Meta Financial Group, Inc. Reports Results for Fiscal 2013 Second Quarter.
Company reports net income of $3.1 million, core earnings improvement
from fiscal 2013 first quarter and fiscal 2012 second quarter
city (1990 pop. 100,814), seat of Minnehaha co., SE S.Dak., on the Big Sioux River; settled 1856, inc. as a village 1877, as a city 1883. Settlers abandoned the site in 1862 because of Native American raids, but with the establishment (1865) of Fort
, S.D., May 2, 2013 /PRNewswire/ — Meta Financial Group,
MFG Marithe Francois Girbaud
” or the “Company”)
Highlights for the fiscal 2013 second quarter ended March 31, 2013
* MFG’s fiscal 2013 second quarter net income totaled $3.1
million versus $10.0 million in last year’s second fiscal quarter.
Net income was $2.8 million for the prior year fiscal second quarter
excluding the after-tax effect of the
Government National Mortgage Association
securities gain of $7.2
** Second quarter average assets grew to $1.8 billion, compared to
$1.5 billion last year, driven by Meta Payment Systems (
* The MPS segment recorded fiscal 2013 second quarter earnings of
$2.4 million compared to $2.5 million for the same period in 2012.
** The year-over-year slight decline in earnings was primarily due
to the previously
tr.v. dis·closed, dis·clos·ing, dis·clos·es
1. To expose to view, as by removing a cover; uncover.
2. To make known (something heretofore kept secret).
at one MPS business
partner that is now ramping up again
** During the fiscal 2013 third quarter, the pre-tax contribution
from this partner is expected to reach $0.5 million to $1.2 million
based on recent estimates received from the partner with further
earnings increases expected thereafter
** MPS generated an average of $1.3 billion in non-interest bearing
deposits in the fiscal 2013 second quarter compared to $1.1 billion in
the same quarter of the prior year, an increase of 21%
* The Traditional Bank (Retail Bank) segment recorded fiscal 2013
second quarter earnings of $1.0 million compared to $7.6 million for the
same quarter of the prior year or $0.4 million after excluding the GNMA
** Total loans increased $15.3 million during the linked quarter, or
5.0%, to $321.7 million
* Non-performing assets (NPA) were 0.11% of total assets at March
31, 2013 compared to 0.16% at
30, 2012, with continuing
1. Advantageous; helpful:
2. Encouraging; propitious:
trends in comparison to industry NPA averages of over
decreased by $0.75 or 3% from
$26.42 at September 30, 2012 to $25.67 per share at March 31, 2013
primarily due to a decline in unrealized gains in securities caused by
cost of funds
at MetaBank averaged 0.20% during the
quarter (and was 0.11% for March) compared to 0.27% for the same quarter
Meta Financial Group, Inc . (
: CASH) reported net income for
the 2013 fiscal second quarter of $3.1 million, or 57 cents per
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture.
share, compared to $10.0 million, or $3.10 per diluted share, for the
prior fiscal year second quarter. The prior year quarter included the
see Federal National Mortgage Association.
(GNMA) securities that resulted in a gain of $11.4
million, or $7.2 million after taxes. Excluding this item, earnings for
the prior fiscal year quarter were $2.8 million or 86 cents per diluted
Year-to-date net income for the six months ended March 31, 2013 was
$6.3 million, or $1.14 per diluted share, compared to $13.1 million, or
$4.09 per diluted share, for the prior year period. Excluding the
The one or ones mentioned previously.
securities gain, earnings for the prior year period were
$5.9 million or $1.83 per diluted share.
Average diluted shares for the six month period ended March 31, 2013
increased 72% from the prior year period primarily due to
1. Almost exact or correct:
2.2 million shares of common stock being sold in May 2012 and September
Chairman, President and
city (1990 pop. 75,450), seat of Smith co., E Tex.; inc. 1850. In the heart of the rich East Texas oil field, Tyler has refineries and other oil-based industries.
