What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-26 compared with 2020-03-02 · 460 added, 464 removed, 878 unchanged (51% of the section changed)

58 unchanged sentences

Revenue Recognition

Description of the Matter

As discussed in Note 2 and Note 3 of the consolidated financial statements, the Company recorded card revenues and other fees of $459.4 million, interchange revenues of $330.2 million, and processing and settlement services revenues of $287.1 million in operating revenues for the year ended December 31, 2019.

Description of the Matter As discussed in Note 2 and Note 3 of the consolidated financial statements, the Company recorded card revenues and other fees of $593.9 million, interchange revenues of $351.8 million, and processing and settlement services revenues of $293.2 million in operating revenues for the year ended December 31, 2020.

Card revenues and other fees consist of monthly maintenance fees, new card fees, ATM fees, and other card revenues, which include revenue associated with the Company’s gift card program.

The Company records estimated cash back rewards as a reduction to card revenues and other fees.

Processing and settlement services revenues include cash transfer revenues, Simply Paid disbursement revenues, and tax refund processing service revenues.

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The Company recognizes revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.

Auditing card revenues and other fees, interchange revenues, and cash transfer revenues was complex due to the high aggregate dollar value and large volume of revenue-generating transactions, the number of contracts involved with each revenue stream, the number of systems and processes involved in the processing of such transactions, including third-party service organizations, and the judgment required by management in estimating the average card lifetime used to recognize new card fees.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s processes, systems and controls related to the recognition of card revenues and other fees, interchange revenues, and cash transfer revenues, including, among others, controls related to management’s assessment of when control of goods and services is transferred to customers, the Company’s use of relevant third-party service organizations, and management’s review of significant assumptions and underlying data used to estimate the average card lifetime.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s processes, systems and controls related to the recognition of card revenues and other fees, interchange revenues, and cash transfer revenues, including, among others, controls related to management’s assessment of when control of goods and services is transferred to customers, the Company’s use of relevant third-party service organizations, and management’s review of significant assumptions and underlying data used to estimate the average card lifetime and the cash back rewards.

Our audit procedures included, among others, assessing a sample of contracts to determine whether terms that may impact revenue recognition were identified and properly considered in the Company’s evaluation of the accounting for the contracts, calculating revenue per transaction based upon the card revenues and other fees, interchange revenues, and cash transfer revenues recognized and relevant non-financial metrics for each revenue stream (e.g., purchase volumes and number of card activations) and comparing the revenue per transaction for each revenue stream to historical trends and expectations based on contractual rates and historical data.

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In addition, we tested the methodology and significant assumptions and underlying data used in management’s estimate of the average card lifetime by comparing the assumptions and data to the Company’s historical data involving the period from activation of the card through the date of last positive balance.

We tested the methodology and significant assumptions and underlying data used in management’s estimate of the cash back rewards by comparing the customer activity and customer redemption rates to comparable peer trends and the Company’s historical reward data.

/s/ Ernst & Young LLP

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CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

Assets (In thousands, except par value)

Current assets:

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Loans to bank customers, net of allowance for loan losses of $ 757 and $ 1,166 as of December 31, 2020 and 2019, respectively

21,011 21,417

Prepaid expenses and other assets 40,481 10,991

Property and equipment, net

Property, equipment, and internal-use software, net 133,400 145,476

Operating lease right-of-use assets 13,134 26,373

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Goodwill and intangible assets 491,778 520,994

Total assets $ 4,115,267 $ 2,460,590

Liabilities and Stockholders’ Equity

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Accounts payable $ 34,823 $ 37,876

Deposits 2,735,116 1,175,341

Obligations to customers 95,375 69,377

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Operating lease liabilities 16,396 24,445

Line of credit — 35,000

Net deferred tax liabilities 7,192 17,772

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Retained earnings 651,890 629,040

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income 3,428 2,040

Total stockholders’ equity 1,009,832 927,356

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Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

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Interest expense, net 761 1,864 5,046

Other (expense) income, net ( 1,217 ) 27 ( 1,552 )

Income before income taxes 28,095 121,081 123,817

Income tax expense 4,964 21,184 5,114

Net income $ 23,131 $ 99,897 $ 118,703

Basic earnings per common share:

$ 0.43 $ 1.91 $ 2.27

Diluted earnings per common share:

$ 0.42 $ 1.88 $ 2.18

Basic weighted-average common shares issued and outstanding:

52,438 52,195 52,222

Diluted weighted-average common shares issued and outstanding:

53,685 53,138 54,481

See notes to consolidated financial statements

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Year Ended December 31,

2020 2019 2018

(In thousands)

Other comprehensive income (loss)

Unrealized holding gain (loss), net of tax

Net income $ 23,131 $ 99,897 $ 118,703

Other comprehensive income

Unrealized holding gain, net of tax 1,388 2,177 593

Comprehensive income $ 24,519 $ 102,074 $ 119,296

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Class A Common Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total Stockholders' Equity

Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Shares Amount

(In thousands)

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Stock-based compensation — — 50,093 — — 50,093

Repurchases of Class A common stock

Other comprehensive loss

Cumulative effect of accounting change and tax reform

Net income — — — 118,703 — 118,703

Other comprehensive income — — — — 593 593

Balance at December 31, 2018 52,917 $ 53 $ 380,753 $ 529,143 $ ( 137 ) $ 909,812

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Stock-based compensation — — 29,583 — — 29,583

Repurchases of Class A common stock ( 2,072 ) ( 2 ) ( 99,998 ) — — ( 100,000 )

Net income — — — 99,897 — 99,897

Other comprehensive income — — — — 2,177 2,177

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Stock-based compensation — — 53,694 — — 53,694

Repurchases of Class A common stock

Walmart restricted shares 975 1 ( 1 ) — — —

Net income — — — 23,131 — 23,131

Other comprehensive income — — — — 1,388 1,388

Cumulative effect adjustment for adoption of ASU No.

2016-13 (CECL) — — — ( 281 ) — ( 281 )

Balance at December 31, 2020 54,034 $ 54 $ 354,460 $ 651,890 $ 3,428 $ 1,009,832

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Year Ended December 31,

2020 2019 2018

(In thousands)

Operating activities

Net income $ 23,131 $ 99,897 $ 118,703

Adjustments to reconcile net income to net cash provided by operating activities:

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Amortization of intangible assets 28,119 32,616 32,761

Provision for uncollectible overdrawn accounts

Employee stock-based compensation

Amortization of (discount) premium on available-for-sale investment securities

Provision for uncollectible overdrawn accounts from purchase transactions 7,684 6,641 12,442

Stock-based compensation 53,694 29,583 50,093

Losses in equity method investments 6,290 — —

Realized gain on sale of available-for-sale investment securities ( 5,073 ) — —

Amortization of premium (discount) on available-for-sale investment securities 999 ( 117 ) 1,042

Change in fair value of contingent consideration — ( 1,866 ) 3,298

Amortization of deferred financing costs 169 1,334 1,594

Impairment of capitalized software

Deferred income tax expense (benefit)

Impairment of long-lived assets 21,719 578 922

Deferred income tax (benefit) expense ( 15,003 ) 6,876 ( 234 )

Changes in operating assets and liabilities:

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Income tax receivable/payable 9,531 11,682 ( 1,253 )

Other, net ( 1,665 ) 1,021 3,403

Net cash provided by operating activities 209,178 189,914 251,051

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Payments for acquisition of property and equipment ( 59,035 ) ( 78,214 ) ( 61,030 )

Net increase in loans

Business acquisition, net of cash acquired

Net changes in loans ( 453 ) ( 2,459 ) ( 5,887 )

Investment in TailFin Labs, LLC ( 35,000 ) — —

Other ( 3,534 ) — —

Net cash used in investing activities ( 785,832 ) ( 153,853 ) ( 114,967 )

Financing activities

Borrowings from notes payable

Repayments of borrowings from notes payable — ( 60,000 ) ( 22,500 )

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Repayments on revolving line of credit ( 135,000 ) — —

Proceeds from exercise of options

Proceeds from exercise of options and ESPP purchases 16,997 7,226 21,880

Taxes paid related to net share settlement of equity awards ( 12,453 ) ( 21,338 ) ( 46,007 )

Net increase (decrease) in deposits

Net (decrease) increase in obligations to customers

Net changes in deposits 1,554,191 146,100 ( 16,733 )

Net changes in settlement assets and obligations to customers ( 512,534 ) ( 66,760 ) 17,255

Contingent consideration payments ( 4,000 ) ( 4,634 ) ( 4,856 )

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Deferred financing costs — ( 719 ) —

Net cash used in financing activities

Net (decrease) increase in unrestricted cash, cash equivalents and restricted cash

Net cash provided by (used in) financing activities 1,007,201 ( 65,125 ) ( 50,961 )

Net increase (decrease) in unrestricted cash, cash equivalents and restricted cash 430,547 ( 29,064 ) 85,123

Unrestricted cash, cash equivalents and restricted cash, beginning of period 1,066,154 1,095,218 1,010,095

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Note 1— Organization

Green Dot Corporation (“we,” “our,” or “us” refer to Green Dot Corporation and its consolidated subsidiaries) is a financial technology leader and bank holding company with a mission to reinvent banking for the masses.

Our company’s long-term strategy is to create a unique, sustainable and highly valuable fintech ecosystem, in part through the continued evolution of our innovative Banking as a Service (“BaaS”) platform, that’s intended to fuel the engine of innovation and growth for us and our business partners.

Enabled by proprietary technology, our commercial bank charter and our high-scale program management operating capability, our vertically integrated technology and banking platform is used by a growing list of America’s most prominent consumer and technology companies to design and deploy their own bespoke financial services solutions to their customers and partners, while we use that same integrated platform for our own leading collection of banking and financial services products marketed directly to consumers through what we believe to be the most broadly distributed, omni-channel branchless banking platforms in the United States.

Green Dot Corporation (“we,” “our,” or “us” refer to Green Dot Corporation and its consolidated subsidiaries) is a financial technology and registered bank holding company focused on making modern banking and money movement accessible for all.

Our goal is to deliver trusted, best-in-class money management and payment solutions to our customers and partners, seamlessly connecting people to their money.

Our proprietary technology enables faster, more efficient electronic payments and money management, powering intuitive and seamless ways for people to spend, send, control and save their money.

Through our bank, we offer a suite of financial products to consumers and businesses including debit, prepaid, checking, credit and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements.

We were incorporated in Delaware in 1999 and became a bank holding company under the Bank Holding Company Act and a member bank of the Federal Reserve System in December 2011.

We are headquartered in Pasadena, California, with additional facilities throughout the United States and in Shanghai, China.

Note 2— Summary of Significant Accounting Policies

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Our consolidated financial statements include the results of Green Dot Corporation and our wholly-owned subsidiaries.

We prepared the accompanying consolidated financial statements in accordance with generally accepted accounting principles in the United States of America, or GAAP.

