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Item 7. Management’s Discussion and Analysis

2022-02-28 compared with 2021-02-26 · 321 added, 233 removed, 321 unchanged (63% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934 (the “Exchange Act”).

This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, (the "Securities Act") and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).

All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements.

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In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements.

Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including the impact of the coronavirus (COVID-19) pandemic on our business, results of operations and financial condition and our and the U.S.

government’s response to it, and the impact of the coronavirus (COVID-19) pandemic on our business, results of operations and financial condition and our and the U.S.

government’s response to it, and those identified below, under “Part I, Item 1A.

Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including the continuing impact of the coronavirus (COVID-19) pandemic on our business, results of operations and financial condition and our and the U.S.

government or regulator’s further responses to it, and those identified above, under “Part I, Item 1A.

Risk Factors,” and elsewhere herein.

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In this Annual Report, unless otherwise specified or the context otherwise requires, “Green Dot,” “we,” “us,” and “our” refer to Green Dot Corporation and its consolidated subsidiaries.

Green Dot Corporation 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.

Green Dot Corporation is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence.

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.

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 tax refund processing, cash deposits and disbursements.

Our products and services are divided among our two reportable segments:

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

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

Our CODM (who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue 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.

Net interest income earned by our bank, eliminations of intersegment revenues and expenses, unallocated corporate expenses, and other costs that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses.

Prior periods presented have been recast to align with our revised segment presentation for the year ended December 31, 2021.

Refer to " Part 1, Item 1.

Business " for more detailed information.

Financial Results and Trends

Business " for more detailed information regarding the organization of our business.

Consolidated Financial Results and Trends

Our results of operations for the years ended December 31, 2021 and 2020 were as follows:

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Net income 47,480 23,131 24,349 105.3 %

Impact of COVID-19

The unprecedented and rapid spread of the COVID-19 pandemic and the measures implemented to contain it have created a significant amount of economic volatility in our markets.

We have taken steps to ensure the health and safety of our employees and continued service to our customers and partners, while at the same time seeking to mitigate the impact of the pandemic on our financial condition and results of operations.

Our employees and business continuity

In response to the pandemic, we enacted business continuity plans in Shanghai, China and across the U.S., mandated that our employees work from home, required contractors to work remotely and implemented strict travel

restrictions.

To date, our U.S.

employees have been successful in maintaining our operations in a remote work environment and our offices in China have since reopened consistent with local guidelines.

Most of our U.S.

personnel will continue to operate remotely for the foreseeable future.

While we experienced disruption in staffing levels at our third-party call centers across the globe in the first half of 2020, staffing levels have been restored to appropriate levels and we continue to monitor the situation, as we evaluate future operating plans.

In response to our remote employee workforce strategy in the U.S., we have commenced closure of most our leased office locations beginning in 2021.

However, we will be required to continue making our contractual payments until our operating leases are formally terminated or expire.

Demand for our products and services

Beginning in March 2020, the business and operations of our retail distributors, employers offering our PayCard programs and certain of our BaaS partners have been disrupted, with many experiencing reduced foot traffic or usage of their products and services.

The conditions caused by the COVID-19 pandemic adversely affected our customers’ spending levels and the ability or willingness to purchase our products and services through our retail distributors, lowered the volume of transactions through our BaaS and PayCard programs and delayed the launching of new products and services.

Subsequently, governmental actions in the second quarter of 2020, such as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) helped mitigate the effects of COVID-19 on our business.

In particular, stimulus funds and incremental unemployment benefits provided under the CARES Act and a fundamental shift in consumer behavior towards electronic payments have created a higher demand and usage of our products and services.

On a year-over-year basis, our gross dollar volume, purchase volume and the number of active accounts grew year-over-year by 34%, 16% and 8%, respectively, compared to December 31, 2019.

In December 2020, an additional $900 billion economic stimulus package was signed into law, providing for additional direct payments and enhanced unemployment benefits through March 2021.

There has also been significant discussion among lawmakers regarding another economic relief package, which may provide for further direct payments and extend unemployment benefits.

While we believe our cardholder programs will continue to benefit from current and potentially further governmental economic relief packages, as well as the accelerated adoption of digital payments during the pandemic, we expect our key performance indicators will normalize as the effect of governmental actions lessen.

Impact on interest income, cost structure and liquidity

Interest Income

The Federal Reserve announced reductions in short-term interest rates in March 2020 that have lowered the yields on our cash and investment balances and therefore, we have experienced a reduction in the amount of interest income we earn.

An extended duration of near zero short-term interest rates will continue to impact the amount of net interest income we earn in the future.

Cost Structure

We have experienced increased costs, including higher disputed transaction losses, which were exacerbated by the disruption in staffing levels at our third-party call centers in the first half of 2020.

We have implemented cost-saving measures to offset increased costs and are otherwise working to continue mitigating the conditions driving our higher costs.

We have taken steps to strengthen our liquidity position and ensure we have ample flexibility to pursue strategic priorities, including utilizing our revolving credit facility, strictly managing our enterprise-wide employee headcount and delaying or reducing non-critical projects.

We currently have the full $100 million available to us under our revolving credit facility should we need it to invest in strategic initiatives.

Additionally, the CARES Act provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022.

As of December 31, 2020, we have deferred payment of approximately $3.9 million.

However, if another economic relief package is signed into law that provides for substantial additional direct payments and unemployment benefits, we may need to increase the size of our cash contributions to our subsidiary bank, Green Dot Bank, to maintain its capital, leverage and other financial commitments.

The duration and magnitude of the effects of COVID-19 remain uncertain and dependent on various factors, including the continued severity and transmission rate of the virus and new variants of the virus, the nature of and duration for which the preventative measures remain in place, the extent and effectiveness of containment and

mitigation efforts, including vaccination programs, the type of stimulus measures and other policy responses that the U.S.

government may further adopt, and the impact of these and other factors on our employees, customers, retail distributors, partners and vendors.

See Part II, Item 1A, Risk Factors , for an additional discussion of risk related to the COVID-19 pandemic.

Refer to "Segment Results" below for a summary of financial results of each of our reportable segments.

Total operating revenues

Our total operating revenues for the year ended December 31, 2020 increased $145.2 million , or 13.1% over the prior year comparable period, generating revenue growth principally from our Account Services segment and to a lesser extent, our Processing and Settlement Services segment.

Account Services

Within our Account Services segment, total operating revenues increased year-over-year by 16% for the year ended December 31, 2020, primarily attributable to growth in our key metrics, such as gross dollar volume and purchase volume.

The growth in our key metrics resulted in year-over-year increases in BaaS program management service fee revenues earned from platform partners, monthly maintenance fee assessments and interchange revenues, partially offset by an increase in estimated cash back rewards that we record as a reduction to card revenues and other fees.

We also experienced a year-over-year decline in net interest income during the year ended December 31, 2020 due to lower yields on our cash and investment balances as a result of rate decreases by the Federal Reserve.

The growth in gross dollar volume was driven principally from the growth in the number of direct deposit active accounts, as new and existing customers utilized our platform to receive stimulus funds and unemployment benefits under the CARES Act and the additional stimulus package that was passed by the federal government in December 2020.

While we believe gross dollar volume is a strong indicator of our revenue for all our account programs and believe our long term strategy and unique collection of assets and product offerings provide an advantage to address the competitive pressures we face from new entrants, such as "challenger" banks, current economic conditions caused by the COVID-19 pandemic have created mixed trends in our business that make it difficult to forecast future results.

We saw an increased proportion of ACH deposits coming from government benefits when account holders filed for unemployment benefits during the year.

The December stimulus package reinstituted supplemental federal unemployment benefits at $300 per week through March 2021.

While such state and federal unemployment benefits helped to offset the economic impact of the pandemic, it remains unclear whether such benefits will be maintained, significantly reduced or replaced after March 2021, which may impact our future results.

In January 2021, we announced the launch of GO2bank, a new mobile bank designed to help the majority of Americans living paycheck to paycheck build a stronger financial foundation.

GO2bank is designed to help our customers lower the cost of accessing and managing their money and offers features such as overdraft protection, high-value rewards, high-interest savings, and opportunities to establish, build, and track credit, regardless of credit history.

While still in its early stages, we remain encouraged by the growth opportunity GO2bank provides to our financial results in 2021 and beyond.

Processing and Settlement Services

Within our Processing and Settlement Services segment, total operating revenues increased slightly year-over-year by 1%.

Our processing and settlement services revenues increased due to a higher number of tax refund payments processed and the introduction of new tax processing services, as well as growth in the number of cash transfers, partially offset by a year-over-year decline in Simply Paid disbursement transactions due to the continued effects of the COVID-19 pandemic on the rideshare industry.

During the fourth quarter of 2020, we experienced a modest decline in the number of cash transfers and the related revenue, as compared to the same period in 2019, as a result of the non-renewal of a reload partner arrangement.

