Net Income Increases 77% over Prior Year Highlights for the fiscal
2010 first quarter ended December 31, 2009 - Meta Financial Group
(MFG) 2010 first quarter net income was $1.2 million compared to
$0.7 million for the same period last year - Meta Payment Systems
(MPS) 2010 first quarter net income was $0.9 million with
non-interest income up 29% - Traditional Bank segment 2010 first
quarter net income reached $0.5 million compared to a net loss of
$1.0 million for the same period last year - MPS deposits at
quarter end were up $124.9 million, or 27%, over same period last
year Subsequent events - MFG completed two common stock private
placements raising $8.9 million on the sale of 415,000 shares
representing 13.5% of our current outstanding shares. The share
sales were priced at recent market prices. - This new capital will
be deployed immediately to support MPS growth as several
significant new sponsorship programs are being added and other
current programs are being expanded. - Current season income
tax-related programs are trending positively and reflect revenue
expansion in the new refund transfer (RT) program. - MPS completed
a strategic restructuring that resulted in a reduction of 47
positions and a refocusing of the division's resources on its core
businesses, producing better alignment with its large
business-to-business clients. The move will also yield significant
cost savings during the 2010 fiscal year with no net impact on
current revenue streams. STORM LAKE, Iowa, Feb. 9
/PRNewswire-FirstCall/ -- Meta Financial Group (NASDAQ:CASH)
reported net income for the 2010 first quarter of $1.2 million or
45 cents per diluted share compared to $0.7 million or 26 cents per
diluted share for the 2009 first quarter. The current quarterly
earnings results were primarily driven by a $4.4 million increase
in fee revenue from MPS, a $1.9 million gain on the sale of
securities available for sale, and partially offset by a loan loss
provision expense increase of $2.6 million. The provision expense
was primarily related to a larger income tax-related loan program,
as compared to the prior year, which will produce most of the
program's earnings in the March 2010 quarter. President and Chief
Executive Officer J. Tyler Haahr commented, "We are very pleased
with our first quarter results across the entire enterprise as the
Company's core businesses - retail banking and payment systems were
profitable. These encouraging results, coupled with an $8.9 million
addition to capital in January, new and expanded business
relationships to profitably utilize the capital, and a program to
reduce operating expenses by nearly $5 million annually, cause us
to be optimistic about our ongoing performance. In addition, we
continue to expect, as stated in our 2009 annual report that as the
economy improves and interest rates rise, our low-cost deposit base
will become more valuable and lead to increased earnings." Haahr
said the previously announced capital raises were accomplished
through two common stock private placements priced at recent market
value, noting that similar transactions by other issuers have been
priced at a 20% to 40% discount to share price. The investments are
passive in nature and do not include any board positions or
management rights, Haahr pointed out. "While many other
institutions have augmented capital with the U.S. Treasury's TARP
program, we elected to forego that route given our access to this
less expensive and less burdensome alternative." The Company
believes that restructuring-related cost savings will result from
reorganizing its Meta Payment Systems division to concentrate the
unit's activities on its fundamental business-to-business servicing
and to discontinue certain product development efforts. Further,
the Company expects that the recent capital raises will support its
balance sheet growth associated with the significant additional
no-cost deposits resulting from expanding several existing
relationships and advancing implementation of opportunities in the
pipeline. The Company anticipates that revenue momentum will be
maintained and earnings capacity will be enhanced through the
reduction of the Company's operating expenses. Summary Financial
Data * Three Months Ended ------------------ 12/31/09 9/30/09
12/31/08 -------- ------- -------- Net Interest Income -millions
$7.3 $7.1 $6.2 Non Interest Income -millions 22.0 13.9 15.5 Net
Income (Loss) -millions 1.2 (0.7) 0.7 Diluted earnings (loss) per
share 0.45 (0.28) 0.26 Net interest margin 3.33% 3.52% 3.49%
Non-performing assets - % of total assets 1.65% 1.76% 1.98% MPS
active cards - millions 22.7 18.5 17.9 MPS transaction volume
-billions $3.9 $3.0 $2.4 * 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 2010
first quarter reached $31.1 million compared to $24.3 million for
the same quarter last year. The growth for the quarter was
primarily driven by increased MPS fee revenue of $4.4 million and a
$1.9 million gain on the sale of securities available for sale.
