2 unchanged sentences
A significant portion of our operating revenues are derived from our BaaS partners and the products and services sold at our largest retail distributors.
−Removed: Approximately 54% and 50% of our total operating revenues for the three and six months ended June 30, 2024, respectively, was generated from a single BaaS partner.
−Removed: Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 10% for each of the three and six months ended June 30, 2024.
+Added: Approximately 59% and 53% of our total operating revenues for the three and nine months ended September 30, 2024, respectively, was generated from a single BaaS partner.
+Added: Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 10% for each of the three and nine months ended September 30, 2024, respectively.
We expect that Walmart will continue to have a significant impact on our operating revenues in future periods, particularly in our Consumer Services segment.
56 unchanged sentences
Fraudulent and other illegal activity involving our products and services could adversely affect our financial position and results of operations.
−Removed: Criminals are using increasingly sophisticated methods to engage in illegal activities using deposit account products (including prepaid cards), reload products, or customer information and may see their effectiveness enhanced by the use of Artificial Intelligence.
+Added: Criminals are using increasingly sophisticated methods to engage in illegal activities using deposit account products (including demand deposit accounts and prepaid cards), reload products, or customer information and may see their effectiveness enhanced by the use of Artificial Intelligence.
Illegal activities involving our products and services often include malicious social engineering schemes.
3 unchanged sentences
We rely upon third parties for transaction processing services, which subjects us and our customers to risks related to the vulnerabilities of those third parties.
−Removed: A single significant incident of fraud, or increases in the overall level of fraud, involving our cards and other products and services, have in the past and could in the future, result in reputational damage to us in addition to losses.
−Removed: Such damage could reduce the use and acceptance of our cards and other products and services, cause retail distributors to cease doing business with us, or lead to greater regulation that would increase our compliance costs.
+Added: A single significant incident of fraud, or increases in the overall level of fraud, involving our deposit account products, and other products and services, have in the past and could in the future, result in reputational damage to us in addition to losses.
+Added: Such damage could reduce the use and acceptance of our deposit account products and other products and services, cause retail distributors to cease doing business with us, or lead to greater regulation that would increase our compliance costs.
Fraudulent activity could also result in the imposition of regulatory sanctions, including significant monetary fines, which could adversely affect our business, results of operations and financial condition.
To address the challenges that we face with respect to fraudulent activity, we have implemented risk control mechanisms that have made it more difficult for all customers, including legitimate customers, to obtain and use our products and services.
−Removed: We believe it is likely that our risk control mechanisms may continue to adversely affect our new card activations for the foreseeable future and that our operating revenues may be negatively impacted as a result.
+Added: We believe it is likely that our risk control mechanisms may continue to adversely affect our new account and card activations for the foreseeable future and that our operating revenues may be negatively impacted as a result.
Further, implementing such risk control mechanisms can be costly and has and may continue to negatively impact our operating margins as we continuously seek to enhance our risk controls.
18 unchanged sentences
If a retail distributor or other banking partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuing bank from the sales of our products and services, we are liable for any amounts owed to our customers.
−Removed: As of June 30, 2024, we had assets subject to settlement risk of $915.8 million.
+Added: As of September 30, 2024, we had assets subject to settlement risk of $587.1 million.
Given the possibility of recurring volatility in global financial markets, the approaches we use to assess and monitor the creditworthiness of our retail distributors or other banking partners may be inadequate, and we may be unable to detect and take steps to mitigate an increased credit risk in a timely manner.
51 unchanged sentences
In addition, our insurance costs may also increase substantially in the future to cover the costs our insurance carriers may incur.
−Removed: A data security breach could expose us to liability and protracted and costly litigation, regulatory penalties, and could adversely affect our reputation and operating revenues.
+Added: A cyber-attack, incident or security breach could expose us to liability and protracted and costly litigation, regulatory penalties, and could adversely affect our reputation and operating revenues.
