What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 214 added, 146 removed, 598 unchanged (38% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Assets (In thousands, except par value)

6 unchanged sentences

Prepaid expenses and other assets 51,734 69,419

Income tax receivable 1,839 —

Total current assets 2,424,826 1,637,910

Investment securities available-for-sale, at fair value 2,067,504 2,203,142

Loans to bank customers, net of allowance for credit losses of $ 10,376 and $ 11,383 as of March 31, 2024 and December 31, 2023, respectively

Loans to bank customers, net of allowance for credit losses of $ 17,360 and $ 11,383 as of June 30, 2024 and December 31, 2023, respectively

34,687 30,534

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Class A common stock, $ 0.001 par value;

100,000 shares authorized as of March 31, 2024 and December 31, 2023;

53,158 and 52,816 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

100,000 shares authorized as of June 30, 2024 and December 31, 2023;

53,707 and 52,816 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 392,810 375,980

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

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

2024 2023 2024 2023

(In thousands, except per share data)

11 unchanged sentences

Total operating expenses 430,788 361,090 872,222 726,475

Operating income 10,554 50,995

Operating (loss) income ( 23,667 ) 4,786 ( 13,113 ) 55,781

Interest expense, net 1,272 238 2,729 1,882

Other expense, net ( 4,530 ) ( 2,224 ) ( 6,340 ) ( 5,248 )

Income before income taxes 7,287 46,327

Income tax expense 2,537 10,315

Net income $ 4,750 $ 36,012

Basic earnings per common share:

(Loss) income before income taxes ( 29,469 ) 2,324 ( 22,182 ) 48,651

Income tax (benefit) expense ( 754 ) 1,746 1,783 12,061

Net (loss) income $ ( 28,715 ) $ 578 $ ( 23,965 ) $ 36,590

Basic (loss) earnings per common share:

$ ( 0.54 ) $ 0.01 $ ( 0.45 ) $ 0.70

Diluted earnings per common share $ 0.09 $ 0.69

Diluted (loss) earnings per common share $ ( 0.54 ) $ 0.01 $ ( 0.45 ) $ 0.70

Basic weighted-average common shares issued and outstanding:

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

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

2024 2023 2024 2023

(In thousands)

Net income $ 4,750 $ 36,012

Net (loss) income $ ( 28,715 ) $ 578 $ ( 23,965 ) $ 36,590

Other comprehensive income and loss

Unrealized holding (loss) income, net of tax ( 679 ) 36,297

Comprehensive income $ 4,071 $ 72,309

Unrealized holding income (loss), net of tax 18,414 ( 33,366 ) 17,735 2,931

Comprehensive (loss) income $ ( 10,301 ) $ ( 32,788 ) $ ( 6,230 ) $ 39,521

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

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

1 unchanged sentence

(In thousands)

Balance at December 31, 2023 52,816 $ 53 $ 375,980 $ 770,304 $ ( 286,987 ) $ 859,350

Balance at March 31, 2024 53,158 $ 53 $ 383,205 $ 775,054 $ ( 287,666 ) $ 870,646

Common stock issued under stock plans, net of withholdings and related tax effects 549 1 2,358 — — 2,359

Stock-based compensation — — 7,247 — — 7,247

Net loss — — — ( 28,715 ) — ( 28,715 )

Other comprehensive income — — — — 18,414 18,414

Balance at June 30, 2024 53,707 $ 54 $ 392,810 $ 746,339 $ ( 269,252 ) $ 869,951

Three Months Ended June 30, 2023

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

Shares Amount

(In thousands)

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

Common stock issued under stock plans, net of withholdings and related tax effects 347 — 2,811 — — 2,811

Stock-based compensation — — 10,616 — — 10,616

Net income — — — 578 — 578

Other comprehensive loss — — — — ( 33,366 ) ( 33,366 )

Balance at March 31, 2024 53,158 $ 53 $ 383,205 $ 775,054 $ ( 287,666 ) $ 870,646

Three Months Ended March 31, 2023

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

See notes to unaudited consolidated financial statements

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Six Months Ended June 30, 2024

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

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Stock-based compensation — — 15,872 — — 15,872

Net loss — — — ( 23,965 ) — ( 23,965 )

