What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-10 compared with 2020-11-06 · 265 added, 347 removed, 507 unchanged (55% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Assets (In thousands, except par value)

2 unchanged sentences

Restricted cash 4,900 4,859

Investment securities available-for-sale, at fair value — 10,020

Settlement assets 416,753 782,262

1 unchanged sentence

Prepaid expenses and other assets 69,436 66,705

Income tax receivable 961 870

Total current assets 3,279,156 2,413,423

Investment securities available-for-sale, at fair value 996,215 970,969

Loans to bank customers, net of allowance for loan losses of $ 642 and $ 1,166 as of September 30, 2020 and December 31, 2019, respectively

Loans to bank customers, net of allowance for loan losses of $ 1,531 and $ 757 as of March 31, 2021 and December 31, 2020, respectively

26,089 21,011

20 unchanged sentences

Operating lease liabilities 14,600 16,396

Line of credit — 35,000

Net deferred tax liabilities 7,192 7,192

3 unchanged sentences

Class A common stock, $ 0.001 par value;

100,000 shares authorized as of September 30, 2020 and December 31, 2019;

53,459 and 51,807 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

100,000 shares authorized as of March 31, 2021 and December 31, 2020;

54,389 and 54,034 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 364,926 354,460

Retained earnings 677,625 651,890

Accumulated other comprehensive income 2,947 2,040

Accumulated other comprehensive (loss) income ( 19,116 ) 3,428

Total stockholders’ equity 1,023,489 1,009,832

3 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(In thousands, except per share data)

1 unchanged sentence

Card revenues and other fees $ 186,012 $ 141,394

Processing and settlement service revenues 57,526 54,620 246,042 229,272

Cash processing revenues 90,915 123,066

Interchange revenues 111,226 90,866

7 unchanged sentences

Total operating expenses 359,501 303,320

Operating (loss) income ( 2,650 ) ( 2,187 ) 61,589 123,161

Operating income 33,985 58,849

Interest expense, net 37 241

Other (expense) income, net ( 1,086 ) 192

(Loss) income before income taxes ( 4,339 ) ( 2,299 ) 61,562 121,413

Income tax (benefit) expense ( 1,347 ) ( 1,768 ) 14,415 23,209

Net (loss) income $ ( 2,992 ) $ ( 531 ) $ 47,147 $ 98,204

Basic (loss) earnings per common share:

Income before income taxes 32,862 58,800

Income tax expense 7,127 11,955

Net income $ 25,735 $ 46,845

Basic earnings per common share:

$ 0.47 $ 0.89

Diluted (loss) earnings per common share:

Diluted earnings per common share:

$ 0.46 $ 0.87

5 unchanged sentences

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND LOSS

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

(In thousands)

Net (loss) income $ ( 2,992 ) $ ( 531 ) $ 47,147 $ 98,204

Other comprehensive income

Unrealized holding gain, net of tax 756 167 907 2,329

Comprehensive (loss) income $ ( 2,236 ) $ ( 364 ) $ 48,054 $ 100,533

Net income $ 25,735 $ 46,845

Other comprehensive (loss) income

Unrealized holding (loss) gain, net of tax ( 22,544 ) 4,157

Comprehensive income $ 3,191 $ 51,002

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Three Months Ended September 30, 2020

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

Shares Amount

(In thousands)

Balance at June 30, 2020 53,297 $ 53 $ 323,083 $ 678,898 $ 2,191 $ 1,004,225

Common stock issued under stock plans, net of withholdings and related tax effects 162 — ( 4,922 ) — — ( 4,922 )

Stock-based compensation — — 11,806 — — 11,806

Net loss — — — ( 2,992 ) — ( 2,992 )

Other comprehensive income — — — — 756 756

Balance at September 30, 2020 53,459 $ 53 $ 329,967 $ 675,906 $ 2,947 $ 1,008,873

Three Months Ended September 30, 2019

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

Three Months Ended March 31, 2021

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

Shares Amount

(In thousands)

Balance at June 30, 2019 51,809 $ 52 $ 291,958 $ 627,878 $ 2,025 $ 921,913

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

Common stock issued under stock plans, net of withholdings and related tax effects 355 — ( 6,771 ) — — ( 6,771 )

Stock-based compensation — — 17,237 — — 17,237

Repurchases of Class A common stock ( 406 ) — — — — —

Net loss — — — ( 531 ) — ( 531 )

Other comprehensive income — — — — 167 167

Balance at September 30, 2019 51,479 $ 52 $ 297,593 $ 627,347 $ 2,192 $ 927,184

See notes to unaudited consolidated financial statements

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Nine Months Ended September 30, 2020

Net income — — — 25,735 — 25,735

Other comprehensive loss — — — — ( 22,544 ) ( 22,544 )

Balance at March 31, 2021 54,389 $ 54 $ 364,926 $ 677,625 $ ( 19,116 ) $ 1,023,489

Three Months Ended March 31, 2020

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

9 unchanged sentences

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

Balance at September 30, 2020 53,459 $ 53 $ 329,967 $ 675,906 $ 2,947 $ 1,008,873

Nine Months Ended September 30, 2019

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

Shares Amount

(In thousands)

