GREEN DOT CORP 10-Q

ITEM 1. Financial Statements GREEN DOT CORPORATION CONSOLIDATED BALANCE SHEETS September 30, 2024 December 31, 2023 (unaudited) Assets (In thousands, except par value) Current assets: Unrestricted cash and cash equivalents $ 1,453,549 $ 682,263 Restricted cash 44 4,239 Investment securities available-for-sale, at fair value 43,257 33,859 Settlement assets 587,106 737,989 Accounts receivable, net 84,635 110,141 Prepaid expenses and other assets 49,459 69,419 Income tax receivable 1,322 — Total current assets 2,219,372 1,637,910 Investment securities available-for-sale, at fair value 2,120,803 2,203,142 Loans to bank customers, net of allowance for credit losses of $ 17,778 and $ 11,383 as of September 30, 2024 and December 31, 2023, respectively 33,380 30,534 Prepaid expenses and other assets 193,791 221,656 Property, equipment, and internal-use software, net 181,386 179,376 Operating lease right-of-use assets 3,801 5,342 Deferred expenses 1,226 1,546 Net deferred tax assets 128,263 117,139 Goodwill and intangible assets 403,265 420,477 Total assets $ 5,285,287 $ 4,817,122 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 95,043 $ 119,870 Deposits 3,837,906 3,293,603 Obligations to customers 215,588 314,278 Settlement obligations 50,821 57,001 Amounts due to card issuing banks for overdrawn accounts 84 225 Other accrued liabilities 94,844 91,239 Operating lease liabilities 2,118 3,369 Deferred revenue 7,181 6,343 Line of credit — 61,000 Income tax payable 2,497 6,262 Total current liabilities 4,306,082 3,953,190 Other accrued liabilities 1,217 1,895 Operating lease liabilities 2,068 2,687 Notes payable 43,675 — Total liabilities 4,353,042 3,957,772 Commitments and contingencies (Note 17) Stockholders’ equity: Class A common stock, $ 0.001 par value; 100,000 shares authorized as of September 30, 2024 and December 31, 2023; 53,751 and 52,816 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 54 53 Additional paid-in capital 400,769 375,980 Retained earnings 738,499 770,304 Accumulated other comprehensive loss ( 207,077 ) ( 286,987 ) Total stockholders’ equity 932,245 859,350 Total liabilities and stockholders’ equity $ 5,285,287 $ 4,817,122 See notes to unaudited consolidated financial statements 1 Table of Contents GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands, except per share data) Operating revenues: Card revenues and other fees $ 310,372 $ 253,407 $ 878,002 $ 735,380 Cash processing revenues 34,897 36,256 198,447 191,925 Interchange revenues 48,397 54,968 148,950 178,950 Interest income, net 16,077 8,398 43,453 29,030 Total operating revenues 409,743 353,029 1,268,852 1,135,285 Operating expenses: Sales and marketing expenses 52,626 56,495 167,948 194,530 Compensation and benefits expenses 61,795 59,168 189,967 192,934 Processing expenses 228,227 162,375 631,789 460,555 Other general and administrative expenses 70,027 81,830 295,193 238,324 Total operating expenses 412,675 359,868 1,284,897 1,086,343 Operating (loss) income ( 2,932 ) ( 6,839 ) ( 16,045 ) 48,942 Interest expense, net 1,577 239 4,306 2,121 Other expense, net ( 3,705 ) ( 802 ) ( 10,045 ) ( 6,050 ) (Loss) income before income taxes ( 8,214 ) ( 7,880 ) ( 30,396 ) 40,771 Income tax (benefit) expense ( 374 ) ( 1,615 ) 1,409 10,446 Net (loss) income $ ( 7,840 ) $ ( 6,265 ) $ ( 31,805 ) $ 30,325 Basic (loss) earnings per common share: $ ( 0.15 ) $ ( 0.12 ) $ ( 0.60 ) $ 0.58 Diluted (loss) earnings per common share $ ( 0.15 ) $ ( 0.12 ) $ ( 0.60 ) $ 0.58 Basic weighted-average common shares issued and outstanding: 53,722 52,367 53,373 52,127 Diluted weighted-average common shares issued and outstanding: 53,722 52,367 53,373 52,436 See notes to unaudited consolidated financial statements 2 Table of Contents GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Net (loss) income $ ( 7,840 ) $ ( 6,265 ) $ ( 31,805 ) $ 30,325 Other comprehensive income and loss Unrealized holding income (loss), net of tax 62,175 ( 47,263 ) 79,910 ( 44,332 ) Comprehensive income (loss) $ 54,335 $ ( 53,528 ) $ 48,105 $ ( 14,007 ) See notes to unaudited consolidated financial statements 3 Table of Contents GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) Three Months Ended September 30, 2024 Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity Shares Amount (In thousands) Balance at June 30, 2024 53,707 $ 54 $ 392,810 $ 746,339 $ ( 269,252 ) $ 869,951 Common stock issued under stock plans, net of withholdings and related tax effects 44 — ( 228 ) — — ( 228 ) Stock-based compensation — — 8,187 — — 8,187 Net loss — — — ( 7,840 ) — ( 7,840 ) Other comprehensive income — — — — 62,175 62,175 Balance at September 30, 2024 53,751 $ 54 $ 400,769 $ 738,499 $ ( 207,077 ) $ 932,245 Three Months Ended September 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 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 loss — — — ( 6,265 ) — ( 6,265 ) Other comprehensive loss — — — — ( 47,263 ) ( 47,263 ) Balance at September 30, 2023 52,415 $ 52 $ 368,222 $ 793,907 $ ( 367,060 ) $ 795,121 See notes to unaudited consolidated financial statements 4 Table of Contents GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED) (UNAUDITED) Nine Months Ended September 30, 2024 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, 2023 52,816 $ 53 $ 375,980 $ 770,304 $ ( 286,987 ) $ 859,350 Common stock issued under stock plans, net of withholdings and related tax effects 935 1 730 — — 731 Stock-based compensation — — 24,059 — — 24,059 Net loss — — — ( 31,805 ) — ( 31,805 ) Other comprehensive income — — — — 79,910 79,910 Balance at September 30, 2024 53,751 $ 54 $ 400,769 $ 738,499 $ ( 207,077 ) $ 932,245 Nine Months Ended September 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 741 — ( 85 ) — — ( 85 ) Stock-based compensation — — 27,732 — — 27,732 Net income — — — 30,325 — 30,325 Other comprehensive loss — — — — ( 44,332 ) ( 44,332 ) Balance at September 30, 2023 52,415 $ 52 $ 368,222 $ 793,907 $ ( 367,060 ) $ 795,121 See notes to unaudited consolidated financial statements 