Other comprehensive income — — — — 17,735 17,735

Balance at June 30, 2024 53,707 $ 54 $ 392,810 $ 746,339 $ ( 269,252 ) $ 869,951

Six Months Ended June 30, 2023

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

Shares Amount

(In thousands)

Balance at December 31, 2022 51,674 $ 52 $ 340,575 $ 763,582 $ ( 322,728 ) $ 781,481

Common stock issued under stock plans, net of withholdings and related tax effects 667 — 439 — — 439

Stock-based compensation — — 19,798 — — 19,798

Net income — — — 36,590 — 36,590

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

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

See notes to unaudited consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

Operating activities

Net income $ 4,750 $ 36,012

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 23,965 ) $ 36,590

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization of property, equipment and internal-use software 32,259 27,587

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Payments for property, equipment and internal-use software ( 31,494 ) ( 38,120 )

Net changes in loans and advances ( 39,939 ) ( 15,069 )

Net changes in loans ( 20,204 ) ( 17,866 )

Investment in TailFin Labs, LLC ( 35,000 ) ( 35,000 )

Proceeds from other investments 39,118 —

Other investing activities ( 330 ) ( 872 )

Net cash used in investing activities ( 4,526 ) ( 32,720 )

Net cash provided by (used in) investing activities 7,783 ( 9,581 )

Financing activities

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Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2023 for additional disclosures, including a summary of our significant accounting policies.

There have been no material changes to our significant accounting policies during the three months ended March 31, 2024.

There have been no material changes to our significant accounting policies during the six months ended June 30, 2024, except as discussed further below.

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

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accordingly, accounting estimates require the exercise of judgment.

These financial statements were prepared using information reasonably available as of March 31, 2024 and through the date of this report.

These financial statements were prepared using information reasonably available as of June 30, 2024 and through the date of this report.

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

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"Risk Factors" in this report.

We have historically performed our annual goodwill impairment assessment as of September 30, the last day of our third fiscal quarter.

During the second quarter of fiscal year 2024, we voluntarily made the decision to change the date of our annual impairment assessment from September 30 to November 30.

The change was made to align the annual goodwill impairment assessment date more closely with the timing of our annual and long-term budgeting cycles.

We determined this change in accounting principle is preferable and will not affect our consolidated financial statements.

This change is not applied retrospectively, as it is impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight.

Accordingly, the change will be applied prospectively.

We believe the change in goodwill impairment testing date does not represent a material change to our method of applying an accounting principle in light of our internal controls over financial reporting and requirements to assess goodwill impairment upon certain triggering events, and does not delay, accelerate or avoid any impairment charges.

In addition, we last performed a quantitative assessment as of December 31, 2023 on each of our reporting units as an update to our September 30, 2023 annual test.

As such, no more than 12 months will have elapsed between our previous assessment and our next annual assessment as of November 30, 2024.

Recent Accounting Pronouncements

In November 2023, the Financial Standards Accounting Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07 "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2—Summary of Significant Accounting Policies (continued)

disclosures about significant segment expenses.

ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

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We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3— Revenues

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The following tables disaggregate our revenues earned from external customers by each of our reportable segments:

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Consumer Services B2B Services Money Movement Services Total

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$ 94,051 $ 241,731 $ 56,674 $ 392,456

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Consumer Services B2B Services Money Movement Services Total

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$ 125,942 $ 180,004 $ 49,974 $ 355,920

Six Months Ended June 30, 2024

Consumer Services B2B Services Money Movement Services Total

Timing of recognition (In thousands)

Transferred point in time $ 140,472 $ 69,752 $ 161,949 $ 372,173

Transferred over time 51,586 406,420 1,554 459,560

Operating revenues (1)

$ 192,058 $ 476,172 $ 163,503 $ 831,733

Six Months Ended June 30, 2023

Consumer Services B2B Services Money Movement Services Total

Timing of recognition (In thousands)

Transferred point in time $ 176,778 $ 68,362 $ 146,702 $ 391,842

Transferred over time 85,791 282,478 1,513 369,782

Operating revenues (1)

$ 262,569 $ 350,840 $ 148,215 $ 761,624

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

Also excludes the effects of inter-segment revenues.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

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

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

We recognized approximately $ 2.9 million and $ 14.4 million in revenue for the three months ended March 31, 2024 and 2023, 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 $ 7.6 million in revenue for the three months ended June 30, 2024 and 2023, respectively, and $ 3.6 and $ 22.0 for the six months ended June 30, 2024 and 2023, 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 respective 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.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4— Investment Securities

