- 2019 Fiscal Fourth Quarter Net Income of $20.2 million, or $0.53 Per Diluted Share -

- Fiscal 2019 Net Income of $97.0 million, or $2.49 Per Diluted Share -

- Fiscal 2019 Earnings Per Share up 49% Versus Fiscal 2018 -

SIOUX FALLS, S.D., Oct. 24, 2019 (GLOBE NEWSWIRE) -- Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the “Company”) reported net income of $20.2 million, or $0.53 per diluted share, for the three months ended September 30, 2019, compared to net income of $8.7 million, or $0.24 per diluted share, for the three months ended September 30, 2018. The Company reported record net income of $97.0 million, or $2.49 per diluted share, for the fiscal year ended September 30, 2019, compared to net income of $51.6 million, or $1.67 per diluted share, for the fiscal year ended September 30, 2018.

“Earnings for the full fiscal year nearly doubled year-over-year, and more than doubled in the fiscal fourth quarter compared to the same period last year. This is reflective of the earnings power of the Company following our merger with Crestmark,” said President and CEO Brad Hanson. “Looking ahead, we remain focused on delivering against the key initiatives we have outlined with the goal of driving long-term value to shareholders. Finally, we continued to return excess capital to shareholders via quarterly dividends and ongoing share repurchases and plan to maintain flexibility as we continue to optimize our capital structure.”

Highlights for the 2019 Fiscal Fourth Quarter and Year Ended September 30, 2019

  • Total gross loans and leases at September 30, 2019 increased 24% to $3.65 billion compared to September 30, 2018, and increased by $25.5 million, or 1%, when compared to June 30, 2019.
  • Average deposits from the payments division increased $271.1 million, or 11%, to $2.63 billion for the 2019 fiscal fourth quarter when compared to the same quarter of fiscal 2018.
  • Total revenue for the fiscal 2019 fourth quarter was $101.6 million, an increase of 39% from the same period of the prior year. Total revenue for the fiscal year ended September 30, 2019 was $486.8 million, an increase of 54% from the fiscal year ended September 30, 2018.
  • Net interest income was $65.6 million for the 2019 fiscal fourth quarter, an increase of $17.1 million, or 35%, compared to $48.5 million for the fourth quarter of fiscal 2018. Total fiscal year 2019 net interest income was $264.2 million, representing a $133.7 million increase over the prior fiscal year.
  • Net interest margin ("NIM") was 4.95% for the fiscal fourth quarter of 2019, an increase from 4.05% over the same period of the prior year, while the tax-equivalent net interest margin ("NIM, TE") increased to 5.00% from 4.27% over that same period. NIM for the 2019 fiscal year was 4.91% compared to 3.14% during fiscal year 2018 while NIM, TE increased to 5.02% for fiscal year 2019 from 3.41% for fiscal year 2018.
  • The Company recognized $3.5 million pre-tax, or $0.07 per share on an after-tax basis, in compensation and benefits expense charges during the fiscal 2019 fourth quarter related to organizational changes, including severance, to further support its key strategic initiatives and drive enhanced operating leverage.
  • Repurchased $3.5 million, or 106,038 shares at an average price of $33.01 per share during the fiscal 2019 fourth quarter. For the 2019 fiscal year, the Company repurchased an aggregate of $46.5 million, or 1,680,772 shares at an average price of $27.67 per share. As of September 30, 2019, 319,228 shares remained available for repurchase under the common stock share repurchase program that was announced during the fiscal 2019 second quarter.

Net Interest Income
Net interest income for the fiscal 2019 fourth quarter was $65.6 million, an increase of 35% from the same quarter in 2018. The increase was driven primarily by growth in loans and leases, largely attributable to the Company's commercial, consumer and warehouse finance portfolios.

During the fourth quarter of fiscal 2019, loan and lease interest income grew by $25.5 million, when compared to the same quarter in fiscal 2018, offset in part by an increase in interest expense of $3.5 million. The quarterly average outstanding balance of loans and leases as a percentage of interest-earning assets for the quarter ended September 30, 2019 increased to 71%, from 52% for the quarter ended September 30, 2018, while the quarterly average balance of total investments as a percentage of interest-earning assets decreased to 28% from 46% over that same period. The Company’s average interest-earning assets for the fiscal 2019 fourth quarter grew by $515.9 million, or 11%, to $5.26 billion from the same quarter of the prior year, primarily as a result of growth in loans and leases in the Company's commercial finance portfolio.

