GREEN DOT CORP 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Quarterly Report on Form 10-Q, 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 below, under “Part II, 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 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. Overview 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. 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 our 2024 Annual Report on Form 10-K "Part I, Item 1. Business" for more detailed information about our operations and Note 19—Segment Information in the notes to the accompanying unaudited consolidated financial statements. 27 Table of Contents Consolidated Financial Results and Trends 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) Total operating revenues $ 504,176 $ 407,121 $ 97,055 23.8 % $ 1,063,050 $ 859,109 $ 203,941 23.7 % Total operating expenses 490,777 430,788 59,989 13.9 % 988,906 872,222 116,684 13.4 % 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 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. 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. 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. 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 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 June 30, 2025. 28 Table of Contents 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 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. 29 Table of Contents 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. Income taxes 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"). 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 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. 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 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 30 Table of Contents 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. 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. 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 higher 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. 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. See Part II, Item 1A, "Risk Factors," for an additional discussion of risks related to macro-economic factors. 31 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 quarterly and annual revenues: 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* 3.48 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) % Number of cash transfers 7.52 8.15 (0.63) (7.7) % 15.03 15.92 (0.89) (5.6) % 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 June 30, 2025 and 2024, 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. 32 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. 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 33 Table of Contents 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, 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 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. 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 10—Income Taxes to the Consolidated Financial Statements included herein for a discussion of the significant tax differences that impacted our effective tax rate. Critical Accounting Estimates 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. 34 Table of Contents 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 June 30, 2025 2024 Amount % of Total Operating Revenues Amount % of Total Operating Revenues (In thousands, except percentages) Operating revenues: Card revenues and other fees $ 381,224 75.6 % $ 286,127 70.3 % Cash processing revenues 54,484 10.8 56,744 13.9 Interchange revenues 46,967 9.3 49,585 12.2 Interest income, net 21,501 4.3 14,665 3.6 Total operating revenues $ 504,176 100.0 % $ 407,121 100.0 % 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 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. 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 $47.0 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 $21.5 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). 35 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: Three Months Ended June 30, 2025 2024 Amount % of Total Operating Revenues Amount % of Total Operating Revenues (In thousands, except percentages) Operating expenses: Sales and marketing expenses $ 50,159 9.9 % $ 52,947 13.0 % Compensation and benefits expenses 63,847 12.7 61,348 15.1 Processing expenses 293,213 58.2 207,896 51.1 Other general and administrative expenses 83,558 16.6 108,597 26.7 Total operating expenses $ 490,777 97.4 % $ 430,788 105.9 % 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 $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 $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. 36 Table of Contents Income Tax Expense and Benefit The following table presents a breakdown of our effective tax rate among federal, state, and other: Three Months Ended June 30, 2025 2024 U.S. federal statutory tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 4.4 8.3 Foreign tax rate differential 0.1 1.8 General business credits 0.2 15.9 Stock-based compensation (0.2) (3.9) IRC 162(m) limitation (0.5) 4.8 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. 37 Table of Contents 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, 2025 2024 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." 38 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: Six Months Ended June 30, 2025 2024 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. 39 Table of Contents 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, 2025 2024 U.S. 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 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 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. Segment Results Consumer Services 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) Financial Results Segment revenues $ 93,099 $ 96,620 $ (3,521) (3.6) % $ 188,355 $ 197,232 $ (8,877) (4.5) % Segment expenses 60,005 62,171 (2,166) (3.5) % 121,629 129,524 (7,895) (6.1) % Segment profit $ 33,094 $ 34,449 $ (1,355) (3.9) % $ 66,726 $ 67,708 $ (982) (1.5) % Key Metrics (In millions, except percentages) Gross dollar volume $ 3,925 $ 4,014 $ (89) (2.2) % $ 8,163 $ 8,514 $ (351) (4.1) % 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 June 30, 2025 and 2024, respectively. 40 Table of Contents As additional supplemental information, our key metrics within our Consumer Services segment is presented on a quarterly basis as follows: 2025 2024 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Gross dollar volume $ 3,925 $ 4,238 $ 4,060 $ 3,983 $ 4,014 $ 4,500 Number of active accounts * 1.67 1.80 1.88 1.78 1.76 1.93 Direct deposit active accounts * 0.41 0.41 0.43 0.44 0.45 0.46 Purchase volume $ 2,991 $ 3,127 $ 3,082 $ 2,904 $ 3,036 $ 3,339 * Represents total number of active accounts as of the end of each quarter. 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 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. B2B Services 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) Financial Results Segment revenues $ 348,650 $ 252,056 $ 96,594 38.3 % $ 690,641 $ 493,256 $ 197,385 40.0 % Segment expenses 320,670 232,978 87,692 37.6 % 635,509 455,895 179,614 39.4 % Segment profit $ 27,980 $ 19,078 $ 8,902 46.7 % $ 55,132 $ 37,361 $ 17,771 47.6 % Key Metrics (In millions, except percentages) Gross dollar volume $ 34,620 $ 28,116 $ 6,504 23.1 % $ 67,634 $ 54,371 $ 13,263 24.4 % 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 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: 41 Table of Contents 2025 2024 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Gross dollar volume $ 34,620 $ 33,014 $ 31,222 $ 29,490 $ 28,116 $ 26,255 Number of active accounts* 1.81 1.78 1.79 1.68 1.65 1.58 Purchase volume $ 2,000 $ 1,986 $ 2,070 $ 1,983 $ 1,976 $ 1,935 * Represents total number of active accounts as of the end of each quarter. 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 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 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) Financial Results Segment revenues $ 50,848 $ 52,963 $ (2,115) (4.0) % $ 161,095 $ 156,113 $ 4,982 3.2 % Segment expenses 16,736 17,672 (936) (5.3) % 50,157 54,975 (4,818) (8.8) % Segment profit $ 34,112 $ 35,291 $ (1,179) (3.3) % $ 110,938 $ 101,138 $ 9,800 9.7 % Key Metrics (In millions, except percentages) Number of cash transfers 7.52 8.15 (0.63) (7.7) % 15.03 15.92 (0.89) (5.6) % Number of tax refunds processed 3.73 4.20 (0.47) (11.1) % 11.71 13.48 (1.77) (13.1) % As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows: 2025 2024 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Number of cash transfers 7.52 7.51 8.14 8.22 8.15 7.77 Number of tax refunds processed 3.73 7.98 0.15 0.19 4.20 9.28 42 Table of Contents 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. 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. 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 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) Financial Results Unallocated revenue and inter-segment eliminations $ 8,567 $ 917 $ 7,650 834.2 % $ 17,037 $ 3,378 $ 13,659 404.4 % Unallocated corporate expenses and inter-segment eliminations 58,328 55,737 2,591 4.6 % 113,849 116,355 (2,506) (2.2) % Total $ (49,761) $ (54,820) $ 5,059 (9.2) % $ (96,812) $ (112,977) $ 16,165 (14.3) % 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, 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 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 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 43 Table of Contents 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: Six Months Ended June 30, 2025 2024 (In thousands) Total cash provided by Operating activities $ 177,701 $ 120,674 Investing activities 501,664 7,783 Financing activities 40,762 502,258 Increase in unrestricted cash, cash equivalents and restricted cash $ 720,127 $ 630,715 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 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. 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 $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 $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 $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. 44 Table of Contents 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 Senior Unsecured Notes In 2024 and 2025, we issued and sold senior unsecured notes (the "Notes") in an aggregate principal amount of $65 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. 2025 Revolving Facility In February 2025, we entered into a new revolving line of credit agreement 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 line of credit 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. We had no outstanding balance as of June 30, 2025. 2019 Revolving Facility In October 2019, we entered into a secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto. The credit agreement provided for a $100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), which matured in October 2024. 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. 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 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 intend to continue to invest in growth and cost efficiency initiatives in the normal course of business until we reach a conclusion regarding the process we recently initiated to explore potential strategic alternatives. The amount and timing of these investments 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, 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 the prior year, 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 have made and may further 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. 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 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. 45 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 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 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: 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 46 Table of Contents 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 (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 760,052 14.0 % 4.0 % n/a Common equity Tier 1 capital $ 760,052 46.4 % 4.5 % n/a Tier 1 capital $ 760,052 46.4 % 6.0 % 6.0 % Total risk-based capital $ 786,731 48.1 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 406,732 7.7 % 4.0 % 5.0 % Common equity Tier 1 capital $ 406,732 35.0 % 4.5 % 6.5 % Tier 1 capital $ 406,732 35.0 % 6.0 % 8.0 % Total risk-based capital $ 414,431 35.7 % 8.0 % 10.0 % 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 % 47 Table of Contents