2 unchanged sentences

(In thousands)

March 31, 2024

June 30, 2024

Corporate bonds $ 10,000 $ — $ ( 277 ) $ 9,723

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Total investment securities $ 2,617,266 $ — $ ( 380,265 ) $ 2,237,001

As of March 31, 2024 and December 31, 2023, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of June 30, 2024 and December 31, 2023, 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)

March 31, 2024

June 30, 2024

Corporate bonds $ — $ — $ 9,723 $ ( 277 ) $ 9,723 $ ( 277 )

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

As such, we have not recorded any credit-related impairment losses during the three months ended March 31, 2024 or 2023 on our available-for-sale investment securities.

Unrealized losses as of March 31, 2024 and December 31, 2023 are the result of increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

All of the underlying securities within our investment portfolio were in an unrealized loss position as of March 31, 2024 and December 31, 2023 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to increases in interest rates by the Federal Reserve, and general volatility in market conditions.

As such, we have not recorded any meaningful credit-related impairment losses during the three and six months ended June 30, 2024 or 2023 on our available-for-sale investment securities.

Unrealized losses as of June 30, 2024 and December 31, 2023 are the result of increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

Almost all of the underlying securities within our investment portfolio were in an unrealized loss position as of June 30, 2024 and December 31, 2023 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to 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.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of March 31, 2024, the contractual maturities of our available-for-sale investment securities were as follows:

As of June 30, 2024, the contractual maturities of our available-for-sale investment securities were as follows:

Amortized cost Fair value

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The expected payments on mortgage-backed and asset-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5— Accounts Receivable

Accounts receivable, net consisted of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In thousands)

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

Three Months Ended March 31,

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

2024 2023 2024 2023

(In thousands)

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(In thousands)

March 31, 2024

June 30, 2024

Residential $ — $ — $ — $ — $ 6,314 $ 6,314

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Percentage of outstanding 6.8 % 1.9 % 6.1 % 14.8 % 85.2 % 100.0 %

We offer an optional overdraft protection program service on certain demand deposit account programs that allows customers who opt-in and meet certain criteria to spend up to a pre-authorized amount in excess of their available card balance.

When overdrawn, the purchase related balances due on these deposit accounts are reclassified as consumer loans.

1 unchanged sentence

Overdrawn balances are unsecured and considered immediately due from the customer.

Also included in consumer loans are advances made to taxpayers under our tax advance program.

These loan balances generally fluctuate over the first half of each year due to the seasonal nature of these advances.

A portion of our secured credit card portfolio is classified as loans held for sale.

1 unchanged sentence

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

As of March 31, 2024 and December 31, 2023, the fair value of the loans held for sale amounted to approximately $ 4.4 million and $ 4.7 million, respectively.

As of June 30, 2024 and December 31, 2023, the fair value of the loans held for sale amounted to approximately $ 4.3 million and $ 4.7 million, respectively.

Nonperforming Loans

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See Note 2 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2023 for further information on the criteria for classification as nonperforming.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In thousands)

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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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Non-Classified Classified Non-Classified Classified

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

Three Months Ended March 31,

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

2024 2023 2024 2023

(In thousands)

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

As of March 31, 2024 and December 31, 2023, our net investment in TailFin Labs amounted to approximately $ 141.3 million and $ 109.5 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 $ 4.1 million for the three months ended March 31, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023, our net investment in TailFin Labs amounted to approximately $ 136.6 million and $ 109.5 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 $ 4.8 million and $ 3.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 7.9 million and $ 7.2 million for the six months ended June 30, 2024 and 2023, 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 $ 3.3 million and $ 3.5 million at March 31, 2024 and December 31, 2023, respectively.

Equity in earnings from this investment for the three months ended March 31, 2024 and 2023 were not significant.

Our equity method investments also include an investment held by our bank, which amounted to $ 3.3 million and $ 3.5 million at June 30, 2024 and December 31, 2023, respectively.

Equity in earnings from this investment for the three and six months ended June 30, 2024 and 2023 were not significant.