5 Table of Contents GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, 2024 2023 (In thousands) Operating activities Net (loss) income $ ( 31,805 ) $ 30,325 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization of property, equipment and internal-use software 47,732 42,306 Amortization of intangible assets 16,295 18,593 Provision for uncollectible overdrawn accounts from purchase transactions 15,509 7,356 Provision for loan losses 22,471 21,404 Stock-based compensation 24,059 27,732 Losses in equity method investments 11,931 9,286 Amortization of discount on available-for-sale investment securities ( 1,614 ) ( 1,724 ) Impairment of long-lived assets 4,944 — Other ( 1,810 ) ( 3,128 ) Changes in operating assets and liabilities: Accounts receivable, net 9,997 1,081 Prepaid expenses and other assets 16,024 8,385 Deferred expenses 320 12,946 Accounts payable and other accrued liabilities ( 24,534 ) ( 15,505 ) Deferred revenue 157 ( 19,363 ) Income tax receivable/payable ( 4,803 ) ( 7,859 ) Other, net ( 478 ) 613 Net cash provided by operating activities 104,395 132,448 Investing activities Purchases of available-for-sale investment securities ( 11,845 ) — Proceeds from maturities of available-for-sale securities 154,682 131,559 Proceeds from sales and calls of available-for-sale securities 273 197 Payments for property, equipment and internal-use software ( 52,168 ) ( 55,501 ) Net changes in loans ( 24,366 ) ( 21,562 ) Investment in TailFin Labs, LLC ( 35,000 ) ( 35,000 ) Proceeds from other investments 55,088 — Other investing activities ( 846 ) ( 1,273 ) Net cash provided by investing activities 85,818 18,420 Financing activities Borrowings on notes payable 44,551 — Borrowings on revolving line of credit 238,000 153,000 Repayments on revolving line of credit ( 299,000 ) ( 161,000 ) Proceeds from exercise of options and ESPP purchases 2,719 3,415 Taxes paid related to net share settlement of equity awards ( 1,988 ) ( 3,500 ) Net changes in deposits 547,477 ( 238,417 ) Net changes in settlement assets and obligations to customers 46,013 ( 8,776 ) Deferred financing costs ( 894 ) — Net cash provided by (used in) financing activities 576,878 ( 255,278 ) Net increase (decrease) in unrestricted cash, cash equivalents and restricted cash 767,091 ( 104,410 ) Unrestricted cash, cash equivalents and restricted cash, beginning of period 686,502 819,845 Unrestricted cash, cash equivalents and restricted cash, end of period $ 1,453,593 $ 715,435 Cash paid for interest $ 9,896 $ 3,615 Cash paid for income taxes $ 6,003 $ 17,100 Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period: Unrestricted cash and cash equivalents $ 1,453,549 $ 711,399 Restricted cash 44 4,036 Total unrestricted cash, cash equivalents and restricted cash, end of period $ 1,453,593 $ 715,435 See notes to unaudited consolidated financial statements 6 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1— Organization Green Dot Corporation (“we,” “our,” or “us” refer to Green Dot Corporation and its consolidated subsidiaries) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Our technology platform enables us to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money, and making financial empowerment more accessible for all. Through Green Dot Bank, our wholly-owned subsidiary, we offer a suite of financial products to consumers and businesses including debit, prepaid, checking, credit, prepaid, and payroll cards, as well as robust money processing services, such as tax refund processing, cash deposits and disbursements. We were incorporated in Delaware in 1999 and became a bank holding company under the Bank Holding Company Act and a member bank of the Federal Reserve System in December 2011. Note 2— Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP. We consolidated our wholly-owned subsidiaries and eliminated all significant intercompany balances and transactions. We have also prepared the accompanying unaudited consolidated financial statements in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X and, consequently, they do not include all of the annual disclosures required by GAAP. 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 previously disclosed significant accounting policies during the nine months ended September 30, 2024. 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. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These financial statements were prepared using information reasonably available as of September 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. Actual results may differ from these estimates due to a variety of factors, including those identified under Part II, Item 1A. "Risk Factors" in this report. 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. 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. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. 7 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 3— Revenues As discussed in Note 19 — Segment Informatio n, we determine our operating segments based on how our chief operating decision maker manages our operations, makes operating decisions and evaluates operating performance. Within our segments, we believe that the nature, amount, timing and uncertainty of our revenue and cash flows and how they are affected by economic factors can be further illustrated based on the timing in which revenue for each of our products and services is recognized. Our products and services are offered to customers within the United States and certain U.S. territories. The following tables disaggregate our revenues earned from external customers by each of our reportable segments: Three Months Ended September 30, 2024 Consumer Services B2B Services Money Movement Services Total Timing of recognition (In thousands) Transferred point in time $ 70,325 $ 38,617 $ 33,965 $ 142,907 Transferred over time 25,251 224,647 861 250,759 Operating revenues (1) $ 95,576 $ 263,264 $ 34,826 $ 393,666 Three Months Ended September 30, 2023 Consumer Services B2B Services Money Movement Services