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

Common stock issued under stock plans, net of withholdings and related tax effects 634 1 ( 13,298 ) — — ( 13,297 )

Stock-based compensation — — 30,136 — — 30,136

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

Net income — — — 98,204 — 98,204

Other comprehensive income — — — — 2,329 2,329

Balance at September 30, 2019 51,479 $ 52 $ 297,593 $ 627,347 $ 2,192 $ 927,184

Balance at March 31, 2020 52,854 $ 53 $ 306,151 $ 675,604 $ 6,197 $ 988,005

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

6 unchanged sentences

Stock-based compensation 17,237 11,385

Losses in equity method investments 4,313 —

Realized gain on sale of available-for-sale investment securities ( 5,062 ) —

Amortization of premium (discount) on available-for-sale investment securities 618 ( 209 )

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

Losses (earnings) in equity method investments 875 ( 223 )

Amortization of premium on available-for-sale investment securities 659 138

Amortization of deferred financing costs 42 42

Impairment of internal-use software 1,099 121

Changes in operating assets and liabilities:

17 unchanged sentences

Financing activities

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

Borrowings on revolving line of credit — 100,000

3 unchanged sentences

Net changes in deposits 859,868 442,017

Net decrease in obligations to customers ( 84,304 ) ( 25,311 )

Net changes in settlement assets and obligations to customers 395,482 ( 34,667 )

Contingent consideration payments ( 1,000 ) ( 1,000 )

Repurchase of Class A common stock — ( 100,000 )

Net cash provided by (used in) financing activities 983,001 ( 335,374 )

Net increase (decrease) in unrestricted cash, cash equivalents and restricted cash 1,075,914 ( 230,840 )

Net cash provided by financing activities 1,247,579 469,893

Net increase in unrestricted cash, cash equivalents and restricted cash 1,219,990 500,153

Unrestricted cash, cash equivalents and restricted cash, beginning of period 1,496,701 1,066,154

1 unchanged sentence

Cash paid for interest $ 84 $ 283

Cash paid for/(refund from) income taxes $ 5,497 $ ( 3,612 )

Cash refund from income taxes $ ( 20 ) $ ( 95 )

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:

6 unchanged sentences

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, such as cash deposits and disbursements, and tax refund processing.

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

4 unchanged sentences

Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2020 for additional disclosures, including a summary of our significant accounting policies.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2020, other than the adoption of the accounting pronouncements discussed herein.

There have been no material changes to our significant accounting policies during the three months ended March 31, 2021, other than the adoption of the accounting pronouncements discussed herein.

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal and recurring items, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented.

2 unchanged sentences

accordingly, accounting estimates require the exercise of judgment.

These financial statements were prepared using information reasonably available as of September 30, 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.

These financial statements were prepared using information reasonably available as of March 31, 2021 and through the date of this report.

The accounting estimates used in the preparation of our consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained, and as our 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.

1 unchanged sentence

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") that requires financial assets measured at amortized cost be presented at the net amount expected to be collected.

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 under ASU 2016-13 eliminate the probable incurred loss recognition model under GAAP and introduce 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 new ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

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

Recently issued accounting pronouncements not yet adopted

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.

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies various aspects related to the accounting for income taxes.

The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and modifies existing guidance to improve 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 do not anticipate any immediate impact on our consolidated financial statements upon adoption.

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

Recently issued accounting pronouncements not yet adopted

In August 2020, the FASB issued ASU No.

2 unchanged sentences

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

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

In March 2020, the FASB issued ASU No.

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 9 — Debt, to these consolidated financial statements for additional information.

Note 3— Revenues

Disaggregation of Revenues

Our products and services are offered only to customers within the United States.

We determine our operating segments based on how our chief operating decision maker manages our operations, makes operating decisions and evaluates operating performance.

As discussed in Note 19 — Segment Informatio n, we determine our operating segments based on how our chief operating decision maker manages our operations, makes operating decisions and evaluates operating performance.

Within our segments, we believe that the nature, amount, timing and uncertainty of our revenue and cash flows and how they are affected by economic factors can be further illustrated based on the timing in which revenue for each of our products and services is recognized.

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

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

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

Timing of revenue recognition (In thousands)

Transferred at a point in time $ 113,695 $ 57,526 $ 114,418 $ 54,616

Our products and services are offered only to customers within the United States.

The following table disaggregates our revenues earned from external customers by each of our reportable segments:

Three Months Ended March 31, 2021

Consumer Services B2B Services Money Movement Services Total

Timing of recognition (In thousands)

Transferred point in time $ 112,652 $ 48,859 $ 89,120 $ 250,631

Transferred over time 66,026 70,249 1,247 137,522

1 unchanged sentence

$ 178,678 $ 119,108 $ 90,367 $ 388,153

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

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

Timing of revenue recognition (In thousands)

Transferred at a point in time $ 369,874 $ 246,042 $ 378,492 $ 229,263

Three Months Ended March 31, 2020

Consumer Services B2B Services Money Movement Services Total

Timing of recognition (In thousands)

Transferred point in time $ 89,301 $ 47,057 $ 119,100 $ 255,458

Transferred over time 56,944 41,972 952 99,868

2 unchanged sentences

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

Within our Account Services segment, revenues recognized at a point in time are comprised principally of ATM fees, interchange, and other similar transaction-based fees.

