Meta Financial Group, Inc.® Announces Results for 2020 Fiscal Second Quarter
- 2020 Fiscal Second Quarter Net Income of
- Committed to Further Enhancing Financial Capacity and Flexibility -
- Suspends 2020 Outlook and Share Repurchase Program -
“Our fiscal second quarter, which has in the past been driven by our high volume tax businesses, was met with unprecedented uncertainty and market volatility associated with the spread of COVID-19. Our priorities are the health and safety of our employees and preserving access to the financial products our customers need to make it through these difficult times,” said President and CEO
Business Developments
- Through
April 20, 2020 , the Company authorized 502 applications, totaling$189.5 million in loan requests for the Paycheck Protection Program. - Effective
April 1, 2020 ,MetaBank, N.A. ("MetaBank" or the "Bank") converted from a federal thrift charter to a national bank charter, and the Company converted from a savings and loan holding company to a bank holding company that has elected treatment as a financial holding company. The Bank now operates under the name "MetaBank, National Association." The Company and the Bank effected these conversions in order to more closely align the Bank's regulatory charter to its current and future strategy with respect to becoming a national business that provides innovative financial solutions to consumers and businesses in niche markets often overlooked by traditional banks. As a result of the bank conversion, the Bank is no longer subject to qualified thrift lending requirements. - The sale of MetaBank's
Community Bank division toCentral Bank closed onFebruary 29, 2020 and included all of theCommunity Bank's deposits, branch locations, fixed assets, employees, and a portion of the Community Bank’s loan portfolio. The final deposit and loan balances included in the transaction totaled$290.5 million and$268.8 million , respectively. The remainingCommunity Bank loans not sold toCentral Bank , which totaled$896.2 million atMarch 31, 2020 , have been retained by the Company under a servicing agreement withCentral Bank . - MetaBank expanded its faster payments platform to include Visa Direct, Visa’s real-time push payments solution.
Visa clients can use Visa Direct to enable businesses and payment service providers to make payments, disbursements and remittances rapidly, conveniently and cost-effectively, to more than a billion eligible debit and prepaid cards worldwide. As a leading issuer of payments services, the addition of Visa Direct builds on MetaBank’s faster payments platform that also includes MasterCard Send, ACH origination, wire transfers and more.
Financial Highlights for the 2020 Fiscal Second Quarter Ended
- During the fiscal 2020 second quarter, the Company recognized a
$19.3 million gain on divestiture of theCommunity Bank division, partially offset by one-time expenses related to the transaction of$1.0 million resulting in a pre-tax net gain from the transaction of$18.3 million , or$0.51 per share. - Total gross loans and leases at
March 31, 2020 increased$175.8 million , or 5%, to$3.61 billion , compared toMarch 31, 2019 and increased$27.5 million , or 1% when compared toDecember 31, 2019 . - Average deposits from the payments divisions for the fiscal 2020 second quarter increased nearly 11% to
$3.31 billion when compared to the same quarter in fiscal 2019. - Total revenue for the fiscal 2020 second quarter was
$188.3 million , compared to$176.4 million for the same quarter in fiscal 2019, representing a 7% increase. - Net interest income for the fiscal 2020 second quarter was
$67.7 million , compared to$71.4 million in the comparable quarter in fiscal 2019. - Net interest margin ("NIM") decreased to 4.78% for the fiscal 2020 second quarter from 5.06% over the same period of the prior fiscal year, while the tax-equivalent net interest margin ("NIM, TE") decreased to 4.82% from 5.18% for that same period in fiscal 2019.
- During the quarter ended
March 31, 2020 , the Company repurchased 2,592,381 of its shares, at a weighted average price of$31.78 , under its share repurchase program, which is authorized throughDecember 31, 2022 . The Company suspended repurchase activity under its share repurchase program in March. The Company had 34,607,962 shares outstanding atMarch 31, 2020 .
COVID-19 Business Update
First and foremost, the Company is focused on the well-being of its employees, partners and customers. Preventative health measures were recently put in place to protect employees and customers including mandating remote work options and social distancing measures where possible, restricting non-essential business travel and enhancing preventative cleaning services at all office locations. The Company also enacted a COVID-19 Crisis Command Center consisting of leadership and business continuity planning resources throughout the organization to effectively monitor possible interruptions related to the pandemic and to ensure business continuity.
The Company's loan and lease portfolio is diversified by geography and industry. While asset quality remains strong at this time, the Company's focus is on actively monitoring and assisting customers. The following actions have been implemented:
- tighter underwriting standards;
- monitoring and placing limits on originations to industries and customers most adversely impacted by the COVID-19 pandemic, including, but not limited to transportation, travel, entertainment, and retail;
- contacting customers in order to assess their credit situations and needs;
- offering flexible repayment options to current customers, when appropriate; and
- utilizing CARES Act, SBA and
USDA programs and loan products to help our small business clients.
The Company increased its allowance for loan and lease losses during the fiscal second quarter as a result of the emerging COVID-19 pandemic. The Company will continue to diligently monitor the allowance for loan and lease losses and adjust as necessary in future periods to maintain an appropriate and supportable level.
