What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-09 · 190 added, 120 removed, 326 unchanged (49% of the section changed)

21 unchanged sentences

Consolidated Financial Results and Trends

Our consolidated results of operations for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

2023 2022 Change %

Our consolidated results of operations for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 Change % 2023 2022 Change %

(In thousands, except percentages)

4 unchanged sentences

Total operating revenues

Our total operating revenues for the three months ended March 31, 2023 increased $15.8 million, or 3.9%, over the prior year comparable period, driven primarily by higher revenues in our B2B Services segment, partially offset by lower revenues earned in our Consumer Services segment.

Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which resulted in an increase in our total gross dollar volume of 34% for the three months ended March 31, 2023.

However, our deposit account programs overall were negatively impacted by several other factors, including our strategic decision to reduce marketing spend on GO2bank in the current period due to higher than expected acquisition costs per account, our decision to de-emphasize many of our legacy cardholder programs in support of GO2bank, macro-economic factors leading to economic challenges for consumers and other trends that have impacted acquisition at retail locations, and the non-renewal of certain BaaS partner programs as previously disclosed.

Each of these factors impacted our consolidated active accounts, purchase volume and number of cash transfers, which decreased year-over-year by 22%, 15% and 2%, respectively.

In our Consumer Services segment, revenues decreased during the three months ended March 31, 2023 by 12%, over the prior year comparable period.

Gross dollar volume, the number of active accounts, the number of direct deposit active accounts and purchase volume declined year-over-year for the three months ended March 31, 2023 by 14%, 21%, 13% and 13%, respectively.

We believe these decreases are attributable to several factors discussed above, including lower account acquisition from reduced marketing spend on GO2bank, changes in consumer traffic within our retail locations and the non-renewal of one of our retail partner programs.

Our total operating revenues for the three and six months ended June 30, 2023 increased $3.1 million, or 0.9%, and $18.9 million, or 2.5%, respectively, over the prior year comparable periods, driven primarily by higher revenues in our B2B Services segment, partially offset by lower revenues earned in our Consumer Services and Money Movement Services segments.

Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which generated an increase in our total gross dollar volume of 42% and 38% for the three and six months ended June 30, 2023, respectively.

However, our total operating revenues were negatively impacted by several other factors impacting our deposit account programs, including our strategic decision in the short-term to reduce marketing spend on GO2bank during the first half of the year in response to market trends, our decision to de-emphasize many of our legacy cardholder programs in support of GO2bank, macro-economic factors leading to economic challenges for consumers and other trends that have impacted acquisition at retail locations, and the non-renewal of certain BaaS partner programs as previously disclosed.

These factors impacted the number of consolidated active accounts, purchase volume and number of cash transfers, each of which decreased for the three months ended June 30, 2023 by 20%, 15% and 4%, respectively, over the prior year comparable periods.

Similarly, our purchase volume and number of cash transfers decreased for the six months ended June 30, 2023 by 15% and 3%, respectively, from the prior year comparable period.

In our Consumer Services segment, revenues decreased during the three and six months ended June 30, 2023 by 14% and 13%, respectively, over the prior year comparable periods.

Gross dollar volume, the number of active accounts, the number of direct deposit active accounts and purchase volume declined year-over-year for the three months ended June 30, 2023 by 10%, 15%, 12% and 13%, respectively.

Gross dollar volume and purchase volume declined year-over-year by similar levels of 12% and 13%, respectively, for the six months ended June 30, 2023.

We believe these decreases are attributable to the factors discussed above, including lower account acquisition from reduced marketing spend on GO2bank during the first half of 2023, observed changes in consumer traffic within our retail locations and the non-renewal of one of our retail partner programs.

These factors had a corresponding impact on the amount of revenue we earn from accounts, including through monthly maintenance fees, ATM fees and interchange fees.

These revenue declines in our Consumer Services segment were partially offset by the continued adoption of our optional overdraft protection program services made available to accountholders across our portfolios.

Within our B2B Services segment, revenues increased by 28% during the three months ended March 31, 2023, over the prior year comparable period.

The increase was driven by year-over-year growth in our gross dollar volume by 63%, despite reductions in the number of active accounts and purchase volume of 24% and 17%, respectively, over the same period.

These declines in revenue from our Consumer Services segment were partially offset by the continued adoption of our optional overdraft protection program services available to accountholders across our portfolios.

In our B2B Services segment, revenues increased during the three and six months ended June 30, 2023 by 26% and 27%, respectively, over the prior year comparable periods.

The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the three and six months ended June 30, 2023 by 68% and 66%, respectively, despite reductions in purchase volume of 19% and 18%, respectively, and a decline in the number of active accounts.

The number of active accounts decreased by 26% from the comparable prior year periods.

Growth in gross dollar volume concentrated from certain BaaS programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, partially offset by the non-renewals of other BaaS partners as previously disclosed.

Money Movement Services segment revenues increased by 1% for the three months ended March 31, 2023, over the prior year comparable period.

The increase in our Money Movement Services was primarily attributable to an increase in the number of tax refunds processed, which increased by 3% compared with the prior year period, partially offset by a decrease in the number of cash transfers processed, which decreased by 2% year-over-year.

Our Money Movement Services segment revenues decreased for the three and six months ended June 30, 2023 by 8% and 2%, respectively, over the prior year comparable periods.

The decrease in our Money Movement Services segment was primarily attributable to a decrease in the number of cash transfers processed, which decreased for the three and six months ended June 30, 2023 by 4% and 3%, respectively, from the prior year comparable periods.