Interest income increased by $0.3 million or 4%. Net Interest
Income Net interest income for the 2010 first quarter was $7.3
million, up $1.1 million or 18% from the same quarter last year.
Net interest margin contracted to 3.33% for the 2010 first quarter
as compared to 3.49% for the same quarter last year. Overall, asset
yields declined by 81 basis points due to a lower average yield in
the investment portfolio as a result of the lower rate environment
and a continued strategy to more heavily weight low-risk
investments. Overall cost of funds for all deposits and
interest-bearing liabilities decreased by 59 basis points from
1.40% in the 2009 quarter to 0.81% in 2010. As of December 31,
2009, low- and no-cost checking deposits represented 82% of total
deposits compared to 76% one year earlier. The increase was driven
by growth of $124.9 million, or 27%, in MPS deposits, as of the end
of the quarter, as compared to one year earlier. The Company's
average earning assets for the 2010 first quarter grew by $169.1
million, or 24%, to $871.3 million from $702.2 million during the
same quarter last year. 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
for the 2010 first quarter increased $131.3 million, or 18%, to
$860.0 million from $728.6 million for the same period last year.
The increase resulted mainly from an increase in MPS non-interest
bearing deposits. Non-Interest Income 2010 first quarter
non-interest income of $22.0 million increased $6.5 million, or
42%, over the same quarter for 2009. MPS fee income grew by $4.4
million or 29% due to the expansion of existing prepaid card and
credit programs. Fee income was reduced by a decline in the average
net realizable value of rebate cards for one program. MPS first
quarter non-interest income increased from the 2009 fourth quarter
by $6.0 million or 44%. Non-Interest Expense Non-interest expense
grew $4.2 million, or 23%, to $22.8 million for the 2010 first
quarter as compared to the same period in fiscal 2009. The bulk of
the increase occurred in variable card processing expense that
moves in line with revenue and to a lesser extent,
personnel-related expense at MPS. Card Processing expense for the
2010 first quarter was $8.4 million, or 59%, higher than the same
period in 2009, primarily due to increased sales and transaction
volumes from the expansion of existing prepaid and credit programs
at MPS. Processing expense increases are attributable to
settlement, network, and operating platform functions. Compensation
expense was $8.7 million for the 2010 first quarter, up $1.3
million or 16% from the same period in 2009. 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, 2009 first quarter compensation expense
increased by 30% over the same period in 2008. Additionally, the
aforementioned reduction in staffing will further improve the
division's efficiency. Credit Quality Retail Bank credit quality
remained relatively unchanged compared to the prior quarter ended
September 30, 2009. 30+ day loan delinquencies at December 31, 2009
were 5.0% of total loans compared to 3.6% at September 30, 2009.
Non-performing loans at December 31, 2009 were $13.9 million
representing 3.2% of total loans compared to $12.6 million, or 3.2%
of total loans at September 30, 2009. Non-performing assets at
December 31, 2009 were $15.2 million representing 1.7% of total
assets compared to $14.7 million, or 1.8% at September 30, 2009.
Loans Total loans, net of allowance for loan losses, increased
$28.3 million, or 7%, to $419.9 million during the three months
ended December 31, 2009. This increase primarily relates to an
increase of $48.7 million in MPS tax-related loans. A partial
offset is related to an increase in the allowance for loan losses
of $5.2 million. Overall, real estate loans decreased by $4.2
million and commercial operating loans decreased by $5.2 million.
