Meta Financial Group, Inc.® Announces Results for 2021 Fiscal First Quarter
Meta Financial Group (Nasdaq: CASH) reported a 50% increase in earnings per share, reaching $0.84 for Q1 FY2021, compared to $0.56 in Q1 FY2020. Net income grew to $28 million from $21.1 million. The company's total revenue rose 9% to $111.5 million, aided by a 2% increase in net interest income to $66 million. The efficiency ratio improved by 9% to 62.2% while average deposits surged 83% to $5.07 billion. However, net interest margin declined to 4.65%. The company is actively involved in distributing Economic Impact Payments and has expanded its solar lending business by 29%.
- Earnings per share rose 50% to $0.84.
- Net income increased to $28 million from $21.1 million.
- Total revenue climbed 9% to $111.5 million.
- Operating efficiency ratio improved by 9% to 62.2%.
- Average deposits surged 83% to $5.07 billion.
- Solar lending business increased by 29%.
- Net interest margin dropped to 4.65% from 4.94%.
- Total gross loans decreased by 4% year-over-year.
- Earnings Per Share Increased
- Efficiency Ratio Improved
SIOUX FALLS, S.D., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Meta Financial Group, Inc.® (Nasdaq: CASH) (“Meta” or the “Company”) reported net income of
“Solid revenues, lower expenses, and better efficiency ratios combined to deliver excellent results in the first quarter of fiscal year 2021. I am extremely proud of my team's ability to persevere during the pandemic, delivering significant value to customers and shareholders from a remote working environment," said President and CEO Brad Hanson. "During the quarter, we spent time getting ready for the upcoming tax season, implementing H&R Block, and preparing for the distribution of the second round of Economic Impact Payments while advancing our long-standing mission of Financial Inclusion for All®, with increased resources and prioritization of Environmental, Social and Governance initiatives."
"Our quarterly results demonstrate ongoing progress in optimizing our business platforms, enabling us to improve our efficiency ratio by over 600 basis points compared with the prior year. Our loan portfolios continue to perform well, as our credit metrics demonstrate the Company's ability to weather the worst of the pandemic, leaving us well-positioned to continue to remix our balance sheet with higher yield and return earning assets," said Executive Vice President and CFO Glen Herrick.
Business Development Highlights for the 2021 Fiscal First Quarter
- Began our new three-year program with Emerald Financial Services, LLC, a wholly-owned indirect subsidiary of H&R Block, Inc., which we announced in the fourth quarter of fiscal 2020. Have already moved more than
$150 million in deposits and began issuing Emerald Prepaid Mastercard® to applicants. - Completed negotiations with the U.S. Department of the Treasury's Bureau of the Fiscal Service ("Fiscal Service") to disperse a second round of Economic Income Payment ("EIP") stimulus payments through the distribution of prepaid cards. The Company began distributing cards under this authorization January 4, 2021.
- Expanded our solar lending business, increasing our solar credit balance
29% to$323.9 million . - Increased resources dedicated to our Environmental, Social, and Governance ("ESG") activities by hiring an experienced Vice President of ESG and Community Impact and forming a Board-level ESG committee to provide oversight.
Financial Highlights for the 2021 Fiscal First Quarter
- Total revenue for the first quarter was
$111.5 million , an increase of9% compared to$102.1 million for the same quarter in fiscal 2020. - Operating efficiency ratio improved to
62.2% at December 31, 2020, compared to68.2% at December 31, 2019. See non-GAAP reconciliation table below. - Net interest income for the first quarter was
$66.0 million , compared to$64.7 million in the comparable quarter last year. - Net interest margin ("NIM") decreased to
4.65% for the first quarter from4.94% during the same period of last year, while the tax-equivalent net interest margin ("NIM, TE") decreased to4.67% from4.99% for that same period in fiscal 2020. The decrease in NIM during the first quarter was primarily driven by excess cash associated with the Company's participation in the EIP program, as described further below. - Total gross loans and leases at December 31, 2020 decreased
$143.7 million , or4% , to$3.44 billion , compared to December 31, 2019 and increased$125.4 million , or4% when compared to September 30, 2020. - Average deposits from the payments division for the fiscal 2021 first quarter increased nearly
83% to$5.07 billion when compared to the same quarter in fiscal 2020. A significant portion of the year-over-year increase reflected the Company's participation in the EIP program, as described further below. - The Company repurchased 1,864,474 shares during the first quarter at an average price of
$29.46 . Through January 20, 2021, the Company repurchased an additional 300,000 of its shares, at a weighted average price of$38.73 .
