Second Quarter Highlights *
- Net income of $3.0 million for second quarter
- Net income from continuing operations of $1.2 million, an increase of 88%
over 2007
- Diluted earnings per share of $1.16, or $0.46 for continuing operations
- Record revenue of $24.5 million, up 72% from 2007; 57% higher on
continuing operations
- KPMG LLC retained as new independent registered public accounting firm
- SEC and Nasdaq compliance completed with first and second quarter 10-Q
filings
- Meta Payment Systems(R) (MPS) launches new programs and files five
patents
- Net interest margin widened to 3.59%, an increase of 14 basis points
- MetaBank West Central sale completed with an after-tax gain of $1.8
million
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 3/31/07 3/31/08 3/31/07
Net Interest Income
- millions $6.2 $5.3 $5.4 $11.5 $10.4
Non Interest Income
- millions 12.3 6.1 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 92,767 85,447
Total assets $810,535 $686,080
Liabilities
Deposits $593,923 $522,978
Other borrowings 147,524 78,534
Other liabilities 16,212 36,470
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) 2008 2007 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 11,490 10,434
Provision for loan losses 200 (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 expense 16,355 9,010 29,141 17,593
Income (loss) from continuing
operations before income tax
expense (benefit) 1,946 1,051 694 (2,503)
Income tax expense (benefit)
from continuing operations 743 412 281 (847)
Income (loss) from continuing
operations 1,203 639 413 (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 56 500 (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 share 2,638,333 2,515,266
At Period Ended: March 31, September 30,
2008 2007
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 operations 0.39% 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 securities 216,426 158,701
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 3,625 4,792
Net interest income 5,274 4,991
Provision for loan losses (130) 4,063
Net interest income after provision for loan losses 5,404 928
Non-interest income 6,130 4,100
Non-interest expense 12,786 8,583
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 taxes 72 (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, 2007 2006
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 2,567,575 2,506,220
At Period Ended: December 31, September 30,
2007 2007
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 outstanding 2,589,717 2,589,717
Non-performing assets to total
assets-continuing operations 0.36% 0.38%
SOURCE Meta Financial Group
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Related links:
http://www.metacash.com
CONTACT:
Investor Relations of Meta Financial Group,
+1-712-732-4117
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