What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-12 · 243 added, 143 removed, 331 unchanged (54% of the section changed)

10 unchanged sentences

In this Quarterly Report, unless otherwise specified or the context otherwise requires, “Green Dot,” “we,” “us,” and “our” refer to Green Dot Corporation and its consolidated subsidiaries.

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.

Green Dot Corporation is a financial technology platform and registered bank holding company 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.

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Business" for more detailed information about our operations and Note 19—Segment Information in the notes to the accompanying unaudited consolidated financial statements.

Recent Developments

In March 2025, we announced that we had initiated a process to explore potential strategic alternatives.

No assurances can be given as to the outcome or timing of the strategic review process, including without limitation that such process will result in a transaction or that any transaction, if pursued, will be successfully completed.

We do not intend to disclose further developments regarding the process unless and until it is determined that further disclosure is appropriate.

We also announced in March 2025 the commencement of a CEO transition process, pursuant to which George Gresham ceased serving as our President and Chief Executive Officer, and as a member of our Board of Directors, and William I Jacobs, our Chairperson of the Board, was appointed to serve as our interim Chief Executive Officer, and Chris Ruppel, our Chief Revenue Officer, was appointed to serve as our interim President.

Consolidated Financial Results and Trends

Our consolidated results of operations for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

2025 2024 Change %

Our consolidated results of operations for the three and six months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 Change % 2025 2024 Change %

(In thousands, except percentages)

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Total operating expenses 490,777 430,788 59,989 13.9 % 988,906 872,222 116,684 13.4 %

Net income 25,773 4,750 21,023 442.6 %

Net loss (47,025) (28,715) (18,310) 63.8 % (21,252) (23,965) 2,713 (11.3) %

Refer to "Segment Results" below for a summary of financial results of each of our reportable segments.

Total operating revenues

Our total operating revenues for the three months ended March 31, 2025 increased $106.9 million or 24%, 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.

Continued growth of certain BaaS partner programs generated an increase in our total gross dollar volume and number of consolidated active accounts for the three months ended March 31, 2025 of 21% and 2%, respectively, which increased our total operating revenues year-over-year.

However, as discussed below, our total operating revenues were negatively impacted by unfavorable trends and factors in our deposit account programs, driving, among other things, a reduction of approximately 3% to each of our purchase volume and number of cash transfers for the three months ended March 31, 2025, as compared to the prior year period.

In our Consumer Services segment, revenues decreased during the three months ended March 31, 2025 by 5% from the prior year comparable period.

We believe these decreases in our Consumer Services segment are attributable to several factors, including 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.

Our total operating revenues for the three and six months ended June 30, 2025 increased $97.1 million, or 24%, and $203.9 million, or 24%, respectively, over the prior year comparable periods, driven primarily by higher revenues in our B2B Services segment, partially offset by lower revenues earned in our Consumer Services segment.

Continued growth of certain BaaS partner programs generated an increase of 20% in our total gross dollar volume for each of the three and six months ended June 30, 2025, and increased the number of consolidated active accounts during the three months ended June 30, 2025 by 2%, which increased our total operating revenues year-over-year.

However, as discussed below, our total operating revenues were negatively impacted by unfavorable trends and factors in our deposit account programs, driving, among other things, a reduction in purchase volume and the effective interchange rates we earn thereon, and a reduction in the number of cash transfers of 8% and 6% for the three and six months ended June 30, 2025, respectively, over the prior year comparable periods.

In our Consumer Services segment, revenues decreased during the three and six months ended June 30, 2025 by 4% and 5%, respectively, over the prior year comparable periods.

Similarly, gross dollar volume and purchase volume each declined for the six months ended June 30, 2025 by 4%.

While these declining trends have begun to moderate, we believe these decreases in our Consumer Services segment remain attributable to several factors, including macro-economic factors affecting consumer behavior and other competitive trends that have impacted account acquisition.

These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance 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 during the three months ended March 31, 2025 by 42% over the prior year comparable period.

The increase was driven by strong year-over-year growth in our gross dollar volume, which increased by 26%, and to a lesser extent, growth in purchase volume, which increased by 3%, and the number of active accounts for the three months ended March 31, 2025, which increased by 13%.

In our B2B Services segment, revenues increased during the three and six months ended June 30, 2025 by 38% and 40%, respectively, over the prior year comparable periods.

The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the three and six months ended June 30, 2025 by 23% and 24%, respectively, and to a lesser extent, growth in purchase volume, which increased by 1% and 2%, respectively, over the prior year comparable periods.

The number of active accounts for the three months ended June 30, 2025 increased by 10% 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.

In our Money Movement Services segment, revenues increased during the three months ended March 31, 2025 by 7% from the prior year comparable period.

This increase in revenue was driven primarily by an increase in our tax processing revenues.

Although the number of tax refunds processed decreased by 14% for the three months ended March 31, 2025, as compared to the prior year period, our tax processing revenues increased due to the expansion of our taxpayer advance programs and a favorable mix-shift in the distribution channel in which the tax refund was processed.

The decrease in the number of tax refunds processed is principally attributable to our online tax preparation partners.

The increase in tax processing revenues was partially offset by a 3% decline in the number of cash transfers processed for the three months ended March 31, 2025 from the prior year comparable period.

In our Money Movement Services segment, revenues decreased during the three months ended June 30, 2025 by 4% and increased by 3% during the six months ended June 30, 2025, over the prior year comparable periods.

The decrease in our Money Movement Services revenue during the three months ended June 30, 2025 was driven by decreases in both our tax processing revenues and cash transfer revenues.

Our tax processing revenues decreased during the three months ended June 30, 2025 due to an 11% decrease in the number of tax refunds processed and from lower ancillary tax program fees that are associated with tax refund transfers.

Our money processing revenues decreased during the three months ended June 30, 2025 primarily due to an 8% decrease in the number of cash transfers processed from the comparable prior year period, partially offset by the mix of cash transfer types and locations where the transactions occurred, as the fees we receive vary depending on these factors.

The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment 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 March 31, 2025.

Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 70% for the three months ended March 31, 2025, over the prior year comparable 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).

The increase in our Money Movement Services segment during the six months ended June 30, 2025 was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in money processing revenues.