The Company's capital position remained strong as of
2020 Tax Season Update
For the 2020 tax season, MetaBank originated
During the second quarter of fiscal 2020, total tax services product revenue was
Tax services product income, net of losses and direct product expenses, increased 1% when comparing the first six months of fiscal 2020 to the same period of the prior fiscal year.
Net Interest Income
Net interest income for the fiscal 2020 second quarter was
During the second quarter of fiscal year 2020, investment securities interest income decreased
NIM decreased to 4.78% for the fiscal 2020 second quarter from 5.06% for the comparable quarter in fiscal 2019. The net effect of purchase accounting accretion contributed three basis points to NIM for the fiscal 2020 second quarter as compared to six basis points and 18 basis points for the quarters ended
The overall reported tax-equivalent yield (“TEY”) on average earning asset yields decreased by 74 basis points to 5.64% for the fiscal 2020 second quarter compared to the fiscal 2019 second quarter, driven primarily by a lower interest rate environment. The fiscal 2020 second quarter TEY on the securities portfolio was 2.68% compared to 3.36% for the same period of the prior fiscal year.
The Company's cost of funds for all deposits and borrowings averaged 0.83% during the fiscal 2020 second quarter, compared to 1.17% for the fiscal 2019 second quarter. This decrease was primarily due to a decrease in overnight borrowings rates as well as an increase in the average balance of the Company's noninterest-bearing deposits. The Company's overall cost of deposits was 0.66% in the fiscal second quarter of 2020, compared to 1.06% in the same quarter of fiscal 2019.
Noninterest Income
Fiscal 2020 second quarter noninterest income was
Noninterest Expense
Noninterest expense decreased 17% to
Income Tax Expense
The Company recorded income tax expense of
The Company originated
Investments, Loans and Leases
Total investments | $ | 1,310,476 | $ | 1,337,840 | $ | 1,407,257 | $ | 1,502,640 | $ | 1,649,754 | |||||||||
Loans held for sale | |||||||||||||||||||
Consumer credit products | — | — | 122,299 | 45,582 | 42,342 | ||||||||||||||
SBA/ |
13,610 | 13,883 | 26,478 | 17,257 | 17,403 | ||||||||||||||
— | 250,383 | — | — | — | |||||||||||||||
Total loans held for sale | 13,610 | 264,266 | 148,777 | 62,839 | 59,745 | ||||||||||||||
National Lending | |||||||||||||||||||
Term lending(2) | 725,581 | 695,347 | 641,742 | 562,557 | 507,886 | ||||||||||||||
Asset based lending(2) | 250,211 | 250,633 | 250,465 | 229,573 | 230,557 | ||||||||||||||
Factoring | 285,495 | 285,776 | 296,507 | 320,344 | 287,955 | ||||||||||||||
Lease financing(2) | 238,788 | 223,715 | 177,915 | 165,136 | 155,181 | ||||||||||||||
Insurance premium finance | 332,800 | 349,299 | 361,105 | 358,772 | 307,875 | ||||||||||||||
SBA/ |
92,000 | 90,269 | 88,831 | 99,791 | 77,481 | ||||||||||||||
Other commercial finance | 101,472 | 99,617 | 99,665 | 99,677 | 98,956 | ||||||||||||||
Commercial Finance | 2,026,347 | 1,994,656 | 1,916,230 | 1,835,850 | 1,665,891 | ||||||||||||||
Consumer credit products | 113,544 | 115,843 | 106,794 | 155,539 | 139,617 | ||||||||||||||
Other consumer finance | 144,895 | 154,772 | 161,404 | 164,727 | 170,824 | ||||||||||||||
Consumer Finance | 258,439 | 270,615 | 268,198 | 320,266 | 310,441 | ||||||||||||||
Tax Services | 95,936 | 101,739 | 2,240 | 24,410 | 84,824 | ||||||||||||||
Warehouse Finance | 333,829 | 272,522 | 262,924 | 250,003 | 186,697 | ||||||||||||||
Total National Lending loans and leases | 2,714,551 | 2,639,532 | 2,449,592 | 2,430,529 | 2,247,853 | ||||||||||||||
Community Banking | |||||||||||||||||||
Commercial real estate and operating | 654,429 | 682,399 | 883,932 | 877,412 | 869,917 | ||||||||||||||
Consumer one-to-four family real estate and other | 205,046 | 220,588 | 259,425 | 256,853 | 257,079 | ||||||||||||||
Agricultural real estate and operating | 36,759 | 40,778 | 58,464 | 61,169 | 60,167 | ||||||||||||||
Total Community Banking loans | 896,234 | 943,765 | 1,201,821 | 1,195,434 | 1,187,163 | ||||||||||||||
Total gross loans and leases | 3,610,785 | 3,583,297 | 3,651,413 | 3,625,963 | 3,435,016 | ||||||||||||||
Allowance for loan and lease losses | (65,355 | ) | (30,176 | ) | (29,149 | ) | (43,505 | ) | (48,672 | ) | |||||||||
Net deferred loan and lease origination fees | 8,139 | 7,177 | 7,434 | 5,068 | 2,964 | ||||||||||||||
Total loans and leases, net of allowance(3) | $ | 3,553,569 | $ | 3,560,298 | $ | 3,629,698 | $ | 3,587,526 | $ | 3,389,308 | |||||||||
(1) The |
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(2) The Company updated the presentation of its loan and lease table beginning in the fiscal 2020 first quarter. The new presentation included a new category called term lending. Certain balances previously included in the asset based lending and lease financing categories were reclassified into the new term lending category during the fiscal 2020 first quarter. Prior period balances have been conformed to the new presentation. | |||||||||||||||||||
(3) As of |
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The Company continued to utilize cash flow from its amortizing securities portfolio to fund loan and lease growth. Investment securities totaled
On
Total gross loans and leases increased
At
Asset Quality
The Company’s allowance for loan and lease losses was
The following table presents the Company's allowance for loan and lease losses as a percentage of its total loans and leases.