We prepared the accompanying consolidated financial statements in accordance with generally accepted accounting principles in the United States of America, or U.S.

We eliminate all significant intercompany balances and transactions on consolidation.

We include the results of operations of acquired companies from the date of acquisition.

Reclassifications

Beginning with the first quarter of 2019, we present net interest income generated from operations at Green Dot Bank, our subsidiary bank, as a component of our total operating revenues.

Prior year amounts, formerly reported below operating income on our consolidated statements of operations, have been reclassified to conform to our current year presentation on our consolidated statements of operations.

This reclassification changed our previously reported total operating revenues, but had no impact on our previously reported consolidated net income or cash flows for any comparative periods presented.

Net interest income at Green Dot Bank has become an increasingly important revenue component as Green Dot Bank's ability to invest its growing customer balances and generate interest income is one of several unique advantages we have as both a leading financial technology company and a federally regulated bank.

Net interest income or expense generated outside of Green Dot Bank continues to be reported below operating income on our consolidated statements of operations.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements, including the accompanying notes.

We base our estimates and assumptions on historical factors, current circumstances, and the experience and judgment of management.

We evaluate our estimates and assumptions on an ongoing basis.

Actual results could differ from those estimates.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

Future events and their effects cannot be predicted with certainty;

accordingly, accounting estimates require the exercise of judgment.

These financial statements were prepared using information reasonably available as of December 31, 2020 and through the date of this report.

The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes.

Actual results may differ from these estimates due to the uncertainty around the magnitude, duration and effects of the COVID-19 pandemic, as well as other factors.

Unrestricted Cash and Cash Equivalents

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Our investment portfolio is primarily comprised of fixed income securities.

We classify these securities as available-for-sale and report them at fair value with the related unrealized gains and losses, net of tax, included in accumulated other comprehensive income, a component of stockholders’ equity.

We establish an allowance for credit losses limited by the amount that the fair value of the investment is less than its amortized cost.

If the impairment of the investment security is credit-related, the impairment is recorded in earnings with any subsequent improvements in credit recognized through a reversal of the allowance established.

Non-credit related impairment is recorded in accumulated other comprehensive income or loss, a component of stockholders' equity.

We classify investment securities with maturities less than or equal to 365 days as current assets.

We regularly evaluate each fixed income security where the value has declined below amortized cost to assess whether the decline in fair value is credit or non-credit related.

In determining whether an impairment is credit related or not, we consider the extent of the decline in fair value compared to the security's amortized cost, the presence of adverse conditions such as the financial condition of the issuer, the payment structure of the security, credit rating changes and other qualitative factors, as well as whether we either plan to sell the security or it is more likely-than-not that we will be required to sell the security before recovery of its amortized cost.

If we intend to sell an investment security or believe we will more-likely-than-not be required to sell a security, we record the full amount of the impairment in earnings.

GREEN DOT CORPORATION

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Note 2—Summary of Significant Accounting Policies (continued)

We regularly evaluate each fixed income security where the value has declined below amortized cost to assess whether the decline in fair value is other-than-temporary.

In determining whether an impairment is other-than-temporary, we consider the severity and duration of the decline in fair value, the length of time expected for recovery, the financial condition of the issuer, and other qualitative factors, as well as whether we either plan to sell the security or it is more likely-than-not that we will be required to sell the security before recovery of its amortized cost.

If the impairment of the investment security is credit-related, an other-than-temporary impairment is recorded in earnings.

We recognize non-credit-related impairment in accumulated other comprehensive income.

If we intend to sell an investment security or believe we will more-likely-than-not be required to sell a security, we record the full amount of the impairment as an other-than-temporary impairment.

Interest on fixed income securities, including amortization of premiums and accretion of discounts, is included in interest income.

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Accounts Receivable, net

Accounts receivable is comprised principally of receivables due from card issuing banks, overdrawn account balances due from cardholders, trade accounts receivable, fee advances and other receivables.

Accounts receivable is comprised principally of trade accounts receivable, receivables due from card issuing banks, overdrawn account balances due from cardholders, fee advances and other receivables.

We record accounts receivable net of reserves for estimated uncollectible accounts.

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We are exposed to losses from any unrecovered overdrawn account balances.

We establish a reserve for uncollectible overdrawn accounts.

We classify overdrawn accounts into age groups based on the number of days that have elapsed since an account last had activity, such as a purchase, ATM transaction or maintenance fee assessment.

Reserves for overdrawn account balances from purchase transactions are included as a component of other general and administrative expenses on our consolidated statements of operations.

Overdrawn cardholder balances from maintenance fee assessments are presented net of the consideration we expect to receive under ASC 606, Revenue from Contracts with Customers, and are recorded as contra-revenue within card revenues and other fees.

We classify overdrawn accounts from purchase transactions into age groups based on the number of days that have elapsed since an account last had activity, such as a purchase, ATM transaction or fee assessment.

We calculate a reserve factor for each age group based on the average recovery rate for the most recent six months .

These factors are applied to these age groups to estimate our overall reserve.

These factors are applied to these age groups to estimate our overall expected loss reserve.

When more than 90 days have passed without activity in an account, we write off the full amount of the overdrawn account balance.

We include our provision for uncollectible overdrawn accounts related to maintenance fees and purchase transactions as an offset to card revenues and other fees and in other general and administrative expenses, respectively, in the accompanying consolidated statements of operations.

Restricted Cash

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Nonperforming loans generally include loans that have been placed on nonaccrual status.

We generally place loans on nonaccrual status when they are past due 90 days or more.

We generally place loans and secured credit cards on nonaccrual status when they are past due 90 days or more.

We reverse the related accrued interest receivable and apply interest collections on nonaccrual loans as principal reductions;

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For our secured credit card portfolio, when an account is past due 90 days, collateral deposits are applied against outstanding credit card balances.

Any balance in excess of the collateral balance is charged off at 180 days.

Any balance, inclusive of principal and interest in excess of the collateral balance is charged off at 180 days.

We consider a loan to be impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.

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If the recorded investment in impaired loans exceeds this amount, we establish a specific allowance as a component of the allowance for loan losses or by adjusting an existing valuation allowance for the impaired loan.

Allowance for Loan Losses

We establish an allowance for loan losses to account for estimated credit losses inherent in our loan portfolio, including our secured credit cards.

For each portfolio of loans, our estimate of inherent losses is separately calculated on an aggregate basis for groups of loans and are considered to have similar credit characteristics and risk of loss.

We analyze historical loss rates for these groups to determine a loss rate for each group of loans.

We then adjust the rates for qualitative factors which in our judgment affect the expected inherent losses.

Qualitative considerations include, but are not limited to, prevailing economic or market conditions, changes in the loan grading and underwriting process, changes in the estimated value of the underlying collateral for collateral dependent loans, delinquency and nonaccrual status, problem loan trends, and geographic concentrations.

We separately establish specific allowances for impaired loans based on the present value of changes in cash flows expected to be collected, or for impaired loans that are considered collateral dependent, the estimated fair value of the collateral.

Allowance for Credit Losses

We establish an allowance for estimated credit losses inherent in our loan portfolio over the life of the loans, including our secured credit cards.

For each portfolio of loans, our estimate of expected losses is separately calculated on an aggregated basis for pools of loans that exhibit similar credit characteristics and risk of loss.

We analyze historical loss rates for these groups to determine a loss rate for each group of loans, and consider if adjustments are needed for current conditions, and other reasonable and supportable forecasts beyond our balance sheet date that may differ from historical results.

We also consider adjustments based on qualitative factors which in our judgment may affect the expected credit losses.

Qualitative considerations include, but are not limited to, changes in prevailing economic or market conditions, the loan grading and underwriting process, the borrower's credit rating or credit score, the estimated value of the underlying collateral for collateral dependent loans, the volume and severity of delinquent and nonaccrual loans, problem loan trends, legal and regulatory requirements, collection and lending practices, and geographic or other concentrations of credit risk.

Property and Equipment

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Once a development project is substantially complete and the software is ready for its intended use, we begin depreciating these costs on a straight-line basis over the internal-use software’s estimated useful life.

The estimated useful lives of the respective classes of assets are as follows:

Computer equipment, furniture and office equipment

Computer software purchased

Capitalized internal-use software

Tenant improvements

Shorter of the useful life or the lease term

GREEN DOT CORPORATION

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Note 2—Summary of Significant Accounting Policies (continued)

The estimated useful lives of the respective classes of assets are as follows:

Building 30 years

Computer equipment, furniture and office equipment 3 - 10 years

Computer software purchased 3 years

Capitalized internal-use software 3 - 7 years

Tenant improvements Shorter of the useful life or the lease term

We determine if an arrangement is or contains a lease at inception of the agreement.

Right-of-use (ROU) assets and liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term.

For this purpose, we consider only fixed payments stated in the leases at the time of commencement.

Variable lease payments that are not based on a specified rate or index are expensed when incurred.

Since an implicit interest rate for our leases generally cannot be determined under our contracts, we use an incremental borrowing rate based on the information available to us at the commencement date in determining the present value of our lease payments.

Our incremental borrowing rate is based on a variety of considerations, including borrowing rates currently available to us for loans with similar terms and market participant information based on credit spreads for issuers of similar risk and credit rating.

The ROU asset also reflects any lease payments made prior to commencement and is recorded net of any lease incentives received.

Our ROU asset and liability reflects, as applicable, options to extend or terminate a lease when it is reasonably certain that we will exercise such options.

We exclude all leases with an initial term of 12 months or less under the short term lease exemption.

We have also made a policy election to combine our lease and non-lease components for each of our existing classes of leased assets.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease expense is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

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We measure the loss as the amount by which the carrying amount exceeds its fair value calculated using the present value of estimated net future cash flows.

We recorded impairment charges of $ 0.6 million , $ 0.9 million and $ 1.3 million for the years ended December 31, 2019 , 2018 and 2017 , respectively, associated with capitalized internal-use software we determined to no longer be utilized and any remaining carrying value was written off.

We recorded total impairment charges of $ 21.7 million , $ 0.6 million and $ 0.9 million for the years ended December 31, 2020 , 2019 and 2018, respectively.

Impairment charges for the year ended December 31, 2020 were principally associated with capitalized internal-use software, and our operating lease right-of-use assets and other tenant improvements we determined to no longer be utilized as a result of our remote workforce strategy.

These impairment charges are included in other general and administrative expenses in our consolidated statements of operations.

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A reporting unit, as defined under applicable accounting guidance, is an operating segment or one level below an operating segment, referred to as a component.

We may in any given period bypass the qualitative assessment and proceed directly to a two-step method to assess and measure impairment of the reporting unit's goodwill.

We first assess qualitative factors to determine whether it is more likely-than-not (i.e., a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying value.

This step serves as the basis for determining whether it is necessary to perform the two-step quantitative impairment test.

The first step of the quantitative impairment test involves a comparison of the estimated fair value of each reporting unit to its carrying amount, including goodwill.