Revenues recognized over time consist of new card fees, monthly maintenance fees, revenue earned from gift cards and substantially all BaaS partner program management fees.

Substantially all of our processing and settlement services are recognized at a point in time.

Refer to Note 19 — Segment Informatio n for our revenues disaggregated by our products and services and the components to our total operating revenues on our Consolidated Statements of Operations for additional information.

Also excludes the effects of intersegment revenues.

Revenues recognized at a point in time are comprised of ATM fees, interchange, and other similar transaction-based fees.

Revenues recognized over time consists of new card fees, monthly maintenance fees, revenue earned from gift cards and substantially all BaaS partner program management fees.

Substantially all of our money movement services are recognized at a point in time.

Contract Balances

1 unchanged sentence

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

We recognized approximately $ 0.1 million and $ 0.2 million in revenue for the three months ended September 30, 2020 and 2019, respectively, and $ 25.9 million and $ 31.6 million for the nine months ended September 30, 2020 and 2019, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods.

We recognized approximately $ 17.6 million and $ 17.0 million in revenue for the three months ended March 31, 2021 and 2020, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

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.

3 unchanged sentences

(In thousands)

September 30, 2020

March 31, 2021

Corporate bonds $ 10,000 $ 17 $ — $ 10,017

11 unchanged sentences

Total investment securities $ 966,841 $ 6,178 $ ( 2,050 ) $ 970,969

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of September 30, 2020 and December 31, 2019, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

As of March 31, 2021 and December 31, 2020, 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 fair value Total unrealized loss

1 unchanged sentence

(In thousands)

September 30, 2020

March 31, 2021

Agency bond securities $ 219,036 $ ( 11,803 ) $ — $ — $ 219,036 $ ( 11,803 )

Agency mortgage-backed securities 673,673 ( 15,086 ) — — 673,673 ( 15,086 )

Municipal bonds 24,181 ( 593 ) — — 24,181 ( 593 )

1 unchanged sentence

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 — — 113 ( 2 ) 113 ( 2 )

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

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 three and nine months ended September 30, 2020 or 2019 on our available-for-sale investment securities.

Upon adoption of ASU 2016-13, we establish an allowance for credit losses limited by the amount that the fair value of the investment is less than its amortized cost, rather than a direct write down under previous GAAP.

Any subsequent improvements in credit will be recognized in income through a reversal of the allowance established.

We continue to record non-credit-related losses as a component of accumulated other comprehensive income or loss.

Our investments generally consist of highly rated securities, substantially all of which are directly or indirectly backed by the U.S.

federal government.

Our investment policy restricts our investments to highly liquid, low credit risk assets.

As such, we have no t recorded any significant credit-related impairment losses during the three months ended March 31, 2021 or 2020 on our available-for-sale investment securities.

Unrealized losses as of March 31, 2021 are the result of recent fluctuations in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

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 nine months ended September 30, 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 September 30, 2020, the contractual maturities of our available-for-sale investment securities were as follows:

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of March 31, 2021, the contractual maturities of our available-for-sale investment securities were as follows:

Amortized cost Fair value

6 unchanged sentences

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:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In thousands)

12 unchanged sentences

Our net overdrawn account balances due from cardholders are a result of purchase transactions that we honor or maintenance fee assessments, in each case, in excess of the funds in the cardholder’s account.

Reserves for overdrawn account balances from purchase transactions are subject to our recent adoption of ASU 2016-13 and 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 and are recorded as contra-revenue within card revenues and other fees.

The adoption of ASU 2016-13 did not result in any material changes to our methods for developing allowances for any component within our accounts receivable given their short-term nature.

Overdrawn cardholder balances from maintenance fee assessments are presented net of the consideration we expect to receive and are recorded as contra-revenue within card revenues and other fees.

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(In thousands)

6 unchanged sentences

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:

The following table presents total outstanding loans, gross of the related allowance for credit 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

(In thousands)

September 30, 2020

March 31, 2021

Residential $ — $ — $ — $ — $ 3,067 $ 3,067

1 unchanged sentence

Installment — — — — 423 423

Consumer 591 4 — 595 1,648 2,243

Secured credit card 366 322 835 1,523 10,320 11,843

9 unchanged sentences

Nonperforming Loans

The following table presents the carrying value, gross of the related allowance for loan losses, of our nonperforming loans.

The following table presents the carrying value, gross of the related allowance for credit losses, of our nonperforming loans.

See Note 2 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information on the criteria for classification as nonperforming.

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In thousands)

10 unchanged sentences

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:

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

GREEN DOT CORPORATION

1 unchanged sentence

Note 6—Loans to Bank Customers (continued)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Non-Classified Classified Non-Classified Classified

3 unchanged sentences

Installment 290 133 360 137

Consumer 2,243 — — —

Secured credit card 11,008 835 13,465 1,363

3 unchanged sentences

Our TDR modifications involve an extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk.