Total Timing of recognition (In thousands) Transferred point in time $ 76,722 $ 35,383 $ 31,196 $ 143,301 Transferred over time 38,363 162,074 893 201,330 Operating revenues (1) $ 115,085 $ 197,457 $ 32,089 $ 344,631 Nine Months Ended September 30, 2024 Consumer Services B2B Services Money Movement Services Total Timing of recognition (In thousands) Transferred point in time $ 210,797 $ 108,369 $ 195,914 $ 515,080 Transferred over time 76,837 631,067 2,415 710,319 Operating revenues (1) $ 287,634 $ 739,436 $ 198,329 $ 1,225,399 Nine Months Ended September 30, 2023 Consumer Services B2B Services Money Movement Services Total Timing of recognition (In thousands) Transferred point in time $ 253,500 $ 103,745 $ 177,898 $ 535,143 Transferred over time 124,154 444,552 2,406 571,112 Operating revenues (1) $ 377,654 $ 548,297 $ 180,304 $ 1,106,255 (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. 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. Revenues recognized over time consists of new card fees, monthly maintenance fees, revenue earned from gift cards and substantially all BaaS (as defined herein) partner program management service fees. 8 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 3—Revenues (continued) As presented on our consolidated balance sheets, we record deferred revenue for any upfront payments received in advance of our performance obligations being satisfied. These contract liabilities consist principally of unearned new card fees and monthly maintenance fees. We recognized approximately $ 0.2 million and $ 0.7 million in revenue for the three months ended September 30, 2024 and 2023, respectively, and $ 3.7 million and $ 22.6 million for the nine months ended September 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. Note 4— Investment Securities Our available-for-sale investment securities were as follows: Amortized cost Gross unrealized gains Gross unrealized losses Fair value (In thousands) September 30, 2024 Corporate bonds $ 10,000 $ — $ ( 157 ) $ 9,843 Agency bond securities 240,582 — ( 32,480 ) 208,102 Agency mortgage-backed securities 2,196,117 45 ( 274,047 ) 1,922,115 Municipal bonds 29,121 — ( 5,121 ) 24,000 Total investment securities $ 2,475,820 $ 45 $ ( 311,805 ) $ 2,164,060 December 31, 2023 Corporate bonds $ 10,000 $ — $ ( 374 ) $ 9,626 Agency bond securities 240,447 — ( 40,217 ) 200,230 Agency mortgage-backed securities 2,337,411 — ( 333,901 ) 2,003,510 Municipal bonds 29,408 — ( 5,773 ) 23,635 Total investment securities $ 2,617,266 $ — $ ( 380,265 ) $ 2,237,001 As of September 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 Fair value Unrealized loss Fair value Unrealized loss (In thousands) September 30, 2024 Corporate bonds $ — $ — $ 9,843 $ ( 157 ) $ 9,843 $ ( 157 ) Agency bond securities — — 208,102 ( 32,480 ) 208,102 ( 32,480 ) Agency mortgage-backed securities 8,120 ( 87 ) 1,905,138 ( 273,960 ) 1,913,258 ( 274,047 ) Municipal bonds — — 24,000 ( 5,121 ) 24,000 ( 5,121 ) Total investment securities $ 8,120 $ ( 87 ) $ 2,147,083 $ ( 311,718 ) $ 2,155,203 $ ( 311,805 ) December 31, 2023 Corporate bonds $ — $ — $ 9,626 $ ( 374 ) $ 9,626 $ ( 374 ) Agency bond securities — — 200,230 ( 40,217 ) 200,230 ( 40,217 ) Agency mortgage-backed securities — — 2,001,270 ( 333,901 ) 2,001,270 ( 333,901 ) Municipal bonds — — 23,636 ( 5,773 ) 23,636 ( 5,773 ) Total investment securities $ — $ — $ 2,234,762 $ ( 380,265 ) $ 2,234,762 $ ( 380,265 ) 9 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 4—Investment Securities (continued) Our investments generally consist of highly rated securities, substantially all of which are directly or indirectly backed by the U.S. federal government, as our investment policy restricts our investments to highly liquid, low credit risk assets. As such, we have not recorded any meaningful credit-related impairment losses during the three and nine months ended September 30, 2024 or 2023 on our available-for-sale investment securities. Unrealized losses as of September 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 September 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. As of September 30, 2024, the contractual maturities of our available-for-sale investment securities were as follows: Amortized cost Fair value (In thousands) Due in one year or less $ 43,525 $ 43,257 Due after one year through five years 81,357 74,326 Due after five years through ten years 134,225 114,721 Due after ten years 54,121 43,055 Mortgage and asset-backed securities 2,162,592 1,888,701 Total investment securities $ 2,475,820 $ 2,164,060 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. Note 5— Accounts Receivable Accounts receivable, net consisted of the following: September 30, 2024 December 31, 2023 (In thousands) Trade receivables $ 34,535 $ 29,786 Reserve for uncollectible trade receivables ( 74 ) ( 109 ) Net trade receivables 34,461 29,677 Overdrawn accountholder balances from purchase transactions 7,942 9,565 Reserve for uncollectible overdrawn accounts from purchase transactions ( 2,489 ) ( 5,281 ) Net overdrawn accountholder balances from purchase transactions 5,453 4,284 Accountholder fees 2,521 2,564 Receivables due from card issuing banks 1,951 1,768 Fee advances, net 8,874 41,974 Other receivables 31,375 29,874 Accounts receivable, net $ 84,635 $ 110,141 10 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 5—Accounts Receivable (continued) Activity in the reserve for uncollectible overdrawn accounts from purchase transactions consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Balance, beginning of period $ 2,737 $ 2,692 $ 5,281 $ 2,230 Provision for uncollectible overdrawn accounts from purchase transactions 4,248 1,827 15,509 7,356 Charge-offs ( 4,496 ) ( 2,361 ) ( 18,301 ) ( 7,428 ) Balance, end of period $ 2,489 $ 2,158 $ 2,489 $ 2,158 Note 6— Loans to Bank Customers The following table presents total outstanding loans, gross of the related allowance for credit losses, and a summary of the related payment status: 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Total