Company Quick10K Filing
Quick10K
Meta Financial Group
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$26.16 39 $1,030
10-Q 2019-03-31 Quarter: 2019-03-31
10-Q 2018-12-31 Quarter: 2018-12-31
10-K 2018-09-30 Annual: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-K 2017-09-30 Annual: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-K 2016-09-30 Annual: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
10-K 2015-09-30 Annual: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-Q 2014-12-31 Quarter: 2014-12-31
10-K 2014-09-30 Annual: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-Q 2013-12-31 Quarter: 2013-12-31
8-K 2019-04-25 Earnings, Regulation FD, Exhibits
8-K 2019-03-26 Other Events, Exhibits
8-K 2019-03-20 Regulation FD, Exhibits
8-K 2019-01-30 Shareholder Vote
8-K 2019-01-28 Earnings, Regulation FD, Exhibits
8-K 2019-01-28 Earnings, Regulation FD, Exhibits
8-K 2019-01-16 Officers, Exhibits
8-K 2018-12-07 Accountant, Exhibits
8-K 2018-11-27 Other Events, Exhibits
8-K 2018-10-30 Earnings, Officers, Regulation FD, Exhibits
8-K 2018-09-25 Regulation FD, Exhibits
8-K 2018-09-12 Regulation FD, Exhibits
8-K 2018-08-28 Regulation FD, Exhibits
8-K 2018-08-01 M&A, Officers, Other Events, Exhibits
8-K 2018-07-26 Earnings, Regulation FD, Exhibits
8-K 2018-06-28 Other Events, Exhibits
8-K 2018-06-20 Other Events, Exhibits
8-K 2018-05-30 Other Events, Exhibits
8-K 2018-05-29 Shareholder Vote, Other Events, Exhibits
8-K 2018-04-30 Earnings, Regulation FD, Exhibits
8-K 2018-03-05 Regulation FD, Exhibits
8-K 2018-02-27 Other Events, Exhibits
8-K 2018-01-30 Earnings, Regulation FD, Exhibits
8-K 2018-01-25 Regulation FD, Exhibits
8-K 2018-01-22 Shareholder Vote, Exhibits
8-K 2018-01-09 Enter Agreement, Other Events, Exhibits
8-K 2018-01-02 Other Events
RTN Raytheon 50,370
SWM Schweitzer Mauduit 982
TPC Tutor Perini 856
MESA Mesa Air Group 223
EBMT Eagle Bancorp Montana 110
SCX LS Starrett 56
BRN Barnwell Industries 11
LNGB Longbau Group 0
POWW Ammo 0
ACCA Acacia Diversified Holdings 0
CASH 2019-03-31
Part I - Financial Information
Item 1. Financial Statements.
Note 1. Basis of Presentation
Note 2. Summary of Significant Accounting Policies and Recently Adopted Accounting Standards Updates ("Asu")
Note 3. Acquisitions
Note 4. Loans and Leases, Net
Note 5. Earnings per Common Share
Note 6. Securities
Note 7. Rental Equipment, Net
Note 8. Goodwill and Intangible Assets
Note 9. Stock Compensation
Note 10. Income Taxes
Note 11. Commitments and Contingencies
Note 12. Revenue From Contracts with Customers
Note 13. Fair Value Measurements
Note 14. Segment Reporting
Note 15. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 6. Exhibits.
EX-31.1 cash3312019exhibit311.htm
EX-31.2 cash3312019exhibit312.htm
EX-32.1 cash3312019exhibit321.htm
EX-32.2 cash3312019exhibit322.htm

Meta Financial Group Earnings 2019-03-31

CASH 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cash331201910-q.htm 10-Q Document
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission File Number:  0-22140

metalogoa17.jpg
META FINANCIAL GROUP, INC.®
(Exact name of registrant as specified in its charter)
Delaware
42-1406262
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

5501 South Broadband Lane, Sioux Falls, South Dakota 57108
(Address of principal executive offices and Zip Code)

(605) 782-1767
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES ☒  NO☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  YES ☒  NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company See the definitions of "large accelerated filer." "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer☒
Accelerated filer☐
Non-accelerated filer☐
Smaller Reporting Company☐
Emerging growth company☐
 
 
 




If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ☐ YES  ☒ NO

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $.01 par value
CASH
The NASDAQ Stock Market LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class:
Outstanding at May 2, 2019:
Common Stock, $.01 par value
39,449,882 shares
Nonvoting Common Stock, $.01 par value
0 Nonvoting shares
 
 
 
 
 



META FINANCIAL GROUP, INC.
FORM 10-Q

Table of Contents
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
Item 1.
 
 
 
Item 1A.  
 
 
 
Item 6.
 
 

i



PART I - FINANCIAL INFORMATION
Item 1.    Financial Statements.
META FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(Dollars in Thousands, Except Share Data(1))
(Unaudited)
 
 
ASSETS
March 31, 2019
 
September 30, 2018
Cash and cash equivalents
$
156,461

 
$
99,977

Investment securities available for sale, at fair value
1,081,663

 
1,484,160

Mortgage-backed securities available for sale, at fair value
413,493

 
364,065

Investment securities held to maturity, at cost
146,992

 
163,893

Mortgage-backed securities held to maturity, at cost
7,606

 
7,850

Loans held for sale
59,745

 
15,606

Loans and leases
3,437,980

 
2,944,739

Allowance for loan and lease losses
(48,672
)
 
(13,040
)
Federal Home Loan Bank Stock, at cost
7,436

 
23,400

Accrued interest receivable
20,281

 
22,016

Premises, furniture, and equipment, net
45,457

 
40,458

Rental equipment, net
140,087

 
107,290

Bank-owned life insurance
88,565

 
87,293

Foreclosed real estate and repossessed assets
29,548

 
31,638

Goodwill
307,464

 
303,270

Intangible assets
60,506

 
70,719

Prepaid assets
26,597

 
27,906

Deferred taxes
19,079

 
18,737

Other assets
49,754

 
35,090

 


 
 
Total assets
$
6,050,042

 
$
5,835,067

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 
 
 
 
 
LIABILITIES
 

 
 
Noninterest-bearing checking
$
3,034,428

 
$
2,405,274

Interest-bearing checking
183,492

 
111,587

Savings deposits
59,978

 
54,765

Money market deposits
56,563

 
51,995

Time certificates of deposit
154,401

 
276,180

Wholesale deposits
1,481,445

 
1,531,186

Total deposits
4,970,307

 
4,430,987

Short-term debt
11,583

 
425,759

Long-term debt
99,800

 
88,963

Accrued interest payable
9,239

 
7,794

Accrued expenses and other liabilities
135,404

 
133,838

Total liabilities
5,226,333

 
5,087,341

 
 
 
 
STOCKHOLDERS’ EQUITY
 

 
 

Preferred stock, 3,000,000 shares authorized, no shares issued or outstanding at March 31, 2019 and September 30, 2018, respectively

 

Common stock, $.01 par value; 90,000,000 and 90,000,000 shares authorized, 39,565,496 and 39,192,063 shares issued, 39,450,938 and 39,167,280 shares outstanding at March 31, 2019 and September 30, 2018, respectively
395

 
393

Common stock, Nonvoting, $.01 par value; 3,000,000 shares authorized, no shares issued or outstanding at March 31, 2019 and September 30, 2018, respectively

 

Additional paid-in capital
576,406

 
565,811

Retained earnings
258,600

 
213,048

Accumulated other comprehensive loss
(10,264
)
 
(33,111
)
Treasury stock, at cost, 114,558 and 24,783 common shares at March 31, 2019 and September 30, 2018, respectively
(4,956
)
 
(1,989
)
Total equity attributable to parent
820,181

 
744,152

Noncontrolling interest
3,528

 
3,574

Total stockholders’ equity
823,709

 
747,726

 
 
 
 
Total liabilities and stockholders’ equity
$
6,050,042

 
$
5,835,067

See Notes to Condensed Consolidated Financial Statements.
(1)All share and per share data has been adjusted to reflect the 3-for-1 forward stock split effected by the Company on October 4, 2018.

2



META FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data(1))
Three Months Ended March 31,
 
Six Months Ended March 31,
 
2019
 
2018
 
2019
 
2018
Interest and dividend income:
 
 
 
 
 
 
 
Loans and leases, including fees
$
73,670

 
$
17,844

 
$
134,168

 
$
34,287

Mortgage-backed securities
2,861

 
4,047

 
5,559

 
7,805

Other investments
11,763

 
11,480

 
23,543

 
22,136

 
88,294

 
33,371

 
163,270

 
64,228

Interest expense:
 

 
 

 
 

 
 

Deposits
14,740

 
2,957

 
25,336

 
4,842

FHLB advances and other borrowings
2,204

 
3,009

 
6,312

 
5,785

 
16,944

 
5,966

 
31,648

 
10,627

 
 
 
 
 
 
 
 
Net interest income
71,350

 
27,405

 
131,622

 
53,601

 
 
 
 
 
 
 
 
Provision for loan and lease losses
33,318

 
18,343

 
42,417

 
19,411

 
 
 
 
 
 
 
 
Net interest income after provision for loan and lease losses
38,032

 
9,062

 
89,205

 
34,190

 
 
 
 
 
 
 
 
Noninterest income:
 

 
 

 
 

 
 

Refund transfer product fees
31,601

 
33,803

 
31,862

 
33,995

Tax advance product fees
33,038

 
33,838

 
34,723

 
35,785

Card fees
23,052

 
26,856

 
42,403

 
52,103

Rental income
9,890

 

 
20,780

 

Loan and lease fees
925

 
1,042

 
2,173

 
2,334

Bank-owned life insurance
631

 
650

 
1,273

 
1,319

Deposit fees
2,093

 
982

 
4,031

 
1,830

Gain (loss) on sale of securities available-for-sale, net (Includes $231 and ($166) reclassified from accumulated other comprehensive income (loss) for net gains (losses) on available for sale securities for the three months ended March 31, 2019 and 2018, respectively and $209 and ($1,176) for the six months ended March 31, 2019 and 2018, respectively)
231

 
(166
)
 
209

 
(1,176
)
Gain on sale of loans and leases
1,085

 

 
1,951

 

Loss on foreclosed real estate
(200
)
 

 
(185
)
 
(19
)
Other income
2,679

 
414

 
3,556

 
516

Total noninterest income
105,025

 
97,419

 
142,776

 
126,687

 
 
 
 
 
 
 
 
Noninterest expense:
 

 
 

 
 

 
 

Compensation and benefits
49,164

 
32,172

 
82,174

 
54,512

Refund transfer product expense
7,181

 
9,871

 
7,191

 
9,972

Tax advance product expense
2,225

 
1,474

 
2,677

 
1,754

Card processing
6,971

 
7,190

 
14,056

 
13,730

Occupancy and equipment
7,212

 
4,477

 
13,670

 
9,367

Operating lease equipment depreciation
4,485

 

 
12,251

 

Legal and consulting
4,308

 
3,239

 
8,277

 
5,655

Marketing
585

 
668

 
1,124

 
1,221

Data processing
321

 
243

 
758

 
657

Intangible amortization
5,596

 
2,731

 
9,978

 
4,412

Impairment expense
9,660

 

 
9,660

 

Other expense
12,546

 
6,432

 
22,733

 
11,259

Total noninterest expense
110,254

 
68,497

 
184,549

 
112,539

 
 
 
 
 
 
 
 
Income before income tax expense
32,803

 
37,984

 
47,432

 
48,338

 
 
 
 
 
 
 
 
Income tax (benefit) expense (Includes $58 and ($46) reclassified from accumulated other comprehensive loss for the three months ended March 31, 2019 and 2018, respectively and $52 and ($329) for the six months ended March 31, 2019 and 2018, respectively)
(395
)
 
6,548

 
(2,086
)
 
12,232

 
 
 
 
 
 
 
 
Net income before noncontrolling interest
33,198

 
31,436

 
49,518

 
36,106

Net income attributable to noncontrolling interest
1,078

 

 
2,000

 

Net income attributable to parent
$
32,120

 
$
31,436

 
$
47,518

 
$
36,106

 
 
 
 
 
 
 
 
Earnings per common share
 

 
 

 
 

 
 

Basic
$
0.81

 
$
1.08

 
$
1.21

 
$
1.24

Diluted
$
0.81

 
$
1.08

 
$
1.20

 
$
1.24

See Notes to Condensed Consolidated Financial Statements.
(1)All share and per share data has been adjusted to reflect the 3-for-1 forward stock split effected by the Company on October 4, 2018.


3


META FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in Thousands)
Three Months Ended March 31,
 
Six Months Ended
March 31,
 
2019
 
2018
 
2019
 
2018
Net income before noncontrolling interest
$
33,198

 
$
31,436

 
$
49,518

 
$
36,106

 
 
 
 
 
 
 
 
Other comprehensive (loss) income:
 

 
 

 
 

 
 

Change in net unrealized gain (loss) on debt securities
25,089

 
(35,993
)
 
31,260

 
(43,472
)
(Gain) loss realized in net income
(231
)
 
166

 
(209
)
 
1,176

 
24,858

 
(35,827
)
 
31,051

 
(42,296
)
Unrealized gain (loss) on currency translation
116

 

 
(245
)
 

Deferred income tax effect
6,051

 
(8,879
)
 
7,484

 
(11,964
)
Total other comprehensive (loss) income
18,923

 
(26,948
)
 
23,322

 
(30,332
)
Total comprehensive income
52,121

 
4,488

 
72,840

 
5,774

Total comprehensive income attributable to noncontrolling interest
1,078

 

 
2,000

 

Comprehensive income attributable to parent
$
51,043

 
$
4,488

 
$
70,840

 
$
5,774

See Notes to Condensed Consolidated Financial Statements.


4


META FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data(1))
 
Meta Financial Group, Inc. Stockholders' Equity
 
 
 
 
Three Months Ended March 31, 2019
 
 
Common
Stock
 
 
Additional
Paid-in
Capital
 
 
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 
 
Treasury
Stock
 
Total
Stockholders’
Equity
 
Noncontrolling Interest
 
Total Equity
Balance, December 31, 2018
$
394

 
$
572,156

 
$
228,453

 
$
(29,186
)
 
$
(4,356
)
 
$
767,461

 
$
3,267

 
$
770,728

Cash dividends declared on common stock ($0.05 per share)

 

 
(1,973
)
 

 

 
(1,973
)
 

 
(1,973
)
Issuance of common shares due to restricted stock
1

 

 

 

 

 
1

 

 
1

Shares repurchased for tax withholdings on stock compensation

 

 

 

 
(600
)
 
(600
)
 

 
(600
)
Stock compensation

 
4,250

 

 

 

 
4,250

 

 
4,250

Total other comprehensive income

 

 

 
18,922

 

 
18,922

 

 
18,922

Net income

 

 
32,120

 

 

 
32,120

 
1,078

 
33,198

Net investment by (distribution to) noncontrolling interests

 

 

 

 

 

 
(817
)
 
(817
)
Balance, March 31, 2019
$
395

 
$
576,406

 
$
258,600

 
$
(10,264
)
 
$
(4,956
)
 
$
820,181

 
$
3,528

 
$
823,709

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, September 30, 2018
$
393

 
$
565,811

 
$
213,048

 
$
(33,111
)
 
$
(1,989
)
 
$
744,152

 
$
3,574

 
$
747,726

Adoption of Accounting Standards Update 2014-09, net of income taxes

 

 
1,502

 

 

 
1,502

 

 
1,502

Adoption of Accounting Standards Update 2016-01

 

 
475

 
(475
)
 

 

 

 

Cash dividends declared on common stock ($0.10 per share)

 

 
(3,943
)
 

 

 
(3,943
)
 

 
(3,943
)
Issuance of common shares due to exercise of stock options

 
54

 

 

 

 
54

 

 
54

Issuance of common shares due to restricted stock
3

 

 

 

 

 
3

 

 
3

Issuance of common shares due to ESOP

 
2,010

 

 

 

 
2,010

 

 
2,010

Shares repurchased for tax withholdings on stock compensation
(1
)
 
1

 

 

 
(2,967
)
 
(2,967
)
 

 
(2,967
)
Stock compensation

 
8,530

 

 

 

 
8,530

 

 
8,530

Total other comprehensive income

 

 

 
23,322

 

 
23,322

 

 
23,322

Net income

 

 
47,518

 

 

 
47,518

 
2,000

 
49,518

Net investment by (distribution to) noncontrolling interests

 

 

 

 

 

 
(2,046
)
 
(2,046
)
Balance, March 31, 2019
$
395

 
$
576,406

 
$
258,600

 
$
(10,264
)
 
$
(4,956
)
 
$
820,181

 
$
3,528

 
$
823,709


5


 
Meta Financial Group, Inc. Stockholders' Equity
 
 
 
 
Three Months Ended March 31, 2018
 
 
Common
Stock
 
 
Additional
Paid-in
Capital
 
 
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 
 
Treasury
Stock
 
Total
Stockholders’
Equity
 
Noncontrolling Interest
 
Total Equity
Balance, December 31, 2017
$
290

 
$
262,678

 
$
170,578

 
$
5,782

 
$
(1,623
)
 
$
437,705

 
$

 
$
437,705

Cash dividends declared on common stock ($0.04 per share)

 

 
(1,261
)
 

 

 
(1,261
)
 

 
(1,261
)
Issuance of common shares due to exercise of stock options

 
147

 

 

 

 
147

 

 
147

Issuance of common shares due to restricted stock
1

 

 

 

 

 
1

 

 
1

Shares repurchased for tax withholdings on stock compensation

 
(412
)
 

 

 
(43
)
 
(455
)
 

 
(455
)
Stock compensation

 
3,078

 

 

 

 
3,078

 

 
3,078

Total other comprehensive (loss)

 

 

 
(26,948
)
 

 
(26,948
)
 

 
(26,948
)
Net income

 

 
31,436

 

 

 
31,436

 

 
31,436

Balance, March 31, 2018
$
291

 
$
265,491

 
$
200,753

 
$
(21,166
)
 
$
(1,666
)
 
$
443,703

 
$

 
$
443,703

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, September 30, 2017
$
288

 
$
258,144

 
$
167,164

 
$
9,166

 
$
(266
)
 
$
434,496

 
$

 
$
434,496

Cash dividends declared on common stock ($0.08 per share)

 

 
(2,517
)
 

 

 
(2,517
)
 

 
(2,517
)
Issuance of common shares due to exercise of stock options

 
147

 

 

 

 
147

 

 
147

Issuance of common shares due to restricted stock
2

 

 

 

 

 
2

 

 
2

Issuance of common shares due to ESOP
1

 
1,605

 

 

 

 
1,606

 

 
1,606

Shares repurchased for tax withholdings on stock compensation

 
(726
)
 

 

 
(1,400
)
 
(2,126
)
 

 
(2,126
)
Stock compensation

 
6,321

 

 

 

 
6,321

 

 
6,321

Total other comprehensive (loss)

 

 

 
(30,332
)
 

 
(30,332
)
 

 
(30,332
)
Net income

 

 
36,106

 

 

 
36,106

 

 
36,106

Balance, March 31, 2018
$
291

 
$
265,491

 
$
200,753

 
$
(21,166
)
 
$
(1,666
)
 
$
443,703

 
$

 
$
443,703

See Notes to Condensed Consolidated Financial Statements.
(1)All share and per share data has been adjusted to reflect the 3-for-1 forward stock split effected by the Company on October 4, 2018.


6



META FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
Six Months Ended March 31,
(Dollars in Thousands)
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income
$
49,518

 
$
36,106

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation, amortization and accretion, net
28,933

 
19,183

Stock compensation
8,530

 
6,321

Provision (recovery):
 
 
 
Loan and lease losses
42,417

 
19,411

Deferred taxes
(7,811
)
 
126

Loans held for sale:
 
 
 
Originations
(42,961
)
 

Purchases
(5,940
)
 

Proceeds from sales
36,461

 

Net change
8,760

 

Fair value adjustment of foreclosed real estate

 
23

Net realized (gain) loss:
 
 
 
Other assets
(46
)
 
(15
)
Foreclosed real estate or other assets
185

 
19

Available for sale securities, net
(209
)
 
1,176

Loans held for sale
(1,650
)
 

Leases receivable and rental equipment
(1,985
)
 

Net change:
 
 
 
Other assets
(16,226
)
 
(14,472
)
Accrued interest payable
1,445

 
(965
)
Accrued expenses and other liabilities
21,951

 
36,779

Accrued interest receivable
1,735

 
1,776

Change in bank-owned life insurance value
(1,272
)
 
(1,319
)
Impairment on rental equipment
6,194

 

Impairment of intangibles
111

 

Net cash provided by operating activities
128,140

 
104,149

 
 
 
 
Cash flows from investing activities:
 

 
 

Available for sale securities:
 
 
 
Purchases
(222,436
)
 
(323,995
)
Proceeds from sales
534,779

 
126,373

Proceeds from maturities and principal repayments
66,417

 
71,652

Held to maturity:
 
 
 
Proceeds from maturities and principal repayments
16,225

 
19,863

Loans and leases:
 
 
 
Purchases
(144,104
)
 
(88,986
)
Proceeds from sales
10,857

 
9,582

Net change
(399,380
)
 
(143,766
)
Proceeds from sales of foreclosed real estate or other assets
1,905

 
122

Federal Home Loan Bank stock:
 
 
 
Purchases
(358,516
)
 
(477,604
)
Redemption
374,480

 
520,880

Rental equipment:
 
 
 
Purchases
(58,968
)
 

Proceeds from sales
4,962

 

Net change
674

 

Premises and equipment:
 
 
 
Purchases
(8,815
)
 
(3,689
)
Proceeds from sales
101

 

Net cash (used in) investing activities
(181,819
)
 
(289,568
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Net change:
 
 
 
Checking, savings, and money market deposits
712,896

 
464,084

Time deposits
(121,887
)
 
(51,925
)
Wholesale deposits
(49,777
)
 
(295,086
)
FHLB and other borrowings

 
(385,000
)
Federal funds
(422,000
)
 
(703,000
)
Securities sold under agreements to repurchase
(890
)
 
(758
)

7


Net investment by (distribution to) noncontrolling interests
(2,046
)
 

Proceeds from other liabilities
5,027

 

Principal payments:
 
 
 
Other liabilities
(6,032
)
 

Capital lease obligations
(40
)
 
(31
)
Cash dividends paid
(3,943
)
 
(2,517
)
Purchase of shares by ESOP
2,010

 
1,606

Issuance of restricted stock
3

 
2

Proceeds from exercise of stock options & issuance of common stock
54

 
147

Shares repurchased for tax withholdings on stock compensation
(2,967
)
 
(2,126
)
Net cash provided by (used in) financing activities
110,408

 
(974,604
)
 
 
 
 
Effect of exchange rate changes on cash
(245
)
 

 
 
 
 
Net change in cash and cash equivalents
56,484

 
(1,160,023
)
 
 
 
 
Cash and cash equivalents at beginning of year
99,977

 
1,267,586

Cash and cash equivalents at end of year
$
156,461

 
$
107,563



META FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Con't.)
 
Six Months Ended March 31,
 
2019
 
2018
Supplemental disclosure of cash flow information
 

 
 

Cash paid during the period for:
 

 
 

Interest
$
18,389

 
$
9,662

Income taxes
1,218

 
3,966

Franchise taxes
73

 
66

Other taxes
465

 
153

 
 
 
 
Supplemental schedule of non-cash investing activities:
 

 
 

Transfers
 
 
 
Loans and leases to foreclosed real estate or other assets

 
(29,922
)
Loans transferred to held for sale
39,452

 

Purchases/Sales of investment securities accrued, not settled
 
 
 
Purchases - Available for sale

 

Securities transferred from held-to-maturity to available-for-sale

 
(306,000
)
Short and long term debt transferred from other liabilities
20,026

 

See Notes to Condensed Consolidated Financial Statements.

8



NOTE 1. BASIS OF PRESENTATION

The interim unaudited Condensed Consolidated Financial Statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended September 30, 2018 included in Meta Financial Group, Inc.’s (“Meta” or the “Company”) Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on November 29, 2018.  Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted.

The financial information of the Company included herein has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X.  Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of the three and six month periods ended March 31, 2019 are not necessarily indicative of the results expected for the fiscal year ending September 30, 2019.

All share and per share data reported in this Form 10-Q has been adjusted to reflect the 3-for-1 forward stock split of the Company's common stock effected by the Company on October 4, 2018.

Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. These changes and reclassifications did not impact previously reported net income or comprehensive income.

Certain amounts in the Recorded Investment table presented in Note 4 to the consolidated financial statements have been restated from what was previously reported as of September 30, 2018 on Form 10-K.

Loan and lease tables have been conformed to be consistent with the Company's updated presentation of its lending portfolio. The new presentation includes expanding the commercial and consumer finance portfolio to present the lending categories that are included in each, presenting the warehouse finance portfolio as its own category, and condensing the community bank loan categories. Warehouse finance loans were previously included in the consumer finance portfolio. All current and prior period numbers are reflective of this new presentation and total loan and lease balances remained unchanged.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS UPDATES ("ASU")

Significant accounting policies in effect and disclosed within the Company’s most recent audited consolidated financial statements as of September 30, 2018 remain substantially unchanged with the exception of the policies impacted by the adoption of noted ASUs below.

Adopted ASUs
Revenue Recognition - The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), subsequent related Updates (collectively, ASU 2014-09), and ASU 2016-04, Liabilities - Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage of Certain Prepaid Stored-Value Products on October 1, 2018. ASU 2014-09 modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of non-financial assets, unless those contracts are within the scope of other guidance. Upon adoption, the Company recorded a cumulative-effect adjustment of $1.5 million to retained earnings, net of tax, due to changes in timing of revenue recognition from breakage of unregistered, unused prepaid cards in the Company’s Meta Payment Systems (MPS) division. Refer to Note 12. Revenue from Contracts with Customers for additional information.


9


Financial Instruments - The Company adopted ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities and related Updates (collectively, ASU 2016-01) on October 1, 2018. ASU 2016-01 makes several revisions to Subtopic 825-10, including that ASU 2016-01: (1) requires equity investments to be measured at fair value with changes in fair value recognized in net income, (2) simplifies impairment assessment of equity investments without readily determinable fair value, (3) eliminates requirement to disclose methods and significant assumptions used to estimate fair value of financial instruments measured at amortized cost, (4) requires the use of an exit price notion when measuring fair value of financial instruments for disclosure purposes, and (5) requires separate presentation of financial assets and liabilities by measurement category and form of financial asset on the balance sheet and accompanying notes. Upon adoption, the Company recorded a cumulative-effect adjustment that reclassed $0.5 million, net of tax, from accumulated other comprehensive income to retained earnings, due to the Company’s cumulative change in fair value of equity securities with readily determinable fair value. Refer to Note 6. Securities for additional information.

The Company also adopted the following ASUs on October 1, 2018, none of which had a material impact on the Company’s consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash
ASU 2017-01, Clarifying the Definition of a Business
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
ASU 2017-05, Other Income - Gains and Losses from Derecognition of Non-Financial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and accounting for Partial Sales of Non-Financial Assets
ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

ASUs to be Adopted
Leases - ASU 2016-02, Leases (Topic 842), and related Updates (collectively Topic 842) will become effective for the Company on October 1, 2019. For lessees, Topic 842 establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with such classification affecting the pattern and classification of expense recognition in the income statement. For lessors, the guidance with Topic 842 is largely unchanged from current guidance.
A modified retrospective transition approach is required. An entity may choose to use either (1) the standard’s effective date or (2) the beginning of the earliest comparative period presented in the financial statements, as the date of initial application. The Company expects to adopt Topic 842 using the effective date, October 1, 2019, as the date of initial application. Consequently, financial information will not be updated and disclosures required under Topic 842 will not be provided for dates and periods before October 1, 2019.
FASB has released several updates to Topic 842 through subsequent ASUs, many of which allow for practical expedients in transition. The Company expects to elect the ‘package of practical expedients’, which permits the Company to not reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements, with the latter not being applicable to the Company. The new standard also provides practical expedients for a lessee’s and lessor’s ongoing accounting. The Company expects to elect the short-term lease recognition exemption for all leases that qualify. The Company (as a lessee and lessor) also expects to elect the practical expedient to not separate lease and non-lease components for all of its leases that qualify.
As a lessee, the Company expects Topic 842 to have a material effect on its financial statements. While the Company continues to assess the effects of adoption, the Company believes the significant effects will relate to (1) recognition of ROU assets and lease liabilities on the balance sheet for the Company’s office and equipment operating leases; (2) recognition of ROU assets and lease liabilities on the balance sheet for the Company’s service contracts that meet the revised definition of a lease under Topic 842; and (3) providing significant new disclosures about the Company’s leasing activities. The Company is currently implementing a methodology and process to estimate and account for the ROU assets and lease liabilities.



As a lessor, the Company continues to assess the effects of adoption, however the Company believes the significant effects will relate to (1) earlier recognition of expense due to a narrower definition of initial direct costs; (2) gross presentation of costs excluded from contract consideration that are reimbursed by the lessee as revenue and expenses on the income statement; and (3) presentation of leasing activities on the Company’s financial statements. The Company is currently in the process of implementing a new lease accounting system, processes and procedures to reflect the new standard.
Other Upcoming ASUs - Refer to the Company’s most recently audited consolidated financial statements for the year ended September 30, 2018 for the latest update on ASUs relevant to the Company and not yet adopted as of March 31, 2019.

NOTE 3. ACQUISITIONS

The Company acquired Crestmark Bancorp, Inc. ("Crestmark") and its bank subsidiary, Crestmark Bank, on August 1, 2018 for a purchase price of $295.8 million paid by issuance of 9,919,512 shares of Meta common stock. The initial accounting for certain liabilities and goodwill were incomplete and the amounts recorded were considered provisional. The Company recognized certain measurement period adjustments as disclosed below during the three months ended March 31, 2019. The amount of goodwill recorded remains provisional, as well as the other assets and liabilities noted in the table below, as more information becomes available related to DC Solar. The measurement period remains open for the Crestmark acquisition until August 1, 2019. The following table summarizes the allocation of the purchase price to net assets of Crestmark as of the August 1, 2018 acquisition date.
(Dollars in Thousands)
Estimated fair value as previously reported(a)
 
Measurement period adjustments
 
Fair value as adjusted
Rental Equipment
$
98,977

 
$
(3,355
)
 
$
95,622

Intangible assets
28,253

 
(117
)
 
28,136

Goodwill
204,547

 
4,194

 
208,742

Accrued expenses and other liabilities
88,301

 
723

 
89,024

Net other assets
55,464

 

 
55,464

Noncontrolling interest
3,167

 

 
3,167

Purchase price
295,773

 

 
295,773

(a) As previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2018


Measurement Period Adjustments and Impairment - DC Solar
The Company previously purchased a portfolio of mobile solar generators ("MSGs") from DC Solar Solutions, Inc. and certain of its affiliates, a relationship in the Company's solar leasing business, and, in turn, leased the MSGs to DC Solar Distribution, Inc., an affiliate of DC Solar Solutions. During the second fiscal quarter of 2019, the Company became aware that the DC Solar entities and their affiliates filed for bankruptcy and the entities, including their principals, are subjects of ongoing federal investigations involving allegations of fraudulent misconduct. The Company had three separate operating leases with DC Solar - two of the transactions were included in the acquired Crestmark balances on August 1, 2018. The third transaction was originated in August 2018 after the Crestmark acquisition date. The Company considered the bankruptcy filing and fraud allegations as new facts and circumstances and concluded the alleged fraud existed at the acquisition date for the acquired DC Solar transactions. As a result, the identified impairment for the acquired DC Solar transactions and other related adjustments were recorded as measurement period adjustments to the acquired assets and liability amounts recognized and were offset through provisional goodwill. The impairment and related adjustments for the DC Solar transaction originated post-acquisition are reflected in current earnings.



The Company continues to gather information about the situation and, as of the date of this filing, has identified and located 175 of 176 of the underlying assets, however the timing and extent to which the Company will be able to recover and re-lease the underlying assets remains uncertain, due in part to claims by third parties as to their potential interests in the underlying assets. The adjustments to goodwill and impairment recognized for the DC Solar events reflect the Company's best estimate of the potential loss incurred, based on the Company's present understanding of the relevant facts. Assumptions utilized in the estimate included recoverability of the MSGs and the Company's ability to re-lease them, contractual rents, and residual values. As new facts and circumstances become available, the Company will assess any remaining exposure with respect to these DC Solar matters to determine whether additional adjustments to goodwill and/or impairment loss is necessary. As long as the required criteria under GAAP are met, the Company will continue to account for adjustments to the acquired DC Solar transactions as adjustments to goodwill until the measurement period closes, which will not extend beyond August 1, 2019.
The table below reflects the net impact of the foregoing DC Solar matters, based upon the Company's present understanding of the relevant facts and circumstances, to the Company's financial statements at March 31, 2019 and for the three months ended March 31, 2019.
 
 
Increase (Decrease)
Balance Sheet:
(Dollars in Thousands)
 
Operating lease equipment
$
(12,589
)
 
Goodwill
1,968

 
Other assets
(394
)
 
Liabilities
(4,461
)
 
Total balance sheet impact
$
(6,554
)
 
 
 
 
Regulatory capital impact
$
(8,522
)
 
 
 
 
 
Income (Expense)
 Income Statement:
 
 
Rental income
$
1,633

 
Other income
315

 
Impairment
(9,549
)
 
Income tax benefit
1,047

 
Impact to net income
$
(6,554
)
Measurement Period Adjustments - Other
The Company recorded additional measurement period adjustments in the second fiscal quarter of 2019 for provisional tax and compensation liabilities assumed through the Crestmark acquisition. The Company obtained additional information about facts and circumstances existing at the Crestmark acquisition date that resulted in an increase to liabilities and goodwill recognized of $2.2 million.





NOTE 4. LOANS AND LEASES, NET
Loan and lease tables have been conformed to be consistent with the Company's updated categorization of its lending portfolio between National Lending and Community Banking.
Loans and leases at March 31, 2019 and September 30, 2018 were as follows:
 
March 31, 2019
 
September 30, 2018
National Lending
(Dollars in Thousands)
Asset based lending
$
572,210

 
$
477,917

Factoring
287,955

 
284,221

Lease financing
321,414

 
265,315

Insurance premium finance
307,875

 
337,877

SBA/USDA
77,481

 
59,374

Other commercial finance
98,956

 
85,145

Commercial finance
1,665,891

 
1,509,849

Consumer credit products
139,617

 
80,605

Other consumer finance
170,824

 
189,756

Consumer finance(1)
310,441

 
270,361

Tax services
84,824

 
1,073

Warehouse finance(1)
186,697

 
65,000

Total National Lending
2,247,853

 
1,846,283

Community Banking
 
 
 
Commercial real estate and operating
869,917

 
790,890

Consumer one-to-four family real estate and other
257,079

 
247,318

Agricultural real estate and operating
60,167

 
60,498

Total Community Banking
1,187,163

 
1,098,706

Total gross loans and leases
3,435,016

 
2,944,989

 
 
 
 
Allowance for loan and lease losses
(48,672
)
 
(13,040
)
Net deferred loan origination fees (costs)
2,964

 
(250
)
Total loans and leases, net(2)
$
3,389,308

 
$
2,931,699

(1) Warehouse finance loans are presented in their own line. Previously these balances were included with consumer finance loans. Prior period balances have also been adjusted to reflect this change.
(2) As of March 31, 2019, the remaining balance of acquired loans and leases from the Crestmark acquisition was $591.1 million and the remaining balances of the credit and interest rate mark discounts related to the acquired loans and leases held for investment were $8.7 million and $4.5 million, respectively, while the remaining balance of the interest rate mark premium related to the acquired loans held for sale was $0.8 million. On August 1, 2018, the Company acquired loans and leases from the Crestmark acquisition totaling $1.06 billion and recorded related credit and interest rate mark discounts of $12.3 million and $6.0 million, respectively.

During the six months ended March 31, 2019, the Company transferred $39.5 million of consumer credit product loans to held for sale and originated $43.0 million of SBA/USDA and consumer credit product loans as held for sale. The Company sold held for sale loans resulting in proceeds of $36.5 million and gains on sale of $1.7 million during the six months ended March 31, 2019. During the six months ended March 31, 2018, the Company did not designate any loans as held for sale or sell any held for sale loans.


13


Loans purchased and sold by portfolio segment, including participation interests, for the three and six months ended March 31, 2019 and 2018 were as follows:
 
Three Months Ended
 
Six Months Ended
 
March 31, 2019
 
March 31, 2018
 
March 31, 2019
 
March 31, 2018
Loans Purchased
(Dollars in Thousands)
Loans held for sale
$
5,940

 
$

 
$
5,940

 
$

Loans held for investment:
 
 
 
 
 
 
 
Total National Lending
10,621

 

 
125,591

 
72,751

Total Community Banking
7,432

 
13,823

 
18,513

 
16,235

Total purchases
23,933

 
13,823

 
150,044

 
88,986

Loans Sold
 
 
 
 
 
 
 
Loans held for sale
28,051

 

 
34,904

 

Loans held for investment:
 
 
 
 
 
 
 
Total Community Banking
10,479

 
3,666

 
10,857

 
9,582

Total sales
$
38,530

 
$
3,666

 
$
45,761

 
$
9,582


The net investment in direct financing and sales-type leases is comprised of the following as of March 31, 2019 and September 30, 2018.
 
March 31, 2019
 
September 30, 2018
 
(Dollars in Thousands)
Minimum lease payments receivable
$
366,361

 
$
301,835

Estimated residual value of leased equipment
11,328

 
12,406

Unamortized initial direct costs
4,190

 
1,806

Premium on acquired leases
9

 
26

Unearned income
(56,266
)
 
(48,949
)
Net investment in direct financing and sales-type leases
$
325,622

 
$
267,124

Future minimum lease payments receivable on noncancelable direct financing and sales-type leases were as follows as of March 31, 2019.
 
As of March 31, 2019
 
(Dollars in thousands)
Remaining in 2019
$
69,316

2020
115,307

2021
90,333

2022
55,328

2023
29,147

2024 and thereafter
6,930

Total
$
366,361

The Company did not record any contingent rental income from sales-type and direct financing leases in the six months ended March 31, 2019.


14


Activity in the allowance for loan and lease losses and balances of loans and leases by portfolio segment for each of the three and six months ended March 31, 2019 and 2018 was as follows:
Allowance for loan and lease losses:
Beginning balance
 
Provision (recovery) for loan and lease losses
 
Charge-offs
 
Recoveries
 
Ending balance
Three Months Ended March 31, 2019
(Dollars in Thousands)
National Lending
 
 
 
 
 
 
 
 
 
Asset based lending
$
2,065

 
$
1,365

 
$

 
$
69

 
$
3,499

Factoring
1,062

 
1,799

 
(1,125
)
 
25

 
1,761

Lease financing
1,084

 
1,671

 
(1,044
)
 
254

 
1,965

Insurance premium finance
972

 
1,797

 
(1,877
)
 
27

 
919

SBA/USDA
253

 
221

 

 

 
474

Other commercial finance
291

 
234

 

 

 
525

Commercial finance
5,727

 
7,087

 
(4,046
)
 
375

 
9,143

Consumer credit products
1,151

 
163

 

 

 
1,314

Other consumer finance
4,222

 
3,336

 
(2,456
)
 
28

 
5,130

Consumer finance
5,373

 
3,499

 
(2,456
)
 
28

 
6,444

Tax services
1,546

 
22,473

 
(1
)
 
84

 
24,102

Warehouse finance
176

 
9

 

 

 
185

Total National Lending
12,822

 
33,068

 
(6,503
)
 
487

 
39,874

Community Banking
 
 
 
 
 
 
 
 
 
Commercial real estate and operating
6,570

 
103

 

 

 
6,673

Consumer one-to-four family real estate and other
719

 
259

 
(20
)
 

 
958

Agricultural real estate and operating
1,179

 
(112
)
 

 
100

 
1,167

Total Community Banking
8,468

 
250

 
(20
)
 
100

 
8,798

Total
$
21,290

 
$
33,318

 
$
(6,523
)
 
$
587

 
$
48,672


15


Allowance for loan and lease losses:
Beginning balance
 
Provision (recovery) for loan and lease losses
 
Charge-offs
 
Recoveries
 
Ending balance
Six Months Ended March 31, 2019
(Dollars in Thousands)
National Lending
 
 
 
 
 
 
 
 
 
Asset based lending
$
107

 
$
3,528

 
$
(262
)
 
$
126

 
$
3,499

Factoring
64

 
3,022

 
(1,375
)
 
50

 
1,761

Lease financing
59

 
1,542

 
(1,462
)
 
1,826

 
1,965

Insurance premium finance
1,031

 
1,890

 
(2,085
)
 
83

 
919

SBA/USDA
13

 
461

 

 

 
474

Other commercial finance
28

 
497

 

 

 
525

Commercial finance
1,302

 
10,940