Note 8— Deposits

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In thousands)

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

March 31, 2024

June 30, 2024

(In thousands)

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We classify amounts outstanding on our consolidated balance sheets based on the remaining duration of the credit facility, however, we may make voluntary repayments at any time prior to maturity.

As of March 31, 2024, the outstanding balance on the 2019 Revolving Facility was $ 45 million, with $ 55 million available for use.

As of June 30, 2024, the outstanding balance on the 2019 Revolving Facility was $ 62 million, with $ 38 million available for use.

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

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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 March 31, 2024 was approximately 6.93 %.

The interest rate on our outstanding balance as of June 30, 2024 was approximately 7.08 %.

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.

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

At March 31, 2024, we were in compliance with all such covenants.

At June 30, 2024, 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 months ended March 31, 2024 and 2023 of approximately $ 1.4 million and $ 1.6 million, respectively.

We incurred total cash interest expense during the three months ended June 30, 2024 and 2023 of approximately $ 1.2 million and $ 0.2 million, respectively and during the six months ended June 30, 2024 and 2023 of $ 2.7 million and $ 1.8 million, respectively.

Note 10— Income Taxes

Income tax expense for the three months ended March 31, 2024 and 2023 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

Income tax expense for the six months ended June 30, 2024 and 2023 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:

Three Months Ended March 31,

Six Months Ended June 30,

federal statutory tax rate 21.0 % 21.0 %

6 unchanged sentences

Bank owned life insurance surrender ( 3.1 ) —

Nondeductible expenses 2.6 0.8

Nondeductible expenses and penalties ( 65.5 ) 0.5

Global intangible low-tax income tax ( 3.2 ) 0.7

Other ( 0.1 ) ( 0.1 )

3 unchanged sentences

Note 10—Income Taxes (continued)

The effective tax rate for the three months ended March 31, 2024 and 2023 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 surrender 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 three months ended March 31, 2024 as compared to the three months ended March 31, 2023 is primarily due to the impact of a $ 0.2 million increase in tax expense associated with shortfalls from stock-based compensation and the initiated surrender of a portion of our existing bank owned life insurance policies which resulted in a tax charge of $ 0.5 million and a surrender penalty of $ 0.2 million.

We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $ 1.5 million for the three months ended March 31, 2024, compared to a $ 1.3 million discrete tax expense for the prior year comparable period.

These increases were partially offset by a decrease of $ 1.0 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of $ 0.5 million in state income taxes, net of federal benefits, and the impact of general business credits.

The effective tax rate for the six months ended June 30, 2024 and 2023 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, nondeductible expenses and penalties, cash surrender 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 decrease in the effective tax rate for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is primarily due to the impact of a decrease of $ 2.5 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of $ 3.3 million in state income taxes, net of federal benefits, and the impact of general business credits.

These decreases were partially offset by a $ 0.5 million increase in tax expense associated with shortfalls from stock-based compensation, an increase in tax expense due to nondeductible expenses and penalties, and the initiated surrender of a portion of our existing bank owned life insurance policies which resulted in a tax charge of $ 0.5 million and a surrender penalty of $ 0.2 million during the six months ended June 30, 2024.

We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $ 2.8 million for the six months ended June 30, 2024, compared to a $ 2.3 million discrete tax expense for the prior year comparable period.

The increase in nondeductible expenses and penalties for the six months ended June 30, 2024 is primarily related to the tax effect associated with the civil money penalty accrual for our consent order received from the Federal Reserve Board discussed in Note 17 - Commitments and Contingencies.

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

For the three months ended March 31, 2024 and 2023, the provision for GILTI tax expense was not material to our financial statements.

For the six months ended June 30, 2024 and 2023, 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 March 31, 2024 and 2023, 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 June 30, 2024 and 2023, 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.

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

federal tax return during the second quarter ended June 30, 2020, and the examination remains ongoing as of March 31, 2024.

federal tax return during the second quarter ended June 30, 2020, and the examination remains ongoing as of June 30, 2024.

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

As of March 31, 2024, we had federal net operating loss carryforwards of approximately $ 13.1 million and state net operating loss carryforwards of approximately $ 108.1 million, which will be available to offset future income.

As of June 30, 2024, we had federal net operating loss carryforwards of approximately $ 13.1 million and state net operating loss carryforwards of approximately $ 108.1 million, which will be available to offset future income.

If not used, the federal net operating losses will expire between 2029 and 2035.