This step serves as the basis for determining whether it is necessary to perform the quantitative impairment test.

If it is more likely-than-not goodwill is impaired, a quantitative impairment test compares the estimated fair value of each reporting unit to its carrying amount, including goodwill.

If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired;

however, if the carrying amount of the reporting unit exceeds its estimated fair value, then the second step of the quantitative impairment test must be performed.

The second step compares the implied fair value of the reporting unit’s goodwill with its carrying amount to measure the amount of impairment loss, if any.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

however, if the carrying amount of the reporting unit exceeds its estimated fair value, the difference is recorded as an impairment loss directly to goodwill.

We may in any given period bypass the qualitative assessment and proceed directly to a quantitative method to assess and measure impairment of the reporting unit's goodwill.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

For intangible assets subject to amortization, we recognize an impairment loss if the carrying amount of the intangible asset is not recoverable and exceeds its estimated fair value.

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Generally, we expect to settle these obligations within two months .

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

Under applicable accounting guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability.

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Our operating revenues consist of card revenues and other fees, processing and settlement service revenues and interchange revenues.

The core principle of the recent revenue standard is that these revenues will be recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, as determined under a five-step process.

The core principle of the revenue standard is that these revenues will be recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, as determined under a five-step process.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

A description of our principal revenue generating activities is as follows:

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For GPR cards, average card lifetime is determined based on recent historical data using the period from sale (or activation) of the card through the date of last positive balance.

We reassess average card lifetime quarterly.

We reassess average card lifetime for GPR cards quarterly and gift cards annually.

We report the unearned portion of new card fees as a component of deferred revenue in our consolidated balance sheets.

See Contract Balances discussed in Note 3 — Revenues , for further information.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

We charge ATM fees to cardholders when they withdraw money at certain ATMs in accordance with the terms and conditions in our cardholder agreements.

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In the case of our gift card program, we record the related revenues using the redemption method.

We also offer cash-back rewards to cardholders on certain programs.

The amount of these cash rewards varies based on multiple factors, including the terms and conditions for cardholder eligibility, the redemption amount based on cardholder activity, and the cardholder redemption rates.

We accrue our estimated cash-back rewards as a component of other accrued liabilities on our consolidated balance sheets and as a reduction to card revenues and other fees on our consolidated statements of operations.

Substantially all our fees are collected from our cardholders at the time the fees are assessed and debited from their account balance.

Program management fees from our BaaS partners are earned on a monthly basis, pursuant to the terms of each program management agreement.

Program management fees from our BaaS partners are generally earned over time on a monthly basis, pursuant to the terms of each program management agreement.

Our agreements are generally multi-year arrangements of varying lengths.

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Similarly, we earn Simply Paid disbursement fees from our business partners as payment disbursements are made.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

We earn tax refund processing service revenues when a customer of a third-party tax preparation company chooses to pay their tax preparation fee through the use of our tax refund processing services.

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We pay our retail distributors, and brokers' commissions based on sales of our prepaid debit cards and cash transfer products in their stores.

We defer and expense commissions related to new cards sales ratably over the average card lifetime, which is currently less than one year for our GPR and gift cards.

We defer and expense commissions related to new cards sales ratably over the average card lifetime, which is currently less than one year for our retail GPR and gift cards.

Absent a new card fee, we recognize the cost of the related commissions immediately.

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The cost of media advertising is recorded when the advertising first takes place.

We record the costs associated with

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

card packages and placards as prepaid expenses, and we record the costs associated with personalized GPR cards as deferred expenses.

We record the costs associated with card packages and placards as prepaid expenses, and we record the costs associated with personalized GPR cards as deferred expenses.

We recognize the prepaid cost of card packages and placards over the related sales period, and we amortize the deferred cost of personalized GPR cards, when activated, over the average card lifetime.

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Also included in sales and marketing expenses are use taxes to various states related to purchases of materials since we do not charge sales tax to customers when new cards or cash transfer transactions are purchased.

Employee Stock-Based Compensation

Stock-Based Compensation

We record employee stock-based compensation expense based on the grant-date fair value of the award.

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Vesting is based upon continued service to our company and we account for any forfeitures as they occur.

We have issued performance based and market based restricted stock units to our executive officers and employees.

For performance-based awards, we recognize compensation cost for the restricted stock units if and when we conclude it is probable that the performance metrics will be satisfied, over the requisite service period based on the grant-date fair value of the stock.

We reassess the probability of vesting at each reporting period and adjust compensation expense based on the probability assessment.

For market based restricted stock units, we base compensation expense on the fair value estimated at the date of grant using a Monte Carlo simulation or similar lattice model.

We have issued performance-based restricted stock units to our executive officers and employees that are subject to performance conditions, market conditions, or a combination thereof.

For awards subject to performance conditions, we determine the grant-date fair value of the stock and recognize compensation cost for the restricted stock units if and when we conclude it is probable that the performance metrics will be satisfied, over the requisite service period.

The grant-date fair value of the awards are not subsequently remeasured, however, we reassess the probability of vesting at each reporting period and record a cumulative adjustment to compensation expense based on the likelihood the performance metrics will be achieved.

For awards with market conditions, we base compensation expense on the fair value estimated at the date of grant using a Monte Carlo simulation or similar

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

lattice model.

We recognize compensation expense over the requisite service period regardless of the market condition being satisfied, provided that the requisite service has been rendered, since the estimated grant date fair value incorporates the probability of outcomes that the market condition will be achieved.

Under our retirement policy adopted in April 2018, following a qualified retirement, any service-based requirement for unvested stock awards held by the eligible employee is eliminated.

Under our retirement policy, any service-based requirement for unvested stock awards held by a retirement eligible employee is eliminated.

Accordingly, the related compensation expense is recognized immediately for qualifying awards granted to eligible employees, or in the case of ineligible employees who later become eligible under the retirement policy, over the period from the grant date to the date a qualifying retirement is achieved, if earlier than the standard vesting dates.

Performance-based restricted stock units issued to retirement eligible employees remain subject to the stock awards’ annual performance targets and the expense will be adjusted accordingly based expected achievement.

Performance-based restricted stock units issued to retirement eligible employees remain subject to the stock awards’ annual performance targets and the expense is adjusted accordingly based on expected achievement.

We measure the fair value of equity instruments issued to non-employees based on the grant-date fair value, and recognize the related expense in the same periods that the goods or services are received.

Our income tax expense is comprised of current and deferred income tax expense.

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We accrue income tax related interest and penalties, if applicable, within income tax expense.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

Earnings Per Common Share

We currently have only one class of common stock outstanding.

Basic EPS is calculated by dividing net income by the weighted-average common shares issued and outstanding.

Diluted EPS is calculated dividing net income by the weighted-average number of the common shares issued and outstanding for each period plus amounts representing the dilutive effect of outstanding stock options, restricted stock units (including performance based restricted stock units), and shares to be purchased under our employee stock purchase plan.

We calculate dilutive potential common shares using the treasury stock method.

We exclude the effects of restricted stock units and stock options from the computation of diluted EPS in periods in which the effect would be anti-dilutive.

Additionally, we exclude any performance based restricted stock units for which the performance contingency has not been met as of the end of the period.

We apply the two-class method in calculating earnings per common share, or EPS, because we have certain unvested restricted shares outstanding that are entitled to participate with our common stockholders in the distributions of earnings based on their dividend rights.

The two-class method requires net income to be allocated between each class or series of common stock and other participating securities based on their respective rights to receive dividends, whether or not declared.

Basic EPS is then calculated by dividing net income allocated to each class of common stockholders by the respective weighted-average common shares issued and outstanding.

Diluted EPS is calculated by dividing adjusted net income for each class of common stock by the respective weighted-average number of the common shares issued and outstanding for each period plus amounts representing the dilutive effect of outstanding stock options, restricted stock units (including performance based restricted stock units), shares to be purchased under our employee stock purchase plan and participating unvested restricted shares.

We calculate dilutive potential common shares using the treasury stock method and the two-class method, as applicable.

We exclude the effects of such equity instruments from the computation of diluted EPS in periods in which the effect would be anti-dilutive.

Additionally, we exclude any performance-based restricted stock units and performance-based stock options for which the performance contingency has not been met as of the end of the period.

Regulatory Matters and Capital Adequacy

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If we fail to comply with any of these requirements, we may become subject to formal or informal enforcement actions, proceedings, or investigations, which could result in regulatory orders, restrictions on our business operations or requirements to take corrective actions, which may, individually or in the aggregate, affect our results of operations and restrict our ability to grow.

If we fail to comply with the applicable capital and leverage requirements, or if our subsidiary bank fails to comply with its applicable capital and leverage requirements, the Federal Reserve Board may limit our or Green Dot Bank's ability to pay dividends.

If we fail to comply with the applicable capital and leverage

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

requirements, or if our subsidiary bank fails to comply with its applicable capital and leverage requirements, the Federal Reserve Board may limit our or Green Dot Bank's ability to pay dividends.

In addition, as a bank holding company and a financial holding company, we are generally prohibited from engaging, directly or indirectly, in any activities other than those permissible for bank holding companies and financial holding companies.

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Recently issued accounting pronouncements not yet adopted

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other ("ASU 2017-04") :

Simplifying the Test for Goodwill Impairment , which simplifies the existing two-step guidance for goodwill impairment testing by eliminating the second step resulting in a write-down to goodwill equal to the initial amount of impairment determined in step one.

The ASU is to be applied prospectively for reporting periods beginning after December 15, 2019.

We adopted the new accounting pronouncement upon its effective date on January 1, 2020, the effect of which did not have any impact to our financial statements upon initial adoption.

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

We are currently evaluating the provisions of ASU 2020-06, but do not expect any material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"), which provides optional expedients and exceptions to GAAP requirements for modifications of debt instruments, leases, derivatives and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

The guidance permits entities to treat such modifications as the continuation of the original contract, without any required accounting reassessments or remeasurements.

The amendments in ASU 2020-04 were effective upon issuance and may be elected over time through December 31, 2022, as reference rate reform activities occur.

Upon adoption, the guidance must be applied prospectively for all eligible contract modifications.

We continue to monitor the impact of ASU 2020-04 as reference rate reform continues to develop, however, do not expect any material impact on our consolidated financial statements as our revolving line of credit is based on variable rates available that we elect at the time of borrowing.

See Note 11 - Debt, to these consolidated financial statements for additional information.

Recently adopted accounting pronouncements

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions and improves consistent application of Topic 740.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

We adopted ASU 2019-12 on January 1, 2021, the results of which did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No.

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Credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited by the amount that the fair value is less than amortized cost.

The amendments of ASU 2016-13 eliminate the probable incurred loss recognition model under current GAAP and introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments.

The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts.

The new ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

We adopted the new accounting pronouncement upon its effective date on January 1, 2020 on a prospective basis and have substantially completed our assessment of the impact on our consolidated financial statements.