We and our retail distributors, tax preparation partners, network acceptance members, third-party processors and the merchants that accept our cards receive, transmit and store confidential customer and other information, including personal information, in connection with the sale and use of our products and services.
−Removed: Our encryption software and the other technologies we use to provide security for storage, processing and transmission of confidential customer and other information may not be effective to protect against data security breaches by third parties.
+Added: Despite the encryption software and the other technologies and systems we use to provide security for storage, processing and transmission of confidential customer and other information these technologies or systems have been, and continue to be, vulnerable to cyber-attacks, incidents and data security breaches by third parties and we have experienced, and may in the future experience, successful attacks, incidents and breaches.
The risk of unauthorized circumvention of our security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers, including state sponsored hackers.
−Removed: Our retail distributors, tax preparation partners, network acceptance members, other business partners, third-party processors and the merchants that accept our cards also may experience similar security breaches or discover securities vulnerabilities involving the receipt, transmission and storage of our confidential customer and other information.
+Added: Our retail distributors, tax preparation partners, network acceptance members, other business partners, third-party processors and the merchants that accept our cards also may experience similar cyber-attacks, incidents or security breaches or discover securities vulnerabilities involving the receipt, transmission and storage of our confidential customer and other information.
Improper access to our or these third parties’ systems or databases could result in the theft, publication, deletion or modification of confidential customer and other information.
−Removed: A data security breach of the systems on which sensitive accountholder or other customer or end-customer data and account information are stored could lead to fraudulent activity involving our products and services, reputational damage and claims or regulatory actions, including penalties, against us.
−Removed: Regardless of whether or not we are sued or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack.
+Added: A data security breach of the systems on which sensitive accountholder or other customer or end-customer data and account information are stored have led, and could in the future lead, to fraudulent activity involving our products and services, reputational damage and claims, and could lead to regulatory actions, including penalties, against us.
+Added: Further, a cyber-attack or other incident could go undetected and persist in our systems for extended periods.
+Added: Regardless of whether or not we are sued or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack or other incident.
Depending on the nature and magnitude of the accessed data, this effort may require substantial resources.
If we are sued in connection with any data security breach, we could be involved in protracted and costly litigation and might be forced to pay damages and/or change our business practices, any of which could have a material adverse effect on our operating revenues and profitability.
−Removed: We would also likely have to pay (or indemnify the banks that issue our cards for) fines, penalties and/or other assessments imposed by Visa or Mastercard as a result of any data security breach.
+Added: We would also likely have to pay (or indemnify the banks that issue our products and services which includes cards) fines, penalties and/or other assessments imposed by Visa or Mastercard as a result of any data security breach.
Further, a significant data security breach could lead to additional regulation, which could impose new and costly compliance obligations.
31 unchanged sentences
If regulators believe that we or Green Dot Bank have not complied with any of these requirements, we may become subject to formal or informal enforcement actions, proceedings, or investigations, which could result in regulatory orders, penalties, restitution, restrictions on our business operations or requirements to take corrective actions, which may, individually or in the aggregate, affect our results of operations and restrict our ability to grow.
−Removed: For example, in July 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 AML regulations.
+Added: For example, in July 2024 we and our subsidiary bank received the Consent Order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations.
The Consent Order included a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024.
17 unchanged sentences
We are subject to state money transmission licensing requirements and a wide range of federal and other state laws and regulations.
−Removed: In particular, our products and services are subject to an increasingly strict set of legal and regulatory requirements intended to protect consumers, such as various disclosure and consent requirements, mandated or prohibited terms and conditions, prohibitions on discrimination based on certain prohibited bases, prohibitions on unfair, deceptive or abusive acts or practices, or to help detect and prevent money laundering, terrorist financing and other illicit activities.
−Removed: For example, we are subject to the AML reporting and
−Removed: recordkeeping requirements of the BSA, as amended by the PATRIOT Act.
+Added: In particular, our products and services are subject to an increasingly strict set of legal and regulatory requirements intended to protect consumers, such as various disclosure and consent requirements, mandated or prohibited terms and conditions, prohibitions on discrimination based on certain prohibited bases, prohibitions on unfair, deceptive or abusive acts or practices, or to help detect and prevent money
+Added: laundering, terrorist financing and other illicit activities.
+Added: For example, we are subject to the AML reporting and recordkeeping requirements of the BSA, as amended by the PATRIOT Act.
Monitoring and complying with all applicable laws, regulations and licensing requirements can be difficult and costly.
5 unchanged sentences
Further, with the current administration and leadership at federal agencies such as the CFPB, we expect that financial institutions will remain heavily regulated in the near future and that additional laws or regulations may be adopted that further regulate specific banking practices, including with respect to the fees we are permitted to charge to customers.
−Removed: If additional regulatory requirements were imposed on our bank or the sale of our products and services, the requirements could lead to a loss of retail distributors, tax preparation partners or other business partners, which could materially and adversely impact our operations.
+Added: If additional regulatory requirements were imposed on our bank or the sale of our products and services, the requirements could lead to a loss of retail distributors, network participants, tax preparation partners or other business partners, which could materially and adversely impact our operations.
Moreover, if our products are adversely impacted by the interpretation or enforcement of these regulations or if we or any of our retail distributors or tax preparation partners were unwilling or unable to make such operational changes to comply with the interpretation or enforcement thereof, we would no longer be able to sell our products and services through that noncompliant retail distributor or tax preparation partner, which could materially and adversely affect our business, financial position and operating results.
8 unchanged sentences
Furthermore, a material portion of our operating revenues is derived from interchange fees.
−Removed: For the three months ended June 30, 2024, interchange revenues represented 12% of our total operating revenues, and we expect interchange revenues to continue to represent a significant percentage of our total operating revenues.
+Added: For each of the three and nine months ended September 30, 2024, interchange revenues represented 12% of our total operating revenues, and we expect interchange revenues to continue to represent a significant percentage of our total operating revenues.
The amount of interchange revenues that we earn is highly dependent on the interchange rates that the payment networks set and adjust from time to time.
The enactment of the Dodd-Frank Act required the Federal Reserve Board to implement regulations that have substantially limited interchange fees for many issuers.
−Removed: While the interchange rates that may be earned by us and
−Removed: Green Dot Bank are exempt from the limitations imposed by the Dodd-Frank Act, federal legislators and regulatory authorities have become increasingly focused on interchange fees, and continue to propose new legislation that could result in significant adverse changes to the rates we are able to charge and there can be no assurance that future regulation or changes by the payment networks will not substantially impact our interchange revenues.
+Added: While the interchange rates that may be earned by us and Green Dot Bank are exempt from the limitations imposed by the Dodd-Frank Act, federal legislators and regulatory authorities have become increasingly focused on interchange fees, and continue to propose new legislation that could result in significant adverse changes to the rates we are able to charge and there can be no assurance that future regulation or changes by the payment networks will not substantially impact our interchange revenues.
If interchange rates decline, whether due to actions by the payment networks or future regulation, we would likely need to change our fee structure to offset the loss of interchange revenues.
7 unchanged sentences
Plaintiffs or regulatory agencies or authorities in these matters have sought and may seek recovery of very large or indeterminate amounts, seek to have aspects of our business suspended or modified or seek to impose sanctions, including significant monetary fines.
−Removed: For example, in July 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 AML regulations.
+Added: For example, in July 2024 we and our subsidiary bank received the Consent Order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations.
The Consent Order included a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024.
16 unchanged sentences
We may unknowingly violate the intellectual property or other proprietary rights of others and, thus, may be subject to claims by third parties.
−Removed: Because of the existence of a large number of patents in the mobile technology field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its elements infringes or will infringe
−Removed: on the patent rights of others.
+Added: Because of the existence of a large number of patents in the mobile technology
+Added: field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its elements infringes or will infringe on the patent rights of others.