Although the number of tax refunds processed decreased by 13% for the six months ended June 30, 2025, as compared to the prior year period, our tax processing revenues increased due to the expansion of our taxpayer advance programs and a favorable mix-shift in the distribution channel in which the tax refund was processed.

The decrease in the number of tax refunds processed in each of the three and six months ended June 30, 2025 was principally attributable to our online tax preparation partners.

Due to the seasonal nature of our tax products and services, substantially all of our tax processing revenues are earned during the first half of each year.

The increase in tax processing revenues for the six months ended June 30, 2025 was partially offset by a 6% decline in the number of cash transfers processed from the prior year comparable period, due to the same reasons discussed above.

Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 46% and 57% for the three and six months ended June 30, 2025, respectively, over the prior year comparable periods.

The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners and net proceeds from investment securities sold, and to a lesser extent, higher yielding investments from our bond repositioning strategy, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Total operating expenses

Our total operating expenses for the three months ended March 31, 2025 increased $56.7 million, or 13%, 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, partially offset by a decrease in other general and administrative expenses, sales and marketing expenses and to a lesser extent, a decrease in compensation and benefits expenses, each as discussed in more detail below.

The increase in our processing expenses for the three months ended March 31, 2025 was driven primarily by the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment discussed above.

This increase was partially offset by lower other general and administrative expenses, which decreased during the three months ended March 31, 2025 primarily due to a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system that were incurred in the first quarter of 2024 that did not recur in the current period, and lower professional services fees related to our anti-money laundering ("AML") programs, due to the completion of certain initiatives.

Our sales and marketing expenses also decreased, principally due to a decrease in revenue-sharing arrangements in our tax processing business, partially offset by an increase in sales commissions from higher revenues on products subject to tiered revenue-sharing agreements in our Consumer Services segment.

To a lesser extent, total operating expenses decreased due to a decrease in compensation and benefits expenses, driven primarily by a decrease in employee stock-based compensation due to forfeitures of awards from certain employees and severance benefits not recurring at the same magnitude in the current period as a result of our reduction in employee workforce in the comparable prior year period, partially offset by an increase in third-party call center support costs associated with the growth of the BaaS account programs discussed above.

Our income tax expense for the three months ended March 31, 2025 increased by $5.3 million, or 211%, from the prior year comparable period primarily due to an increase in our pre-taxable income, partially offset by a decrease in our effective tax rate.

Our effective tax rate for the three months ended March 31, 2025 was 23.4%, a decrease from 34.8% for the prior year comparable period.

The decrease in our effective tax rate was due to several factors, including the impact of general business credits, tax benefits from bank owned life insurance policies, a decrease in tax expense associated with shortfalls from stock-based compensation, a decrease in tax expense from nondeductible expenses, 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, and a reduction of the incremental taxes and penalties ("surrender penalties") we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies completed in 2024.

These decreases in our effective tax rate were partially offset by an increase in state income taxes expense, net of federal benefits.

Our total operating expenses for the three and six months ended June 30, 2025 increased $60.0 million, or 14%, and $116.7 million, or 13%, respectively, over the prior year comparable periods.

The increase in our total operating expenses for the respective periods was driven primarily by an increase in processing expenses within our B2B Services segment, and to a lesser extent, an increase in compensation and benefits expenses, partially offset by a decrease in other general and administrative expenses and a reduction in sales and marketing expenses, each as discussed in more detail below for the respective periods.

For the three months ended June 30, 2025, the increase in total operating expenses was driven primarily by an increase in our processing expenses from the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment discussed above.

To a lesser extent, total operating expenses 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 our BaaS account programs discussed above, and higher accrued bonus compensation expense due to our current financial performance relative to our annual targets, partially offset by a decrease in employee stock-based compensation expense due to forfeitures of awards.

These increases were partially offset by lower other general and administrative expenses, which decreased during the three months ended June 30, 2025 primarily due to the timing of accruals in the prior year related to the civil money penalty under our Consent Order from the Federal Reserve Board, and to a lesser extent, a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, and lower professional services fees related to our anti-money laundering ("AML") programs due to the year-over-year timing of spend on certain initiatives.

These decreases were partially offset by an increase in software licenses and hosting costs due to investments in our platform and operations, and an increase from expenses associated with our strategic review process.

Our sales and marketing expenses also decreased, principally due to a decrease in supply chain materials expenses, which are comprised of debit card plastics and related materials costs, from lower active accounts.

Our total operating expenses for the six months ended June 30, 2025 increased over the prior year comparable period, driven by similar factors as discussed above.

Our processing expenses increased during the six months ended June 30, 2025, due to the same reasons discussed above.

Compensation and benefits expenses also increased due to the same reasons discussed above, and were further partially offset from severance benefits that did not recur at the same magnitude in the current period as a result of our reduction in employee workforce in the comparable prior year period.

Other general and administrative expenses decreased due to the same factors discussed above, and further decreased due to the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system in the prior year comparable period that did not recur in the current period.

Sales and marketing expenses also decreased due to the same factors discussed above and a decrease in revenue-sharing arrangements in our tax processing business, partially offset by an increase in sales commissions from higher revenues on products subject to tiered revenue-sharing agreements in our Consumer Services segment.

Other expense, net

Other expense, net for the three and six months ended June 30, 2025 increased $70.2 million and $94.1 million, respectively, from the prior year comparable periods.

These increases resulted principally from a $70 million incentive payment made by TailFin Labs, LLC ("TailFin") in connection with the extension of the Walmart MoneyCard agreement and related agreements, partially offset by higher income earned from bank-owned life insurance policies.

In addition, during the first quarter of 2025, we determined we would sell certain available-for-sales securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the six months ended June 30, 2025.

Our income tax benefit for the three months ended June 30, 2025 increased by $15.1 million from the prior year comparable period primarily due to an increase in our loss before taxes and a decrease in nondeductible expenses and penalties primarily related to the tax effect associated with the civil money penalty we incurred in 2024 for our Consent Order received from the Federal Reserve Board.

Our effective tax rate for the six months ended June 30, 2025 was 27.4%, an increase from (8.0)% for the prior year comparable period.

The increase in our effective tax rate was due to several factors, including a lower tax rate benefit from reduced general business credits, an increase 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, and a lower tax rate benefit from the cash surrender value in bank-owned life insurance policies.