The impact to net income was limited due to the lower profitability of this arrangement.

The non-renewal of this agreement will impact the number of cash transfers in 2021.

However, any year-over-year growth or decline in cash transfers in 2021 will be dependent on multiple factors, including the level of growth in our Account Services programs.

In addition, we anticipate revenues from our tax processing services to decline year-over-year in 2021 as result of securing a multi-year agreement with one of our largest customers in exchange for lower economics on tax refund transfers.

Our total operating revenues for the year ended December 31, 2021 increased $179.4 million , or 14% over the prior year comparable period, generating revenue growth across our Consumer Services and B2B Services segments, partially offset by lower revenues earned from our Money Movement Services.

Our deposit account programs within our Consumer Services and B2B Services segments continue to benefit from demand for digital payments.

We have seen a fundamental shift in consumer behavior towards electronic payments throughout the COVID-19 pandemic that has created a higher demand and usage of our products and services.

Additionally, these two segments have benefited from economic stimulus funds and incremental unemployment benefits enacted by the U.S.

federal government.

In December 2020, an additional $900 billion economic stimulus package was signed into law, providing for additional direct payments and enhanced unemployment benefits.

In March 2021, another $1.9 trillion economic package was authorized under the American Rescue Plan Act of 2021, which provided for additional direct payments, enhanced unemployment benefits that expired in September 2021 and monthly child tax credit payments which expired in December 2021.

As a result of these consumer trends and economic factors, our consolidated gross dollar volume and purchase volume grew by 22% and 8%, respectively, for the year ended December 31, 2021, despite a year-over-year decline in total active accounts.

This increase was driven by strong organic growth from new and existing partners in our B2B Services segment.

Within our B2B Services segment, gross dollar volume and purchase volume each grew 51%, and 18%, respectively, for the year ended December 31, 2021, and the average number of active accounts in this segment across the year grew 8%.

This growth resulted in an increase in program management service fee revenues earned from BaaS partners and interchange revenues.

In our Consumer Services segment, gross dollar volume declined 2% for the year ended December 31, 2021.

Gross dollar volume was impacted by the reduction in enhanced federal unemployment benefits, as the weekly benefit to cardholders was reduced by half in 2021 compared with the prior year period and discontinued in early September 2021.

The average number of active accounts and direct deposit accounts across the year declined by 6% and 3%, respectively, for the year ended December 31, 2021.

Active accounts and direct deposit accounts in this segment declined, principally in the second half of 2021, as a result of the timing of when stimulus funds were received by cardholders at the end of December 2020, which resulted in a sizable increase in new and existing customers utilizing our account programs in the prior year.

To a lesser extent, these metrics were also impacted by enhanced fraud monitoring controls we implemented to protect our customers.

Despite these year-over-year declines in our Consumer Services segment, revenue growth in the segment benefited from customer adoption of new features, such as the introduction of our optional overdraft protection program services made available to cardholders across our portfolios, including our GO2bank product launched earlier this year, and favorable decreases in the amount of cash back rewards on our legacy card programs due to changes in consumer behavioral trends and the estimated redemption amounts.

While many of our cardholders have benefited from federal relief programs, much of the enhanced pandemic related unemployment benefits provided by the federal government ended in September 2021.

The impact of further governmental actions and whether or not these benefits are reinstituted may also impact our future results.

We expect our key performance indicators will continue to normalize as the effect of governmental actions continues to lessen.

Total Money Movement Services segment revenues for the year ended December 31, 2021 decreased by 17% compared with the prior year comparable period.

The decrease in our Money Movement Services was primarily attributable to the number of cash transfers processed, which also decreased by 17% compared with the prior year comparable period.

The decrease in volume of cash transfers was largely due to our decision not to renew a reload partner agreement in the fourth quarter of 2020.

While the non-renewal of this agreement has impacted segment revenues and the number of cash transfers we process, the effect on segment profit was less impactful due to the higher than average sales commission rate associated with this agreement.

Any year-over-year growth or decline in cash transfers in 2022 will be dependent on multiple factors, including the level of growth of deposit account programs in our Consumer Services and B2B Services segments.

Our tax processing revenues have also decreased year-over-year for the year ended December 31, 2021 as a result of a decrease in the number of tax refunds processed of 3% for the comparable period.

The decrease in number of tax refunds processed for the year ended December 31, 2021 compared to the prior year period was attributable to lower volumes in both our online consumer and professional tax channels.

Tax processing revenues were also impacted by lower unit economics earned from refund transfers with one of our largest customers due to the terms that were agreed upon in connection with a new multi-year arrangement.

Total operating expenses

Our total operating expenses for the year ended December 31, 2021 increased $143.0 million, or 12%, over the prior year comparable period.

This increase was primarily the result of several factors, including higher processing expenses associated with the growth of certain BaaS account programs and an increase in other general and administrative expenses, primarily due to a year-over-year increase in dispute transaction losses and impairment charges to long-lived assets we no longer intend to utilize.

We also experienced higher compensation and benefits expenses, principally due to higher stock-based compensation expenses, which was driven by higher achievement of performance-based equity awards relative to the prior year period and in part by inducement awards issued in connection with several key executive hires during the period.

Compensation and benefits also increased due to higher accrued bonus compensation for non-executive employees and increased severance costs associated with the reorganization of our leadership team.

For the year ended December 31, 2020, we also experienced higher sales and marketing expenses attributable to the year-over-year increases in operating revenues generated from products and services that are subject to revenue-sharing arrangements with our distributors and partners.

In addition, under our current Walmart MoneyCard agreement, effective January 1, 2020, the sales commission rate we pay to Walmart for the MoneyCard program increased from the prior agreement.

While we continue to build operational efficiencies within our customer service operations, in the short-term, we have incurred significantly higher dispute transaction losses year-over-year, primarily due to higher volumes of incoming customer disputes and operational disruptions caused by the COVID-19 pandemic.

While we do not anticipate these conditions to persist over the long-term, dispute transaction losses have negatively impacted other general and administrative expenses for the year ended December 31, 2020, which we expect will normalize in 2021 as our improvement measures begin to take effect.

In response to the COVID-19 pandemic, our U.S.

employees have shifted to a fully remote workforce strategy and we expect to continue operating in a remote environment for the foreseeable future.

As a result, we have commenced closure of most our leased office locations in the U.S.

beginning in 2021.

While we will be required to continue making our contractual payments until our operating leases are formally terminated or expire, we recorded impairment charges to our operating lease right-of-use assets and related property and equipment located at our office facilities during the period.

We also recorded impairment charges of internal-use software related to legacy platforms that have been replaced by new technology platforms expected to better scale with our operations.

Total impairment charges to long-lived assets amounted to approximately $21.7 million for the year ended December 31, 2020.

Income tax expense for the year ended December 31, 2020 decreased $16.2 million from the prior year comparable period.

The decrease in income tax expense was primarily driven by the decline in our operating income, as our effective tax rate of 17.7% for the year ended December 31, 2020 remained consistent with the prior year comparable period.

Our effective tax rate for the year ended December 31, 2020 and 2019 is lower than our statutory federal income tax rate primarily due to tax benefits from general business credits and stock-based compensation, offset by higher taxes from non-deductible executive compensation.

This increase was the result of several factors, including higher processing expenses within our B2B Services segment associated with the growth of certain BaaS account programs and an increase in third-party call center support (a component of compensation and benefits expenses) within Consumer Services and B2B Services, to meet the increased demand in our customer service center as a result of our efforts to improve our customers' overall experience.

In addition, both of these segments experienced year-over-year growth in transaction losses, a component within other general and administrative expenses, from increases in gross dollar volume and purchase volume in our B2B Services segment and the introduction of our overdraft protection services in our Consumer Services segment.

The increase in total operating expenses for the year ended December 31, 2021 was partially offset by a decrease in sales and marketing expenses due to a decrease in sales commissions from lower revenues within our Money Movement Services segment, as well as impairment charges we recorded during the fourth quarter 2020 that did not recur in 2021.

As a result of our shift to a remote workforce strategy in 2020, we recorded impairment charges in 2020 to our operating lease right-of-use assets and related property and equipment located at our office facilities, as well as certain internal-use software that were replaced by newer technology platforms.

We intend to continue to make growth-oriented investments and incur other expenditures that will benefit our financial results in 2022 and beyond.

Our growth-oriented investments are focused on marketing efforts for our GO2bank product and building a modern and scalable core banking and card management platform that reduces our reliance on third-party processors and increases our ability to innovate and preserve margins.

To support our efforts in building a modern banking platform, we expect our software license and hosting costs, a component of other general and administrative expenses, and salary and wage expenses, a component of compensation and benefits expenses to increase year-over-year.

Our income tax expense for the year ended December 31, 2021 increased $11.3 million, or 227% over the prior year comparable period.

The increase in our income tax expense was due primarily to a 127% increase in income before taxes and an increase in our effective tax rate.

