What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-08 · 145 added, 124 removed, 683 unchanged (28% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Assets (In thousands, except par value)

8 unchanged sentences

Investment securities available-for-sale, at fair value 2,135,268 2,363,687

Loans to bank customers, net of allowance for loan losses of $ 12,641 and $ 9,078 as of June 30, 2023 and December 31, 2022, respectively

Loans to bank customers, net of allowance for loan losses of $ 15,552 and $ 9,078 as of September 30, 2023 and December 31, 2022, respectively

27,638 21,421

25 unchanged sentences

Class A common stock, $ 0.001 par value;

100,000 shares authorized as of June 30, 2023 and December 31, 2022;

52,341 and 51,674 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

100,000 shares authorized as of September 30, 2023 and December 31, 2022;

52,415 and 51,674 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 368,222 340,575

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

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

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

2023 2022 2023 2022

12 unchanged sentences

Total operating expenses 359,868 332,983 1,086,343 1,020,838

Operating income 4,786 23,939 55,781 75,531

Operating (loss) income ( 6,839 ) 10,765 48,942 86,296

Interest expense, net 239 27 2,121 143

Other expense, net ( 802 ) ( 4,249 ) ( 6,050 ) ( 9,057 )

Income before income taxes 2,324 19,872 48,651 70,607

Income tax expense 1,746 4,864 12,061 16,975

Net income $ 578 $ 15,008 $ 36,590 $ 53,632

Basic earnings per common share:

(Loss) income before income taxes ( 7,880 ) 6,489 40,771 77,096

Income tax (benefit) expense ( 1,615 ) 1,793 10,446 18,768

Net (loss) income $ ( 6,265 ) $ 4,696 $ 30,325 $ 58,328

Basic (loss) earnings per common share:

$ ( 0.12 ) $ 0.09 $ 0.58 $ 1.08

Diluted earnings per common share $ 0.01 $ 0.27 $ 0.70 $ 0.97

Diluted (loss) earnings per common share $ ( 0.12 ) $ 0.09 $ 0.58 $ 1.07

Basic weighted-average common shares issued and outstanding:

5 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND LOSS

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

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

2023 2022 2023 2022

(In thousands)

Net income $ 578 $ 15,008 $ 36,590 $ 53,632

Other comprehensive income (loss)

Unrealized holding (loss) gain, net of tax ( 33,366 ) ( 79,983 ) 2,931 ( 192,579 )

Comprehensive (loss) income $ ( 32,788 ) $ ( 64,975 ) $ 39,521 $ ( 138,947 )

Net (loss) income $ ( 6,265 ) $ 4,696 $ 30,325 $ 58,328

Other comprehensive loss

Unrealized holding loss, net of tax ( 47,263 ) ( 112,269 ) ( 44,332 ) ( 304,848 )

Comprehensive loss $ ( 53,528 ) $ ( 107,573 ) $ ( 14,007 ) $ ( 246,520 )

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

1 unchanged sentence

(In thousands)

Balance at March 31, 2023 51,994 $ 52 $ 347,385 $ 799,594 $ ( 286,431 ) $ 860,600

Balance at June 30, 2023 52,341 $ 52 $ 360,812 $ 800,172 $ ( 319,797 ) $ 841,239

Common stock issued under stock plans, net of withholdings and related tax effects 74 — ( 524 ) — — ( 524 )

Stock-based compensation — — 7,934 — — 7,934

Net income — — — 578 — 578

Net loss — — — ( 6,265 ) — ( 6,265 )

Other comprehensive loss — — — — ( 47,263 ) ( 47,263 )

Balance at June 30, 2023 52,341 $ 52 $ 360,812 $ 800,172 $ ( 319,797 ) $ 841,239

Three Months Ended June 30, 2022

Balance at September 30, 2023 52,415 $ 52 $ 368,222 $ 793,907 $ ( 367,060 ) $ 795,121

Three Months Ended September 30, 2022

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

1 unchanged sentence

(In thousands)

Balance at March 31, 2022 54,293 $ 54 $ 388,299 $ 737,994 $ ( 142,403 ) $ 983,944

Balance at June 30, 2022 53,740 $ 54 $ 376,902 $ 753,002 $ ( 222,386 ) $ 907,572

Common stock issued under stock plans, net of withholdings and related tax effects 71 — ( 655 ) — — ( 655 )

3 unchanged sentences

Other comprehensive loss — — — — ( 112,269 ) ( 112,269 )

