“MetaBank performed well during the third quarter, more than doubling earnings per share, as various timing items including tax season delays, additional card fee income from government stimulus programs, and reduced provision helped enhance performance year-over-year. Our results demonstrate how MetaBank’s mission of financial inclusion for all® is creating value for all our stakeholders, including our customers, employees and shareholders,” said President and CEO
Business Development Highlights for the 2021 Fiscal Third Quarter
- Published our inaugural 2020 Environmental, Social and Governance ("ESG") Report, building on the Company's vision, culture, and mission of financial inclusion for all®. The Company's 2020 ESG report can be downloaded at https://www.metafinancialgroup.com/environmental-social-governance.
- Launched the Company's Community Impact Program, focused on financial inclusion, personal and family financial empowerment, educational support, and disaster relief. Concentrating on these four areas positions MetaBank to encourage long-lasting positive impact in our communities.
- Expanded our renewable energy investment tax credit financing, originating
$72.0 million for the first nine months of the fiscal year 2021, resulting in$18.9 million in total net ITC. - Entered into a new Banking as a Service ("BaaS") partnership with Clair, a social impact embedded fintech startup. The Company will act as both the issuing bank and bank services provider, offering digital banking services for users of Clair.
Financial Highlights for the 2021 Fiscal Third Quarter
- Total revenue for the third quarter was
$130.9 million , an increase of$27.7 million compared to$103.2 million for the same quarter in fiscal 2020 primarily driven by a timing shift of refund transfer product fees and additional payments card fee income from government stimulus programs. - Operating efficiency ratio improved 185 basis points to 61.75% at
June 30, 2021 compared to 63.60% atJune 30, 2020 . See non-GAAP reconciliation table below. - Net interest income for the third quarter was
$68.5 million , an increase of$6.4 million compared to$62.1 million in the third quarter last year, reflecting a decrease in deposit interest expense. - Net interest margin ("NIM") improved to 3.75% for the third quarter from 3.28% during the same period of last year, chiefly due to the decrease of cash associated with the Company's participation in the EIP program and an increase in national lending loans and leases.
- Total gross loans and leases at
June 30, 2021 decreased$1.5 million , to$3.50 billion , compared toJune 30, 2020 and decreased$152.8 million , or 4%, when compared toMarch 31, 2021 . The decrease was primarily driven due to the seasonal nature of the taxpayer advance loans. - Average deposits from the Payments businesses for the fiscal 2021 third quarter increased nearly 8% to
$6.79 billion when compared to the prior year quarter largely driven by excess cash on consumer cards related to government stimulus programs.
Tax Season Recap
During the third quarter of the fiscal 2021, total tax services product revenue was
Economic Impact Program ("EIP") Update
Of the 16.5 million prepaid cards issued in conjunction with the three EIP stimulus programs, totaling approximately
Net Interest Income
Net interest income for the third quarter of fiscal 2021 was
Interest expense during the third quarter decreased
Fiscal 2021 third quarter NIM increased to 3.75% from 3.28% for the third quarter last year. The overall reported tax-equivalent yield (“TEY”) on average earning asset yields increased 26 basis points to 3.85% compared to the prior year quarter, primarily driven by a reduction in low-yielding cash held at the
The Company's cost of funds for all deposits and borrowings averaged 0.09% during the fiscal 2021 third quarter, compared to 0.28% during the prior year quarter, primarily driven by a reduction in wholesale deposit balances. The Company's overall cost of deposits was 0.01% in the fiscal third quarter of 2021, compared to 0.17% in the same quarter last year.