As of the Period Ended | |||||||
(Unaudited) | |||||||
Commercial finance | 1.28 | % | 0.80 | % | 0.55 | % | |
Consumer finance | 1.74 | % | 2.22 | % | 2.08 | % | |
Tax services | 22.22 | % | 1.62 | % | 28.42 | % | |
Warehouse finance | 0.10 | % | 0.10 | % | 0.10 | % | |
National Lending | 1.92 | % | 0.90 | % | 1.77 | % | |
1.49 | % | 0.68 | % | 0.74 | % | ||
Total loans and leases | 1.81 | % | 0.84 | % | 1.42 | % | |
The Company assessed each of its loan and lease portfolios during the fiscal second quarter and increased its allowance for loan and lease losses as a percentage of total loans and leases in the commercial finance and community bank portfolios as a result of the emerging COVID-19 pandemic. The reduction in consumer finance was largely driven by lower trending charge-off rates on student loans mainly serving students in the medical community. Tax services coverage rates were driven only by typical seasonal activity and are not expected to be materially impacted by COVID-19 as the tax lending season is substantially complete. Warehouse finance remained largely unchanged due to the structure of the credit protections in place. The Company expects to continue to diligently monitor the allowance for loan and lease losses and adjust as necessary in future periods to maintain an appropriate and supportable level. When adding the
Activity in the allowance for loan and lease losses for the periods presented were as follows.
(Unaudited) | Three Months Ended | Six Months Ended | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Beginning balance | $ | 30,176 | $ | 29,149 | $ | 21,290 | $ | 29,149 | $ | 13,040 | |||||||||
Provision - tax services loans | 19,596 | 911 | 22,473 | 20,507 | 23,969 | ||||||||||||||
Provision - all other loans and leases | 17,700 | 2,496 | 10,845 | 20,196 | 18,448 | ||||||||||||||
Charge-offs - tax services loans | — | — | (1 | ) | — | (43 | ) | ||||||||||||
Charge-offs - all other loans and leases | (3,187 | ) | (3,918 | ) | (6,522 | ) | (7,105 | ) | (9,283 | ) | |||||||||
Recoveries - tax services loans | 74 | 739 | 84 | 813 | 176 | ||||||||||||||
Recoveries - all other loans and leases | 996 | 799 | 503 | 1,795 | 2,365 | ||||||||||||||
Ending balance | $ | 65,355 | $ | 30,176 | $ | 48,672 | $ | 65,355 | $ | 48,672 | |||||||||
Provision for loan and lease 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 | $ | 35,810 | $ | 7,487 | $ | 18,721 | $ | 62,018 | $ | 1,964,329 | $ | 2,026,347 | $ | 9,372 | $ | 16,024 | $ | 25,396 | |||||||||||||||||
Consumer finance | 1,781 | 1,078 | 1,345 | 4,204 | 254,235 | 258,439 | 1,345 | — | 1,345 | ||||||||||||||||||||||||||
Tax services | 668 | — | — | 668 | 95,268 | 95,936 | — | — | — | ||||||||||||||||||||||||||
Warehouse finance | — | — | — | — | 333,829 | 333,829 | — | — | — | ||||||||||||||||||||||||||
Total National Lending | 38,259 | 8,565 | 20,066 | 66,890 | 2,647,661 | 2,714,551 | 10,717 | 16,024 | 26,741 | ||||||||||||||||||||||||||
Total Community Banking | 1,012 | 2,735 | 4,723 | 8,470 | 887,764 | 896,234 | 2,905 | 1,818 | 4,723 | ||||||||||||||||||||||||||
Total loans and leases held for investment | $ | 39,271 | $ | 11,300 | $ | 24,789 | $ | 75,360 | $ | 3,535,425 | $ | 3,610,785 | $ | 13,622 | $ | 17,842 | $ | 31,464 | |||||||||||||||||
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 | $ | 24,127 | $ | 4,642 | $ | 17,732 | $ | 46,501 | $ | 1,948,155 | $ | 1,994,656 | $ | 5,733 | $ | 16,593 | $ | 22,326 | |||||||||||||||||
Consumer finance | 2,295 | 1,234 | 1,648 | 5,177 | 265,438 | 270,615 | 1,648 | — | 1,648 | ||||||||||||||||||||||||||