As of September 30, 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 September 30, 2020 and December 31, 2019:

September 30, 2020 December 31, 2019

As of March 31, 2021, 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 March 31, 2021 and December 31, 2020:

March 31, 2021 December 31, 2020

Unpaid Principal Balance Carrying Value Unpaid Principal Balance Carrying Value

2 unchanged sentences

Installment 133 100 137 103

Allowance for Loan Losses

Activity in the allowance for loan losses consisted of the following:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Allowance for Credit Losses

Activity in the allowance for credit losses in our loan portfolio consisted of the following:

Three Months Ended March 31,

(In thousands)

11 unchanged sentences

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

The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation

GREEN DOT CORPORATION

1 unchanged sentence

Note 7—Equity Method Investment (continued)

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.

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 September 30, 2020, our net investment balance is included in the long term portion of the caption entitled prepaid expenses and other assets on our consolidated balance sheet.

We recorded total equity in losses of approximately $ 1.6 million and $ 4.3 million for the three and nine months ended September 30, 2020, which are recorded as a component of other income and expense on our consolidated statements of operations.

Total equity in losses also includes income and losses from an investment held by our bank under the Community Reinvestment Act, which is inconsequential to these consolidated financial statements.

As of March 31, 2021, our net investment in TailFin Labs amounted to approximately $ 62.2 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 $ 1.6 million for the three months ended March 31, 2021, 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 other investments that are not material to these consolidated financial statements.

Note 8— Deposits

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In thousands)

8 unchanged sentences

Total deposits $ 3,594,984 $ 2,735,116

Total deposit balances have increased substantially as compared to December 31, 2019, principally as a result of stimulus funds and other government benefits received by our cardholders under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Total deposit balances have increased substantially as compared to December 31, 2020, principally due to funds received by our cardholders from federal relief programs signed into law at the end of December 2020 and March 2021.

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

September 30, 2020

March 31, 2021

(In thousands)

10 unchanged sentences

We use the proceeds of any borrowings under the 2019 Revolving Facility for working capital and other general corporate purposes, subject to the terms and conditions set forth in the credit agreement.

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, 2019, the outstanding balance on our revolving line of credit was $ 35.0 million.

The entire $ 100.0 million remains available for use under the credit facility as of September 30, 2020.

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 March 31, 2021, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

GREEN DOT CORPORATION

1 unchanged sentence

Note 9—Debt (continued)

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.

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 %, (b) 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.

3 unchanged sentences

We must also maintain a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio at the end of each fiscal quarter, as set forth in the credit agreement.

At September 30, 2020, we were in compliance with all such covenants.

At March 31, 2021, we were in compliance with all such covenants.

If an event of default shall occur and be continuing under the facility, the commitments may be terminated and the principal amounts outstanding under the 2019 Revolving Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

Senior Credit Facility

In October 2014, we entered into a $ 225.0 million credit agreement with Bank of America, N.A., as an administrative agent, Wells Fargo Bank, National Association, and the other lenders party thereto.

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").

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

The Revolving Facility remained available for use until the Senior Credit Facility matured in October 2019, at which point we entered into the 2019 Revolving Facility discussed above.

We did no t incur any cash interest expense related to our debt during the three months ended September 30, 2020 and 2019 .

Cash interest expense was $ 0.6 million for each of the nine months ended September 30, 2020 and 2019.

We did no t incur any cash interest expense related to our debt during the three months ended March 31, 2021.

Cash interest expense was $ 0.2 million for the three months ended March 31, 2020 .

Note 10— Income Taxes

Income tax expense for the nine months ended September 30, 2020 and 2019 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

Income tax expense for the three months ended March 31, 2021 and 2020 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

The sources and tax effects of the differences are as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

federal statutory tax rate 21.0 % 21.0 %

2 unchanged sentences

Employee stock-based compensation ( 6.1 ) 2.1

IRC 162(m) limitation 4.5 1.9

Nondeductible executive compensation 8.4 4.2

Nondeductible expenses 0.3 0.6

1 unchanged sentence

Effective tax rate 21.7 % 20.3 %

The effective tax rate for the nine months ended September 30, 2020 and 2019 differs from the statutory federal income tax rate of 21 %, primarily due to state income taxes, net of federal tax benefits, general business credits, employee stock-based compensation, and the Internal Revenue Code (IRC) 162(m) limitation on the deductibility of

The effective tax rate for the three months ended March 31, 2021 and 2020 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, employee stock-based compensation, and the Internal Revenue Code (IRC) 162(m) limitation on the deductibility of executive compensation.

The increase in the effective tax rate for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 is primarily due to an increase in our expected pre-tax income and the corresponding rate impact on items such as general business credits and the IRC 162(m) limitation on the deductibility of executive compensation.

The overall increase in the effective tax rate for three months ended March 31, 2021 was partially offset by an increase of $ 3.3 million in excess tax benefits from stock-based compensation.

We recognized an excess tax benefit on stock-based compensation of $ 2.0 million for the three months ended March 31, 2021, compared to a $ 1.2 million discrete tax expense on shortfalls from stock based compensation for the prior year comparable period.

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 three months ended March 31, 2021, the provision for GILTI tax expense was not material to our financial statements.

GREEN DOT CORPORATION

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Note 10—Income Taxes (continued)

certain executive compensation.