Noninterest Income
Fiscal 2021 third quarter noninterest income increased to
Noninterest Expense
Noninterest expense increased 14% to
Income Tax Expense
The Company recorded income tax expense of
The Company originated
Investments, Loans and Leases
Total investments | $ | 1,981,852 | $ | 1,552,892 | $ | 1,309,452 | $ | 1,360,712 | $ | 1,268,416 | |||||||||
Loans held for sale | |||||||||||||||||||
Consumer credit products | 12,582 | 6,233 | 234 | 962 | 391 | ||||||||||||||
SBA/ | 57,208 | 61,402 | 32,983 | 52,542 | 31,438 | ||||||||||||||
18,115 | — | 100,442 | 130,073 | 48,076 | |||||||||||||||
Total loans held for sale | 87,905 | 67,635 | 133,659 | 183,577 | 79,905 | ||||||||||||||
National Lending | |||||||||||||||||||
Term lending | 920,279 | 891,414 | 881,306 | 805,323 | 738,454 | ||||||||||||||
Asset based lending | 263,237 | 248,735 | 242,298 | 182,419 | 181,130 | ||||||||||||||
Factoring | 320,629 | 277,612 | 275,650 | 281,173 | 206,361 | ||||||||||||||
Lease financing | 282,940 | 308,169 | 283,722 | 281,084 | 264,988 | ||||||||||||||
Insurance premium finance | 417,652 | 344,841 | 338,227 | 337,940 | 359,147 | ||||||||||||||
SBA/ | 263,709 | 331,917 | 300,707 | 318,387 | 308,611 | ||||||||||||||
Other commercial finance | 118,081 | 103,234 | 101,209 | 101,658 | 100,214 | ||||||||||||||
Commercial Finance | 2,586,527 | 2,505,922 | 2,423,119 | 2,307,984 | 2,158,905 | ||||||||||||||
Consumer credit products | 105,440 | 104,842 | 88,595 | 89,809 | 102,808 | ||||||||||||||
Other consumer finance | 122,316 | 130,822 | 162,423 | 134,342 | 138,777 | ||||||||||||||
Consumer Finance | 227,756 | 235,664 | 251,018 | 224,151 | 241,585 | ||||||||||||||
Tax Services | 41,268 | 225,921 | 92,548 | 3,066 | 19,168 | ||||||||||||||
Warehouse Finance | 335,704 | 332,456 | 318,937 | 293,375 | 277,614 | ||||||||||||||
Total National Lending loans and leases | 3,191,255 | 3,299,963 | 3,085,622 | 2,828,576 | 2,697,272 | ||||||||||||||
Community Banking | |||||||||||||||||||
Commercial real estate and operating | 294,810 | 335,587 | 339,141 | 457,371 | 608,303 | ||||||||||||||
Consumer one-to-four family real estate and other | 1,349 | 4,567 | 5,077 | 16,486 | 166,479 | ||||||||||||||
Agricultural real estate and operating | 7,825 | 7,911 | 9,724 | 11,707 | 24,655 | ||||||||||||||
Total Community Banking loans | 303,984 | 348,065 | 353,942 | 485,564 | 799,437 | ||||||||||||||
Total gross loans and leases | 3,495,239 | 3,648,028 | 3,439,564 | 3,314,140 | 3,496,709 | ||||||||||||||
Allowance for credit losses | (91,208 | ) | (98,892 | ) | (72,389 | ) | (56,188 | ) | (65,747 | ) | |||||||||
Net deferred loan and lease origination fees | 1,431 | 9,503 | 9,111 | 8,625 | 5,937 | ||||||||||||||
Total loans and leases, net of allowance | $ | 3,405,462 | $ | 3,558,639 | $ | 3,376,286 | $ | 3,266,577 | $ | 3,436,899 |
The Company's investment security balances at
Total gross loans and leases totaled
At
As of
Consumer finance loans totaled
Tax services loans totaled
Community bank loans held for investment totaled
Asset Quality
The Company’s allowance for credit losses totaled
The year-over-year increase in the allowance was primarily driven by a
The following table presents the Company's allowance for credit losses as a percentage of its total loans and leases.
As of the Period Ended | ||||||||||||
(Unaudited) | ||||||||||||
Commercial finance | 1.73 | % | 1.77 | % | 1.88 | % | 1.85 | % | 1.30 | % | 1.36 | % |
Consumer finance | 3.80 | % | 4.70 | % | 4.39 | % | 4.31 | % | 1.64 | % | 1.75 | % |
Tax services | 58.99 | % | 12.90 | % | 1.53 | % | 0.06 | % | 0.06 | % | 59.67 | % |
Warehouse finance | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % |
National Lending | 2.44 | % | 2.57 | % | 1.89 | % | 1.86 | % | 1.20 | % | 1.68 | % |
4.36 | % | 4.03 | % | 4.01 | % | 3.37 | % | 4.59 | % | 2.55 | % | |
Total loans and leases | 2.61 | % | 2.71 | % | 2.10 | % | 2.08 | % | 1.70 | % | 1.88 | % |
(1) Represents the Company's allowance coverage ratio upon the adoption of the Accounting Standards Update 2016-13 using
The Company's allowance for credit losses as a percentage of total loans and leases decreased to 2.61% at
Activity in the allowance for credit losses for the periods presented was as follows.
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Beginning balance | $ | 98,892 | $ | 72,389 | $ | 65,355 | $ | 56,188 | $ | 29,149 | |||||
Adoption of CECL accounting standard | — | — | — | 12,773 | — | ||||||||||
Provision - tax services loans | 4,685 | 27,680 | (100 | ) | 32,819 | 20,407 | |||||||||
Provision - all other loans and leases | (36 | ) | 2,519 | 15,193 | 8,294 | 35,390 | |||||||||
Charge-offs - tax services loans | (9,505 | ) | — | (9,797 | ) | (9,505 | ) | (9,797 | ) | ||||||
Charge-offs - all other loans and leases | (5,360 | ) | (4,248 | ) | (5,808 | ) | (15,284 | ) | (12,912 | ) | |||||
Recoveries - tax services loans | 17 | 54 | 15 | 1,027 | 827 | ||||||||||
Recoveries - all other loans and leases | 2,515 | 498 | 889 | 4,896 | 2,684 | ||||||||||
Ending balance | $ | 91,208 | $ | 98,892 | $ | 65,747 | $ | 91,208 | $ | 65,747 |
Provision for credit losses was
The Company's past due loans and leases were as follows for the periods presented.