While we do not expect a material quantitative effect, if any, to our consolidated financial statements upon adoption, we will provide expanded credit loss disclosures and any final quantitative impact as required beginning in the first quarter of 2020.

The amendments under ASU 2016-13 eliminated the probable incurred loss recognition model under GAAP and introduced a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments.

The estimate of expected credit losses requires entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts.

The ASU also expanded the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses.

We adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost.

Results for periods after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported under previously applicable accounting standards.

The adoption of ASU 2016-13

GREEN DOT CORPORATION

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Note 2—Summary of Significant Accounting Policies (continued)

Recently adopted accounting pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) ("ASU 2016-02") in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP.

The guidance has been modified through additional technical corrections since its original issuance, including optional transition relief as provided for under ASU No.

2018-11, Leases (Topic 842):

Targeted Improvements .

ASU 2016-02 requires that a lessee should recognize a liability to make lease payments and a right-of-use ("ROU") asset representing its right to use the underlying asset for leases with a term greater than 12 months.

We adopted the new lease standard effective January 1, 2019, electing the optional transition method that permits the new standard to be applied prospectively, as of the effective date, without restating comparative periods presented.

As a result, prior periods continue to be reported in accordance with our historical lease accounting policies.

We elected the package of practical expedients under the new standard, which allows us to not reassess 1) whether any expired or existing contracts as of the adoption date are or contain a lease, 2) lease classification for any expired or existing leases as of the adoption date and 3) initial direct costs for any existing leases as of the adoption date.

We did not elect to use the hindsight practical expedient under the new standard when determining the lease term and assessing any impairment of ROU assets.

The adoption of ASU 2016-02 resulted in the recognition of operating ROU assets of approximately $ 17.9 million on our consolidated balance sheet and a corresponding lease liability of approximately $ 25.1 million .

The difference between the lease assets and liabilities recognized on our consolidated balance sheets primarily relates to accrued rent on existing leases that were offset against the ROU assets upon adoption.

The adoption of the standard did not have any impact on our consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows.

See Note 19 — Leases , for discussion on updates to our lease accounting policies and additional disclosures.

In August 2018, the FASB issued ASU No.

2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15") , which amends ASC 350-40 to address implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract.

ASU 2018-15 aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.

As a result, certain implementation costs incurred by companies under hosting arrangements will be deferred and amortized.

We adopted the standard effective January 1, 2019 on a prospective basis, the effect of which did not have a material impact on our consolidated financial statements.

In June 2018, the FASB issued ASU No.

2018-07, Compensation – Stock Compensation (Topic 718):

Improvements to Non-employee Share-Based Payment Accounting ("ASU 2018-07"), to align the accounting for share-based payment awards issued to employees and non-employees, particularly with regard to the measurement date and the impact of performance conditions.

The guidance requires equity-classified share-based payment awards issued to non-employees to be measured on the grant date, instead of being remeasured through the performance completion date under the previous guidance.

We adopted the standard effective January 1, 2019, the effect of which did not have any impact on our consolidated financial statements upon adoption.

resulted in an adjustment of approximately $ 0.3 million, net of tax, to beginning retained earnings, the effect of which we do not consider material to our consolidated financial statements.

Most of our financial assets within the scope of ASU 2016-13 are considered highly short-term in nature and therefore, we are less susceptible to risks and uncertainty of credit losses over extended periods of time.

The adoption of ASU 2016-13 did not result in any material changes to our methods for developing our allowance for credit losses, or the information we assess in developing our current estimate of expected credit losses.

See Notes 4, 5 and 6 to these consolidated financial statements for additional information on our financial assets within scope of the new accounting standard.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other ("ASU 2017-04"):

Simplifying the Test for Goodwill Impairment, which simplified the existing two-step guidance for goodwill impairment testing by eliminating the second step resulting in a write-down to goodwill equal to the initial amount of impairment determined in step one.

We adopted the provisions of ASU 2017-04 on January 1, 2020, the effect of which did not have a material impact on our consolidated financial statements.

Note 3— Revenues

Adoption of ASC 606

On January 1, 2018, we adopted ASC 606 using the modified retrospective method applied to contracts which were not completed upon adoption, the impact of which did not result in any cumulative adjustment to our retained earnings.

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting policies.

The impact of our adoption of ASC 606 was limited to a change in presentation of certain incentive agreements.

Prior to the adoption of ASC 606, incentive payments with our retail distributors and other partners had generally been recorded as a reduction to revenues over the related period of benefit the incentive payment related.

Upon the adoption of ASC 606, such payments are classified as sales and marketing expenses since these contractual arrangements have been determined to be outside the scope of contracts with our customers under the new accounting standard.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

The total amount of incentive payments recognized was $ 6.4 million , $ 7.1 million and $ 4.8 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

Disaggregation of Revenues

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The following table disaggregates our revenues by the timing in which the revenue is recognized:

Year Ended December 31, 2019

Year Ended December 31, 2018

Account Services

Processing and Settlement Services

Account Services

Processing and Settlement Services

Timing of revenue recognition

(In thousands)

Transferred at a point in time

Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018

Account Services Processing and Settlement Services Account Services Processing and Settlement Services Account Services Processing and Settlement Services

Timing of recognition (In thousands)

Transferred point in time $ 482,553 $ 293,216 $ 489,696 $ 287,052 $ 500,629 $ 247,942

Transferred over time 458,543 4,662 293,500 6,406 289,714 3,473

Operating revenues (1)

$ 941,096 $ 297,878 $ 783,196 $ 293,458 $ 790,343 $ 251,415

(1) Excludes net interest income, a component of total operating revenues, as it remains outside the scope of ASC 606, Revenues

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Significant Judgments and Estimates

Transaction prices related to our account cardholder services are based on stand-alone fees stated within the terms and conditions and may also include certain elements of variable consideration depending upon the product’s features, such as cardholder incentives, cash-back rewards, monthly fee concessions and reserves on accounts that may become overdrawn.

Transaction prices related to our account cardholder services are based on stand-alone fees stated within the terms and conditions and may also include certain elements of variable consideration depending upon the product’s features, such as cash-back rewards and reserves on accounts that may become overdrawn.

We estimate such amounts using historical data and customer behavior patterns to determine these estimates which are recorded as a reduction to the corresponding fee revenue.

Additionally, while the number of transactions that a cardholder may perform is unknown, any uncertainty is resolved at the end of each daily service contract.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

Contract Balances

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These contract liabilities consist principally of unearned new card fees and monthly maintenance fees.

We recognized approximately $ 31.8 million and $ 28.7 million for the years ended December 31, 2019 and 2018 , or substantially all of the amount of contract liabilities included in deferred revenue at the beginning of the respective periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods.

We recognized approximately $ 25.9 million, $ 31.8 million and $ 28.7 million for the years ended December 31, 2020, 2019, and 2018, or substantially all of the amount of contract liabilities included in deferred revenue at the beginning of the respective periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods.

Changes in the deferred revenue balance are driven primarily by the amount of new card fees recognized during the period, and the degree to which these reductions to the deferred revenue balance are offset by the deferral of new card fees associated with cards sold during the period.

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These deferred commissions are not material and are included in deferred expenses on our consolidated balance sheets.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

Practical Expedients and Exemptions

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Our available-for-sale investment securities were as follows:

Amortized cost

Gross unrealized gains

Gross unrealized losses

Amortized cost Gross unrealized gains Gross unrealized losses Fair value

(In thousands)

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December 31, 2019

Negotiable certificate of deposit

Corporate bonds $ 10,000 $ 12 $ — $ 10,012

Agency bond securities 19,980 20 — 20,000

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Total investment securities $ 274,957 $ 2,725 $ ( 243 ) $ 277,439

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of December 31, 2020 and 2019, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

Less than 12 months

12 months or more

Total unrealized loss

Unrealized loss

Less than 12 months 12 months or more Total

fair value Total unrealized loss

Fair value Unrealized loss Fair value Unrealized loss

(In thousands)

December 31, 2020

Agency bond securities $ 189,127 $ ( 1,713 ) $ — $ — $ 189,127 $ ( 1,713 )

Agency mortgage-backed securities 162,579 ( 337 ) — — 162,579 ( 337 )

Municipal bonds

Total investment securities $ 351,706 $ ( 2,050 ) $ — $ — $ 351,706 $ ( 2,050 )

December 31, 2019

Agency bond securities

Agency mortgage-backed securities $ 43,337 $ ( 153 ) $ 8,735 $ ( 88 ) $ 52,072 $ ( 241 )

Municipal bonds — — 113 ( 2 ) 113 ( 2 )

Asset-backed securities

Total investment securities $ 43,337 $ ( 153 ) $ 8,848 $ ( 90 ) $ 52,185 $ ( 243 )

We did not record any other-than-temporary impairment losses during the year s ended December 31, 2019 and 2018 on our available-for-sale investment securities.

We do not intend to sell these investments and we have determined that it is more likely than not that we will not be required to sell these investments before recovery of their amortized cost bases, which may be at maturity.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

Our investments generally consist of highly rated securities, as our investment policy restricts our investments to highly liquid, low credit risk assets.

We did no t record any significant credit-related impairment losses during the years ended December 31, 2020 or 2019 on our available-for-sale investment securities.

As of December 31, 2020, we have performed an evaluation of our allowance for credit losses and have determined that such an allowance is not material to our available-for-sale investment portfolio as the vast majority of our investment securities are issued by government-sponsored entities.

We do not intend to sell our investments and we have determined that it is more likely than not that we will not be required to sell our investments before recovery of their amortized cost bases, which may be at maturity.

During the year ended December 31, 2020, we recorded a realized gain of approximately $ 5.1 million as a result of the sale of certain investment securities.

The gain recognized upon sale of the investments was reclassified from accumulated other comprehensive income and is recorded as a component of other income and expenses on our consolidated statements of operations.