The increase in the effective tax rate for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 is primarily due to an increase of $ 0.5 million in taxable income resulting from the IRC 162(m) limitation on the deductibility of certain executive compensation and a $ 3.9 million decline in excess tax benefits from stock-based compensation.

We recognized an excess tax benefit on stock compensation of $ 0.5 million for the nine months ended September 30, 2020, compared to a $ 4.4 million excess tax benefit for the prior year comparable period.

These increases were partially offset by the impact of general business credits.

On March 27, 2020, the CARES Act was signed into law, which, among other things, includes certain income tax provisions for individuals and corporations;

however, these benefits do not impact our current tax provision.

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 nine months ended September 30, 2020, the provision for GILTI tax expense was not material to our financial statements.

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.

During the second quarter 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 capital loss carryforward amount.

As of September 30, 2020 and December 31, 2019, we did no t have a valuation allowance on any of our deferred tax assets as we believed it was more-likely-than-not that we would realize the benefits of our deferred tax assets.

As of March 31, 2021, we did no t have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we would realize the benefits of our deferred tax assets.

As of March 31, 2020, we maintained a valuation allowance against our capital loss carryforwards as we believed it was more-likely-than-not that the tax benefits related to the capital loss carryforwards would not be realized.

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

We remain subject to examination of our federal income tax return for the years ended December 31, 2017 through 2020.

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.

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 that the returns were filed.

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

federal tax return during the second quarter June 30, 2020 and the examination remains ongoing.

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

As of September 30, 2020, we have federal net operating loss carryforwards of approximately $ 31.9 million and state net operating loss carryforwards of approximately $ 57.9 million which will be available to offset future income.

federal tax return during the second quarter June 30, 2020, and the examination remains ongoing as of March 31, 2021.

We do not expect the outcome of this examination will have any material impact on our consolidated financial statements.

As of March 31, 2021, 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.

Of our total state net operating loss carryforwards, approximately $ 31.7 million will expire between 2021 and 2039, while the remaining balance of approximately $ 26.2 million does not expire and carries forward indefinitely.

Of our total state net operating loss carryforwards, approximately $ 46.6 million will expire between the fourth quarter of 2021 and 2040, while the remaining balance of approximately $ 22.2 million does not expire and carries forward indefinitely.

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 $ 19.4 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.

As of September 30, 2020 and December 31, 2019, we had a liability of $ 9.8 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.

As of March 31, 2021 and December 31, 2020, we had a liability of $ 11.0 million and $ 9.5 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

The reconciliation of the beginning unrecognized tax benefits balance to the ending balance is as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Increases related to positions taken during the current year 1,470 1,200

Decreases as a result of a lapse of applicable statute of limitations — ( 456 )

Ending balance $ 10,988 $ 9,833

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 10,805 $ 9,662

As of September 30, 2020 and 2019, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 0.8 million and $ 0.4 million, respectively.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

As of March 31, 2021 and 2020, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 0.5 million and $ 0.6 million, respectively.

Note 11— Stockholders' Equity

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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 and entered into an accelerated share repurchase agreement for $ 100 million in May 2019.

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 September 30, 2020, we have an authorized $ 50 million remaining under our current stock repurchase program for any additional repurchases.

As of March 31, 2021, we have an authorized $ 50 million remaining under our current stock repurchase program for any additional repurchases.

Walmart Restricted Shares

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Walmart is entitled to voting rights and participate in any dividends paid from the issuance date on the unvested balance, and therefore, the total amount of restricted shares issued are included in our total Class A shares outstanding.

As of September 30, 2020, there were 731,253 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.

As of March 31, 2021, there were 568,751 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 the term of our relationship with Walmart.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12— Stock-Based Compensation

We currently grant restricted equity awards to employees, directors and non-employee consultants under our 2010 Equity Incentive Plan.

Additionally, through our 2010 Employee Stock Purchase Plan, employees are able to purchase shares of our Class A common stock at a discount through payroll deductions.

We currently grant restricted stock unit awards to employees, directors and non-employee consultants under our 2010 Equity Incentive Plan and from time to time may also grant stock option awards.

Through our 2010 Employee Stock Purchase Plan, employees are also able to purchase shares of our Class A common stock at a discount through payroll deductions.

We have reserved shares of our Class A common stock for issuance under these plans.

The total stock-based compensation expense recognized was $ 17.2 million and $ 11.4 million for the three months ended March 31, 2021 and 2020, respectively.

Restricted Stock Units

The following table summarizes restricted stock units subject to only service conditions granted under our 2010 Equity Incentive Plan:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Restricted stock units with only service conditions for the three months ended March 31, 2021 was as follows:

Shares Weighted-Average Grant-Date Fair Value

(In thousands, except per share data)

Outstanding at December 31, 2020 1,222 $ 36.24

Restricted stock units granted 342 50.87

Weighted-average grant-date fair value $ 51.96 $ 35.41 $ 30.45 $ 48.39

Restricted stock units vested ( 235 ) 30.11

Restricted stock units canceled ( 41 ) 37.15

Outstanding at March 31, 2021 1,288 $ 41.21

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.

The actual number of shares subject to the award is determined at the end of the annual performance period and may range from 0 % to 200 % of the target shares granted.