Haahr commented, “The
second quarter represented a
of the solid performance we
saw in the prior quarter, despite the challenges presented by the lower
interest rate environment. The strengths of the organization were
evident in the ongoing improvement in our funding costs, now at 11 basis
points, and the
growth fueled by deposits from the Meta
Payment Systems division. The 21% growth in MPS average deposits from
the prior year second quarter would have been even higher were it not
for the general delay in income tax filings due to Congressional
Lack or absence of action.
lack of action; inertia
and subsequent expedited spending caused by that delay. The MPS
partner that had experienced a business interruption during 2012 is
its business with us, albeit at a slower pace than
they had originally indicated to us. We continue to be
1. One who usually expects a favorable outcome.
2. A believer in philosophical optimism.
prospects for this relationship as we move forward.
The Retail Bank showed stronger loan growth than has been
experienced for two years. In addition, our investment portfolio
strategy is playing out as we expected when we expanded our position in
tax-free municipal bonds during 2012. Our tax rate over the first six
months was just 20% compared to 36% for the same period last year,
representing a very substantial economic benefit that isn’t readily
apparent when reviewing interest margin
Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM.
Management believes that a presentation of Core Earnings provides a
meaningful comparison between periods by adjusting for certain revenue
and expenses during the three and six month periods ended March 31,
2013. Core Earnings are defined as Net Income adjusted for the effect of
the prior year income contribution related to a gain on a GNMA security
sale, a temporary interruption at a MPS business partner and an
charge for a retail branch closure.
Financial Summary Revenue Total revenue (interest income plus
non-interest income) for the 2013 fiscal second quarter was $24.8
million compared to $37.1 million for the same quarter last year. The
revenue decrease in this quarter was largely
to a decrease
in gain on sale of securities available for sale.
Total revenue for the six months ended March 31, 2013 was $47.8
million compared to $62.4 million for the same period in 2012, a
decrease of $14.6 million, or 23%, due primarily to the aforementioned
decrease in gain on sale of securities available for sale.
Net Interest Income Net interest income for the fiscal 2013 second
quarter was $8.9 million, down $0.5 million, or 5%, from the same
quarter last year. Average interest-earning assets for the fiscal 2013
second quarter increased to $1.7 billion, up from $1.4 billion during
the same quarter last year. Net interest margin decreased from 2.72% in
the 2012 second quarter to 2.41%. Asset yields declined by 37 basis
points from the same quarter last year due both to a lower interest rate
environment and a continuation of an ongoing shift in our asset mix to
favor more investments and
Being in due proportion; proportional.
tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates
To make proportionate.
lower loans. The decrease in
asset yields was partially offset by a decline in the cost of total
overall investment portfolio to include more tax-free municipal bonds
has resulted in
) now comprising 42% of
average interest-earning assets in the quarter compared to 60% one year
ago. Tax-free municipal bonds now
35% of the total investment
portfolio. It is important to note that the Company’s increased
investments in tax-free municipal bonds has significantly reduced its
effective tax rate and, thus, further enhanced the earnings contribution
of these securities. The tax-equivalent yield of MBS and other
investments was 2.12% for second quarter of fiscal 2013 and 2.18% for
the same quarter in 2012, even with higher
speeds (and, thus,
increased premium amortization and much lower yields on the MBS) in
2013. These yields should improve as prepayment speeds slow with
v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es
1. To make stable or steadfast.
or higher interest rates.
Net interest income for the six months ended March 31, 2013 was
$17.7 million, down $0.3 million, or 2%, lower than the same period in
2012. Contributing to this slight decrease was a 49 basis point decrease
in asset yields partially offset by a 46 basis point decrease in the
average rate paid on interest-bearing liabilities. Average
have increased 28% from the prior year period while interest
bearing liabilities increased by 30%. The tax-equivalent yield of MBS
and other investments was 2.11% for the six months ended March 31, 2013
and 2.31% for the same period in fiscal 2012.
Since September 30, 2012, the fair value of asset-backed, small
business administration, agency, municipal and corporate bonds in our
portfolio has increased from $435 million to $522 million, with most of
that increase resulting from non-bank qualified municipal purchases
during the first quarter partially offset by the sale of all
asset-backed and small business administration bonds and a significant
reduction in agency holdings.
Overall, our cost of funds for all deposits and borrowings decreased
by 7 basis points to 0.20% during the fiscal 2013 second quarter (and
was 0.11% in March), down from 0.27% in the 2012 second quarter. As of
March 31, 2013, low- and no-cost checking deposits represented 93% of
total deposits compared to 91% one year earlier. This increase mainly
resulted from ongoing growth in non-interest bearing deposits generated
by existing MPS programs.