NIM was 4.95% in the fiscal 2019 fourth quarter, an increase of 90 basis points from 4.05% in the fourth quarter of fiscal 2018. The net effect of purchase accounting accretion contributed 14 basis points to NIM for the fourth quarter of fiscal 2019 and 12 basis points to NIM for the same period of the prior year.

The overall reported tax-equivalent yield (“TEY”) on average-earning asset yields increased by 90 basis points to 6.15% when comparing the fiscal 2019 fourth quarter to the fiscal 2018 fourth quarter, driven primarily by the Company's improved earning asset mix, which reflects higher balances for the national lending portfolio. The fiscal 2019 fourth quarter TEY on the securities portfolio was 2.83% compared to 3.09% for the same period of the prior fiscal year.

The Company's cost of funds for all deposits and borrowings averaged 1.17% during the fiscal 2019 fourth quarter, compared to 1.01% for the fiscal 2018 fourth quarter. This increase was primarily due to an increase in the cost of wholesale funding, including brokered deposits. The Company's overall cost of deposits was 0.95% in the fiscal fourth quarter of 2019, compared to 0.78% in the same quarter of fiscal 2018.

Noninterest Income
Fiscal 2019 fourth quarter noninterest income was $36.0 million, an increase of 46% over the same quarter of fiscal 2018, which was due in large part to increases in rental income and gain on sale of loans and leases, primarily as a result of the Crestmark merger. Also contributing to the increase were growth in deposit fees and an improvement in gain (loss) on sale of securities. Partially offsetting the increase were decreases in card fee income and other income over that same period of the prior fiscal year. The card fee income decrease was primarily related to the transition of certain fees to deposit fees.

Noninterest Expense
Noninterest expense increased to $76.1 million, or 14%, for the fiscal 2019 fourth quarter, compared to the same quarter in fiscal 2018, primarily due to increases in compensation and benefits, operating lease depreciation expense, and occupancy and equipment expense. These increases were primarily a result of the Crestmark merger. The increase in noninterest expense was partially offset by a decrease in legal and consulting expenses when comparing the fiscal 2019 fourth quarter to the same period of the prior year. The Company recognized $3.5 million pre-tax in compensation and benefits expense related to organizational changes, including severance, during the fiscal fourth quarter of 2019.

Income Tax Expense
The Company recorded an income tax benefit of $0.1 million for the fiscal 2019 fourth quarter, compared to an income tax benefit of $7.6 million for the fiscal 2018 fourth quarter. The fiscal 2018 fourth quarter results included a $4.6 million income tax benefit recognized by the Company as a result of amending a historical tax return of Crestmark, Bancorp, Inc. Also contributing to the reduced income tax benefit was an increase in net income before tax during the fourth quarter of fiscal 2019 compared to the same period of the prior year. For the 2019 fiscal year, our effective tax rate was (3.4)%, compared to 9.0% for the 2018 fiscal year.

The Company originated $19.7 million in solar leases during the fiscal 2019 fourth quarter, compared to $15.0 million in solar leases originated during the fiscal 2018 fourth quarter, and originated $104.4 million in solar leases for the 2019 fiscal year. Investment tax credits related to solar leases are recognized ratably based on income throughout each fiscal year. The timing and impact of future solar tax credits are expected to vary from period to period, and Meta intends to undertake only those tax credit opportunities that meet the Company's underwriting and return criteria.

Investments, Loans and Leases

(Dollars in thousands)September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018
          
Total investments$1,407,257  $1,502,640  $1,649,754  $1,855,791  $2,019,968 
          
Loans held for sale         
Consumer credit products122,299  45,582  42,342  24,233  — 
SBA/USDA(1)26,478  17,257  17,403  9,327  15,606 
Total loans held for sale148,777  62,839  59,745  33,560  15,606 
          