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In addition, we have state business tax credits of approximately $ 21.2 million that can be carried forward indefinitely and other state business tax credits of approximately $ 0.6 million that will start to expire on December 31, 2024 and continue to expire through December 31, 2027.

As of March 31, 2024 and December 31, 2023, we had a liability of $ 13.5 million and $ 12.1 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

As of June 30, 2024 and December 31, 2023, we had a liability of $ 13.4 million and $ 12.1 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:

Three Months Ended March 31,

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10—Income Taxes (continued)

Six Months Ended June 30,

(In thousands)

4 unchanged sentences

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 12,897 $ 11,899

As of March 31, 2024 and 2023, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 1.4 million and $ 1.0 million, respectively.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

As of June 30, 2024 and 2023, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 1.6 million and $ 1.2 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 March 31, 2024, we had an authorized $ 4.5 million remaining under our stock repurchase program for additional repurchases.

There were no repurchases during the three months ended March 31, 2024.

As of June 30, 2024, we had an authorized $ 4.5 million remaining under our stock repurchase program for additional repurchases.

There were no repurchases during the six months ended June 30, 2024.

Note 12— Stock-Based Compensation

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

The total stock-based compensation expense recognized was $ 8.6 million and $ 9.2 million for the three months ended March 31, 2024 and 2023, respectively.

The total stock-based compensation expense recognized was $ 7.2 million and $ 10.6 million for the three months ended June 30, 2024 and 2023, respectively, and $ 15.9 million and $ 19.8 million for the six months ended June 30, 2024 and 2023, respectively.

Restricted Stock Units

Restricted stock unit activity for awards subject to only service conditions was as follows for the three months ended March 31, 2024:

Restricted stock unit activity for awards subject to only service conditions was as follows for the six months ended June 30, 2024:

Shares Weighted-Average Grant-Date Fair Value

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Restricted stock units canceled ( 156 ) 21.93

Outstanding at March 31, 2024

Outstanding at June 30, 2024

3,330 $ 12.95

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity for the three months ended March 31, 2024 was as follows:

Performance-based restricted stock unit activity for the six months ended June 30, 2024 was as follows:

Shares Weighted-Average Grant-Date Fair Value

2 unchanged sentences

Performance restricted stock units granted 996 8.98

Performance restricted stock units vested ( 2 ) 50.23

Performance restricted stock units canceled ( 82 ) 25.12

Outstanding at March 31, 2024

Outstanding at June 30, 2024

1,900 $ 15.48

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12—Stock-Based Compensation (continued)

We grant performance-based restricted stock units to certain employees that are subject to the attainment of pre-established internal performance conditions, market conditions, or a combination thereof (collectively referred to herein as "performance-based restricted stock units").

2 unchanged sentences

Stock Options

Total stock option activity for the three months ended March 31, 2024 was as follows:

Total stock option activity for the six months ended June 30, 2024 was as follows:

Options Weighted-Average Exercise Price

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Options canceled ( 10 ) 18.80

Outstanding at March 31, 2024

Outstanding at June 30, 2024

1,000 $ 23.83

Exercisable at March 31, 2024

Exercisable at June 30, 2024

1,000 $ 23.83

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13— Earnings per Common Share

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

Three Months Ended March 31,

(In thousands, except per share data)

Basic earnings per Class A common share

Note 13— Earnings (Loss) per Common Share

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

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

2024 2023 2024 2023

(In thousands, except per share data)

Basic earnings (loss) per Class A common share

Net (loss) income $ ( 28,715 ) $ 578 $ ( 23,965 ) $ 36,590

Weighted-average Class A shares issued and outstanding 53,452 52,193 53,197 52,004

Basic earnings per Class A common share $ 0.09 $ 0.70

Diluted earnings per Class A common share

Net income allocated to Class A common stockholders $ 4,750 $ 36,012

Basic (loss) earnings per Class A common share $ ( 0.54 ) $ 0.01 $ ( 0.45 ) $ 0.70

Diluted earnings (loss) per Class A common share

Net (loss) income allocated to Class A common stockholders $ ( 28,715 ) $ 578 $ ( 23,965 ) $ 36,590

Weighted-average Class A shares issued and outstanding 53,452 52,193 53,197 52,004

4 unchanged sentences

Diluted weighted-average Class A shares issued and outstanding 53,452 52,437 53,197 52,201

Diluted earnings per Class A common share $ 0.09 $ 0.69

Diluted (loss) earnings per Class A common share $ ( 0.54 ) $ 0.01 $ ( 0.45 ) $ 0.70

For the periods presented, we excluded certain restricted stock units and stock options outstanding, which could potentially dilute basic EPS in the future, from the computation of diluted EPS as their effect was anti-dilutive.