Balance at June 30, 2022 53,740 $ 54 $ 376,902 $ 753,002 $ ( 222,386 ) $ 907,572

Balance at September 30, 2022 52,502 $ 53 $ 357,050 $ 757,698 $ ( 334,655 ) $ 780,146

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

5 unchanged sentences

Net income — — — 30,325 — 30,325

Other comprehensive income — — — — 2,931 2,931

Balance at June 30, 2023 52,341 $ 52 $ 360,812 $ 800,172 $ ( 319,797 ) $ 841,239

Six Months Ended June 30, 2022

Other comprehensive loss — — — — ( 44,332 ) ( 44,332 )

Balance at September 30, 2023 52,415 $ 52 $ 368,222 $ 793,907 $ ( 367,060 ) $ 795,121

Nine Months Ended September 30, 2022

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

7 unchanged sentences

Other comprehensive loss — — — — ( 304,848 ) ( 304,848 )

Balance at June 30, 2022 53,740 $ 54 $ 376,902 $ 753,002 $ ( 222,386 ) $ 907,572

Balance at September 30, 2022 52,502 $ 53 $ 357,050 $ 757,698 $ ( 334,655 ) $ 780,146

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

29 unchanged sentences

Other investing activities ( 1,273 ) ( 1,856 )

Net cash used in investing activities ( 9,581 ) ( 649,499 )

Net cash provided by (used in) investing activities 18,420 ( 828,108 )

Financing activities

7 unchanged sentences

Repurchase of Class A common stock — ( 74,050 )

Net cash used in financing activities ( 272,578 ) ( 81,117 )

Net cash (used in) provided by financing activities ( 255,278 ) 69,459

Net decrease in unrestricted cash, cash equivalents and restricted cash ( 104,410 ) ( 506,568 )

21 unchanged sentences

Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures, including a summary of our significant accounting policies.

There have been no material changes to our significant accounting policies during the six months ended June 30, 2023.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2023.

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

2 unchanged sentences

accordingly, accounting estimates require the exercise of judgment.

These financial statements were prepared using information reasonably available as of June 30, 2023 and through the date of this report.

These financial statements were prepared using information reasonably available as of September 30, 2023 and through the date of this report.

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

6 unchanged sentences

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Consumer Services B2B Services Money Movement Services Total

7 unchanged sentences

Note 3—Revenues (continued)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Consumer Services B2B Services Money Movement Services Total

4 unchanged sentences

$ 132,042 $ 162,589 $ 37,671 $ 332,302

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Consumer Services B2B Services Money Movement Services Total

4 unchanged sentences

$ 377,654 $ 548,297 $ 180,304 $ 1,106,255

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Consumer Services B2B Services Money Movement Services Total

10 unchanged sentences

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

We recognized approximately $ 7.6 million and $ 9.0 million in revenue for the three months ended June 30, 2023 and 2022, respectively, and $ 22.0 million and $ 25.5 million for the six months ended June 30, 2023 and 2022, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods.

We recognized approximately $ 0.7 million and $ 0.3 million in revenue for the three months ended September 30, 2023 and 2022, respectively, and $ 22.6 million and $ 25.8 million for the nine months ended September 30, 2023 and 2022, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods.

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

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

During the three months ended September 30, 2023, we recorded an increase in revenue from our gift card program, a component of “Card revenues and other fees” on our Consolidated Statements of Operations.

The change was the result of an update in our estimated breakage rates to better reflect current customer spending patterns on remaining gift card portfolios.

This change amounted to approximately $ 10 million during the three months ended September 30, 2023.

The impact of this change on our card revenues and other fees is not material to future periods.

GREEN DOT CORPORATION

4 unchanged sentences

(In thousands)

June 30, 2023

September 30, 2023

Corporate bonds $ 10,000 $ — $ ( 584 ) $ 9,416

9 unchanged sentences

Total investment securities $ 2,791,843 $ 8 $ ( 428,164 ) $ 2,363,687

As of June 30, 2023 and December 31, 2022, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

As of September 30, 2023 and December 31, 2022, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

Less than 12 months 12 months or more Total fair value Total unrealized loss

1 unchanged sentence

(In thousands)

June 30, 2023

September 30, 2023

Corporate bonds $ — $ — $ 9,416 $ ( 584 ) $ 9,416 $ ( 584 )

11 unchanged sentences

federal government, as our investment policy restricts our investments to highly liquid, low credit risk assets.