Tax services | — | — | — | — | 101,739 | 101,739 | — | — | — | ||||||||||||||||||||||||||
Warehouse finance | — | — | — | — | 272,522 | 272,522 | — | — | — | ||||||||||||||||||||||||||
Total National Lending | 26,422 | 5,876 | 19,380 | 51,678 | 2,587,854 | 2,639,532 | 7,381 | 16,593 | 23,974 | ||||||||||||||||||||||||||
Total Community Banking | 376 | 1,612 | 9 | 1,997 | 941,768 | 943,765 | — | 9 | 9 | ||||||||||||||||||||||||||
Total loans and leases held for investment | $ | 26,798 | $ | 7,488 | $ | 19,389 | $ | 53,675 | $ | 3,529,622 | $ | 3,583,297 | $ | 7,381 | $ | 16,602 | $ | 23,983 | |||||||||||||||||
The Company had not experienced significant asset deterioration as of
The Company's nonperforming assets at
The Company's nonperforming loans and leases at
Deposits, Borrowings and Other Liabilities
Total average deposits for the fiscal 2020 second quarter decreased by
The average balance of total deposits and interest-bearing liabilities was
Total end-of-period deposits decreased 20% 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 | 2020 |
2019 |
2019 |
2019 |
2019 |
|||||||||
Company | ||||||||||||||
Tier 1 leverage capital ratio | 7.28 | % | 8.28 | % | 8.33 | % | 8.05 | % | 7.45 | % | ||||
Common equity Tier 1 capital ratio | 10.24 | % | 10.10 | % | 10.35 | % | 10.19 | % | 10.94 | % | ||||
Tier 1 capital ratio | 10.60 | % | 10.46 | % | 10.71 | % | 10.55 | % | 11.31 | % | ||||
Total capital ratio | 13.57 | % | 12.74 | % | 13.01 | % | 13.22 | % | 14.20 | % | ||||
MetaBank | ||||||||||||||
Tier 1 leverage capital ratio | 8.52 | % | 9.70 | % | 9.65 | % | 9.37 | % | 8.42 | % | ||||
Common equity Tier 1 capital ratio | 12.36 | % | 12.18 | % | 12.31 | % | 12.22 | % | 12.72 | % | ||||
Tier 1 capital ratio | 12.41 | % | 12.24 | % | 12.37 | % | 12.27 | % | 12.76 | % | ||||
Total capital ratio | 13.66 | % | 12.90 | % | 13.02 | % | 13.26 | % | 13.92 | % | ||||
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) | 2020 |
2019 |
2019 |
2019 |
2019 |
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(Dollars in Thousands) | |||||||||||||||
Total stockholders' equity | $ | 805,074 | $ | 837,068 | $ | 843,958 | $ | 822,901 | $ | 823,709 | |||||
Adjustments: | |||||||||||||||
LESS: |
303,625 | 304,020 | 304,020 | 302,850 | 302,768 | ||||||||||
LESS: Certain other intangible assets | 44,909 | 47,855 | 50,501 | 53,249 | 56,456 | ||||||||||
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards | 11,589 | 16,876 | 15,569 | 13,858 | 7,381 | ||||||||||
LESS: Net unrealized gains (losses) on available-for-sale securities | 2,337 | 3,897 | 6,458 | 2,329 | (10,022 | ) | |||||||||
LESS: Non-controlling interest | 3,762 | 4,305 | 4,047 | 3,508 | 3,528 | ||||||||||
LESS: Unrealized currency gains (losses) | — | — | — | — | (242 | ) | |||||||||
Common Equity Tier 1(1) | 438,852 | 460,115 | 463,363 | 447,107 | 463,840 | ||||||||||
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 | 2,036 | 2,372 | 2,350 | 2,119 | 2,064 | ||||||||||
Total Tier 1 Capital | 454,549 | 476,148 | 479,374 | 462,887 | 479,565 | ||||||||||
Allowance for loan and lease losses | 53,580 | 30,239 | 29,272 | 43,641 | 48,812 | ||||||||||
Subordinated debentures (net of issuance costs) | 73,724 | 73,684 | 73,644 | 73,605 | 73,566 | ||||||||||
Total qualifying capital | $ | 581,853 | $ | 580,071 | $ | 582,290 | $ | 580,133 | $ | 601,963 | |||||
(1) Capital ratios were determined using the Basel III capital rules that became effective on |
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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.