The Company’s average interest-earning assets for the 2013
second quarter grew by $308.7 million, or 22%, to $1.70 billion, up from
$1.39 billion during the same quarter last year. This increase primarily
reflects the growth in the securities portfolio.
The Company’s average total deposits and interest-bearing
liabilities for the fiscal 2013 second quarter increased $278.4 million,
or 21%, to $1.63 billion from $1.35 billion for the same quarter last
year. This increase was generated primarily from an increase in
MPS-generated non-interest bearing deposits, slightly offset by a
decrease in more costly certificates of deposit of $21.8 million. MPS
average quarterly deposits increased $223.6 million or 21% from the same
period last year. MPS average deposit growth was
tr.v. sup·pressed, sup·press·ing, sup·press·es
1. To put an end to forcibly; subdue.
2. To curtail or prohibit the activities of.
fiscal 2013 quarter due to a delay in the acceptance of tax returns by
the Internal Revenue Service and the subsequent expedited spending of
refunds placed on
tr.v. pre·paid, pre·pay·ing, pre·pays
To pay or pay for beforehand.
Non-Interest Income Fiscal 2013 second quarter non-interest income
of $15.1 million decreased $11.7 million, or 44%, from the same quarter
in 2012. This decrease was primarily due to a decrease in the gain on
sale of securities available for sale of $11.1 million. The decrease was
also due to a decrease in card fee income of $1.7 million compared to
the fiscal 2012 second quarter resulting from a temporary interruption
at one MPS business partner that accounted for $2.5 million of the
decrease. The reimplementation of the program began in late
2012 and we believe the program will generate approximately $0.5 to $1.2
million in non-interest income in the fiscal 2013 third quarter with
amounts increasing thereafter to levels comparable to or above those
prior to the interruption. This level is based on the partner’s
updated projections and is somewhat lower than previous estimates for
the 2013 fiscal third quarter due to an adjustment of operational
processes during implementation that has delayed the ramp up.
Non-interest income for the six months ended March 31, 2013
decreased $14.0 million, or 33%, over the same period in the prior year
due primarily to the GNMA securities portfolio sale during the same
period of the prior fiscal year. MPS fee income decreased by $4.1
million, or 13.9%, due to the previously discussed temporary
interruption at one MPS business partner.
Non-Interest Expense Non-interest expense increased slightly to
$20.6 million for the second quarter of fiscal 2013 as compared to $20.2
million for the same quarter in fiscal 2012. Compensation expense was
$9.1 million for the fiscal 2013 second quarter, $1.0 million, or 13%,
higher than the same period in 2012. At March 31, 2013 overall staffing
was 8% higher than March 31, 2012 primarily due to hiring in compliance
and oversight-related areas. We expect staffing growth to moderate going
forward due to technology-related efficiencies. The Company completed
installation of a major BSA/AML system during the quarter. Legal and
consulting expenses decreased $1.2 million to $0.8 million for the
second quarter of fiscal 2013 as compared to $2.0 million for the same
quarter in fiscal 2012. The decrease is primarily due to a reduction in
the use of outside specialists to assist in addressing
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.
matters. Impairment on assets held for sale increased $0.4 million
during the three and six months ended March 31, 2013 due to an expected
sale of a branch in the Central Iowa market.
Fiscal year-to-date 2013 non-interest expense decreased by $0.3
million, or 1%, to $38.7 million from $39.0 million for the same period
in fiscal year 2012. Compensation expense increased $2.2 million due
primarily to an 8% increase in overall staffing. Legal and consulting
expense decreased $1.5 million.
Loans The Retail Bank’s 2013 second fiscal quarter showed
growth of $15.3 million, or 5.0% compared with the first fiscal quarter.
Total loans, net of allowance for loan losses, increased $3.9 million,
or 1.2%, to $330.9 million at March 31, 2013 from $327.0 million at
September 30, 2012. The increase from September 30, 2012 primarily
relates to higher residential mortgage loans of $16.6 million, $8.0
million in agricultural real estate loans and to a lesser extent, $2.1
million in agricultural operating loans, partially offset by a decrease
in commercial and multi-family real estate loans of $17.7 million, $3.4
million in consumer loans, and $1.7 million in commercial operating
During the six months ended March 31, 2013, the Company recognized a
negative provision for loan losses of $0.3 million.
$10.1 million at March 31, 2013 and $9.2 million at September 30,
Credit Quality The Retail Bank’s non-performing assets at March
31, 2013 were $1.9 million and represented 0.11% of total assets,
compared to $2.6 million and 0.16% of total assets at September 30,
2012, a decline of $0.8 million. There continued to be no non-performing
assets within the MPS segment at March 31, 2013.
Retail Bank non-performing loans at March 31, 2013 and September 30,
2012 were $1.9 million, representing 0.6% of total loans.
The Retail Bank’s level of foreclosed real estate and
repossessed assets decreased to $9,000 compared to $0.8 million at
September 30, 2012. The decrease was primarily due to a sale of two
commercial and multi-family real estate assets, which, after expenses,
resulted in a loss of $0.4 million recognized during the first quarter
of fiscal year 2013.
Investments Total investment securities available for sale increased
by $86.6 million to $521.9 million at March 31, 2013 as compared to
September 30, 2012. Municipal bond purchases amounted to $197.3 million
for the six month period.
Total government guaranteed MBS available for sale increased by
$34.0 million, or 5% to $715.4 million at March 31, 2013 compared to
September 30, 2012.
Overall, total investments and MBS increased by $120.7 million, or
11% from September 30, 2012 to March 31, 2013.
Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately.
Total deposits increased $177.4
million, or 13%, to $1.6 billion at March 31, 2013 as compared to $1.4
billion at September 30, 2012. Deposits attributable to MPS also
increased by $186.2 million, or 16%, at March 31, 2013, compared to
September 30, 2012. Certificates of deposits decreased by $18.8 million
primarily related to maturities exceeding new volume. The average
balance of total deposits and interest-bearing liabilities was $1.6
billion for the three month period ended March 31, 2013 compared to $1.3
billion for the same period in the prior fiscal year.
MetaBank decreased its
purchases and other borrowings
by $22.7 million during the six months ended March 31, 2013 due mainly
to a decrease in securities sold under agreements to
tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es
To buy (something) again.
The act of buying something that one previously sold or owned.
Business Segment Performance Meta Payment Systems For the fiscal
2013 second quarter, MPS recorded net income of $2.4 million as compared
to $2.5 million for the same period last year. MPS 2013 second quarter
revenue of $17.7 million decreased $1.1 million compared to the same
fiscal 2012 quarter due to the aforementioned MPS business partner
of certain credit sponsorship programs
amounting to $3.2 million. The average internal net interest yield MPS
received for its deposits was 1.10% in the 2012 fiscal second quarter
and 1.16% in the comparable 2013 period.
Total 2013 second quarter average MPS-generated deposits increased
by $223.6 million or 21%, compared to the same quarter of fiscal 2012.
This increase resulted almost entirely from growth in existing core
prepaid card programs.
Traditional Bank (Retail Bank)The Retail Bank segment recorded net
income of $1.0 million for the second quarter of fiscal 2013, as
compared to $7.6 million in the prior year quarter. Fiscal 2012 second
quarter results were
A long narrow pillow or cushion.
tr.v. bol·stered, bol·ster·ing, bol·sters
1. To support or prop up with or as if with a long narrow pillow or cushion.
by an increase in gain on sale of
securities available for sale of $10.8 million. Other items included in
the current period results were a negative loan loss provision of $0.3
million compared to a charge of $0.2 million in the prior year quarter.
In addition, an
charge of $0.4 million was recorded in
the second quarter of fiscal 2013 related to the closing of a retail
branch which is expected to lower expenses and improve efficiency going
forward with minimal, if any, loss of business.
Retail Bank average checking balances increased by $4.5 million, or
8%, at March 31, 2013, as compared to one year ago.
Capital Ratios At March 31, 2013, MetaBank exceeded federal
regulatory requirements to remain classified as a well-capitalized
institution. In that respect, MetaBank’s Tier 1 (core) capital to
adjusted total assets was 8.51% compared to a well-capitalized
requirement of 5.0%, its total capital to risk-weighted assets ratio was
22.63% which exceeds the well-capitalized requirement of 10.0%, and
MetaBank’s Tier 1 (core) capital to risk-weighted assets ratio was
22.08% compared to the well-capitalized requirement of 6.0%.
MetaBank’s Tier 1 (core) capital to average adjusted total assets
ratio was 8.32%.
This press release and other important information about the Company
are available at http://www.metafinancialgroup.com. All information
provided is subject to potentially more detailed information contained
in the Company’s filings with the Securities and Exchange
Commission (“SEC”). The Company undertakes no duty to update
the information provided herein or therein.
Meta Financial Group, Inc., (“Meta Financial” or “the
Company” or “us”) and its wholly-owned subsidiary,
MetaBank (TM)(the “Bank” or “MetaBank”), may from
time to time make written or oral “forward-looking
statements,” including this earnings release, statements contained
in its filings with the SEC, in its reports to stockholders, and in
other communications by the Company, which are made in good faith by the
Company pursuant to the ”
” provisions of the
You can identify forward-looking statements by words such as
“may,” “hope,” “will,” “should,”
“expect,” “plan,” “anticipate,”
“intend,” “believe,” “estimate,”
“predict,” “potential,” “continue,”
“could,” “future” or the negative of those terms or
other words of similar meaning. You should read statements that contain
these words carefully because they discuss our future expectations or
state other “forward-looking” information. These
forward-looking statements include statements with respect to the
Company’s beliefs, expectations, estimates, and intentions that are
subject to significant risks and uncertainties, and are subject to
change based on various factors, some of which are beyond the
Company’s control. Such statements address, among others, the
following subjects: future operating results; customer retention; loan
and other product demand; important components of the Company’s
balance sheet and income statements; growth and expansion; new products
and services, such as those offered by the Bank or Meta Payment Systems
(“MPS”), a division of the Bank; credit quality and adequacy
of reserves; technology; and the Company’s employees. The following
factors, among others, could cause the Company’s financial
performance to differ materially from the expectations, estimates, and
intentions expressed in such forward looking statements: the strength of
officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world’s third largest country in population and the fourth largest country in area.
economy in general and the strength of the local
economies in which the Company conducts operations; the effects of, and
changes in, trade, monetary, and fiscal policies and laws, including
interest rate policies of the Board of Governors of the Federal Reserve
System (the “Federal Reserve”), as well as efforts of the
United States Treasury in
in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun.
with bank regulatory agencies to
/stim·u·late/ () to excite functional activity.
To arouse a body or a responsive structure to increased functional activity.
the economy and protect the financial system; inflation,
interest rate, market, and monetary fluctuations; the timely development
of and acceptance of new products and services offered by the Company as
well as risks (including reputational and
1. To that, this, or it.
2. Archaic In addition to that; furthermore.
1. to that or it
and the perceived overall value of these products and services by users;
the risks of dealing with or utilizing third party vendors; the scope of
imposed by the
1. One who supervises.
2. One who is in charge of a particular department or unit, as in a governmental agency or school system.
3. One who is an elected administrative officer in certain U.S.
directives and/or the Consent Orders entered into by the Company and the
Bank with the
Office of Thrift Supervision
(the functions of which were
transferred to the
Office of the Comptroller of the Currency
(“OCC”) and the Federal Reserve) and any other such actions
which may be initiated; the impact of changes in financial
services’ laws and regulations, including but not limited to our
relationship with our regulators, the OCC and the Federal Reserve;
technological changes, including but not limited to the protection of
electronic files or databases; acquisitions; litigation risk in general,
including but not limited to those risks involving the MPS division; the
growth of the Company’s business as well as expenses related
thereto; changes in
and saving habits; and the success
of the Company at managing and collecting assets of borrowers in
The foregoing list of factors is not exclusive. Additional
discussions of factors affecting the Company’s business and
prospects are contained in the Company’s periodic filings with the
SEC. The Company expressly disclaims any intent or obligation to update
any forward-looking statement, whether written or oral, that may be made
from time to time by or on behalf of the Company or its
SOURCE Meta Financial Group, Inc.