GREEN DOT CORP 10-K

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, (the "Securities Act") and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified above, under “Part I, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason. In this Annual Report, unless otherwise specified or the context otherwise requires, “Green Dot,” “we,” “us,” and “our” refer to Green Dot Corporation and its consolidated subsidiaries. Overview Green Dot Corporation is a financial technology platform and registered bank holding company ("BHC") that builds banking and payment solutions to create value, retain and reward customers, and accelerate growth for businesses of all sizes. For more than two decades, we have delivered financial tools and services that address the most pressing financial needs of consumers and businesses, and that transform the way people and businesses manage and move money. Through Green Dot Bank, our wholly-owned subsidiary, we deliver a broad spectrum of financial products to consumers and businesses through our portfolio of brands, including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, such as tax refunds, cash deposits and disbursements. 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, transaction losses and fraud management, and customer support and related expenses. Our operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services, and 3) Money Movement Services. 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 that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses. Refer to " Part I, Item 1. Business " for more detailed information about our operations and Note 24—Segment Information to the Consolidated Financial Statements. Consolidated Financial Results and Trends Our consolidated results of operations for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Change % (In thousands, except percentages) Total operating revenues $ 1,723,876 $ 1,501,328 $ 222,548 14.8 % Total operating expenses 1,725,544 1,478,658 246,886 16.7 % Net (loss) income (26,702) 6,722 (33,424) (497.2) % Refer to "Segment Results" below for a summary of financial results of each of our reportable segments. 32 Table of Contents Total operating revenues Our total operating revenues for the year ended December 31, 2024 increased $222.5 million , or 15% over the prior year comparable period, driven primarily by higher revenues in our B2B Services segment and to a lesser extent in our Money Movement Services segment, partially offset by lower revenues earned in our Consumer Services segment. Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which generated an increase in our total gross dollar volume of 33% for the year ended December 31, 2024. However, as discussed below, our total operating revenues were negatively impacted by unfavorable trends and factors in our deposit account programs that reduced the average number of consolidated active accounts, purchase volume and number of cash transfers for the year ended December 31, 2024 by 5% , 10% and 5%, respectively, from the prior year comparable period. In our Consumer Services segment, revenues decreased during the year ended December 31, 2024 by 19% from the prior year comparable period. Gross dollar volume and purchase volume declined for the year ended December 31, 2024 by 16% and 19%, respectively, and the average number of active accounts and direct deposit accounts for the fiscal year declined by 18% and 19%, respectively. We believe these decreases in our Consumer Services segment are attributable to several factors, including our decision to wind-down many of our legacy accountholder programs in support of GO2bank, macro-economic factors affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations, and the non-renewal of one of our retail partner programs in a prior period. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, new card fees, ATM fees and interchange fees. Revenues within this segment were also adversely impacted by a decrease in breakage revenue on our gift card portfolios for the comparable period. In our B2B Services segment, revenues increased by 40% during the year ended December 31, 2024 over the prior year comparable period. The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the year ended December 31, 2024 by 45%, and to a lesser extent, growth in purchase volume, which also increased year-over-year by 9%. The average number of active accounts for the year ended December 31, 2024 increased by 15% over the prior year comparable period. The growth in gross dollar volume was driven primarily by certain BaaS programs that do not generate interchange fees and resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, partially offset by the non-renewals of certain other BaaS partners in prior periods. In our Money Movement Services segment, revenues increased for the year ended December 31, 2024 by 4% from the prior year comparable period. The increase in revenues was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased by 2% during the year ended December 31, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a 5% decline in the number of cash transfers processed during the year ended December 31, 2024 from the prior year comparable period. The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment as discussed above. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs. We continued to experience an increase in the number of cash transfers processed for third-party programs, which has grown steadily on a year-over-year basis, and represented the majority of our total cash transfers as of December 31, 2024. Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 67% for the year ended December 31, 2024 from the prior year comparable period. The increase in net interest income was the result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue). 33 Table of Contents Total operating expenses Our total operating expenses for the year ended December 31, 2024 increased $246.9 million, or 17%, over the prior year comparable period. The increase in our total operating expenses was driven primarily by an increase in processing expenses within our B2B Services segment, and to a lesser extent, a net increase in compensation and benefits expenses and other general and administrative expenses, partially offset by a decrease in sales and marketing expenses, each as discussed in more detail below. The increase in our processing expenses for the year ended December 31, 2024 was driven primarily by the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment discussed above, partially offset by reductions in processor costs realized from the migration to our in-licensed card management system. Our total operating expenses also increased due to an increase in compensation and benefits expenses, driven primarily by an increase in third-party call center support costs associated with the growth of the BaaS account programs, as discussed above, and higher accrued bonus compensation expense, partially offset by lower salary and wages driven by the reduction in employee workforce we initiated in February 2024 (the "Headcount Reduction") and lower employee stock-based compensation expense, primarily due to fluctuations in the expected achievement of certain performance-based equity awards. Other general and administrative expenses increased during the year ended December 31, 2024 due to a civil money penalty paid, as discussed further below, higher professional services fees related to our anti-money laundering program ("AML") programs, including improvements to our compliance controls, policies and procedures, and the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in the amount of customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, as well as lower losses from purchase overdraft transactions. These increases in total operating expenses were partially offset by lower sales and marketing expenses, principally due to decreases in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, and to a lesser extent, reduced marketing spend within our Consumer Services segment. On July 19, 2024, we and our subsidiary bank entered into a consent order (the "Consent Order") with 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. For further discussion, see the headings " As a bank holding company, we are subject to extensive and potentially changing regulation and are required to serve as a source of strength for Green Dot Bank " and “ Litigation or investigations could result in significant settlements, sanctions, fines or penalties ” included as part of our risk factor disclosures in Part I, Item 1A, "Risk Factors." Income taxes Our income tax expense for the year ended December 31, 2024 decreased $3.7 million, or 47%, from the prior year comparable period. The decrease in our income tax expense was due primarily to a decrease in our pre-taxable income. Our effective tax rate for the years ended December 31, 2024 and 2023 was (18.5)% and 54.1%, respectively. The decrease in our effective tax rate was primarily attributable to a decrease in state income taxes expense, net of federal benefits, the impact of general business credits, and a reduction in the amount of compensation expense that was subject to the Internal Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation. These decreases were partially offset by incremental taxes and penalties ("surrender penalties") we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies, an increase in the valuation allowance on a portion of our unrealized loss on equity securities, an increase in tax expense associated with shortfalls from stock-based compensation, and an increase in tax expense due to nondeductible