What changed in this filing

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Item 1. Financial Statements

2021-11-08 compared with 2021-08-06 · 140 added, 129 removed, 706 unchanged (28% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Assets (In thousands, except par value)

8 unchanged sentences

Investment securities available-for-sale, at fair value 1,188,216 970,969

Loans to bank customers, net of allowance for loan losses of $ 6,693 and $ 757 as of June 30, 2021 and December 31, 2020, respectively

Loans to bank customers, net of allowance for loan losses of $ 7,451 and $ 757 as of September 30, 2021 and December 31, 2020, respectively

28,157 21,011

25 unchanged sentences

Class A common stock, $ 0.001 par value;

100,000 shares authorized as of June 30, 2021 and December 31, 2020;

54,640 and 54,034 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

100,000 shares authorized as of September 30, 2021 and December 31, 2020;

54,671 and 54,034 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 386,465 354,460

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

12 unchanged sentences

Total operating expenses 330,669 293,720 1,027,740 907,890

Operating income 31,803 5,390 65,788 64,239

Operating income (loss) 8,830 ( 2,650 ) 74,618 61,589

Interest expense, net 38 39 113 723

Other income, net 1,633 2,154 547 2,346

Income before income taxes 33,398 7,101 66,260 65,901

Income tax expense 8,465 3,807 15,592 15,762

Net income $ 24,933 $ 3,294 $ 50,668 $ 50,139

Basic earnings per common share:

Other income (expense), net 849 ( 1,650 ) 1,396 696

Income (loss) before income taxes 9,641 ( 4,339 ) 75,901 61,562

Income tax expense (benefit) 2,306 ( 1,347 ) 17,898 14,415

Net income (loss) $ 7,335 $ ( 2,992 ) $ 58,003 $ 47,147

Basic earnings (loss) per common share:

$ 0.13 $ ( 0.06 ) $ 1.06 $ 0.89

Diluted earnings per common share:

Diluted earnings (loss) per common share:

$ 0.13 $ ( 0.06 ) $ 1.04 $ 0.87

6 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

(In thousands)

Net income $ 24,933 $ 3,294 $ 50,668 $ 50,139

Net income (loss) $ 7,335 $ ( 2,992 ) $ 58,003 $ 47,147

Other comprehensive income (loss)

Unrealized holding gain (loss), net of tax 8,652 ( 4,006 ) ( 13,892 ) 151

Unrealized holding (loss) gain, net of tax ( 4,010 ) 756 ( 17,902 ) 907

Comprehensive income (loss) $ 3,325 $ ( 2,236 ) $ 40,101 $ 48,054

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Three Months Ended June 30, 2021

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

Three Months Ended September 30, 2021

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

Shares Amount

(In thousands)

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

Balance at June 30, 2021 54,640 $ 55 $ 375,551 $ 702,558 $ ( 10,464 ) $ 1,067,700

Common stock issued under stock plans, net of withholdings and related tax effects 31 — ( 594 ) — — ( 594 )

1 unchanged sentence

Net income — — — 7,335 — 7,335

Other comprehensive income — — — — 8,652 8,652

Balance at June 30, 2021 54,640 $ 55 $ 375,551 $ 702,558 $ ( 10,464 ) $ 1,067,700

Three Months Ended June 30, 2020

Other comprehensive loss — — — — ( 4,010 ) ( 4,010 )

Balance at September 30, 2021 54,671 $ 55 $ 386,465 $ 709,893 $ ( 14,474 ) $ 1,081,939

Three Months Ended September 30, 2020

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

1 unchanged sentence

(In thousands)

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

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 income — — — 3,294 — 3,294

Other comprehensive loss — — — — ( 4,006 ) ( 4,006 )

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

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

See notes to unaudited consolidated financial statements

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

6 unchanged sentences

Other comprehensive loss — — — — ( 17,902 ) ( 17,902 )

Balance at June 30, 2021 54,640 $ 55 $ 375,551 $ 702,558 $ ( 10,464 ) $ 1,067,700

Six Months Ended June 30, 2020

Balance at September 30, 2021 54,671 $ 55 $ 386,465 $ 709,893 $ ( 14,474 ) $ 1,081,939

Nine Months Ended September 30, 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 June 30, 2020 53,297 $ 53 $ 323,083 $ 678,898 $ 2,191 $ 1,004,225

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

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

53 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 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.

