net
(loss) $(729) $(1,837) $(1,463) $(1,023) ===== ======= =======
======= (Loss) per common share Basic-(loss) from continuing
operations $(0.28) $(0.71) $(0.56) $(0.71) ====== ====== ======
====== Basic-net (loss) $(0.28) $(0.71) $(0.56) $(0.40) ======
====== ====== ====== Diluted-(loss) from continuing operations
$(0.28) $(0.68) $(0.56) $(0.69) ====== ====== ====== ======
Diluted-net (loss) $(0.28) $(0.68) $(0.56) $(0.38) ====== ======
====== ====== Selected Financial Information For the Year Ended
September 30, 2009 2008 ---- ---- Return on average assets-
continuing operations -0.20% -0.24% Return on average equity-
continuing operations -3.25% -4.07% Average shares outstanding for
diluted earnings per share 2,601,077 2,638,333 September 30,
September 30, At Period Ended: 2009 2008 --------------
-------------- Equity to total assets 5.67% 6.44% Book value per
common share outstanding $17.97 $17.57 Tangible book value per
common share outstanding $17.13 $16.72 Common shares outstanding
2,634,215 2,602,655 Non-performing assets to total assets-
continuing operations 1.76% 1.06% Meta Financial Group, Inc. (R)
121 East Fifth Street P.O. Box 1307 Storm Lake, Iowa 50588
DATASOURCE: Meta Financial Group, Inc. CONTACT: Meta Financial
Group, Inc. Investor Relations, +1-712-732-4117 Web Site:
http://www.bankmeta.com/
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