As such, we have not recorded any significant credit-related impairment losses during the three and six months ended June 30, 2023 or 2022 on our available-for-sale investment securities.

Unrealized losses as of June 30, 2023 and December 31, 2022 are the result of increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

Substantially all of the underlying securities within our investment portfolio were in an unrealized loss position as of June 30, 2023 and December 31, 2022 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to recent increases in interest rates by the Federal Reserve, and general volatility in market conditions.

As such, we have not recorded any significant credit-related impairment losses during the three and nine months ended September 30, 2023 or 2022 on our available-for-sale investment securities.

Unrealized losses as of September 30, 2023 and December 31, 2022 are the result of increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

Substantially all of the underlying securities within our investment portfolio were in an unrealized loss position as of September 30, 2023 and December 31, 2022 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to recent increases in interest rates by the Federal Reserve, and general volatility in market conditions.

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

2 unchanged sentences

Note 4—Investment Securities (continued)

As of June 30, 2023, the contractual maturities of our available-for-sale investment securities were as follows:

As of September 30, 2023, the contractual maturities of our available-for-sale investment securities were as follows:

Amortized cost Fair value

9 unchanged sentences

Accounts receivable, net consisted of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In thousands)

11 unchanged sentences

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

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

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

2023 2022 2023 2022

10 unchanged sentences

(In thousands)

June 30, 2023

September 30, 2023

Residential $ — $ — $ — $ — $ 4,822 $ 4,822

20 unchanged sentences

Changes in valuation allowances are recorded as a component of other income and expenses on our consolidated statement of operations.

As of June 30, 2023 and December 31, 2022, the fair value of the loans held for sale amounted to approximately $ 4.3 million and $ 5.3 million, respectively.

As of September 30, 2023 and December 31, 2022, the fair value of the loans held for sale amounted to approximately $ 4.9 million and $ 5.3 million, respectively.

Nonperforming Loans

1 unchanged sentence

See Note 2 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2022 for further information on the criteria for classification as nonperforming.

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In thousands)

14 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Non-Classified Classified Non-Classified Classified

8 unchanged sentences

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

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

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

2023 2022 2023 2022

18 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, our net investment in TailFin Labs amounted to approximately $ 110.2 million and $ 82.4 million, respectively, and is included in the long-term portion of prepaid expenses and other assets on our consolidated balance sheets.

We recorded equity in losses from TailFin Labs of $ 3.1 million and $ 5.0 million for the three months ended June 30, 2023 and 2022, respectively, and $ 7.2 million and $ 7.1 million for the six months ended June 30, 2023 and 2022, respectively.

As of September 30, 2023 and December 31, 2022, our net investment in TailFin Labs amounted to approximately $ 109.4 million and $ 82.4 million, respectively, and is included in the long-term portion of prepaid expenses and other assets on our consolidated balance sheets.

We recorded equity in losses from TailFin Labs of $ 0.8 million and $ 3.2 million for the three months ended September 30, 2023 and 2022, respectively, and $ 8.0 million and $ 10.3 million for the nine months ended September 30, 2023 and 2022, respectively.

These amounts are recorded as a component of other income and expense on our consolidated statements of operations.

Our equity method investments also include an investment held by our bank, which amounted to $ 4.4 million and $ 4.8 million at June 30, 2023 and December 31, 2022, respectively.

Equity in earnings from this investment for the three and six months ended June 30, 2023 and 2022 were de minimis.

Our equity method investments also include an investment held by our bank, which amounted to $ 3.5 million and $ 4.8 million at September 30, 2023 and December 31, 2022, respectively.

Equity in earnings from this investment for the three and nine months ended September 30, 2023 and 2022 were de minimis.

Note 8— Deposits

Deposits are categorized as non-interest bearing or interest-bearing deposit accounts as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In thousands)

9 unchanged sentences

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

June 30, 2023

September 30, 2023

(In thousands)

13 unchanged sentences

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

As of June 30, 2023, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

As of September 30, 2023, the outstanding balance on the 2019 Revolving Facility was $ 27 million.

In March 2023, we amended the terms of our agreement to replace LIBOR with the Secured Overnight Financing Rate ("SOFR").

1 unchanged sentence

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.

The interest rate on our outstanding balance as of September 30, 2023 was approximately 6.67 %.

We also pay a commitment fee, which varies from 0.20 % to 0.35 % per annum on the actual daily unused portions of the 2019 Revolving Facility.