As of | Accruing and Nonaccruing Loans and Leases | Nonperforming Loans and Leases | |||||||||||||||||||||||||||||||||
(Dollars in Thousands) | 30-59 Days Past Due | 60-89 Days Past Due | > 89 Days Past Due | Total Past Due | Current | Total Loans and Leases Receivable | > 89 Days Past Due and Accruing | Non-accrual balance | Total | ||||||||||||||||||||||||||
Commercial finance | $ | 22,117 | $ | 10,650 | $ | 8,844 | $ | 41,611 | $ | 2,544,916 | $ | 2,586,527 | $ | 4,350 | $ | 17,315 | $ | 21,665 | |||||||||||||||||
Consumer finance | 843 | 1,009 | 525 | 2,377 | 225,379 | 227,756 | 469 | — | 469 | ||||||||||||||||||||||||||
Tax services | — | 40,958 | — | 40,958 | 310 | 41,268 | — | — | — | ||||||||||||||||||||||||||
Warehouse finance | — | — | — | — | 335,704 | 335,704 | — | — | — | ||||||||||||||||||||||||||
Total National Lending | 22,960 | 52,617 | 9,369 | 84,946 | 3,106,309 | 3,191,255 | 4,819 | 17,315 | 22,134 | ||||||||||||||||||||||||||
Total Community Banking | 62 | — | 1,769 | 1,831 | 302,153 | 303,984 | — | 19,773 | 19,773 | ||||||||||||||||||||||||||
Total loans and leases held for investment | $ | 23,022 | $ | 52,617 | $ | 11,138 | $ | 86,777 | $ | 3,408,462 | $ | 3,495,239 | $ | 4,819 | $ | 37,088 | $ | 41,907 |
As of | Accruing and Nonaccruing Loans and Leases | Nonperforming Loans and Leases | |||||||||||||||||||||||||||||||||
(Dollars in Thousands) | 30-59 Days Past Due | 60-89 Days Past Due | > 89 Days Past Due | Total Past Due | Current | Total Loans and Leases Receivable | > 89 Days Past Due and Accruing | Non-accrual balance | Total | ||||||||||||||||||||||||||
Commercial finance | $ | 34,675 | $ | 8,730 | $ | 9,488 | $ | 52,893 | $ | 2,453,029 | $ | 2,505,922 | $ | 4,810 | $ | 18,305 | $ | 23,115 | |||||||||||||||||
Consumer finance | 2,033 | 4,162 | 2,294 | 8,489 | 227,175 | 235,664 | 517 | — | 517 | ||||||||||||||||||||||||||
Tax services | 507 | — | — | 507 | 225,414 | 225,921 | — | — | — | ||||||||||||||||||||||||||
Warehouse finance | — | — | — | — | 332,456 | 332,456 | — | — | — | ||||||||||||||||||||||||||
Total National Lending | 37,215 | 12,892 | 11,782 | 61,889 | 3,238,074 | 3,299,963 | 5,327 | 18,305 | 23,632 | ||||||||||||||||||||||||||
Total Community Banking | 12 | — | 1,818 | 1,830 | 346,235 | 348,065 | — | 19,824 | 19,824 | ||||||||||||||||||||||||||
Total loans and leases held for investment | $ | 37,227 | $ | 12,892 | $ | 13,600 | $ | 63,719 | $ | 3,584,309 | $ | 3,648,028 | $ | 5,327 | $ | 38,129 | $ | 43,456 |
The Company's nonperforming assets at
The Company's nonperforming loans and leases at
Loan and lease balances that were within their active deferment period decreased to
Meta is now revising its credit administration policies and reviewing its loan portfolio to better align with OCC guidance for national banks, a process that began during the quarter ending
The Company has various portfolios of consumer finance and tax services loans that present unique risks. Due to the unique risks associated with these portfolios, the Company monitors other credit quality indicators in their evaluation of the appropriateness of the allowance for credit losses on these portfolios, and as such, these loans are not included in the asset classification table below. The Company's loans and leases by asset classification were as follows for the periods presented.
Asset Classification | Pass | Watch | Special Mention | Substandard | Doubtful | Total | ||||||||||||
As of | (Dollars in Thousands) | |||||||||||||||||
Commercial finance | $ | 2,370,132 | $ | 135,691 | $ | 55,805 | $ | 74,941 | $ | 7,166 | $ | 2,643,735 | ||||||
Warehouse finance | 335,704 | — | — | — | — | 335,704 | ||||||||||||
Total National Lending | 2,705,836 | 135,691 | 55,805 | 74,941 | 7,166 | 2,979,439 | ||||||||||||
Total Community Banking | 212,283 | 33,494 | 16,126 | 60,196 | — | 322,099 | ||||||||||||
Total Loans and Leases | $ | 2,918,119 | $ | 169,185 | $ | 71,931 | $ | 135,137 | $ | 7,166 | $ | 3,301,538 |
Asset Classification | Pass | Watch | Special Mention | Substandard | Doubtful | Total | ||||||||||||
As of | (Dollars in Thousands) | |||||||||||||||||
Commercial finance | $ | 2,310,043 | $ | 142,506 | $ | 59,904 | $ | 52,492 | $ | 2,378 | $ | 2,567,323 | ||||||
Warehouse finance | 332,456 | — | — | — | — | 332,456 | ||||||||||||
Total National Lending | 2,642,499 | 142,506 | 59,904 | 52,492 | 2,378 | 2,899,779 | ||||||||||||
Total Community Banking | 239,650 | 84,107 | 684 | 23,625 | — | 348,066 | ||||||||||||
Total Loans and Leases | $ | 2,882,149 | $ | 226,613 | $ | 60,588 | $ | 76,117 | $ | 2,378 | $ | 3,247,845 |
Deposits, Borrowings and Other Liabilities
Total average deposits for the fiscal 2021 third quarter decreased by
The average balance of total deposits and interest-bearing liabilities was
Total end-of-period deposits decreased 22% to
The Company and MetaBank remained above the federal regulatory minimum capital requirements at
The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analysis.