National Lending         
Asset based lending688,520  615,309  572,210  554,072  477,917 
Factoring296,507  320,344  287,955  284,912  284,221 
Lease financing381,602  341,957  321,414  290,889  265,315 
Insurance premium finance361,105  358,772  307,875  330,712  337,877 
SBA/USDA88,831  99,791  77,481  67,893  59,374 
Other commercial finance99,665  99,677  98,956  89,402  85,145 
Commercial Finance(2)1,916,230  1,835,850  1,665,891  1,617,880  1,509,849 
Consumer credit products106,794  155,539  139,617  96,144  80,605 
Other consumer finance161,404  164,727  170,824  182,510  189,756 
Consumer Finance268,198  320,266  310,441  278,654  270,361 
Tax Services2,240  24,410  84,824  76,575  1,073 
Warehouse Finance262,924  250,003  186,697  176,134  65,000 
Total National Lending loans and leases2,449,592  2,430,529  2,247,853  2,149,243  1,846,283 
Community Banking         
Commercial real estate and operating883,932  877,412  869,917  863,753  790,890 
Consumer one-to-four family real estate and other259,425  256,853  257,079  256,341  247,318 
Agricultural real estate and operating58,464  61,169  60,167  58,971  60,498 
Total Community Banking loans1,201,821  1,195,434  1,187,163  1,179,065  1,098,706 
Total gross loan and leases3,651,413  3,625,963  3,435,016  3,328,308  2,944,989 
Allowance for loan and lease losses(29,149) (43,505) (48,672) (21,290) (13,040)
Net deferred loan and lease origination fees (costs)7,434  5,068  2,964  1,190  (250)
Total loan and leases, net of allowance$3,629,698  $3,587,526  $3,389,308  $3,308,208  $2,931,699 

(1) The September 30, 2019 balance included $0.7 million of an interest rate mark premium related to the acquired loans and leases from the Crestmark acquisition.
(2) The September 30, 2019 balance included $5.6 million and $2.6 million of credit and interest rate mark discounts, respectively, related to the acquired loans and leases from the Crestmark acquisition.

The Company continued to utilize sales of securities and cash flow from its amortizing securities portfolio to fund loan and lease growth. Investment securities totaled $1.41 billion at September 30, 2019, as compared to $2.02 billion at September 30, 2018.

Total gross loans and leases receivable increased $706.4 million, or 24%, to $3.65 billion at September 30, 2019 from $2.94 billion at September 30, 2018, which was primarily attributable to growth in the commercial finance and warehouse finance portfolios.

At September 30, 2019, commercial finance loans, which comprised 52% of the Company's gross loan and lease portfolio, totaled $1.92 billion, reflecting growth of $80.4 million, or 4%, from June 30, 2019.

Community banking loans grew $103.1 million, or 9%, at September 30, 2019 compared to September 30, 2018.

Asset Quality
The Company’s allowance for loan and lease losses was $29.1 million at September 30, 2019, compared to $13.0 million at September 30, 2018, which difference was driven primarily by increases in the allowance in the commercial and consumer finance portfolios of $13.3 million and $2.6 million, respectively. The Company's allowance at September 30, 2019 decreased $14.4 million compared to June 30, 2019, primarily from net charge-offs of $18.5 million during the 2019 fiscal fourth quarter, of which $15.4 million were related to charging-off a majority of the remaining balances of tax services loans. The timing and amount of these net charge-offs within the tax services portfolio are consistent with the same period of the prior year.

The following table presents, for the periods indicated, the allowance for loan and lease loss activity.

(Unaudited)Three Months Ended Year Ended
Allowance for loan and lease loss activitySeptember 30, 2019 June 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
(Dollars in thousands)         
Beginning balance$43,505  $48,672  $21,950  $13,040  $7,534 
Provision - tax services loans(9) 914  1,009  24,873  21,344 
Provision - all other loans and leases4,130  8,198  3,697  30,776  8,089 
Charge-offs - tax services loans(15,426) (9,627) (11,295) (25,096) (21,802)
Charge-offs - all other loans and leases(3,351) (5,124) (3,420) (17,758) (4,162)
Recoveries - tax services loans10  36  31  223  453 
Recoveries - all other loans and leases290  436  1,068  3,091  1,584 
Ending balance$29,149  $43,505  $13,040  $29,149  $13,040 

Provision for loan and lease losses was $4.1 million for the quarter ended September 30, 2019, compared to $4.7 million for the comparable period in the prior fiscal year. The decrease in provision was primarily driven by a decrease in loan balances within the consumer finance portfolio, as well as a decrease in provision in the tax services and community bank portfolios to maintain allowance levels. As a partial offset, the provision in the commercial finance portfolio for the quarter ended September 30, 2019 increased year-over-year due to related loan and lease growth. Net charge-offs were $18.5 million for the quarter ended September 30, 2019, compared to $13.6 million for the quarter ended September 30, 2018.