These increases in our effective tax rate were partially offset by a decrease in state income taxes expense, net of federal benefits, a decrease in tax expense associated with shortfalls from stock-based compensation, and a decrease in tax expense from nondeductible expenses and penalties primarily related to the civil money penalty under our Consent Order discussed above.

On July 4, 2025, H.R.

1, commonly referred to as the “One Big Beautiful Bill Act" (“OBBBA”) was signed into law, enacting significant changes to the U.S.

federal tax code with various effective dates from 2025 to 2027.

The OBBBA introduced several provisions that may affect our future financial results, including an elective deduction for domestic research expenditures, reinstatement of elective 100% first-year bonus depreciation, and modifications to GILTI, among other provisions.

We are currently assessing the impact of these tax law changes on our effective tax rate and deferred tax assets in 2025 and future periods.

A quantitative estimate of the specific financial effects cannot be reasonably determined at this time due to the complexity of the changes in the tax reform.

The impact of the tax provisions contained in the OBBBA will depend on our facts in each year and anticipated guidance from the U.S.

Department of the Treasury.

Furthermore, since the OBBBA was enacted subsequent to our balance sheet date, our tax provision for the three and six months ended June 30, 2025, does not incorporate the effects of these tax law changes.

We will continue to monitor additional guidance as it becomes available and reflect the impact in future periods as appropriate.

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 consolidated financial statements, but do not expect it will have a material impact on our results of operations in future periods.

Our foreign subsidiary operates in China which has enacted legislation consistent with the OECD model rules effective beginning in 2024.

The results of this legislation do not have a material impact on our consolidated financial statements.

We are monitoring further legislative developments and continuing to evaluate the potential impact of Pillar Two on our consolidated financial statements, but do not expect 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, excluding any impact from our strategic review process, 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.

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, excluding any impact from our strategic review process and non-operating items such as our equity method losses in TailFin, we expect our core results of operations will stabilize on a full year basis year-over-year in 2025 based on our anticipated initiatives and cost reduction measures we have implemented.

In March 2025, we announced that we had initiated a process to explore potential strategic alternatives.

We do not intend to disclose further developments regarding the process unless and until it is determined that further disclosure is appropriate.

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, accelerating our ability to onboard new partners in our B2B Services and Money Movement segments, adding new features and functionality to our Arc platform, 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.

In March 2025, we also initiated a re-alignment of teams and

resources across the enterprise in a continual effort to better support our strategic priorities and growth channels, and to improve our operating efficiency.

of our GO2bank product, and other initiatives across our account programs with the objective of returning to active account growth.

We have created synergies 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.

In March 2025, we also initiated a re-alignment of teams and resources across the enterprise in a continual effort to better support our strategic priorities and growth channels, and improve our operating efficiency.

We expect this re-alignment to further improve our cost structure year-over-year.

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 conduct our strategic review process, incur or accrue for additional retention and interim officer compensation expenses and incur additional expenses in connection with our ongoing investments in our AML program, including improvements to our compliance controls, policies and procedures.

We believe investments in our AML program will ultimately help us to continue to remediate matters identified in the Consent Order from the previous year, reduce our fraud losses over the long term and cost-efficiently scale our compliance and regulatory programs as we look to grow our business.

While expenses related to our AML programs have decreased through the first half of 2025 on a year-over-year basis, this is in part a timing matter, and we expect to incur higher expenses in this area during the second half of the year.

We believe investments in our AML program will ultimately help us continue to remediate matters identified in the Consent Order from the previous year, reduce our fraud losses over the long term and cost-efficiently scale our compliance and regulatory programs as we look to grow our business.

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.

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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.

However, we are also beginning to shift a portion of our investment securities portfolio into variable rate debt securities to improve net yields and balance the effect of our interest sharing arrangements with BaaS partners.

To address some of this dynamic, we have begun to reposition a portion of our investment securities portfolio into variable rate debt securities to improve net yields and balance the effect of our interest sharing arrangements with BaaS partners.

Further, the duration and magnitude of the continuing effects of macro-economic factors remain uncertain and dependent on various factors outside of our control.

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We believe the following measures are the primary indicators of our quarterly and annual revenues:

Three Months Ended March 31,

2025 2024 Change %

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

2025 2024 Change % 2025 2024 Change %

(In millions, except percentages)

Gross dollar volume $ 38,545 $ 32,130 $ 6,415 20.0 % $ 75,797 $ 62,885 $ 12,912 20.5 %

Number of active accounts* 3.58 3.51 0.07 2.0 %

Number of active accounts* 3.48 3.41 0.07 2.1 % n/a n/a n/a n/a

Purchase volume $ 4,991 $ 5,012 $ (21) (0.4) % $ 10,104 $ 10,286 $ (182) (1.8) %

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Number of tax refunds processed 3.73 4.20 (0.47) (11.1) % 11.71 13.48 (1.77) (13.1) %

* Represents the number of active accounts as of March 31, 2025 and 2024, respectively.

* Represents the number of active accounts as of June 30, 2025 and 2024, respectively.

See “Segment Results” for additional information and discussion regarding key metrics performance by segment.

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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.

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, internal controls and strategic review process 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.

Income Tax Expense and Benefit

Our income tax expense and benefit 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.

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Critical Accounting Estimates

There have been no material changes during the three months ended March 31, 2025 to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Comparison of Consolidated Results for the Three Months Ended March 31, 2025 and 2024

There have been no material changes during the six months ended June 30, 2025 to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Comparison of Consolidated Results for the Three Months Ended June 30, 2025 and 2024

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:

Three Months Ended March 31,

Three Months Ended June 30,

Amount % of Total

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Total operating revenues $ 504,176 100.0 % $ 407,121 100.0 %

Card Revenues and Other Fees — Card revenues and other fees totaled $376.0 million for the three months ended March 31, 2025, an increase of $94.5 million, or 34%, from the comparable prior year period.

Card Revenues and Other Fees — Card revenues and other fees totaled $381.2 million for the three months ended June 30, 2025, an increase of $95.1 million, or 33%, 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 and ATM fees, as a result of a decline in active accounts in our Consumer Services segment during the current period, and lower breakage revenue on our gift card portfolio.

Cash Processing Revenues — Cash processing revenues totaled $113.4 million for the three months ended March 31, 2025, an increase of $6.6 million, or 6%, from the comparable prior year period.

