Second Quarter Highlights * - Net income of $3.0 million for second quarter
STORM LAKE, Iowa, May 15 /PRNewswire-FirstCall/ -- Meta Financial Group
(Nasdaq: CASH) (the Company) reported diluted earnings per share of $1.16 for
the second quarter of 2008 on net income of $3.0 million. For the first
fiscal quarter of 2008, the Company reported a diluted net loss of $0.29 per
share on a net loss of $0.7 million. This compares to diluted earnings per
share of $0.28 and a net loss of $1.08 for the 2007 second and first quarters,
respectively. Earnings growth in the second quarter was driven by an increase
in card fee income, primarily related to new programs, and an increase in net
interest income which were partially offset by increases in card processing
expense and growth-related personnel costs. In addition, the 2008 second
quarter included an after-tax gain of $1.8 million from the sale of the
MetaBank West Central bank subsidiary.
President and Chief Executive Officer J. Tyler Haahr stated, "Our second
quarter net income was our highest earnings quarter ever, and was accomplished
despite a difficult economic environment. The completion of the sale of our
West Central bank reflects our strategic plan to redeploy capital from banking
markets that have limited growth potential to our Meta Payment Systems
division (MPS) that is demonstrating exciting growth and expansion
opportunities. We believe the banking sector outlook is positive in our
remaining retail markets and shows good potential for profitable growth."
Summary Financial Data * Three Months Ended Six Months Ended
3/31/08 12/31/07 3/31/073/31/08 3/31/07
Net Interest Income
- millions $6.2 $5.3 $5.4 $11.5$10.4
Non Interest Income
- millions 12.36.1 4.4 18.4 8.5
Net Income (Loss) -
millions $3.0 $(0.7) $0.7 $2.3$(2.0)
Diluted earnings
(loss) per share 1.16 (0.29) 0.28 0.87(0.78)
Net interest margin 3.59% 3.49% 3.45% 3.52%3.46%
Non-performing
assets - % of total assets 0.39% 0.36% 0.38%
MPS active cards - millions 11.4 11.1 7.7
MPS transaction
volume - billions $2.3 $1.6 $1.1 $3.9 $1.9
* Also, please see more detailed Financial Highlights tables at the end
of this document.
Financial Summary
Revenue
Total revenue for the second quarter of fiscal year 2008 reached a record
high of $24.5 million compared to $14.1 million for the same quarter in fiscal
year 2007. Revenues in 2008 included a $2.3 million gain on sale of the
MetaBank West Central subsidiary.For continuing operations, revenues
increased $8.1 million, or 57 percent. The improvement in revenues was
primarily driven by increased card fee income from organic growth and new card
programs, by our partnership with income tax providers and higher net interest
income. Net of taxes, the sale of the subsidiary increased earnings per
diluted share by $0.70 in the second quarter.
On a business segment basis, MPS revenues (interest income plus
non-interest income) grew by 179 percent over the same quarter a year ago and
now comprise 68 percent of the Company's total revenue from continuing
operations compared to 38 percent in the second quarter of the prior year.
Although prepaid card-related deposits increased during the quarter, the
average transfer pricing yield realized by MPS on these deposits dropped by
132 basis points, or 26 percent, from 5.15 percent to 3.83 percent, in line
with market conditions.
MPS launched new programs with tax preparers Jackson Hewitt and H&R Block
and a travel card with AAA. The division also experienced growth in rebate
and gift cards. MPS also saw exciting adoption rates on iAdvance, its new
patent-pending micro-credit product. MPS will have seasonality in its results
going forward from its relationships in the tax industry.
Net Interest Income
Net interest income for the second quarter was $6.2 million, up $0.8
million or 15 percent from the same quarter last year. This growth is the
result of a continued widening of the Company's net interest margin and higher
interest-earning assets. Net interest margin improved 14 basis points from
3.45 percent in the second quarter of 2007 to 3.59 percent in 2008. Both
asset yields and liability costs decreased over the period; however, a more
favorable deposit mix contributed to the wider margin. As of March 31, 2008,
low- and no-cost checking and prepaid card deposits represented 63 percent of
total deposits, compared to 48 percent one year earlier. The bulk of this
shift is due to the dramatic growth in card-related deposits at MPS and growth
in checking deposits in our branch locations.
Non-Interest Income
Non-interest income grew considerably in the 2008 second quarter, reaching
a record high of $12.3 million. This represents an increase of $7.9 million,
or 180 percent, over the same quarter in 2007. MPS card fee income grew by
$7.8 million, triple the same period of 2007, due to the aforementioned
existing program growth and the introduction of several significant new
programs.
Non-Interest Expense
Non-interest expense grew $7.3 million or 82 percent from the second
quarter of fiscal year 2007 to $16.4 million from the same period in the
current fiscal year. The bulk of the increase occurred in card processing and
personnel-related expense and primarily was the result of continued growth in
MPS. These increases relate not only to existing products but to a purposeful
investment in new product development. These outlays affect short term
results but position the Company for future earnings growth as these products
are introduced to the market.
Compensation expense was $6.5 million for the second quarter of fiscal
year 2008 up $2.0 million from the same period in 2007. The increase
primarily represents new program growth within MPS.
MPS also continued to invest in innovation and demonstrate its industry
leadership. The Company filed five patents in the quarter and received
several industry awards, including Most Innovative Product (iAdvance), Best
Promotion Card Program (Hasbro/Young America), and Industry Leadership (Brad
Hanson and Scott Galit).
Card processing expense was $3.5 million higher than the same period in
2007, primarily due to growing card volumes from the previously mentioned new
tax services relationships and expansion of existing prepaid card programs.
Other card processing expense increases are attributable to settlement
functions related to value loading and card spend.
The Company's occupancy and equipment expense was $0.8 million higher than
the same period in 2007, primarily driven by the addition of administrative
office space in Sioux Falls and Omaha and a new branch office in Des Moines,
as well as investment in computer hardware and software, primarily to support
growth at the MPS division.
Other general and administrative expenses rose primarily due to the
increase in the number of employees and the general increase in business
activities.
Credit Quality
The Company's credit quality remains stable. Non-performing loans at
March 31, 2008 were $2.9 million representing 0.70 percent of total loans
compared to $2.3 million, or 0.64 percent at September 30, 2007. The Company
believes it has been thoughtful in extending credit to new borrowers and has
continued to actively manage risk profiles on existing customers. The
Company's underlying credit trends are strong, and the Company continues to
foster a conservative credit culture. The Company does not have any direct
exposure to subprime mortgage loans or securities.
Loans
Total loans, net of allowance for loan losses, increased $48.3 million
during the six months ended March 31, 2008, to $404.0 million or 14 percent
since September 30, 2007. This increase primarily relates to growth of $28.0
million in commercial real estate and $14.5 million from the consumer loan
portfolio. The increase in the consumer loan portfolio is primarily from MPS
credit-related programs.
Deposits and Other Liabilities
The Company continues to grow its low- and no-cost deposit portfolio as a
result of new and existing program growth at MPS. Prepaid card deposits and
checking deposits were up $100.0 million, or 36 percent, at March 31, 2008, as
compared to September 30, 2007. A portion of this increase results from
seasonal gift card deposits that remain unspent and were not present at
September 30. Traditional bank checking deposits also showed positive trends.
Business Segment Performance
Meta Payment Systems
MPS recorded net income of $2.2 million, or $0.82 per diluted share, for
the second quarter of fiscal year 2008, compared to $0.7 million, or $0.26 per
diluted share, for the same period last year.
Traditional Banking
The Traditional Banking segment recorded a net loss of $0.7 million, or
$0.28 per diluted share, for the second quarter of fiscal year 2008, compared
to net income of $0.4 million, or $0.15 per diluted share for the same period
last year.
Other Information
Please see the Meta Financial Group, Inc. press release issued on March
31, 2008, regarding the sale of its MetaBank West Central subsidiary. This
transaction, which involved the sale of the stock of MetaBank West Central,
closed on March 28, 2008.
On February 15, 2008, the Company announced that it was investigating a
possible defalcation regarding the issuance of fraudulent certificates of
deposit by a former employee over a number of years. Evidence currently
available indicates that there are some $4.2 million of bogus CDs still
outstanding to various financial institutions. At this point, there has been
no determination of liability for the Company. If the Company is found to be
liable, the Company believes its insurance will provide coverage.
Meta Financial Group and MetaBank continue to meet regulatory requirements
for classification as well-capitalized institutions.
This press release and other important information about the Company are
available at http://www.metacash.com.
Corporate Profile: Meta Financial Group, Inc(R). (doing business as Meta
Financial Group) is the holding company for MetaBank and Meta Trust
Company(R). MetaBank is a federally-chartered savings bank with four market
areas: Northwest Iowa Market, Brookings Market, Central Iowa Market, Sioux
Empire Market; and the Meta Payment Systems(R) prepaid card division.
Thirteen retail banking offices and one administrative office support
customers throughout northwest and central Iowa, and in Brookings and Sioux
Falls, South Dakota.
The Company, and its wholly-owned subsidiaries, MetaBank and Meta Trust,
may from time to time make written or oral "forward-looking statements,"
including statements contained in its filings with the Securities and Exchange
Commission, in its reports to shareholders, and in other communications by the
Company, which are made in good faith by the Company pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
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 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 MPS or MetaBank; credit
quality and adequacy of reserves; technology; and our 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 the
United States 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 Federal Reserve Board; 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 litigation)
attendant thereto and the perceived overall value of these products and
services by users; the risks of dealing with or utilizing third-party vendors;
the impact of changes in financial services' laws and regulations;
technological changes, including but not limited to the protection of
electronic files or databases; acquisitions; 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 consumer
spending and saving habits; and the success of the Company at managing and
collecting assets of borrowers in default.
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 subsidiaries.
Financial Highlights
Consolidated Statement of Financial Condition
(Dollars In Thousands)
Assets March 31, 2008 September 30, 2007
Cash and cash equivalents $64,552 $86,320
Investments and mortgage-backed securities 249,262 158,701
Loans receivable, net 403,954 355,612
Other assets 92,76785,447
Total assets $810,535 $686,080
Liabilities
Deposits $593,923 $522,978
Other borrowings147,52478,534
Other liabilities16,21236,470
Total liabilities$757,659 $637,982
Shareholders' equity $52,876 $48,098
Total liabilities and shareholders'
equity $810,535 $686,080
Consolidated Statements of Income
For the 3 Months For the 6 Months
(Dollars In Thousands,Ended March 31: Ended March 31:
except per share data) 20082007 2008 2007
(As Restated)(As Restated)
Interest income $9,895 $9,720$18,794 $19,503
Interest expense 3,679 4,277 7,304 9,069
Net interest income 6,216 5,443 11,49010,434
Provision for loan losses200(225)70 3,838
Net interest income after
provision for loan losses 6,016 5,668 11,420 6,596
Non-interest income 12,285 4,393 18,415 8,494
Non-interest expense16,355 9,010 29,14117,593
Income (loss) from continuing
operations before income tax
expense (benefit) 1,946 1,051694(2,503)
Income tax expense (benefit)
from continuing operations743 412281 (847)
Income (loss) from continuing
operations 1,203 639413(1,656)
Gain on sale from discontinued
operations before taxes 2,309 - 2,309 -
Income (loss) from discontinued
operations before taxes 4 152 76 (501)
Income tax expense (benefit) from
discontinued operations 478 56500 (188)
Income (loss) from discontinued
operations 1,835 96 1,885 (313)
Net income (loss) $3,038$735 $2,298 $(1,969)
Earnings (loss) per common share
Basic-income (loss) from
continuing operations $0.47 $0.25 $0.16$(0.66)
Basic-net income (loss)$1.18 $0.29 $0.89$(0.78)
Diluted-income (loss) from
continuing operations $0.46 $0.24 $0.16$(0.66)
Diluted-net income (loss) $1.16 $0.28 $0.87$(0.78)
Selected Financial Information
For the 6 Months Ended March 31, 2008 2007
Return on average assets-continuing
operations 0.12% -0.45%
Return on average equity-continuing
operations 2.02% -7.42%
Average shares outstanding for diluted
earnings per share2,638,333 2,515,266
At Period Ended:March 31, September 30,
20082007
Equity to total assets 6.52% 7.01%
Book value per common share outstanding$20.37 $18.57
Tangible book value per common share
outstanding $19.62 $17.99
Common shares outstanding 2,596,084 2,589,717
Non-performing assets to total
assets-continuing operations0.39% 0.38%
Financial Highlights
Consolidated Statement of Financial Condition
(Dollars In Thousands)
December 31, September 30,
2007 2007
Assets
Cash and cash equivalents $29,075 $86,320
Investments and mortgage-backed securities216,426 158,701
Loans receivable, net 386,660 355,612
Other assets 129,233 85,447
Total assets $761,394 $686,080
Liabilities
Deposits $582,025 $522,978
Other borrowings 81,730 78,534
Other liabilities 49,080 36,470
Total liabilities $712,835 $637,982
Shareholders' equity$48,559 $48,098
Total liabilities and shareholders' equity $761,394 $686,080
Consolidated Statements of Income
For the 3 Months
Ended December 31:
(Dollars In Thousands, except per share data) 2007 2006
(Restated)
Interest income $8,899 $9,783
Interest expense 3,6254,792
Net interest income 5,2744,991
Provision for loan losses(130) 4,063
Net interest income after provision for loan losses 5,404 928
Non-interest income 6,1304,100
Non-interest expense 12,7868,583
Loss from continuing operations before
income tax (benefit)(1,252) (3,555)
Income tax (benefit) from continuing operations(462) (1,259)
Loss from continuing operations(790) (2,296)
Income (loss) from discontinued operations
before taxes72 (652)
Income tax expense (benefit) from discontinued
operations 22 (244)
Income (loss) from discontinued operations 50 (408)
Net loss $(740) $(2,704)
Loss per common share
Basic-loss from continuing operations $(0.31) $(0.92)
Basic-net loss $(0.29) $(1.08)
Diluted-loss from continuing operations$(0.31) $(0.92)
Diluted-net loss $(0.29) $(1.08)
Selected Financial Information
For the 3 Months Ended December 31,20072006
Return on average assets-
continuing operations -0.46% -1.25%
Return on average equity-
continuing operations -7.18% -20.10%
Average shares outstanding for
diluted earnings per share 2,567,5752,506,220
At Period Ended:December 31, September 30,
20072007
Equity to total assets 6.38% 7.01%
Book value per common share outstanding $18.75 $18.57
Tangible book value per common share
outstanding$18.17 $17.99
Common shares outstanding2,589,717 2,589,717
Non-performing assets to total
assets-continuing operations0.36%0.38%
SOURCE Meta Financial Group