Regardless of the merit of these claims, we may be required to devote significant time and resources to defending against these claims or to protecting and enforcing our own rights.
12 unchanged sentences
Should we require additional credit at levels we are unable to access, the cost of credit is greater than expected, or our cost-savings measures are ineffective or result in us incurring greater costs, our operating results could be adversely affected.
−Removed: Our debt agreements contain restrictive covenants and financial ratio tests that restrict or prohibit our ability to engage in or enter into a variety of transactions.
−Removed: Under our $100 million five-year revolving facility, we are subject to various covenants that may have the effect of limiting, among other things, our ability and the ability of certain of our subsidiaries to:
−Removed: merge with other entities, enter into a transaction resulting in a change in control, create new liens, incur additional indebtedness, sell assets outside of the ordinary course of business, enter into transactions with affiliates (other than subsidiaries) or substantially change the general nature of our and our subsidiaries’ business, taken as a whole, make certain investments, enter into restrictive agreements, or make certain dividends or other distributions.
−Removed: These restrictions could limit our ability to take advantage of financing, merger, acquisition or other opportunities, to fund our business operations or to fully implement our current and future operating strategies.
−Removed: We must also maintain compliance with a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio of 2.50 and 1.25, respectively, at the end of any fiscal quarter.
−Removed: Our ability to meet these financial ratios and tests will be dependent upon our future performance and may be affected by events beyond our control (including factors discussed in this “Risk Factors" section).
−Removed: If we fail to satisfy these requirements, our indebtedness under these agreements could become accelerated and payable at a time when we are unable to pay them.
−Removed: This would adversely affect our ability to implement our operating strategies and would have a material adverse effect on our financial condition.
−Removed: Our revolving facility is set to mature in October 2024 and we continue to evaluate alternative sources of funding, which may subject us to similar covenant requirements in the future.
+Added: We have increased debt service obligations as a result of the issuance of our senior unsecured notes.
+Added: In September and October 2024, we issued and sold senior unsecured notes in an aggregate principal amount of $50.0 million that mature in September 2029.
+Added: As a result of these transactions, we have incurred additional debt service obligations in addition to normal operating expenses and planned capital expenditures.
+Added: Our increased level of indebtedness may have several important effects on our future operations, including, without limitation, a portion of our cash flow must be dedicated to the payment of interest and principal on the senior unsecured notes, reducing funds available for distribution to stockholders and limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes.
+Added: Our ability to meet our debt service obligations and to reduce our total indebtedness will be dependent upon our future performance, as well as Green Dot Bank and its ability to pay dividends to us, which will be subject to regulatory restrictions, general economic, industry and competitive conditions and to financial, business and other factors affecting us and Green Dot Bank, many of which are beyond our control.
+Added: In addition, the senior unsecured notes contain certain affirmative and negative non-financial covenants applicable to us and Green Dot Bank that could limit our ability to take advantage of financing, merger, acquisition or other opportunities, to fund our business operations or to fully implement our current and future operating strategies.
+Added: We cannot assure you that we will be able to continue to generate cash flow at or above its current level and that we will be able to pay principal and interest on the senior unsecured notes as they become due.
+Added: Further, we cannot assure you that our maintenance of our indebtedness or occurrence of future indebtedness will not adversely affect our operating results or financial condition.
GENERAL RISKS
50 unchanged sentences
Our net goodwill and intangible assets represent a significant portion of our consolidated assets.
−Removed: Our net goodwill and intangible assets were $407.9 million as of June 30, 2024.
+Added: Our net goodwill and intangible assets were $403.3 million as of September 30, 2024.
Under generally accepted accounting principles in the United States, or ("U.S.
16 unchanged sentences
These restrictions could affect the willingness or ability of a third party to acquire control of us for so long as we are a bank holding company.
−Removed: Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
+Added: Unregistered Sales of Equity Securities and Use of Proceeds
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.