As of the dates indicated | 2021(1) | 2021 | 2020 | 2020 | 2020 | |||||||||
Company | ||||||||||||||
Tier 1 leverage capital ratio | 6.85 | % | 4.75 | % | 7.39 | % | 6.58 | % | 5.91 | % | ||||
Common equity Tier 1 capital ratio | 12.76 | % | 11.29 | % | 10.72 | % | 11.78 | % | 11.51 | % | ||||
Tier 1 capital ratio | 13.11 | % | 11.63 | % | 11.07 | % | 12.18 | % | 11.90 | % | ||||
Total capital ratio | 16.18 | % | 14.65 | % | 14.14 | % | 15.30 | % | 14.99 | % | ||||
MetaBank | ||||||||||||||
Tier 1 leverage capital ratio | 7.83 | % | 5.47 | % | 8.60 | % | 7.56 | % | 6.89 | % | ||||
Common equity Tier 1 capital ratio | 14.94 | % | 13.39 | % | 12.87 | % | 13.96 | % | 13.82 | % | ||||
Tier 1 capital ratio | 14.96 | % | 13.40 | % | 12.89 | % | 14.00 | % | 13.86 | % | ||||
Total capital ratio | 16.22 | % | 14.66 | % | 14.14 | % | 15.26 | % | 15.12 | % |
(1)
The following table provides the non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP:
Standardized Approach(1) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||
Total stockholders' equity | $ | 876,633 | $ | 835,258 | $ | 813,210 | $ | 847,308 | $ | 829,909 | |||||||||
Adjustments: | |||||||||||||||||||
LESS: | 301,179 | 301,602 | 301,999 | 302,396 | 302,814 | ||||||||||||||
LESS: Certain other intangible assets | 35,100 | 36,779 | 39,403 | 40,964 | 42,865 | ||||||||||||||
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards | 17,753 | 19,306 | 24,105 | 18,361 | 10,360 | ||||||||||||||
LESS: Net unrealized gains (losses) on available-for-sale securities | 14,750 | 12,458 | 19,894 | 17,762 | 8,382 | ||||||||||||||
LESS: Non-controlling interest | 1,490 | 1,092 | 1,536 | 3,603 | 3,787 | ||||||||||||||
ADD: Adoption of Accounting Standards Update 2016-13 | 13,913 | 10,439 | 10,439 | — | — | ||||||||||||||
Common Equity Tier 1(1) | 520,274 | 474,460 | 436,712 | 464,222 | 461,701 | ||||||||||||||
Long-term borrowings and other instruments qualifying as Tier 1 | 13,661 | 13,661 | 13,661 | 13,661 | 13,661 | ||||||||||||||
Tier 1 minority interest not included in common equity tier 1 capital | 932 | 690 | 749 | 1,894 | 1,894 | ||||||||||||||
Total Tier 1 Capital | 534,867 | 488,811 | 451,122 | 479,777 | 477,256 | ||||||||||||||
Allowance for credit losses | 51,317 | 53,232 | 51,070 | 49,343 | 50,338 | ||||||||||||||
Subordinated debentures (net of issuance costs) | 73,936 | 73,892 | 73,850 | 73,807 | 73,765 | ||||||||||||||
Total qualifying capital | $ | 660,119 | $ | 615,935 | $ | 576,042 | $ | 602,927 | $ | 601,359 |
(1) Capital ratios were determined using the Basel III capital rules that became effective on
The following table provides a reconciliation of tangible common equity and tangible common equity excluding accumulated other comprehensive income ("AOCI"), each of which is used in calculating tangible book value data, to Total Stockholders' Equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.