As of December 31, 2020, the contractual maturities of our available-for-sale investment securities were as follows:

Amortized cost

Amortized cost Fair value

(In thousands)

Due in one year or less

Due after one year through five years $ 10,000 $ 10,110

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The expected payments on mortgage-backed and asset-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5— Accounts Receivable

Accounts receivable, net consisted of the following:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(In thousands)

Overdrawn account balances due from cardholders

Reserve for uncollectible overdrawn accounts

Net overdrawn account balances due from cardholders

Trade receivables $ 25,279 $ 14,512

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Net trade receivables 24,964 14,310

Overdrawn cardholder balances from purchase transactions 3,229 4,327

Reserve for uncollectible overdrawn accounts from purchase transactions ( 1,653 ) ( 3,398 )

Net overdrawn cardholder balances from purchase transactions 1,576 929

Overdrawn cardholder balances from maintenance fees 3,165 2,235

Total net overdrawn account balances due from cardholders 4,741 3,164

Receivables due from card issuing banks 4,377 5,758

Fee advances, net 21,424 26,268

Other receivables 12,249 10,043

Accounts receivable, net $ 67,755 $ 59,543

Activity in the reserve for uncollectible overdrawn accounts consisted of the following:

Activity in the reserve for uncollectible overdrawn accounts from purchase transactions consisted of the following:

Year Ended December 31,

2020 2019 2018

(In thousands)

Balance, beginning of period $ 3,398 $ 2,710 $ 3,333

Provision for uncollectible overdrawn accounts:

Purchase transactions

Provision for uncollectible overdrawn accounts from purchase transactions 7,684 6,641 12,442

Charge-offs ( 9,429 ) ( 5,953 ) ( 13,065 )

Balance, end of period $ 1,653 $ 3,398 $ 2,710

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6— Loans to Bank Customers

The following table presents total outstanding loans, gross of the related allowance for loan losses, and a summary of the related payment status:

30-59 Days Past Due

60-89 Days Past Due

90 Days or More Past Due

Total Past Due

Total Current or Less Than 30 Days Past Due

Total Outstanding

30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Total Current or Less Than 30 Days Past Due Total Outstanding

(In thousands)

December 31, 2020

Residential $ — $ — $ — $ — $ 3,008 $ 3,008

Commercial — — — — 3,435 3,435

Installment — — — — 497 497

Secured credit card 864 699 1,363 2,926 11,902 14,828

Total loans $ 864 $ 699 $ 1,363 $ 2,926 $ 18,842 $ 21,768

Percentage of outstanding 4.0 % 3.2 % 6.3 % 13.4 % 86.6 % 100.0 %

December 31, 2019

Residential $ 1 $ — $ — $ 1 $ 4,530 $ 4,531

Commercial — — — — 158 158

Installment 1 — — 1 1,246 1,247

Secured credit card 1,080 939 2,183 4,202 12,445 16,647

Total loans $ 1,082 $ 939 $ 2,183 $ 4,204 $ 18,379 $ 22,583

Percentage of outstanding 4.8 % 4.2 % 9.7 % 18.6 % 81.4 % 100.0 %

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6—Loans to Bank Customers (continued)

Nonperforming Loans

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See Note 2 — Summary of Significant Accounting Policies for further information on the criteria for classification as nonperforming.

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(In thousands)

Residential $ 240 $ 290

Installment 137 147

Secured credit card 1,363 2,183

Total loans $ 1,740 $ 2,620

Credit Quality Indicators

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Classified loans are those loans that have demonstrated credit weakness where we believe there is a heightened risk of principal loss, including all impaired loans.

Classified loans are generally internally categorized as substandard, doubtful, or loss, consistent with regulatory guidelines.

Classified loans include those designated as substandard, doubtful, or loss, consistent with regulatory guidelines.

Secured credit card loans are considered classified if they are greater than 90 days past due.

However, our secured credit card portfolio is collateralized by cash deposits made by each cardholder in an amount equal to the user's available credit limit, which mitigates the risk of any significant credit losses we expect to incur.

The table below presents the carrying value, gross of the related allowance for loan losses, of our loans within the primary credit quality indicators related to our loan portfolio:

December 31, 2019

December 31, 2018

Non-Classified

December 31, 2020 December 31, 2019

Non-Classified Classified Non-Classified Classified

(In thousands)

Residential $ 2,768 $ 240 $ 4,241 $ 290

Commercial 3,435 — 158 —

Installment 360 137 1,058 189

Secured credit card 13,465 1,363 14,464 2,183

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6—Loans to Bank Customers (continued)

Total loans $ 20,028 $ 1,740 $ 19,921 $ 2,662

Impaired Loans and Troubled Debt Restructurings

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Our TDR modifications related to extensions of the maturity dates at a stated interest rate lower than the current market rate for new debt with similar risk.

As of December 31, 2020, none of our TDR modifications have been made in response to the COVID-19 pandemic.

The following table presents our impaired loans and loans that we modified as TDRs as of December 31, 2020 and 2019:

December 31, 2019

December 31, 2018

Unpaid Principal Balance

Carrying Value

Unpaid Principal Balance

Carrying Value

December 31, 2020 December 31, 2019

Unpaid Principal Balance Carrying Value Unpaid Principal Balance Carrying Value

(In thousands)

Residential $ 240 $ 180 $ 290 $ 221

Installment 137 103 160 48

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6—Loans to Bank Customers (continued)

Allowance for Loan Losses

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Year Ended December 31,

2020 2019 2018

(In thousands)

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Balance, end of period $ 757 $ 1,166 $ 1,144

Note 7— Equity Method Investment

On January 2, 2020, we effectuated our agreement with Walmart to jointly establish a new fintech accelerator under the name TailFin Labs, LLC (“TailFin Labs”), with a mission to develop innovative products, services and technologies that sit at the intersection of retail shopping and consumer financial services.

The entity is majority-owned by Walmart and focuses on developing tech-enabled solutions to integrate omni-channel retail shopping and financial services.

We hold a 20 % ownership interest in the entity, in exchange for annual capital contributions of $ 35.0 million per year from January 2020 through January 2024.

We account for our investment in TailFin Labs under the equity method of accounting in accordance with ASC 323, Investments – Equity Method and Joint Ventures.

Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for, among other things, its proportionate share of earnings or losses.

However, given the capital structure of the TailFin Labs arrangement, we apply the Hypothetical Liquidation Book Value ("HLBV") method to determine the allocation of profits and losses since our liquidation rights and priorities, as defined by the agreement, differ from our underlying ownership interest.

The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation provisions of the agreement if the partnership was to be liquidated at book value as of the balance sheet date.

Each partner’s allocation of income or loss in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions.

Any future economic benefits derived from products or services developed by TailFin Labs will be negotiated on a case-by-case basis between the parties.

As of December 31, 2020, our net investment in TailFin Labs amounted to approximately $ 28.8 million and is included in the long term portion of prepaid expenses and other assets on our consolidated balance sheet.

We recorded equity in losses from TailFin Labs of approximately $ 7.0 million for the year ended December 31, 2020, which is recorded as a component of other income and expense on our consolidated statement of operations.

Total equity in losses also includes income and losses from an investment held by our bank under the Community Reinvestment Act, which are not material to these consolidated financial statements.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 8— Property and Equipment

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(In thousands)

Land $ 205 $ 205

Building 605 605

Computer equipment, furniture, and office equipment 61,093 61,193

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Tenant improvements 5,037 14,435

335,913 334,793

Less accumulated depreciation and amortization ( 202,513 ) ( 189,317 )

Property and equipment, net $ 133,400 $ 145,476

Depreciation and amortization expense was $ 49.5 million , $ 38.6 million and $ 33.5 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

Included in those amounts are depreciation expense related to internal-use software of $ 35.1 million , $ 25.5 million and $ 20.0 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The net carrying value of capitalized internal-use software was $ 117.6 million and $ 119.9 million at December 31, 2020 and 2019, respectively.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Total depreciation and amortization expense was $ 58.0 million, $ 49.5 million and $ 38.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Included in those amounts are depreciation expense related to internal-use software of $ 43.9 million, $ 35.1 million and $ 25.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

We recorded impairment charges to property and equipment of $ 14.7 million , $ 0.6 million and $ 0.9 million for the years ended December 31, 2020 , 2019 and 2018.

Impairment charges for the year ended December 31, 2020 were primarily associated with capitalized internal-use software we determined to no longer be utilized, as well as tenant improvements and other computer equipment at our office locations that will no longer provide any future economic benefit as a result of our remote workforce strategy.

See Note 20 — Leases , for additional information.

Note 9— Goodwill and Intangible Assets

1 unchanged sentence

(In thousands)

Goodwill $ 301,790 $ 301,790

Intangible assets, net 189,988 219,204

2 unchanged sentences

We completed our annual goodwill impairment test as of September 30, 2020.

Based on the results of step one of the annual goodwill impairment test, we determined that step two was not required for each of our reporting units as their fair values exceeded their carrying values indicating there was no impairment.

Based on the results of the annual goodwill impairment test, we determined that each of the fair values of our reporting units exceeded their carrying values and therefore, no impairment was recorded.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9—Goodwill and Intangible Assets (continued)

Intangible Assets

The gross carrying amounts and accumulated amortization related to intangibles assets were as follows:

December 31, 2019

December 31, 2018

Gross Carrying Value

Accumulated Amortization

Net Book Value

Gross Carrying Value

Accumulated Amortization

Net Book Value

Weighted Average Useful Lives

(In thousands)

December 31, 2020 December 31, 2019

Gross Carrying Value Accumulated Amortization Net Book Value Gross Carrying Value Accumulated Amortization Net Book Value Weighted Average Useful Lives

(In thousands) (In thousands) (Years)

Customer relationships $ 309,773 $ ( 150,445 ) $ 159,328 $ 309,773 $ ( 126,167 ) $ 183,606 12.8

Trade names 44,086 ( 18,535 ) 25,551 44,086 ( 15,689 ) 28,397 14.6

Patents 3,000 ( 1,636 ) 1,364 3,000 ( 1,364 ) 1,636 11.0

Software licenses 5,595 ( 2,698 ) 2,897 4,832 ( 837 ) 3,995 3.0

Other 5,964 ( 5,116 ) 848 5,964 ( 4,394 ) 1,570 5.0

Total intangible assets $ 368,418 $ ( 178,430 ) $ 189,988 $ 367,655 $ ( 148,451 ) $ 219,204

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(In thousands)

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

2021 $ 28,863

Thereafter 66,297

Total $ 189,988

Note 10— Deposits

Deposits are categorized as non-interest or interest-bearing deposits as follows:

Non-interest bearing deposit accounts

(In thousands)

Account programs

Other demand deposits

Total non-interest bearing deposit accounts

Non-interest bearing deposit accounts $ 2,704,050 $ 1,055,818

Interest-bearing deposit accounts

Checking accounts 5,060 95,995

Secured card deposits

Savings 8,505 6,619

GPR deposits 12,955 11,892

Time deposits, denominations greater than or equal to $100 3,767 3,854

2 unchanged sentences

Total deposits $ 2,735,116 $ 1,175,341

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10—Deposits (continued)

The scheduled contractual maturities for total time deposits are presented in the table below:

(In thousands)

Due in 2021 $ 1,346

Due in 2022 1,451

Due in 2023 912

Due in 2024 458

Due in 2025 379

Total time deposits $ 4,546

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Note 11— Debt

As of December 31, 2019 and 2018 , our outstanding debt consisted of the following:

December 31, 2019

December 31, 2018

(In thousands)

Term facility

2019 Revolving Facility

Total debt outstanding

2019 Revolving Facility

In October 2019, we entered into a secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto.

The new credit facility provides for a $ 100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), maturing in October 2024.

The credit facility provides for a $ 100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), maturing in October 2024.

We use the proceeds of any borrowings under the revolving facility for working capital and other general corporate purposes, subject to the terms and conditions set forth in the credit agreement.

We may make voluntary repayments at any time or from time to time until maturity.