2 unchanged sentences

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

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

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

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

We incurred total cash interest expense during the three and six months ended June 30, 2023 of approximately $ 0.2 million and $ 1.8 million, respectively.

We did not incur any interest expense during the three and six months ended June 30, 2022.

We incurred total cash interest expense during the three and nine months ended September 30, 2023 of approximately $ 0.2 million and $ 2.0 million, respectively.

We did not incur any interest expense during the three and nine months ended September 30, 2022.

Note 10— Income Taxes

Income tax expense for the six months ended June 30, 2023 and 2022 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

Income tax expense for the nine months ended September 30, 2023 and 2022 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

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

Six Months Ended June 30,

Nine Months Ended September 30,

federal statutory tax rate 21.0 % 21.0 %

10 unchanged sentences

Note 10—Income Taxes (continued)

The effective tax rate for the six months ended June 30, 2023 and 2022 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, stock-based compensation, cash value growth in bank owned life insurance policies, and the Internal Revenue Code (the "IRC") 162(m) limitation on the deductibility of executive compensation.

The net increase in the effective tax rate for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily due to the impact of an increase of $ 0.2 million in state income taxes, net of federal benefits, and the impact of a $ 1.1 million increase in tax expense associated with shortfalls from stock-based compensation.

We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $ 2.3 million for the six months ended June 30, 2023, compared to a $ 1.2 million discrete tax expense for the prior year comparable period.

These increases were partially offset by the impact of an increase of $ 0.2 million in tax benefits from bank owned life insurance policies, a decrease of $ 0.7 million subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, and the impact of general business credits.

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

The IRA contains a number of revisions to the IRC, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022.

The effective tax rate for the nine months ended September 30, 2023 and 2022 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, stock-based compensation, cash value growth in bank owned life insurance policies, and the Internal Revenue Code (the "IRC") 162(m) limitation on the deductibility of executive compensation.

The net increase in the effective tax rate for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 is primarily due to the impact of an increase of $ 0.3 million in state income taxes, net of federal benefits, and the impact of a $ 1.0 million increase in tax expense associated with shortfalls from stock-based compensation.

We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $ 2.9 million for the nine months ended September 30, 2023, compared to a $ 1.9 million discrete tax expense for the prior year comparable period.

These increases were partially offset by a decrease of $ 1.1 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation and the impact of general business credits.

The Inflation Reduction Act of 2022 (the "IRA") levies a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases.

To date, these tax law revisions have had no immediate effect and we do not expect that they will have a material impact on our results of operations in the future.

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

For the six months ended June 30, 2023 and 2022, the provision for GILTI tax expense was not material to our financial statements.

For the nine months ended September 30, 2023 and 2022, the provision for GILTI tax expense was not material to our financial statements.

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

As of June 30, 2023 and 2022, we did no t have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we will realize the benefits of our deferred tax assets.

As of September 30, 2023 and 2022, we did no t have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we will realize the benefits of our deferred tax assets.

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

2 unchanged sentences

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

federal tax return during the second quarter ended June 30, 2020, and the examination remains ongoing as of June 30, 2023.

federal tax return during the second quarter ended June 30, 2020, and the examination remains ongoing as of September 30, 2023.

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

As of June 30, 2023, we have federal net operating loss carryforwards of approximately $ 15.2 million and state net operating loss carryforwards of approximately $ 102.3 million, which will be available to offset future income.

As of September 30, 2023, we have federal net operating loss carryforwards of approximately $ 15.2 million and state net operating loss carryforwards of approximately $ 102.3 million, which will be available to offset future income.

If not used, the federal net operating losses will expire between 2029 and 2034.

2 unchanged sentences

In addition, we have state business tax credits of approximately $ 20.9 million that can be carried forward indefinitely and other state business tax credits of approximately $ 1.1 million that will start to expire on December 31, 2023 and continue to expire through December 31, 2027.

As of June 30, 2023 and December 31, 2022, we had a liability of $ 12.3 million and $ 11.2 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

As of September 30, 2023 and December 31, 2022, we had a liability of $ 12.6 million and $ 11.2 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

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

2 unchanged sentences

Note 10—Income Taxes (continued)

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

Beginning balance $ 11,178 $ 10,972

Increases related to positions taken during prior years 1,260 —

Increases related to positions taken during the current year 1,500 1,434

2 unchanged sentences

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 12,129 $ 12,074

As of June 30, 2023 and 2022, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 1.2 million and $ 1.0 million, respectively.