For fiscal year 2019, the Company recorded a provision for loan and lease losses of $55.7 million, compared to $29.4 million for the prior fiscal year, primarily driven by loan and lease growth and increased net charge-offs within the commercial finance portfolio.

The Company’s nonperforming assets at September 30, 2019 were $56.5 million, representing 0.91% of total assets, compared to $51.0 million, or 0.84% of total assets at June 30, 2019 and $41.8 million, or 0.72% of total assets, at September 30, 2018. At September 30, 2019, foreclosed and repossessed assets were $29.5 million, representing 0.48% of total assets, compared to $29.5 million, or 0.48% of total assets at June 30, 2019 and $31.6 million, or 0.54% of total assets, at September 30, 2018. For each of these periods, the outstanding foreclosed and repossessed asset balance was primarily related to a previously disclosed agricultural relationship.

Deposits, Borrowings and Other Liabilities
Total average deposits for the 2019 fiscal fourth quarter increased by $466.6 million, or 11%, compared to the same period in fiscal 2018. Average wholesale deposits increased $265.5 million, or 20%, and noninterest-bearing checking deposits increased $219.9 million, or 9%, for the 2019 fiscal fourth quarter when compared to the same period in fiscal 2018. Average deposits from the payments division increased $271.1 million, or 11%, to $2.63 billion for the 2019 fiscal fourth quarter when compared to the same quarter of fiscal 2018.

The average balance of total deposits and interest-bearing liabilities was $5.15 billion for the three-month period ended September 30, 2019, compared to $4.58 billion for the same period in fiscal 2018, representing an increase of 12%.

Total end-of-period deposits decreased 2% to $4.34 billion at September 30, 2019, compared to $4.43 billion at September 30, 2018. The decrease in end-of-period deposits was primarily a result of decreases in certificates of deposits and noninterest-bearing checking deposits. The decrease in noninterest-bearing checking deposits is related to the cyclicality of the Company's business, as a portion of its noninterest-bearing deposit base can fluctuate depending on the day of the week, primarily related to payroll processing timing. As noted above, average noninterest-bearing checking deposits increased 9% for the 2019 fiscal fourth quarter when compared to the same period in fiscal 2018.

Regulatory Capital
The Company and MetaBank remained above the federal regulatory minimum capital requirements at September 30, 2019 and continued to be classified as well-capitalized institutions. Regulatory capital ratios of the Company and the Bank 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.

As of the dates indicatedSeptember 30,
 2019		June 30,
 2019		March 31,
 2019		December 31,
2018		September 30,
2018
Company     
Tier 1 leverage capital ratio8.33%8.05%7.45%7.90%8.50%
Common equity Tier 1 capital ratio10.35%10.19%10.94%10.10%10.56%
Tier 1 capital ratio10.71%10.55%11.31%10.47%10.97%
Total capital ratio13.01%13.22%14.20%12.69%13.18%
MetaBank     
Tier 1 leverage capital ratio9.65%9.37%8.42%9.01%9.75%
Common equity Tier 1 capital ratio12.31%12.22%12.72%11.87%12.50%
Tier 1 capital ratio12.37%12.27%12.76%11.91%12.56%
Total capital ratio13.02%13.26%13.92%12.41%12.89%

The following table provides 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)September 30,
 2019		June 30,
 2019		March 31,
 2019		December 31,
2018		September 30,
2018
 (Dollars in Thousands)
Total stockholders' equity$843,958 $822,901 $823,709 $770,728 $747,726 
Adjustments:     
  LESS: Goodwill, net of associated deferred tax liabilities304,020 302,850 302,768 299,037 299,456 
  LESS: Certain other intangible assets50,501 53,249 56,456 61,317 64,716 
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards15,569 13,858 7,381 4,720 — 
  LESS: Net unrealized gains (losses) on available-for-sale securities6,458 2,329 (10,022)(28,829)(33,114)
  LESS: Non-controlling interest4,047 3,508 3,528 3,267 3,574 
  LESS: Unrealized currency gains (losses)— — (242)(357)3 
Common Equity Tier 1 (1)463,363 447,107 463,840 431,573 413,091 
  Long-term debt and other instruments qualifying as Tier 113,661 13,661 13,661 13,661 13,661 
  Tier 1 minority interest not included in common equity tier 1 capital2,350 2,119 2,064 1,796 2,118 
Total Tier 1 capital479,374 462,887 479,565 447,030 428,870 
  Allowance for loan and lease losses29,272 43,641 48,812 21,422 13,185 
  Subordinated Debentures (net of issuance costs)73,644 73,605 73,566 73,528 73,491 
Total qualifying capital$582,290 $580,133 $601,963 $541,980 $515,546 

(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 and tangible common equity excluding AOCI, each of which is used in calculating tangible book value data, to Total Stockholders' Equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.

 September 30,
 2019		June 30,
 2019		March 31,
 2019		December 31,
2018		September 30,
2018
 (Dollars in Thousands)
Total Stockholders' Equity$843,958 $822,901 $823,709 $770,728 $747,726 
Less: Goodwill309,505 307,941 307,464 303,270 303,270 
Less: Intangible assets52,810 56,153 60,506 66,366 70,719 
  Tangible common equity481,643 458,807 455,739 401,092 373,737 
Less: Accumulated Other Comprehensive Income (Loss) ("AOCI")6,339 2,308 (10,264)(29,186)(33,111)
  Tangible common equity excluding AOCI (Loss)$475,304 $456,499 $466,003 $430,278 $406,848 

Future Outlook
The Company currently expects full-year fiscal 2020 GAAP earnings per common share to range between $3.30 to $3.50.

Conference Call
The Company will host a conference call and earnings webcast at 4:00 p.m. CDT (5:00 p.m. EDT) on October 24, 2019. 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 beginning approximately 10 minutes prior to start time. Please ask to join the Meta Financial conference call, and provide conference ID 6288753 upon request. International callers should dial (636) 812-6634. A webcast replay will also be archived at www.metafinancialgroup.com for one year.

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: 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; 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: maintaining our executive management team; the expected growth opportunities, beneficial synergies and/or operating efficiencies from the Crestmark acquisition may not be fully realized or may take longer to realize than expected; customer losses and business disruption related to the Crestmark acquisition; unanticipated or unknown losses and liabilities may be incurred by the Company following the Crestmark acquisition; the costs, risks and effects on the Company of the ongoing federal investigation and bankruptcy proceedings involving DC Solar Solutions, Inc., DC Solar Distribution, Inc., and their affiliates, including the potential financial impact of those matters on the net book value of Company assets leased to DC Solar Distribution and the Company’s ability to recognize certain investment tax credits associated with such assets; factors relating to the Company’s share repurchase program; actual changes in interest rates and the Fed Funds rate; additional changes in tax laws; 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 Congress and the United States Treasury in conjunction with bank regulatory agencies to stimulate the economy and protect the financial system; inflation, market, and monetary fluctuations; the timely and efficient development of, 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, including, in connection with the Company’s refund advance business, the risk of reduced volume of refund advance loans as a result of reduced customer demand for or acceptance of usage of Meta’s strategic partners’ refund advance products; 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, 2018, 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)

ASSETSSeptember 30, 2019June 30, 2019March 31, 2019December 31, 2018September 30, 2018
Cash and cash equivalents$126,545 $100,732 $156,461 $164,169 $99,977 
Investment securities available for sale, at fair value889,947 961,897 1,081,663 1,340,870 1,484,160 
Mortgage-backed securities available for sale, at fair value382,546 395,201 413,493 354,186 364,065 
Investment securities held to maturity, at cost127,582 138,128 146,992 153,075 163,893 
Mortgage-backed securities held to maturity, at cost7,182 7,414 7,606 7,661 7,850 
Loans held for sale148,777 62,839 59,745 33,560 15,606 
Loans and leases3,658,847 3,631,031 3,437,980 3,329,498 2,944,739 
Allowance for loan and lease losses(29,149)(43,505)(48,672)(21,290)(13,040)
Federal Home Loan Bank Stock, at cost30,916 17,236 7,436 15,600 23,400 
Accrued interest receivable20,400 19,722 20,281 22,076 22,016 
Premises, furniture, and equipment, net45,932 46,360 45,457 44,299 40,458 
Rental equipment, net208,537 184,732 140,087 146,815 107,290 
Bank-owned life insurance89,827 89,193 88,565 87,934 87,293 
Foreclosed real estate and repossessed assets29,494 29,514 29,548 31,548 31,638 
Goodwill309,505 307,941 307,464 303,270 303,270 
Intangible assets52,810 56,153 60,506 66,366 70,719 
Prepaid assets9,476 22,023 26,597 31,483 27,906 
Deferred taxes18,884 21,630 19,079 23,607 18,737 
Other assets54,832 52,831 49,754 48,038 35,090 
  Total assets$6,182,890 $6,101,072 $6,050,042 $6,182,765 5,835,067 
      
LIABILITIES AND STOCKHOLDERS’ EQUITY     
      
LIABILITIES     
Noninterest-bearing checking$2,358,010 $2,751,931 $3,034,428 $2,739,757 2,405,274 
Interest-bearing checking185,768 157,802 183,492 128,662 111,587 
Savings deposits49,773 52,179 59,978 52,229 54,765 
Money market deposits76,911 68,604 56,563 54,559 51,995 
Time certificates of deposit109,275 116,698 154,401 170,629 276,180 
Wholesale deposits1,557,268 1,628,000 1,481,445 1,790,611 1,531,186 
  Total deposits4,337,005 4,775,214 4,970,307 4,936,447 4,430,987 
Short-term borrowings646,019 146,613 11,583 231,293 425,759 
Long-term borrowings215,838 209,765 99,800 88,983 88,963 
Accrued interest payable9,414 12,350 9,239 11,280 7,794 
Accrued expenses and other liabilities130,656 134,229 135,404 144,034 133,838 
  Total liabilities5,338,932 5,278,171 5,226,333 5,412,037 5,087,341 
      
STOCKHOLDERS’ EQUITY     
Preferred stock— — — — — 
Common stock, $.01 par value378 379 395 394 393 
Common stock, Nonvoting, $.01 par value— — — — — 
Additional paid-in capital580,826 578,715 576,406 572,156 565,811 
Retained earnings252,813 238,004 258,600 228,453 213,048 
Accumulated other comprehensive income (loss)6,339 2,308 (10,264)(29,186)(33,111)
Treasury stock, at cost(445)(13)(4,956)(4,356)(1,989)
Total equity attributable to parent839,911 819,393 820,181 767,461 744,152 
Non-controlling interest4,047 3,508 3,528 3,267 3,574 
Total stockholders' equity843,958 822,901 823,709 770,728 747,726 
  Total liabilities and stockholders’ equity$6,182,890 $6,101,072 $6,050,042 $6,182,765 $5,835,067 


Condensed Consolidated Statements of Operations (Unaudited)

 Three Months Ended Year Ended
(Dollars in Thousands, Except Share and Per Share Data)September 30, 2019June 30, 2019September 30, 2018 September 30, 2019September 30, 2018
Interest and dividend income:      
Loans and leases, including fees$70,628 $69,732 $45,131  $274,528 $98,475 
Mortgage-backed securities2,768 3,063 3,724  11,390 15,479 
Other investments7,432 8,837 11,346  39,811 44,580 
 80,828 81,632 60,201  325,729 158,534 
Interest expense:      
Deposits10,917 10,395 8,057  46,648 15,163 
FHLB advances and other borrowings4,294 4,269 3,607  14,874 12,822 
 15,211 14,664 11,664  61,522 27,985 
       
Net interest income65,617 66,968 48,537  264,207 130,549 
       
Provision for loan and lease losses4,121 9,112 4,706  55,650 29,432 
       
Net interest income after provision for loan and lease losses61,496 57,856 43,831  208,557 101,117 
       
Noninterest income:      
Refund transfer product fees639 6,697 526  39,198 41,879 
Tax advance product fees(70)34 (36) 34,687 35,703 
Card fees18,043 19,537 19,536  79,982 94,446 
Rental income10,886 9,386 7,333  41,053 7,333 
Loan and lease fees1,107 1,012 1,025  4,292 4,470 
Bank-owned life insurance634 628 638  2,535 2,590 
Deposit fees2,725 2,335 1,487  9,090 4,451 
Gain (loss) on sale of securities available-for-sale, net80 440 (6,979) 729 (8,177)
Gain on sale of loans and leases1,380 1,913 355  5,244 355 
Loss on foreclosed real estate(93)— —  (278)(19)
Other income649 1,808 728  6,013 1,494 
Total noninterest income35,980 43,790 24,613  222,545 184,525 
       
Noninterest expense:      
Compensation and benefits38,461 35,176 30,093  155,811 109,044 
Refund transfer product expense48 287 85  7,526 11,750 
Tax advance product expense1 425 81  3,102 1,817 
Card processing5,008 4,613 5,485  23,677 26,283 
Occupancy and equipment7,265 7,136 5,653  28,071 19,740 
Operating lease equipment depreciation7,901 6,029 5,386  26,181 5,386 
Legal and consulting4,968 4,065 6,628  17,310 15,064 
Marketing1,195 368 1,037  2,688 2,674 
Data processing453 260 268  1,471 1,226 
Intangible amortization3,358 4,374 3,564  17,711 9,641 
Impairment expense— — 18  9,660 18 
Other expense7,485 9,735 8,342  39,952 25,589 
Total noninterest expense76,143 72,468 66,640  333,160 228,232 
       
Income before income tax expense21,333 29,178 1,804  97,942 57,410 
       
Income tax (benefit) expense(130)(1,158)(7,591) (3,374)5,117 
       
Net income before noncontrolling interest21,463 30,336 9,395  101,316 52,293 
Net income attributable to noncontrolling interest1,268 1,045 673  4,312 673 
Net income attributable to parent$20,195 $29,291 $8,722  $97,004 $51,620 
       
Earnings per common share(1)      
Basic$0.53 $0.75 $0.24  $2.49 $1.68 
Diluted$0.53 $0.75 $0.24  $2.49 $1.67 
Shares used in computing earnings per share(1)      
Basic37,868,788 38,903,266 35,711,400  38,880,919 30,737,499 
Diluted37,912,616 38,977,690 35,823,162  38,921,637 30,853,050 


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 reflects tax-equivalent adjustments. Non-accruing loans and leases have been included in the table as loans carrying a zero yield.

Three Months Ended September 30,2019 2018
(Dollars in Thousands)Average
Outstanding
Balance		 Interest
Earned /
Paid		 Yield /
Rate(1)		 Average
Outstanding
Balance		 Interest
Earned /
Paid		 Yield /
Rate(2)
Interest-earning assets:           
Cash and fed funds sold$68,435  $505  2.93% $60,946  $532  3.47%
Mortgage-backed securities396,075  2,768  2.77% 543,042  3,724  2.72%
Tax exempt investment securities555,285  2,743  2.48% 1,314,380  8,069  3.23%
Asset-backed securities307,080  2,615  3.38% 273,625  2,251  3.26%
Other investment securities204,695  1,569  3.04% 70,380  494  2.79%
Total investments1,463,135  9,695  2.83% 2,201,427  14,538  3.09%
Commercial finance loans and leases1,882,699  44,375  9.35% 1,091,459  27,035  9.83%
Consumer finance loans381,165  8,268  8.61% 245,405  5,043  8.15%
Tax services loans21,445  (13) (0.25)% 13,210  (14) (0.41)%
Warehouse finance loans249,022  3,913  6.24% 57,228  879  6.09%
National lending loans and leases2,534,331  56,543  8.85% 1,407,302  32,943  9.29%
Community banking loans1,195,214  14,085  4.68% 1,075,586  12,188  4.50%
Total loans and leases3,729,545  70,628  7.51% 2,482,888  45,131  7.21%
Total interest-earning assets5,261,115  $80,828  6.15% 4,745,261  $60,201  5.25%
Non-interest-earning assets869,171      635,317     
Total assets$6,130,286      $5,380,578     
            
Interest-bearing liabilities:           
Interest-bearing checking155,099  136  0.35% 90,627  56  0.24%
Savings49,846  9  0.07% 55,163  10  0.07%
Money markets71,793  157  0.86% 49,822  41  0.33%
Time deposits115,036  601  2.07% 214,946  926  1.71%
Wholesale deposits1,593,616  10,014  2.49% 1,328,128  7,024  2.10%
Total interest-bearing deposits1,985,390  10,917  2.18% 1,738,686  8,057  1.84%
Overnight fed funds purchased336,457  1,999  2.36% 362,076  2,051  2.25%
FHLB advances115,707  713  2.44% —  —  —%
Subordinated debentures73,618  1,162  6.26% 73,466  1,158  6.25%
Other borrowings45,302  420  3.68% 31,593  398  5.00%
Total borrowings571,084  4,294  2.98% 467,135  3,607  3.06%
Total interest-bearing liabilities2,556,474  15,211  2.36% 2,205,821  11,664  2.10%
Non-interest-bearing deposits2,595,386  —  —% 2,375,499  —  —%
Total deposits and interest-bearing liabilities5,151,860  $15,211  1.17% 4,581,320  $11,664  1.01%
Other non-interest-bearing liabilities144,703      146,148     
Total liabilities5,296,563      4,727,468     
Shareholders' equity833,723      653,110     
Total liabilities and shareholders' equity$6,130,286      $5,380,578     
Net interest income and net interest rate spread including non-interest-bearing deposits  $65,617  4.98%   $48,537  4.24%
            
Net interest margin    4.95%     4.05%
Tax equivalent effect    0.05%     0.22%
Net interest margin, tax-equivalent(3)    5.00%     4.27%

(1) Tax rate used to arrive at the TEY for the three months ended September 30, 2019 was 21%.
(2) Tax rate used to arrive at the TEY for the three months ended September 30, 2018 was 24.53%.
(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:September 30,
 2019		 June 30,
2019		 March 31,
2019		 December 31,
2018		 September 30,
2018
Equity to total assets13.65% 13.49% 13.61% 12.47% 12.81%
Book value per common share outstanding$22.32  $21.72  $20.88  $19.56  $19.09 
Tangible book value per common share outstanding$12.74  $12.11  $11.55  $10.18  $9.54 
Tangible book value per common share outstanding excluding AOCI$12.57  $12.05  $11.81  $10.92  $10.39 
Common shares outstanding37,807,064  37,878,205  39,450,938  39,405,508  39,167,280 
Non-performing assets to total assets0.91% 0.84% 0.68% 0.73% 0.72%
Non-performing loans and leases to total loans and leases0.70% 0.57% 0.28% 0.42% 0.35%
Net interest margin4.95% 5.07% 5.06% 4.60% 4.05%
Net interest margin, tax-equivalent5.00% 5.15% 5.18% 4.76% 4.27%
Return on average assets1.32% 1.91% 1.89% 1.03% 0.65%
Return on average equity9.69% 14.17% 16.18% 8.19% 5.34%
Full-time equivalent employees1,186  1,218  1,231  1,229  1,219 


Quarterly Amortization of Intangibles Expense
(Dollars in Thousands)ActualAnticipated
For the Three Months EndedSep 30,
 2019		Dec 31,
 2019		Mar 31,
 2020		Jun 30,
 2020		Sep 30,
 2020		Dec 31,
 2020		Mar 31,
 2021		Jun 30,
 2021		Sep 30,
 2021
          
Amortization of Intangibles(1)$3,358 $2,675 $3,400 $2,632 $2,277 $2,008 $2,752 $2,008 $1,756 

(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.

About Meta Financial Group®
Meta Financial Group, Inc. ® (Nasdaq: CASH) is the holding company for the financial services company MetaBank® (“Meta”). Founded in 1954, Meta has grown to operate in several different financial sectors: payments, commercial finance, tax services, community banking and consumer lending. Meta works with high-value niche industries, strategic-growth companies and technology adopters to grow their businesses and build more profitable customer relationships. Meta tailors solutions for bank and non-bank businesses, and provides a focused collaborative approach. The organization is helping to shape the evolving financial services landscape by directly investing in innovation and complementary businesses that strategically expand its suite of services. Meta has a national presence and over 1,200 employees, with corporate headquarters in Sioux Falls, S.D. For more information, visit the Meta Financial Group website or LinkedIn.

Investor Relations and Media Contact:
Brittany Kelley Elsasser
Director of Investor Relations
605.362.2423
bkelley@metabank.com

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