Additionally, we have excluded any performance-based restricted stock units where the performance contingency has not been met as of the end of the period, or whereby the result of including such awards was anti-dilutive.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13—Earnings (Loss) per Common Share (continued)

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

Three Months Ended March 31,

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

2024 2023 2024 2023

(In thousands)

4 unchanged sentences

Total 2,074 2,225 2,191 2,292

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 14— Fair Value Measurements

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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, 2023.

As of March 31, 2024 and December 31, 2023, our assets carried at fair value on a recurring basis were as follows:

As of June 30, 2024 and December 31, 2023, our assets carried at fair value on a recurring basis were as follows:

Level 1 Level 2 Level 3 Total Fair Value

March 31, 2024 (In thousands)

June 30, 2024 (In thousands)

Investment securities:

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Total assets $ — $ 2,237,001 $ 4,735 $ 2,241,736

We based the fair value of our fixed income securities held as of March 31, 2024 and December 31, 2023 on quoted prices in active markets for similar assets.

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three months ended March 31, 2024 or 2023.

We based the fair value of our fixed income securities held as of June 30, 2024 and December 31, 2023 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, 2024 or 2023.

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.

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Fair Value of Financial Instruments

The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value, at March 31, 2024 and December 31, 2023 are presented in the table below.

March 31, 2024 December 31, 2023

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, 2024 and December 31, 2023 are presented in the table below.

June 30, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

10 unchanged sentences

Our leases have remaining lease terms of less than 1 year to approximately 9 years, most of which generally include renewal options of varying terms.

Our total lease expense amounted to approximately $ 0.9 million and $ 1.0 million for the three months ended March 31, 2024 and 2023, respectively.

Our total lease expense amounted to approximately $ 0.9 million for each of the three months ended June 30, 2024 and 2023 and $ 1.8 million and $ 1.9 million for the six months ended June 30, 2024 and 2023, 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:

March 31, 2024

June 30, 2024

Cash paid for operating lease liabilities (in thousands) $ 1,833

1 unchanged sentence

Weighted average discount rate 5.1 %

Maturities of our operating lease liabilities as of March 31, 2024 are as follows:

Maturities of our operating lease liabilities as of June 30, 2024 are as follows:

Operating Leases

9 unchanged sentences

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.

We and our subsidiary bank received a proposed consent order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations.

Included in the proposed consent order are proposals for civil money penalties related to these issues.

While we are still in discussions with the Federal Reserve Board regarding these proposals, we accrued an estimated liability of $ 20 million related to the proposed consent order during the three months ended December 31, 2023.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

There may be an exposure to loss in excess of the amount accrued.

We believe the estimate of the aggregate range of reasonably possible losses (meaning the likelihood of losses is more than remote but less than likely), is up to $ 50 million as of March 31, 2024.

This estimated range of reasonably possible losses is based on currently available information for those proceedings in which we are involved and considers our best estimate of such losses for those matters for which an estimate can be made.

However, there can be no assurance that our accrual is sufficient or that losses from the proposed consent order will not exceed the estimated range.

As previously disclosed, on July 19, 2024, we and our subsidiary bank received a consent order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations.

Included in the consent order was a civil money penalty related to these issues in the amount of $ 44 million which was subsequently paid in July 2024.

We previously accrued an estimated liability of $ 20 million related to the consent order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024.

Other Litigation and Claims

2 unchanged sentences

The complaint purported to assert three causes of action (for breach of contract, breach of fiduciary duty, and a statutory claim for deceptive trade practices).

The proposed class comprised all Texas residents and GO2bank customers or accountholders 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 November 21, 2023, we filed a motion to compel arbitration and stay all proceedings based on the express language of the deposit agreement.

On March 29, 2024, the court granted the motion, thereby directing the matter into arbitration, and likewise concluded that the “the contract’s prohibition on class and other non-individual claims is valid and enforceable."