2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||
Total Stockholders' Equity | $ | 876,633 | $ | 835,258 | $ | 813,210 | $ | 847,308 | $ | 829,909 | |||||||||
Less: | 309,505 | 309,505 | 309,505 | 309,505 | 309,505 | ||||||||||||||
Less: Intangible assets | 34,898 | 36,903 | 39,660 | 41,692 | 43,974 | ||||||||||||||
Tangible common equity | 532,230 | 488,850 | 464,045 | 496,111 | 476,430 | ||||||||||||||
Less: Accumulated other comprehensive income (loss) ("AOCI") | 15,222 | 12,809 | 20,119 | 17,542 | 7,995 | ||||||||||||||
Tangible common equity excluding AOCI | $ | 517,008 | $ | 476,041 | $ | 443,926 | $ | 478,569 | $ | 468,435 |
Conference Call
The Company will host a conference call and earnings webcast at
Upcoming Investor Events
Raymond James U.S. Bank Conference ,September 8, 2021 |Chicago, IL
Forward-Looking Statements
The Company and MetaBank may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the
You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company’s control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results; expectations in connection with the impact of the ongoing COVID-19 pandemic and related government actions on our business, our industry and the capital markets; customer retention; loan and other product demand; expectations concerning acquisitions and divestitures; new products and services, including those offered by Meta Payment Systems, Refund Advantage, EPS Financial and Specialty Consumer Services divisions; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; technology; and the Company's employees. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto including the deployment and efficacy of the COVID-19 vaccines, or other unusual and infrequently occurring events; actual changes in interest rates and the Fed Funds rate; additional changes in tax laws; the strength of
The 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
Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Share Data)
ASSETS | |||||||||||||||||||
Cash and cash equivalents | $ | 720,243 | $ | 3,724,242 | $ | 1,586,451 | $ | 427,367 | $ | 3,108,141 | |||||||||
Investment securities available for sale, at fair value | 854,023 | 921,947 | 797,363 | 814,495 | 825,579 | ||||||||||||||
Mortgage-backed securities available for sale, at fair value | 1,063,582 | 558,833 | 430,761 | 453,607 | 338,250 | ||||||||||||||
Investment securities held to maturity, at cost | 60,228 | 67,709 | 76,176 | 87,183 | 98,205 | ||||||||||||||
Mortgage-backed securities held to maturity, at cost | 4,019 | 4,403 | 5,152 | 5,427 | 6,382 | ||||||||||||||
Loans held for sale | 87,905 | 67,635 | 133,659 | 183,577 | 79,905 | ||||||||||||||
Loans and leases | 3,496,670 | 3,657,531 | 3,448,675 | 3,322,765 | 3,502,646 | ||||||||||||||
Allowance for credit losses | (91,208 | ) | (98,892 | ) | (72,389 | ) | (56,188 | ) | (65,747 | ) | |||||||||
28,433 | 28,433 | 27,138 | 27,138 | 31,836 | |||||||||||||||
Accrued interest receivable | 16,230 | 17,429 | 17,133 | 16,628 | 17,545 | ||||||||||||||
Premises, furniture, and equipment, net | 44,107 | 41,510 | 39,932 | 41,608 | 40,361 | ||||||||||||||
Rental equipment, net | 211,368 | 211,397 | 206,732 | 205,964 | 216,336 | ||||||||||||||
Bank-owned life insurance | 94,142 | 93,542 | 92,937 | 92,315 | 91,697 | ||||||||||||||
Foreclosed real estate and repossessed assets, net | 1,204 | 1,483 | 7,186 | 9,957 | 6,784 | ||||||||||||||
309,505 | 309,505 | 309,505 | 309,505 | 309,505 | |||||||||||||||
Intangible assets | 34,898 | 36,903 | 39,660 | 41,692 | 43,974 | ||||||||||||||
Prepaid assets | 7,482 | 10,201 | 11,270 | 8,328 | 6,806 | ||||||||||||||
Deferred taxes | 20,072 | 25,435 | 24,411 | 17,723 | 15,944 | ||||||||||||||
Other assets | 88,909 | 110,877 | 82,763 | 82,983 | 104,877 | ||||||||||||||
Total assets | $ | 7,051,812 | $ | 9,790,123 | $ | 7,264,515 | $ | 6,092,074 | $ | 8,779,026 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
LIABILITIES | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing checking | 5,385,569 | 7,928,235 | 5,581,597 | 4,356,630 | 6,537,809 | ||||||||||||||
Interest-bearing checking | 255,509 | 416,164 | 274,504 | 157,571 | 187,003 | ||||||||||||||
Savings deposits | 93,608 | 126,834 | 54,080 | 47,866 | 55,896 | ||||||||||||||
Money market deposits | 63,920 | 55,045 | 56,440 | 48,494 | 40,811 | ||||||||||||||
Time certificates of deposit | 11,425 | 12,614 | 13,522 | 20,223 | 25,000 | ||||||||||||||
Wholesale deposits | 78,840 | 103,521 | 227,648 | 348,416 | 743,806 | ||||||||||||||
Total deposits | 5,888,871 | 8,642,413 | 6,207,791 | 4,979,200 | 7,590,325 | ||||||||||||||
Short-term borrowings | — | — | — | — | — | ||||||||||||||
Long-term borrowings | 93,634 | 95,336 | 96,760 | 98,224 | 209,781 | ||||||||||||||
Accrued interest payable | 1,853 | 679 | 2,068 | 1,923 | 4,332 | ||||||||||||||
Accrued expenses and other liabilities | 190,821 | 216,437 | 144,686 | 165,419 | 144,679 | ||||||||||||||
Total liabilities | 6,175,179 | 8,954,865 | 6,451,305 | 5,244,766 | 7,949,117 | ||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common stock, | 319 | 319 | 326 | 344 | 346 | ||||||||||||||
Common stock, Nonvoting, | — | — | — | — | — | ||||||||||||||
Additional paid-in capital | 602,720 | 601,222 | 598,669 | 594,569 | 592,693 | ||||||||||||||
Retained earnings | 262,578 | 225,471 | 198,000 | 234,927 | 228,500 | ||||||||||||||
Accumulated other comprehensive income | 15,222 | 12,809 | 20,119 | 17,542 | 7,995 | ||||||||||||||
(5,696 | ) | (5,655 | ) | (5,440 | ) | (3,677 | ) | (3,412 | ) | ||||||||||
Total equity attributable to parent | 875,143 | 834,166 | 811,674 | 843,705 | 826,122 | ||||||||||||||
Noncontrolling interest | 1,490 | 1,092 | 1,536 | 3,603 | 3,787 | ||||||||||||||
Total stockholders’ equity | 876,633 | 835,258 | 813,210 | 847,308 | 829,909 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,051,812 | $ | 9,790,123 | $ | 7,264,515 | $ | 6,092,074 | $ | 8,779,026 |
Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data)
Three Months Ended | Year Ended | ||||||||||||||||||
2021 | 2020 | ||||||||||||||||||
Interest and dividend income: | |||||||||||||||||||
Loans and leases, including fees | $ | 62,287 | $ | 68,472 | $ | 59,911 | $ | 192,415 | $ | 199,107 | |||||||||
Mortgage-backed securities | 3,446 | 2,608 | 2,269 | 8,176 | 7,151 | ||||||||||||||
Other investments | 4,250 | 4,589 | 5,226 | 13,207 | 18,176 | ||||||||||||||
69,983 | 75,669 | 67,406 | 213,798 | 224,434 | |||||||||||||||
Interest expense: | |||||||||||||||||||
Deposits | 188 | 445 | 3,130 | 1,429 | 20,712 | ||||||||||||||
FHLB advances and other borrowings | 1,320 | 1,374 | 2,139 | 4,045 | 9,197 | ||||||||||||||
1,508 | 1,819 | 5,269 | 5,474 | 29,909 | |||||||||||||||
Net interest income | 68,475 | 73,850 | 62,137 | 208,324 | 194,525 | ||||||||||||||
Provision for credit losses | 4,612 | 30,290 | 15,093 | 40,991 | 55,796 | ||||||||||||||
Net interest income after provision for credit losses | 63,863 | 43,560 | 47,044 | 167,333 | 138,729 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Refund transfer product fees | 12,073 | 22,680 | 4,595 | 35,400 | 33,726 | ||||||||||||||
Tax advance product fees | 891 | 44,562 | 28 | 47,413 | 31,840 | ||||||||||||||
Payments card and deposit fees | 29,203 | 29,875 | 21,302 | 81,641 | 65,957 | ||||||||||||||
Other bank and deposit fees | 338 | 133 | 214 | 709 | 1,083 | ||||||||||||||
Rental income | 9,976 | 9,846 | 11,231 | 29,707 | 34,682 | ||||||||||||||
Net gain realized on investment securities | — | 6 | — | 6 | — | ||||||||||||||
Gain on divestitures | — | — | — | — | 19,275 | ||||||||||||||
Gain (loss) on sale of other | 5,955 | 2,133 | 1,214 | 10,935 | 969 | ||||||||||||||
Other income | 4,017 | 4,218 | 2,464 | 15,550 | 11,512 | ||||||||||||||
Total noninterest income | 62,453 | 113,453 | 41,048 | 221,361 | 199,044 | ||||||||||||||
Noninterest expense: | |||||||||||||||||||
Compensation and benefits | 38,604 | 43,932 | 32,102 | 114,867 | 100,631 | ||||||||||||||
Refund transfer product expense | 2,435 | 6,146 | (139 | ) | 8,642 | 7,482 | |||||||||||||
Tax advance product expense | (25 | ) | 2,189 | (11 | ) | 2,534 | 2,820 | ||||||||||||
Card processing | 6,809 | 7,212 | 7,128 | 20,138 | 19,432 | ||||||||||||||