Borrowings available under the 2019 Revolving Facility as of December 31, 2019 amounted to $ 65.0 million .

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10—Debt (continued)

We classify amounts outstanding as long-term on our consolidated balance sheets;

however, we may make voluntary repayments at any time prior to maturity.

As of December 31, 2020, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

At our election, loans made under the credit agreement bear interest at 1) a LIBOR rate (the “LIBOR Rate") or 2) a base rate determined by reference to the highest of (a) the United States federal funds rate plus .50 %, (a) the Wells Fargo prime rate and (c) a daily rate equal to one-month LIBOR rate plus 1.0 % (the “Base Rate"), plus in either case an applicable margin.

The margin is dependent upon on our total leverage ratio and varies from 1.25 % to 2.00 % for LIBOR Rate loans and .25 % to 1.00 % for Base Rate loans.

The interest rate on our outstanding balance as of December 31, 2019 was 3.05 % .

We also pay a commitment fee, which varies from .20 % to .35 % per annum on the actual daily unused portions of the 2019 Revolving Facility.

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The credit agreement provided for 1) a $ 75.0 million five-year revolving facility (the "Revolving Facility") and 2) a five-year $ 150.0 million term loan facility ("Term Facility" and, together with the Revolving Facility, the "Senior Credit Facility").

Quarterly principal payments of $ 5.6 million were payable under the Term Facility, with any remaining balance outstanding due upon maturity on October 23, 2019.

In March 2019, we elected to make a voluntary prepayment of $ 60.0 million to retire the Term Facility without penalty or additional premium.

1 unchanged sentence

Cash interest expense related to our debt was $ 0.6 million, $ 0.6 million, and $ 3.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12— Stockholders’ Equity

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In the event a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock will receive Class A common stock, or rights to acquire Class A common stock, as the case may be.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11—Stockholders’ Equity (continued)

Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our Class A common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of our preferred stock and payment of other claims of creditors.

2 unchanged sentences

Comprehensive Income

The tax impact on unrealized losses on investment securities available-for-sale for the years ended December 31, 2019 , 2018 and 2017 was approximately $ 0.8 million , $ 0.1 million and $ 0.1 million , respectively.

The tax impact on unrealized gains on investment securities available-for-sale for the years ended December 31, 2020 , 2019 and 2018 was approximately $ 0.3 million, $ 0.8 million and $ 0.1 million, respectively.

Stock Repurchase Program

In June 2015, our Board of Directors authorized, subject to regulatory approval, a repurchase of shares of our Class A Common Stock in an amount up to $ 150 million under a stock repurchase program ("Repurchase Program") with no expiration date.

We completed our repurchase of all Class A Common Stock under the initial authorization in 2017.

In May 2017, our Board of Directors authorized, subject to regulatory approval, expansion of our stock repurchase program by an additional $ 150 million.

We sought and received regulatory approval during the second quarter of 2019, at which point we entered into an accelerated share repurchase agreement, as further discussed below.

We sought and received regulatory approval during the second quarter of 2019, at which point we entered into a $ 100 million accelerated share repurchase agreement.

In August 2019, we completed final settlement of shares purchased under this agreement, receiving in total approximately 2.1 million shares at an average repurchase price of $ 48.26 .

As of December 31, 2020, we have an authorized $ 50 million remaining under our current stock repurchase program for any additional repurchases.

Accelerated Share Repurchases

We have entered into accelerated share repurchase arrangements (“ASRs”) with a financial institution from time to time under the Repurchase Program.

The following table summarizes our ASR activity for the years presented in these consolidated financial statements:

Purchase Period End Date

Number of Shares (In thousands)

Average repurchase price per share

ASR Amount (In thousands)

March 2017 ASR

November 2017

We elected to cash settle approximately $2.0 million worth of shares owed back to the counterparty under our March 2017 accelerated share repurchase agreement.

In exchange for an up-front payment, the financial institution delivers shares of our Class A Common Stock during the purchase periods of each ASR.

Upon settlement, we either receive additional shares from the financial institution or we may be required to deliver additional shares or cash to the financial institution, at our election.

The final number of shares received upon settlement for the ASR is determined based on the volume-weighted average price of our common stock over the term of the agreement less an agreed upon discount and subject to adjustments pursuant to the terms and conditions of the ASR.

The up-front payments are accounted for as a reduction to shareholders’ equity on our consolidated balance sheets in the periods the payments are made.

The ASRs are accounted for in two separate transactions:

1) a treasury stock repurchase for the initial shares received and 2) a forward stock purchase contract indexed to our own stock for the unsettled portion of the ASR.

The par value of the shares received are recorded as a reduction to common stock with the remainder recorded as a reduction to additional paid-in capital and retained earnings.

The ASRs meet all of the applicable criteria for equity classification, and therefore are not accounted for as derivative instruments.

The initial repurchase of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

The shares are retired upon repurchase, but remain authorized for registration and issuance in the future.

Walmart Restricted Shares

On January 2, 2020, we issued Walmart, in a private placement, 975,000 restricted shares of our Class A Common Stock.

The shares vest in equal monthly increments through December 1, 2022, however, Walmart is entitled to voting rights and participate in any dividends paid from the issuance date on the unvested balance.

As such, the total amount of restricted shares issued are included in our total Class A shares outstanding.

As of December 31, 2020, there were 650,000 unvested shares outstanding.

The estimated grant-date fair value of the restricted shares is recorded as a component of stock-based compensation expense over the related period we expect to benefit under our relationship with Walmart.

GREEN DOT CORPORATION

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Year Ended December 31,

2020 2019 2018

(In thousands)

4 unchanged sentences

Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

2 unchanged sentences

Restricted stock unit activity for the year ended December 31, 2020 was as follows:

Weighted-Average Grant-Date Fair Value

Shares Weighted-Average Grant-Date Fair Value

(In thousands, except per share data)

4 unchanged sentences

Outstanding at December 31, 2020

1,222 $ 36.24

The total fair value of restricted stock vested for the years ended December 31, 2020, 2019 and 2018 was $ 25.6 million, $ 30.9 million and $ 67.5 million, respectively, based on the price of our Class A common stock on the vesting date.

Performance-Based Restricted Stock Units

We grant performance-based restricted stock units to certain employees which are subject to the attainment of pre-established annual performance targets for, among other things, non-GAAP earnings per share for the grant year.

The actual number of shares subject to the award is determined at the end of the annual performance period and may range from zero to 150 % of the target shares granted.

These awards contain an additional service component after each annual performance period is concluded and the unvested balance of the shares determined at the end of the annual performance period will vest over the remaining requisite service period.

Compensation expense related to these awards is recognized using the accelerated attribution method over the vesting period (generally, a period of four years) based on the fair value of the closing market price of our Class A common stock on the date of the grant

We grant performance-based restricted stock units to certain employees that are subject to the attainment of pre-established internal performance conditions, market conditions, or a combination thereof (collectively referred to herein as performance-based restricted stock units).

The actual number of shares subject to the award is determined at the end of the performance period and may range from zero to 200 % of the target shares granted depending upon the terms of the award.

These awards generally contain an additional service component after each performance period is concluded and the unvested balance of the shares after the performance metrics are achieved will vest over the remaining requisite service period.

Compensation expense related to these awards is recognized using the accelerated attribution method over the vesting period (generally, a total period of four years ) based on the grant date fair value of the award.

GREEN DOT CORPORATION

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Note 13—Employee Stock-Based Compensation (continued)

and the estimated performance that is expected to be achieved.

In the case of our former Chief Executive Officer, vesting of his awards was based on our achievement of total shareholder return ("TSR") relative to the S&P 600 index over a three-year performance period, with awards eligible for a maximum payout up to 150 % of the target shares for awards granted prior to 2019 or 200 % of the target shares for awards granted in 2019, respectively.

Compensation expense related to these awards is recognized over the performance period based on the grant date fair value through the use of a Monte Carlo simulation and are not subsequently re-measured.

Any unvested awards of our former Chief Executive Officer were forfeited as of December 31, 2019 as a result of his retirement.

The following table summarizes the performance-based restricted stock units granted under our 2010 Equity Incentive Plan:

Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

Performance based restricted stock units granted

Performance restricted stock units granted 1,045 722 276

Weighted-average grant-date fair value $ 33.15 $ 48.45 $ 71.70

Performance-based restricted stock unit activity for the year ended December 31, 2020 was as follows:

Weighted-Average Grant-Date Fair Value

Shares Weighted-Average Grant-Date Fair Value

(In thousands, except per share data)

3 unchanged sentences

Performance restricted stock units canceled ( 695 ) $ 48.72

Actual adjustment for certified performance periods

Outstanding at December 31, 2020

In June 2019, we modified the performance targets for certain performance-based restricted stock units issued at the beginning of 2019.

The modification for these awards was classified as improbable to probable, and resulted in a lower grant date fair value at the time of modification compared to the original grant date and an overall decrease in stock-based compensation expense recognized for the year ended December 31, 2019 compared to the prior year period.

Stock-based compensation for these modified awards, as well as other performance-based restricted stock units issued during the year, have further been adjusted to reflect our estimated achievement under the modified targets.

The total fair value of performance based restricted stock vested for the years ended December 31, 2019 , 2018 and 2017 was $ 22.7 million , $ 45.1 million and $ 4.4 million , respectively, based on the price of our Class A common stock on the vesting date.

The total fair value of all performance-based restricted stock vested for the years ended December 31, 2020, 2019 and 2018 was $ 12.4 million, $ 22.7 million and $ 45.1 million, respectively, based on the price of our Class A common stock on the vesting date.

Stock Options

Stock option activity for the year ended December 31, 2019 was as follows:

In connection with the recent hiring of certain executive officers, we granted stock options subject to market conditions during the year ended December 31, 2020.

The stock options have a seven-year term that vest subject to continued service over three years , and upon our company achieving certain stock trading prices within a five-year period.

Compensation expense related to these awards is recognized over the greater of the explicit service period or a derived implicit period based on when the performance targets are expected to be achieved.

The grant date fair value is determined through the use of a Monte Carlo simulation and is not subsequently re-measured.

The following table summarizes our market-based stock options granted:

Year Ended December 31,

(In thousands, except per share data)

Stock options granted 2,250

Weighted-average exercise price $ 31.30

Weighted-Average Remaining Contractual Life

Aggregate Intrinsic Value

Weighted-average grant-date fair value $ 14.57

Year Ended December 31,

Risk-free interest rate 0.63 %

Expected term (in years) 3.30

Expected dividends —

Expected volatility 53.8 %

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13—Employee Stock-Based Compensation (continued)

Total stock option activity for the year ended December 31, 2020 was as follows:

Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life

(in Years) Aggregate Intrinsic Value

(In thousands, except per share data and years)

Outstanding at December 31, 2019

Options granted 2,250 31.30

Options exercised ( 404 ) 26.13

Options canceled ( 393 ) 28.37

Outstanding at December 31, 2020

1,634 $ 32.04 5.99 $ 38,836

Exercisable at December 31, 2020

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12—Employee Stock-Based Compensation (continued)

134 22.95 2.06 $ 4,411

We have not issued any service only based stock option awards from our 2010 Equity Incentive Plan for the periods presented in these consolidated financial statements.