The decrease in cash transfers was the result of fewer active accounts within our Consumer Services and B2B Services segments discussed above.

The Green Dot Network is a service provider to accountholders in our Consumer Services and B2B Services segments, as well as third-party programs.

Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, increased by 20% during the three months ended March 31, 2023.

The increase in net interest income was attributable to the increase in the overall size of our investment securities portfolio, as well as an increase in short-term interest rates by the Federal Reserve, which have resulted in an increase in net interest income compared to the prior year.

Revenues within our Corporate and Other segment was offset by the interest we share with certain BaaS partners.

In addition, the number of tax refunds processed during the three and six months ended June 30, 2023 decreased by 14% and 2%, respectively, compared with the prior year periods, which further reduced revenues generated from this segment.

The decrease in the number of tax refunds processed during three months ended June 30, 2023 was primarily due to a timing shift between the first and second quarters of the tax season.

Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, decreased by 7% for the three months ended June 30, 2023, and increased by 5% during the six months ended June 30, 2023, in each case from the prior year comparable periods.

Changes in net interest income were attributable to fluctuations in the overall size of our cash and investment securities portfolio, and the timing of increases in short-term interest rates by the Federal Reserve.

Revenues within our Corporate and Other segment were offset by the portion of interest we share with certain BaaS partners.

Total operating expenses

Our total operating expenses for the three months ended March 31, 2023 increased by $16.4 million, or 5%, over the prior year comparable period.

The increase in our total operating expenses for the comparable periods was primarily driven by an increase in processing expenses within our B2B Services segment associated with the growth of certain BaaS account programs discussed above, and to a lesser extent, an increase in compensation and benefits expenses.

Our compensation and benefits expenses increased primarily due to an increase in third-party call center support costs associated with the growth of certain programs also within our B2B Services segment, partially offset by a reduction in stock-based compensation expense, primarily due to forfeited awards associated with certain former executive officers and employees and the timing of awards granted in the current period versus the comparable prior year period.

The increase in total operating expenses was partially offset by lower sales and marketing expenses principally due to a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, as well as reduced marketing spend associated with GO2bank, and lower other general and

administrative expenses.

Other general and administrative expenses decreased during the three months ended March 31, 2023 in part due to lower overall transaction losses as a result of lower purchase volume and continued operational efficiencies in managing customer disputes and fraud, as well as reductions in professional services fees and certain impairment charges of internal-use software that did not recur in the current year period.

Our income tax expense for the three months ended March 31, 2023 decreased $1.8 million, or 15%, on a year-over-year basis.

The decrease in our income tax expense was primarily due to a decrease in our taxable income and a decrease in our effective tax rate.

Our effective tax rate for the three months ended March 31, 2023 was 22.3%, compared to 23.9% for the prior year period, primarily due to the impact of general business credits, tax benefits from bank owned life insurance policies, a decrease in state income taxes expense net of federal benefits, and a reduction in the amount of compensation expense that was subject to the Internal Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation.

These favorable decreases to our effective tax rate were partially offset by an increase in tax expense associated with shortfalls from stock-based compensation.

Our total operating expenses for the three and six months ended June 30, 2023 increased $22.3 million, or 7%, and $38.6 million, or 6%, respectively, over the prior year comparable periods.

The increase in our total operating expenses for the comparable periods was driven primarily by an increase in processing expenses within our B2B Services segment associated with the growth of certain BaaS account programs discussed above, and to a lesser extent, an increase in compensation and benefits expenses.

Our compensation and benefits expenses increased primarily due to an increase in third-party call center support costs associated with the growth of certain programs also within our B2B Services segment, and higher stock-based compensation expense, primarily due to reversals recorded in the prior year comparable period for certain performance-based equity incentive awards that were not expected to be achieved.

These increases in operating expenses for the three and six months ended June 30, 2023 were partially offset by lower sales and marketing expenses principally due to decreases in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, as well as reduced marketing spend associated with GO2bank in the first half of the year, and lower other general and administrative expenses.

Other general and administrative expenses decreased during the three and six months ended June 30, 2023 primarily due to a $13 million legal settlement and certain impairment charges of internal-use software we recorded in the prior year comparable period that in each case did not recur, as well as reductions in professional services fees, partially offset by higher overall transaction losses, attributable in part to an increase in dispute volume associated with tax refund deposits.

Our income tax expense for the three and six months ended June 30, 2023 decreased by $3.1 million, or 64%, and $4.9 million, or 29%, respectively, from the prior year comparable periods.

The decrease in our income tax expense was primarily due to a decrease in our taxable income, partially offset by a higher effective tax rate.

Our effective tax rate for the six months ended June 30, 2023 was 24.8%, compared to 24.0% for the same period in the prior year.

The increase in our effective tax rate was primarily due to an increase in state income taxes expense, net of federal benefits, and an increase in tax expense associated with shortfalls from stock-based compensation.

These increases were partially offset by the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction in the amount of compensation expense that was subject to the Internal Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation.

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law.

3 unchanged sentences

We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results.

Our growth-oriented investments are focused on cost-effectively re-engaging in marketing initiatives in support of 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 hosting costs and software licenses, 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 in 2023.

Our growth-oriented investments are focused on cost-effectively re-engaging in strategic marketing initiatives in support of our GO2bank product when it is effective to do so 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, our hosting costs and software licenses, a component of other general and administrative expenses, and salary and wage expenses, a component of compensation and benefits expenses, have increased and we expect will continue to increase year-over-year in 2023.