COVID-19 Business Update
As of December 31, 2020, the Company had 612 loans outstanding with total loan balances of
As of December 31, 2020,
The Company's capital position remained strong as of December 31, 2020, even while absorbing the temporary impact resulting from the receipt of deposits in conjunction with EIP payments described below. In addition, the Company has options available that can be used to effectively manage capital levels, including a strong and flexible balance sheet.
EIP Program Update
The Bank is serving as the sole Financial Agent for distributing prepaid debit cards used in the EIP program. The Company's Payments division, in collaboration with Fiserv and Visa, is proud to have provided a safe and secure mechanism for individuals, including the underbanked, to receive their stimulus payments. Under the first round of EIP, approximately
On December 27, 2020, the U.S. Congress, through the Consolidated Appropriations Act of 2021 (“CAA”), directed the Internal Revenue Service (“IRS”) to distribute a second round of EIP via the U.S. Treasury to persons in the U.S. eligible to receive them. The Bank entered into an amendment of its existing agreement with the U.S. Department of the Treasury’s Bureau of the Fiscal Service ("Fiscal Service"), under which the Bank will act as a Financial Agent to Fiscal Service in connection with the provision of prepaid debit card services to disburse a portion of the EIP payments to eligible recipients via Bank-issued prepaid cards.
Under the second round, the Bank disbursed approximately
While the EIP Program's impact to earnings is expected to be slightly positive, it continues to temporarily have a significant impact on cash and deposit balances, leading to a reduced NIM along with a corresponding impact on the Company's leverage capital ratios. In conjunction with the Program and its balance sheet impacts, the Bank was granted temporary exemption from its requirements to maintain minimum regulatory capital leverage ratios by the Officer of the Comptroller of the Currency due to deposits received as part of the EIP program. The influx of EIP deposits is not expected to have any material impact on the Company's risk-weighted capital ratios.
The Company is working with other banks to transfer deposits off-balance sheet in an effort to relieve the impact of the substantial influx of deposits related to the second round of EIP.
Net Interest Income
Net interest income for the fiscal 2021 first quarter was
During the first fiscal quarter of 2021, loan and lease interest income decreased
NIM decreased to
The overall reported tax-equivalent yield (“TEY”) on average earning asset yields decreased by 116 basis points to
The Company's cost of funds for all deposits and borrowings averaged
Noninterest Income
Fiscal 2021 first quarter noninterest income increased to
Noninterest Expense
Noninterest expense decreased
Income Tax Expense
The Company recorded income tax expense of
The Company originated
Investments, Loans and Leases
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | ||||||||||||||||||||
| Total investments | $ | 1,309,452 | $ | 1,360,712 | $ | 1,268,416 | $ | 1,310,476 | $ | 1,337,840 | ||||||||||||||
| Loans held for sale | ||||||||||||||||||||||||
| Consumer credit products | 234 | 962 | 391 | — | — | |||||||||||||||||||
| SBA/USDA | 32,983 | 52,542 | 31,438 | 13,610 | 13,883 | |||||||||||||||||||
| Community Bank(1) | 100,442 | 130,073 | 48,076 | — | 250,383 | |||||||||||||||||||
| Total loans held for sale | 133,659 | 183,577 | 79,905 | 13,610 | 264,266 | |||||||||||||||||||
| National Lending | ||||||||||||||||||||||||
| Term lending | 881,306 | 805,323 | 738,454 | 725,581 | 695,347 | |||||||||||||||||||
| Asset based lending | 242,298 | 182,419 | 181,130 | 250,211 | 250,633 | |||||||||||||||||||
| Factoring | 275,650 | 281,173 | 206,361 | 285,495 | 285,776 | |||||||||||||||||||
| Lease financing | 283,722 |
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FAQ
What were Meta Financial Group's earnings for Q1 FY2021?
Earnings per share for Q1 FY2021 were $0.84, up 50% from $0.56 for the same quarter last year.
How did Meta Financial Group's revenue change in Q1 FY2021?
Total revenue increased by 9% to $111.5 million compared to $102.1 million in Q1 FY2020.
What is the stock symbol for Meta Financial Group?
The stock symbol for Meta Financial Group is CASH.
What impact did the EIP program have on Meta Financial Group?
The EIP program temporarily increased cash and deposit balances, affecting the net interest margin and capital ratios.
How did the efficiency ratio change for Meta Financial Group?
The efficiency ratio improved by 9% to 62.2% in Q1 FY2021.
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