These awards generally 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 and the estimated performance that is expected to be achieved.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12—Stock-Based Compensation (continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Performance-based restricted stock unit activity for the three months ended March 31, 2021 was as follows:

Shares Weighted-Average Grant-Date Fair Value

(In thousands, except per share data)

Performance-based restricted stock units granted (1)

Weighted-average grant-date fair value $ 51.25 $ — $ 34.82 $ 50.15

(1) Performance awards granted also reflects, as applicable, the issuance of any shares awarded in excess of their original target amount based on the Compensation Committee's certification of completed performance years.

The grant date fair value for these awards are based on the grant price at the time of the original award.

Performance-Based Stock Options

In connection with the recent hiring of certain executive officers, we granted performance-based stock options with 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 the performance-based stock options granted to date:

Nine Months Ended September 30,

Outstanding at December 31, 2020 946 $ 35.62

Performance restricted stock units granted (at target) 398 46.93

Performance restricted stock units vested ( 215 ) 35.20

Performance restricted stock units canceled ( 4 ) 65.46

Adjustment for completed performance periods 111 33.34

Outstanding at March 31, 2021 1,236 $ 39.50

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 0 % 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 period of at least four years ) based on the grant date fair value of the award.

Stock Options

Total stock option activity for the three months ended March 31, 2021 was as follows:

Options Weighted-Average Exercise Price

(In thousands, except per share data)

Performance-based stock options granted 2,250

Weighted-average exercise price $ 31.30

Weighted-average grant-date fair value $ 14.57

The estimated grant-date fair value of each performance option grant was based on the following weighted-average assumptions:

Nine Months Ended September 30,

Risk-free interest rate 0.63 %

Expected term (in years) 3.30

Expected dividends —

Expected volatility 53.8 %

The total stock-based compensation expense recognized was $ 11.8 million and $ 6.9 million for the three months ended September 30, 2020 and 2019, respectively, and $ 36.8 million and $ 30.1 million for the nine months ended September 30, 2020 and 2019, respectively.

Total stock-based compensation expense includes amounts related to each of the awards discussed above and purchases made under our 2010 Employee Stock Purchase Plan, and reflects, as applicable, accelerated expense recognition associated with our retirement policy.

Under our retirement policy, following a qualified retirement, any service-based requirement for unvested stock awards held by the 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.

Outstanding at December 31, 2020 1,634 $ 32.04

Options granted — —

Options exercised ( 63 ) 28.18

Options canceled ( 1 ) 31.61

Outstanding at March 31, 2021 1,570 $ 32.19

Exercisable at March 31, 2021 404 $ 22.85

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13— Earnings (Loss) per Common Share

The calculation of basic and diluted earnings (loss) per share (EPS) was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Note 13— Earnings per Common Share

The calculation of basic and diluted earnings per share (EPS) was as follows:

Three Months Ended March 31,

(In thousands, except per share data)

Basic earnings (loss) per Class A common share

Net (loss) income $ ( 2,992 ) $ ( 531 ) $ 47,147 $ 98,204

Basic earnings per Class A common share

Net income $ 25,735 $ 46,845

Amount attributable to unvested Walmart restricted shares ( 283 ) ( 808 )

Net (loss) income allocated to Class A common stockholders $ ( 2,949 ) $ ( 531 ) $ 46,405 $ 98,204

Net income allocated to Class A common stockholders $ 25,452 $ 46,037

Weighted-average Class A shares issued and outstanding 53,651 51,894

Basic (loss) earnings per Class A common share $ ( 0.06 ) $ ( 0.01 ) $ 0.89 $ 1.87

Diluted earnings (loss) per Class A common share

Net (loss) income allocated to Class A common stockholders $ ( 2,949 ) $ ( 531 ) $ 46,405 $ 98,204

Basic earnings per Class A common share $ 0.47 $ 0.89

Diluted earnings per Class A common share

Net income allocated to Class A common stockholders $ 25,452 $ 46,037

Re-allocated earnings 7 12

Diluted net (loss) income allocated to Class A common stockholders $ ( 2,950 ) $ ( 531 ) $ 46,421 $ 98,204

Diluted net income allocated to Class A common stockholders $ 25,459 $ 46,049

Weighted-average Class A shares issued and outstanding 53,651 51,894

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Stock options 514 57

Restricted stock units 751 199 658 463

Service-based restricted stock units 523 338

Performance-based restricted stock units 361 351

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Diluted weighted-average Class A shares issued and outstanding 55,068 52,673

Diluted (loss) earnings per Class A common share $ ( 0.06 ) $ ( 0.01 ) $ 0.87 $ 1.84

Diluted earnings per Class A common share $ 0.46 $ 0.87

The restricted shares issued to Walmart contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing EPS pursuant to the two-class method.

1 unchanged sentence

For the periods presented, we excluded certain restricted stock units and stock options outstanding (as applicable), 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 and performance-based stock options where the performance contingency has not been met as of the end of the period.

Additionally, we have excluded any performance-based restricted stock units where the performance contingency has not been met as of the end of the period.

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(In thousands)

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Options to purchase Class A common stock 500 98

Restricted stock units 133 476 175 314

Service-based restricted stock units 107 491

Performance-based restricted stock units 657 174

8 unchanged sentences

For more information regarding the fair value hierarchy and how we measure fair value, see Note 2–Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2020.