We also expect to continue to incur duplicative processing and other costs associated with the implementation of our modern banking platform as we expect to continue to operate redundant platforms until our technology transformation is completed.

6 unchanged sentences

In general, while increases in short-term interest rates benefit the yield we earn on our cash, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue in our consolidated financial statements), and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested.

Accordingly, we expect the net effect to have a negative impact on our consolidated financial statements in 2023 compared to 2022.

Based on the overall macro-economic environment, expected interest rate impacts, our commitment to making growth-oriented investments and the timing of the related expense savings from our technology transformation, the non-renewals in our Consumer Services and B2B Services segments, and trends occurring within our retail channel in our Consumer Services segment, we believe our consolidated operating profit will decline year-over-year in fiscal year 2023.

Accordingly, the net effect has had and we expect will continue to have a negative impact on our consolidated financial statements in 2023 compared to 2022.

Based on the overall macro-economic environment, expected interest rate impacts, our commitment to making growth-oriented investments and the timing of the related expense savings from our technology transformation, the non-renewals in our Consumer Services and B2B Services segments, and trends occurring within our retail channel in our Consumer Services segment, our consolidated operating profit has declined and we expect it will continue to decline year-over-year in fiscal year 2023.

Further, the duration and magnitude of the continuing effects of macro-economic factors remain uncertain and dependent on various factors.

3 unchanged sentences

We believe the following measures are the primary indicators of our quarterly and annual revenues:

Three Months Ended March 31,

2023 2022 Change %

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

2023 2022 Change % 2023 2022 Change %

(In millions, except percentages)

Gross dollar volume $ 24,724 $ 17,356 $ 7,368 42.5 % $ 48,013 $ 34,792 $ 13,221 38.0 %

Number of active accounts* 3.84 4.93 (1.09) (22.1) %

Number of active accounts* 3.71 4.61 (0.9) (19.5) % n/a n/a n/a n/a

Purchase volume $ 5,734 $ 6,760 $ (1,026) (15.2) % $ 11,879 $ 13,952 $ (2,073) (14.9) %

1 unchanged sentence

Number of tax refunds processed 3.87 4.48 (0.61) (13.6) % 13.78 14.09 (0.31) (2.2) %

* Represents the number of active accounts as of March 31, 2023 and 2022, respectively.

* Represents the number of active accounts as of June 30, 2023 and 2022, respectively.

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

75 unchanged sentences

Reference is made to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Comparison of Three-Month Periods Ended March 31, 2023 and 2022

Comparison of Three-Month Periods Ended June 30, 2023 and 2022

Operating Revenues

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:

Three Months Ended March 31,

Three Months Ended June 30,

Amount % of Total

8 unchanged sentences

Total operating revenues $ 365,876 100.0 % $ 362,769 100.0 %

Card Revenues and Other Fees — Card revenues and other fees totaled $239.9 million for the three months ended March 31, 2023, an increase of $27.1 million, or 12.7%, from the comparable prior year period.

Card Revenues and Other Fees — Card revenues and other fees totaled $242.1 million for the three months ended June 30, 2023, an increase of $23.5 million, or 10.8%, from the comparable prior year period.

Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners.

In addition, card revenues and other fees also increased due to customer adoption of optional features launched on our card programs, such as our overdraft protection program.

These increases were partially offset by decreases in cardholder fees, such as monthly maintenance fees and ATM fees for the reasons discussed above in "Overview."

Cash Processing Revenues — Cash processing revenues totaled $101.8 million for the three months ended March 31, 2023, an increase of $1.8 million, or 2%, from the comparable prior year period.

The increase is primarily due to higher overall tax processing revenues due to a 3% increase in the number of tax refunds processed, partially offset by a decline in the number of cash transfers processed as a result of fewer active accounts within our Consumer Services and B2B Services segments discussed above in "Overview."

Interchange Revenues — Interchange revenues totaled $64.0 million for the three months ended March 31, 2023, a decrease of $14.9 million, or 19%, from the comparable prior year period.

The decrease was primarily due to a decrease in purchase volume during the three months ended March 31, 2023, as well as a lower effective interchange rate earned for the comparable periods.

These increases were partially offset by decreases in cardholder fees, such as monthly maintenance fees, ATM fees and new card fees for the reasons discussed above in "Overview."

Cash Processing Revenues — Cash processing revenues totaled $53.8 million for the three months ended June 30, 2023, a decrease of $3.7 million, or 6%, from the comparable prior year period.

The decrease was due to lower tax processing revenues as a result of a 14% decrease in the number of tax refunds processed, and lower cash transfer revenues as a result of a decline of 4% in the number of cash transfers processed due to fewer active accounts within our Consumer Services and B2B Services segments discussed above in "Overview." The decrease in the number of tax refunds processed during three months ended June 30, 2023 was primarily due to a timing shift between the first and second quarters of the tax season.

Interchange Revenues — Interchange revenues totaled $60.0 million for the three months ended June 30, 2023, a decrease of $16.0 million, or 21%, from the comparable prior year period.

The decrease was primarily due to a decrease in purchase volume of 15% during the three months ended June 30, 2023, as well as a lower effective interchange rate earned for the comparable periods.

Our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors.

Interest Income, net — Net interest income totaled $10.7 million for the three months ended March 31, 2023, an increase of $1.8 million, or 20%, from the comparable prior year period.

The increase in net interest income earned was the result of an increase in the overall size of our investment securities portfolio, funded primarily from the use of our cardholder deposit account programs.

In addition, the Federal Reserve has instituted several increases in short-term interest rates in 2022 and 2023 to manage the effects of inflation, which also increased the amount of interest income we earned on our deposits and recent investments.