Occupancy and equipment expense | 7,381 | 6,748 | 6,502 | 21,017 | 20,169 | ||||||||||||||
Operating lease equipment depreciation | 8,122 | 7,419 | 8,536 | 23,122 | 25,237 | ||||||||||||||
Legal and consulting | 5,680 | 6,045 | 4,660 | 16,972 | 15,242 | ||||||||||||||
Intangible amortization | 2,013 | 2,757 | 2,636 | 6,784 | 8,714 | ||||||||||||||
Impairment expense | 505 | 554 | — | 2,217 | 750 | ||||||||||||||
Other expense | 9,999 | 12,969 | 9,827 | 33,775 | 38,291 | ||||||||||||||
Total noninterest expense | 81,523 | 95,971 | 71,241 | 250,068 | 238,768 | ||||||||||||||
Income before income tax expense | 44,793 | 61,042 | 16,851 | 138,626 | 99,005 | ||||||||||||||
Income tax expense (benefit) | 4,934 | 1,133 | (2,426 | ) | 9,600 | 3,870 | |||||||||||||
Net income before noncontrolling interest | 39,859 | 59,909 | 19,277 | 129,026 | 95,135 | ||||||||||||||
Net income attributable to noncontrolling interest | 1,158 | 843 | 1,087 | 3,221 | 3,573 | ||||||||||||||
Net income attributable to parent | $ | 38,701 | $ | 59,066 | $ | 18,190 | $ | 125,805 | $ | 91,562 | |||||||||
Less: Allocation of Earnings to participating securities(1) | 729 | 1,113 | 432 | 2,411 | 2,097 | ||||||||||||||
Net income attributable to common shareholders(1) | 37,972 | 57,953 | 17,758 | 123,394 | 89,465 | ||||||||||||||
Earnings per common share | |||||||||||||||||||
Basic | $ | 1.21 | $ | 1.84 | $ | 0.53 | $ | 3.87 | $ | 2.54 | |||||||||
Diluted | $ | 1.21 | $ | 1.84 | $ | 0.53 | $ | 3.87 | $ | 2.54 | |||||||||
Shares used in computing earnings per common share | |||||||||||||||||||
Basic | 31,320,893 | 31,520,505 | 33,794,154 | 31,880,653 | 35,180,068 | ||||||||||||||
Diluted | 31,338,947 | 31,535,022 | 33,815,651 | 31,900,597 | 35,201,702 |
(1) Amounts presented are used in the two-class earnings per common share calculation.
Average Balances, Interest Rates and Yields
The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and in rates. Only the yield/rate reflects tax-equivalent adjustments. Nonaccruing loans and leases have been included in the table as loans carrying a zero yield.
Three Months Ended | 2021 | 2020 | |||||||||||||||||||
(Dollars in Thousands) | Average Outstanding Balance | Interest Earned / Paid | Yield / Rate(1) | Average Outstanding Balance | Interest Earned / Paid | Yield / Rate(1) | |||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Cash and fed funds sold | $ | 1,867,988 | $ | 528 | 0.11 | % | $ | 2,692,270 | $ | 783 | 0.12 | % | |||||||||
Mortgage-backed securities | 882,042 | 3,446 | 1.57 | % | 342,174 | 2,269 | 2.67 | % | |||||||||||||
Tax exempt investment securities | 263,401 | 884 | 1.70 | % | 417,042 | 1,658 | 2.02 | % | |||||||||||||
Asset-backed securities | 438,163 | 1,651 | 1.51 | % | 336,562 | 1,770 | 2.11 | % | |||||||||||||
Other investment securities | 246,493 | 1,187 | 1.93 | % | 197,643 | 1,014 | 2.06 | % | |||||||||||||
Total investments | 1,830,099 | 7,168 | 1.62 | % | 1,293,420 | 6,711 | 2.22 | % | |||||||||||||
Total commercial finance | 2,616,942 | 48,641 | 7.46 | % | 2,160,175 | 40,375 | 7.52 | % | |||||||||||||
Total consumer finance | 241,813 | 3,916 | 6.50 | % | 247,824 | 4,635 | 7.52 | % | |||||||||||||
Total tax services | 91,804 | 604 | 2.64 | % | 39,845 | — | — | % | |||||||||||||
Total warehouse finance | 332,759 | 5,151 | 6.21 | % | 304,839 | 4,582 | 6.05 | % | |||||||||||||
National lending loans and leases | 3,283,318 | 58,312 | 7.12 | % | 2,752,683 | 49,592 | 7.25 | % | |||||||||||||
Community Banking loans | 335,415 | 3,975 | 4.75 | % | 870,245 | 10,319 | 4.77 | % | |||||||||||||
Total loans and leases | 3,618,733 | 62,287 | 6.90 | % | 3,622,928 | 59,911 | 6.65 | % | |||||||||||||
Total interest-earning assets | $ | 7,316,820 | $ | 69,983 | 3.85 | % | $ | 7,608,618 | $ | 67,406 | 3.59 | % | |||||||||
Noninterest-earning assets | 841,738 | 830,589 | |||||||||||||||||||
Total assets | $ | 8,158,558 | $ | 8,439,206 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing checking(2) | $ | 336,576 | $ | — | — | % | $ | 226,382 | $ | — | — | % | |||||||||
Savings | 107,803 | 5 | 0.02 | % | 55,572 | 1 | 0.01 | % | |||||||||||||