As of September 30, 2023 and 2022, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 1.3 million and $ 1.1 million, respectively.

Note 11— Stockholders' Equity

1 unchanged sentence

In February 2022, our Board of Directors authorized a $ 100 million increase to our stock repurchase program.

As of June 30, 2023, we had an authorized $ 4.5 million remaining under our stock repurchase program for additional repurchases.

As of September 30, 2023, we had an authorized $ 4.5 million remaining under our stock repurchase program for additional repurchases.

Accelerated Share Repurchases

19 unchanged sentences

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

The total stock-based compensation expense recognized was $ 10.6 million and $ 5.6 million for the three months ended June 30, 2023 and 2022, respectively, and $ 19.8 million and $ 20.5 million for the six months ended June 30, 2023 and 2022, respectively.

The total stock-based compensation expense recognized was $ 7.9 million and $ 10.8 million for the three months ended September 30, 2023 and 2022, respectively, and $ 27.7 million and $ 31.3 million for the nine months ended September 30, 2023 and 2022, respectively.

GREEN DOT CORPORATION

2 unchanged sentences

Restricted Stock Units

Restricted stock unit activity for awards subject to only service conditions was as follows for the six months ended June 30, 2023:

Restricted stock unit activity for awards subject to only service conditions was as follows for the nine months ended September 30, 2023:

Shares Weighted-Average Grant-Date Fair Value

5 unchanged sentences

Restricted stock units canceled ( 259 ) 30.33

Outstanding at June 30, 2023

Outstanding at September 30, 2023

2,039 $ 23.64

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity for the six months ended June 30, 2023 was as follows:

Performance-based restricted stock unit activity for the nine months ended September 30, 2023 was as follows:

Shares Weighted-Average Grant-Date Fair Value

5 unchanged sentences

Adjustment for completed performance periods 15 46.82

Outstanding at June 30, 2023

Outstanding at September 30, 2023

1,123 $ 23.70

3 unchanged sentences

Stock Options

Total stock option activity for the six months ended June 30, 2023 was as follows:

Total stock option activity for the nine months ended September 30, 2023 was as follows:

Options Weighted-Average Exercise Price

4 unchanged sentences

Options canceled ( 139 ) 50.89

Outstanding at June 30, 2023

Outstanding at September 30, 2023

1,024 $ 23.81

Exercisable at June 30, 2023

Exercisable at September 30, 2023

1,024 $ 23.81

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13— Earnings per Common Share

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

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

Note 13— Earnings and Loss per Common Share

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

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

2023 2022 2023 2022

1 unchanged sentence

Basic earnings per Class A common share

Net income $ 578 $ 15,008 $ 36,590 $ 53,632

Net (loss) income $ ( 6,265 ) $ 4,696 $ 30,325 $ 58,328

Amount attributable to unvested Walmart restricted shares — ( 10 ) — ( 204 )

Net income allocated to Class A common stockholders $ 578 $ 14,955 $ 36,590 $ 53,406

Net (loss) income allocated to Class A common stockholders $ ( 6,265 ) $ 4,686 $ 30,325 $ 58,124

Weighted-average Class A shares issued and outstanding 52,367 53,053 52,127 53,840

Basic earnings per Class A common share $ 0.01 $ 0.28 $ 0.70 $ 0.98

Basic (loss) earnings per Class A common share $ ( 0.12 ) $ 0.09 $ 0.58 $ 1.08

Diluted earnings per Class A common share

Net income allocated to Class A common stockholders $ 578 $ 14,955 $ 36,590 $ 53,406

Net (loss) income allocated to Class A common stockholders $ ( 6,265 ) $ 4,686 $ 30,325 $ 58,124

Re-allocated earnings — — — 2

Diluted net income allocated to Class A common stockholders $ 578 $ 14,956 $ 36,590 $ 53,409

Diluted net (loss) income allocated to Class A common stockholders $ ( 6,265 ) $ 4,686 $ 30,325 $ 58,126

Weighted-average Class A shares issued and outstanding 52,367 53,053 52,127 53,840

5 unchanged sentences

Diluted weighted-average Class A shares issued and outstanding 52,367 53,382 52,436 54,428

Diluted earnings per Class A common share $ 0.01 $ 0.27 $ 0.70 $ 0.97

Diluted (loss) earnings per Class A common share $ ( 0.12 ) $ 0.09 $ 0.58 $ 1.07

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

3 unchanged sentences

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

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

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

2023 2022 2023 2022

13 unchanged sentences

For more information regarding the fair value hierarchy and how we measure fair value, see Note 2–Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2022.