Our effective tax rate for the years ended December 31, 2021 and 2020 was 25.5% and 17.7%, respectively.

The increase in our effective tax rate was primarily attributable to lower tax benefits from general business credits, stock-based compensation and higher expenses related to state taxes, net of federal benefits.

COVID-19 Update

The health and safety of our employees remains a top priority for our business and most of our U.S.

personnel continue to operate remotely.

In response to our remote workforce strategy, we have closed most of our U.S.

leased office locations.

However, we will be required to continue making our contractual payments until our operating leases are formally terminated or expire.

In response to the economic impact caused by COVID-19, the Federal Reserve announced reductions in short-term interest rates in March 2020, which has impacted the yields on our cash and investment balances.

We have continued to experience a reduction in the amount of interest income we earn compared to recent periods prior to COVID-19.

While it is expected that the Federal Reserve will increase interest rates in 2022 to slow the effects of economic inflation tied to the COVID-19 pandemic, it is uncertain when or how many times interest rates will be increased.

The Federal Reserve's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future.

The duration and magnitude of the continuing effects of COVID-19 remain uncertain and dependent on various factors, including the continued severity and transmission rate of the virus, new variants of the virus, the nature of and duration for which preventative measures remain in place, the extent and effectiveness of containment and mitigation efforts, including vaccination programs and mandates, and the type of stimulus measures and other policy responses that the U.S.

government may further adopt, if any.

See Part II, Item 1A, Risk Factors , for an additional discussion of risk related to the COVID-19 pandemic.

Consolidated Key Metrics

We review a number of metrics to help us monitor the performance of, and identify trends affecting, our business.

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Gross Dollar Volume $ 70,822 $ 58,203 $ 12,619 21.7 % $ 58,203 $ 43,459 $ 14,744 33.9 %

GDV from Direct Deposit Sources $ 39,465 $ 31,380 $ 8,085 25.8 % $ 31,380 $ 29,755 $ 1,625 5.5 %

Number of Active Accounts* 5.07 5.45 (0.38) (7.0) % 5.45 5.04 0.41 8.1 %

Direct Deposit Active Accounts* 2.46 2.14 0.32 15.0 % 2.14 2.04 0.1 4.9 %

Purchase Volume $ 33,736 $ 31,220 $ 2,516 8.1 % $ 31,220 $ 27,004 $ 4,216 15.6 %

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Tax Refunds Processed 12.14 12.46 (0.32) (2.6) % 12.46 12.09 0.37 3.1 %

* Represents number of active and direct deposit active accounts as of December 31, 2020 , 2019, and 2018 respectively.

* Represents number of active accounts as of December 31, 2021 , 2020, and 2019 respectively.

See “Segment Results” for additional information and discussion regarding key metrics performance by segment.

The definitions of our key metrics are as follows:

Gross Dollar Volume — Represents the total dollar volume of funds loaded to our account products from direct deposit and non-direct deposit sources.

A substantial portion of our gross dollar volume is generated from direct deposit sources.

We use both aggregate gross dollar volume and gross dollar volume from direct deposit sources to analyze the total amount of money moving onto our account programs, determine the overall engagement and usage patterns of our account holder base.

These metrics also serve as leading indicators of revenue generated through our Account Services segment products, inclusive of interest income generated on deposits held at Green Dot Bank, fees charged to account holders and interchange revenues generated through the spending of account balances.

The increases in gross dollar volume in the aggregate and from direct deposit sources during the year ended December 31, 2020 from the comparable prior year period were principally driven by the increase in the number of direct deposit active accounts and stimulus funds and unemployment benefits received under the CARES Act and additional Economic Impact Payments received at the end of December 2020.

Number of Active Accounts — represents accounts in our portfolio that had a purchase, deposit or ATM withdrawal transaction during the applicable quarter.

Any bank account within our Account Services segment that is subject to United States Patriot Act compliance and, therefore, requires customer identity verification prior to use and is intended to accept ongoing customer cash or ACH deposits (including without limitation general purpose reloadable prepaid card accounts, demand deposit or checking accounts, and credit cards) qualifies as an account for purposes of this metric.

We use both aggregate active accounts and direct deposit active accounts to analyze the overall size of our active customer base and to analyze multiple metrics expressed as an average across this active account base.

In particular, we monitor the mix of direct deposit accounts and non-direct deposit accounts.

Our direct deposit active accounts, on average, have the longest tenure and generate the majority of our gross dollar volume in any period and thus, generate more revenue over their lifetime than other active accounts.

As of December 31, 2020, we experienced an increase on a year-over-year basis in the number of active accounts and direct deposit active accounts of 8% and 15%, respectively, primarily driven by new and existing customers utilizing our platform to receive stimulus funds and unemployment benefits provided for under the CARES Act and the accelerated adoption of digital payments during the pandemic.

We use this metric to analyze the total amount of money moving onto our account programs, and to determine the overall engagement and usage patterns of our account holder base.

This metric also serves as a leading indicator of revenue generated through our Consumer Services and B2B Services segments, inclusive of fees charged to account holders and interchange revenues generated through the spending of account balances.

Number of Active Accounts — Represents any bank account within our Consumer Services and B2B Services segments that is subject to the USA PATRIOT Act of 2001 compliance and, therefore, requires customer identity verification prior to use and is intended to accept ongoing customer cash or ACH deposits.

This metric includes checking accounts, general purpose reloadable prepaid card accounts, and secured credit card accounts in our portfolio that had at least one purchase, deposit or ATM withdrawal transaction during the applicable quarter.

We use this metric to analyze the overall size of our active customer base and to analyze multiple metrics expressed as an average across this active account base.

Beginning with the first quarter of 2021, we have provided certain key metrics at the realigned segment level and have revised our direct deposit active account metric.

Following these changes, the direct deposit active accounts metric only consists of accounts in our Consumer Services segment and no longer include direct deposit active accounts in our B2B Services segment.

Based on the economic structure of our partnerships within our B2B services segment, we believe that total active accounts is the most relevant key metric for the B2B Services segment.

We also narrowed the definition of "direct deposit active account" to include only active accounts that have received one or more payroll or government benefit transaction during the period.

Prior period metrics have been restated to conform to our current definition.

Our direct deposit active accounts within our Consumer Services segment, on average, have the longest tenure and generate the majority of our gross dollar volume in any period and thus, generate more revenue over their lifetime than other active accounts.

Refer to sub-section entitled Consumer Services under “Segment Results” below for key metric results for direct deposit active accounts.

Purchase Volume — Represents the total dollar volume of purchase transactions made by our account holders.

This metric excludes the dollar volume of ATM withdrawals.

We use this metric to analyze interchange revenue, which is a key component of our results of operations.

The increase in purchase volume of 15.6% during the year ended December 31, 2020, from the comparable prior year period was driven by an increase in Gross Dollar Volume, as described above.

This metric excludes the dollar volume of ATM withdrawals and volume generated by certain BaaS programs where the BaaS partner receives interchange and we earn a platform fee.

We use this metric to analyze interchange revenue, which is a key component of our financial performance.

Number of Cash Transfers — Represents the total number of cash transfer transactions conducted by consumers, such as a point-of-sale swipe reload transaction, the purchase of a MoneyPak or an e-cash mobile remittance transaction marketed under various brand names, that we conducted through our retail distributors in a specified period.

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We review this metric as a measure of the size and scale of our retail cash processing network, as an indicator of customer engagement and usage of our products and services, and to analyze cash transfer revenue, which is a key component of our financial performance.

Our cash transfers increased 5.8% during the year ended December 31, 2020 over the comparable prior year period primarily due to an increase in the number of third-party account programs that utilize the Green Dot Network to accept cash reloads.

As discussed above, during the fourth quarter of 2020, we experienced a modest decline in the number of cash transfers and the related revenue, as compared to the same period in 2019, as a result of the non-renewal of a reload partner arrangement.

Number of Tax Refunds Processed — Represents the total number of tax refunds processed in a specified period.

We review this metric as a measure of the size and scale of our tax refund processing platform and as an indicator of consumer engagement and usage of its products and services.

The increase in the number of tax refunds processed of 3.1% for the year ended December 31, 2020 from the comparable prior year period was primarily due to an increase in refunds processed through online consumer tax filing software platforms, compared to the prior year period.

The number of tax refunds processed is most concentrated during the first half of each year and is minimal during the second half of each year.

We review this metric as a measure of the size and scale of our tax refund processing platform and as an indicator of customer engagement and usage of its products and services.

Key components of our results of operations

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Card Revenues and Other Fees — Card revenues consist of monthly maintenance fees, ATM fees, new card fees and other revenues.

We charge maintenance fees on GPR cards, checking accounts and certain cash transfer products, such as MoneyPak, pursuant to the terms and conditions in our customer agreements.

We charge maintenance fees on prepaid cards, checking accounts and certain cash transfer products, such as MoneyPak, pursuant to the terms and conditions in our customer agreements.