2020 |
2019 |
2019 |
2019 |
2019 |
|||||||||||
(Dollars in Thousands) | |||||||||||||||
Total Stockholders' Equity | $ | 805,074 | $ | 837,068 | $ | 843,958 | $ | 822,901 | $ | 823,709 | |||||
Less: |
309,505 | 309,505 | 309,505 | 307,941 | 307,464 | ||||||||||
Less: Intangible assets | 46,766 | 50,151 | 52,810 | 56,153 | 60,506 | ||||||||||
Tangible common equity | 448,803 | 477,412 | 481,643 | 458,807 | 455,739 | ||||||||||
Less: Accumulated other comprehensive income (loss) ("AOCI") | 1,654 | 3,895 | 6,339 | 2,308 | (10,264 | ) | |||||||||
Tangible common equity excluding AOCI | $ | 447,149 | $ | 473,517 | $ | 475,304 | $ | 456,499 | $ | 466,003 | |||||
Outlook
Given the deteriorating economic environment and the uncertainty of the impact on the business following the emergence of the COVID-19 pandemic, the Company is suspending fiscal 2020 earnings per share guidance.
Conference Call
The Company will host a conference call and earnings webcast at
Forward-Looking Statements
The Company and
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 the Company and MetaBank; the extent in which the COVID-19 pandemic and measures taken in response thereto impact our business, our industry and the capital markets; customer retention; loan and other product demand; important components of the Company's statements of financial condition and operations; growth and expansion; expectations concerning the Company's acquisitions and divestitures, including potential benefits of, and other expectations for the Company in connection with, such transactions; new products and services, such as those offered by MetaBank or the Company's Payments divisions (which include Meta Payment Systems, Refund Advantage, EPS Financial and Specialty Consumer 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; 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, or other unusual and infrequently occurring events; 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 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 | $ | 108,733 | $ | 152,189 | $ | 126,545 | $ | 100,732 | $ | 156,461 | |||||||||
Investment securities available for sale, at fair value | 840,525 | 852,603 | 889,947 | 961,897 | 1,081,663 | ||||||||||||||
Mortgage-backed securities available for sale, at fair value | 355,094 | 362,120 | 382,546 | 395,201 | 413,493 | ||||||||||||||
Investment securities held to maturity, at cost | 108,105 | 116,313 | 127,582 | 138,128 | 146,992 | ||||||||||||||
Mortgage-backed securities held to maturity, at cost | 6,752 | 6,804 | 7,182 | 7,414 | 7,606 | ||||||||||||||
Loans held for sale | 13,610 | 264,266 | 148,777 | 62,839 | 59,745 | ||||||||||||||
Loans and leases | 3,618,924 | 3,590,474 | 3,658,847 | 3,631,031 | 3,437,980 | ||||||||||||||
Allowance for loan and lease losses | (65,355 | ) | (30,176 | ) | (29,149 | ) | (43,505 | ) | (48,672 | ) | |||||||||
Federal Home Loan |
29,944 | 13,796 | 30,916 | 17,236 | 7,436 | ||||||||||||||
Accrued interest receivable | 16,958 | 18,687 | 20,400 | 19,722 | 20,281 | ||||||||||||||
Premises, furniture, and equipment, net | 38,871 | 38,671 | 45,932 | 46,360 | 45,457 | ||||||||||||||
Rental equipment, net | 200,837 | 211,673 | 208,537 | 184,732 | 140,087 | ||||||||||||||
Bank-owned life insurance | 91,081 | 90,458 | 89,827 | 89,193 | 88,565 | ||||||||||||||
Foreclosed real estate and repossessed assets | 7,249 | 1,328 | 29,494 | 29,514 | 29,548 | ||||||||||||||
309,505 | 309,505 | 309,505 | 307,941 | 307,464 | |||||||||||||||
Intangible assets | 46,766 | 50,151 | 52,810 | 56,153 | 60,506 | ||||||||||||||
Prepaid assets | 9,727 | 14,813 | 9,476 | 22,023 | 26,597 | ||||||||||||||
Deferred taxes | 20,887 | 19,752 | 18,884 | 21,630 | 19,079 | ||||||||||||||
Other assets | 85,652 | 97,499 | 54,832 | 52,831 | 49,754 | ||||||||||||||
Total assets | $ | 5,843,865 | $ | 6,180,926 | 6,182,890 | $ | 6,101,072 | $ | 6,050,042 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