Net loan growth for the retail bank 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 existing programs at
MPS. Total MPS deposits were up $169.9 million, or 40%, at December
31, 2009, as compared to September 30, 2009. This increase results
from prepaid card organic growth across several product verticals
and seasonality. The Company reduced its advances and other
borrowings by $72.8 million during the three months ended December
31, 2009, primarily due to the growth of deposits. Business Segment
Performance Meta Payment Systems For the 2010 first quarter, MPS
recorded net income of $0.9 million, or 34 cents per diluted share,
as compared to net income of $1.9 million, or 72 cents per diluted
share for the same period last year. MPS 2010 first quarter revenue
grew by 27%, from $18.0 million in fiscal 2009 to $22.9 million in
2010, notwithstanding a 78 basis point reduction in the average
transfer pricing yield received for its deposits from 2.46% in 2009
to 1.68% in the 2010 period. The interest income effect of this
rate decrease was $1.0 million and was partially offset by a $0.1
million increase due to higher deposit balances. Loan loss
provision expense increased by $2.3 million over the prior year
quarter primarily due to a larger pre-season tax-related loan
program. The provision expense was consistent with expectations and
precedes the majority of revenues which will be recorded in the
March 2010 quarter. A small portion of the increase, $0.3 million,
relates to origination growth in the successful iAdvance credit
program. Non-interest income for the quarter increased from $15.1
million in fiscal 2009 to $19.5 million, or 29%, in 2010. The
growth was spread among prepaid and credit programs. Current 2010
first quarter non-interest expenses increased by $4.4 million, or
33%, due to volume-driven increases in program support costs and
investments in operational infrastructure, over the previous year
first quarter. Traditional Banking The Traditional Banking segment
recorded net income of $0.5 million, or 17 cents per diluted share,
for the first quarter of fiscal year 2010, compared to a net loss
of $1.0 million, or 37 cents per diluted share for the same period
last year. 2010 first quarter results benefited from an increase in
non-interest income of $1.8 million from the prior year period and
net interest income increased by $0.6 million while expenses
declined by $0.1 million. Other Information MetaBank continues to
meet and exceed all federal regulatory requirements for
classification as a well-capitalized institution. 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 significant portion of the Company's
revenues that are derived from income tax-related programs; 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) December 31, September 30, 2009 2009 ---- ---- Assets
Cash and cash equivalents $82,907 $6,177 Investments and
mortgage-backed securities 339,376 364,838 Loans receivable, net
419,911 391,609 Other assets 73,951 72,153 ------ ------ Total
assets $916,145 $834,777 ======== ======== Liabilities Deposits
$810,505 $653,747 Other borrowings 44,022 116,796 Other liabilities
15,063 16,889 ------ ------ Total liabilities 869,590 787,432
------- ------- Shareholders' equity 46,555 47,345 ------ ------
Total liabilities and shareholders' equity $916,145 $834,777
======== ======== Consolidated Statements of Income For the 3
Months Ended December 31: ------------ (Dollars In Thousands,
Except Share and Per Share Data) 2009 2008 ---- ---- Interest
income $9,064 $8,727 Interest expense 1,745 2,566 ----- ----- Net
interest income 7,319 6,161 Provision for loan losses 4,691 2,129
----- ----- Net interest income after provision for loan losses
2,628 4,032 Non-interest income 22,038 15,535 Non-interest expense
22,803 18,552 ------ ------ Income before income tax expense 1,863
1,015 Income tax expense 671 342 --- --- Net income $1,192 $673
====== ==== Earnings per common share Basic $0.45 $0.26 ===== =====
Diluted $0.45 $0.26 ===== ===== Selected Financial Information For
the 3 Months Ended December 31, 2009 2008 ---- ---- Return on
average assets 0.52% 0.34% Return on average equity 9.59% 6.03%
Average shares outstanding for diluted earnings per share 2,674,204
2,597,655 At Period Ended: December 31, 2009 September 30, 2009
----------------- ------------------ Equity to total assets 5.08%
5.67% Book value per common share outstanding $17.61 $17.97
Tangible book value per common share outstanding $16.66 $17.13
Common shares outstanding 2,643,727 2,634,215 Non-performing assets
to total assets 1.65% 1.76% Meta Financial Group, Inc. (R) 121 East
Fifth Street P.O. Box 1307 Storm Lake, Iowa 50588 DATASOURCE: Meta
Financial Group, Inc. CONTACT: Investor Relations of Meta Financial
Group, Inc., +1-712-732-4117 Web Site: http://www.metacash.com/
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