Money markets | 58,517 | 66 | 0.45 | % | 40,091 | 33 | 0.33 | % | |||||||||||||
Time deposits | 11,877 | 27 | 0.91 | % | 25,392 | 113 | 1.78 | % | |||||||||||||
Wholesale deposits | 86,295 | 90 | 0.42 | % | 817,414 | 2,983 | 1.47 | % | |||||||||||||
Total interest-bearing deposits | 601,068 | 188 | 0.13 | % | 1,164,852 | 3,130 | 1.08 | % | |||||||||||||
Overnight fed funds purchased | 11 | — | 0.25 | % | 59,055 | 48 | 0.33 | % | |||||||||||||
FHLB advances | — | — | — | % | 110,000 | 670 | 2.45 | % | |||||||||||||
Subordinated debentures | 73,907 | 1,148 | 6.23 | % | 73,738 | 1,153 | 6.29 | % | |||||||||||||
Other borrowings | 20,657 | 172 | 3.35 | % | 27,032 | 268 | 3.98 | % | |||||||||||||
Total borrowings | 94,575 | 1,320 | 5.60 | % | 269,825 | 2,139 | 3.19 | % | |||||||||||||
Total interest-bearing liabilities | 695,643 | 1,508 | 0.87 | % | 1,434,677 | 5,269 | 1.48 | % | |||||||||||||
Noninterest-bearing deposits | 6,380,371 | — | — | % | 6,057,314 | — | — | % | |||||||||||||
Total deposits and interest-bearing liabilities | $ | 7,076,014 | $ | 1,508 | 0.09 | % | $ | 7,491,991 | $ | 5,269 | 0.28 | % | |||||||||
Other noninterest-bearing liabilities | 225,862 | 122,940 | |||||||||||||||||||
Total liabilities | 7,301,876 | 7,614,931 | |||||||||||||||||||
Shareholders' equity | 856,682 | 824,276 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 8,158,558 | $ | 8,439,206 | |||||||||||||||||
Net interest income and net interest rate spread including noninterest-bearing deposits | $ | 68,475 | 3.76 | % | $ | 62,137 | 3.30 | % | |||||||||||||
Net interest margin | 3.75 | % | 3.28 | % | |||||||||||||||||
Tax-equivalent effect | 0.02 | % | 0.02 | % | |||||||||||||||||
Net interest margin, tax-equivalent(3) | 3.77 | % | 3.31 | % |
(1) Tax rate used to arrive at the TEY for the three months ended
(2) Of the total balance,
(3) Net interest margin expressed on a fully-taxable-equivalent basis ("net interest margin, tax-equivalent") is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.
Selected Financial Information
As of and For the Three Months Ended | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||
Equity to total assets | 12.43 | % | 8.53 | % | 11.19 | % | 13.91 | % | 9.45 | % | |||||||||
Book value per common share outstanding | $ | 27.46 | $ | 26.16 | $ | 24.93 | $ | 24.66 | $ | 23.96 | |||||||||
Tangible book value per common share outstanding | $ | 16.67 | $ | 15.31 | $ | 14.23 | $ | 14.44 | $ | 13.76 | |||||||||
Tangible book value per common share outstanding excluding AOCI | $ | 16.20 | $ | 14.91 | $ | 13.61 | $ | 13.93 | $ | 13.53 | |||||||||
Common shares outstanding | 31,919,780 | 31,926,008 | 32,620,251 | 34,360,890 | 34,631,160 | ||||||||||||||
Nonperforming assets to total assets | 0.64 | % | 0.48 | % | 0.73 | % | 0.79 | % | 0.64 | % | |||||||||
Nonperforming loans and leases to total loans and leases | 1.17 | % | 1.17 | % | 1.18 | % | 0.97 | % | 1.10 | % | |||||||||
Net interest margin | 3.75 | % | 3.07 | % | 4.65 | % | 3.77 | % | 3.28 | % | |||||||||
Net interest margin, tax-equivalent | 3.77 | % | 3.08 | % | 4.67 | % | 3.79 | % | 3.31 | % | |||||||||
Return on average assets | 1.90 | % | 2.22 | % | 1.73 | % | 0.69 | % | 0.86 | % | |||||||||
Return on average equity | 18.07 | % | 28.93 | % | 13.91 | % | 6.21 | % | 8.83 | % | |||||||||
Full-time equivalent employees | 1,109 | 1,075 | 1,038 | 1,015 | 999 |
Non-GAAP Reconciliation
Efficiency Ratio | For the last twelve months ended | ||||||||||||||||||
(Dollars in Thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||
Noninterest Expense - GAAP | $ | 330,352 | $ | 320,070 | $ | 315,828 | $ | 319,051 | $ | 314,911 | |||||||||
Net Interest Income | 272,837 | 266,499 | 260,386 | 259,038 | 260,142 | ||||||||||||||
Noninterest Income | 262,111 | 240,706 | 247,766 | 239,794 | 235,024 | ||||||||||||||
Total Revenue: GAAP | $ | 534,948 | $ | 507,205 | $ | 508,152 | $ | 498,832 | $ | 495,166 | |||||||||
Efficiency Ratio, last twelve months | 61.75 | % | 63.10 | % | 62.15 | % | 63.96 | % | 63.60 | % |
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