As of September 30, 2020 and December 31, 2019, our assets and liabilities carried at fair value on a recurring basis were as follows:

As of March 31, 2021 and December 31, 2020, our assets and liabilities carried at fair value on a recurring basis were as follows:

Level 1 Level 2 Level 3 Total Fair Value

September 30, 2020 (In thousands)

March 31, 2021 (In thousands)

Corporate bonds $ — $ 10,017 $ — $ 10,017

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

We based the fair value of our fixed income securities held as of September 30, 2020 and December 31, 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 three and nine months ended September 30, 2020 or 2019.

The following table presents changes in our contingent consideration payable for the three and nine months ended September 30, 2020 and 2019, which is categorized in Level 3 of the fair value hierarchy:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

We based the fair value of our fixed income securities held as of March 31, 2021 and December 31, 2020 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 three months ended March 31, 2021 or 2020.

The following table presents changes in our contingent consideration payable for the three months ended March 31, 2021 and 2020, which is categorized in Level 3 of the fair value hierarchy:

Three Months Ended March 31,

(In thousands)

1 unchanged sentence

Payments of contingent consideration ( 1,000 ) ( 1,000 )

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

Balance, end of period $ 4,300 $ 8,300

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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 September 30, 2020 and December 31, 2019 are presented in the table below.

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 March 31, 2021 and December 31, 2020 are presented in the table below.

GREEN DOT CORPORATION

1 unchanged sentence

Note 15—Fair Value of Financial Instruments (continued)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Carrying Value Fair Value Carrying Value Fair Value

4 unchanged sentences

Deposits $ 3,594,984 $ 3,594,940 $ 2,735,116 $ 2,735,072

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

Note 16— 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 5 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.

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 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 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 total lease expense amounted to approximately $ 2.3 million and $ 3.5 million for the three months ended September 30, 2020 and 2019, respectively, and $ 6.9 million and $ 8.1 million for the nine months ended September 30, 2020 and 2019, respectively.

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

As of December 31, 2020, we committed to a remote workforce strategy for most U.S.

based employees and recorded a substantial impairment charge 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 $ 1.3 million and $ 2.3 million for the three months ended March 31, 2021 and 2020, respectively.

Our lease expense is generally based on fixed payments stated within the agreements.

2 unchanged sentences

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

September 30, 2020

March 31, 2021

Cash paid for operating lease liabilities (in thousands) $ 2,423

1 unchanged sentence

Weighted average discount rate 4.8 %

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 16—Leases (continued)

Maturities of our operating lease liabilities as of September 30, 2020 is as follows:

Maturities of our operating lease liabilities as of March 31, 2021 is as follows:

Operating Leases

1 unchanged sentence

Remainder of 2021 $ 7,392

Thereafter 1,732

imputed interest ( 2,402 )

Total lease liabilities $ 23,021

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17— Commitments and Contingencies

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 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 March 31, 2021, the estimated fair value of our remaining earn-out payments amounted to $ 4.3 million.

Litigation and Claims

4 unchanged sentences

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.

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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,

(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.

GREEN DOT CORPORATION

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Note 17—Commitments and Contingencies (continued)

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

Generally, a maximum obligation under these contracts is not explicitly stated.

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

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.

On February 28, 2017, we completed our acquisition of all the membership interests of UniRush, an online direct-to-consumer GPR card and corporate payroll card provider.

The transaction terms include an earn-out equal to the greater of (i) a specified percentage of the revenue generated by the online direct-to-consumer GPR card portfolio for the five-year period following the closing or (ii) $ 20 million, payable quarterly over five years .

Note 18— Significant Retailer Concentration

Note 18— Significant Retailer and Partner Concentration

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

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Revenues derived from our products sold at retail distributors constituting greater than 10% of our total operating revenues were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Walmart 27 % 35 % 27 % 33 %

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:

September 30, 2020 December 31, 2019

Three Months Ended March 31,

Walmart 24 % 25 %

* Constitutes less than 10% for the period presented.

In addition, approximately 16 % of our total operating revenues for the three months ended March 31, 2021 were generated from a single BaaS partner, without a corresponding concentration to our gross profit for the period.

Note 19— Segment Information

Effective beginning with the first quarter of 2021, we have realigned our segment financial reporting based on how our current Chief Operating Decision Maker (“CODM”) manages our businesses, including resource allocation and performance assessment.

Our CODM organizes and manages the business primarily on the basis of the channels in which our product and services are offered and uses net revenues and segment profit to assess profitability.

Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses.

As a result of this realignment, our operations are now aggregated amongst three reportable segments:

1) Consumer Services, 2) Business to Business ("B2B") Services, and 3) Money Movement Services.

Our Consumer Services segment consists of revenues and expenses derived from deposit account programs, such as consumer checking accounts, prepaid cards, secured credit cards, and gift cards that we offer to consumers (i) through distribution arrangements with more than 90,000 retail locations and thousands of neighborhood Financial Service Center locations (the "Retail" channel), and (ii) directly through various marketing channels, such as online search engine optimization, online displays, direct mail campaigns, mobile advertising, and affiliate referral programs (the "Direct" channel).