Interest Income, net — Net interest income totaled $10.0 million for the three months ended June 30, 2023, a decrease of $0.7 million, or 7%, from the comparable prior year period.

The decrease in net interest income earned was the result of a decrease in the overall size of our cash and investment securities portfolio.

The reduction in size of our interest-bearing assets was partially offset by increases in short-term interest rates, as the Federal Reserve has instituted several increases in short-term rates over the course of 2022 and 2023 to manage the effects of inflation.

Operating Expenses

The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses:

Three Months Ended March 31,

Three Months Ended June 30,

Amount % of Total

8 unchanged sentences

Total operating expenses $ 361,090 98.8 % $ 338,830 93.4 %

Sales and Marketing Expenses — Sales and marketing expenses totaled $75.2 million for the three months ended March 31, 2023, a decrease of $8.3 million, or 10% from the comparable prior year period.

This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements and our strategic decision to reduce marketing spend on GO2bank in our Direct channel to manage our acquisition costs per account.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $68.8 million for the three months ended March 31, 2023, an increase of $2.5 million or 4% from the comparable prior year period.

The increase was primarily driven by an increase in third-party call center support costs associated with the growth of certain programs within our B2B Services segment.

These increases were partially offset by a decrease in stock-based compensation expense principally due to forfeited awards associated with certain former executive officers and employees and the timing of awards granted in the current period versus the comparable prior year period.

Processing Expenses — Processing expenses totaled $145.1 million for the three months ended March 31, 2023, an increase of $33.0 million or 29% from the comparable prior year period.

Sales and Marketing Expenses — Sales and marketing expenses totaled $62.8 million for the three months ended June 30, 2023, a decrease of $14.6 million, or 19% from the comparable prior year period.

This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, and lower supply chain expenses due to a decline in the number of active accounts over the comparable prior year period and the non-renewal of certain partner programs previously announced.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $65.0 million for the three months ended June 30, 2023, an increase of $7.4 million or 13% from the comparable prior year period.

The increase was primarily driven by an increase in third-party call center support costs associated with the growth of certain programs within our B2B Services segment, and an increase in stock-based compensation expense, primarily due to reversals recorded in the prior year comparable period for certain performance-based equity incentive awards that were not expected to be achieved.

Processing Expenses — Processing expenses totaled $153.1 million for the three months ended June 30, 2023, an increase of $40.7 million or 36% from the comparable prior year period.

This increase was principally due to growth in certain 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 $76.3 million for the three months ended March 31, 2023, a decrease of $10.8 million or 12%, from the comparable prior year period.

The decrease in other general and administrative expenses was primarily due to lower overall transaction losses compared to the prior year period due to lower purchase volume and continued operational efficiencies in managing customer disputes and fraud, as well as reductions in professional services fees and certain impairment charges of internal-use software that did not recur in the current year period.

Other General and Administrative Expenses — Other general and administrative expenses totaled $80.2 million for the three months ended June 30, 2023, a decrease of $11.3 million or 12%, from the comparable prior year period.

The decrease in other general and administrative expenses was primarily due to a $13 million legal settlement and certain impairment charges of internal-use software in the prior year period that in each case did not recur, as well as reductions in professional services fees.

These decreases were partially offset by an increase in overall transaction losses, attributable in part to an increase in dispute volume associated with tax refund deposits.

The following table presents a breakdown of our effective tax rate among federal, state, and other:

Three Months Ended March 31,

Three Months Ended June 30,

federal statutory tax rate 21.0 % 21.0 %

7 unchanged sentences

Effective tax rate 75.1 % 24.5 %

Our income tax expense totaled $10.3 million for the three months ended March 31, 2023, a decrease of $1.8 million or 15% from the prior year comparable period, primarily due to a decrease in taxable income and our effective tax rate.

The decrease in our effective tax rate for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 was primarily due to the impact of general business credits, tax benefits

from bank owned life insurance policies, a decrease in state income taxes expense net of federal benefits, and a reduction in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation.

These favorable decreases to our effective tax rate were partially offset by an increase in tax expense associated with shortfalls from stock-based compensation.

Our income tax expense totaled $1.7 million for the three months ended June 30, 2023, a decrease of $3.1 million or 64% from the prior year comparable period, primarily due to a decrease in our taxable income.

The increase in our effective tax rate for the three months ended June 30, 2023 as compared to the three months ended

June 30, 2022 was primarily due to an increase in state income taxes, net of federal benefits, an increase in tax expense associated with shortfalls from stock-based compensation, an increase in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, and nondeductible expenses.

These increases to our effective tax rate were partially offset by the impact of general business credits and tax benefits from bank owned life insurance policies.

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

Comparison of Six Months Ended June 30, 2023 and 2022

Operating Revenues

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:

Six Months Ended June 30,

Amount % of Total

Operating Revenues Amount % of Total

Operating Revenues

(In thousands, except percentages)

Operating revenues:

Card revenues and other fees 481,973 61.6 % 431,402 56.5 %

Cash processing revenues 155,669 19.9 157,495 20.6

Interchange revenues 123,982 15.9 154,894 20.3

Interest income, net 20,632 2.6 19,595 2.6

Total operating revenues $ 782,256 100.0 % $ 763,386 100.0 %

Card Revenues and Other Fees — Card revenues and other fees totaled $482.0 million for the six months ended June 30, 2023, an increase of $50.6 million, or 12%, from the comparable prior year period.

This increase was driven principally by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Revenues—Card Revenues and Other Fees."