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

We charge new card fees, if applicable, when a consumer purchases a GPR card, gift card,

or a checking account product.

Other revenues consist primarily of revenue associated with our gift card program, annual fees associated with our secured credit card portfolio, transaction-based fees, fees associated with optional products or services, and cash-back rewards we offer to cardholders.

We charge new card fees, if applicable, when a consumer purchases a prepaid card, gift card, or a checking account product through our Retail channel.

Our cash-back rewards are recorded as a reduction to card revenues and other fees.

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The average fee per ATM transaction depends upon the mix of products in our portfolio at any given point in time and the extent to which cardholders use ATMs within our free network that carry no fee for cash withdrawal transactions.

Our aggregate new card fee revenues vary based upon the number of GPR cards and checking accounts activated and the average new card fee.

Our aggregate new card fee revenues vary based upon the number of prepaid cards and checking accounts activated and the average new card fee.

The average new card fee depends primarily upon the mix of products that we sell since there are variations in new account fees based on the product and/or the location or source where our products are purchased.

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Our aggregate other fees vary primarily based upon account sales of all types, gift card sales, purchase transactions and the number of active accounts in our portfolio.

Processing and Settlement Service Revenues — Processing and settlement service revenues consist of cash transfer revenues, tax refund processing service revenues, Simply Paid disbursement revenues and other tax processing service revenues.

Cash Processing Revenues — Cash processing revenues (which we have previously referred to as processing and settlement services revenues) consist of cash transfer revenues, tax refund processing service revenues, Simply Paid disbursement revenues and other tax processing service revenues.

We earn cash transfer revenues when consumers fund their cards through a reload transaction at a Green Dot Network retail location.

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We classify our operating expenses into the following four categories:

Sales and Marketing Expenses — Sales and marketing expenses consist primarily of the commissions we pay to our retail distributors, brokers and platform partners, advertising and marketing expenses, and the costs of manufacturing and distributing card packages, placards and promotional materials to our retail distributors and personalized GPR and GoBank cards to consumers who have activated their cards.

We generally establish commission percentages in long-term distribution agreements with our retail distributors and platform partners.

Sales and Marketing Expenses — Sales and marketing expenses consist primarily of the commissions we pay to our retail distributors, brokers and partners, advertising and marketing expenses, and the costs of manufacturing and distributing card packages, placards and promotional materials to our retail distributors and personalized debit cards to consumers who have activated their cards.

We generally establish commission percentages in long-term distribution agreements with our retail distributors and partners.

Aggregate commissions with our retail distributors are determined by the number of account products and cash transfers sold at their respective retail stores.

Commissions with our platform partners and, in certain cases, our retail distributors are determined by the revenue generated from the ongoing use of the associated card programs.

Commissions with our partners and, in certain cases, our retail distributors are determined by the revenue generated from the ongoing use of the associated card programs.

We incur advertising and marketing expenses for television, sponsorships, online and in-store promotions.

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For this reason, these expenses do not always track changes in our operating revenues.

Our manufacturing and distribution costs vary primarily based on the number of GPR and GoBank accounts activated by consumers.

Our manufacturing and distribution costs vary primarily based on the number of accounts activated by consumers.

Compensation and Benefits Expenses — Compensation and benefits expenses represent the compensation and benefits that we provide to our employees and the payments we make to third-party contractors.

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Bank fees generally vary based on the total number of tax refund transfers processed and gateway and network fees vary based on the numbers of disbursements made.

Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional service fees, telephone and communication costs, depreciation and amortization of our property and equipment and intangible assets, changes in contingent consideration, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance.

Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional service fees, telephone and communication costs, depreciation and amortization of our property and equipment, amortization of our intangible assets, impairment charges of long-lived assets, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance.

We incur telephone and communication costs primarily from customers contacting us through our toll-free telephone numbers.

These costs vary with the total number of active accounts in our portfolio, as do losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud.

Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, rent and utilities vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics.

Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, impairment charges of long-lived assets, rent and utilities vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics.

Income Tax Expense

Our income tax expense consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services.

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.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP.

We prepare our consolidated financial statements in accordance with U.S.

The preparation of our consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures.

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To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

We believe that the

accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Revenue Recognition

As prescribed under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, we recognize revenues when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, as determined under a five-step process.

We charge new card fees, if applicable, when a consumer purchases a prepaid card, gift card, or a checking account product through our Retail channel.

Our new card fee provides our cardholders a material right and accordingly we defer and recognize new card fee revenues on a straight-line basis over the period commensurate with our performance obligation to our customers.

We consider the performance obligation period to be the average card lifetime, which is currently less than one year for our GPR cards and gift cards.

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

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

lifetimes may vary in the future as cardholder behavior changes relative to historical experience because customers are influenced by changes in the pricing of our services, the availability of substitute products, and other factors.

We also defer commissions paid to retail distributors related to new card sales as costs to obtain contracts and expense ratably over the average card lifetime commensurate with our GPR and gift cards.

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

We consider the performance obligation period to be the average card lifetime, which is currently less than one year for our deposit account programs acquired through our Retail channel.

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

We reassess average card lifetime quarterly for prepaid cards and checking accounts and annually for gift cards.

Average card lifetimes may vary in the future as cardholder behavior changes relative to historical experience because customers are influenced by changes in the pricing of our services, the availability of substitute products, and other factors.

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

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

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

Cash rewards have increased by approximately 123% for the year ended December 31, 2020 compared to the prior year period, as our cash-back programs have grown, principally from our Green Dot Unlimited product launched in the second half of 2019.

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

Cash rewards have decreased by approximately 51% for the year ended December 31, 2021 compared to the prior year period, as our cash-back programs have declined, principally from our decision to shift from our Green Dot Unlimited product to our recently launched GO2bank product which does not have a cash rewards feature.

Increases or decreases in our estimate of cash-back rewards is dependent upon cardholder behavioral changes and we periodically evaluate our estimation process and assumptions based on developments in redemption patterns, dollars redeemed and other cardholder behavioral trends.

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Reserve for Uncollectible Overdrawn Accounts

Our cardholder accounts may become overdrawn as a result of maintenance fee assessments or from purchase transactions that we honor, in each case in excess of the funds in the cardholder’s account.

While we decline authorization attempts for amounts that exceed the available balance in a cardholder’s account, the application of card association rules, the timing of the settlement of transactions and the assessment of the card’s monthly maintenance fee, among other things, can result in overdrawn accounts.

Overdrawn account balances are deemed to be our receivables due from cardholders, and we include them as a component of accounts receivable, net, on our consolidated balance sheets.

We generally recover overdrawn account balances from those cardholders that perform a reload transaction.

In addition, we recover some overdrawn account balances related to purchase transaction through enforcement of payment network rules, which allow us to recover the amounts from the merchant where the purchase transaction was conducted.

For cardholders who are not enrolled or do not meet the eligibility requirements of our overdraft protection program, we generally decline authorization attempts for amounts that exceed the available balance in a cardholder’s account, however, the application of card association rules, the timing of the settlement of transactions and the assessment of the card’s monthly maintenance fee, among other things, can still result in overdrawn accounts.

These overdrawn account balances are deemed to be receivables due from cardholders, and are included as a component of accounts receivable, net, on our consolidated balance sheets.

We generally recover overdrawn account balances from those cardholders that perform a reload transaction and in some cases, through enforcement of payment network rules, which allow us to recover the amounts from the merchant where the purchase transaction was conducted.

However, we are exposed to losses from any unrecovered overdrawn account balances.

The probability of recovering these amounts is primarily related to the number of days that have elapsed since an account had activity, such as a purchase, ATM transaction or fee assessment.

Generally, we recover 50-60% of overdrawn account balances in accounts that have had activity in the last 30 days, less than 15% in accounts that have had activity in the last 30 to 60 days, and less than 10% when more than 60 days have elapsed.

We establish a reserve for uncollectible overdrawn accounts.

We classify overdrawn accounts into age groups based on the number of days since the account last had repayment activity.

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

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

The probability of recovering these amounts is primarily related to the number of days that have elapsed since an account had transaction activity, such as a purchase, ATM transaction or fee assessment.

We generally recover approximately 50-60% of overdrawn account balances in accounts that have

had transaction activity in the last 30 days and less than 10% when more than 30 days have elapsed.

As such, we establish a reserve for uncollectible overdrawn accounts.

We classify overdrawn accounts by transaction type and age groups based on the number of days since the account last had activity.

We then calculate a reserve factor for each transaction type and age group based on the average recovery rate for the most recent six months discussed above.

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

We rely on these historical rates because they have remained relatively consistent over time.

When more than 90 days have passed without any activity in an account, we consider recovery to be remote and charge off the full amount of the overdrawn account balance against the reserve for uncollectible overdrawn accounts.

Generally, when more than 60 days have passed without any activity in an account, we consider recovery to be remote and charge off the full amount of the overdrawn account balance against the reserve for uncollectible overdrawn accounts.