Although the number of tax refunds processed decreased by 14% during the three months ended March 31, 2025, our tax processing revenues increased from the expansion of our taxpayer advance program and a favorable mix-shift in the distribution channel in which the tax refund was processed.

These increases were partially offset by decreases in certain accountholder fees, such as monthly maintenance fees and ATM fees, as a result of a decline in active accounts in our Consumer Services segment during the current period.

Cash Processing Revenues — Cash processing revenues totaled $54.5 million for the three months ended June 30, 2025, a decrease of $2.2 million, or 4%, from the comparable prior year period.

In our Money Movement Services segment, our tax processing revenues decreased for the three months ended June 30, 2025 due to an 11% decrease in the number of tax refunds processed and from lower ancillary tax program fees that are associated with tax refund transfers.

The decrease in the number of tax refunds processed is principally attributable to our online tax preparation partners.

The increase in tax processing revenues was partially offset by a 3% decline in the number of cash transfers processed during the three months ended March 31, 2025 from the prior year comparable period.

In addition, our cash transfer revenues decreased due to an 8% decrease in the number of cash transfers processed, partially offset by the mix of cash transfer types and locations where the transactions occurred, as the fees we receive vary depending on these factors.

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 $47.9 million for the three months ended March 31, 2025, a decrease of $3.1 million, or 6%, from the comparable prior year period.

The decrease was primarily due to a decrease in purchase volume of 3% during the three months ended March 31, 2025, as well as a lower effective interchange rate earned for the comparable periods.

Our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates.

Interchange Revenues — Interchange revenues totaled $47.0 million for the three months ended June 30, 2025, a decrease of $2.6 million, or 5%, from the comparable prior year period.

The decrease was primarily due to a lower effective interchange rate earned for the comparable periods, which 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 $21.6 million for the three months ended March 31, 2025, an increase of $8.9 million, or 70%, from the comparable prior year period.

Interest Income, net — Net interest income totaled $21.5 million for the three months ended June 30, 2025, an increase of $6.8 million, or 46%, from the comparable prior year period.

The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners and net proceeds from investment securities sold, and to a lesser extent higher yielding investments from our bond repositioning strategy, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

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:

Three Months Ended March 31,

Three Months Ended June 30,

Amount % of Total

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Total operating expenses $ 490,777 97.4 % $ 430,788 105.9 %

Sales and Marketing Expenses — Sales and marketing expenses totaled $59.7 million for the three months ended March 31, 2025, a decrease of $2.7 million, or 4%, from the comparable prior year period.

This decrease was primarily driven by a decrease in revenue-sharing arrangements in our tax processing business, partially offset by an increase in sales commissions from higher revenues on products subject to tiered revenue-sharing agreements in our Consumer Services segment.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $66.2 million for the three months ended March 31, 2025, a decrease of $0.6 million, or 1%, from the comparable prior year period.

The decrease was driven primarily by a decrease in employee stock-based compensation due to forfeitures of awards from certain employees and severance benefits not recurring at the same magnitude in the current period as a result of our reduction in employee workforce in the comparable prior year period, partially offset by an increase in third-party call center support costs associated with the growth of the BaaS account programs within our B2B Services segment.

Processing Expenses — Processing expenses totaled $285.3 million for the three months ended March 31, 2025, an increase of $89.6 million, or 46%, from the comparable prior year period.

Sales and Marketing Expenses — Sales and marketing expenses totaled $50.2 million for the three months ended June 30, 2025, a decrease of $2.7 million, or 5%, from the comparable prior year period.

This decrease was driven primarily by a decrease in supply chain materials expenses, which are comprised of debit card plastics and related materials costs, from lower active accounts.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $63.8 million for the three months ended June 30, 2025, an increase of $2.5 million, or 4%, from the comparable prior year period.

The increase was driven primarily by an increase in third-party call center support costs associated with the growth of the BaaS account programs within our B2B Services segment, and higher accrued bonus compensation expense due to our current financial performance relative to our annual targets, partially offset by a decrease in employee stock-based compensation expense due to forfeitures of awards.

Processing Expenses — Processing expenses totaled $293.2 million for the three months ended June 30, 2025, an increase of $85.3 million, or 41%, from the comparable prior year period.

This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment.

Other General and Administrative Expenses — Other general and administrative expenses totaled $86.9 million for the three months ended March 31, 2025, a decrease of $29.7 million, or 25%, from the comparable prior year period.

This decrease was primarily due to a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system that were incurred in the first quarter of 2024 that did not recur in the current period, and lower professional services fees related to our AML programs, due to the completion of certain initiatives.

Other General and Administrative Expenses — Other general and administrative expenses totaled $83.6 million for the three months ended June 30, 2025, a decrease of $25.0 million, or 23%, from the comparable prior year period.

This decrease was driven primarily by the timing of accruals in the prior year period related to the civil money penalty under our Consent Order from the Federal Reserve Board, and to a lesser extent, a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, and lower professional services fees related to our AML programs due to the year-over-year timing of spend on certain initiatives, partially offset by an increase in software licenses and hosting costs due to investments in our platform and operations, and an increase from expenses associated with our strategic review process.

Other Expense, net

Other expense, net totaled $25.7 million for the three months ended March 31, 2025, an increase of $23.9 million, from the prior year comparable period.

In April 2025, we sold certain available-for-sales securities in order to reposition the proceeds into higher yielding assets.

As a result, we recorded a realized loss of $24.5 million for the three months ended March 31, 2025 because we no longer had the intent to hold the securities until recovery of their amortized cost bases.

This increase was partially offset by a decrease in equity method losses in TailFin Labs, LLC due to lower marketing expenses, and higher income earned from bank-owned life insurance policies.

Income Tax Expense

Other expense, net totaled $74.7 million for the three months ended June 30, 2025, an increase of $70.2 million, from the prior year comparable period.

This increase was driven by our equity method losses associated with TailFin and resulted principally from a $70 million incentive payment that TailFin made in connection with the extension of the Walmart MoneyCard agreement and related agreements, partially offset by higher income earned from bank-owned life insurance policies.

We recorded the incentive payment as a component of equity in losses attributable to TailFin during the three months ended June 30, 2025 under our HLBV method of accounting.