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 committed to delivering trusted, best-in-class money management and payment solutions to customers and partners, seamlessly connecting people to their money.

Our technology platform enables us to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money, and making financial empowerment more accessible for all.

We offer a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, such as 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.

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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 six months ended June 30, 2021, other than the adoption of the accounting pronouncements discussed herein.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 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.

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accordingly, accounting estimates require the exercise of judgment.

These financial statements were prepared using information reasonably available as of June 30, 2021 and through the date of this report.

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

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

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Consumer Services B2B Services Money Movement Services Total

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$ 162,129 $ 128,161 $ 45,596 $ 335,886

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Consumer Services B2B Services Money Movement Services Total

4 unchanged sentences

$ 144,375 $ 88,139 $ 56,536 $ 289,050

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Consumer Services B2B Services Money Movement Services Total

4 unchanged sentences

$ 517,237 $ 370,697 $ 201,982 $ 1,089,916

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Consumer Services B2B Services Money Movement Services Total

9 unchanged sentences

Note 3—Revenues (continued)

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

Revenues recognized at a point in time are comprised of interchange, ATM fees, other similar cardholder transaction-based fees, and substantially all of our cash processing revenues.

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.

As disclosed on our Consolidated Balance Sheets, we record deferred revenue for any upfront payments received in advance of our performance obligations being satisfied.

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

We recognized approximately $ 9.1 million and $ 8.9 million in revenue for the three months ended June 30, 2021 and 2020, respectively, and $ 26.6 million and $ 25.9 million for the six months ended June 30, 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 obligations satisfied in previous periods.

We recognized approximately $ 26.6 million and $ 25.9 million for the nine months ended September 30, 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 obligations satisfied in previous periods.

Substantially all of the deferred revenue balances at the beginning of the periods are recognized in the first half of each year.

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)

June 30, 2021

September 30, 2021

Corporate bonds $ 10,000 $ — $ ( 79 ) $ 9,921

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Note 4—Investment Securities (continued)

As of June 30, 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:

As of September 30, 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)

June 30, 2021

September 30, 2021

Corporate bonds $ 9,921 $ ( 79 ) $ — $ — $ 9,921 $ ( 79 )

Agency bond securities 214,100 ( 6,740 ) 9,791 ( 209 ) 223,891 ( 6,949 )

10 unchanged sentences

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 and six months ended June 30, 2021 or 2020 on our available-for-sale investment securities.

Unrealized losses as of June 30, 2021 are the result of recent fluctuations in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

As such, we have no t recorded any significant credit-related impairment losses during the three and nine months ended September 30, 2021 or 2020 on our available-for-sale investment securities.

Unrealized losses as of September 30, 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.

As of June 30, 2021, the contractual maturities of our available-for-sale investment securities were as follows:

As of September 30, 2021, the contractual maturities of our available-for-sale investment securities were as follows:

Amortized cost Fair value

10 unchanged sentences

Accounts receivable, net consisted of the following:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(In thousands)

8 unchanged sentences

Receivables due from card issuing banks 4,703 4,377

Fee advances, net 2,098 21,424

Fee advances 3,627 21,424

Other receivables 24,174 12,249

4 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

10 unchanged sentences

(In thousands)

June 30, 2021

September 30, 2021

Residential $ — $ — $ — $ — $ 2,367 $ 2,367

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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.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(In thousands)

14 unchanged sentences

Note 6—Loans to Bank Customers (continued)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Non-Classified Classified Non-Classified Classified

9 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 June 30, 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 June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

As of September 30, 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 September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

Unpaid Principal Balance Carrying Value Unpaid Principal Balance Carrying Value

4 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

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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 June 30, 2021, our net investment in TailFin Labs amounted to approximately $ 61.5 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 $ 0.7 million and $ 2.8 million for the three months ended June 30, 2021 and 2020, respectively, and $ 2.3 million and $ 2.9 million for the six months ended June 30, 2021 and 2020, respectively, which are 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.

As of September 30, 2021, our net investment in TailFin Labs amounted to approximately $ 61.5 million and is included in the long term portion of prepaid expenses and other assets on our consolidated balance sheet.

Equity in earnings and losses from TailFin Labs was an inconsequential amount for the three months ended September 30, 2021.

We recorded equity in losses from TailFin Labs of $ 1.6 million for the three months ended September 30, 2020, and $ 2.3 million and $ 4.5 million for the nine months ended September 30, 2021 and 2020, respectively, which are recorded as a component of other income and expense on our consolidated statement of operations.