Cash Processing Revenues — Cash processing revenues totaled $155.7 million for the six months ended June 30, 2023, a decrease of $1.8 million, or 1%, from the comparable prior year period.

Cash processing revenues decreased as a result of a decline in the number of cash transfers processed, which decreased by 3% due to declines in the number of active accounts within our Consumer Services and B2B Services segments over the comparable prior year period, partially offset by an increase in tax refund processing revenues.

Despite a decline in the number of tax refunds processed, which decreased by 2% for the comparable periods, our total tax processing revenues increased modestly for the first half of the year due to additional ancillary tax services offered to taxpayers.

Interchange Revenues — Interchange revenues totaled $124.0 million for the six months ended June 30, 2023, a decrease of $30.9 million, or 20%, from the comparable prior year period.

The decrease was primarily due to a decrease in purchase volume and effective interchange rate earned as discussed under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Revenues—Interchange Revenues."

Interest Income, net — Net interest income totaled $20.6 million for the six months ended June 30, 2023, an increase of $1.0 million, or 5%, from the comparable prior year period.

This increase was driven by increases in short-term interest rates for the comparable period, as discussed under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Revenues—Interest Income, net."

Operating Expenses

The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses:

Six Months Ended June 30,

Amount % of Total

Operating Revenues Amount % of Total

Operating Revenues

(In thousands, except percentages)

Operating expenses:

Sales and marketing expenses 138,035 17.6 % 160,902 21.1 %

Compensation and benefits expenses 133,766 17.1 123,875 16.2

Processing expenses 298,180 38.1 224,480 29.4

Other general and administrative expenses 156,494 20.0 178,598 23.4

Total operating expenses $ 726,475 92.8 % $ 687,855 90.1 %

Sales and Marketing Expenses — Sales and marketing expenses totaled $138.0 million for the six months ended June 30, 2023, a decrease of $22.9 million, or 14% from the comparable prior year period.

This decrease was driven primarily by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Expenses—Sales and Marketing Expenses." In addition, sales and marketing expenses decreased further as a result our strategic decision in the short-term to reduce marketing spend on GO2bank during the first half of the year in response to market trends.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $133.8 million for the six months ended June 30, 2023, an increase of $9.9 million, or 8% from the comparable prior year period.

The increase was primarily due to an increase in third-party call center support costs associated with the growth of certain programs within our B2B Services segment, as well as higher sales and wages and related expenses, in part due to our growth-oriented investments discussed in our "Overview."

Processing Expenses — Processing expenses totaled $298.2 million for the six months ended June 30, 2023, an increase of $73.7 million, or 33% from the comparable prior year period.

This increase was driven by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Expenses—Processing Expenses."

Other General and Administrative Expenses — Other general and administrative expenses totaled $156.5 million for the six months ended June 30, 2023, a decrease of $22.1 million, or 12%, from the comparable prior year period.

This decrease was driven by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Expenses—Other General and Administrative Expenses."

The following table presents a breakdown of our effective tax rate among federal, state, and other:

Six Months Ended June 30,

federal statutory tax rate 21.0 % 21.0 %

State income taxes, net of federal tax benefit 1.5 0.8

General business credits (3.3) (1.7)

Stock-based compensation 4.7 1.7

IRC 162(m) limitation 1.8 2.3

Bank owned life insurance (1.4) (0.7)

Nondeductible expenses 1.0 0.4

Other (0.5) 0.2

Effective tax rate 24.8 % 24.0 %

Our income tax expense totaled $12.1 million for the six months ended June 30, 2023, a decrease of $4.9 million or 29% from the prior year comparable period primarily due to a decrease in our taxable income, partially offset by an increase in our effective tax rate.

The increase in the effective tax rate for the six months ended June 30, 2023 from the prior year comparable period was primarily due to an increase in state income taxes expense, net of federal benefits, and an increase in tax expense associated with shortfalls from stock-based compensation.

These increases were partially offset by the impact of general business credits, tax benefits from bank owned life

insurance policies, and a reduction in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation.

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

Segment Results

Consumer Services

The results of operations and key metrics of our Consumer Services segment for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

2023 2022 Change %

The results of operations and key metrics of our Consumer Services segment for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 Change % 2023 2022 Change %

(In thousands, except percentages)

5 unchanged sentences

Gross dollar volume $ 5,122 $ 5,715 $ (593) (10.4) % $ 10,799 $ 12,336 $ (1,537) (12.5) %

Number of active accounts* 2.41 3.04 (0.63) (20.7) %

Direct deposit active accounts* 0.60 0.69 (0.09) (13.0) %

Number of active accounts* 2.35 2.78 (0.43) (15.5) % n/a n/a n/a n/a

Direct deposit active accounts* 0.59 0.67 (0.08) (11.9) % n/a n/a n/a n/a

Purchase volume $ 3,984 $ 4,588 $ (604) (13.2) % $ 8,328 $ 9,605 $ (1,277) (13.3) %

* Represents total number of active and direct deposit active accounts as of March 31, 2023 and 2022, respectively.

* Represents total number of active and direct deposit active accounts as of June 30, 2023 and 2022, respectively.

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

Q1 Q4 Q3 Q2 Q1

Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

3 unchanged sentences

Purchase volume $ 3,984 $ 4,344 $ 4,229 $ 4,302 $ 4,588 $ 5,017

Segment revenues within Consumer Services for the three months ended March 31, 2023 decreased $18.9 million, or 12%, compared to the prior year comparable period, while our segment expenses for the three months ended March 31, 2023 decreased $17.4 million, or 17%.