The proposed class comprised all Texas residents and GO2bank customers or accountholders who “had their accounts or funds

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

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 March 29, 2024, the court granted our motion to compel arbitration and stay all proceedings based on the express language of the contract, which motion had been filed in November 2023.

The court further concluded that the “the contract’s prohibition on class and other non-individual claims is valid and enforceable." On May 28, 2024, the court thereafter entered an order formally confirming the earlier ruling and staying the case.

On August 6, 2024, the parties jointly requested the court to dismiss the suit with prejudice.

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

8 unchanged sentences

On February 18, 2020, a putative shareholder derivative action entitled Hellman v.

Streit, et al., No.

Streit, et al.

20-cv-01572-SVW-PVC was filed, purportedly on behalf of the company, in United States District Court for the Central District of California, against certain of our current and former officers and directors.

1 unchanged sentence

The Hellman action seeks to recover, among other things, unspecified compensatory damages on behalf of the company.

Pursuant to a stipulated agreement, the parties to the Hellman action have requested that the court enter an order staying the action through the close of discovery in the Koffsmon action.

Pursuant to a stipulated agreement between the parties, the Hellman action is stayed through the close of discovery in the Koffsmon action.

On July 15, 2024, a putative shareholder derivative action entitled DiBlasio v.

Streit, et al.

24-cv-05924 was filed, purportedly on behalf of the company, in the United States District Court for the Central District of California, against certain of our current and former officers and directors.

The suit asserts claims for breach of fiduciary duty, abuse of control, and unjust enrichment, as well as claims under Section 14(a) of the Exchange Act, based on the allegations made in Koffsmon action, and on the proposed consent order from the Federal Reserve Board.

The DiBlasio action seeks to recover, among other things, unspecified compensatory damages on behalf of the company.

Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of these matters.

4 unchanged sentences

If we were found to be in violation of any laws and regulations governing banking, money transmitters, electronic fund transfers, or money laundering in the United States or abroad, we could be subject to penalties or could be forced to change our business practices.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

From time to time, we enter into contracts containing provisions that contingently require us to indemnify various parties against claims from third parties.

4 unchanged sentences

and (iv) contracts under which we may be required to indemnify our retail distributors, suppliers, vendors and other parties with whom we have contracts against claims arising from certain of our actions, omissions, violations of law and/or infringement of patents, trademarks, copyrights and/or other intellectual property rights.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

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

6 unchanged sentences

The loss of a significant retail distributor could have a material adverse effect upon our card sales, profitability, and revenue growth.

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

Three Months Ended March 31,

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

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

2024 2023 2024 2023

Walmart 10 % 17 % 10 % 17 %

In addition, approximately 46 % and 32 % of our total operating revenues for the three months ended March 31, 2024 and 2023, respectively, were generated from a single BaaS partner, but without a corresponding concentration to our gross profit for the respective periods.

In addition, approximately 54 % and 41 % of our total operating revenues for the three months ended June 30, 2024 and 2023, respectively, and 50 % and 36 % for the six months ended June 30, 2024 and 2023, respectively, were generated from a single BaaS partner, but without a corresponding concentration to our gross profit for the respective 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.

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

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

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

2 unchanged sentences

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

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Segment Information (continued)

Our Corporate and Other segment primarily consists of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses, which 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, and insurance.

3 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Segment Revenue (In thousands)

8 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.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Segment Information (continued)

Three Months Ended March 31,

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

2024 2023 2024 2023

Segment Profit (In thousands)

4 unchanged sentences

Total segment profit 33,998 38,869 93,230 121,412

Reconciliation to income before income taxes

Reconciliation to (loss) income before income taxes

Depreciation and amortization of property, equipment and internal-use software 15,827 13,886 32,259 27,587

4 unchanged sentences

Other expense 678 857 6,269 3,391

Operating income 10,554 50,995

Operating (loss) income ( 23,667 ) 4,786 ( 13,113 ) 55,781

Interest expense, net 1,272 238 2,729 1,882

Other expense, net ( 4,530 ) ( 2,224 ) ( 6,340 ) ( 5,248 )

Income before income taxes $ 7,287 $ 46,327

(Loss) income before income taxes $ ( 29,469 ) $ 2,324 $ ( 22,182 ) $ 48,651

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