As of June 30, 2023 and December 31, 2022, our assets carried at fair value on a recurring basis were as follows:

As of September 30, 2023 and December 31, 2022, our assets carried at fair value on a recurring basis were as follows:

Level 1 Level 2 Level 3 Total Fair Value

June 30, 2023 (In thousands)

September 30, 2023 (In thousands)

Investment securities:

13 unchanged sentences

Total assets $ — $ 2,363,687 $ 5,324 $ 2,369,011

We based the fair value of our fixed income securities held as of June 30, 2023 and December 31, 2022 on quoted prices in active markets for similar assets.

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three and six months ended June 30, 2023 or 2022.

We based the fair value of our fixed income securities held as of September 30, 2023 and December 31, 2022 on quoted prices in active markets for similar assets.

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three and nine months ended September 30, 2023 or 2022.

A reconciliation of changes in fair value for Level 3 assets or liabilities are not considered material to these consolidated financial statements and therefore are not presented for any of the periods presented.

19 unchanged sentences

Fair Value of Financial Instruments

The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value, at June 30, 2023 and December 31, 2022 are presented in the table below.

June 30, 2023 December 31, 2022

The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value, at September 30, 2023 and December 31, 2022 are presented in the table below.

September 30, 2023 December 31, 2022

Carrying Value Fair Value Carrying Value Fair Value

10 unchanged sentences

Our leases have remaining lease terms of less than 1 year to approximately 10 years, most of which generally include renewal options of varying terms.

Our total lease expense amounted to approximately $ 0.9 million and $ 1.2 million for the three months ended June 30, 2023 and 2022, respectively, and $ 1.9 million and $ 2.3 million for the six months ended June 30, 2023 and 2022, respectively.

Our total lease expense amounted to approximately $ 0.8 million and $ 1.0 million for the three months ended September 30, 2023 and 2022, respectively, and $ 2.8 million and $ 3.3 million for the nine months ended September 30, 2023 and 2022, respectively.

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

2 unchanged sentences

Additional information related to our right of use assets and related lease liabilities is as follows:

June 30, 2023

September 30, 2023

Cash paid for operating lease liabilities (in thousands) $ 1,890

1 unchanged sentence

Weighted average discount rate 5.1 %

Maturities of our operating lease liabilities as of June 30, 2023 are as follows:

Maturities of our operating lease liabilities as of September 30, 2023 are as follows:

Operating Leases

8 unchanged sentences

Litigation and Claims

In the ordinary course of business, we are a party to various legal proceedings, including, from time to time, regulatory and governmental matters as well as actions which are asserted to be maintainable as class action suits.

In the ordinary course of business, we are a party to various legal proceedings, including, from time to time, regulatory, supervisory, and governmental matters as well as actions which are asserted to be maintainable as class action suits, employment claims, and or enforcement actions.

We review these actions on an ongoing basis to determine whether it is probable and estimable that a loss has occurred and use that information when making accrual and disclosure decisions.

We have provided reserves where necessary for all claims and, based on current knowledge and in part upon the advice of legal counsel, all matters are believed to be adequately covered by insurance, or, if not covered, we do not expect the outcome in any legal proceedings, individually or collectively, to have a material adverse impact on our financial condition or results of operations.

We have provided reserves where necessary for all claims and, based on current knowledge and in part upon the advice of legal counsel, all matters are believed to be adequately covered by insurance, or, if not covered, would not be likely to have a material adverse impact on our financial condition or results of operations.

Nonetheless, given the inherent unpredictability of these matters, an adverse outcome could, from time to time, have a material adverse impact on our financial condition or results of operations.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

On October 20, 2023, an alleged class action captioned Lyons v.

et al ., was filed in the U.S.

District Court for the Middle District of Alabama, alleging that Walmart, Green Dot Corporation, and Green Dot Bank breached implied warranties of merchantability and fitness for a particular purpose, and were otherwise negligent in the packaging of gift cards at Walmart stores, resulting in the unauthorized tampering with, and loss of stored values, on four gift cards sold in advance of the 2022 Christmas holiday season but that were later used at another location in January 2023.

The suit seeks to represent a nationwide class of persons who purchased a Visa Prepaid card issued by us and subjected to unauthorized use by a third party after purchase but prior to the first authorized use, at a Walmart retail store located in a state that has adopted Article 2 of the Uniform Commercial Code (thereby excluding Louisiana).

On October 24, 2023 the court on its own initiative ordered plaintiff to re-plead the action based on insufficient jurisdictional allegations, and an amended complaint was filed October 30, 2023.

On October 25, 2023, a putative class action, Brockingon v.

Green Dot Corporation, was filed in the Circuit Court of the 7th Judicial District for Volusia County, Florida, alleging the company violated Florida debt collection law by emailing, monthly, several email communications that her “Green Dot Account statement is ready” that were received between 5:58 a.m.

and 6:02 a.m., outside the permitted communication times of 8:01 a.m.

Plaintiff alleges that these communications are debt collection communications covered by the Florida Consumer Collection Practices Act, and seeks to represent a class of persons with Florida addresses who received communications between the hours of 9 p.m and 8 a.m.

in connection with the collection of a consumer debt.

On October 27, 2023, an alleged class action, Hester v.

Green Dot Corporation , was filed in District Court for Travis County, Texas, alleging he was unable to access funds in his account for an extended period, and that we have similarly blocked access for other customers.

The complaint purports to allege three causes of action for breach of contract, breach of fiduciary duty, and deceptive trade practices in violation of the Texas Deceptive Trade Practices Act.

The proposed class is all Texas residents and GO2bank customers or account holders who “had their accounts or funds blocked, closed, or otherwise restricted” for more than 72 hours at any time during the four years (or the length of the longest applicable statute of limitations for any asserted claim) immediately preceding the filing of this action continuing through the date of judgment.

On December 18, 2019, an alleged class action entitled Koffsmon v.

4 unchanged sentences

The suit is purportedly brought on behalf of purchasers of our securities between May 9, 2018 and November 7, 2019, and seeks compensatory damages, fees and costs.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

On October 6, 2021, the Court appointed the New York Hotel Trades Council & Hotel Association of New York City, Inc.

10 unchanged sentences

Given the uncertainty of litigation and the preliminary stage of these claims, we are currently unable to estimate the probability of the outcome of these actions or the range of reasonably possible losses, if any, or the impact on our results of operations, financial condition or cash flows, except as disclosed.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

Other Legal Matters

17 unchanged sentences

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

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

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

2023 2022 2023 2022

Walmart 17 % 19 % 17 % 20 %

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 18—Significant Retailer and Partner Concentration (continued)

In addition, approximately 41 % and 29 % of our total operating revenues for the three months ended June 30, 2023 and 2022, respectively, and 36 % and 26 % for the six months ended June 30, 2023 and 2022, respectively, were generated from a single BaaS partner, but without a corresponding concentration to gross profit for the periods.

In addition, approximately 47 % and 35 % of our total operating revenues for the three months ended September 30, 2023 and 2022, respectively, and 39 % and 29 % for the nine months ended September 30, 2023 and 2022, respectively, were generated from a single BaaS partner, but without a corresponding concentration to gross profit for the periods.

Note 19— Segment Information

4 unchanged sentences

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

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Segment Information (continued)

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

8 unchanged sentences

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

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Segment Information (continued)

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

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

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

2023 2022 2023 2022

9 unchanged sentences

Segment revenue adjustments represent commissions and certain processing-related costs associated with our BaaS products and services, which are netted against our B2B Services revenues when evaluating segment performance, as well as certain other investment income earned by our bank, which is included in Corporate and Other.

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

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Segment Information (continued)

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

2023 2022 2023 2022

5 unchanged sentences

Total segment profit 23,735 45,493 145,147 203,367

Reconciliation to income before income taxes

Reconciliation to (loss) income before income taxes

Depreciation and amortization of property, equipment and internal-use software 14,720 14,482 42,307 42,881

4 unchanged sentences

Other expense 1,695 847 5,086 4,042

Operating income 4,786 23,939 55,781 75,531

Operating (loss) income ( 6,839 ) 10,765 48,942 86,296

Interest expense, net 239 27 2,121 143

Other expense, net ( 802 ) ( 4,249 ) ( 6,050 ) ( 9,057 )

Income before income taxes $ 2,324 $ 19,872 $ 48,651 $ 70,607

(Loss) income before income taxes $ ( 7,880 ) $ 6,489 $ 40,771 $ 77,096

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

What changed 10-Q

Item 1. Financial Statements