LIABILITIES | |||||||||||||||||||
Deposits held for sale | $ | — | $ | 288,975 | $ | — | $ | — | $ | — | |||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing checking | 2,900,484 | 2,927,967 | 2,358,010 | 2,751,931 | 3,034,428 | ||||||||||||||
Interest-bearing checking | 152,504 | 67,642 | 185,768 | 157,802 | 183,492 | ||||||||||||||
Savings deposits | 37,615 | 17,436 | 49,773 | 52,179 | 59,978 | ||||||||||||||
Money market deposits | 37,266 | 42,286 | 76,911 | 68,604 | 56,563 | ||||||||||||||
Time certificates of deposit | 25,492 | 23,454 | 109,275 | 116,698 | 154,401 | ||||||||||||||
Wholesale deposits | 809,043 | 1,438,820 | 1,557,268 | 1,628,000 | 1,481,445 | ||||||||||||||
Total deposits | 3,962,404 | 4,517,605 | 4,337,005 | 4,775,214 | 4,970,307 | ||||||||||||||
Short-term borrowings | 717,000 | 194,000 | 646,019 | 146,613 | 11,583 | ||||||||||||||
Long-term borrowings | 211,353 | 213,070 | 215,838 | 209,765 | 99,800 | ||||||||||||||
Accrued interest payable | 3,607 | 6,620 | 9,414 | 12,350 | 9,239 | ||||||||||||||
Accrued expenses and other liabilities | 144,427 | 123,588 | 130,656 | 134,229 | 135,404 | ||||||||||||||
Total liabilities | 5,038,791 | 5,343,858 | 5,338,932 | 5,278,171 | 5,226,333 | ||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common stock, |
346 | 372 | 378 | 379 | 395 | ||||||||||||||
Common stock, Nonvoting, |
— | — | — | — | — | ||||||||||||||
Additional paid-in capital | 590,682 | 587,678 | 580,826 | 578,715 | 576,406 | ||||||||||||||
Retained earnings | 212,027 | 244,005 | 252,813 | 238,004 | 258,600 | ||||||||||||||
Accumulated other comprehensive income (loss) | 1,654 | 3,895 | 6,339 | 2,308 | (10,264 | ) | |||||||||||||
(3,397 | ) | (3,187 | ) | (445 | ) | (13 | ) | (4,956 | ) | ||||||||||
Total equity attributable to parent | 801,312 | 832,763 | 839,911 | 819,393 | 820,181 | ||||||||||||||
Noncontrolling interest | 3,762 | 4,305 | 4,047 | 3,508 | 3,528 | ||||||||||||||
Total stockholders’ equity | 805,074 | 837,068 | 843,958 | 822,901 | 823,709 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 5,843,865 | $ | 6,180,926 | $ | 6,182,890 | $ | 6,101,072 | $ | 6,050,042 | |||||||||
Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data)
Three Months Ended | Six Months Ended | |||||||||||||||||
2020 |
2019 |
|||||||||||||||||
Interest and dividend income: | ||||||||||||||||||
Loans and leases, including fees | $ | 70,493 | $ | 68,702 | $ | 73,670 | $ | 139,195 | $ | 134,168 | ||||||||
Mortgage-backed securities | 2,493 | 2,389 | 2,861 | 4,882 | 5,559 | |||||||||||||
Other investments | 6,417 | 6,534 | 11,763 | 12,952 | 23,543 | |||||||||||||
79,403 | 77,625 | 88,294 | 157,029 | 163,270 | ||||||||||||||
Interest expense: | ||||||||||||||||||
Deposits | 8,242 | 9,340 | 14,740 | 17,583 | 25,336 | |||||||||||||
FHLB advances and other borrowings | 3,424 | 3,634 | 2,204 | 7,058 | 6,312 | |||||||||||||
11,666 | 12,974 | 16,944 | 24,641 | 31,648 | ||||||||||||||
Net interest income | 67,737 | 64,651 | 71,350 | 132,388 | 131,622 | |||||||||||||
Provision for loan for lease losses | 37,296 | 3,407 | 33,318 | 40,703 | 42,417 | |||||||||||||
Net interest income after provision for loan and lease losses | 30,441 | 61,244 | 38,032 | 91,685 | 89,205 | |||||||||||||
Noninterest income: | ||||||||||||||||||
Refund transfer product fees | 28,939 | 192 | 31,601 | 29,131 | 31,862 | |||||||||||||
Tax advance product fees | 29,536 | 2,276 | 33,038 | 31,812 | 34,723 | |||||||||||||
Payments card and deposit fees | 23,156 | 21,499 | 24,671 | 44,655 | 45,477 | |||||||||||||
Other bank and deposit fees | 381 | 487 | 474 | 868 | 957 | |||||||||||||
Rental income | 11,100 | 12,351 | 9,890 | 23,451 | 20,780 | |||||||||||||
Gain on sale of securities available-for-sale, net | — | — | 231 | — | 209 | |||||||||||||
Gain on divestitures | 19,275 | — | — | 19,275 | — | |||||||||||||
Gain (loss) on sale of other | 2,325 | (2,568 | ) | 2,230 | (244 | ) | 3,496 | |||||||||||
Other income | 5,801 | 3,246 | 2,890 | 9,047 | 5,272 | |||||||||||||
Total noninterest income | 120,513 | 37,483 | 105,025 | 157,995 | 142,776 | |||||||||||||
Noninterest expense: | ||||||||||||||||||
Compensation and benefits | 34,260 | 34,268 | 49,164 | 68,529 | 82,174 | |||||||||||||
Refund transfer product expense | 7,449 | 173 | 7,181 | 7,621 | 7,191 | |||||||||||||
Tax advance product expense | 1,698 | 1,132 | 2,225 | 2,830 | 2,677 | |||||||||||||
Card processing | 6,696 | 5,607 | 6,971 | 12,303 | 14,056 | |||||||||||||
Occupancy and equipment expense | 7,013 | 6,655 | 7,212 | 13,668 | 13,670 | |||||||||||||
Operating lease equipment depreciation | 8,421 | 8,280 | 4,485 | 16,701 | 12,251 | |||||||||||||
Legal and consulting | 5,909 | 4,674 | 4,308 | 10,583 | 8,277 | |||||||||||||
Intangible amortization | 3,402 | 2,676 | 5,596 | 6,077 | 9,978 | |||||||||||||
Impairment expense | 507 | 242 | 9,660 | 750 | 9,660 | |||||||||||||
Other expense | 16,374 | 12,091 | 13,452 | 28,464 | 24,615 | |||||||||||||
Total noninterest expense | 91,729 | 75,798 | 110,254 | 167,526 | 184,549 | |||||||||||||
Income before income tax expense | 59,225 | 22,929 | 32,803 | 82,154 | 47,432 | |||||||||||||
Income tax expense (benefit) | 5,617 | 680 | (395 | ) | 6,297 | (2,086 | ) | |||||||||||
Net income before noncontrolling interest | 53,608 | 22,249 | 33,198 | 75,857 | 49,518 | |||||||||||||
Net income attributable to noncontrolling interest | 1,304 | 1,181 | 1,078 | 2,485 | 2,000 | |||||||||||||
Net income attributable to parent | $ | 52,304 | $ | 21,068 | $ | 32,120 | $ | 73,372 | $ | 47,518 | ||||||||
Earnings per common share | ||||||||||||||||||
Basic | $ | 1.45 | $ | 0.56 | $ | 0.81 | $ | 2.00 | $ | 1.21 | ||||||||
Diluted | $ | 1.45 | $ | 0.56 | $ | 0.81 | $ | 2.00 | $ | 1.20 | ||||||||
Shares used in computing earnings per share | ||||||||||||||||||
Basic | 35,948,799 | 37,431,788 | 39,429,595 | 36,691,705 | 39,381,682 | |||||||||||||
Diluted | 35,970,296 | 37,465,878 | 39,496,832 | 36,713,339 | 39,450,263 | |||||||||||||
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. Non-accruing loans and leases have been included in the table as loans carrying a zero yield.
Three Months Ended |
2020 | 2019 | |||||||||||||||||||
(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 | $ | 196,754 | $ | 739 | 1.51 | % | $ | 281,069 | $ | 1,914 | 2.76 | % | |||||||||
Mortgage-backed securities | 358,103 | 2,493 | 2.80 | % | 374,096 | 2,861 | 3.10 | % | |||||||||||||
Tax exempt investment securities | 454,177 | 2,132 | 2.39 | % | 926,156 | 6,138 | 3.40 | % | |||||||||||||
Asset-backed securities | 304,674 | 2,271 | 3.00 | % | 285,783 | 2,677 | 3.80 | % | |||||||||||||
Other investment securities | 192,379 | 1,275 | 2.67 | % | 142,452 | 1,034 | 2.95 | % | |||||||||||||
Total investments | 1,309,333 | 8,171 | 2.68 | % | 1,728,487 | 12,710 | 3.36 | % | |||||||||||||
Commercial finance loans and leases | 2,020,358 | 41,643 | 8.29 | % | 1,649,973 | 41,954 | 10.31 | % | |||||||||||||
Consumer finance loans | 264,307 | 5,386 | 8.20 | % | 327,441 | 7,289 | 9.03 | % | |||||||||||||
Tax services loans | 516,491 | 6,351 | 4.95 | % | 369,331 | 8,204 | 9.01 | % | |||||||||||||
Warehouse finance loans | 314,474 | 4,785 | 6.12 | % | 181,781 | 2,789 | 6.22 | % | |||||||||||||
National lending loans and leases | 3,115,630 | 58,165 | 7.51 | % | 2,528,526 | 60,236 | 9.66 | % | |||||||||||||
Community banking loans | 1,080,142 | 12,328 | 4.59 | % | 1,181,294 | 13,434 | 4.61 | % | |||||||||||||
Total loans and leases | 4,195,772 | 70,493 | 6.76 | % | 3,709,820 | 73,670 | 8.05 | % | |||||||||||||
Total interest-earning assets | $ | 5,701,859 | $ | 79,403 | 5.64 | % | $ | 5,719,376 | $ | 88,294 | 6.38 | % | |||||||||
Non-interest-earning assets | 909,040 | 1,068,318 | |||||||||||||||||||
Total assets | $ | 6,610,899 | $ | 6,787,694 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing checking | $ | 182,107 | $ | 105 | 0.23 | % | $ | 148,640 | $ | 78 | 0.21 | % | |||||||||