Our total equity in earnings and losses also includes other investments held by our bank that are not material to these consolidated financial statements.

Note 8— Deposits

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(In thousands)

9 unchanged sentences

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

June 30, 2021

September 30, 2021

(In thousands)

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

As of June 30, 2021, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

As of September 30, 2021, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

GREEN DOT CORPORATION

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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 June 30, 2021, we were in compliance with all such covenants.

At September 30, 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.

We did no t incur any cash interest expense related to our debt during the three and six months ended June 30, 2021.

Cash interest expense was $ 0.4 million for the three months ended June 30, 2020 and $ 0.6 million for the six months ended June 30, 2020.

We did no t incur any cash interest expense related to our debt during the three and nine months ended September 30, 2021, or during the three months ended September 30, 2020.

Cash interest expense amounted to $ 0.6 million for the nine months ended September 30, 2020.

Note 10— Income Taxes

Income tax expense for the six months ended June 30, 2021 and 2020 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

Income tax expense for the nine months ended September 30, 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:

Six Months Ended June 30,

Nine Months Ended September 30,

federal statutory tax rate 21.0 % 21.0 %

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Effective tax rate 23.6 % 23.4 %

The effective tax rate for the six months ended June 30, 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 overall decrease in the effective tax rate for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 is primarily due to a decrease of $ 1.1 million on the IRC 162(m) limitation on the deductibility of executive compensation and an increase of $ 3.1 million in excess tax benefits from stock-based compensation.

We recognized an excess tax benefit on stock-based compensation of $ 1.9 million for the six months ended June 30, 2021, compared to a $ 1.2 million discrete tax expense on shortfalls from stock based compensation for the prior year comparable period.

The effective tax rate for the nine months ended September 30, 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 overall increase in the effective tax rate for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 is primarily due to an increase of $ 2.0 million on the IRC 162(m) limitation on the deductibility of executive compensation, partially offset by an increase of $ 1.5 million in excess tax benefits from stock-based compensation.

We recognized an excess tax benefit on stock-based compensation of $ 1.9 million for the nine months ended September 30, 2021, compared to a $ 0.5 million excess tax benefit 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 six months ended June 30, 2021, the provision for GILTI tax expense was not material to our financial statements.

For the nine months ended September 30, 2021, the provision for GILTI tax expense was not material to our financial statements.

GREEN DOT CORPORATION

2 unchanged sentences

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 June 30, 2021 and 2020, 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 will realize the benefits of our deferred tax assets.

During the six months 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 capital loss carryforward amount.

As of September 30, 2021 and 2020, 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 will realize the benefits of our deferred tax assets.

During the second quarter of 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.

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

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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 June 30, 2021.

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

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

As of June 30, 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.

As of September 30, 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.

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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 June 30, 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.

As of September 30, 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

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The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 10,798 $ 9,657

As of June 30, 2021 and 2020, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 0.6 million and $ 0.7 million, respectively.

As of September 30, 2021 and 2020, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 0.7 million and $ 0.8 million, respectively.

Note 11— Stockholders' Equity

1 unchanged sentence

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

As of June 30, 2021, we have an authorized $ 50 million remaining under our current stock repurchase program for any additional repurchases.

As of September 30, 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 June 30, 2021, there were 487,502 unvested shares outstanding.

As of September 30, 2021, there were 406,253 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 the term of our relationship with Walmart.

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

The total stock-based compensation expense recognized was $ 8.4 million and $ 13.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 25.6 million and $ 25.0 million for the six months ended June 30, 2021 and 2020, respectively.

The total stock-based compensation expense recognized was $ 11.5 million and $ 11.8 million for the three months ended September 30, 2021 and 2020, respectively, and $ 37.1 million and $ 36.8 million for the nine months ended September 30, 2021 and 2020, respectively.

Restricted Stock Units

Restricted stock units subject to service only conditions for the six months ended June 30, 2021 was as follows:

Restricted stock unit activity for awards subject to only service conditions was as follows for the nine months ended September 30, 2021:

Shares Weighted-Average Grant-Date Fair Value

5 unchanged sentences

Restricted stock units canceled ( 205 ) 39.83

Outstanding at June 30, 2021

Outstanding at September 30, 2021

1,539 $ 43.14

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity for the six months ended June 30, 2021 was as follows:

Performance-based restricted stock unit activity for the nine months ended September 30, 2021 was as follows:

Shares Weighted-Average Grant-Date Fair Value

5 unchanged sentences

Adjustment for completed performance periods 113 34.04

Outstanding at June 30, 2021

Outstanding at September 30, 2021

1,154 $ 38.74

2 unchanged sentences

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.

Compensation expense related to these awards is recognized using the accelerated attribution method over the applicable vesting periods.

Stock Options

Total stock option activity for the six months ended June 30, 2021 was as follows:

Total stock option activity for the nine months ended September 30, 2021 was as follows:

Options Weighted-Average Exercise Price

4 unchanged sentences

Options canceled ( 363 ) 50.80

Outstanding at June 30, 2021

Outstanding at September 30, 2021

1,205 $ 26.62

Exercisable at June 30, 2021

Exercisable at September 30, 2021

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13— Earnings per Common Share

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

Three Months Ended June 30, Six Months Ended June 30,

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,

2021 2020 2021 2020

(In thousands, except per share data)

Basic earnings per Class A common share

Net income $ 24,933 $ 3,294 $ 50,668 $ 50,139

Basic earnings (loss) per Class A common share

Net income (loss) $ 7,335 $ ( 2,992 ) $ 58,003 $ 47,147

Amount attributable to unvested Walmart restricted shares ( 58 ) 43 ( 547 ) ( 742 )

Net income allocated to Class A common stockholders $ 24,698 $ 3,242 $ 50,151 $ 49,311

Net income (loss) allocated to Class A common stockholders $ 7,277 $ ( 2,949 ) $ 57,456 $ 46,405

Weighted-average Class A shares issued and outstanding 54,221 52,635 53,961 52,269

Basic earnings per Class A common share $ 0.46 $ 0.06 $ 0.93 $ 0.95

Diluted earnings per Class A common share

Net income allocated to Class A common stockholders $ 24,698 $ 3,242 $ 50,151 $ 49,311

Basic earnings (loss) per Class A common share $ 0.13 $ ( 0.06 ) $ 1.06 $ 0.89

Diluted earnings (loss) per Class A common share

Net income (loss) allocated to Class A common stockholders $ 7,277 $ ( 2,949 ) $ 57,456 $ 46,405

Re-allocated earnings 1 — 12 16

Diluted net income allocated to Class A common stockholders $ 24,702 $ 3,243 $ 50,162 $ 49,324

Diluted net income (loss) allocated to Class A common stockholders $ 7,278 $ ( 2,949 ) $ 57,468 $ 46,421

Weighted-average Class A shares issued and outstanding 54,221 52,635 53,961 52,269

5 unchanged sentences

Diluted weighted-average Class A shares issued and outstanding 55,415 52,635 55,180 53,455

Diluted earnings per Class A common share $ 0.45 $ 0.06 $ 0.91 $ 0.93

Diluted earnings (loss) per Class A common share $ 0.13 $ ( 0.06 ) $ 1.04 $ 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.

The computation above excludes income attributable to the unvested restricted shares from the numerator and excludes the dilutive impact of those underlying shares from the denominator.

The number of weighted average shares issued and outstanding in periods of net loss are the same for basic and diluted EPS, as the effects of including potentially dilutive common shares is anti-dilutive.

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.

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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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

13 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 June 30, 2021 and December 31, 2020, our assets and liabilities carried at fair value on a recurring basis were as follows:

As of September 30, 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

June 30, 2021 (In thousands)

September 30, 2021 (In thousands)

Corporate bonds $ — $ 9,921 $ — $ 9,921

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

We based the fair value of our fixed income securities held as of June 30, 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 and six months ended June 30, 2021 or 2020.

The following table presents changes in our contingent consideration payable for the three and six months ended June 30, 2021 and 2020, which is categorized in Level 3 of the fair value hierarchy:

Three Months Ended June 30, Six Months Ended June 30,

We based the fair value of our fixed income securities held as of September 30, 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 and nine months ended September 30, 2021 or 2020.

The following table presents changes in our contingent consideration payable for the three and nine months ended September 30, 2021 and 2020, which is categorized in Level 3 of the fair value hierarchy:

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

2021 2020 2021 2020

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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 June 30, 2021 and December 31, 2020 are presented in the table below.

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Carrying Value Fair Value Carrying Value Fair Value

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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, many of which include renewal options of varying terms.

Our leases have remaining lease terms between approximately 1 year to 4 years, some of which include renewal options.

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

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however, we may be contractually obligated to continue making lease payments where no termination option is available.

Our total lease expense amounted to approximately $ 0.6 million and $ 2.2 million for the three months ended June 30, 2021 and 2020, respectively, and $ 1.8 million and $ 4.6 million for the six months ended June 30, 2021 and 2020, respectively.

Our total lease expense amounted to approximately $ 1.0 million and $ 2.3 million for the three months ended September 30, 2021 and 2020, respectively, and $ 2.8 million and $ 6.9 million for the nine months ended September 30, 2021 and 2020, respectively.

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

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

June 30, 2021

September 30, 2021

Cash paid for operating lease liabilities (in thousands) $ 7,987

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Weighted average discount rate 4.8 %

Maturities of our operating lease liabilities as of June 30, 2021 is as follows:

Maturities of our operating lease liabilities as of September 30, 2021 is as follows:

Operating Leases

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Financial Commitments

In May 2021, we announced that we entered into a definitive agreement to purchase the assets and operations of Tax Refund Solutions (“TRS”), a business segment of Republic Bank & Trust Company ("Republic Bank"), subject to customary closing conditions.

Pursuant to the terms of the definitive agreement, we have agreed to pay Republic Bank approximately $ 165 million in cash for the TRS assets.

We are seeking the Federal Reserve’s approval of or non-objection, as applicable, to the proposed transaction.

The parties are working to complete the proposed transaction in the third quarter of 2021.

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 June 30, 2021, the estimated fair value of our remaining earn-out payments amounted to $ 3.3 million, and is recorded in the current portion of other accrued liabilities on our consolidated balance sheets.

As of September 30, 2021, the estimated fair value of our remaining earn-out payments amounted to $ 2.3 million, and is recorded in the current portion of other accrued liabilities on our consolidated balance sheets.

GREEN DOT CORPORATION

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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.

Refer to Note 20 — Subsequent Event for additional information regarding litigation and claims.

Other Legal Matters

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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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

Walmart 23 % 27 % 23 % 27 %

In addition, approximately 20 % and 18 % of our total operating revenues for the three and six months ended June 30, 2021, respectively, were generated from a single BaaS partner, without a corresponding concentration to our gross profit for the period.

In addition, approximately 23 % and 19 % of our total operating revenues for the three and nine months ended September 30, 2021, respectively, were generated from a single BaaS partner, without a corresponding concentration to our gross profit for the period.

Note 19— Segment Information

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

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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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

5 unchanged sentences

Total segment profit 46,246 33,689 182,530 171,057

Reconciliation to income before income taxes

Reconciliation to income (loss) before income taxes

Depreciation and amortization of property, equipment and internal-use software 15,265 14,839 42,446 43,014

3 unchanged sentences

Other expense 3,628 2,507 7,430 6,826

Operating income 31,803 5,390 65,788 64,239

Operating income (loss) 8,830 ( 2,650 ) 74,618 61,589

Interest expense, net 38 39 113 723

Other income, net 1,633 2,154 547 2,346

Income before income taxes $ 33,398 $ 7,101 $ 66,260 $ 65,901

Other income (expense), net 849 ( 1,650 ) 1,396 696

Income (loss) before income taxes $ 9,641 $ ( 4,339 ) $ 75,901 $ 61,562

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 20— Subsequent Event

Pursuant to the terms of the definitive agreement, we agreed to pay Republic Bank approximately $ 165 million in cash for the TRS assets.

On October 4, 2021, we announced we had been unable to obtain the Federal Reserve’s approval of or non-objection to the transaction, and therefore, the transaction would not be consummated.

The agreement provides for a termination fee payable by us of $ 5 million, which we recorded in the fourth quarter of 2021.

On October 5, 2021, Republic Bank filed a claim against us in the Court of Chancery of the State of Delaware.

The lawsuit claims that we have breached the contract in which we agreed, subject to certain conditions, to purchase the TRS business.

The lawsuit seeks, among other forms of relief, an order of specific performance requiring that we close the transaction or, in the alternative, monetary damages.

We are defending the action.

Given the uncertainty of litigation and the preliminary stage of this claim, we are currently unable to estimate the probability of the outcome of this action or the range of reasonably possible loss, if any.

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