The total intrinsic value of options exercised was $ 10.5 million, $ 2.4 million and $ 36.2 million for the years ended December 31, 2020, 2019, and 2018, respectively.

We have not issued any new stock option awards from our equity plan for the periods presented in these consolidated financial statements.

Accordingly, any additional required disclosures with respect to fair value assumptions of our stock options have been omitted.

As of December 31, 2020, there was $ 53.4 million of aggregate unrecognized compensation cost related to unvested restricted stock units (including performance-based awards) expected to be recognized in compensation expense in future periods, with a weighted-average period of 2.6 years.

As of December 31, 2019 , we had no unvested stock options and thus, no remaining unrecognized compensation cost.

As of December 31, 2020, there was $ 13.7 million remaining of unrecognized compensation cost related to stock options, with a weighted-average period of 1.3 years.

Note 14— Income Taxes

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(In thousands)

Federal $ 15,846 $ 11,914 $ 4,011

State 3,650 1,790 894

Foreign 471 604 443

Current income tax expense 19,967 14,308 5,348

Deferred income tax expense (benefit)

Federal ( 11,212 ) 8,102 1,136

State ( 3,722 ) ( 1,226 ) ( 1,370 )

Foreign ( 69 ) — —

Deferred income tax (benefit) expense ( 15,003 ) 6,876 ( 234 )

Income tax expense $ 4,964 $ 21,184 $ 5,114

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 14—Income Taxes (continued)

Income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

federal statutory tax rate 21.0 % 21.0 % 21.0 %

3 unchanged sentences

Tax Cuts and Jobs Act remeasurement — — 0.2

IRC 162(m) limitation

Non-deductible executive compensation 17.2 0.1 2.2

Capital loss valuation allowance release ( 1.1 ) — —

Non-deductible penalties 1.1 — —

Other 0.1 0.6 0.5

Effective tax rate 17.7 % 17.5 % 4.1 %

Due to the passage of the Tax Cuts and Jobs Act in 2017, we are now subject to an additional tax on the 'Global Intangible Low-Taxed Income' (GILTI) earned by our foreign subsidiary.

Under FASB Staff Q&A, Topic 740, No.

5, Accounting for Global Intangible Low-Taxed Income , an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred.

We have made a policy election to account for GILTI in the year the tax is incurred.

For the year ended December 31, 2019 , the provision for GILTI expense was not material to our financial statements.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13—Income Taxes (continued)

The increase in the effective tax rate for the year ended December 31, 2019 as compared to the year ended December 31, 2018 is primarily due to the decrease in benefit on the recognition of excess tax benefits from stock-based compensation and additional expenses related to state taxes, net of federal benefits.

The increase in the effective tax rate for the year ended December 31, 2020 as compared to the prior year ended December 31, 2019 is primarily due to an increase of the IRC 162(m) limitation on the deductibility of certain executive compensation.

This increase was partially offset by the impact of general business credits and an increase in excess tax benefits from stock-based compensation.

We have made a policy election to account for Global Intangible Low-Taxed Income ("GILTI") in the year the GILTI tax is incurred.

For the year ended December 31, 2020, the provision for GILTI tax expense was not material to our financial statements.

The tax effects of temporary difference that give rise to significant portions of our deferred tax assets and liabilities were as follows:

19 unchanged sentences

Total deferred tax liabilities 48,068 51,896

Net deferred tax liabilities

Net deferred tax assets (liabilities) $ 5,547 $ ( 8,735 )

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 14—Income Taxes (continued)

We establish a valuation allowance when we consider it more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

As of December 31, 2019 , we provided a valuation allowance against our capital loss carryforwards as we believe it is more-likely-than-not that the tax benefits related to the capital loss carryforwards will not be realized.

During the second quarter ended June 30, 2020, we released our valuation allowance against our capital loss carryforwards as we recognized capital gains on the sale of certain investment securities during that period sufficient to offset our entire capital loss carryforward amount.

As of December 31, 2020, we did not have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we will realize the benefits of our deferred tax assets.

We are subject to examination by the Internal Revenue Service, or IRS, and various state tax authorities.

1 unchanged sentence

We generally remain subject to examination of our various state income tax returns for a period of four to five years from the respective dates the returns were filed.

As of December 31, 2019 , we have federal net operating loss carryforwards of approximately $ 31.9 million , state net operating loss carryforwards of approximately $ 57.9 million , and capital loss carryforwards of approximately $ 1.5 million , which will be available to offset future income.

The IRS initiated an examination of our 2017 U.S.

federal tax return during the second quarter ended June 30, 2020 and the examination remains ongoing as of December 31, 2020.

We do not expect that this examination will have a material impact on our consolidated financial statements.

As of December 31, 2020, we have federal net operating loss carryforwards of approximately $ 19.2 million and state net operating loss carryforwards of approximately $ 68.8 million which will be available to offset future income.

If not used, the federal net operating losses will expire between 2026 and 2034.

In regards to the state net operating loss carryforwards, approximately $ 46.6 million will expire between 2021 and 2040, while the remaining balance of approximately $ 22.2 million, does not expire and carries forward indefinitely.

The capital loss carryforwards will expire between 2020 and 2023.

The net operating losses are subject to an annual IRC Section 382 limitation which restricts their utilization against taxable income in future periods.

In addition, we have state business tax credits of approximately $ 17.3 million that can be carried forward indefinitely and other state business tax credits of approximately $ 1.1 million that will expire between 2023 and 2027.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13—Income Taxes (continued)

As of December 31, 2020 and 2019, we had a liability of $ 9.5 million and $ 8.4 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(In thousands)

2 unchanged sentences

Increases related to positions taken during the current year

Decreases related to positions settled with tax authorities

1,500 1,576 1,607

Decreases due to a lapse of applicable statute of limitations

( 862 ) ( 456 ) ( 664 )

Ending balance $ 9,518 $ 8,398 $ 6,965

1 unchanged sentence

We recognized accrued interest and penalties related to unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018, of approximately $ 0.5 million, $ 0.5 million and $ 0.3 million, respectively.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15— Earnings per Common Share

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

Basic earnings per Class A common share

Net income $ 23,131 $ 99,897 $ 118,703

Amount attributable to unvested Walmart restricted shares ( 346 ) — —

Net income allocated to Class A common stockholders $ 22,785 $ 99,897 $ 118,703

Weighted-average Class A shares issued and outstanding 52,438 52,195 52,222

1 unchanged sentence

Diluted earnings per Class A common share

Net income allocated to Class A common stockholders $ 22,785 $ 99,897 $ 118,703

Re-allocated earnings 8 — —

Diluted net income allocated to Class A common stockholders $ 22,793 $ 99,897 $ 118,703

Weighted-average Class A shares issued and outstanding 52,438 52,195 52,222

7 unchanged sentences

For the periods presented, we excluded certain restricted stock units and stock options outstanding, which could potentially dilute basic EPS in the future, from the computation of diluted EPS as their effect was anti-dilutive.

Additionally, we have excluded any performance based restricted stock units for which the performance contingency has not been met as of the end of the period, or whereby the result of including such awards was anti-dilutive.

Additionally, we have excluded any performance-based restricted stock units and performance-based stock options where the performance contingency has not been met as of the end of the period, or whereby the result of including such awards was anti-dilutive.

The following table shows the weighted-average number of anti-dilutive shares excluded from the diluted EPS calculation:

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 14—Earnings per Common Share (continued)

Year Ended December 31,

2020 2019 2018

(In thousands)

3 unchanged sentences

Performance-based restricted stock units 301 459 143

Total options, restricted and performance-based stock units

Unvested Walmart restricted shares 796 — —

Total 1,929 813 163

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 16— Fair Value Measurements

3 unchanged sentences

As of December 31, 2020 and 2019, our assets and liabilities carried at fair value on a recurring basis were as follows:

Total Fair Value

December 31, 2019

(In thousands)

Level 1 Level 2 Level 3 Total Fair Value

December 31, 2020 (In thousands)

Corporate bonds $ — $ 10,110 $ — $ 10,110

3 unchanged sentences

Asset-backed securities — 5,172 — 5,172

Total assets $ — $ 970,969 $ — $ 970,969

Contingent consideration $ — $ — $ 5,300 $ 5,300

December 31, 2019

Negotiable certificate of deposit

Corporate bonds $ — $ 10,012 $ — $ 10,012

Agency bond securities — 20,000 — 20,000

2 unchanged sentences

Asset-backed securities — 32,052 — 32,052

Total assets $ — $ 277,439 $ — $ 277,439

Contingent consideration $ — $ — $ 9,300 $ 9,300

We based the fair value of our fixed income securities held as of December 31, 2020 and 2019 on quoted prices in active markets for similar assets.

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the year s ended December 31, 2019 and 2018 .

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15—Fair Value Measurements (continued)

The following table presents changes in our contingent consideration payable for the year s ended December 31, 2019 , 2018 and 2017 , which is categorized in Level 3 of the fair value hierarchy:

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the years ended December 31, 2020 and 2019.

The following table presents changes in our contingent consideration payable for the years ended December 31, 2020 , 2019 and 2018, which is categorized in Level 3 of the fair value hierarchy:

Year Ended December 31,

2020 2019 2018

(In thousands)

3 unchanged sentences

Balance, end of period $ 5,300 $ 9,300 $ 15,800

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17— Fair Value of Financial Instruments

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The fair value of our debt is classified as a Level 2 liability in the fair value hierarchy.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 16—Fair Value of Financial Instruments (continued)

Fair Value of Financial Instruments

The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value, at December 31, 2020 and 2019 are presented in the table below.

December 31, 2019

December 31, 2018

Carrying Value

December 31, 2020 December 31, 2019

Carrying Value Fair Value Carrying Value Fair Value

(In thousands)

2 unchanged sentences

Financial Liabilities

Deposits $ 2,735,116 $ 2,735,072 $ 1,175,341 $ 1,175,298

Line of credit $ — $ — $ 35,000 $ 35,000

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 18— Concentrations of Credit Risk

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We maintain reserves for uncollectible overdrawn accounts and uncollectible trade receivables.

With respect to our loan portfolio (excluding secured credit cards), approximately 92.3 % of our borrowers reside in the state of Utah and approximately 42.3 % in the city of Provo.

With respect to our loan portfolio (excluding secured credit cards), as of December 31, 2020 approximately 92.3 % of our borrowers reside in the state of Utah and approximately 42.3 % in the city of Provo.

Consequently, this loan portfolio is susceptible to any adverse market or environmental conditions that may impact this specific geographic region.

Credit risk associated with our secured credit card portfolio is mitigated by collateral provided by the borrower in the amount of their credit limit.

Credit risk for our settlement assets is concentrated with our retail distributors and other business partners, which we frequently monitor.

Credit risk for our settlement assets is concentrated with our retail distributors and other business partners, which we frequently monitor and is further mitigated by the short collection period.

Note 19— Defined Contribution Plan

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Note 20— Leases

We enter into operating lease agreements principally related to our corporate office locations.

Our leases consist of operating lease agreements principally related to our corporate and subsidiary office locations.

Currently, we do not enter into any financing lease agreements.

Our leases have remaining lease terms of less than 1 year to approximately 6 years , most of which include renewal options of varying terms.

We made a policy election to adopt the short term lease exemption for all leases with an initial term of 12 months or less.

Significant Assumptions, Judgments and Policies

Under Topic 842, we determine if an arrangement is or contains a lease at inception.

ROU assets and liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term.

For this purpose, we consider only fixed payments stated in the leases at the time of commencement.

Variable lease payments that are not based on a specified rate or index are expensed when incurred.

Since an implicit interest rate for our leases cannot be determined under our contracts, we use an incremental borrowing rate based on the information available to us at the commencement date in determining the present value of our lease payments.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Leases (continued)

The ROU asset also reflects any lease payments made prior to commencement and is recorded net of any lease incentives received.

Our ROU asset and liability reflects, as applicable, options to extend or terminate a lease when it is reasonably certain that we will exercise such options.

We also made a policy election to combine our lease and non-lease components for each of our existing classes of leased assets.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease expense is recognized on a straight-line basis over the lease term.

Our leases have remaining lease terms of less than 1 year to approximately 5 years, many of which generally include renewal options of varying terms.

As of December 31, 2020 and for the foreseeable future, we have committed to a remote workforce strategy for most U.S.

based employees.

As such, during the fourth quarter of 2020, we recorded an impairment charge of approximately $ 7.0 million related to our lease right-of-use assets as we no longer intend to utilize our leased office spaces in the U.S.

for the duration of our remaining lease terms.

Our lease agreements have or will be terminated in due course in accordance with our lease provisions, however, we may be contractually obligated to continue making lease payments where no termination option is available.

Our total lease expense amounted to approximately $ 9.2 million, $ 11.3 million, and $ 7.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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Supplemental information related to our ROU assets and related lease liabilities is as follows:

December 31, 2019

Year Ended December 31,

Cash paid for operating lease liabilities (in thousands) $ 9,910 $ 8,850

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Weighted average discount rate 4.8 % 4.7 %

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 20—Leases (continued)

Maturities of our operating lease liabilities as of December 31, 2020 is as follows:

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Note 21— Commitments and Contingencies

At December 31, 2019 , the future minimum annual payments through various agreements with vendors and retail distributors was as follows:

Vendor/Retail Distributor Commitments

Year ending December 31,

(In thousands)

Total of future commitments

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 20—Commitments and Contingencies (continued)

In the event we terminate our processing services agreement for convenience, we are required to pay a single lump sum equal to any minimum payments remaining on the date of termination.

These future minimum obligations are included in our vendor and retail distributor commitments.

In addition to the above contractual obligations, our definitive agreement to acquire all of the equity interests of UniRush provides for a minimum $ 4 million annual earn-out payment for five years following the closing, ending in February 2022.

Financial Commitments

As discussed in Note 7 — Equity Method Investment, we are committed to make annual capital contributions in TailFin Labs, LLC of $ 35.0 million per year from January 2020 through January 2024.

Our definitive agreement to acquire all of the equity interests of UniRush provides for a minimum $ 4 million annual earn-out payment for five years following the closing, ending in February 2022.

As of December 31, 2020, the estimated fair value of our remaining earn-out payments amounted to $ 5.3 million.

In addition, through the normal course of business, we may enter into various agreements with our vendors and retail distributors that may subject us to minimum annual requirements.

Litigation and Claims

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Green Dot Corp., et al., No.

19-cv-10701-DDP-E, was filed in the United States District Court for the Central District of California, against us and two of our officers.

19-cv-10701-DDP-E, was filed in the United States District Court for the Central District of California, against us and two of our former officers.

The suit asserts purported claims under Sections 10(b) and 20(a) of the Exchange Act for allegedly misleading statements regarding our business strategy.

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These cases have been related.

The defendants have not yet responded to the complaints in these matters.

We have not yet responded to the complaints in these matters.

Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of this matter.

We are unable at this time to determine whether the outcome of the litigation would have a material impact on our results of operations, financial condition or cash flows.

The third and final performance period under an earn-out provision for the acquisition of our tax refund processing business ended on June 30, 2017.

We believed that our tax refund processing business did not achieve its earn-out performance target for the fiscal year performance period based on the provisions of the contract and therefore, the total potential payout of $ 26 million had not been accrued in any period subsequent to June 30, 2017.

We were in the process of resolving the final earn-out calculation with the selling shareholders with the assistance of a neutral third party pursuant to the terms of the contract.

Prior to the final outcome of that process, we and the sellers mutually agreed to a payment of $ 13.5 million .

This payment was made in October of 2018 and is reflected as a component of other general and administrative expenses on our consolidated income statement for the year ended December 31, 2018.

Other Matters

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 21—Commitments and Contingencies (continued)

Other Legal Matters

We monitor the laws of all 50 states to identify state laws or regulations that apply (or may apply) to our products and services.

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(ii) certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities, and other claims arising from our use of the premises;

(iii) certain agreements with our officers, directors, and employees, under

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 20—Commitments and Contingencies (continued)

which we may be required to indemnify these persons for liabilities arising out of their relationship with us;

(iii) certain agreements with our officers, directors, and employees, under which we may be required to indemnify these persons for liabilities arising out of their relationship with us;

and (iv) contracts under which we may be required to indemnify our retail distributors, suppliers, vendors and other parties with whom we have contracts against claims arising from certain of our actions, omissions, violations of law and/or infringement of patents, trademarks, copyrights and/or other intellectual property rights.

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For additional information regarding overdrafts on cardholders’ accounts, refer to Note 5 — Accounts Receivable .

Note 21— Significant Retailer Concentration

Note 22— Significant Retailer and Partner Concentrations

A credit concentration may exist if customers are involved in similar industries, economic sectors, and geographic regions.

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Year Ended December 31,

No other retail distributor or partner made up greater than 10% of our total operating revenues for the years ended December 31, 2019 , 2018 , and 2017 .

2020 2019 2018

Walmart 27 % 34 % 36 %

In addition, approximately 13 % of our total operating revenues for the year ended December 31, 2020 were generated from a single BaaS partner, without a corresponding concentration to our gross profit for the period.

Settlement Asset Concentrations

Settlement assets derived from our products sold at retail distributors constituting greater than 10% of the settlement assets outstanding on our consolidated balance sheets were as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Walmart * 13 %

* Constitutes less than 10% for the period presented.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 23— Regulatory Requirements

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We and Green Dot Bank are subject to commitments that we have made to the Federal Reserve Board and the Utah Department of Financial Institutions.

These commitments require Green Dot Bank to maintain cash and/or cash equivalents in an amount equal to no less than 100 % of insured deposits generated by Green Dot Bank related to GPR cards, a subset of its total deposits.

In addition, we and Green Dot Bank are subject to various regulatory capital requirements administered by the federal banking agencies.

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The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 22—Regulatory Requirements (continued)

As of December 31, 2020 and 2019, we and Green Dot Bank were categorized as "well capitalized" under applicable regulatory standards.

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December 31, 2020

Regulatory Minimum

"Well-capitalized" Minimum

Amount Ratio Regulatory Minimum "Well-capitalized" Minimum

(In thousands, except ratios)

Green Dot Corporation:

Tier 1 leverage

Common equity Tier 1 capital

Tier 1 leverage $ 515,134 17.5 % 4.0 % n/a

Common equity Tier 1 capital $ 515,134 57.8 % 4.5 % n/a

Tier 1 capital $ 515,134 57.8 % 6.0 % 6.0 %

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December 31, 2019

Regulatory Minimum

"Well-capitalized" Minimum

Amount Ratio Regulatory Minimum "Well-capitalized" Minimum

(In thousands, except ratios)

Green Dot Corporation:

Tier 1 leverage

Common equity Tier 1 capital

Tier 1 leverage $ 400,445 22.2 % 4.0 % n/a

Common equity Tier 1 capital $ 400,445 70.5 % 4.5 % n/a

Tier 1 capital $ 400,445 70.5 % 6.0 % 6.0 %

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 23— Selected Unaudited Quarterly Financial Information

The following tables set forth a summary of our quarterly financial information for each of the four quarters in 2019 and 2018 :

(In thousands, except per share data)

Total operating revenues

Total operating expenses

Operating (loss) income

Interest expense, net

(Loss) income before income taxes

Income tax (benefit) expense

Net income (loss)

Earnings (loss) per common share

Class A common stock

(In thousands, except per share data)

Total operating revenues

Total operating expenses

Operating income

Interest expense, net

Income before income taxes

Income tax (benefit) expense

Earnings per common share

Class A common stock

Note 24— Segment Information

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We do not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 24—Segment Information (continued)

The following tables present certain financial information for each of our reportable segments for the periods then ended:

Year Ended December 31, 2020

Account Services

Processing and Settlement Services

Corporate and Other

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

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Year Ended December 31, 2019

Account Services

Processing and Settlement Services

Corporate and Other

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

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Year Ended December 31, 2018

Account Services

Processing and Settlement Services

Corporate and Other

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

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Operating income $ 200,191 $ 74,323 $ ( 144,099 ) $ 130,415

Note 25— Subsequent Events

On October 29, 2019, we entered into the 2020 Amended and Restated Walmart MoneyCard Program Agreement (the “Program Agreement”) with Walmart Inc.

and certain of Walmart’s subsidiaries, which provides for us to continue to serve as the issuing bank and program manager for the Walmart MoneyCard suite of reloadable debit card products.

The term of the Program Agreement began on January 1, 2020 and expires on January 31, 2027, with an automatic renewal clause for an additional period of one year , subject to certain terms as discussed in the Program Agreement.

The entity is majority-owned by Walmart and is expected to focus on developing tech-enabled solutions to integrate omni-channel retail shopping and financial services.

We own a 20 % equity interest in the newly formed entity, in exchange for capital contributions of $ 35.0 million per year over the next 5 years .

We will account for our investment in TailFin Labs under the equity method of accounting.

Any economic benefits derived from products or services developed by TailFin Labs will be negotiated on a case-by-case basis between the parties.

As an incentive for Walmart and us to work together to achieve growth across all current and future mutual lines of business that we are engaged, on January 2, 2020, we issued Walmart, in a private placement, 975,000 restricted shares of our Class A Common Stock.

The shares will vest in equal monthly increments through December 1, 2022.

Walmart will be entitled to vote and receive any dividends paid from the issuance date.

Changes in and Disagreement With Accountants on Accounting and Financial Disclosure

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data