Our actual recovery rates and related estimates thereof may change in the future in response to factors such as customer behavior, product pricing and features that impact the frequency and velocity of reloads and other deposits to such accounts.

We include our provision for uncollectible overdrawn accounts related to purchase transactions in other general and administrative expenses in our consolidated statements of operations.

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

Allowance for Credit Losses

We establish an allowance for estimated credit losses inherent in our loan portfolio over the life of the loans, including our secured credit cards and overdrawn balances associated with our overdraft protection program.

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

We also consider adjustments based on qualitative factors which in our judgment may affect the expected credit losses including, but not limited to, changes in prevailing economic or market conditions and the estimated value of the underlying collateral for collateral dependent loans.

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

Goodwill and Intangible Assets

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Operating Revenues

The following table presents a breakdown of our operating revenues among card revenues and other fees, processing and settlement service revenues, interchange revenues and net interest income:

The following table presents a breakdown of our operating revenues among card revenues and other fees, cash processing revenues, interchange revenues and net interest income:

Year Ended December 31,

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Card revenues and other fees $ 788,834 55.0 % $ 593,915 47.4 %

Processing and settlement service revenues 293,216 23.4 287,064 25.9

Cash processing revenues 245,539 17.1 293,216 23.4

Interchange revenues 380,037 26.6 351,843 28.0

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Card Revenues and Other Fees — Card revenues and other fees totaled $788.8 million for the year ended December 31, 2021, an increase of $194.9 million, or 33%, from the comparable prior year period.

Our card revenues and other fees increased principally as a result of BaaS program management service fee revenues earned from platform partners and to a lesser extent, an increase in monthly maintenance fee assessments as a result of higher account balances that benefited from government stimulus.

These increases were offset partially by an increase in estimated cash back rewards that we record as a reduction to card revenues and other fees.

Our estimate of cash rewards varies based on multiple factors including the terms and conditions of the cash back

program, customer activity and customer redemption rates.

Cash rewards have increased steadily year-over-year as our cash-back programs have grown, principally from those programs launched in the second half of 2019.

Processing and Settlement Service Revenues — Processing and settlement service revenues totaled $293.2 million for the year ended December 31, 2020, an increase of $6.1 million, or 2%, from the comparable prior year period.

This increase was driven primarily by year-over-year growth in transaction volume associated with cash transfers, expanded adoption of our taxpayer advance programs and the introduction of new tax processing services for the year ended December 31, 2020 compared to the prior year period, partially offset by lower Simply Paid disbursement transactions due to the effects of the COVID-19 pandemic on the rideshare industry.

Our card revenues and other fees increased in part as a result of an increase in total gross dollar volume of 22%.

The increase in total gross dollar volume resulted in an increase in program management service fee revenues earned from BaaS partners.

Card revenues and other fees also increased as a result of optional features recently launched on our card programs, such as our overdraft protection program, as well as a favorable decrease in the estimated accrual of cash back rewards, which we record as a reduction to revenue.

Our estimate of cash rewards varies based on multiple factors including the terms and conditions of the cash back program currently in effect, customer activity and customer redemption rates.

Cash Processing Revenues — Cash processing revenues totaled $245.5 million for the year ended December 31, 2021, a decrease of $47.7 million, or 16%, from the comparable prior year period.

The decrease is primarily due to a decline in the number of cash transfers processed year-over-year, largely due to our decision not to renew a reload network agreement with a partner in the fourth quarter of 2020.

Additionally, we experienced a lower number of tax refunds processed between the comparable periods and lower unit economics earned from refund transfers with one of our largest customers due to the terms that were agreed upon in connection with a new multi-year arrangement.

Interchange Revenues — Interchange revenues totaled $380.0 million for the year ended December 31, 2021, an increase of $28.2 million, or 8%, from the comparable prior year period.

The increase was primarily due to an increase in purchase volume during the year ended December 31, 2020 compared to the prior year period, which we attribute primarily to stimulus funds and unemployment benefits made available under the CARES Act, partially offset by a decline in the interchange rate earned as a result of an increase in the average dollar amount purchased per transaction.

Interest Income, net — Net interest income totaled $14.8 million for the year ended December 31, 2020, a decrease of $17.1 million, or 54%, from the comparable prior year period.

The decrease was principally the result of lower yields on our investment securities portfolio and cash held from customer funds on deposit as a result of rate decreases by the Federal Reserve during the first quarter of 2020.

The increase was primarily due to an increase in purchase volume during the year ended December 31, 2021.

Interest Income, net — Net interest income totaled $18.8 million for the year ended December 31, 2021, an increase of $4.0 million, or 27%, from the comparable prior year period.

The increase in net interest income earned was the result of an increase in the size of our investment securities portfolio, funded primarily from increases in deposit accounts attributed to economic stimulus funds and other government benefit programs, as well as organic growth in certain deposit account programs.

Operating Expenses

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Total operating expenses $ 1,366,723 95.5 % $ 1,223,687 97.6 %

Sales and Marketing Expenses — Sales and marketing expenses totaled $415.1 million for the year ended December 31, 2020, an increase of $28.3 million, or 7% compared to the year ended December 31, 2019.

This increase was primarily driven by an increase in sales commissions associated with higher revenues generated from products that are subject to revenue-sharing agreements.

In addition, beginning on January 1, 2020, the sales commission rate we pay for the MoneyCard program increased from the prior agreement.

These increases were partially offset by lower advertising expenses as we focused our marketing spending on more efficient channels.

Sales and Marketing Expenses — Sales and marketing expenses totaled $382.2 million for the year ended December 31, 2021, a decrease of $32.9 million, or 8% compared to the year ended December 31, 2020.

This decrease was primarily driven by a decrease in sales commissions due to lower revenues within our Money Movement Services segment, partially offset by higher advertising and supply chain expenses in connection with the continued roll-out of GO2bank, which we launched in the first quarter of 2021.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $264.7 million for the year ended December 31, 2021, an increase of $31.5 million, or 14%, compared to the year ended December 31, 2020.

The increase was primarily due to an increase in stock-based compensation expense of approximately $24.1 million, driven primarily by higher achievement of performance-based awards compared to the prior year period and inducement awards issued in connection with several key executive hires during the period.

Salaries and wages were also higher by $15.2 million, which was attributable to accrued bonus compensation and increased severance expenses associated with a reorganization of our leadership team.

These increases were partially offset by lower employee travel expenses due to COVID-19 related travel restrictions.

The increase was primarily due to higher third-party call center support costs to meet increased demand in our customer service center from the volume of federal relief funds deposited into our account programs and our effort to improve our customer's overall experience, partially offset by lower employee stock-based compensation due to the acceleration of awards in the prior year period associated with certain former executive employees.

Processing Expenses — Processing expenses totaled $389.3 million for the year ended December 31, 2021, an increase of $95.6 million, or 33%, compared to the year ended December 31, 2020.

This increase was principally due to growth in BaaS account programs within our Account Services segment and overall volume of transactions processed through our platform.

This increase was principally due to growth in BaaS account programs within our B2B Services segment and overall volume of transactions processed through our consolidated platform.

Other General and Administrative Expenses — Other general and administrative expenses totaled $330.6 million for the year ended December 31, 2021, an increase of $48.9 million, or 17%, from the comparable prior year period.

This increase was primarily due to a year-over-year growth in dispute transaction losses and impairment

charges of long-lived assets, as discussed above in our management overview, and higher depreciation and amortization of property, plant and equipment as a result of growth in capital expenditures in recent years.

This increase was primarily due to a year-over-year growth in transaction losses as a result of increases in gross dollar volume and purchase volume in our B2B Services segment and the introduction of our overdraft protection services in our Consumer Services segment, as well as higher professional fees and software license expenses for the reasons discussed above.

These increases were partially offset by lower rent expenses as a result of our office closures in the U.S and related impairment charges of long-lived assets recorded during the year ended December 31, 2020.

Income Tax Expense

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Employee stock-based compensation (2.6) (7.7)

Non-deductible executive compensation 17.2 0.1

IRC 162(m) limitation 8.0 17.2

Non-deductible penalties — 1.1

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Effective tax rate 25.5 % 17.7 %

Our income tax expense totaled $5.0 million for the year ended December 31, 2020, representing a decrease of $16.2 million from the comparable prior year period.

The decrease in income tax expense was primarily driven by the decline in our operating income as our effective tax rate for the year ended December 31, 2020 remained consistent with the prior year comparable period.

Our income tax expense totaled $16.2 million for the year ended December 31, 2021, representing an increase of $11.3 million from the comparable prior year period.

The increase in income tax expense was primarily driven by the increase in our operating income.

Our effective tax rate for the year ended December 31, 2021 is higher than our statutory federal income tax rate primarily due to higher taxes from non-deductible executive compensation and expenses related to state taxes, net of federal benefits.