Our gross dollar volume, purchase volume, total number of active accounts and direct deposit active accounts decreased during the three months ended March 31, 2023 by 14%, 13%, 21% and 13%, respectively, primarily from several factors discussed above, including reduced marketing spend on GO2bank and observed changes in consumer traffic within our retail locations, both of which have negatively impacted account acquisition, as well as the non-renewal of one of our partner programs.

Segment revenues within Consumer Services for the three and six months ended June 30, 2023 decreased $21.9 million, or 14%, and $40.8 million, or 13%, respectively, from the prior year comparable periods, while our segment expenses for the three and six months ended June 30, 2023 decreased $5.8 million, or 6% and $23.2 million, or 12%, respectively.

Our gross dollar volume, total number of active accounts, direct deposit active accounts and purchase volume decreased during the three months ended June 30, 2023 by 10%, 15%, 12%, and 13% respectively, primarily from each of the several factors discussed in our "Overview," including our strategic decision in the short-term to reduce marketing spend on GO2bank during the first half of the year in response to market trends and observed changes in consumer traffic within our retail locations, both of which have negatively impacted account acquisition, as well as the non-renewal of one of our partner programs previously announced.

Our gross dollar volume and purchase volume decreased year-over-year by similar levels during the six months ended June 30, 2023.

Our monthly maintenance fees, ATM revenue and interchange revenues decreased as a result of the decreases in each of our key metrics stated above.

These decreases were partially offset by continued customer adoption of optional features on our card programs, such as our overdraft protection program.

Consumer Services expenses decreased for the three months ended March 31, 2023 from the comparable prior year period due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, a decrease in marketing spend on GO2bank as discussed above, and a decrease in transactions losses due to both lower transaction volumes and improvement in loss rates.

As a result of each of these multiple factors, our segment profit decreased for the three months ended March 31, 2023 by approximately 3%.

The results of operations and key metrics of our B2B Services segment for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

2023 2022 Change %

Consumer Services expenses decreased for the three and six months ended June 30, 2023 from the comparable prior year periods due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, and a decrease in marketing spend on

GO2bank as discussed above, partially offset by an increase in transactions losses that was attributable in part to an increase in dispute volume associated with tax refund deposits.

As a result of these multiple factors, our segment profit decreased for the three and six months ended June 30, 2023 by approximately 27% and 15%, respectively.

The results of operations and key metrics of our B2B Services segment for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 Change % 2023 2022 Change %

(In thousands, except percentages)

5 unchanged sentences

Gross dollar volume $ 19,602 $ 11,641 $ 7,961 68.4 % $ 37,214 $ 22,456 $ 14,758 65.7 %

Number of active accounts* 1.43 1.89 (0.46) (24.3) %

Number of active accounts* 1.36 1.83 (0.47) (25.7) % n/a n/a n/a n/a

Purchase volume $ 1,750 $ 2,172 $ (422) (19.4) % $ 3,551 $ 4,347 $ (796) (18.3) %

* Represents total number of active accounts as of March 31, 2023 and 2022, respectively.

* Represents total number of active accounts as of June 30, 2023 and 2022, respectively.

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

Q1 Q4 Q3 Q2 Q1

Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

3 unchanged sentences

* Represents total number of active accounts as of the end of each quarter.

Segment revenues within our B2B Services for the three months ended March 31, 2023 increased $37.4 million, or 28%, compared to the prior year period, while our segment expenses for the three months ended March 31, 2023 increased $37.4 million, or 34%.

Our gross dollar volume during the three months ended March 31, 2023 increased 63% from the comparable prior year period despite the number of active accounts within this segment decreasing by 24% year-over-year.

Segment revenues within our B2B Services for the three and six months ended June 30, 2023 increased $37.1 million, or 25.9% and $74.5 million, or 27%, respectively, compared to the prior year periods, while our segment expenses for the three and six months ended June 30, 2023 increased $42.2 million, or 35.0%, and $79.6 million, or 34%, respectively.

Our gross dollar volume during the three and six months ended June 30, 2023 increased 68% and 66%, respectively, from the comparable prior year periods, despite the number of active accounts within this segment decreasing by 26% year-over-year.

We have continued to experience organic growth from both new and existing users concentrated in certain BaaS programs that tend to yield higher gross dollar volume per active user.

The growth in gross dollar volume from these programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners.

This increase was partially offset by a decrease in active accounts and the associated purchase volume due to the non-renewals of certain BaaS partners as previously disclosed, resulting in a lower amount of interchange revenue earned from the comparable prior year period .

B2B Services expenses increased for the three months ended March 31, 2023 from the comparable prior year period, principally due to higher processing expenses with the growth of certain BaaS account programs and higher third-party call center support costs as a result of the increase in gross dollar volume.

This increase was partially offset by a decrease in active accounts and the associated purchase volume, which decreased during the three and six months ended 19% and 18%, respectively, due to the non-renewals of certain BaaS partners as previously disclosed, resulting in a lower amount of interchange revenue earned from the prior year comparable periods.

B2B Services expenses increased for the three and six months ended June 30, 2023 from the comparable prior year periods, principally due to higher processing expenses with the growth of certain BaaS account programs and higher third-party call center support costs as a result of the increase in gross dollar 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.

Money Movement Services

The results of operations and key metrics of our Money Movement Services segment for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

2023 2022 Change %

The results of operations and key metrics of our Money Movement Services segment for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 Change % 2023 2022 Change %

(In thousands, except percentages)

7 unchanged sentences

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

Q1 Q4 Q3 Q2 Q1

Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

1 unchanged sentence

Number of tax refunds processed 3.87 9.91 0.20 0.28 4.48 9.61

Segment revenues within our Money Movement services for the three months ended March 31, 2023 increased $0.9 million, or 1%, from the comparable prior year period, and segment expenses for the three months ended March 31, 2023 increased $1.4 million, or 4%.

The increase in segment revenues for the three months ended March 31, 2023 was driven primarily by our tax processing revenues, which increased as a result of a 3% increase in the number of tax refunds processed compared to the prior year period.

This increase was partially offset by a lower number of cash transfers processed, which decreased by 2%, from the prior year comparable period.

Segment revenues within our Money Movement services for the three and six months ended June 30, 2023 decreased $4.2 million, or 8% and $3.2 million, or 2%, respectively, from the comparable prior year periods.

Segment expenses for the three and six months ended June 30, 2023 decreased $3.8 million, or 16%, and $2.4 million, or 4%, respectively.

The decrease in segment revenues for the three and six months ended June 30, 2023 was driven primarily by a decline in the number of cash transfers processed, which decreased by 4% and 3%, respectively, from the prior year comparable periods.

The Green Dot Network is a service provider to accountholders in our Consumer Services and B2B Services segments, as well as third-party programs.

The decrease in cash transfers was the result of lower active accounts within our Consumer Services and B2B Services segments discussed above.

Money Movement expenses increased during the three months ended March 31, 2023, primarily due to an increase in third-party costs in support the volume growth of our tax refund processing services, partially offset by a decrease in sales commissions from lower cash transfer revenues.

The decrease in the number of cash transfers was the result of fewer active accounts within our Consumer Services and B2B Services segments discussed above.

In addition, our tax processing revenues decreased during the three months ended June 30, 2023 due to a decline in the number of tax refunds processed, which decreased by 14% from the prior year comparable period.

The decrease in the number of tax refunds processed during three months ended June 30, 2023 was primarily due to a timing shift between the first and second quarters of the tax season.

Despite a decline in the number of tax refunds processed for the six months ended June 30, 2023, which decreased by 2% from the prior year comparable period, our total tax processing revenues increased modestly for the first half of the year due to additional ancillary tax services offered to taxpayers.

Money Movement Services expenses decreased during the three and six months ended June 30, 2023, primarily due to a decrease in third-party call center support costs as a result of lower volumes from our tax refund processing services, and decreases in sales commissions from lower cash transfer revenues.

Corporate and Other

The results of operations and key metrics of our Corporate and Other segment for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

2023 2022 Change %

The results of operations and key metrics of our Corporate and Other segment for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 Change % 2023 2022 Change %

(In thousands, except percentages)

4 unchanged sentences

Revenues within Corporate and Other are comprised of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue) and eliminations of inter-segment revenues.

Unallocated corporate expenses include our fixed expenses such as salaries, wages and related benefits for our employees, professional services fees, software licenses, telephone

and communication costs, rent, utilities, insurance and eliminations of inter-segment expenses.

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

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.

1 unchanged sentence

Refer to Note 19—Segment Information to the Consolidated Financial Statements included herein for a summary reconciliation.

Total net interest income increased year-over-year for the three months ended March 31, 2023 as a result of an increase in the overall size of our investment securities portfolio and recent increases in interest rates by the Federal Reserve.

This increase was offset by the interest we share with certain BaaS partners.

Unallocated corporate expenses for the three months ended March 31, 2023 increased year-over-year by approximately 8%, as a result of higher software licenses, and to a lesser extent, an increase in salary and wage expenses and related benefits, each in support of our investments to build a modern and scalable core banking and card management platform, as well as other growth initiatives as discussed above in "Overview."

Total net interest income decreased by 7% for the three months ended June 30, 2023, and increased by 5% during the six months ended June 30, 2023 from the prior year comparable periods.

Changes in net interest income are attributable to fluctuations in the overall size of our cash and investment securities portfolio, and the timing of increases in short-term interest rates by the Federal Reserve.

Revenues within our Corporate and Other segment were offset by the portion of interest we share with certain BaaS partners.

Unallocated corporate expenses for the three and six months ended June 30, 2023 increased year-over-year by approximately 4% and 6%, respectively, as a result of higher software licenses, and to a lesser extent, an increase in salary and wage expenses and related benefits, each in support of our investments to build a modern and scalable core banking and card management platform, as well as other growth initiatives as discussed above in "Overview." These increases were partially offset by reductions in professional services fees, which did not recur at similar levels to the prior year comparable periods.

Liquidity and Capital Resources

The following table summarizes our major sources and uses of cash for the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

3 unchanged sentences

Financing activities (272,578) (81,117)

(Decrease) increase in unrestricted cash, cash equivalents and restricted cash $ (93,836) $ 1,002

For the three months ended March 31, 2023 and 2022, we financed our operations primarily through our cash flows generated from operations.

Decrease in unrestricted cash, cash equivalents and restricted cash $ (154,393) $ (543,162)

For the six months ended June 30, 2023 and 2022, we financed our operations primarily through our cash flows generated from operations.

From time to time, we may also finance short-term working capital activities through our borrowings under our credit facility.

As of March 31, 2023, our primary source of liquidity was unrestricted cash and cash equivalents totaling $722.0 million.

As of June 30, 2023, our primary source of liquidity was unrestricted cash and cash equivalents totaling $661.5 million.

We also consider our $2.3 billion of available-for-sale investment securities to be highly liquid instruments.

2 unchanged sentences

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 material trends on our business to ensure our liquidity and capital resources remain appropriate throughout this period of uncertainty.

We continue to monitor the

impact of material trends on our business to ensure our liquidity and capital resources remain appropriate throughout this period of uncertainty.

Cash Flows from Operating Activities

Our $100.5 million of net cash provided by operating activities during the three months ended March 31, 2023 was the result of $36.0 million of net income, adjusted for certain non-cash operating items of $42.5 million and increases in net changes in our working capital assets and liabilities of $22.0 million.

Our $115.6 million of net cash provided by operating activities during the three months ended March 31, 2022 was the result of $38.6 million of net income, adjusted for certain non-cash operating items of $53.5 million and net changes in our working capital assets and liabilities of $23.5 million.

Our $127.8 million of net cash provided by operating activities during the six months ended June 30, 2023 was the result of $36.6 million of net income, adjusted for certain non-cash operating items of $85.8 million and increases in net changes in our working capital assets and liabilities of $5.4 million.

Our $187.5 million of net cash provided by operating activities during the six months ended June 30, 2022 was the result of $53.6 million of net income, adjusted for certain non-cash operating items of $95.7 million and net changes in our working capital assets and liabilities of $38.1 million.

Cash Flows from Investing Activities

Our $32.7 million of net cash used in investing activities during the three months ended March 31, 2023 was primarily due to capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, the acquisition of property and equipment of $19.5 million and net changes in loans of $15.1 million, partially offset by proceeds from maturities of available-for-sale securities of $37.1 million.

Our $300.6 million of net cash used in investing activities during the three months ended March 31, 2022 was primarily due to purchases of available-for-sale investment securities, net of proceeds from sales and maturities, of $200.0 million, the purchase of other bank

investments of $31.9 million, capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, and the acquisition of property and equipment of $19.0 million and net changes in loans of $15.0 million.

Our $9.6 million of net cash used in investing activities during the six months ended June 30, 2023 was primarily due to capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, the acquisition of property and equipment of $38.1 million and net changes in loans of $17.9 million, partially offset by proceeds from maturities of available-for-sale securities of $82.3 million.

Our $649.5 million of net cash used in investing activities during the six months ended June 30, 2022 was primarily due to purchases of available-for-sale investment securities, net of proceeds from sales and maturities, of $525.8 million, the purchase of other bank investments of $31.9 million, capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, and the acquisition of property and equipment of $36.5 million.

Cash Flows from Financing Activities

Our $161.6 million of net cash used in financing activities during the three months ended March 31, 2023 was principally the result of a net decrease in customer deposits of $104.4 million and a decrease of $19.9 million in obligations to customers.

We also repaid $35.0 million, net of borrowings, on our revolving line of credit during the three months ended March 31, 2023.

Our $186.0 million of net cash provided from financing activities during the three months ended March 31, 2022 was principally the result of a net increase in customer deposits of $318.3 million, partially offset by a decrease of $104.7 million in obligations to customers and share repurchases of our Class A common stock of $25.0 million.

We also borrowed and repaid $50.0 million on our revolving line of credit during the three months ended March 31, 2022.

Our $272.6 million of net cash used in financing activities during the six months ended June 30, 2023 was principally the result of a net decrease in customer deposits of $216.3 million and a decrease of $21.7 million in obligations to customers.

We also repaid $35.0 million, net of borrowings, on our revolving line of credit during the six months ended June 30, 2023.

Our $81.8 million of net cash provided from financing activities during the six months ended June 30, 2022 was principally the result of a decrease of $120.1 million in obligations to customers and share repurchases of our Class A common stock of $44.0 million, partially offset by a net increase in customer deposits of $85.2 million.

We also borrowed and repaid $50.0 million on our revolving line of credit during the six months ended June 30, 2022.

Other Sources of Liquidity:

5 unchanged sentences

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

As of March 31, 2023, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

As of June 30, 2023, 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.

At March 31, 2023, we were in compliance with all such covenants.

At June 30, 2023, we were in compliance with all such covenants.

Material Cash Requirements

While the effect of COVID-19, increasing inflation and interest rates and other macro-economic factors have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and invest in property and equipment as necessary in the normal course of our business.

While the lasting effect of COVID-19, increasing inflation and interest rates and other macro-economic factors have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and invest in property and equipment as necessary in the normal course of our business.

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 macro-economic uncertainties.

23 unchanged sentences

Basel III Rules.

As of March 31, 2023 and December 31, 2022, we and Green Dot Bank were categorized as "well capitalized" under applicable regulatory standards.

As of June 30, 2023 and December 31, 2022, we and Green Dot Bank were categorized as "well capitalized" under applicable regulatory standards.

To be categorized as "well capitalized," we and Green Dot Bank must maintain specific total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.

There were no conditions or events since March 31, 2023 which management believes would have changed our category as "well capitalized."

There were no conditions or events since June 30, 2023 which management believes would have changed our category as "well capitalized."

The definitions associated with the amounts and ratios below are as follows:

18 unchanged sentences

The standardized risk weights are prescribed in the bank capital rules and reflect regulatory judgment regarding the riskiness of a type of asset or exposure

The actual amounts and ratios, and required "well capitalized" minimum capital amounts and ratios at March 31, 2023 and December 31, 2022 were as follows:

March 31, 2023

The actual amounts and ratios, and required "well capitalized" minimum capital amounts and ratios at June 30, 2023 and December 31, 2022 were as follows:

June 30, 2023

Amount Ratio Regulatory Minimum "Well-capitalized" Minimum

24 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis