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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 September 30, 2023
OR
☐ 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 001-34819
GreenDot_CorporateLogo v4.jpg
(Exact name of Registrant as specified in its charter)

Delaware95-4766827
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)

114 W 7th Street, Suite 240
Austin,Texas78701(626)765-2000
(Address of principal executive offices, including zip code)(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol(s):Name of each exchange on which registered:
Class A Common Stock, $0.001 par valueGDOTNew York Stock Exchange
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 þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
There were 52,452,310 shares of Class A common stock outstanding, par value $0.001 per share as of October 31, 2023.


GREEN DOT CORPORATION
TABLE OF CONTENTS
 Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.


PART I
ITEM 1. Financial Statements
GREEN DOT CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 2023December 31, 2022
(unaudited)
Assets(In thousands, except par value)
Current assets:  
Unrestricted cash and cash equivalents$711,399 $813,945 
Restricted cash4,036 5,900 
Investment securities available-for-sale, at fair value39,581 — 
Settlement assets654,020 493,395 
Accounts receivable, net66,000 74,437 
Prepaid expenses and other assets64,888 78,155 
Total current assets1,539,924 1,465,832 
Investment securities available-for-sale, at fair value2,135,268 2,363,687 
Loans to bank customers, net of allowance for loan losses of $15,552 and $9,078 as of September 30, 2023 and December 31, 2022, respectively
27,638 21,421 
Prepaid expenses and other assets220,570 192,901 
Property, equipment, and internal-use software, net174,570 160,222 
Operating lease right-of-use assets5,986 8,316 
Deferred expenses1,601 14,547 
Net deferred tax assets132,160 117,167 
Goodwill and intangible assets425,856 445,083 
Total assets$4,663,573 $4,789,176 
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable$109,402 $113,891 
Deposits3,193,855 3,450,105 
Obligations to customers362,109 218,239 
Settlement obligations48,670 40,691 
Amounts due to card issuing banks for overdrawn accounts192 328 
Other accrued liabilities88,219 98,580 
Operating lease liabilities3,312 3,167 
Deferred revenue6,306 25,029 
Income tax payable4,305 11,641 
Total current liabilities3,816,370 3,961,671 
Other accrued liabilities21,562 5,777 
Operating lease liabilities3,520 5,247 
Line of credit27,000 35,000 
Total liabilities3,868,452 4,007,695 
Commitments and contingencies (Note 17)
Stockholders’ equity:  
Class A common stock, $0.001 par value; 100,000 shares authorized as of September 30, 2023 and December 31, 2022; 52,415 and 51,674 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
52 52 
Additional paid-in capital368,222 340,575 
Retained earnings793,907 763,582 
Accumulated other comprehensive loss(367,060)(322,728)
Total stockholders’ equity795,121 781,481 
Total liabilities and stockholders’ equity$4,663,573 $4,789,176 
See notes to unaudited consolidated financial statements
1
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands, except per share data)
Operating revenues:
Card revenues and other fees$253,407 $219,577 $735,380 $650,979 
Cash processing revenues36,256 41,318 191,925 198,813 
Interchange revenues54,968 71,407 178,950 226,301 
Interest income, net8,398 11,446 29,030 31,041 
Total operating revenues353,029 343,748 1,135,285 1,107,134 
Operating expenses:
Sales and marketing expenses56,495 66,996 194,530 227,898 
Compensation and benefits expenses59,168 61,868 192,934 185,743 
Processing expenses162,375 125,261 460,555 349,741 
Other general and administrative expenses81,830 78,858 238,324 257,456 
Total operating expenses359,868 332,983 1,086,343 1,020,838 
Operating (loss) income(6,839)10,765 48,942 86,296 
Interest expense, net239 27 2,121 143 
Other expense, net(802)(4,249)(6,050)(9,057)
(Loss) income before income taxes(7,880)6,489 40,771 77,096 
Income tax (benefit) expense(1,615)1,793 10,446 18,768 
Net (loss) income$(6,265)$4,696 $30,325 $58,328 
Basic (loss) earnings per common share:$(0.12)$0.09 $0.58 $1.08 
Diluted (loss) earnings per common share$(0.12)$0.09 $0.58 $1.07 
Basic weighted-average common shares issued and outstanding:52,367 53,053 52,127 53,840 
Diluted weighted-average common shares issued and outstanding:52,367 53,382 52,436 54,428 
See notes to unaudited consolidated financial statements
2
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND LOSS
(UNAUDITED)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Net (loss) income$(6,265)$4,696 $30,325 $58,328 
Other comprehensive loss
Unrealized holding loss, net of tax(47,263)(112,269)(44,332)(304,848)
Comprehensive loss$(53,528)$(107,573)$(14,007)$(246,520)
See notes to unaudited consolidated financial statements
3
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Three Months Ended September 30, 2023
Class A Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
SharesAmount
(In thousands)
Balance at June 30, 202352,341 $52 $360,812 $800,172 $(319,797)$841,239 
Common stock issued under stock plans, net of withholdings and related tax effects74 — (524)— — (524)
Stock-based compensation— — 7,934 — — 7,934 
Net loss— — — (6,265)— (6,265)
Other comprehensive loss— — — — (47,263)(47,263)
Balance at September 30, 202352,415 $52 $368,222 $793,907 $(367,060)$795,121 

Three Months Ended September 30, 2022
Class A Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
SharesAmount
(In thousands)
Balance at June 30, 202253,740 $54 $376,902 $753,002 $(222,386)$907,572 
Common stock issued under stock plans, net of withholdings and related tax effects71 — (655)— — (655)
Stock-based compensation— — 10,806 — — 10,806 
Repurchases of Class A Common Stock(1,309)(1)(30,003)— — (30,004)
Net income— — — 4,696 — 4,696 
Other comprehensive loss— — — — (112,269)(112,269)
Balance at September 30, 202252,502 $53 $357,050 $757,698 $(334,655)$780,146 
See notes to unaudited consolidated financial statements










4
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
(UNAUDITED)

Nine Months Ended September 30, 2023
Class A Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
SharesAmount
(In thousands)
Balance at December 31, 202251,674 $52 $340,575 $763,582 $(322,728)$781,481 
Common stock issued under stock plans, net of withholdings and related tax effects741 — (85)— — (85)
Stock-based compensation— — 27,732 — — 27,732 
Net income— — — 30,325 — 30,325 
Other comprehensive loss— — — — (44,332)(44,332)
Balance at September 30, 202352,415 $52 $368,222 $793,907 $(367,060)$795,121 

Nine Months Ended September 30, 2022
Class A Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
SharesAmount
(In thousands)
Balance at December 31, 202154,868 $55 $401,055 $699,370 $(29,807)$1,070,673 
Common stock issued under stock plans, net of withholdings and related tax effects569 1 (1,257)— — (1,256)
Stock-based compensation— — 31,299 — — 31,299 
Repurchases of Class A Common Stock(2,935)(3)(74,047)— — (74,050)
Net income— — — 58,328 — 58,328 
Other comprehensive loss— — — — (304,848)(304,848)
Balance at September 30, 202252,502 $53 $357,050 $757,698 $(334,655)$780,146 
See notes to unaudited consolidated financial statements

5
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months Ended September 30,
 20232022
 (In thousands)
Operating activities  
Net income$30,325 $58,328 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization of property, equipment and internal-use software42,306 42,881 
Amortization of intangible assets18,593 17,845 
Provision for uncollectible overdrawn accounts from purchase transactions7,356 10,569 
Provision for loan losses21,404 25,754 
Stock-based compensation27,732 31,299 
Losses in equity method investments9,286 11,878 
Amortization of discount on available-for-sale investment securities(1,724)(892)
Impairment of long-lived assets— 4,134 
Other(3,128)(2,392)
Changes in operating assets and liabilities:
Accounts receivable, net1,081 2,480 
Prepaid expenses and other assets8,385 14,849 
Deferred expenses12,946 10,362 
Accounts payable and other accrued liabilities(15,505)36,056 
Deferred revenue(19,363)(14,331)
Income tax receivable/payable(7,859)7,110 
Other, net613 (3,849)
Net cash provided by operating activities132,448 252,081 
Investing activities  
Purchases of available-for-sale investment securities— (922,039)
Proceeds from maturities of available-for-sale securities131,559 244,969 
Proceeds from sales and calls of available-for-sale securities197 3,515 
Payments for acquisition of property and equipment(55,501)(60,605)
Net changes in loans(21,562)(25,158)
Investment in TailFin Labs, LLC(35,000)(35,000)
Purchases of other investments— (31,934)
Other investing activities(1,273)(1,856)
Net cash provided by (used in) investing activities18,420 (828,108)
Financing activities
Borrowings on revolving line of credit153,000 50,000 
Repayments on revolving line of credit(161,000)(50,000)
Proceeds from exercise of options and ESPP purchases3,415 3,443 
Taxes paid related to net share settlement of equity awards(3,500)(4,699)
Net changes in deposits(238,417)182,673 
Net changes in settlement assets and obligations to customers(8,776)(36,261)
Contingent consideration payments— (1,647)
Repurchase of Class A common stock— (74,050)
Net cash (used in) provided by financing activities(255,278)69,459 
Net decrease in unrestricted cash, cash equivalents and restricted cash(104,410)(506,568)
Unrestricted cash, cash equivalents and restricted cash, beginning of period819,845 1,325,640 
Unrestricted cash, cash equivalents and restricted cash, end of period$715,435 $819,072 
Cash paid for interest$3,615 $337 
Cash paid for income taxes$17,100 $9,760 
Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents$711,399 $813,210 
Restricted cash4,036 5,862 
Total unrestricted cash, cash equivalents and restricted cash, end of period$715,435 $819,072 
See notes to unaudited consolidated financial statements
6
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Organization
Green Dot Corporation (“we,” “our,” or “us” refer to Green Dot Corporation and its consolidated subsidiaries) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Our technology platform enables us to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money, and making financial empowerment more accessible for all. We offer a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, such as tax refunds, cash deposits and disbursements.
We were incorporated in Delaware in 1999 and became a bank holding company under the Bank Holding Company Act and a member bank of the Federal Reserve System in December 2011.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP. We consolidated our wholly-owned subsidiaries and eliminated all significant intercompany balances and transactions.
We have also prepared the accompanying unaudited consolidated financial statements in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X and, consequently, they do not include all of the annual disclosures required by GAAP. Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures, including a summary of our significant accounting policies. There have been no material changes to our significant accounting policies during the nine months ended September 30, 2023. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal and recurring items, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These financial statements were prepared using information reasonably available as of September 30, 2023 and through the date of this report. The accounting estimates used in the preparation of our consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes. Actual results may differ from these estimates due to a variety of factors, including those identified under Part II, Item 1A. "Risk Factors" in this report.
Note 3—Revenues
As discussed in Note 19 — Segment Information, we determine our operating segments based on how our chief operating decision maker manages our operations, makes operating decisions and evaluates operating performance. Within our segments, we believe that the nature, amount, timing and uncertainty of our revenue and cash flows and how they are affected by economic factors can be further illustrated based on the timing in which revenue for each of our products and services is recognized. Our products and services are offered to customers within the United States and certain U.S. territories.
The following table disaggregates our revenues earned from external customers by each of our reportable segments:
Three Months Ended September 30, 2023
Consumer ServicesB2B ServicesMoney Movement ServicesTotal
Timing of recognition(In thousands)
Transferred point in time$76,722 $35,383 $31,196 $143,301 
Transferred over time38,363 162,074 893 201,330 
Operating revenues (1)
$115,085 $197,457 $32,089 $344,631 
7
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 3—Revenues (continued)
Three Months Ended September 30, 2022
Consumer ServicesB2B ServicesMoney Movement ServicesTotal
Timing of recognition(In thousands)
Transferred point in time$86,888 $42,179 $36,890 $165,957 
Transferred over time45,154 120,410 781 166,345 
Operating revenues (1)
$132,042 $162,589 $37,671 $332,302 
Nine Months Ended September 30, 2023
Consumer ServicesB2B ServicesMoney Movement ServicesTotal
Timing of recognition(In thousands)
Transferred point in time$253,500 $103,745 $177,898 $535,143 
Transferred over time124,154 444,552 2,406 571,112 
Operating revenues (1)
$377,654 $548,297 $180,304 $1,106,255 
Nine Months Ended September 30, 2022
Consumer ServicesB2B ServicesMoney Movement ServicesTotal
Timing of recognition(In thousands)
Transferred point in time$274,208 $125,869 $186,631 $586,708 
Transferred over time158,654 328,232 2,499 489,385 
Operating revenues (1)
$432,862 $454,101 $189,130 $1,076,093 
(1)
Excludes net interest income, a component of total operating revenues, as it is outside the scope of ASC 606, Revenues. Also excludes the effects of inter-segment revenues.
Revenues recognized at a point in time are comprised of interchange fees, ATM fees, overdraft protection fees, other similar cardholder transaction-based fees, and substantially all of our cash processing revenues. Revenues recognized over time consists of new card fees, monthly maintenance fees, revenue earned from gift cards and substantially all BaaS (as defined herein) partner program management fees.
As presented on our consolidated balance sheets, we record deferred revenue for any upfront payments received in advance of our performance obligations being satisfied. These contract liabilities consist principally of unearned new card fees and monthly maintenance fees. We recognized approximately $0.7 million and $0.3 million in revenue for the three months ended September 30, 2023 and 2022, respectively, and $22.6 million and $25.8 million for the nine months ended September 30, 2023 and 2022, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods. Substantially all of the deferred revenue balances at the beginning of the periods are recognized in the first half of each year. Changes in the deferred revenue balance are driven primarily by the amount of new card fees recognized during the period, and the degree to which these reductions to the deferred revenue balance are offset by the deferral of new card fees associated with cards sold during the period.
During the three months ended September 30, 2023, we recorded an increase in revenue from our gift card program, a component of “Card revenues and other fees” on our Consolidated Statements of Operations. The change was the result of an update in our estimated breakage rates to better reflect current customer spending patterns on remaining gift card portfolios. This change amounted to approximately $10 million during the three months ended September 30, 2023. The impact of this change on our card revenues and other fees is not material to future periods.
8
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 4—Investment Securities
Our available-for-sale investment securities were as follows:
Amortized costGross unrealized gainsGross unrealized lossesFair value
(In thousands)
September 30, 2023
Corporate bonds$10,000 $— $(584)$9,416 
Agency bond securities240,402 — (52,101)188,301 
Agency mortgage-backed securities2,381,995 2 (426,735)1,955,262 
Municipal bonds29,413 — (7,543)21,870 
Total investment securities$2,661,810 $2 $(486,963)$2,174,849 
December 31, 2022
Corporate bonds$10,000 $— $(654)$9,346 
Agency bond securities240,272 — (47,166)193,106 
Agency mortgage-backed securities2,511,958 8 (373,704)2,138,262 
Municipal bonds29,613 — (6,640)22,973 
Total investment securities$2,791,843 $8 $(428,164)$2,363,687 
As of September 30, 2023 and December 31, 2022, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:
Less than 12 months12 months or moreTotal fair valueTotal unrealized loss
Fair valueUnrealized lossFair valueUnrealized loss
(In thousands)
September 30, 2023
Corporate bonds$— $— $9,416 $(584)$9,416 $(584)
Agency bond securities— — 188,301 (52,101)188,301 (52,101)
Agency mortgage-backed securities9,414 (78)1,943,368 (426,657)1,952,782 (426,735)
Municipal bonds— — 21,870 (7,543)21,870 (7,543)
Total investment securities$9,414 $(78)$2,162,955 $(486,885)$2,172,369 $(486,963)
December 31, 2022
Corporate bonds$— $— $9,346 $(654)$9,346 $(654)
Agency bond securities8,972 (457)184,133 (46,709)193,105 (47,166)
Agency mortgage-backed securities892,068 (67,569)1,243,588 (306,135)2,135,656 (373,704)
Municipal bonds16,333 (3,370)6,641 (3,270)22,974 (6,640)
Total investment securities$917,373 $(71,396)$1,443,708 $(356,768)$2,361,081 $(428,164)
Our investments generally consist of highly rated securities, substantially all of which are directly or indirectly backed by the U.S. federal government, as our investment policy restricts our investments to highly liquid, low credit risk assets. As such, we have not recorded any significant credit-related impairment losses during the three and nine months ended September 30, 2023 or 2022 on our available-for-sale investment securities. Unrealized losses as of September 30, 2023 and December 31, 2022 are the result of increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities. Substantially all of the underlying securities within our investment portfolio were in an unrealized loss position as of September 30, 2023 and December 31, 2022 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to recent increases in interest rates by the Federal Reserve, and general volatility in market conditions.
We do not currently intend to sell our investments, and we have determined that it is more likely than not that we will not be required to sell our investments before recovery of their amortized cost bases, which may be at maturity.
9
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 4—Investment Securities (continued)
As of September 30, 2023, the contractual maturities of our available-for-sale investment securities were as follows:
Amortized costFair value
(In thousands)
Due in one year or less$40,055 $39,581 
Due after one year through five years81,179 70,076 
Due after five years through ten years144,223 110,948 
Due after ten years54,413 38,564 
Mortgage and asset-backed securities2,341,940 1,915,680 
Total investment securities$2,661,810 $2,174,849 
The expected payments on mortgage-backed and asset-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.
Note 5—Accounts Receivable
Accounts receivable, net consisted of the following:
September 30, 2023December 31, 2022
 (In thousands)
Trade receivables$24,459 $26,083 
Reserve for uncollectible trade receivables(94)(169)
Net trade receivables24,365 25,914 
Overdrawn cardholder balances from purchase transactions7,621 3,821 
Reserve for uncollectible overdrawn accounts from purchase transactions(2,158)(2,230)
Net overdrawn cardholder balances from purchase transactions5,463 1,591 
Cardholder fees2,307 2,480 
Receivables due from card issuing banks524 3,211 
Fee advances, net8,830 28,924 
Other receivables24,511 12,317 
Accounts receivable, net$66,000 $74,437 
Activity in the reserve for uncollectible overdrawn accounts from purchase transactions consisted of the following:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands)
Balance, beginning of period$2,692 $2,033 $2,230 $3,394 
Provision for uncollectible overdrawn accounts from purchase transactions1,827 3,162 7,356 10,569 
Charge-offs(2,361)(3,076)(7,428)(11,844)
Balance, end of period$2,158 $2,119 $2,158 $2,119 
10
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 6—Loans to Bank Customers
The following table presents total outstanding loans, gross of the related allowance for credit losses, and a summary of the related payment status:
30-59 Days Past Due60-89 Days Past Due90 Days or More Past DueTotal Past DueTotal Current or Less Than 30 Days Past DueTotal Outstanding
(In thousands)
September 30, 2023
Residential$— $— $— $— $4,822 $4,822 
Commercial— — — — 2,695 2,695 
Installment3 — — 3 4,411 4,414 
Consumer2,294 — — 2,294 19,751 22,045 
Secured credit card820 699 3,356 4,875 4,339 9,214 
Total loans$3,117 $699 $3,356 $7,172 $36,018 $43,190 
Percentage of outstanding7.2 %1.6 %7.8 %16.6 %83.4 %100.0 %
December 31, 2022
Residential$— $— $— $— $4,264 $4,264 
Commercial— — — — 2,542 2,542 
Installment— — — — 1,407 1,407 
Consumer2,261 — — 2,261 12,185 14,446 
Secured credit card712 722 2,239 3,673 4,167 7,840 
Total loans$2,973 $722 $2,239 $5,934 $24,565 $30,499 
Percentage of outstanding9.8 %2.4 %7.3 %19.5 %80.5 %100.0 %
We offer an optional overdraft protection program service on certain demand deposit account programs that allows customers who opt-in and meet certain criteria to spend up to a pre-authorized amount in excess of their available balance. When overdrawn, the purchase related balances due on these deposit accounts are reclassified as consumer loans. Fees due from our cardholders for our overdraft service are included as a component of accounts receivable. Overdrawn balances are unsecured and considered immediately due from the customer.
A portion of our secured credit card portfolio is classified as loans held for sale. These loans are included in the long-term portion of prepaid and other assets on our consolidated balance sheets. Changes in valuation allowances are recorded as a component of other income and expenses on our consolidated statement of operations. As of September 30, 2023 and December 31, 2022, the fair value of the loans held for sale amounted to approximately $4.9 million and $5.3 million, respectively.
Nonperforming Loans
The following table presents the carrying value, gross of the related allowance for credit losses, of our nonperforming loans. See Note 2 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2022 for further information on the criteria for classification as nonperforming.
September 30, 2023December 31, 2022
(In thousands)
Residential$52 $153 
Installment83 96 
Secured credit card3,356 2,239 
Total loans$3,491 $2,488 
11
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 6—Loans to Bank Customers (continued)
Credit Quality Indicators
We closely monitor and assess the credit quality and credit risk of our loan portfolio on an ongoing basis. We continuously review and update loan risk classifications. We evaluate our loans using non-classified or classified as the primary credit quality indicator. Classified loans include those designated as substandard, doubtful, or loss, consistent with regulatory guidelines. Secured credit card loans are considered classified if they are greater than 90 days past due. However, our secured credit card portfolio is collateralized by cash deposits made by each cardholder in an amount equal to the user's available credit limit, which mitigates the risk of any significant credit losses we expect to incur.
The table below presents the carrying value, gross of the related allowance for credit losses, of our loans within the primary credit quality indicators related to our loan portfolio:
September 30, 2023December 31, 2022
Non-ClassifiedClassifiedNon-ClassifiedClassified
(In thousands)
Residential$4,770 $52 $4,035 $229 
Commercial2,695 — 2,542 — 
Installment4,331 83 1,306 101 
Consumer22,045 — 14,446 — 
Secured credit card5,858 3,356 5,601 2,239 
Total loans$39,699 $3,491 $27,930 $2,569 
Allowance for Credit Losses
Activity in the allowance for credit losses on our loan portfolio consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Balance, beginning of period$12,641 $10,204 $9,078 $5,555 
Provision for loans5,664 7,302 21,397 25,754 
Loans charged off(2,825)(8,093)(15,074)(21,896)
Recoveries of loans previously charged off72 — 151 — 
Balance, end of period$15,552 $9,413 $15,552 $9,413 
Note 7—Equity Method Investments
On January 2, 2020, we effectuated our agreement with Walmart to jointly establish a new fintech accelerator under the name TailFin Labs, LLC (“TailFin Labs”), with a mission to develop innovative products, services and technologies that sit at the intersection of retail shopping and consumer financial services. The entity is majority-owned by Walmart and focuses on developing tech-enabled solutions to integrate omni-channel retail shopping and financial services. We hold a 20% ownership interest in the entity, in exchange for annual capital contributions of $35.0 million per year from January 2020 through January 2024.
We account for our investment in TailFin Labs under the equity method of accounting in accordance with ASC 323, Investments – Equity Method and Joint Ventures. Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for, among other things, its proportionate share of earnings or losses. However, given the capital structure of the TailFin Labs arrangement, we apply the Hypothetical Liquidation Book Value ("HLBV") method to determine the allocation of profits and losses since our liquidation rights and priorities, as defined by the agreement, differ from our underlying ownership interest. The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation provisions of the agreement if the partnership was to be liquidated at book value as of the balance sheet date. Each partner’s allocation of income or loss in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions.
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 7—Equity Method Investments (continued)
Any future economic benefits derived from products or services developed by TailFin Labs will be negotiated on a case-by-case basis between the parties.
As of September 30, 2023 and December 31, 2022, our net investment in TailFin Labs amounted to approximately $109.4 million and $82.4 million, respectively, and is included in the long-term portion of prepaid expenses and other assets on our consolidated balance sheets. We recorded equity in losses from TailFin Labs of $0.8 million and $3.2 million for the three months ended September 30, 2023 and 2022, respectively, and $8.0 million and $10.3 million for the nine months ended September 30, 2023 and 2022, respectively. These amounts are recorded as a component of other income and expense on our consolidated statements of operations.
Our equity method investments also include an investment held by our bank, which amounted to $3.5 million and $4.8 million at September 30, 2023 and December 31, 2022, respectively. Equity in earnings from this investment for the three and nine months ended September 30, 2023 and 2022 were de minimis.
Note 8—Deposits
Deposits are categorized as non-interest bearing or interest-bearing deposit accounts as follows:
September 30, 2023December 31, 2022
(In thousands)
Non-interest bearing deposit accounts$3,175,777 $3,427,799 
Interest-bearing deposit accounts
Checking accounts1,532 2,461 
Savings6,320 7,899 
Secured card deposits5,476 6,933 
Time deposits, denominations greater than or equal to $250790 2,275 
Time deposits, denominations less than $2503,960 2,738 
Total interest-bearing deposit accounts18,078 22,306 
Total deposits$3,193,855 $3,450,105 
The scheduled contractual maturities for total time deposits are presented in the table below:
September 30, 2023
(In thousands)
Due in 2023$379 
Due in 2024846 
Due in 2025994 
Due in 2026536 
Due in 20271,078 
Thereafter917 
Total time deposits$4,750 
13
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 9—Debt
In October 2019, we entered into a secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto. The credit agreement provides for a $100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), maturing in October 2024. We use the proceeds of any borrowings under the 2019 Revolving Facility for working capital and other general corporate purposes, subject to the terms and conditions set forth in the credit agreement. We classify amounts outstanding as long-term on our consolidated balance sheets; however, we may make voluntary repayments at any time prior to maturity. As of September 30, 2023, the outstanding balance on the 2019 Revolving Facility was $27 million.
In March 2023, we amended the terms of our agreement to replace LIBOR with the Secured Overnight Financing Rate ("SOFR"). At our election, loans made under the credit agreement bear interest at 1) an adjusted SOFR rate (the “SOFR Rate") or 2) a base rate determined by reference to the highest of (a) the United States federal funds rate plus 0.50%, (b) the Wells Fargo prime rate, and (c) an adjusted SOFR rate plus 1.0% (the “Base Rate"), plus in either case, an applicable margin. The applicable margin for borrowings depends on our total leverage ratio and varies from 1.25% to 2.00% for SOFR Rate loans and 0.25% to 1.00% for Base Rate loans. The interest rate on our outstanding balance as of September 30, 2023 was approximately 6.67%. We also pay a commitment fee, which varies from 0.20% to 0.35% per annum on the actual daily unused portions of the 2019 Revolving Facility. Letter of credit fees are payable in respect of outstanding letters of credit at a rate per annum equal to the applicable margin for SOFR Rate loans.
The 2019 Revolving Facility contains certain affirmative and negative covenants including negative covenants that limit or restrict, among other things, liens, indebtedness, investments and acquisitions, mergers and fundamental changes, asset sales, restricted payments, changes in the nature of the business, transactions with affiliates and other matters customarily restricted in such agreements. We must also maintain a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio at the end of each fiscal quarter, as set forth in the credit agreement. At September 30, 2023, we were in compliance with all such covenants.
If an event of default shall occur and be continuing under the facility, the commitments may be terminated and the principal amounts outstanding under the 2019 Revolving Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.
We incurred total cash interest expense during the three and nine months ended September 30, 2023 of approximately $0.2 million and $2.0 million, respectively. We did not incur any interest expense during the three and nine months ended September 30, 2022.
Note 10—Income Taxes
Income tax expense for the nine months ended September 30, 2023 and 2022 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. The sources and tax effects of the differences are as follows:
 Nine Months Ended September 30,
 20232022
U.S. federal statutory tax rate21.0 %21.0 %
State income taxes, net of federal tax benefit1.7 1.3 
General business credits(4.5)(1.9)
Stock-based compensation7.1 2.4 
IRC 162(m) limitation1.1 2.0 
Bank owned life insurance(1.5)(0.8)
Nondeductible expenses1.1 0.6 
Other(0.4)(0.3)
Effective tax rate25.6 %24.3 %
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 10—Income Taxes (continued)
The effective tax rate for the nine months ended September 30, 2023 and 2022 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, stock-based compensation, cash value growth in bank owned life insurance policies, and the Internal Revenue Code (the "IRC") 162(m) limitation on the deductibility of executive compensation. The net increase in the effective tax rate for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 is primarily due to the impact of an increase of $0.3 million in state income taxes, net of federal benefits, and the impact of a $1.0 million increase in tax expense associated with shortfalls from stock-based compensation. We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $2.9 million for the nine months ended September 30, 2023, compared to a $1.9 million discrete tax expense for the prior year comparable period. These increases were partially offset by a decrease of $1.1 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation and the impact of general business credits.
The Inflation Reduction Act of 2022 (the "IRA") levies a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases. To date, these tax law revisions have had no immediate effect and we do not expect that they will have a material impact on our results of operations in the future.
We have made a policy election to account for Global Intangible Low-Taxed Income ("GILTI") in the year the GILTI tax is incurred. For the nine months ended September 30, 2023 and 2022, the provision for GILTI tax expense was not material to our financial statements.
We establish a valuation allowance when we consider it more-likely-than-not that some portion or all of the deferred tax assets will not be realized. As of September 30, 2023 and 2022, we did not have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we will realize the benefits of our deferred tax assets.
We are subject to examination by the Internal Revenue Service, or IRS, and various state tax authorities. We remain subject to examination of our federal income tax return for the years ended December 31, 2017 through 2022. We generally remain subject to examination of our various state income tax returns for a period of four to five years from the respective dates that the returns were filed. The IRS initiated an examination of our 2017 U.S. federal tax return during the second quarter ended June 30, 2020, and the examination remains ongoing as of September 30, 2023. We do not expect the outcome of these examinations will have any material impact on our consolidated financial statements.
As of September 30, 2023, we have federal net operating loss carryforwards of approximately $15.2 million and state net operating loss carryforwards of approximately $102.3 million, which will be available to offset future income. If not used, the federal net operating losses will expire between 2029 and 2034. Of our total state net operating loss carryforwards, approximately $59.0 million will expire between 2026 and 2042, while the remaining balance of approximately $43.3 million does not expire and carries forward indefinitely. The net operating losses are subject to an annual IRC Section 382 limitation, which restricts their utilization against taxable income in future periods. In addition, we have state business tax credits of approximately $20.9 million that can be carried forward indefinitely and other state business tax credits of approximately $1.1 million that will start to expire on December 31, 2023 and continue to expire through December 31, 2027.
As of September 30, 2023 and December 31, 2022, we had a liability of $12.6 million and $11.2 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits. The reconciliation of the beginning unrecognized tax benefits balance to the ending balance is as follows:
15
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 10—Income Taxes (continued)
Nine Months Ended September 30,
20232022
(In thousands)
Beginning balance$11,178 $10,972 
Increases related to positions taken during the current year1,500 1,434 
Decreases related to positions settled with tax authorities(90)— 
Ending balance$12,588 $12,406 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $12,129 $12,074 
As of September 30, 2023 and 2022, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $1.3 million and $1.1 million, respectively.
Note 11—Stockholders' Equity
Stock Repurchase Program
In February 2022, our Board of Directors authorized a $100 million increase to our stock repurchase program. As of September 30, 2023, we had an authorized $4.5 million remaining under our stock repurchase program for additional repurchases.
Accelerated Share Repurchases
In March 2022, we entered into an accelerated share repurchase arrangement ("ASR") with a financial institution for an up-front payment of $25 million. Final settlement of the ASR was completed in April 2022. The final number of shares received upon settlement for the ASR was determined based on the volume-weighted average price of our common stock over the term of the agreement less an agreed upon discount and subject to adjustments pursuant to the terms and conditions of the ASR. Total shares repurchased under the ASR amounted to 914,037 shares at a volume-weighted average price of $27.35.
Other Repurchases
In March 2022, we also entered into a repurchase plan under Rule 10b5-1 of the Exchange Act for $75 million that went into effect at the conclusion of the ASR. The agreement allowed for $10 million of monthly share repurchases through December 31, 2022 until the contract amount was reached, unless otherwise terminated. In December 2022, we early terminated the agreement just prior to completing the entire $75 million of repurchases. We repurchased 3,150,181 shares at a volume-weighted average price of $22.39 under the 10b5-1 plan.
Walmart Restricted Shares
On January 2, 2020, we issued Walmart, in a private placement, 975,000 restricted shares of our Class A Common Stock. The shares vested in equal monthly increments through December 1, 2022; however, Walmart was entitled to voting rights and to participate in any dividends paid from the issuance date on the unvested balance. As such, the total amount of restricted shares issued were included in our total Class A shares outstanding. All shares issued to Walmart were fully vested as of December 31, 2022.
The estimated grant-date fair value of the restricted shares is recorded as a component of stock-based compensation expense over the related period we expect to benefit under the term of our relationship with Walmart.
Note 12—Stock-Based Compensation
We currently grant restricted stock unit awards to employees, directors and non-employee consultants under our 2010 Equity Incentive Plan and from time to time may also grant stock option awards. Through our 2010 Employee Stock Purchase Plan, employees are also able to purchase shares of our Class A common stock at a discount through payroll deductions. We have reserved shares of our Class A common stock for issuance under these plans.
The total stock-based compensation expense recognized was $7.9 million and $10.8 million for the three months ended September 30, 2023 and 2022, respectively, and $27.7 million and $31.3 million for the nine months ended September 30, 2023 and 2022, respectively.
16
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 12—Stock-Based Compensation (continued)
Restricted Stock Units
Restricted stock unit activity for awards subject to only service conditions was as follows for the nine months ended September 30, 2023:
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