Our effective tax rate for the year ended December 31, 2020 was lower than our statutory federal income tax rate primarily due to tax benefits from general business credits and stock-based compensation, offset by higher taxes from non-deductible executive compensation.

The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.

Results of Operations by Segment

Information with respect to the results of operations for each of our reportable segments may be found under Note 24 — Segment Information to the Consolidated Financial Statements included herein, which information is incorporated herein by reference.

Segment Results

Supplemental financial results and key metric data under our revised reportable segments structure for the fiscal year ended December 31, 2019 may be referenced on Form 8-K filed with the SEC on May 3, 2021.

These changes had no impact on our previously reported consolidated financial results for the year ended December 31, 2019.

Consumer Services

Year Ended December 31,

2021 2020 Change %

(In thousands, except percentages)

Financial Results

Segment revenues $ 694,725 $ 620,414 $ 74,311 12.0 %

Segment expenses 471,121 408,244 62,877 15.4 %

Segment profit $ 223,604 $ 212,170 $ 11,434 5.4 %

Key Metrics (In millions, except percentages)

Gross Dollar Volume $ 31,455 $ 32,139 $ (684) (2.1) %

Active Accounts* 3.10 3.73 (0.63) (16.9) %

Direct Deposit Active Accounts* 0.76 0.88 (0.12) (13.6) %

Purchase Volume $ 23,640 $ 22,694 $ 946 4.2 %

* Represents number of active and direct deposit active accounts as of December 31, 2021 and 2020, respectively.

As additional supplemental information, our key metrics within our Consumer Services segment is presented on a quarterly basis as follows:

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

Gross dollar volume $ 6,300 $ 6,811 $ 8,188 $ 10,156 $ 7,562 $ 8,333 $ 8,683 $ 7,561

Number of active accounts 3.10 3.38 3.97 4.07 3.73 3.98 4.10 3.70

Direct deposit active accounts 0.76 0.83 0.92 0.97 0.88 0.91 0.90 0.89

Purchase volume $ 4,881 $ 5,166 $ 6,455 $ 7,138 $ 5,176 $ 5,840 $ 6,123 $ 5,555

Segment revenues within Consumer Services for the year ended December 31, 2021 increased $74.3 million, or 12%, compared to the prior year comparable period, while our segment expenses for the year ended December 31, 2021 increased $62.9 million, or 15%.

Our gross dollar volume and the average number of active accounts and direct deposit active accounts across the year decreased by 2%, 6% and 3%, respectively, during the year ended December 31, 2021 from the comparable prior year period, due to varying factors, including decreases in enhanced federal unemployment benefits in 2021, the timing of economic stimulus received by cardholders at the end of December 2020, and to a lesser extent, enhanced fraud monitoring controls implemented in the current year, as described above under "Overview." Purchase volume increased by 4% during the year ended December 31, 2021 from the comparable prior year period.

Despite these decreases in some of our key metrics, we generated total revenue growth within this segment for the year ended December 31, 2021 from higher interchange revenue associated with the increase in purchase volume, customer adoption of new features, such as the introduction of our recent overdraft protection program, which is an optional service offered to our cardholders, and a favorable decrease in the estimated accrual of cash back rewards.

Our cash back rewards are recorded as a reduction to revenue and is attributable to changes in consumer behavioral trends and estimated redemption amounts.

These increases were partially offset by decreases in the amount of monthly maintenance fees and ATM revenue as a result of the decreases in our gross dollar volume stated above.

Consumer Services expenses increased for the year ended December 31, 2021 from the comparable prior year period, principally due to increased staffing of third-party call center support to meet the increased demand in our customer service center as a result of our effort to improve our customer's overall experience and growth in transaction losses, in part due to the introduction of our overdraft protection services.

Expenses in our Consumer Services segment also increased due to higher advertising and supply chain expenses in connection with the continued roll-out of GO2bank.

Year Ended December 31,

2021 2020 Change %

(In thousands, except percentages)

Financial Results

Segment revenues $ 458,584 $ 304,651 $ 153,933 50.5 %

Segment expenses 385,428 238,759 146,669 61.4 %

Segment profit $ 73,156 $ 65,892 $ 7,264 11.0 %

Key Metrics (In millions, except percentages)

Gross Dollar Volume $ 39,367 $ 26,064 $ 13,303 51.0 %

Active Accounts* 1.97 1.72 $ 0.25 14.5 %

Purchase Volume $ 10,096 $ 8,526 $ 1,570 18.4 %

* Represents number of active accounts as of December 31, 2021 and 2020, respectively.

As additional supplemental information, our key metrics within our B2B Services segment is presented on a quarterly basis as follows:

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

Gross dollar volume $ 10,053 $ 9,593 $ 9,211 $ 10,510 $ 6,787 $ 6,120 $ 6,424 $ 6,733

Number of active accounts 1.97 1.99 2.06 2.28 1.72 1.74 2.15 2.04

Purchase volume $ 2,184 $ 2,190 $ 2,415 $ 3,307 $ 1,685 $ 1,760 $ 2,354 $ 2,727

Segment revenues within our B2B Services for the year ended December 31, 2021 increased $153.9 million, or 51%, compared to the prior year period, while our segment expenses for the year ended December 31, 2021 increased $146.7 million, or 61%.

Our total gross dollar volume increased 51% during the year ended December 31, 2021 from the comparable prior year period, and the average number of active accounts within our B2B Services segment across the year increased by 8% year-over-year as of December 31, 2021 as we continued to experience organic growth from both new and existing users in certain BaaS programs as the demand for digital payments continues, as well as economic stimulus received by our partner programs.

Purchase volume also increased approximately 18% for the year ended December 31, 2021 from the comparable prior year periods, as result of this increased gross dollar volume.

The increase in gross dollar volume and purchase volume drove an increase in our program management service fee revenues earned from our BaaS partners and an increase in the amount of interchange revenue earned.

Despite year-over-year revenue growth for the year ended December 31, 2021, our segment profit has been impacted by the increased staffing of third-party call center support to meet the increased demand in our customer service center and growth in transaction losses as a result of the year-over-year increases in gross dollar volume and purchase volume.

This segment also experienced margin compression because certain BaaS partnerships were structured based on a fixed profit and therefore, our segment profit for certain arrangements will not scale with

revenue growth.

BaaS is our newest channel of business and we remain focused on investing in it and exploring new partnership agreements moving forward.

Money Movement Services

Year Ended December 31,

2021 2020 Change %

(In thousands, except percentages)

Financial Results

Segment revenues $ 239,735 $ 288,009 $ (48,274) (16.8) %

Segment expenses 123,770 164,128 (40,358) (24.6) %

Segment profit $ 115,965 $ 123,881 $ (7,916) (6.4) %

Key Metrics (In millions, except percentages)

Cash Transfers 40.51 48.71 (8.2) (16.8) %

Tax Refunds Processed 12.14 12.46 (0.32) (2.6) %

As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows:

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

Number of cash transfers 9.95 10.05 10.19 10.32 11.29 12.81 12.48 12.13

Number of tax refunds processed 0.12 0.43 4.15 7.44 0.11 0.75 1.90 9.70

Segment revenues within our Money Movement services for the year ended December 31, 2021 decreased $48.3 million, or 17%, from the comparable prior year period, and segment expenses for the year ended December 31, 2021 decreased $40.4 million, or 25%.

The number of cash transfers processed decreased for the year ended December 31, 2021, was largely due to our decision not to renew a reload partner agreement in the fourth quarter of 2020.

While the non-renewal of this agreement has impacted segment revenues and the number of cash transfers we process, the effect on segment profitability was less impactful due to the higher than average sales commission rate associated with this agreement.

In addition, our tax processing revenues decreased for the year ended December 31, 2021 primarily due to a lower number of tax refunds processed and lower unit economics earned from refund transfers with one of our largest customers due to the terms that were agreed upon in connection with a new multi-year arrangement.

Corporate and Other

Year Ended December 31,

2021 2020 Change %

(In thousands, except percentages)

Financial Results

Unallocated revenue and inter-segment eliminations $ ( 5,169 ) $ ( 12,554 ) $ 7,385 (58.8) %

Unallocated corporate expenses and inter-segment eliminations 190,592 183,577 7,015 3.8 %

$ ( 195,761 ) $ ( 196,131 ) $ 370 (0.2) %

Revenues within Corporate and Other are comprised of net interest income earned by our bank and inter-segment eliminations.

Unallocated corporate expenses include our fixed expenses such as salaries, wages and related benefits for our employees, professional service fees, software licenses, telephone and communication costs, rent and utilities, insurance and inter-segment eliminations.

These costs are not considered when our CODM evaluates the performance of our three reportable segments since they are not directly attributable to any reporting segment.

Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges and other non-recurring expenses that are not considered by our CODM when

evaluating our overall consolidated financial results are excluded from our unallocated corporate expenses above.

Refer to Note 24— Segment Information to the Consolidated Financial Statements included herein for a summary reconciliation.

Net interest income increased year-over-year for the year ended December 31, 2021 as a result of an increase in the size of our investment securities portfolio.

Unallocated corporate expenses for the year ended December 31, 2021 increased year-over-year by approximately 4%, as a result of higher professional services expenses, software licenses and telecommunication expenses, partially offset by lower corporate reserves and rent expenses.

Capital Requirements for Bank Holding Companies

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

In July 2013, the Federal Reserve and other U.S.

banking regulators approved final rules regarding new risk-based capital, leverage and liquidity standards, known as “Basel III.” The Basel III rules, which became effective for us and our bank on January 1, 2015, are subject to certain phase-in periods that occur over several years.

Basel III rules contain new capital standards that change the composition of capital, increase minimum capital ratios and strengthen counter-party credit risk capital requirements.

The Basel III rules also include a new definition of common equity Tier 1 capital and require that certain levels of such common equity Tier 1 capital be maintained.

The rules also include a new capital conservation buffer, which impose a common equity requirement above the new minimum that can be depleted under stress and could result in restrictions on capital distributions and discretionary bonuses under certain circumstances, as well as a new standardized approach for calculating risk-weighted assets.

The Basel III rules, which were promulgated by the Federal Reserve and other U.S.

banking regulators, provide for risk-based capital, leverage and liquidity standards.

Under the Basel III rules, we must maintain a ratio of common equity Tier 1 capital to risk-weighted assets of at least 4.5%, a ratio of Tier 1 capital to risk-weighted assets of at least 6%, a ratio of total capital to risk-weighted assets of at least 8% and a minimum Tier 1 leverage ratio of 4.0%.

Either or both of Green Dot Corporation and Green Dot Bank may qualify for and opt to use, from time to time, the community bank leverage ratio framework under the Federal Reserve’s version of the U.S.

Basel III Rules.

Under the community bank leverage ratio framework, a qualifying community banking organization may generally satisfy its capital requirements (and capital conservation buffer) under the U.S.

Basel III rules provided that it has a Tier 1 leverage ratio greater than 9% and satisfies other applicable conditions.

In 2021, Green Dot Corporation and Green Dot Bank qualified for (including, in the case of Green Dot Bank, through grace periods) and opted to use the community bank leverage ratio framework.

Going forward, we expect that Green Dot Corporation will continue to qualify for and use the community bank leverage ratio framework, and that Green Dot Bank will calculate and disclose its risk-based capital ratios and Tier 1 leverage ratio under standardized approach of the U.S.

Basel III Rules.

As of December 31, 2021 and 2020, we and Green Dot Bank were categorized as "well capitalized" under applicable regulatory standards.

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Common equity Tier 1 capital Primarily includes common stock, retained earnings and accumulated OCI, net of deductions and adjustments primarily related to goodwill, deferred tax assets and intangibles.

Under the regulatory capital rules, certain deductions and adjustments to these capital figures are phased in through January 1, 2018.

Total capital

Tier 1 capital plus supplemental capital items such as the allowance for loan losses, subject to certain limits

Tier 1 capital plus supplemental capital items such as the allowance for credit losses, subject to certain limits

Average total assets

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Financing activities 1,034,893 1,007,201

Increase (decrease) in unrestricted cash, cash equivalents and restricted cash $ 430,547 $ (29,064)

(Decrease) increase in unrestricted cash, cash equivalents and restricted cash $ (171,061) $ 430,547

During the years ended December 31, 2021 and 2020, we financed our operations primarily through our cash flows provided by operating activities and customer funds held on deposit.

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At December 31, 2021, our primary source of liquidity was unrestricted cash and cash equivalents totaling $1.3 billion.

We also consider our $971.0 million of investment securities available-for-sale to be highly-liquid instruments.

We also consider our $2.1 billion of investment securities available-for-sale to be highly-liquid instruments.

We use trend and variance analysis as well as our detailed budgets and forecasts to project future cash needs, making adjustments to the projections when needed.

We believe that our current unrestricted cash and cash equivalents, cash flows from operations and borrowing capacity under our credit facility will be sufficient to meet our working capital, capital expenditures, equity method investee capital commitments, and any other capital needs for at least the next 12 months.

We are currently not aware of any other trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

However, if an additional economic relief package is signed into law that provides for substantial additional direct payments and unemployment benefits, we may need to increase the size of our cash contributions to our subsidiary bank, Green Dot Bank, to maintain its capital, leverage and other financial commitments.

at least the next 12 months.

We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

We continue to monitor the impact of COVID-19 on our business to ensure our liquidity and capital resources remain appropriate throughout this period of uncertainty.

Cash Flows from Operating Activities

Our $162.5 million of net cash provided by operating activities in the year ended December 31, 2021 principally resulted from $47.5 million of net income, adjusted for certain non-cash operating expenses of $184.9 million, and a decrease in net working capital assets and liabilities of $69.8 million.

Our $209.2 million of net cash provided by operating activities in the year ended December 31, 2020 principally resulted from $23.1 million of net income, adjusted for certain non-cash operating expenses of $157.5 million, and an increase in net working capital assets and liabilities of $28.6 million.

Our $189.9 million of net cash provided by operating activities in the year ended December 31, 2019 principally resulted from $99.9 million of net income, adjusted for certain non-cash operating expenses of $125.1 million, and a decrease in net working capital assets and liabilities of $35.1 million, driven principally by changes in accounts receivables and prepaid and other assets.

Cash Flows from Investing Activities

Our $1.4 billion of net cash used in investing activities in the year ended December 31, 2021 primarily reflects purchases of available-for-sale investment securities, net of proceeds from sales and maturities of $1.2 billion, payments for the development and acquisition of property and equipment of $57.4 million, purchases of bank-owned life insurance policies of $55.0 million, and capital contributions related to our investment in TailFin Labs, LLC of $35.0 million.

Capital commitment relief granted to us at the end of 2020 by the Federal Reserve on our prepaid card deposits has provided greater flexibility in how we can utilize our cash and cash equivalents, and as a result, we purchased additional available-for-sale investment securities compared to the prior year period.

Our $785.8 million of net cash used in investing activities in the year ended December 31, 2020 primarily reflects purchases of available-for-sale investment securities, net of proceeds from sales and maturities of $687.8 million, payments for the development and acquisition of property and equipment of $59.0 million and capital contributions related to our investment in TailFin Labs, LLC of $35.0 million.

Capital commitment relief recently granted to us by the Federal Reserve on our GPR deposits has provided greater flexibility in how we can utilize our cash and cash equivalents, and as a result, we purchased additional available-for-sale investment securities compared to the prior year.

Our $153.9 million of net cash used in investing activities in the year ended December 31, 2019 primarily reflects payments for the development and acquisition of property and equipment of $78.2 million and purchases of available-for-sale investment securities, net of proceeds from sales and maturities of $73.2 million.

Cash Flows from Financing Activities

Our $1.0 billion of net cash provided by financing activities for the year ended December 31, 2020 was principally the result of a net increase in customer deposits of $1.6 billion, partially offset by a net decrease in obligations to customers of $512.5 million and repayments on our revolving credit facility of $35.0 million.

customer deposit balances have increased substantially as compared to December 31, 2019, driven primarily by stimulus funds and other government benefits received by our cardholders under the CARES Act and the additional economic stimulus package signed into law in December 2020.

Our $65.1 million of net cash used in financing activities for the year ended December 31, 2019 was primarily the result of $100.0 million used for stock repurchases under our stock repurchase program, $60.0 million in repayments of our note payable, a net decrease in obligations to customers of $66.8 million and $21.3 million in taxes paid from net settled equity awards, partially offset by a net increase in customer deposits of $146.1 million and borrowings on our revolving credit facility of $35.0 million.

Our $1.0 billion of net cash provided by financing activities for the year ended December 31, 2021 was principally the result of a net increase in customer deposits of $555.1 million, and a net increase in obligations to customers of $488.7 million.

Our $1.0 billion of net cash provided by financing activities for the year ended December 31, 2020 was principally the result of a net increase in customer deposits of $1.6 billion, partially offset by a net decrease in obligations to customers of $512.5 million and net repayments on our revolving credit facility of $35.0 million.

Total customer deposit balances increased substantially for the years ended December 31, 2021 and 2020 driven primarily by stimulus funds and other government benefits received by our cardholders under the CARES Act and the American Rescue Plan Act.

Other Sources of Liquidity:

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The applicable margin for borrowings depends on our total leverage ratio and varies from 1.25% to 2.00% for LIBOR Rate loans and 0.25% to 1.00% for Base Rate loans.

During the first quarter of 2020, we drew the maximum amount available of $100.0 million as a precautionary measure due to the uncertainty associated with the COVID-19 pandemic, but have since repaid the entire balance resulting in there being no borrowings outstanding as of December 31, 2020.

The terms of our existing agreement also provide for a method to determine an alternative benchmark interest rate in anticipation of the discontinuation of LIBOR under reference rate reform.

This alternative benchmark rate will be selected between the parties taking into consideration recommendations from regulatory bodies or based on prevailing market conventions at the time the alternative rate is established, and may include the Secured Overnight Financing Rate.

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

We are also subject to certain financial covenants, which include maintaining a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio at the end of each fiscal quarter, as defined in the agreement.

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The amount and timing of these payments and the related cash outflows in future periods is difficult to predict and is dependent on a number of factors including the hiring of new employees, the rate of change of computer hardware and software used in our business and our business outlook as a result of the COVID-19 pandemic.

We intend to continue to invest in new products and programs we believe are critical, including GO2bank, new features for our existing products and IT infrastructure to scale and operate effectively to meet our strategic objectives.

However, we do not expect these capital expenditures will exceed the amount of our capital expenditures in 2020.

We expect to fund these capital expenditures primarily through our cash flows provided by operating activities.

We intend to continue to invest in new products and programs we believe are critical, including GO2bank, new features for our existing products and IT infrastructure such as our core banking and card management systems in order to scale and operate effectively to meet our strategic objectives.

While we expect these capital expenditures will exceed the amount of our capital expenditures in 2021, we expect to fund these capital expenditures primarily through our cash flows provided by operating activities.

We have used cash to acquire businesses and technologies and we anticipate that we may continue to do so in the future.

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Additionally, we may make periodic cash contributions to our subsidiary bank, Green Dot Bank, to maintain its capital, leverage and other financial commitments at levels we have agreed to with our regulators.

As we noted above, if another economic relief package is signed into law that provides for substantial additional direct payments and unemployment benefits, we may need to increase the size of our cash contributions to our subsidiary bank to maintain its capital, leverage and other financial commitments.

If another economic relief package is signed into law that provides for substantial additional direct payments and unemployment benefits, we may need to increase the size of our cash contributions to Green Dot Bank to maintain its capital, leverage and other financial commitments.

We also have certain contractual payment obligations, in each case, as described in more detail below.

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See Note 7 - Equity Method Investment of the Notes to our Consolidated Financial Statements for additional information.

In response to our remote employee workforce strategy in the U.S., we have commenced closure of most our leased office locations beginning in 2021.

However, we will be required to continue making our contractual payments until our operating leases are formally terminated or expire.

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

of December 31, 2020, we have a total lease liability of $24.6 million.

In response to our remote employee workforce strategy in the U.S., we have closed most our leased office locations.

However, we are required to continue making our contractual payments until our operating leases are formally terminated or expire.

Our remaining leases have terms of less than 1 year to approximately 5 years, subject to renewal options of varying terms, and as of December 31, 2021, we had a total lease liability of $15.1 million.

See Note 20 - Leases of the Notes to our Consolidated Financial Statements for additional information regarding our lease liabilities as of December 31, 2021.

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Statistical Disclosure by Bank Holding Companies

This section presents information required by the SEC’s Industry Guide 3, “ Statistical Disclosure by Bank Holding Companies .” The tables in this section include Green Dot Bank information only.

The following section presents supplemental information for Bank Holding Companies.

The tables in this section include Green Dot Bank information only.

Distribution of Assets, Liabilities and Stockholders' Equity

The following table presents average balance data and interest income and expense data for our banking operations, as well as the related interest yields and rates for the years ended December 31, 2020 and 2019 and average balance data for the period ended December 31, 2018:

Year ended December 31, Period ended December 31,

Year ended December 31,

2021 2020 2019

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interest expense Yield/

balance Interest income/

interest expense Yield/

(In thousands, except percentages)

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Income, if any, on such loans is recognized on a cash basis.

The following table presents the rate/volume variance in interest income and expense for the year ended December 31, 2020:

December 31, 2020

Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1)

The following table presents the amount of changes in interest income and interest expense due to changes in both average volume and average rate for the years ended:

December 31, 2021 December 31, 2020

Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1)

(In thousands)

Interest-earning assets

Loans $ 3,712 $ 1,266 $ 2,446 $ 404 $ 526 $ (122)

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Cash (3,170) (3,476) 306 (18,907) (20,987) 2,080

$ (17,768) $ (24,117) $ 6,349

Change in interest income $ 7,862 $ (3,492) $ 11,354 $ (17,768) $ (24,117) $ 6,349

Interest-bearing liabilities

Checking accounts $ (49) $ (43) $ (6) $ (1,696) $ (1,205) $ (491)

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Time deposits, denominations less than $250 — 7 (7) 10 12 (2)

$ (1,653) $ (1,145) $ (508)

Change in interest expense (55) (58) 3 (1,683) (1,195) (488)

Change in net interest income and expense $ 7,917 $ (3,434) $ 11,351 $ (16,085) $ (22,922) $ 6,837

(1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

Investment Portfolio

The following table presents the amortized cost and fair value of Green Dot Bank’s investment portfolio at December 31, 2020, 2019 and 2018:

December 31, 2020 December 31, 2019 December 31, 2018

Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

Maturities and Sensitivities to Changes in Interest Rates

The following table presents contractual maturities of loans by type.

All of our loans due after one year are based upon fixed interest rates under the stated terms of the loan agreements:

Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total

(In thousands)

Corporate bonds $ 10,000 $ 10,110 $ 10,000 $ 10,012 $ — $ —

Negotiable certificate of deposit — — — — 15,000 15,000

Agency bond securities 235,839 234,157 19,980 20,000 19,723 19,693

Agency mortgage-backed securities 686,108 691,029 208,821 211,033 87,156 86,813

Municipal bonds 29,977 30,501 4,342 4,342 507 483

Asset-backed securities 4,917 5,172 31,814 32,052 79,274 79,194

Residential $ 526 $ 629 $ 2,286 $ 281 $ 3,722

Commercial 2,533 11 848 — 3,392

Installment 42 1,261 40 — 1,343

Consumer 10,032 — — — 10,032

Secured credit card 6,336 — — — 6,336

Total fixed-income securities $ 19,469 $ 1,901 $ 3,174 $ 281 $ 24,825

The following table shows the scheduled maturities, by amortized cost, and average yields for Green Dot Bank’s investment portfolio at December 31, 2020:

Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years Total

Allocation of Reserve of Credit Losses

The following table shows the reserve for credit losses allocated to each loan category:

December 31, 2021 December 31, 2020

Amount Percentage Amount Percentage

(In thousands, except percentages)

Corporate bonds $ — $ 10,000 $ — $ — $ 10,000

Agency bond securities — — 190,839 45,000 235,839

Agency mortgage-backed securities — — — 686,108 686,108

Municipal bonds — — — 29,977 29,977

Asset-backed securities — — 4,917 — 4,917

Total fixed-income securities $ — $ 10,000 $ 195,756 $ 761,085 $ 966,841

Weighted-average yield — % 2.47 % 1.16 % 1.03 % 1.07 %

Residential $ 87 1.6 % $ 93 12.3 %

Commercial 32 0.6 34 4.5

Installment 42 0.8 37 4.9

Consumer 4,384 78.9 — —

Secured credit card 1,010 18.2 593 78.3

Total $ 5,555 100.0 % $ 757 100.0 %

The following table shows Green Dot Bank’s average deposits and the annualized average rate paid on those deposits for the years ended December 31, 2021, 2020, and 2019:

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Total deposits $ 2,963,339 $ 1,933,017 $ 948,236

The following table shows the scheduled maturities for Green Dot Bank’s time deposits portfolio greater than $100,000 at December 31, 2020:

December 31, 2020

(In thousands)

Less than 3 months $ 416

3 through 6 months 553

6 through 12 months 108

Greater than 12 months 2,690

Key Financial Ratios

The following table shows certain of Green Dot Bank’s key financial ratios for the years ended December 31, 2020, 2019, and 2018:

Our aggregate deposits in denominations that met or exceeded FDIC limits were $180 million, $115 million and $98 million as of December 31, 2021, 2020 and 2019, respectively.

Our time deposits portfolio in excess of FDIC limits is not material at December 31, 2021.

Key Financial and Credit Ratios

The following tables show certain of Green Dot Bank’s key financial and credit ratios for the years ended December 31, 2021, 2020, and 2019:

December 31, 2021 December 31, 2020 December 31, 2019

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Equity to assets ratio 8.1 10.0 19.0

Allowance for credit losses to total loans outstanding 22.4 3.5 5.2

Nonaccrual loans to total loans outstanding 3.4 6.3 9.7

Allowance for credit losses to nonaccrual loans 648.9 55.5 53.4

December 31, 2021 December 31, 2020 December 31, 2019

Net charge-offs during the period to average loans outstanding:

(In thousands)

Net charge-off during the period $ 18,798 $ — $ —

Average amount outstanding 7,578 — —

Secured credit card

Net charge-off during the period 1,382 1,269 1,678

Average amount outstanding 14,062 14,703 17,476

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

What changed 10-K

Item 7. Management’s Discussion and Analysis