expenses and penalties. The increase in nondeductible expenses and penalties for the year ended December 31, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order. In December 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules introducing a 15% global minimum tax rate for large multinational corporations ("Pillar Two"). Certain countries in which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. We are monitoring legislative developments and continuing to evaluate the potential impact of Pillar Two on our 34 Table of Contents consolidated financial statements, but we do not expect that it will have a material impact on our results of operations in future periods. Outlook and Other Trends Affecting Our Business While we are still experiencing a difficult macro-economic environment, competitive headwinds and other factors that have contributed to declining trends in our consolidated operating results in recent periods, we expect our results of operations will stabilize on a year-over-year basis in 2025 based on our anticipated initiatives and cost reduction measures we have implemented. We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results. Our growth-oriented investments are focused on, among other things, cost-effectively re-engaging in strategic marketing initiatives in support of our GO2bank product and other initiatives across our account programs with the objective of returning to active account growth. We have seen reductions in our processing expenses from our processor conversion and expect the implementation of our card management platform will allow us to continue to realize reductions in our processing expenses as we seek to expand account programs. Despite the meaningful reductions to our cost structure we have achieved across our organization through our various initiatives, we are incurring increased expenses in other areas, as we have incurred additional expenses in connection with our continued investments in our AML program, including improvements to our compliance controls, policies and procedures. We believe these investments will ultimately help us to continue to remediate matters identified in the Consent Order and mitigate and reduce our fraud losses over the long term. In September 2024, the Federal Reserve decreased interest rates by 50 basis points, the first rate cut in over four years, and further reduced interest rates by an additional 50 basis points during the fourth quarter of 2024. The Federal Reserve's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future. In general, while increases in short-term interest rates benefit the yield we earn on our cash, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue in our consolidated financial statements), and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested. Accordingly, the net effect has had and we expect will continue to have a negative impact on our consolidated financial statements and will be dependent upon future interest rate changes enacted by the Federal Reserve. Further, the duration and magnitude of the continuing effects of macro-economic factors remain uncertain and dependent on various factors outside of our control. See Part I, Item 1A, "Risk Factors," for an additional discussion of risks related to macro-economic factors. 35 Table of Contents Consolidated Key Metrics We review a number of metrics to help us monitor the performance of, and identify trends affecting, our business. We believe the following measures are the primary indicators of our revenues: Year Ended December 31, Year Ended December 31, 2024 2023 Change % 2023 2022 Change % (In millions, except percentages) Gross dollar volume $ 131,640 $ 99,204 $ 32,436 32.7 % $ 99,204 $ 73,484 $ 25,720 35.0 % Number of active accounts* 3.67 3.57 0.10 2.8 % 3.57 4.15 (0.58) (14.0) % Purchase volume $ 20,325 $ 22,514 $ (2,189) (9.7) % $ 22,514 $ 26,687 $ (4,173) (15.6) % Number of cash transfers 32.28 33.86 (1.58) (4.7) % 33.86 36.06 (2.2) (6.1) % Number of tax refunds processed 13.82 14.14 (0.32) (2.3) % 14.14 14.57 (0.43) (3.0) % * Represents the number of active accounts as of December 31, 2024 , 2023, and 2022 respectively. See “Segment Results” for additional information and discussion regarding key metrics performance by segment. The definitions of our key metrics are as follows: Gross Dollar Volume — Represents the total dollar volume of funds loaded to our account products from direct deposit and non-direct deposit sources. A substantial portion of our gross dollar volume is generated from direct deposit sources. We use this metric to analyze the total amount of money moving onto our account programs, and to determine the overall engagement and usage patterns of our accountholder base. This metric also serves as a leading indicator of revenue generated through our Consumer Services and B2B Services segments, inclusive of fees charged to accountholders and interchange revenues generated through the spending of account balances. Number of Active Accounts — Represents any bank account within our Consumer Services and B2B Services segments that is subject to the USA PATRIOT Act of 2001 compliance and, therefore, requires customer identity verification prior to use and is intended to accept ongoing customer cash or ACH deposits. This metric includes checking accounts, general purpose reloadable prepaid card accounts, and secured credit card accounts in our portfolio that had at least one purchase, deposit or ATM withdrawal transaction during the applicable quarter. We use this metric to analyze the overall size of our active customer base and to analyze multiple metrics expressed as an average across this active account base. Our direct deposit active accounts within our Consumer Services segment, on average, have the longest tenure and generate the majority of our gross dollar volume in any period and thus, generate more revenue over their lifetime than other active accounts. Refer to sub-section entitled Consumer Services under “Segment Results” below for key metric results for direct deposit active accounts. Purchase Volume — Represents the total dollar volume of purchase transactions made by our accountholders. This metric excludes the dollar volume of ATM withdrawals and volume generated by certain BaaS programs where the BaaS partner receives interchange fees and we earn a program management service fee. We use this metric to analyze interchange revenue, which is a key component of our financial performance. Number of Cash Transfers — Represents the total number of cash transfer transactions conducted by consumers, such as a point-of-sale swipe reload transaction, the purchase of a MoneyPak or an e-cash mobile remittance transaction marketed under various brand names, that we conducted through our retail distributors in a specified period. This metric excludes disbursements made through our wage disbursement platform. We review this metric as a measure of the size and scale of our retail cash processing network, as an indicator of customer engagement and usage of our products and services, and to analyze cash transfer revenue, which is a key component of our financial performance. Number of Tax Refunds Processed — Represents the total number of tax refunds processed in a specified period. The number of tax refunds processed is most concentrated during the first half of each year and is minimal during the second half of each year. We review this metric as a measure of the size and scale of our tax refund processing platform and as an indicator of customer engagement and usage of its products and services. 36 Table of Contents Key components of our results of operations Operating Revenues We classify our operating revenues into the following four categories: Card Revenues and Other Fees — Card revenues consist of monthly maintenance fees, ATM fees, new card fees and other revenues. We charge maintenance fees on prepaid cards, checking accounts and certain cash transfer products, such as MoneyPak, pursuant to the terms and conditions in our customer agreements. We charge ATM fees to accountholders when they withdraw money at certain ATMs in accordance with the terms and conditions in our accountholder agreements. We charge new card fees, if applicable, when a consumer purchases a prepaid card, gift card, or a checking account product through our Retail channel. Other revenues consist primarily of revenue associated with our gift card program, annual fees associated with our secured credit card portfolio, transaction-based fees, fees associated with optional products or services, such as our overdraft protection program, and cash-back rewards we offer to accountholders. Our cash-back rewards are recorded as a reduction to card revenues and other fees. Also included in card revenues and other fees are program management service fees earned from our BaaS partners for programs we manage on their behalf. Our aggregate monthly maintenance fee revenues vary primarily based upon the number of active accounts in our portfolio and the average fee assessed per account. Our average monthly maintenance fee per active account depends upon the mix of products in our portfolio at any given point in time and upon the extent to which fees are waived based on various incentives provided to customers in an effort to encourage higher usage and retention. Our aggregate ATM fee revenues vary based upon the number of accountholder ATM transactions and the average fee per ATM transaction. The average fee per ATM transaction depends upon the mix of products in our portfolio at any given point in time and the extent to which accountholders use ATMs within our free network that carry no fee for cash withdrawal transactions. Our aggregate new card fee revenues vary based upon the number of prepaid cards and checking accounts activated and the average new card fee. The average new card fee depends primarily upon the mix of products that we sell since there are variations in new account fees based on the product and/or the location or source where our products are purchased. The revenue we earn from each of these fees may also vary depending upon the channel in which the active accounts were acquired. For example, certain BaaS programs may not assess monthly maintenance fees and as a result, these accounts may generate lower fee revenue than other active accounts. Our aggregate other fees vary primarily based upon account sales of all types, gift card sales, purchase transactions and the number of active accounts in our portfolio. Cash Processing Revenues — Cash processing revenues consist of cash transfer revenues, tax refund processing service revenues, disbursement revenues and other tax processing service revenues. We earn cash transfer revenues when consumers fund their cards through a reload transaction at a Green Dot Network retail location. Our aggregate cash transfer revenues vary based upon the mix of locations where reload transactions occur, since reload fees vary by location. We earn tax refund processing service revenues at the point in time when a customer of a third-party tax preparation company chooses to pay his or her tax preparation fee through the use of our tax refund processing services. We earn disbursement fees from our business partners at the point in time payment disbursements are made. Interchange Revenues — We earn interchange revenues from fees remitted by the merchant’s bank, which are based on rates established by the payment networks, at the point in time when customers make purchase transactions using our products. Our aggregate interchange revenues vary based primarily on the number of active accounts in our portfolio, the average transactional volume of the active accounts in our portfolio, the merchant category of spend, and on the mix of accountholder purchases between those using signature identification technologies and those using personal identification numbers and the corresponding rates. Interest Income, net — Net interest income represents the difference between the interest income earned on our interest-earning assets and the interest expense on our interest-bearing liabilities held at Green Dot Bank. Interest-earning assets include cash from customer deposits, loans, and investment securities. Our interest-bearing liabilities held at Green Dot Bank include interest-bearing deposits. Our net interest income and our net interest margin fluctuate based on changes in the federal funds interest rates and changes in the amount and composition of our interest-bearing assets and liabilities. 37 Table of Contents Operating Expenses We classify our operating expenses into the following four categories: Sales and Marketing Expenses — Sales and marketing expenses consist primarily of the commissions we pay to our retail distributors, brokers and partners, advertising and marketing expenses, and the costs of manufacturing and distributing card packages, placards and promotional materials to our retail distributors and personalized debit cards to consumers who have activated their cards. We generally establish commission percentages in long-term distribution agreements with our retail distributors and partners. Aggregate commissions with our retail distributors are determined by the number of account products and cash transfers sold at their respective retail stores. Commissions with our partners and, in certain cases, our retail distributors are determined by the revenue generated from the ongoing use of the associated card programs. We incur advertising and marketing expenses for television, sponsorships, online and in-store promotions. Advertising and marketing expenses are recognized as incurred and typically deliver a benefit over an extended period of time. For this reason, these expenses do not always track changes in our operating revenues. Our manufacturing and distribution costs vary primarily based on the number of accounts activated by consumers. Compensation and Benefits Expenses — Compensation and benefits expenses represent the compensation and benefits that we provide to our employees and the payments we make to third-party contractors. While we have an in-house customer service function, we employ third-party contractors to conduct call center operations, handle routine customer service inquiries and provide consulting support in the area of IT operations and elsewhere. Compensation and benefits expenses associated with our customer service and loss management functions generally vary in line with the size of our active account portfolio, while the expenses associated with other functions do not. Processing Expenses — Processing expenses consist primarily of the fees charged to us by the payment networks, which process transactions for us, the third-party card processors that maintain the records of our customers' accounts and process transaction authorizations and postings for us and the third-party banks that issue our accounts. These costs generally vary based on the total number of active accounts in our portfolio and gross dollar volume transacted by those accounts. Also included in processing expenses are bank fees associated with our tax refund processing services and gateway and network fees associated with our disbursement services. Bank fees generally vary based on the total number of tax refund transfers processed and gateway and network fees vary based on the number of disbursements made. Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional services fees, telephone and communication costs, depreciation and amortization of our property and equipment, amortization of our intangible assets, impairment charges of long-lived assets, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance. We incur telephone and communication costs primarily from customers contacting us through our toll-free telephone numbers. These costs vary with the total number of active accounts in our portfolio, as do losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud. Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, impairment charges of long-lived assets, rent and utilities vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics. Other Expense, net Other expense, net includes income and expenses we generally do not consider normal operating activities, such as earnings, losses or impairment attributable to equity method investments, realized gains or losses on investment securities, income earned on bank-owned life insurance policies, and changes in valuation allowances on loans held for sale, amongst other similar items that may arise from time to time. Income Tax Expense Our income tax expense consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services. Our effective income tax rate may differ from the 21% U.S. federal statutory rate due to a number of factors, including state income taxes, general business credits, non-deductible expenses and penalties, increases or decreases in valuation allowances and liabilities for uncertain tax positions, excess tax benefits or shortfalls on stock compensation awards, audit developments, and legislative changes. See Note 14—Income Taxes to the Consolidated Financial Statements included herein for a discussion of the significant tax differences that impacted our effective tax rate. 38 Table of Contents Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, current circumstances and various other assumptions that our management believes to be reasonable under the circumstances. In many instances, we could reasonably use different accounting estimates, and in some instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the critical accounting estimates discussed below are critical to understanding our historical and future performance, as these estimates involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. Revenue Recognition As prescribed under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, we recognize revenues when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, as determined under a five-step process. We charge new card fees, if applicable, when a consumer purchases a prepaid card, gift card, or a demand deposit account product through our Retail channel. Our new card fee provides our accountholders a material right and accordingly we defer and recognize new card fee revenues on a straight-line basis over the period commensurate with our performance obligation to our customers. We consider the performance obligation period to be the average card lifetime, which is currently less than one year for our deposit account programs acquired through our Retail channel. The average card lifetime is determined based on recent historical data using the period from sale (or activation) of the card through the date of last positive balance. We reassess average card lifetime quarterly for prepaid cards and checking accounts and annually for gift cards. Average card lifetimes may vary in the future as accountholder behavior changes relative to historical experience because customers are influenced by changes in the pricing of our services, the availability of substitute products, and other factors. We also defer commissions paid to retail distributors related to new card sales as costs to obtain contracts and expense ratably over the average card lifetime commensurate with our deposit account programs acquired through our Retail channel. Transaction prices related to our account services are based on stand-alone fees stated within the terms and conditions and may also include certain elements of variable consideration depending upon the product’s features, such as cash-back rewards and fee assessments that may overdraw an account. We estimate such amounts using historical data and customer behavior patterns to determine these estimates which are recorded as a reduction to the corresponding fee revenue. Additionally, while the number of transactions that an accountholder may perform is unknown, any uncertainty is resolved at the end of each daily service contract. The amount of cash-back rewards on our programs varies based on multiple factors, including the terms and conditions for accountholder eligibility, the redemption amount based on accountholder activity, and the accountholder redemption rates. Our estimated cash-back rewards are recorded as a reduction to card revenues and other fees on our consolidated statements of operations and as a component of other accrued liabilities on our consolidated balance sheets. Cash rewards have decreased by approximately 15% for the year ended December 31, 2024 compared to the prior year period, as our cash-back programs have declined, principally from our shift from our legacy products to our GO2bank product which does not have a cash rewards feature. Increases or decreases in our estimate of cash-back rewards is dependent upon accountholder behavioral changes and we periodically evaluate our estimation process and assumptions based on developments in redemption patterns, dollars redeemed and other accountholder behavioral trends. A relatively small change in any of our assumptions could result in a sizable increase or decrease in the amount of cash-back rewards we accrue. For example, on our Green Dot Unlimited product, a combination of a 1% increase in accountholder eligibility and a $1 increase in the average redemption amount would translate to additional cash rewards of approximately $0.5 million. Differences between actual results and our estimates are adjusted in the period that each accountholder's annual rewards cycle is completed. Reserve for Uncollectible Overdrawn Accounts For accountholders who are not enrolled or do not meet the eligibility requirements of our overdraft protection program, we generally decline authorization attempts for amounts that exceed the available balance in an accountholder’s account, however, the application of card association rules, the timing of the settlement of transactions and the assessment of the card’s monthly maintenance fee, among other things, can still result in overdrawn accounts. These overdrawn account balances are deemed to be receivables due from accountholders, and are included as a component of accounts receivable, net, on our consolidated balance sheets. We generally recover overdrawn account balances from those accountholders that perform a reload transaction and, in some cases, through enforcement of payment network rules, which allow us to recover the amounts from the merchant where the purchase transaction was conducted. However, we are exposed to losses from any unrecovered overdrawn account balances. The probability of recovering these amounts is primarily related to the number of days that have elapsed since an account had transaction activity, such as a purchase, ATM transaction or fee assessment. We generally recover approximately 50-60% of overdrawn account balances in accounts that have had transaction activity in the last 30 days and less than 10% when more than 30 days have elapsed. As such, we establish a reserve for uncollectible overdrawn accounts. We classify overdrawn accounts by transaction type and age groups based on the number of days since the account last had activity. We then calculate a reserve factor for each transaction type and age group based on the average recovery rate for the most recent six months discussed above. These factors are applied to these groups to estimate our overall reserve. We rely on these historical rates because they have remained relatively consistent over time. Generally, when more than 60 days have passed without any activity in an account, we consider recovery to be remote and charge off the full amount of the overdrawn account balance against the reserve for uncollectible overdrawn accounts. Our actual recovery rates and related estimates thereof may change in the future in response to factors such as customer behavior, product pricing and features that impact the frequency and velocity of reloads and other deposits to such accounts. We include our provision for uncollectible overdrawn accounts related to purchase transactions in other general and administrative expenses in our consolidated statements of operations. See Note 5—Accounts Receivable to the Consolidated Financial Statements included herein for more information. Allowance for Credit Losses We establish an allowance for estimated credit losses inherent in our loan portfolio over the life of the loans, including our secured credit cards. For each portfolio of loans, we analyze historical loss rates and other factors to determine a loss rate, and consider if adjustments are needed for current conditions, and other reasonable and supportable forecasts beyond our balance sheet date that may differ from historical results. We also consider adjustments based on qualitative factors which in our judgment may affect the expected credit losses including, but not limited to, changes in prevailing economic or market conditions and the estimated value of the underlying collateral for collateral dependent loans. We separately establish specific allowances for impaired loans based on the present value of changes in cash flows expected to be collected, or for impaired loans that are considered collateral dependent, the estimated fair value of the collateral less estimated costs to sell, if any. Overdrawn balances associated with our overdraft protection program are subject to a similar reserve methodology discussed above under "Reserve for Uncollectible Overdrawn Accounts." See Note 6—Loans to Bank Customers to the Consolidated Financial Statements included herein for more information. Goodwill and Intangible Assets We review the recoverability of goodwill at least annually or whenever significant events or changes occur, which might impair the recovery of recorded costs. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill may not be recoverable include a decline in our stock price and market capitalization, declines in the market conditions of our products, reductions in our future cash flow estimates, and significant adverse industry or economic market trends. We test for impairment of goodwill by first assessing various qualitative factors with respect to developments in our business and the overall economy to determine if it is more likely than not our goodwill is impaired. In the event it is more likely than not the carrying value of our reporting units is greater than its fair value, we calculate the estimated fair value of the reporting unit and record an impairment charge for the difference between the carrying value of the reporting unit and its fair value, not to exceed the carrying amount of goodwill. When applying the quantitative assessment, we determine the fair value of our reporting units based on a weighted average of multiple valuation techniques, principally a combination of an income approach and a market approach. The income approach calculates a value based upon the present value of estimated future cash flows, while the market approach uses earnings multiples of similarly situated guideline public companies. Determining the fair value of a reporting unit requires management judgment and the use of significant estimates and assumptions, which could include, but would not be limited to, future revenues, earnings and the probability of certain outcomes, risk-adjusted discount rates and future economic and market conditions. We completed our annual goodwill impairment test as of November 30, 2024 and concluded there was no impairment in any of our reporting units. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Certain factors which may occur and indicate that an impairment exists include, but are not limited to, the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the underlying assets; and significant adverse industry or market economic trends. In reviewing for impairment, we compare the carrying value of such assets to the estimated undiscounted future net cash flows expected from the use of the assets and their eventual disposition. In the event that the carrying value of assets is determined to be unrecoverable, we would estimate the fair value of the assets and record an impairment charge for the excess of the carrying value over the fair value. The estimate of fair value requires management to make a number of assumptions and projections, which could include, but would not be limited to, future revenues, earnings and the probability of certain outcomes. No impairment charges were recognized related to our intangible assets for the years ended December 31, 2024 and 2023. See Note 9—Goodwill and Intangible Assets to the Consolidated Financial Statements included herein for more information. 39 Table of Contents Results of Operations Pursuant to instruction 1 of the instructions to paragraph 303(b) of Regulation S-K, discussion of the results of operations for the fiscal year ended December 31, 2023 to fiscal year ended December 31, 2022 has been omitted. Such omitted discussion can be found under "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. Comparison of Consolidated Results for the Years Ended December 31, 2024 and 2023 Operating Revenues The following table presents a breakdown of our operating revenues among card revenues and other fees, cash processing revenues, interchange revenues and net interest income: Year Ended December 31, 2024 2023 Amount % of Total Operating Revenues Amount % of Total Operating Revenues (In thousands, except percentages) Operating revenues: Card revenues and other fees $ 1,231,458 71.4 % $ 1,007,565 67.1 % Cash processing revenues 231,753 13.4 225,416 15.0 Interchange revenues 198,300 11.6 231,003 15.4 Interest income, net 62,365 3.6 37,344 2.5 Total operating revenues $ 1,723,876 100.0 % $ 1,501,328 100.0 % Card Revenues and Other Fees — Card revenues and other fees totaled $1.2 billion for the year ended December 31, 2024, an increase of $223.9 million, or 22%, from the comparable prior year period. Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners. These increases were partially offset by decreases in accountholder fees, such as monthly maintenance fees, ATM fees, and new card fees, and lower breakage revenue on our gift card portfolios. Cash Processing Revenues — Cash processing revenues totaled $231.8 million for the year ended December 31, 2024, an increase of $6.4 million, or 3%, from the comparable prior year period. Although the number of tax refunds processed decreased by 2% during the year ended December 31, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a 5% decline in the number of cash transfers processed during the year ended December 31, 2024 from the prior year comparable period. The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment. Interchange Revenues — Interchange revenues totaled $198.3 million for the year ended December 31, 2024, a decrease of $32.7 million, or 14%, from the comparable prior year period. The decrease was primarily due to a 10% decrease in purchase volume during the year ended December 31, 2024, as well as a lower effective interchange rate for the comparable periods. Our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates. In addition, our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors. Interest Income, net — Net interest income totaled $62.4 million for the year ended December 31, 2024, an increase of $25.1 million, or 67%, from the comparable prior year period. The increase in net interest income was primarily the result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue). 40 Table of Contents Operating Expenses The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses: Year Ended December 31, 2024 2023 Amount % of Total Operating Revenues Amount % of Total Operating Revenues (In thousands, except percentages) Operating expenses: Sales and marketing expenses $ 217,210 12.6 % $ 245,325 16.3 % Compensation and benefits expenses 251,044 14.6 238,528 15.9 Processing expenses 887,249 51.5 639,228 42.6 Other general and administrative expenses 370,041 21.5 355,577 23.7 Total operating expenses $ 1,725,544 100.2 % $ 1,478,658 98.5 % Sales and Marketing Expenses — Sales and marketing expenses totaled $217.2 million for the year ended December 31, 2024, a decrease of $28.1 million, or 11%, compared to the year ended December 31, 2023. This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, and to a lesser extent, reduced marketing spend within our Consumer Services segment. Compensation and Benefits Expenses — Compensation and benefits expenses totaled $251.0 million for the year ended December 31, 2024, an increase of $12.5 million, or 5%, compared to the year ended December 31, 2023. The increase was driven primarily by an increase in third-party call center support costs associated with the growth of certain BaaS programs within our B2B Services segment and higher accrued bonus compensation expense, partially offset by lower salary and wages driven by the Headcount Reduction and lower employee stock-based compensation expense, primarily due to fluctuations in the expected achievement of certain performance-based equity awards. Processing Expenses — Processing expenses totaled $887.2 million for the year ended December 31, 2024, an increase of $248.0 million, or 39%, compared to the year ended December 31, 2023. This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment, partially offset by reductions in processor costs realized from the migration to our in-licensed card management system. Other General and Administrative Expenses — Other general and administrative expenses totaled $370.0 million for the year ended December 31, 2024, an increase of $14.4 million, or 4%, from the comparable prior year period. The increase in other general and administrative expenses during the year ended December 31, 2024 was due to a civil money penalty paid under the Consent Order, higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures and the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in the amount of customer dispute volume across our portfolios and reductions in our dispute loss rates, as well as lower losses from purchase overdraft transactions. Other Expense, net Other expense, net totaled $15.4 million for the year ended December 31, 2024, an increase of $10.4 million, or 207%, from the prior year comparable period. The net increase in other expenses was driven primarily from an increase in equity method losses in TailFin Labs, LLC ("TailFin") of $8.1 million, which was comprised of a $10.1 million increase in compensation and related professional services to support project initiatives undertaken during the current year period, partially offset by interest income earned. 41 Table of Contents Income Tax Expense The following table presents a breakdown of our effective tax rate among federal, state and other: Year Ended December 31, 2024 2023 U.S. federal statutory tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.1 2.0 Foreign tax rate differential 1.0 (1.5) General business credits 10.2 (25.0) Stock-based compensation (31.4) 28.8 Bank owned life insurance income 2.6 (4.2) Bank owned life insurance surrender (10.0) — Nondeductible penalties (22.4) 29.1 Global intangible low-tax income tax (1.4) 2.0 IRC 162(m) limitation 12.7 0.4 Change in valuation allowance (1.9) — Other (1.0) 1.5 Effective tax rate (18.5) % 54.1 % Our income tax expense totaled $4.2 million for the year ended December 31, 2024, representing a decrease of $3.7 million from the comparable prior year period. The decrease in income tax expense was primarily driven by the decrease in our taxable income and a lower effective tax rate. The net decrease in the effective tax rate for the year ended December 31, 2024 from the prior year comparable period was primarily due to a decrease of $2.9 million in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of $0.8 million in state income tax expense, net of federal benefits, and the impact of general business credits. These decreases were partially offset by an increase of $2.9 million in the expense related to tax shortfalls from stock-based compensation, an increase of $0.8 million in the expense related to nondeductible penalties, an increase of $0.4 million in the valuation allowance on a portion of our unrealized loss on equity securities, 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. The increases in nondeductible penalties for the years ended December 31, 2024 and 2023 are primarily related to the tax effect associated with the civil money penalty under the Consent Order. Our effective tax rate for the year ended December 31, 2024 is lower than our statutory federal income tax rate primarily due to a reduction in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, cash value growth in bank owned life insurance policies, and higher tax benefits from general business credits partially offset by the expense associated with tax shortfalls from stock-based compensation, the expense related to nondeductible penalties, an increase in the valuation allowance on a portion of our unrealized loss on equity securities, and the expense from the surrender of our existing bank owned life insurance policies. Our negative effective tax rate for the year ended December 31, 2024 was the result of our loss before income taxes of $22.5 million and the tax effect of the civil money penalty under the Consent Order. Our effective tax rate for the year ended December 31, 2023 is higher than our statutory federal income tax rate primarily due to the expense associated with tax shortfalls from stock-based compensation, the expense related to nondeductible penalties, and higher expenses related to state taxes, net of federal benefits, partially offset by higher tax benefits from general business credits and cash value growth in bank owned life insurance policies. The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant. 42 Table of Contents Segment Results Consumer Services The results of operations and key metrics of our Consumer Services segment for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Change % (In thousands, except percentages) Financial Results Segment revenues $ 402,462 $ 498,617 $ (96,155) (19.3) % Segment expenses 240,562 321,427 (80,865) (25.2) % Segment profit $ 161,900 $ 177,190 $ (15,290) (8.6) % Key Metrics (In millions, except percentages) Gross dollar volume $ 16,557 $ 19,708 $ (3,151) (16.0) % Number of active accounts* 1.88 2.05 (0.17) (8.3) % Direct deposit active accounts* 0.43 0.49 (0.06) (12.2) % Purchase volume $ 12,361 $ 15,193 $ (2,832) (18.6) % * Represents number of active and direct deposit active accounts as of December 31, 2024 and 2023, respectively. As additional supplemental information, our key metrics within our Consumer Services segment is presented on a quarterly basis as follows: 2024 2023 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Gross dollar volume 4,060 3,983 4,014 4,500 4,290 4,619 5,122 5,677 Number of active accounts* 1.88 1.78 1.76 1.93 2.05 2.16 2.35 2.41 Direct deposit active accounts* 0.43 0.44 0.45 0.46 0.49 0.52 0.59 0.60 Purchase volume 3,082 2,904 3,036 3,339 3,312 3,553 3,984 4,344 * Represents number of active and direct deposit active accounts as of each period end. Segment revenues within Consumer Services for the year ended December 31, 2024 decreased $96.2 million, or 19%, compared to the prior year comparable period, while our segment expenses for the year ended December 31, 2024 decreased $80.9 million, or 25%. Our gross dollar volume, purchase volume, the average number of active accounts and the average number of direct deposit active accounts across the year decreased during the year ended December 31, 2024 by 16%, 19%, 18% and 19%, respectively, from the comparable prior year period, primarily from each of the several factors discussed above in "Overview." These factors include macro-economic factors affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, as well as the non-renewal of one of our retail partner programs in a prior period. As a result of these decreases in each of our key metrics, our monthly maintenance fee revenues, new card fee revenues, ATM fee revenues and interchange revenues decreased year-over-year. In addition, our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates, as well as a decrease in breakage revenue on our gift card portfolios for each of the comparable periods. Segment expenses for the year ended December 31, 2024 decreased year-over-year due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, a decrease in marketing spend on GO2bank, lower processing expenses from our processor migration, and a decrease in transactions losses attributable to a decrease in the amount of customer dispute volume across our portfolios in this segment and favorable reductions in our dispute loss rates. Despite the year-over-year decline in segment expenses, our segment profit for the year ended December 31, 2024 decreased by approximately 9% from the prior year comparable period. 43 Table of Contents B2B Services The results of operations and key metrics of our B2B Services segment for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Change % (In thousands, except percentages) Financial Results Segment revenues $ 1,081,804 $ 772,991 $ 308,813 40.0 % Segment expenses 989,430 695,688 293,742 42.2 % Segment profit $ 92,374 $ 77,303 $ 15,071 19.5 % Key Metrics (In millions, except percentages) Gross dollar volume $ 115,083 $ 79,496 $ 35,587 44.8 % Number of active accounts* 1.79 1.52 0.27 17.8 % Purchase volume $ 7,964 $ 7,321 $ 643 8.8 % * Represents number of active accounts as of December 31, 2024 and 2023, respectively. As additional supplemental information, our key metrics within our B2B Services segment is presented on a quarterly basis as follows: 2024 2023 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Gross dollar volume 31,222 29,490 28,116 26,255 22,065 20,217 19,602 17,612 Number of active accounts* 1.79 1.68 1.65 1.58 1.52 1.51 1.36 1.43 Purchase volume 2,070 1,983 1,976 1,935 1,961 1,809 1,750 1,801 * Represents number of active accounts as of each period end. Segment revenues within our B2B Services for the year ended December 31, 2024 increased $308.8 million, or 40%, compared to the prior year period, while our segment expenses for the year ended December 31, 2024 increased $293.7 million, or 42%. Our gross dollar volume, purchase volume, and the average number of active accounts during the year ended December 31, 2024 increased by 45%, 9%, and 15%, respectively, from the prior year comparable period. We have continued to experience organic growth from both new and existing users in certain BaaS programs that tend to yield higher gross dollar volume per active user but do not generate comparable levels of interchange fees. The growth in gross dollar volume was driven primarily by certain BaaS programs that do not generate interchange fees and resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners. This increase was partially offset by the non-renewals of certain other BaaS partners in prior periods. Segment expenses increased for the year ended December 31, 2024 from the comparable prior year period, principally due to higher processing expenses with the growth of certain BaaS account programs, as well as higher third-party call center support costs as a result of an increase in gross dollar volume and the number of active accounts. As a result of these factors, our segment profit for the year ended December 31, 2024 increased by approximately 19% from the prior year comparable period. This segment also experienced margin compression because certain BaaS partnerships were structured based on a fixed profit and therefore, our segment profit for certain arrangements will not scale with revenue growth. 44 Table of Contents Money Movement Services The results of operations and key metrics of our Money Movement Services segment for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Change % (In thousands, except percentages) Financial Results Segment revenues $ 217,657 $ 209,674 $ 7,983 3.8 % Segment expenses 95,075 96,498 (1,423) (1.5) % Segment profit $ 122,582 $ 113,176 $ 9,406 8.3 % Key Metrics (In millions, except percentages) Number of cash transfers 32.28 33.86 (1.58) (4.7) % Number of tax refunds processed 13.82 14.14 (0.32) (2.3) % As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows: 2024 2023 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Number of cash transfers 8.14 8.22 8.15 7.77 8.19 8.31 8.66 8.70 Number of tax refunds processed 0.15 0.19 4.20 9.28 0.16 0.20 3.87 9.91 Segment revenues within our Money Movement services for the year ended December 31, 2024 increased $8.0 million, or 4%, from the comparable prior year period, and segment expenses for the year ended December 31, 2024 decreased $1.4 million, or 1%. The increase in segment revenues for the year ended December 31, 2024 was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased by 2% during the year ended December 31, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a 5% decline in the number of cash transfers processed during the year ended December 31, 2024 from the prior year comparable period. The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment, as discussed above. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs. Segment expenses decreased for the year ended December 31, 2024 by 1% from the comparable prior year period primarily from decreases in sales commissions from lower cash transfer revenues, partially offset by third-party costs and related expenses due to growth across our tax processing services. As a result of these factors, our segment profit increased by approximately 8% year-over-year. Corporate and Other The results of operations and key metrics of our Corporate and Other segment for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Change % (In thousands, except percentages) Financial Results Unallocated revenue and inter-segment eliminations $ 5,792 $ 2,513 $ 3,279 130.5 % Unallocated corporate expenses and inter-segment eliminations 217,262 199,308 17,954 9.0 % $ (211,470) $ (196,795) $ (14,675) 7.5 % 45 Table of Contents Revenues within Corporate and Other are comprised of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue) and eliminations of inter-segment revenues. Unallocated corporate expenses include eliminations of inter-segment expenses and our fixed expenses such as salaries, wages and related benefits for our employees and certain third-party contractors, 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 above. Refer to Note 24—Segment Information to the Consolidated Financial Statements included herein for a summary reconciliation. Revenues within our Corporate and Other segment were driven primarily by an increase in net interest income, which increased by 67% for the year ended December 31, 2024 from the prior year comparable period. Net interest income increased as a result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by the portion of interest shared with certain BaaS partners (a reduction of revenue). Unallocated corporate expenses for the year ended December 31, 2024 increased by approximately 9% over the prior year comparable period. The increase was driven primarily from higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures, and higher accrued bonus compensation, partially offset by lower salary and wages from the Headcount Reduction. 46 Table of Contents Capital Requirements for Bank Holding Companies Our subsidiary bank, Green Dot Bank, is a member bank of the Federal Reserve System and our primary regulators are the Federal Reserve Board and the Utah Department of Financial Institutions. We and Green Dot Bank are subject to various regulatory capital requirements administered by the banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines, we and Green Dot Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Basel III rules, which were promulgated by the Federal Reserve and other U.S. banking regulators, provide for risk-based capital, leverage and liquidity standards. Under the Basel III rules, we must maintain a ratio of common equity Tier 1 capital to risk-weighted assets of at least 4.5%, a ratio of Tier 1 capital to risk-weighted assets of at least 6%, a ratio of total capital to risk-weighted assets of at least 8% and a minimum Tier 1 leverage ratio of 4.0%. Either or both of Green Dot Corporation and Green Dot Bank may qualify for and opt to use, from time to time, the community bank leverage ratio framework under the Federal Reserve’s version of the U.S. Basel III Rules. Under the community bank leverage ratio framework, a qualifying community banking organization may generally satisfy its capital requirements (and capital conservation buffer) under the U.S. Basel III rules provided that it has a Tier 1 leverage ratio greater than 9% and satisfies other applicable conditions. Green Dot Corporation and Green Dot Bank qualify for and opt into use of the community bank leverage ratio framework. We expect that Green Dot Corporation will continue to qualify for and use the community bank leverage ratio framework, and that Green Dot Bank will calculate and disclose its risk-based capital ratios and Tier 1 leverage ratio under standardized approach of the U.S. Basel III Rules. As of December 31, 2024 and 2023, we and Green Dot Bank were categorized as "well-capitalized" under applicable regulatory standards. To be categorized as "well-capitalized," we and Green Dot Bank must maintain specific total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There were no conditions or events since December 31, 2024 which management believes would have changed our category as "well-capitalized." The definitions associated with the amounts and ratios below are as follows: Ratio Definition Tier 1 leverage ratio Tier 1 capital divided by average total assets Common equity Tier 1 capital ratio Common equity Tier 1 capital divided by risk-weighted assets Tier 1 capital ratio Tier 1 capital divided by risk-weighted assets Total risk-based capital ratio Total capital divided by risk-weighted assets Terms Definition Tier 1 capital and Common equity Tier 1 capital Includes common stock and retained earnings, adjusted for items primarily related to accumulated OCI, goodwill, deferred tax assets and intangibles. Total capital Tier 1 capital plus supplemental capital items such as the allowance for credit losses, subject to certain limits Average total assets Average total consolidated assets during the period less deductions and adjustments primarily related to goodwill, deferred tax assets and intangibles assets Risk-weighted assets Represents the amount of assets or exposure multiplied by the standardized risk weight (%) associated with that type of asset or exposure. The standardized risk weights are prescribed in the bank capital rules and reflect regulatory judgment regarding the riskiness of a type of asset or exposure 47 Table of Contents The actual amounts and ratios, and required "well-capitalized" minimum capital amounts and ratios at December 31, 2024 and 2023, were as follows: December 31, 2024 Amount Ratio Regulatory Minimum "Well-capitalized" Minimum (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 760,571 15.0 % 4.0 % n/a Common equity Tier 1 capital $ 760,571 42.6 % 4.5 % n/a Tier 1 capital $ 760,571 42.6 % 6.0 % 6.0 % Total risk-based capital $ 782,207 43.8 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 362,697 7.3 % 4.0 % 5.0 % Common equity Tier 1 capital $ 362,697 28.2 % 4.5 % 6.5 % Tier 1 capital $ 362,697 28.2 % 6.0 % 8.0 % Total risk-based capital $ 370,207 28.8 % 8.0 % 10.0 % December 31, 2023 Amount Ratio Regulatory Minimum "Well-capitalized" Minimum (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 730,459 17.9 % 4.0 % n/a Common equity Tier 1 capital $ 730,459 38.0 % 4.5 % n/a Tier 1 capital $ 730,459 38.0 % 6.0 % 6.0 % Total risk-based capital $ 749,623 39.0 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 404,559 9.8 % 4.0 % 5.0 % Common equity Tier 1 capital $ 404,559 27.8 % 4.5 % 6.5 % Tier 1 capital $ 404,559 27.8 % 6.0 % 8.0 % Total risk-based capital $ 412,966 28.4 % 8.0 % 10.0 % Liquidity and Capital Resources The following table summarizes our major sources and uses of cash for the periods presented: Year Ended December 31, 2024 2023 (In thousands) Total cash provided by (used in) Operating activities $ 81,383 $ 97,519 Investing activities 81,402 33,157 Financing activities 743,148 (264,019) Increase (decrease) in unrestricted cash, cash equivalents and restricted cash $ 905,933 $ (133,343) During the years ended December 31, 2024 and 2023, we financed our operations primarily through our cash flows provided by operating activities and customer funds held on deposit, and, from time to time, our short-term working capital activities through our borrowings under our credit facility. As of December 31, 2024, our primary source of liquidity was unrestricted cash and cash equivalents totaling $1.6 billion. We also consider our $2.0 billion of investment securities available-for-sale to be highly-liquid instruments. We use trend and variance analysis as well as our detailed budgets and forecasts to project future cash needs, making adjustments to the projections when needed. We believe that our current unrestricted cash and cash equivalents, cash flows from operations, borrowing capacity under our revolving line of credit, and net proceeds 48 Table of Contents from the issuance and sale of our senior unsecured notes will be sufficient to meet our working capital, capital expenditures, and any other capital needs for at least the next 12 months. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. We continue to monitor the impact of material trends on our business to ensure our liquidity and capital resources remain appropriate throughout this period of uncertainty. Cash Flows from Operating Activities Our $81.4 million of net cash provided by operating activities during the year ended December 31, 2024 principally resulted from $26.7 million of net losses, adjusted for certain non-cash operating expenses of $170.3 million, and a decrease in net working capital assets and liabilities of $62.2 million, which includes the payment of $44 million for the civil money penalty included in the Consent Order. Our $97.5 million of net cash provided by operating activities during the year ended December 31, 2023 principally resulted from $6.7 million of net income, adjusted for certain non-cash operating expenses of $158.9 million, and a decrease in net working capital assets and liabilities of $68.1 million. Cash Flows from Investing Activities Our $81.4 million of net cash provided by investing activities during the year ended December 31, 2024 primarily reflects net proceeds from sales and maturities of our available-for-sale investment securities of $221.1 million, partially offset by payments for property, equipment and internal-use software of $74.3 million, net changes in loans of $27.9 million, and capital contributions related to our investment in TailFin of $35.0 million. Our final payment under our commitment with TailFin was made in January 2024. The year-over-year increase in our net cash provided by investment activities during the year ended December 31, 2024 is principally associated with maturities of our investment securities and our decision not to reinvest the proceeds into new investment securities. Our $33.2 million of net cash provided by investing activities during the year ended December 31, 2023 primarily reflects net proceeds from sales and maturities of our available-for-sale investment securities of $176.9 million, partially offset by payments for property, equipment and internal-use software of $75.9 million, net changes in loans of $29.0 million, and capital contributions related to our investment in TailFin of $35.0 million. Cash Flows from Financing Activities Our $743.1 million of net cash provided by financing activities for the year ended December 31, 2024 was principally the result of a net increase in customer deposits of $718.0 million and a net increase in obligations to customers of $35.6 million. Refer to additional discussion below for our borrowings and repayments of debt. Our $264.0 million of net cash used in financing activities for the year ended December 31, 2023 was principally the result of a net decrease in customer deposits of $159.4 million, and a net decrease in obligations to customers of $132.2 million, partially offset by net borrowings on our revolving credit facility of $26.0 million. Other Sources of Liquidity Senior Unsecured Notes In September and October 2024, we issued and sold senior unsecured notes (the "Notes") in an aggregate principal amount of $50 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. The net proceeds of the offering were used to repay outstanding indebtedness under our revolving credit facility discussed below, and for general corporate purposes. In February 2025, we issued and sold additional Notes in an aggregate principal amount of $15 million. 2025 Revolving Facility In February 2025, we entered into a new revolving line of credit agreement (the "2025 Revolving Facility") with a financial institution up to a maximum principal amount of $20 million, subject to borrowing base limitations defined under the terms of the agreement. The 2025 Revolving Facility matures in August 2026 and will bear interest at variable market rates, but subject to a minimum rate of 6.0% per annum. Interest payments are due monthly, and accrue based on the then-outstanding principal balance. 49 Table of Contents 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 facility provided for a $100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), which matured in October 2024. The proceeds of any borrowings under the 2019 Revolving Facility were used for working capital and other general corporate purposes, subject to the terms and conditions set forth in the credit agreement. 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. Material Cash Requirements While the overall macro-economic environment, the effect of high inflation and interest rates, and other factors described in "Outlook and Other Trends Affecting Our Business" above have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and invest in property, equipment and internal-use software as necessary in the normal course of our business. The amount and timing of these payments and the related cash outflows in future periods is difficult to predict and is dependent on a number of factors including the rate of change of computer hardware and software used in our business and our business outlook as a result of macro-economic uncertainties. We intend to continue to invest in new products and programs, including GO2bank, new features for our existing products and IT infrastructure in order to scale and operate effectively to meet our strategic objectives. We expect our capital expenditures in 2025 to be lower compared to our capital expenditures in 2024, but at similar levels compared to our annual investments in recent years. We expect to fund these capital expenditures primarily through our cash flows provided by operating activities. We have used cash to acquire businesses and technologies and we anticipate that we may continue to do so in the future. The nature of these transactions, however, makes it difficult to predict the amount and timing of such cash requirements. Additionally, we may make periodic cash contributions to our subsidiary bank, Green Dot Bank, to maintain its capital, leverage and other financial commitments at levels we have agreed to with our regulators. If another economic relief package is signed into law that provides for substantial additional direct payments and unemployment benefits, we may need to increase the size of our cash contributions to Green Dot Bank to maintain its capital, leverage and other financial commitments. Contractual Obligations On January 2, 2020, we effectuated our agreement with Walmart to jointly establish a new fintech accelerator under the name TailFin, with a mission to develop innovative products, services and technologies that sit at the intersection of retail shopping and consumer 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 paid in January 2024. See Note 7—Equity Method Investment to the Consolidated Financial Statements included herein for additional information. Our remaining leases have terms of less than 1 year to approximately 8 years, subject to renewal options of varying terms, and as of December 31, 2024, we had a total lease liability of $11.1 million. See Note 20—Leases to the Consolidated Financial Statements included herein for additional information regarding our lease liabilities as of December 31, 2024. In the normal course of business, we enter into various agreements with our vendors and retail distributors that may subject us to minimum annual requirements. While our contractual commitments will have an impact on our future liquidity, we believe that we will be able to adequately fulfill these obligations through cash generated from operations and from our existing cash balances. 50 Table of Contents Statistical Disclosure by Bank Holding Companies The following section presents supplemental information for Bank Holding Companies. The tables in this section include Green Dot Bank information only. Distribution of Assets, Liabilities and Stockholders' Equity The following table presents average balance data and interest income and expense data for our banking operations, as well as the related interest yields and rates for the years ended December 31, 2024, 2023 and 2022: Year ended December 31, 2024 2023 2022 Average balance Interest income/ interest expense Yield/ rate Average balance Interest income/ interest expense Yield/ rate Average balance Interest income/ interest expense Yield/ rate (In thousands, except percentages) Assets Interest-bearing assets Loans (1) $ 37,193 $ 3,637 9.8 % $ 23,801 $ 2,315 9.7 % $ 19,608 $ 2,273 11.6 % Taxable investment securities 2,483,386 46,593 1.9 2,671,049 49,920 1.9 2,581,235 40,349 1.6 Non-taxable investment securities 29,229 806 2.8 29,491 814 2.8 27,852 727 2.6 Federal reserve stock 5,337 353 6.6 7,794 345 4.4 7,693 324 4.2 Fee advances 15,954 2,991 18.7 13,068 3,276 25.1 9,672 2,061 21.3 Cash 1,243,275 69,283 5.6 548,044 29,981 5.5 965,070 13,085 1.4 Total interest-bearing assets 3,814,374 123,663 3.2 % 3,293,247 86,651 2.6 % 3,611,130 58,819 1.6 % Non-interest bearing assets 459,564 311,643 258,260 Total assets $ 4,273,938 $ 3,604,890 $ 3,869,390 Liabilities Interest-bearing liabilities Checking accounts $ 66,106 $ 4,387 6.6 % $ 1,461 $ 7 0.5 % $ 2,204 $ 38 1.7 % Savings deposits 21,726 12 0.1 23,945 15 0.1 16,004 128 0.8 Time deposits, denominations greater than or equal to $250 1,640 54 3.3 1,320 26 2.0 1,833 40 2.2 Time deposits, denominations less than $250 4,258 110 2.6 3,599 56 1.6 3,313 31 0.9 Total interest-bearing liabilities 93,730 4,563 4.9 % 30,325 104 0.3 % 23,354 237 1.0 % Non-interest bearing liabilities 4,062,691 3,495,342 3,683,481 Total liabilities 4,156,421 3,525,667 3,706,835 Total stockholders' equity 117,517 79,223 162,555 Total liabilities and stockholders' equity $ 4,273,938 $ 3,604,890 $ 3,869,390 Net interest income/yield on earning assets $ 119,100 (1.7) % $ 86,547 2.3 % $ 58,582 0.6 % ___________ (1) Non-performing loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis. The following table presents the amount of changes in interest income and interest expense due to changes in both average volume and average rate for the years ended: 51 Table of Contents December 31, 2024 December 31, 2023 Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) (In thousands) Interest-earning assets Loans $ 1,322 $ 12 $ 1,310 $ 42 $ (128) $ 170 Taxable investment securities (3,327) 195 (3,522) 9,571 8,126 1,445 Non-taxable investment securities (8) (1) (7) 87 43 44 Federal reserve stock 8 22 (14) 21 17 4 Fee advances (285) (2,295) 2,010 1,215 406 809 Cash 39,302 570 38,732 16,896 19,701 (2,805) Change in interest income $ 37,012 $ (1,497) $ 38,509 $ 27,832 $ 28,165 $ (333) Interest-bearing liabilities Checking accounts $ 4,380 $ 68 $ 4,312 $ (31) $ (16) $ (15) Savings deposits (3) (2) (1) (113) (245) 132 Time deposits, denominations greater than or equal to $250 28 21 7 (14) (4) (10) Time deposits, denominations less than $250 54 42 12 25 22 3 Change in interest expense 4,459 129 4,330 (133) (243) 110 Change in net interest income and expense $ 32,553 $ (1,626) $ 34,179 $ 27,965 $ 28,408 $ (443) ___________ (1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns. Maturities and Sensitivities to Changes in Interest Rates The following table presents contractual maturities of loans by type. All of our loans due after one year are based upon fixed interest rates under the stated terms of the loan agreements: Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total (In thousands) Residential $ 14 $ 518 $ 6,342 $ — $ 6,874 Commercial 2,585 — — — 2,585 Installment 1,029 807 3,604 — 5,440 Consumer 25,536 — — — 25,536 Secured credit card 9,068 — — — 9,068 Total fixed-income securities $ 38,232 $ 1,325 $ 9,946 $ — $ 49,503 52 Table of Contents Allocation of Reserve of Credit Losses The following table shows the reserve for credit losses allocated to each loan category: December 31, 2024 December 31, 2023 Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans (In thousands, except percentages) Residential $ 83 0.5 % $ 67 0.6 % Commercial 38 0.2 31 0.3 Installment 59 0.3 66 0.6 Consumer 16,161 92.1 10,032 88.1 Secured credit card 1,201 6.9 1,187 10.4 Total $ 17,542 100.0 % $ 11,383 100.0 % Deposits The following table shows Green Dot Bank’s average deposits and the annualized average rate paid on those deposits for the years ended December 31, 2024, 2023, and 2022: December 31, 2024 December 31, 2023 December 31, 2022 Average Balance Weighted-Average Rate Average Balance Weighted-Average Rate Average Balance Weighted-Average Rate (In thousands, except percentages) Interest-bearing deposit accounts Checking accounts $ 66,106 6.6 % $ 1,461 0.5 % $ 2,204 1.7 % Savings deposits 21,726 0.1 23,945 0.1 16,004 0.8 Time deposits, denominations greater than or equal to $250 1,640 3.3 1,320 2.0 1,833 2.2 Time deposits, denominations less than $250 4,258 2.6 3,599 1.6 3,313 0.9 Total interest-bearing deposit accounts 93,730 4.9 % 30,325 0.3 % 23,354 1.0 % Non-interest bearing deposit accounts 3,746,910 3,220,323 3,286,137 Total deposits $ 3,840,640 $ 3,250,648 $ 3,309,491 Our aggregate deposits in denominations that met or exceeded FDIC limits were approximately $116 million, $228 million and $83 million as of December 31, 2024, 2023 and 2022, respectively. Our time deposits portfolio in excess of FDIC limits is not material at December 31, 2024. Key Financial and Credit Ratios The following tables show certain of Green Dot Bank’s key financial and credit ratios for the years ended December 31, 2024, 2023, and 2022: December 31, 2024 December 31, 2023 December 31, 2022 Net return on assets 1.3 % 2.3 % 3.3 % Net return on equity 48.7 104.2 79.2 Equity to assets ratio 2.7 2.2 4.2 Allowance for credit losses to total loans outstanding 35.4 27.2 29.8 Nonaccrual loans to total loans outstanding 5.1 6.1 7.3 Allowance for credit losses to nonaccrual loans 691.7 442.1 405.4 December 31, 2024 December 31, 2023 December 31, 2022 Net charge-offs during the period to average loans outstanding: (In thousands) Consumer Net charge-off during the period $ 17,222 $ 20,111 $ 25,521 Average amount outstanding 9,718 10,036 16,337 Secured credit card Net charge-off during the period 4,181 3,895 3,308 Average amount outstanding 13,302 12,398 10,924 53 Table of Contents