Our B2B Services segment consists of revenues and expenses derived from (i) our partnerships with some of America's most prominent consumer and technology companies that make our banking products and services available to their consumers, partners and workforce through integration with our banking platform (the "Banking-as-a-Service", or "BaaS" channel), and (ii) a comprehensive payroll platform that we offer to corporate enterprises (the "Employer" channel) to facilitate payments for today’s workforce.

Our products and services in this segment include deposit account programs, such as consumer and small business checking accounts and prepaid cards, as well as our Simply Paid Disbursements services utilized by our partners.

Our Money Movement Services segment consists of revenues and expenses generated on a per transaction basis from our services that specialize in facilitating the movement of cash on behalf of consumers and businesses, such as money processing services and tax refund processing services.

Our money processing services are marketed to third-party banks, program managers, and other companies seeking cash deposit and disbursement capabilities for their customers.

Those customers, including our own cardholders, can access our cash deposit and disbursement services at any of the locations within our network of retail distributors and neighborhood Financial Service Centers.

We market our tax-related financial services through a network of tax preparation franchises, independent tax professionals and online tax preparation providers.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19— Segment Information

Our operations are comprised of two reportable segments:

1) Account Services and 2) Processing and Settlement Services.

We identified our reportable segments based on factors such as how we manage our operations and how our chief operating decision maker, who is our Chief Executive Officer, views results.

Our chief operating decision maker organizes and manages our business primarily on the basis of product and service offerings and uses operating income to assess profitability.

The Account Services segment consists of revenues and expenses derived from our deposit account programs, such as prepaid cards, debit cards, consumer and small business checking accounts, secured credit cards, payroll debit cards and gift cards.

These deposit account programs are marketed under several of our leading consumer brand names and under the brand names of our BaaS partners.

The Processing and Settlement Services segment consists of revenues and expenses derived from our products and services that specialize in facilitating the movement of cash on behalf of consumers and businesses, such as consumer cash processing services, wage disbursements and tax refund processing services.

The Corporate and Other segment primarily consists of eliminations of intersegment revenues and expenses, unallocated corporate expenses, depreciation and amortization, and other costs that are not considered when management evaluates segment performance.

Note 19—Segment Information (continued)

The Corporate and Other segment primarily consists of net interest income earned by our bank, eliminations of intersegment revenues and expenses, unallocated corporate expenses, and other fixed costs that are not considered when our CODM evaluates segment performance, such as salaries, wages and related benefits for our employees, professional service fees, software licenses, telephone and communication costs, rent and utilities, and insurance.

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

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

Three Months Ended September 30, 2020

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

Operating revenues $ 238,135 $ 59,382 $ ( 6,447 ) $ 291,070

Operating expenses 211,216 52,613 29,891 293,720

Operating income (loss) $ 26,919 $ 6,769 $ ( 36,338 ) $ ( 2,650 )

Three Months Ended September 30, 2019

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

Operating revenues $ 191,273 $ 56,025 $ ( 6,850 ) $ 240,448

Operating expenses 173,014 49,151 20,470 242,635

Operating income (loss) $ 18,259 $ 6,874 $ ( 27,320 ) $ ( 2,187 )

Nine Months Ended September 30, 2020

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

Operating revenues $ 739,251 $ 252,889 $ ( 22,661 ) $ 969,479

Operating expenses 651,482 169,601 86,807 907,890

Operating income $ 87,769 $ 83,288 $ ( 109,468 ) $ 61,589

Nine Months Ended September 30, 2019

Account Services Processing and Settlement Services Corporate and Other Total

(In thousands)

Operating revenues $ 646,938 $ 236,714 $ ( 24,364 ) $ 859,288

Operating expenses 515,375 149,533 71,219 736,127

We have restated segment information for the historical periods presented herein to conform to our current presentation.

The change in segment presentation does not affect the financial results of our consolidated statements of operations, balance sheets or statements of cash flows as previously presented.

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

Three Months Ended March 31,

Segment Revenue (In thousands)

Consumer Services $ 184,341 $ 152,922

B2B Services 105,975 73,840

Money Movement Services 90,367 120,052

Corporate and Other ( 878 ) ( 273 )

Total segment revenues 379,805 346,541

Net revenue adjustment 13,681 15,628

Total operating revenues $ 393,486 $ 362,169

Net revenue adjustments represent commissions and certain processing-related costs associated with our BaaS products and services, which are netted against our B2B Services revenues when evaluating segment performance.

Three Months Ended March 31,

Segment Profit (In thousands)

Consumer Services $ 53,527 $ 50,385

B2B Services 17,533 19,827

Money Movement Services 48,814 66,719

Corporate and Other ( 46,514 ) ( 44,813 )

Total segment profit 73,360 92,118

Reconciliation to income before income taxes

Depreciation and amortization of property, equipment and internal-use software 13,200 13,697

Stock based compensation and related employer taxes 17,182 11,578

Amortization of acquired intangible assets 6,944 7,279

Other expense 2,049 715

Operating income 33,985 58,849

Interest expense, net 37 241

Other (expense) income, net ( 1,086 ) 192

Income before income taxes $ 32,862 $ 58,800

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-Q

Item 1. Financial Statements