Savings | 46,592 | 6 | 0.05 | % | 56,048 | 9 | 0.07 | % | |||||||||||||
Money markets | 68,421 | 153 | 0.90 | % | 57,932 | 92 | 0.64 | % | |||||||||||||
Time deposits | 84,940 | 427 | 2.02 | % | 148,384 | 715 | 1.95 | % | |||||||||||||
Wholesale deposits | 1,476,085 | 7,551 | 2.06 | % | 2,283,049 | 13,846 | 2.46 | % | |||||||||||||
Total interest-bearing deposits | 1,858,145 | 8,242 | 1.78 | % | 2,694,053 | 14,740 | 2.22 | % | |||||||||||||
Overnight fed funds purchased | 372,596 | 1,307 | 1.41 | % | 103,600 | 637 | 2.49 | % | |||||||||||||
FHLB advances | 110,000 | 670 | 2.45 | % | — | — | — | % | |||||||||||||
Subordinated debentures | 73,698 | 1,158 | 6.32 | % | 73,542 | 1,162 | 6.41 | % | |||||||||||||
Other borrowings | 28,714 | 289 | 4.04 | % | 39,610 | 405 | 4.14 | % | |||||||||||||
Total borrowings | 585,008 | 3,424 | 2.35 | % | 216,752 | 2,204 | 4.12 | % | |||||||||||||
Total interest-bearing liabilities | 2,443,153 | 11,666 | 1.92 | % | 2,910,805 | 16,944 | 2.36 | % | |||||||||||||
Noninterest-bearing deposits | 3,199,148 | — | — | % | 2,953,275 | — | — | % | |||||||||||||
Total deposits and interest-bearing liabilities | $ | 5,642,301 | $ | 11,666 | 0.83 | % | $ | 5,864,080 | $ | 16,944 | 1.17 | % | |||||||||
Other noninterest-bearing liabilities | 136,759 | 129,525 | |||||||||||||||||||
Total liabilities | 5,779,060 | 5,993,605 | |||||||||||||||||||
Shareholders' equity | 831,839 | 794,089 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 6,610,899 | $ | 6,787,694 | |||||||||||||||||
Net interest income and net interest rate spread including noninterest-bearing deposits | $ | 67,737 | 4.81 | % | $ | 71,350 | 5.21 | % | |||||||||||||
Net interest margin | 4.78 | % | 5.06 | % | |||||||||||||||||
Tax-equivalent effect | 0.04 | % | 0.12 | % | |||||||||||||||||
Net interest margin, tax-equivalent(2) | 4.82 | % | 5.18 | % | |||||||||||||||||
(1) Tax rate used to arrive at the TEY for the three months ended |
|||||||||||||||||||||
(2) 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 | 2020 |
2019 |
2019 |
2019 |
2019 |
||||||||||||||
Equity to total assets | 13.78 | % | 13.54 | % | 13.65 | % | 13.49 | % | 13.61 | % | |||||||||
Book value per common share outstanding | $ | 23.26 | $ | 22.52 | $ | 22.32 | $ | 21.72 | $ | 20.88 | |||||||||
Tangible book value per common share outstanding | $ | 12.97 | $ | 12.84 | $ | 12.74 | $ | 12.11 | $ | 11.55 | |||||||||
Tangible book value per common share outstanding excluding AOCI | $ | 12.92 | $ | 12.74 | $ | 12.57 | $ | 12.05 | $ | 11.81 | |||||||||
Common shares outstanding | 34,607,962 | 37,172,081 | 37,807,064 | 37,878,205 | 39,450,938 | ||||||||||||||
Non-performing assets to total assets | 0.67 | % | 0.48 | % | 0.91 | % | 0.84 | % | 0.68 | % | |||||||||
Non-performing loans and leases to total loans and leases | 0.87 | % | 0.62 | % | 0.70 | % | 0.57 | % | 0.28 | % | |||||||||
Net interest margin | 4.78 | % | 4.94 | % | 4.95 | % | 5.07 | % | 5.06 | % | |||||||||
Net interest margin, tax-equivalent | 4.82 | % | 4.99 | % | 5.00 | % | 5.15 | % | 5.18 | % | |||||||||
Return on average assets | 3.16 | % | 1.38 | % | 1.32 | % | 1.91 | % | 1.89 | % | |||||||||
Return on average equity | 25.15 | % | 10.04 | % | 9.69 | % | 14.17 | % | 16.18 | % | |||||||||
Full-time equivalent employees | 992 | 1,088 | 1,186 | 1,218 | 1,231 | ||||||||||||||
Quarterly Amortization of Intangibles Expense
(Dollars in Thousands) | Actual | Anticipated | |||||||||||||||||||||||||
For the Three Months Ended | 2020 |
2020 |
2020 |
2020 |
2021 |
2021 |
2021 |
2021 |
2022 |
||||||||||||||||||
Amortization of intangibles(1) | $ | 3,402 | $ | 2,637 | $ | 2,282 | $ | 2,013 | $ | 2,757 | $ | 2,013 | $ | 1,761 | $ | 1,488 | $ | 2,170 | |||||||||
(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
Investor Relations and Media Contact: |
Director of Investor Relations |
605-362-2423 |
bkelley@metabank.com |