Current or Less Than 30 Days Past Due Total Outstanding (In thousands) September 30, 2024 Residential $ — $ — $ — $ — $ 6,419 $ 6,419 Commercial — — — — 2,574 2,574 Installment — — — — 4,737 4,737 Consumer 1,832 — — 1,832 26,123 27,955 Secured credit card 776 791 2,555 4,122 5,351 9,473 Total loans $ 2,608 $ 791 $ 2,555 $ 5,954 $ 45,204 $ 51,158 Percentage of outstanding 5.1 % 1.6 % 5.0 % 11.6 % 88.4 % 100.0 % December 31, 2023 Residential $ — $ — $ — $ — $ 5,095 $ 5,095 Commercial — — — — 2,716 2,716 Installment — — — — 4,357 4,357 Consumer 2,066 — — 2,066 17,953 20,019 Secured credit card 796 774 2,575 4,145 5,585 9,730 Total loans $ 2,862 $ 774 $ 2,575 $ 6,211 $ 35,706 $ 41,917 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 account balance. When overdrawn, the purchase related balances due on these deposit accounts are reclassified as consumer loans. Fees due from our accountholders for our overdraft service are included as a component of accounts receivable. 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. These loans are included in the long-term portion of prepaid and other assets on our consolidated balance sheets. Changes in valuation allowances are recorded as a component of other income and expenses on our consolidated statement of operations. As of September 30, 2024 and December 31, 2023, the fair value of the loans held for sale amounted to approximately $ 4.0 million and $ 4.7 million, respectively. 11 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 6—Loans to Bank Customers (continued) Nonperforming Loans The following table presents the carrying value, gross of the related allowance for credit losses, of our nonperforming loans. 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. September 30, 2024 December 31, 2023 (In thousands) Residential $ 37 $ 49 Installment — 79 Secured credit card 2,555 2,575 Total loans $ 2,592 $ 2,703 Credit Quality Indicators We closely monitor and assess the credit quality and credit risk of our loan portfolio on an ongoing basis. We continuously review and update loan risk classifications. We evaluate our loans using non-classified or classified as the primary credit quality indicator. Classified loans include those designated as substandard, doubtful, or loss, consistent with regulatory guidelines. Secured credit card loans are considered classified if they are greater than 90 days past due. However, our secured credit card portfolio is collateralized by cash deposits made by each accountholder in an amount equal to the user's available credit limit, which mitigates the risk of any significant credit losses we expect to incur. 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: September 30, 2024 December 31, 2023 Non-Classified Classified Non-Classified Classified (In thousands) Residential $ 6,382 $ 37 $ 5,046 $ 49 Commercial 2,574 — 2,716 — Installment 4,737 — 4,278 79 Consumer 27,955 — 20,019 — Secured credit card 6,918 2,555 7,155 2,575 Total loans $ 48,566 $ 2,592 $ 39,214 $ 2,703 Allowance for Credit Losses Activity in the allowance for credit losses on our loan portfolio consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Balance, beginning of period $ 17,360 $ 12,641 $ 11,383 $ 9,078 Provision for loans 5,724 5,664 22,471 21,397 Loans charged off ( 5,340 ) ( 2,825 ) ( 16,240 ) ( 15,074 ) Recoveries of loans previously charged off 34 72 164 151 Balance, end of period $ 17,778 $ 15,552 $ 17,778 $ 15,552 12 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 7— Equity Method Investments On January 2, 2020, we effectuated our agreement with Walmart to jointly establish a new fintech accelerator under the name TailFin Labs, LLC (“TailFin Labs”), with a mission to develop innovative products, services and technologies that sit at the intersection of retail shopping and consumer financial services. The entity is majority-owned by Walmart and focuses on developing tech-enabled solutions to integrate omni-channel retail shopping and financial services. We hold a 20 % ownership interest in the entity, in exchange for annual capital contributions of $ 35.0 million per year from January 2020 through January 2024. Our final payment under this commitment was made in January 2024. We account for our investment in TailFin Labs under the equity method of accounting in accordance with ASC 323 , Investments – Equity Method and Joint Ventures . Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for, among other things, its proportionate share of earnings or losses. However, given the capital structure of the TailFin Labs arrangement, we apply the Hypothetical Liquidation Book Value ("HLBV") method to determine the allocation of profits and losses since our liquidation rights and priorities, as defined by the agreement, differ from our underlying ownership interest. The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation provisions of the agreement if the partnership was to be liquidated at book value as of the balance sheet date. Each partner’s allocation of income or loss in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions. 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 September 30, 2024 and December 31, 2023, our net investment in TailFin Labs amounted to approximately $ 132.1 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 $ 4.4 million and $ 0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $ 12.3 million and $ 8.0 million for the nine months ended September 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 September 30, 2024 and December 31, 2023, respectively. Equity in earnings from this investment for the three and nine months ended September 30, 2024 and 2023 were not significant. Note 8— Deposits Deposits are categorized as non-interest bearing or interest-bearing deposit accounts as follows: September 30, 2024 December 31, 2023 (In thousands) Non-interest bearing deposit accounts $ 3,734,889 $ 3,214,881 Interest-bearing deposit accounts Checking accounts 86,939 61,679 Savings 6,200 6,077 Secured card deposits 3,877 4,967 Time deposits, denominations greater than or equal to $250 2,185 1,998 Time deposits, denominations less than $250 3,816 4,001 Total interest-bearing deposit accounts 103,017 78,722 Total deposits $ 3,837,906 $ 3,293,603 13 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 8—Deposits (continued) The scheduled contractual maturities for total time deposits are presented in the table below: September 30, 2024 (In thousands) Due in 2024 $ 1,679 Due in 2025 1,442 Due in 2026 830 Due in 2027 1,048 Due in 2028 929 Thereafter 73 Total time deposits $ 6,001 Note 9— Debt Senior Unsecured Notes In September 2024, we issued and sold senior unsecured notes (the "Notes") in an aggregate principal amount of $ 45 million. The Notes have a five-year term, maturing September 15, 2029. The principal amounts bear interest at a fixed rate of 8.75 % per annum, payable semi-annually in arrears. Prior to March 15, 2029, we may redeem at our option, the Notes in whole or in part at any time at a redemption price equal to 100% of the outstanding principal amount to be redeemed, together with accrued but unpaid interest thereon, plus a make-whole amount. On and after March 15, 2029, we may redeem the Notes at 100% of the principal amount, plus accrued and unpaid interest thereon. The Notes are unsecured, senior obligations and are not guaranteed by any of our subsidiaries. The Notes are junior in right of payment to existing and future secured indebtedness. As of September 30, 2024, we were in compliance with all affirmative and negative non-financial covenants thereunder. The net proceeds of the offering were used to repay outstanding indebtedness under our revolving credit facility discussed below, and for general corporate purposes. The following table provides the outstanding long-term debt balance, at amortized cost: September 30, 2024 (In thousands) Senior unsecured notes $ 45,000 Less: Unamortized discount and issuance costs ( 1,325 ) Notes payable, net of unamortized discount and issuance costs $ 43,675 In October 2024, we issued and sold additional Notes in an aggregate principal amount of $ 5 million. 2019 Revolving Facility In October 2019, we entered into a secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto. The credit agreement provided for a $ 100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), which matured in October 2024. As of September 30, 2024, the then-outstanding balance on the 2019 Revolving Facility was repaid in full, and the 2019 Revolving Facility terminated at its maturity date. We incurred total cash interest expense on our debt during the three months ended September 30, 2024 and 2023 of approximately $ 1.5 million and $ 0.2 million, respectively and during the nine months ended September 30, 2024 and 2023 of $ 4.2 million and $ 2.0 million, respectively. 14 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 10— Income Taxes Income tax expense for the nine months ended September 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: Nine Months Ended September 30, 2024 2023 U.S. federal statutory tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 6.1 1.7 Foreign tax rate differential 1.4 ( 0.6 ) General business credits 11.6 ( 4.5 ) IRC 162(m) limitation 3.8 1.1 Stock-based compensation ( 10.0 ) 7.1 Bank owned life insurance income 2.8 ( 1.5 ) Bank owned life insurance surrender ( 7.4 ) — Nondeductible expenses and penalties ( 32.3 ) 0.3 Global intangible low-tax income tax ( 1.5 ) 0.8 Other ( 0.1 ) 0.2 Effective tax rate ( 4.6 ) % 25.6 % The effective tax rate for the nine months ended September 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 nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 is primarily due to the impact of a decrease of $ 1.6 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 $ 2.5 million in state income taxes, net of federal benefits, and the impact of general business credits. These decreases were partially offset by a $ 0.2 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 surrender of our existing bank owned life insurance policies which resulted in a tax charge of $ 1.5 million and surrender penalties of $ 0.7 million during the nine months ended September 30, 2024. We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $ 3.0 million for the nine months ended September 30, 2024, compared to a $ 2.8 million discrete tax expense for the prior year comparable period. The increase in nondeductible expenses and penalties for the nine months ended September 30, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order (defined below) 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 nine months ended September 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 September 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 (the "IRS"), and various state tax authorities. We remain subject to examination of our federal income tax returns for the years ended December 31, 2017 through 2023. We generally remain subject to examination of our various state income tax returns for a period of four to five years from the respective dates that the returns were filed. 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 September 30, 2024. We do not expect that this examination will have a material impact on our consolidated financial statements. 15 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 10—Income Taxes (continued) As of September 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. Of our total state net operating loss carryforwards, approximately $ 59.0 million will expire between 2026 and 2042, while the remaining balance of approximately $ 49.1 million does not expire and carries forward indefinitely. The net operating losses are subject to an annual IRC Section 382 limitation, which restricts their utilization against taxable income in future periods. 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 September 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: Nine Months Ended September 30, 2024 2023 (In thousands) Beginning balance $ 12,109 $ 11,178 Increases related to positions taken during prior years 1,380 1,500 Decreases related to positions settled with tax authorities ( 86 ) ( 90 ) Ending balance $ 13,403 $ 12,588 The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 12,884 $ 12,129 As of September 30, 2024 and 2023, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 1.8 million and $ 1.3 million, respectively. Note 11— Stockholders' Equity Stock Repurchase Program In February 2022, our Board of Directors authorized a $ 100 million increase to our stock repurchase program. As of September 30, 2024, we had an authorized $ 4.5 million remaining under our stock repurchase program for additional repurchases. There were no repurchases during the nine months ended September 30, 2024. Note 12— Stock-Based Compensation We currently grant restricted stock unit awards to employees, directors and non-employee consultants under our 2010 Equity Incentive Plan and from time to time may also grant stock option awards. Through our 2010 Employee Stock Purchase Plan, employees are also able to purchase shares of our Class A common stock at a discount through payroll deductions. We have reserved shares of our Class A common stock for issuance under these plans. The total stock-based compensation expense recognized was $ 8.2 million and $ 7.9 million for the three months ended September 30, 2024 and 2023, respectively, and $ 24.1 million and $ 27.7 million for the nine months ended September 30, 2024 and 2023, respectively. Restricted Stock Units Restricted stock unit activity for awards subject to only service conditions was as follows for the nine months ended September 30, 2024: Shares Weighted-Average Grant-Date Fair Value (In thousands, except per share data) Outstanding at December 31, 2023 2,048 $ 21.66 Restricted stock units granted 2,233 9.16 Restricted stock units vested ( 768 ) 26.15 Restricted stock units canceled ( 182 ) 20.93 Outstanding at September 30, 2024 3,331 $ 12.28 16 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 12—Stock-Based Compensation (continued) Performance-Based Restricted Stock Units Performance-based restricted stock unit activity for the nine months ended September 30, 2024 was as follows: Shares Weighted-Average Grant-Date Fair Value (In thousands, except per share data) Outstanding at December 31, 2023 988 $ 22.88 Performance restricted stock units granted 996 8.98 Performance restricted stock units vested ( 2 ) 50.23 Performance restricted stock units canceled ( 88 ) 24.59 Outstanding at September 30, 2024 1,894 $ 15.47 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"). The actual number of shares subject to the award is determined at the end of the performance period and may range from 0 % to 200 % of the target shares granted depending upon the terms of the award. Compensation expense related to these awards is recognized using the accelerated attribution method over the vesting period based on the grant date fair value of the award. Stock Options Total stock option activity for the nine months ended September 30, 2024 was as follows: Options Weighted-Average Exercise Price (In thousands, except per share data) Outstanding at December 31, 2023 1,010 $ 23.78 Options canceled ( 10 ) 18.80 Outstanding at September 30, 2024 1,000 $ 23.83 Exercisable at September 30, 2024 1,000 $ 23.83 17 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands, except per share data) Basic earnings (loss) per Class A common share Numerator: Net (loss) income $ ( 7,840 ) $ ( 6,265 ) $ ( 31,805 ) $ 30,325 Denominator: Weighted-average Class A shares issued and outstanding 53,722 52,367 53,373 52,127 Basic (loss) earnings per Class A common share $ ( 0.15 ) $ ( 0.12 ) $ ( 0.60 ) $ 0.58 Diluted earnings (loss) per Class A common share Numerator: Net (loss) income allocated to Class A common stockholders $ ( 7,840 ) $ ( 6,265 ) $ ( 31,805 ) $ 30,325 Denominator: Weighted-average Class A shares issued and outstanding 53,722 52,367 53,373 52,127 Dilutive potential common shares: Service-based restricted stock units — — — 173 Performance-based restricted stock units — — — 75 Employee stock purchase plan — — — 61 Diluted weighted-average Class A shares issued and outstanding 53,722 52,367 53,373 52,436 Diluted (loss) earnings per Class A common share $ ( 0.15 ) $ ( 0.12 ) $ ( 0.60 ) $ 0.58 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. The following table shows the weighted-average number of anti-dilutive shares excluded from the diluted EPS calculation: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Class A common stock Options to purchase Class A common stock 1,000 1,024 1,005 1,071 Service-based restricted stock units 829 694 1,020 807 Performance-based restricted stock units — 365 41 318 Total 1,829 2,083 2,066 2,196 18 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 14— Fair Value Measurements Under applicable accounting guidance, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We determine the fair values of our financial instruments based on the fair value hierarchy established under applicable accounting guidance, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value. 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 September 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 September 30, 2024 (In thousands) Assets Investment securities: Corporate bonds $ — $ 9,843 $ — $ 9,843 Agency bond securities — 208,102 — 208,102 Agency mortgage-backed securities — 1,922,115 — 1,922,115 Municipal bonds — 24,000 — 24,000 Loans held for sale — — 4,028 4,028 Total assets $ — $ 2,164,060 $ 4,028 $ 2,168,088 December 31, 2023 Assets Investment securities: Corporate bonds $ — $ 9,626 $ — $ 9,626 Agency bond securities — 200,230 — 200,230 Agency mortgage-backed securities — 2,003,510 — 2,003,510 Municipal bonds — 23,635 — 23,635 Loans held for sale — — 4,735 4,735 Total assets $ — $ 2,237,001 $ 4,735 $ 2,241,736 We based the fair value of our fixed income securities held as of September 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 nine months ended September 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. 19 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 15— Fair Value of Financial Instruments The following describes the valuation technique for determining the fair value of financial instruments, whether or not such instruments are carried at fair value on our consolidated balance sheets. Short-term Financial Instruments Our short-term financial instruments consist principally of unrestricted and restricted cash and cash equivalents, settlement assets and obligations, and obligations to customers . These financial instruments are short-term in nature, and, accordingly, we believe their carrying amounts approximate their fair values. Under the fair value hierarchy, these instruments are classified as Level 1. Investment Securities The fair values of investment securities have been derived using methodologies referenced in 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 . Under the fair value hierarchy, our investment securities are classified as Level 2. Loans We determined the fair values of loans by discounting both principal and interest cash flows expected to be collected using a discount rate commensurate with the risk that we believe a market participant would consider in determining fair value. Under the fair value hierarchy, our loans are classified as Level 3. Deposits The fair value of demand and interest checking deposits and savings deposits is the amount payable on demand at the reporting date. We determined the fair value of time deposits by discounting expected future cash flows using market-derived rates based on our market yields on certificates of deposit, by maturity, at the measurement date. Under the fair value hierarchy, our deposits are classified as Level 2. Debt The fair value of the Notes is based on borrowing rates currently available to a market participant for loans with similar terms, maturity and credit risk. The carrying amount of our outstanding Notes at September 30, 2024 approximates fair value because the interest rate charged is commensurate with current market rates for issuers of similar risk. The fair value of the Notes are classified as a Level 2 liability in the fair value hierarchy. 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 September 30, 2024 and December 31, 2023 are presented in the table below. September 30, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Financial Assets Loans to bank customers, net of allowance $ 33,380 $ 33,138 $ 30,534 $ 30,307 Financial Liabilities Deposits $ 3,837,906 $ 3,837,856 $ 3,293,603 $ 3,293,526 20 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 16— Leases Our leases consist of operating lease agreements principally related to our corporate and subsidiary office locations. Currently, we do not enter into any financing lease agreements. Our leases have remaining lease terms of less than 1 year to approximately 8 years, most of which generally include renewal options of varying terms. Our total lease expense amounted to approximately $ 1.0 million and $ 0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $ 2.8 million for each of the nine months ended September 30, 2024 and 2023. Our lease expense is generally based on fixed payments stated within the agreements. Any variable payments for non-lease components and other short term lease expenses are not considered material. Additional Information Additional information related to our right of use assets and related lease liabilities is as follows: September 30, 2024 Cash paid for operating lease liabilities (in thousands) $ 2,689 Weighted average remaining lease term (years) 4.44 Weighted average discount rate 5.1 % Maturities of our operating lease liabilities as of September 30, 2024 are as follows: Operating Leases (In thousands) Remainder of 2024 $ 985 2025 1,402 2026 476 2027 408 2028 275 Thereafter 1,175 Total 4,721 Less: imputed interest ( 535 ) Total lease liabilities $ 4,186 Note 17— Commitments and Contingencies 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, 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. As previously disclosed, on July 19, 2024, we and our subsidiary bank received a consent order (the "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 On December 18, 2019, an alleged class action entitled Koffsmon v. Green Dot Corp., et al. , No. 19-cv-10701-DDP-E, was filed in the United States District Court for the Central District of California, against us and two of our former officers. The suit asserts purported claims under Sections 10(b) and 20(a) of the Exchange Act for allegedly misleading statements regarding our business strategy. Plaintiff alleges that defendants made statements that were 21 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 17—Commitments and Contingencies (continued) misleading because they allegedly failed to disclose details regarding our customer acquisition strategy and its impact on our financial performance. 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. On October 6, 2021, the Court appointed the New York Hotel Trades Council & Hotel Association of New York City, Inc. Pension Fund as lead plaintiff, and on April 1, 2022, plaintiff filed its First Amended Complaint. Defendants filed a motion to dismiss the First Amended Complaint on May 31, 2022, and the motion was denied on March 29, 2024. On February 18, 2020, a putative shareholder derivative action entitled Hellman v. Streit, et al. , No. 20-cv-01572-SVW-PVC 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 and unjust enrichment, as well as claims under Sections 10(b), 14(a) and 20(a) of the Exchange Act, based largely on the allegations made in the Koffsmon action. The Hellman action seeks to recover, among other things, unspecified compensatory damages on behalf of the company. 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. , No. 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. A first amended complaint was filed on September 27, 2024. 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 Consent Order from the Federal Reserve Board. The DiBlasio action seeks to recover, among other things, unspecified compensatory damages on behalf of the company. Pursuant to a stipulated agreement between the parties, the DiBlasio action is stayed through the close of discovery in the Koffsmon action. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of these matters. 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. Other Legal Matters We monitor the laws of all 50 states to identify state laws or regulations that apply (or may apply) to our products and services. We have obtained money transmitter licenses (or similar such licenses) where applicable, based on advice of counsel or when we have been requested to do so. 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. From time to time, we enter into contracts containing provisions that contingently require us to indemnify various parties against claims from third parties. These contracts primarily relate to: (i) contracts with our card issuing banks, under which we are responsible to them for any unrecovered overdrafts on accountholders’ balances; (ii) certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities, and other claims arising from our use of the premises; (iii) certain agreements with our officers, directors, and employees, under which we may be required to indemnify these persons for liabilities arising out of their relationship with us; 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. Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. With the exception of overdrafts on accountholders’ balances, historically, we have not been required to make payments under these and similar contingent obligations, and no liabilities have been recorded for these obligations in our consolidated balance sheets. For additional information regarding overdrafts on accountholders’ balances, refer to Note 5 — Accounts Receivable. 22 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 18— Significant Retailer and Partner Concentration A credit concentration may exist if customers are involved in similar industries, economic sectors, and geographic regions. Our retail distributors operate in similar economic sectors, but diverse domestic geographic regions. 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 at least 10% of our total operating revenues were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Walmart 10 % 17 % 10 % 17 % In addition, approximately 59 % and 47 % of our total operating revenues for the three months ended September 30, 2024 and 2023, respectively, and 53 % and 39 % for the nine months ended September 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 Our Chief Operating Decision Maker (our "CODM" who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses. Our operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services, and 3) Money Movement Services. 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"). 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 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. Our money processing services, such as cash deposit and disbursements, are marketed to third-party banks, program managers, and other companies seeking cash deposit and disbursement capabilities for their customers. Those customers, including our own accountholders, can access our cash deposit and disbursement services at any of the locations within our network of retail distributors and neighborhood Financial Service Centers. We market our tax-related financial services through a network of tax preparation franchises, independent tax professionals and online tax preparation providers. 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. These costs are not considered when our CODM evaluates the performance of our three reportable segments since they are not directly attributable to any reporting segment. Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges, and other non-recurring expenses that are not considered by our CODM when evaluating our overall consolidated financial results are excluded from our unallocated corporate expenses 23 Table of Contents GREEN DOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Note 19—Segment Information (continued) above. We do not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented. The following tables present financial information for each of our reportable segments for the periods then ended: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Segment Revenue (In thousands) Consumer Services $ 98,046 $ 118,204 $ 295,278 $ 387,128 B2B Services 276,402 199,206 769,658 551,150 Money Movement Services 31,854 32,089 187,967 180,304 Corporate and Other ( 283 ) ( 928 ) 3,095 3,496 Total segment revenues 406,019 348,571 1,255,998 1,122,078 BaaS commissions and processing expenses 4,346 5,168 14,492 15,346 Other income ( 622 ) ( 710 ) ( 1,638 ) ( 2,139 ) Total operating revenues $ 409,743 $ 353,029 $ 1,268,852 $ 1,135,285 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Segment Profit (In thousands) Consumer Services $ 39,389 $ 42,426 $ 107,097 $ 139,450 B2B Services 27,736 18,883 65,097 58,808 Money Movement Services 12,717 12,850 113,855 103,650 Corporate and Other ( 51,527 ) ( 50,424 ) ( 164,504 ) ( 156,761 ) Total segment profit 28,315 23,735 121,545 145,147 Reconciliation to (loss) income before income taxes Depreciation and amortization of property, equipment and internal-use software 15,473 14,720 47,732 42,307 Stock based compensation and related employer taxes 8,210 7,966 24,429 28,255 Amortization of acquired intangible assets 5,246 5,648 16,295 18,593 Impairment charges 8 — 8,528 — Legal settlements and related expenses 869 545 32,896 1,964 Other expense 1,441 1,695 7,710 5,086 Operating (loss) income ( 2,932 ) ( 6,839 ) ( 16,045 ) 48,942 Interest expense, net 1,577 239 4,306 2,121 Other expense, net ( 3,705 ) ( 802 ) ( 10,045 ) ( 6,050 ) (Loss) income before income taxes $ ( 8,214 ) $ ( 7,880 ) $ ( 30,396 ) $ 40,771 24 Table of Contents