Income Tax Expense and Benefit

The following table presents a breakdown of our effective tax rate among federal, state, and other:

Three Months Ended March 31,

Three Months Ended June 30,

federal statutory tax rate 21.0 % 21.0 %

5 unchanged sentences

Bank-owned life insurance income 0.4 5.8

Nondeductible expenses and penalties (0.1) (48.9)

Global intangible low-tax income tax 0.1 (2.1)

Other (0.1) (0.1)

Effective tax rate 25.3 % 2.6 %

Our income tax benefit totaled $15.9 million for the three months ended June 30, 2025, representing an increase of $15.1 million from the prior year comparable period, primarily due to an increase in our loss before taxes and a decrease in nondeductible expenses and penalties primarily related to the tax effect associated with the civil money penalty we incurred in 2024 for our Consent Order from the Federal Reserve Board.

The increase in our effective tax rate for the three months ended June 30, 2025 from the prior year comparable period was due to several factors, including an increase of $1.7 million in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, a decrease of $0.2 million in the amount of general business credits, and a lower tax rate benefit from bank-owned life insurance policies income.

These increases in our effective tax rate were partially offset by a decrease of $0.5 million in the tax expense associated with shortfalls from stock-based compensation, a decrease of $0.3 million in state income taxes expense, net of federal benefits, and a decrease of $14.4 million in tax expense due to nondeductible expenses and penalties discussed above for the three months ended June 30, 2025.

The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.

Comparison of Consolidated Results for the Six Months Ended June 30, 2025 and 2024

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:

Six Months Ended June 30,

Amount % of Total

Operating Revenues Amount % of Total

Operating Revenues

(In thousands, except percentages)

Operating revenues:

Card revenues and other fees $ 757,177 71.2 % $ 567,630 66.1 %

Cash processing revenues 167,857 15.8 163,550 19.0

Interchange revenues 94,886 8.9 100,553 11.7

Interest income, net 43,130 4.1 27,376 3.2

Total operating revenues $ 1,063,050 100.0 % $ 859,109 100.0 %

Card Revenues and Other Fees — Card revenues and other fees totaled $757.2 million for the six months ended June 30, 2025, an increase of $189.6 million, or 33%, from the comparable prior year period.

This increase was driven principally by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Operating Revenues—Card Revenues and Other Fees." In addition, this net increase was further partially offset by lower breakage revenue on our gift card portfolio.

Cash Processing Revenues — Cash processing revenues totaled $167.9 million for the six months ended June 30, 2025, an increase of $4.3 million, or 3%, from the comparable prior year period.

In our Money Movement Services segment, although the number of tax refunds processed decreased by 13% during the six months ended June 30, 2025, our tax processing revenues increased from the expansion of our taxpayer advance program and a favorable mix-shift in the distribution channel in which the tax refund was processed.

The decrease in the number of tax refunds processed is principally attributable to our online tax preparation partners.

The increase in tax processing revenues was partially offset by a 6% decline in the number of cash transfers processed during the six months ended June 30, 2025 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 $94.9 million for the six months ended June 30, 2025, a decrease of $5.7 million, or 6%, from the comparable prior year period.

The decrease was primarily due to a decrease in purchase volume of 2% and a decrease in the effective interchange rate earned as discussed under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Operating Revenues—Interchange Revenues."

Interest Income, net — Net interest income totaled $43.1 million for the six months ended June 30, 2025, an increase of $15.7 million, or 57%, from the comparable prior year period.

This increase was driven principally by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Operating Revenues—Interest Income, net."

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:

Six Months Ended June 30,

Amount % of Total

Operating Revenues Amount % of Total

Operating Revenues

(In thousands, except percentages)

Operating expenses:

Sales and marketing expenses $ 109,847 10.3 % $ 115,322 13.4 %

Compensation and benefits expenses 130,061 12.2 128,172 14.9

Processing expenses 578,530 54.4 403,562 47.0

Other general and administrative expenses 170,468 16.0 225,166 26.2

Total operating expenses $ 988,906 92.9 % $ 872,222 101.5 %

Sales and Marketing Expenses — Sales and marketing expenses totaled $109.8 million for the six months ended June 30, 2025, a decrease of $5.5 million, or 5%, from the comparable prior year period.

This decrease was primarily driven by a decrease in supply chain materials expenses and a decrease in revenue-sharing arrangements in our tax processing business, partially offset by an increase in sales commissions from higher revenues on products subject to tiered revenue-sharing agreements in our Consumer Services segment.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $130.1 million for the six months ended June 30, 2025, an increase of $1.9 million, or 1%, from the comparable prior year period.

This increase was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Operating Expenses—Compensation and Benefits Expenses" and offset further by severance benefits that did not recur at the same magnitude in the current period as a result of our reduction in employee workforce in the comparable prior year period.

Processing Expenses — Processing expenses totaled $578.5 million for the six months ended June 30, 2025, an increase of $174.9 million, or 43%, from the comparable prior year period.

This increase was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Operating Expenses—Processing Expenses."

Other General and Administrative Expenses — Other general and administrative expenses totaled $170.5 million for the six months ended June 30, 2025, a decrease of $54.7 million, or 24%, from the comparable prior year period.

This decrease was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Operating Expenses—Other General and Administrative Expenses." In addition, other general and administrative expenses decreased due to the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system in the prior year comparable period that did not recur in the current period.

Other Expense, net

Other expense, net totaled $100.4 million for the six months ended June 30, 2025, an increase of $94.1 million, from the prior year comparable period.

This increase was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Other Expense, net." In addition, during the first quarter of 2025, we determined we would sell certain available-for-sales securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the six months ended June 30, 2025.

Income Tax Expense and Benefit

The following table presents a breakdown of our effective tax rate among federal, state, and other:

Six Months Ended June 30,

federal statutory tax rate 21.0 % 21.0 %

State income taxes, net of federal tax benefit 5.7 11.5

Foreign tax rate differential 0.3 2.9

General business credits 1.6 24.9

Stock-based compensation (4.9) (12.6)

IRC 162(m) limitation 2.3 7.5

Bank-owned life insurance income 2.0 8.7

Bank-owned life insurance surrender — (3.1)

Nondeductible expenses 0.3 2.6

Nondeductible expenses and penalties (0.3) (65.5)

Global intangible low-tax income tax (0.2) (3.2)

Other (0.1) (0.1)

Effective tax rate 27.4 % (8.0) %

Our income tax expense totaled $7.9 million for the three months ended March 31, 2025, representing an increase of $5.3 million, or 211%, from the prior year comparable period, primarily due to an increase in our taxable income, partially offset by a decrease in our effective tax rate.

The decrease in our effective tax rate for the three months ended March 31, 2025 from the prior year comparable period was due to several factors, including the impact of general business credits, an increase of $0.1 million in tax benefits from bank owned life insurance policies, a decrease of $0.3 million in the tax expense associated with shortfalls from stock-based compensation, a decrease of $0.7 million in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, a decrease of $0.1 million in tax expense due to nondeductible expenses, and a decrease of $0.7 million related to our bank owned life insurance surrender penalties we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies completed in 2024.

These decreases in our effective tax rate were partially offset by an increase in state income taxes expense, net of federal benefits of $1.3 million for the three months ended March 31, 2025 .

Our income tax benefit totaled $8.0 million for the six months ended June 30, 2025, representing an increase of $9.8 million, or 550%, from the prior year comparable period, driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2025 and 2024—Income Tax Expense and Benefit."

The increase in our effective tax rate for the six months ended June 30, 2025 from the prior year comparable period was due to several factors, including an increase of $1.0 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a reduced tax rate benefit due to a decrease of $0.6 million in general business credits, an increase of $0.9 million in state income taxes expense, net of federal benefits, and a lower tax rate benefit from the cash surrender value in bank-owned life insurance policies.

These increases were partially offset by a decrease of $0.8 million in tax expense associated with shortfalls from stock-based compensation, a decrease of $0.7 million related to bank-owned life insurance surrender penalties we incurred in connection with the surrender and restructuring of our existing bank-owned life insurance policies in 2024, and a decrease of $14.5 million in tax expense from nondeductible expenses and penalties associated with the civil money penalty we incurred in 2024 for our Consent Order.

The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.

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Consumer Services

The results of operations and key metrics of our Consumer Services segment for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

2025 2024 Change %

The results of operations and key metrics of our Consumer Services segment for the three and six months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 Change % 2025 2024 Change %

(In thousands, except percentages)

5 unchanged sentences

Gross dollar volume $ 3,925 $ 4,014 $ (89) (2.2) % $ 8,163 $ 8,514 $ (351) (4.1) %

Number of active accounts* 1.80 1.93 (0.13) (6.7) %

Direct deposit active accounts* 0.41 0.46 (0.05) (10.9) %

Number of active accounts* 1.67 1.76 (0.09) (5.1) % n/a n/a n/a n/a

Direct deposit active accounts* 0.41 0.45 (0.04) (8.9) % n/a n/a n/a n/a

Purchase volume $ 2,991 $ 3,036 $ (45) (1.5) % $ 6,118 $ 6,375 $ (257) (4.0) %

* Represents total number of active and direct deposit active accounts as of March 31, 2025 and 2024, respectively.

* Represents total number of active and direct deposit active accounts as of June 30, 2025 and 2024, respectively.

As additional supplemental information, our key metrics within our Consumer Services segment is presented on a quarterly basis as follows:

Q1 Q4 Q3 Q2 Q1

Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

4 unchanged sentences

* Represents total number of active accounts as of the end of each quarter.

Segment revenues within Consumer Services for the three months ended March 31, 2025 decreased $5.4 million, or 5%, from the prior year comparable period, while our segment expenses for the three months ended March 31, 2025 decreased by $5.7 million, or 9%.

Our gross dollar volume and purchase volume each declined by 6% for the three months ended March 31, 2025, and the number of active accounts and direct deposit accounts declined by 7% and 11%, respectively, from the comparable prior year period, primarily due to each of the factors discussed above in "Overview." These factors include macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted acquisition at retail locations, as well as the non-renewal of one of our retail partner programs in a prior period.

Our gross dollar volume and purchase volume decreased year-over-year by similar levels during the three months ended March 31, 2025 for the same reasons discussed above.

Segment revenues within Consumer Services for the three and six months ended June 30, 2025 decreased $3.5 million, or 4%, and $8.9 million, or 5%, respectively, from the prior year comparable periods, while our segment expenses for the three and six months ended June 30, 2025 decreased by $2.2 million, or 3%, and $7.9 million, or 6%, respectively.

Our gross dollar volume and purchase volume declined by 2% and 1%, respectively, for the three months ended June 30, 2025, and the number of active accounts and direct deposit accounts declined by 5% and 9%, respectively, from the comparable prior year periods, primarily due to each of the factors discussed above in "Overview." These factors include macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted account acquisition.

Our gross dollar volume and purchase volume decreased year-over-year by similar levels during the six months ended June 30, 2025.

As a result of these decreases in each of our key metrics, our monthly maintenance 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 the comparable period.

Segment expenses for the three months ended March 31, 2025 decreased from the comparable prior year period primarily due a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, partially offset by an increase in sales commissions from higher revenues on products subject to tiered revenue-sharing agreements.

Overall, segment profit increased for the three months ended March 31, 2025 by approximately 1%, from the prior year comparable period.

The results of operations and key metrics of our B2B Services segment for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

2025 2024 Change %

In addition, our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates for the comparable period, and a lower average spend per transaction.

Segment expenses for the three and six months ended June 30, 2025 decreased from the comparable prior year periods primarily due to a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, and lower supply chain material expenses due to lower active accounts, partially offset by an increase in sales commissions from higher revenues on products subject to tiered revenue-sharing agreements.

Overall, segment profit decreased for the three and six months ended June 30, 2025 by approximately 4% and 1%, respectively, from the prior year comparable periods.

The results of operations and key metrics of our B2B Services segment for the three and six months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 Change % 2025 2024 Change %

(In thousands, except percentages)

5 unchanged sentences

Gross dollar volume $ 34,620 $ 28,116 $ 6,504 23.1 % $ 67,634 $ 54,371 $ 13,263 24.4 %

Number of active accounts* 1.78 1.58 0.20 12.7 %

Number of active accounts* 1.81 1.65 0.16 9.7 % n/a n/a n/a n/a

Purchase volume $ 2,000 $ 1,976 $ 24 1.2 % $ 3,986 $ 3,911 $ 75 1.9 %

* Represents total number of active accounts as of March 31, 2025 and 2024, respectively.

* Represents total number of active accounts as of June 30, 2025 and 2024, respectively.

As additional supplemental information, our key metrics within our B2B Services segment is presented on a quarterly basis as follows:

Q1 Q4 Q3 Q2 Q1

Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

3 unchanged sentences

* Represents total number of active accounts as of the end of each quarter.

Segment revenues within our B2B Services for the three months ended March 31, 2025 increased $100.8 million, or 42%, compared to the prior year period, while our segment expenses for the three months ended March 31, 2025 increased $91.9 million, or 41%.

Our gross dollar volume, purchase volume, and number of active accounts increased during the three months ended March 31, 2025 by 26%, 3%, and 13%, respectively, from the prior year comparable period.

Segment revenues within our B2B Services for the three and six months ended June 30, 2025 increased $96.6 million, or 38%, and $197.4 million, or 40%, respectively, compared to the prior year periods, while our segment expenses for the three and six months ended June 30, 2025 increased $87.7 million, or 38%, and $179.6 million, or 39%, respectively.

Our gross dollar volume, purchase volume, and number of active accounts increased during the three months ended June 30, 2025 by 23%, 1%, and 10%, respectively, from the prior year comparable period.

We have continued to experience organic growth from both new and existing users concentrated 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 from these BaaS programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners.

Segment expenses increased for the three months ended March 31, 2025 from the comparable prior year period, principally due to higher processing expenses associated 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, partially offset by lower transaction losses due to favorable reductions in our dispute loss rates.

As a result of these factors, our segment profit increased for the three months ended March 31, 2025 by approximately 49%, from the prior year comparable period.

Segment profit margin increased year-over-year from improvement in our cost structure, although it was limited because certain BaaS partnerships were structured based largely on a fixed profit and, therefore, our segment profit for certain arrangements will not scale with revenue growth.

Segment expenses increased for the three and six months ended June 30, 2025 from the comparable prior year periods, principally due to higher processing expenses associated 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, partially offset by lower transaction losses due to favorable reductions in our dispute loss rates.

As a result of these factors, our segment profit increased for the three and six months ended June 30, 2025 by approximately 47% and 48%, respectively, from the prior year comparable periods.

Although limited, our segment profit margin increased year-over-year from improvement in our cost structure and revised economics of certain partnerships, despite the impact of certain BaaS partnerships largely providing for a fixed profit.

Money Movement Services

The results of operations and key metrics of our Money Movement Services segment for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

2025 2024 Change %

The results of operations and key metrics of our Money Movement Services segment for the three and six months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 Change % 2025 2024 Change %

(In thousands, except percentages)

7 unchanged sentences

As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows:

Q1 Q4 Q3 Q2 Q1

Q2 Q1 Q4 Q3 Q2 Q1

(In millions)

1 unchanged sentence

Number of tax refunds processed 3.73 7.98 0.15 0.19 4.20 9.28

Segment revenues within our Money Movement services for the three months ended March 31, 2025 increased $7.1 million, or 7%, from the comparable prior year period, while segment expenses for the three months ended March 31, 2025 decreased $3.9 million, or 10%.

The increase in segment revenues for the three months ended March 31, 2025 was driven by higher tax processing revenues despite a lower number of tax refunds processed, due to the expansion of our taxpayer advance program and a favorable mix-shift in the distribution channel in which the tax refund was processed.

partially offset by lower cash transfer revenues.

Segment revenues within our Money Movement services for the three months ended June 30, 2025 decreased $2.1 million, or 4%, and for the six months ended June 30, 2025 increased $5.0 million, or 3%, from the comparable prior year periods.

Segment expenses for the three and six months ended June 30, 2025 decreased $0.9 million, or 5%, and $4.8 million, or 9%, respectively.

The decrease in segment revenues for the three months ended June 30, 2025 was driven by lower tax processing revenues due to an 11% decrease in the number of tax refunds processed and from lower ancillary tax program fees that are associated with tax refund transfers.

The decrease in the number of tax refunds processed is principally attributable to our online tax preparation partners.

These increases were partially offset by a 3% decline in the number of cash transfers processed during the three months ended March 31, 2025 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 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 during the three months ended March 31, 2025 primarily due to a decrease in revenue-sharing arrangements in our tax processing business.

The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment.

The increase in segment revenues for the six months ended June 30, 2025 was driven by higher tax processing revenues despite a lower number of tax refunds processed, due to the expansion of our taxpayer advance program and a favorable mix-shift in the distribution channel in which the tax refund was processed.

These increases were partially offset by a 6% decline in the number of cash transfers processed during the six months ended June 30, 2025 from the prior year comparable period.

The decline in the number of cash transfers processed was due to the same reasons discussed above.

Segment expenses decreased during the three and six months ended June 30, 2025 primarily due to a decrease in revenue-sharing arrangements in our tax processing business.

Corporate and Other

The results of operations and key metrics of our Corporate and Other segment for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

2025 2024 Change %

The results of operations and key metrics of our Corporate and Other segment for the three and six months ended June 30, 2025 and 2024 were as follows:

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

2025 2024 Change % 2025 2024 Change %

(In thousands, except percentages)

8 unchanged sentences

Refer to Note 19—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 70% for the three months ended March 31, 2025, 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 three months ended March 31, 2025 decreased by approximately 8%, over the prior year comparable period.

The decreases were primarily due to a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, and lower professional services fees related to our AML programs, due to the completion of certain initiatives.

Revenues within our Corporate and Other segment were driven primarily by an increase in net interest income, which increased by 46% and 57% for the three and six months ended June 30, 2025, respectively, from the prior year comparable periods.

The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners and net proceeds from investment securities sold, and to a lesser extent higher yielding investments from our bond repositioning strategy, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).

Unallocated corporate expenses for the three months ended June 30, 2025 increased by approximately 5% and for the six months ended June 30, 2025 decreased by approximately 2%, over the prior year comparable periods.

The increase in unallocated corporate expenses for the three months ended June 30, 2025 was driven primarily by an increase in accrued bonus compensation expense due to our current financial performance relative to our annual

targets and higher software licenses and hosting costs due to investments in our platform and operations, partially offset by a decrease from lower professional services fees related to our AML programs due to the year-over-year timing of spend on certain initiatives.

The net decrease for the six months ended June 30, 2025 was impacted by these same factors, and driven lower primarily from professional services fees related to our AML programs.

Liquidity and Capital Resources

The following table summarizes our major sources and uses of cash for the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

Total cash provided by (used in)

Total cash provided by

Operating activities $ 177,701 $ 120,674

2 unchanged sentences

Increase in unrestricted cash, cash equivalents and restricted cash $ 720,127 $ 630,715

For the three months ended March 31, 2025 and 2024, we financed our operations primarily through our cash flows provided by operating activities, customer funds held on deposit and borrowings from our senior unsecured notes.

As of March 31, 2025, our primary source of liquidity was unrestricted cash and cash equivalents totaling $1.8 billion.

For the six months ended June 30, 2025 and 2024, we financed our operations primarily through our cash flows provided by operating activities, customer funds held on deposit and borrowings from our senior unsecured notes.

As of June 30, 2025, our primary source of liquidity was unrestricted cash and cash equivalents totaling $2.3 billion.

We also consider our $1.5 billion of available-for-sale investment securities 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 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 believe that our current unrestricted cash and cash equivalents, cash flows from operations and borrowing capacity under our revolving line of credit 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.

1 unchanged sentence

Cash Flows from Operating Activities

Our $108.7 million of net cash provided by operating activities during the three months ended March 31, 2025 was the result of $25.8 million of net income, adjusted for certain non-cash operating items of $62.8 million and increases in net changes in our working capital assets and liabilities of $20.2 million.

Our $89.2 million of net cash provided by operating activities during the three months ended March 31, 2024 was the result of $4.8 million of net income, adjusted for certain non-cash operating items of $47.2 million and increases in net changes in our working capital assets and liabilities of $37.2 million.

Our $177.7 million of net cash provided by operating activities during the six months ended June 30, 2025 was the result of $21.3 million of net loss, adjusted for certain non-cash operating items of $173.1 million and increases in net changes in our working capital assets and liabilities of $25.8 million.

Our $120.7 million of net cash provided by operating activities during the six months ended June 30, 2024 was the result of $24.0 million of net loss, adjusted for certain non-cash operating items of $97.4 million and increases in net changes in our working capital assets and liabilities of $47.2 million, attributable primarily to the timing of the accrual related to our Consent Order from the Federal Reserve Board and the collection of fee advances outstanding as of the beginning of the year.

Cash Flows from Investing Activities

Our $63.5 million of net cash used in investing activities during the three months ended March 31, 2025 was primarily due to purchases of available-for-sale securities, net of maturities and sales, of $25.9 million, the acquisition of property and equipment of $19.4 million and net changes in loans of $17.6 million.

Our $4.5 million of net cash used in investing activities during the three months ended March 31, 2024 was primarily due to capital contributions related to the payment of the final installment of our investment commitment to TailFin Labs, LLC of $35.0 million, net changes in loans of $39.9 million, and the acquisition of property and equipment of $14.5 million, partially offset by net proceeds from maturities of available-for-sale securities of $45.9 million and the surrender of a portion of our bank-owned life insurance policies of $39.1 million.

Our $501.7 million of net cash provided by investing activities during the six months ended June 30, 2025 was primarily due to proceeds from sales and maturities of available-for-sale securities, net of purchases, of $558.9 million, partially offset by the acquisition of property and equipment of $38.9 million and net changes in loans of $17.4 million.

Our $7.8 million of net cash provided by investing activities during the six months ended June 30, 2024 was primarily due to net proceeds from maturities of available-for-sale securities of $94.8 million, partially offset by capital contributions related to our investment in TailFin of $35.0 million, the acquisition of property and equipment of $31.5 million and net changes in loans of $20.2 million.

Our final payment under our commitment with TailFin was made in January 2024.

Cash Flows from Financing Activities

Our $135.2 million of net cash provided by financing activities during the three months ended March 31, 2025 was principally the result of a net increase in customer deposits of $159.8 million partially offset by a net decrease in obligations to customers of $36.6 million.

Our $40.8 million of net cash provided by financing activities during the six months ended June 30, 2025 was principally the result of a net increase in customer deposits of $86.3 million and borrowings on our notes payable $14.9 million , partially offset by a net decrease in obligations to customers of $60.0 million.

Refer to additional discussion below for our borrowings and repayments of debt.

Our $347.9 million of net cash provided from financing activities during the three months ended March 31, 2024 was principally the result of a net increase in customer deposits of $452.0 million, partially offset by a net decrease of $86.7 million in obligations to customers and repayments of $16.0 million, net of borrowings, on our revolving line of credit during the three months ended March 31, 2024.

Our $502.3 million of net cash provided by financing activities during the six months ended June 30, 2024 was principally the result of a net increase in customer deposits of $613.3 million, partially offset by a net decrease of $113.0 million in obligations to customers.

Other Sources of Liquidity

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Interest payments are due monthly, and accrue based on the then-outstanding principal balance.

We had no outstanding balance as of March 31, 2025.

We had no outstanding balance as of June 30, 2025.

2019 Revolving Facility

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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.

Other Sources

Green Dot Bank has the ability to access various sources of funding, including advances from the Federal Home Loan Bank and the Federal Reserve's discount window.

Availability of these borrowings is subject to various factors, including maintaining eligibility requirements and the amount of pledged collateral.

These sources may be used from time to time to support our short-term liquidity needs.

Material Cash Requirements

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Contractual Obligations

There have been no material changes during the three months ended March 31, 2025 to our contractual obligations disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no material changes during the six months ended June 30, 2025 to our contractual obligations disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Capital Requirements for Bank Holding Companies

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Basel III Rules.

As of March 31, 2025 and December 31, 2024, we and Green Dot Bank were categorized as "well-capitalized" under applicable regulatory standards.

As of June 30, 2025 and December 31, 2024, 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 March 31, 2025 which management believes would have changed our category as "well-capitalized."

There were no conditions or events since June 30, 2025 which management believes would have changed our category as "well-capitalized."

The definitions associated with the amounts and ratios below are as follows:

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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

The actual amounts and ratios, and required "well-capitalized" minimum capital amounts and ratios at March 31, 2025 and December 31, 2024 were as follows:

March 31, 2025

The actual amounts and ratios, and required "well-capitalized" minimum capital amounts and ratios at June 30, 2025 and December 31, 2024 were as follows:

June 30, 2025

Amount Ratio Regulatory Minimum "Well-capitalized" Minimum

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis