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目录

美国
证券交易委员会
华盛顿特区20549
__________________________________________________
表格 10-Q
☑ 根据1934年证券交易法第13或15(d)节的季度报告
截至季度结束日期的财务报告2024年9月30日
或者
☐ 根据1934年证券交易法第13或15(d)节的转型报告书
过渡期从            到
佣金文件号 001-34819
GreenDot_CorporateLogo v4.jpg
（根据其章程规定的准确名称）

特拉华州95-4766827
（设立或组织的其他管辖区域）（内部税务服务雇主识别号码）

114 W 7th Street, Suite 240
奥斯汀得克萨斯州78701(626)765-2000
（总部地址，包括邮政编码）（注册人的电话号码，包括区号）

在法案第12(b)条的规定下注册的证券：
每类股票名称:交易标的名称:注册交易所的名称：
每股价值为0.001美元的A类普通股GDOT请使用moomoo账号登录查看New York Stock Exchange
请勾选以下选项以指示注册人是否在过去12个月内(或在注册人需要提交此类报告的较短时间内)已提交证券交易法1934年第13或15(d)条所要求提交的所有报告，并且在过去90天内已受到此类报告提交要求的影响。Yes þ 否 o
请勾选方框，以表明注册人是否在过去12个月内（或其要求提交此类文件的较短期限内）提交了每份交互式数据文件，其提交是根据规则405号第S-T条（本章第232.405条）要求提交的。Yes þ 否 o
请在检查标记中表明注册人是一个大型加速文件提交人、一个加速文件提交人、一个非加速文件提交人、一个较小的报告公司，还是一个新兴成长公司。请参阅《证券交易法1934年规则120亿.2》中“大型加速文件提交人”、“加速文件提交人”、“较小报告公司”和“新兴成长公司”的定义。
大型加速报告人☑加速文件提交人☐
非加速文件提交人☐较小的报告公司☐
新兴成长公司☐
如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。 o
请在以下方框内打勾：公司是否是空壳公司(根据证券交易法第12b-2条规定定义）。是☐ 否 þ
截至2023年7月31日，续借贷款协议下未偿还的借款额为53,786,844 截至2024年10月31日，A类普通股股数为每股面值0.001美元。


Green Dot公司
目录
 
项目1。
事项二
第3项。
事项4。
项目1。
项目1A。
事项二
项目5。
项目6。


目录
第一部分
项目1.基本报表
Green Dot公司
基本报表
2024年9月30日2023年12月31日
(未经审计)
资产（以千为单位，除每股面值外）
流动资产：  
无限制现金及现金等价物$1,453,549 $682,263 
受限现金44 4,239 
以公允价值计量的可供出售金融资产43,257 33,859 
结算资产587,106 737,989 
2,687,823 84,635 110,141 
预付款项和其他资产49,459 69,419 
应收所得税1,322 — 
总流动资产2,219,372 1,637,910 
可供出售的投资证券，按公允价值计量2,120,803 2,203,142 
银行客户贷款净额，扣除信贷损失准备金$17,778 和 $11,383 截至2024年9月30日和2023年12月31日
33,380 30,534 
预付款项和其他资产193,791 221,656 
物业、设备和内部使用软件，净值181,386 179,376 
经营租赁权使用资产3,801 5,342 
递延费用1,226 1,546 
净递延所得税资产128,263 117,139 
商誉和无形资产403,265 420,477 
资产总额$5,285,287 $4,817,122 
负债和股东权益  
流动负债:  
应付账款$95,043 $119,870 
存款3,837,906 3,293,603 
对客户的义务215,588 314,278 
结算义务50,821 57,001 
透支账户应付银行款项84 225 
其他应计负债94,844 91,239 
经营租赁负债2,118 3,369 
递延收入7,181 6,343 
授信额度— 61,000 
应交所得税2,497 6,262 
流动负债合计4,306,082 3,953,190 
其他应计负债1,217 1,895 
经营租赁负债2,068 2,687 
应付票据43,675 — 
负债合计4,353,042 3,957,772 
承诺和或有事项（第17注）
股东权益:  
A类普通股，$0.0005股，截至2024年4月30日和2024年1月31日，授权股票0.0005股；0.001每股面值; 100,000 截至2024年9月30日和2023年12月31日，已授权股票数量为 53,751 和 52,816 股份分别为2024年9月30日和2023年12月31日的已发行和流通股份
54 53 
额外实收资本400,769 375,980 
保留盈余738,499 770,304 
累计其他综合损失(207,077)(286,987)
股东权益总额932,245 859,350 
负债和股东权益总额$5,285,287 $4,817,122 
查看未经审计的合并基本报表备注
1
目录
Green Dot公司
综合损益表
(未经审计)
截至9月30日的三个月截至9月30日的九个月
 2024202320242023
 （以千为单位，除每股数据外）
营业收入：
卡片收入和其他费用$310,372 $253,407 $878,002 $735,380 
现金处理收入34,897 36,256 198,447 191,925 
互换收入48,397 54,968 148,950 178,950 
利息收入，净额16,077 8,398 43,453 29,030 
总营收409,743 353,029 1,268,852 1,135,285 
营业费用：
销售及推广费用52,626 56,495 167,948 194,530 
薪酬和福利支出61,795 59,168 189,967 192,934 
处理费用228,227 162,375 631,789 460,555 
其他一般和管理费用70,027 81,830 295,193 238,324 
营业费用总计412,675 359,868 1,284,897 1,086,343 
营业（亏损）收入(2,932)(6,839)(16,045)48,942 
利息费用，净额1,577 239 4,306 2,121 
其他费用，净额(3,705)(802)(10,045)(6,050)
（亏损）所得税前收入(8,214)(7,880)(30,396)40,771 
所得税(受益)费用(374)(1,615)1,409 10,446 
净（亏损）利润$(7,840)$(6,265)$(31,805)$30,325 
普通股每股基本(亏损)收益:$(0.15)$(0.12)$(0.60)$0.58 
每股摊薄（亏损）收益$(0.15)$(0.12)$(0.60)$0.58 
普通股加权平均已发行和流通股份：53,722 52,367 53,373 52,127 
稀释后的普通股加权平均已发行和流通股份：53,722 52,367 53,373 52,436 
查看未经审计的合并基本报表备注
2
目录
Green Dot公司
综合收益综合表
(未经审计)
截至9月30日的三个月截至9月30日的九个月
2024202320242023
(以千为单位)
净（亏损）利润$(7,840)$(6,265)$(31,805)$30,325 
其他综合收益和损失
未实现持有收益（损失），净额税后62,175 (47,263)79,910 (44,332)
综合收益（损失）$54,335 $(53,528)$48,105 $(14,007)
查看未经审计的合并基本报表备注
3
目录
Green Dot公司
股东权益变动表汇总表
(未经审计)

2024年9月30日止三个月
A类普通股股本外溢价未分配利润累计其他综合损失股东权益总计
股份金额
(以千为单位)
2024年6月30日余额53,707 $54 $392,810 $746,339 $(269,252)$869,951 
发行普通股股份，扣除扣缴额和相关税收影响净额44 — (228)— — (228)
基于股票的报酬— — 8,187 — — 8,187 
净损失— — — (7,840)— (7,840)
其他综合收益— — — — 62,175 62,175 
2024年9月30日的余额53,751 $54 $400,769 $738,499 $(207,077)$932,245 

2023年9月30日止三个月
A类普通股股本外溢价未分配利润累计其他综合损失股东权益总计
股份金额
(以千为单位)
2023年6月30日的余额52,341 $52 $360,812 $800,172 $(319,797)$841,239 
根据股票计划发行的普通股，扣除未实现股票并减税效应74 — (524)— — (524)
基于股票的报酬— — 7,934 — — 7,934 
净损失— — — (6,265)— (6,265)
其他综合损失— — — — (47,263)(47,263)
2023年9月30日结余52,415 $52 $368,222 $793,907 $(367,060)$795,121 
查看未经审计的合并基本报表备注










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

Nine Months Ended September 30, 2024
Class A Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
SharesAmount
(In thousands)
Balance at December 31, 202352,816 $53 $375,980 $770,304 $(286,987)$859,350 
Common stock issued under stock plans, net of withholdings and related tax effects935 1 730 — — 731 
Stock-based compensation— — 24,059 — — 24,059 
Net loss— — — (31,805)— (31,805)
Other comprehensive income— — — — 79,910 79,910 
Balance at September 30, 202453,751 $54 $400,769 $738,499 $(207,077)$932,245 

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)$795,121 
See notes to unaudited consolidated financial statements
5
Table of Contents
GREEN DOT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(未经审计)
 截至9月30日的九个月
 20242023
 (以千为单位)
经营活动  
净（亏损）利润$(31,805)$30,325 
调整为将净（亏损）收益调节为经营活动提供的现金流量：  
固定资产、设备和内部使用软件的折旧和摊销47,732 42,306 
无形资产摊销16,295 18,593 
购买交易中不良账款计提15,509 7,356 
贷款损失拨备22,471 21,404 
基于股票的报酬24,059 27,732 
权益法投资损失11,931 9,286 
可供出售投资证券折价摊销(1,614)(1,724)
长期资产减值4,944 — 
其他(1,810)(3,128)
经营性资产和负债变动:
2,687,823 9,997 1,081 
预付款项和其他资产16,024 8,385 
递延费用320 12,946 
应付账款和其他应计负债(24,534)(15,505)
递延收入157 (19,363)
应收/应付所得税(4,803)(7,859)
其他，净额(478)613 
经营活动产生的现金流量净额104,395 132,448 
投资活动  
购买可供出售的投资证券(11,845)— 
可供出售证券到期收回的款项154,682 131,559 
可供出售证券的销售和调用所得款项273 197 
购买财产、设备和内部使用软件支出(52,168)(55,501)
贷款净额变动(24,366)(21,562)
对TailFin Labs, LLC的投资(35,000)(35,000)
其他投资收益55,088 — 
其他投资活动(846)(1,273)
投资活动提供的净现金流量85,818 18,420 
筹资活动
应付票据借款44,551 — 
循环信用额度借款238,000 153,000 
循环信用额度还款(299,000)(161,000)
期权行使和ESPP购买所得款项2,719 3,415 
与股份奖励净结算相关的支付的税额(1,988)(3,500)
存款净变动547,477 (238,417)
清算资产和与客户的债务净变动46,013 (8,776)
递延融资成本(894)— 
筹集资金的净现金流量576,878 (255,278)
无限制现金、现金等价物和受限制现金的净增加（减少）767,091 (104,410)
期初的无限制现金、现金等价物和受限制现金686,502 819,845 
期末的无限制现金、现金等价物和受限制现金$1,453,593 $715,435 
支付的利息现金$9,896 $3,615 
支付的所得税费用$6,003 $17,100 
期末无限制现金、现金等价物和受限现金的调节
无限制现金及现金等价物$1,453,549 $711,399 
受限现金44 4,036 
期末总无限制现金、现金等价物和受限现金$1,453,593 $715,435 
查看未经审计的合并基本报表备注
6
目录
Green Dot公司
基本报表附注
(未经审计)
注1—组织形式
green dot 公司（“我们”、“我们”的指的是 green dot 公司及其合并子公司）是一家致力于让所有人都能够轻松、经济实惠且充满信心地进行银行业务的金融科技公司和注册银行控股公司。我们的技术平台使我们能够开发产品和功能，以解决消费者和企业面临的最紧迫的财务挑战，改变他们管理和转移资金的方式，使得财务赋权更容易获得。通过我们的全资子公司银行，绿点银行，我们为消费者和企业提供一系列金融产品，包括借记卡、预付卡、支票、信用卡、预付卡和工资卡，以及强大的资金处理服务，如退税处理、现金存款和支取服务。
我们于1999年在德拉华州注册成立，并于2011年12月根据《银行控股公司法案》成为银行控股公司，同时成为联邦储备系统的成员银行。
注2—重要会计政策之摘要
报告范围
随附的未经审计的合并基本报表是按照美国公认会计准则编制的。我们对全资子公司进行了合并，并消除了所有重要的公司间余额和交易。
我们还准备了符合10-Q表格说明和《X-S条例》第10条的附注未经审计的合并基本报表，因此，它们未包括所有GAAP所需的年度披露。参阅我们截至2023年12月31日的10-k表格的年度报告，以获取额外披露，包括我们重要会计政策的概要。截至2024年9月30日的九个月内我们以前公布的重要会计政策未发生重大变化。在我们看来，附注未经审计的合并基本报表包括所有调整，包括正常和重复项目，为了公正地展示我们的财务状况、经营业绩和现金流量的中间期间。
按照GAAP的规定准备财务报表需要管理层进行估计和假设，这些估计和假设影响资产和负债的报告金额，以及在财务报表日期和报告期间的营业收入和费用金额披露。未来事件及其影响无法确定地预测；因此，会计估计需要行使判断。这些财务报表是根据2024年9月30日合理可获得的信息编制的，并持续至本报告日期。编制我们合并财务报表所使用的会计估计可能会随着新事件的发生、经验的积累、获取更多信息以及我们的经营环境变化而发生变化。由于各种因素，实际结果可能会与这些估计不同，包括本报告中第II部分第1A项目下识别的"风险因素"。
最近的会计声明
2023年11月，财务会计准则委员会（"FASB"）发布了会计准则更新（"ASU"）2023-07《部门报告（主题280）：关于报告环节披露的改进》，通过增加关于重要环节费用的披露，主要扩展了报告环节的年度和中期披露要求。ASU 2023-07将于2024年1月1日起适用于我们的年度报告期，于2025年1月1日起适用于我们的中期报告期，允许提前采用。我们目前正在评估更新标准对我们财务报表披露的潜在影响。
2023年12月，FASB发布了ASU 2023-09《所得税（话题740）：改进所得税披露》，扩大了有关所得税的披露要求，特别是与税率调和和所支付所得税有关的内容。ASU 2023-09将于2025年1月1日起适用于我们的年度期间，可提前采纳。我们目前正在评估更新标准可能对我们财务报表披露的影响。
7
目录
Green Dot公司
合并基本报表附注－（续）
注释3 —— 公司合同资产的变化主要是由于履行其绩效义务和客户付款之间的时间差异。公司通过向客户提供服务以换取客户的考虑而履行其合同义务。当公司向客户转移服务、确认尚未开票的金额并且权利受到除时间流逝以外其他条件的限制时，公司会确认合同资产。当客户已经开票或者其权利是无条件的时，将确认应收账款。收入
如在讨论中所述。 附注19 — 分段信息我们根据我们的首席经营决策者管理我们的业务，做出经营决策和评估经营绩效来确定我们的经营部门。在我们的部门内，我们认为我们的营业收入和现金流的性质、金额、时间和不确定性，以及它们受经济因素影响的方式，可以进一步通过我们的产品和服务的营收确认时间来说明。我们的产品和服务面向美国及部分美国领土内的客户。 以下表格将我们从外部客户获得的营业收入根据我们的报告部门进行了细分:
2024年9月30日止三个月
消费者服务B20亿 Services资金移动服务总计
确认时间(以千为单位)
转移时点$70,325 $38,617 $33,965 $142,907 
逐步转移25,251 224,647 861 250,759 
运营收入(1)
$95,576 $263,264 $34,826 $393,666 
2023年9月30日止三个月
消费者服务B20亿 Services资金转移服务总计
确认时间(以千为单位)
转移时间点$76,722 $35,383 $31,196 $143,301 
逐步转移38,363 162,074 893 201,330 
运营收入(1)
$115,085 $197,457 $32,089 $344,631 
2024年9月30日止九个月
消费者服务B20亿 Services资金运动服务总计
确认时间(以千为单位)
转移的时间点$210,797 $108,369 $195,914 $515,080 
逐步转移76,837 631,067 2,415 710,319 
运营收入(1)
$287,634 $739,436 $198,329 $1,225,399 
2023年9月30日止九个月
消费者服务B20亿 Services资金流动服务总计
确认时间(以千为单位)
转移的时间点$253,500 $103,745 $177,898 $535,143 
逐步转移124,154 444,552 2,406 571,112 
运营收入(1)
$377,654 $548,297 $180,304 $1,106,255 
(1)
将净利息收入排除在外，因为它不在范围内。 ASC 606，收入标准。 还排除了分部间收入的影响。
在某一时间点确认的营业收入包括互换费、ATM费、透支保护费、其他类似账户交易费用，以及几乎所有的现金处理收入。随时间确认的营业收入包括新卡手续费、月度维护费、礼品卡收入，以及几乎所有BaaS（定义见本文）合作伙伴计划管理服务费。
8
Table of Contents
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 3—Revenues (continued)
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 $0.2 million and $0.7 million in revenue for the three months ended September 30, 2024 and 2023, respectively, and $3.7 million and $22.6 million for the nine months ended September 30, 2024 and 2023, 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 respective 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.
Note 4—Investment Securities
Our available-for-sale investment securities were as follows:
Amortized costGross unrealized gainsGross unrealized lossesFair value
(In thousands)
September 30, 2024
Corporate bonds$10,000 $— $(157)$9,843 
Agency bond securities240,582 — (32,480)208,102 
Agency mortgage-backed securities2,196,117 45 (274,047)1,922,115 
Municipal bonds29,121 — (5,121)24,000 
Total investment securities$2,475,820 $45 $(311,805)$2,164,060 
December 31, 2023
Corporate bonds$10,000 $— $(374)$9,626 
Agency bond securities240,447 — (40,217)200,230 
Agency mortgage-backed securities2,337,411 — (333,901)2,003,510 
Municipal bonds29,408 — (5,773)23,635 
Total investment securities$2,617,266 $— $(380,265)$2,237,001 
As of September 30, 2024 and December 31, 2023, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:
Less than 12 months12 months or moreTotal fair valueTotal unrealized loss
Fair valueUnrealized lossFair valueUnrealized loss
(In thousands)
September 30, 2024
Corporate bonds$— $— $9,843 $(157)$9,843 $(157)
Agency bond securities— — 208,102 (32,480)208,102 (32,480)
Agency mortgage-backed securities8,120 (87)1,905,138 (273,960)1,913,258 (274,047)
Municipal bonds— — 24,000 (5,121)24,000 (5,121)
Total investment securities$8,120 $(87)$2,147,083 $(311,718)$2,155,203 $(311,805)
December 31, 2023
Corporate bonds$— $— $9,626 $(374)$9,626 $(374)
Agency bond securities— — 200,230 (40,217)200,230 (40,217)
Agency mortgage-backed securities— — 2,001,270 (333,901)2,001,270 (333,901)
Municipal bonds— — 23,636 (5,773)23,636 (5,773)
Total investment securities$— $— $2,234,762 $(380,265)$2,234,762 $(380,265)

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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 4—Investment Securities (continued)
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 meaningful credit-related impairment losses during the three and nine months ended September 30, 2024 or 2023 on our available-for-sale investment securities. Unrealized losses as of September 30, 2024 and December 31, 2023 are the result of increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities. Almost all of the underlying securities within our investment portfolio were in an unrealized loss position as of September 30, 2024 and December 31, 2023 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to 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.
As of September 30, 2024, the contractual maturities of our available-for-sale investment securities were as follows:
Amortized costFair value
(In thousands)
Due in one year or less$43,525 $43,257 
Due after one year through five years81,357 74,326 
Due after five years through ten years134,225 114,721 
Due after ten years54,121 43,055 
Mortgage and asset-backed securities2,162,592 1,888,701 
Total investment securities$2,475,820 $2,164,060 
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, 2024December 31, 2023
 (In thousands)
Trade receivables$34,535 $29,786 
Reserve for uncollectible trade receivables(74)(109)
Net trade receivables34,461 29,677 
Overdrawn accountholder balances from purchase transactions
7,942 9,565 
Reserve for uncollectible overdrawn accounts from purchase transactions(2,489)(5,281)
Net overdrawn accountholder balances from purchase transactions
5,453 4,284 
Accountholder fees
2,521 2,564 
Receivables due from card issuing banks1,951 1,768 
Fee advances, net8,874 41,974 
Other receivables31,375 29,874 
Accounts receivable, net$84,635 $110,141 

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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 5—Accounts Receivable (continued)
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,
 2024202320242023
 (In thousands)
Balance, beginning of period$2,737 $2,692 $5,281 $2,230 
Provision for uncollectible overdrawn accounts from purchase transactions4,248 1,827 15,509 7,356 
Charge-offs(4,496)(2,361)(18,301)(7,428)
Balance, end of period$2,489 $2,158 $2,489 $2,158 
Note 6—Loans to Bank Customers
The following table presents total outstanding loans, gross of the related allowance for credit losses, and a summary of the related payment status:
30-59 Days Past Due60-89 Days Past Due90 Days or More Past DueTotal Past DueTotal Current or Less Than 30 Days Past DueTotal Outstanding
(In thousands)
September 30, 2024
Residential$— $— $— $— $6,419 $6,419 
Commercial— — — — 2,574 2,574 
Installment— — — — 4,737 4,737 
Consumer1,832 — — 1,832 26,123 27,955 
Secured credit card776 791 2,555 4,122 5,351 9,473 
Total loans$2,608 $791 $2,555 $5,954 $45,204 $51,158 
Percentage of outstanding5.1 %1.6 %5.0 %11.6 %88.4 %100.0 %
December 31, 2023
Residential$— $— $— $— $5,095 $5,095 
Commercial— — — — 2,716 2,716 
Installment— — — — 4,357 4,357 
Consumer2,066 — — 2,066 17,953 20,019 
Secured credit card796 774 2,575 4,145 5,585 9,730 
Total loans$2,862 $774 $2,575 $6,211 $35,706 $41,917 
Percentage of outstanding6.8 %1.9 %6.1 %14.8 %85.2 %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 account balance. When overdrawn, the purchase related balances due on these deposit accounts are reclassified as consumer loans. Fees due from our accountholders for our overdraft service are included as a component of accounts receivable. Overdrawn balances are unsecured and considered immediately due from the customer. Also included in consumer loans are advances made to taxpayers under our tax advance program. These loan balances generally fluctuate over the first half of each year due to the seasonal nature of these advances.
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, 2024 and December 31, 2023, the fair value of the loans held for sale amounted to approximately $4.0 million and $4.7 million, respectively.
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 6—Loans to Bank Customers (continued)
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, 2023 for further information on the criteria for classification as nonperforming.
September 30, 2024December 31, 2023
(In thousands)
Residential$37 $49 
Installment— 79 
Secured credit card2,555 2,575 
Total loans$2,592 $2,703 
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 accountholder 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, 2024December 31, 2023
Non-ClassifiedClassifiedNon-ClassifiedClassified
(In thousands)
Residential$6,382 $37 $5,046 $49 
Commercial2,574 — 2,716 — 
Installment4,737 — 4,278 79 
Consumer27,955 — 20,019 — 
Secured credit card6,918 2,555 7,155 2,575 
Total loans$48,566 $2,592 $39,214 $2,703 
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,
2024202320242023
(In thousands)
Balance, beginning of period$17,360 $12,641 $11,383 $9,078 
Provision for loans5,724 5,664 22,471 21,397 
Loans charged off(5,340)(2,825)(16,240)(15,074)
Recoveries of loans previously charged off34 72 164 151 
Balance, end of period$17,778 $15,552 $17,778 $15,552 
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
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. Our final payment under this commitment was made in 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. 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, 2024 and December 31, 2023, our net investment in TailFin Labs amounted to approximately $132.1 million and $109.5 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 $4.4 million and $0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $12.3 million and $8.0 million for the nine months ended September 30, 2024 and 2023, 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 $3.3 million and $3.5 million at September 30, 2024 and December 31, 2023, respectively. Equity in earnings from this investment for the three and nine months ended September 30, 2024 and 2023 were not significant.
Note 8—Deposits
Deposits are categorized as non-interest bearing or interest-bearing deposit accounts as follows:
September 30, 2024December 31, 2023
(In thousands)
Non-interest bearing deposit accounts$3,734,889 $3,214,881 
Interest-bearing deposit accounts
Checking accounts86,939 61,679 
Savings6,200 6,077 
Secured card deposits3,877 4,967 
Time deposits, denominations greater than or equal to $2502,185 1,998 
Time deposits, denominations less than $2503,816 4,001 
Total interest-bearing deposit accounts103,017 78,722 
Total deposits$3,837,906 $3,293,603 

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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 8—Deposits (continued)
The scheduled contractual maturities for total time deposits are presented in the table below:
September 30, 2024
(In thousands)
Due in 2024$1,679 
Due in 20251,442 
Due in 2026830 
Due in 20271,048 
Due in 2028929 
Thereafter73 
Total time deposits$6,001 
Note 9—Debt
Senior Unsecured Notes
In September 2024, we issued and sold senior unsecured notes (the "Notes") in an aggregate principal amount of $45 million. The Notes have a five-year term, maturing September 15, 2029. The principal amounts bear interest at a fixed rate of 8.75% per annum, payable semi-annually in arrears.
Prior to March 15, 2029, we may redeem at our option, the Notes in whole or in part at any time at a redemption price equal to 100% of the outstanding principal amount to be redeemed, together with accrued but unpaid interest thereon, plus a make-whole amount. On and after March 15, 2029, we may redeem the Notes at 100% of the principal amount, plus accrued and unpaid interest thereon.
The Notes are unsecured, senior obligations and are not guaranteed by any of our subsidiaries. The Notes are junior in right of payment to existing and future secured indebtedness. As of September 30, 2024, we were in compliance with all affirmative and negative non-financial covenants thereunder. The net proceeds of the offering were used to repay outstanding indebtedness under our revolving credit facility discussed below, and for general corporate purposes.
The following table provides the outstanding long-term debt balance, at amortized cost:
September 30, 2024
(In thousands)
Senior unsecured notes$45,000 
Less: Unamortized discount and issuance costs(1,325)
Notes payable, net of unamortized discount and issuance costs$43,675 
In October 2024, we issued and sold additional Notes in an aggregate principal amount of $5 million.
2019 Revolving Facility
In October 2019, we entered into a secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto. The credit agreement provided for a $100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), which matured in October 2024. As of September 30, 2024, the then-outstanding balance on the 2019 Revolving Facility was repaid in full, and the 2019 Revolving Facility terminated at its maturity date.
We incurred total cash interest expense on our debt during the three months ended September 30, 2024 and 2023 of approximately $1.5 million and $0.2 million, respectively and during the nine months ended September 30, 2024 and 2023 of $4.2 million and $2.0 million, respectively.
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 10—Income Taxes
Income tax expense for the nine months ended September 30, 2024 and 2023 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,
 20242023
U.S. federal statutory tax rate21.0 %21.0 %
State income taxes, net of federal tax benefit6.1 1.7 
Foreign tax rate differential1.4 (0.6)
General business credits11.6 (4.5)
IRC 162(m) limitation3.8 1.1 
Stock-based compensation(10.0)7.1 
Bank owned life insurance income2.8 (1.5)
Bank owned life insurance surrender(7.4)— 
Nondeductible expenses and penalties(32.3)0.3 
Global intangible low-tax income tax(1.5)0.8 
Other(0.1)0.2 
Effective tax rate(4.6)%25.6 %
The effective tax rate for the nine months ended September 30, 2024 and 2023 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, nondeductible expenses and penalties, cash surrender 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 decrease in the effective tax rate for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 is primarily due to the impact of a decrease of $1.6 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of $2.5 million in state income taxes, net of federal benefits, and the impact of general business credits. These decreases were partially offset by a $0.2 million increase in tax expense associated with shortfalls from stock-based compensation, an increase in tax expense due to nondeductible expenses and penalties, and the surrender of our existing bank owned life insurance policies which resulted in a tax charge of $1.5 million and surrender penalties of $0.7 million during the nine months ended September 30, 2024. We recognized a discrete tax expense related to tax shortfalls from stock-based compensation of $3.0 million for the nine months ended September 30, 2024, compared to a $2.8 million discrete tax expense for the prior year comparable period. The increase in nondeductible expenses and penalties for the nine months ended September 30, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order (defined below) discussed in Note 17 - Commitments and Contingencies.
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, 2024 and 2023, 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, 2024 and 2023, 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 (the "IRS"), and various state tax authorities. We remain subject to examination of our federal income tax returns for the years ended December 31, 2017 through 2023. 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, 2024. We do not expect that this examination will have a material impact on our consolidated financial statements.
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 10—Income Taxes (continued)
As of September 30, 2024, we had federal net operating loss carryforwards of approximately $13.1 million and state net operating loss carryforwards of approximately $108.1 million, which will be available to offset future income. If not used, the federal net operating losses will expire between 2029 and 2035. Of our total state net operating loss carryforwards, approximately $59.0 million will expire between 2026 and 2042, while the remaining balance of approximately $49.1 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 $21.2 million that can be carried forward indefinitely and other state business tax credits of approximately $0.6 million that will start to expire on December 31, 2024 and continue to expire through December 31, 2027.
As of September 30, 2024 and December 31, 2023, we had a liability of $13.4 million and $12.1 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:
Nine Months Ended September 30,
20242023
(In thousands)
Beginning balance$12,109 $11,178 
Increases related to positions taken during prior years1,380 1,500 
Decreases related to positions settled with tax authorities(86)(90)
Ending balance$13,403 $12,588 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $12,884 $12,129 
As of September 30, 2024 and 2023, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $1.8 million and $1.3 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, 2024, we had an authorized $4.5 million remaining under our stock repurchase program for additional repurchases. There were no repurchases during the nine months ended September 30, 2024.
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 $8.2 million and $7.9 million for the three months ended September 30, 2024 and 2023, respectively, and $24.1 million and $27.7 million for the nine months ended September 30, 2024 and 2023, respectively.
Restricted Stock Units
Restricted stock unit activity for awards subject to only service conditions was as follows for the nine months ended September 30, 2024:
 SharesWeighted-Average Grant-Date Fair Value
(In thousands, except per share data)
Outstanding at December 31, 2023
2,048 $21.66 
Restricted stock units granted2,233 9.16 
Restricted stock units vested(768)26.15 
Restricted stock units canceled(182)20.93 
Outstanding at September 30, 2024
3,331 $12.28 
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 12—Stock-Based Compensation (continued)
Performance-Based Restricted Stock Units
Performance-based restricted stock unit activity for the nine months ended September 30, 2024 was as follows:
 SharesWeighted-Average Grant-Date Fair Value
(In thousands, except per share data)
Outstanding at December 31, 2023
988 $22.88 
Performance restricted stock units granted996 8.98 
Performance restricted stock units vested(2)50.23 
Performance restricted stock units canceled(88)24.59 
Outstanding at September 30, 2024
1,894 $15.47 
We grant performance-based restricted stock units to certain employees that are subject to the attainment of pre-established internal performance conditions, market conditions, or a combination thereof (collectively referred to herein as "performance-based restricted stock units"). The actual number of shares subject to the award is determined at the end of the performance period and may range from 0% to 200% of the target shares granted depending upon the terms of the award. Compensation expense related to these awards is recognized using the accelerated attribution method over the vesting period based on the grant date fair value of the award.
Stock Options
Total stock option activity for the nine months ended September 30, 2024 was as follows:
 OptionsWeighted-Average Exercise Price
(In thousands, except per share data)
Outstanding at December 31, 2023
1,010 $23.78 
Options canceled(10)18.80 
Outstanding at September 30, 2024
1,000 $23.83 
Exercisable at September 30, 2024
1,000 $23.83 
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 13—Earnings (Loss) per Common Share
The calculation of basic and diluted earnings and loss per share ("EPS") was as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
(In thousands, except per share data)
Basic earnings (loss) per Class A common share
Numerator:
Net (loss) income$(7,840)$(6,265)$(31,805)$30,325 
Denominator:
Weighted-average Class A shares issued and outstanding53,722 52,367 53,373 52,127 
Basic (loss) earnings per Class A common share$(0.15)$(0.12)$(0.60)$0.58 
Diluted earnings (loss) per Class A common share
Numerator:
Net (loss) income allocated to Class A common stockholders$(7,840)$(6,265)$(31,805)$30,325 
Denominator:
Weighted-average Class A shares issued and outstanding53,722 52,367 53,373 52,127 
Dilutive potential common shares:
Service-based restricted stock units— — — 173 
Performance-based restricted stock units— — — 75 
Employee stock purchase plan— — — 61 
Diluted weighted-average Class A shares issued and outstanding53,722 52,367 53,373 52,436 
Diluted (loss) earnings per Class A common share$(0.15)$(0.12)$(0.60)$0.58 
For the periods presented, we excluded certain restricted stock units and stock options outstanding, which could potentially dilute basic EPS in the future, from the computation of diluted EPS as their effect was anti-dilutive. Additionally, we have excluded any performance-based restricted stock units where the performance contingency has not been met as of the end of the period, or whereby the result of including such awards was anti-dilutive.
The following table shows the weighted-average number of anti-dilutive shares excluded from the diluted EPS calculation:
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
(In thousands)
Class A common stock
Options to purchase Class A common stock1,000 1,024 1,005 1,071 
Service-based restricted stock units829 694 1,020 807 
Performance-based restricted stock units— 365 41 318 
Total 1,829 2,083 2,066 2,196 
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 14—Fair Value Measurements
Under applicable accounting guidance, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
We determine the fair values of our financial instruments based on the fair value hierarchy established under applicable accounting guidance, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value.
For more information regarding the fair value hierarchy and how we measure fair value, 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, 2023.
As of September 30, 2024 and December 31, 2023, our assets carried at fair value on a recurring basis were as follows:
Level 1Level 2Level 3Total Fair Value
September 30, 2024(In thousands)
Assets
Investment securities:
Corporate bonds$— $9,843 $— $9,843 
Agency bond securities— 208,102 — 208,102 
Agency mortgage-backed securities— 1,922,115 — 1,922,115 
Municipal bonds— 24,000 — 24,000 
Loans held for sale— — 4,028 4,028 
Total assets$— $2,164,060 $4,028 $2,168,088 
December 31, 2023
Assets
Investment securities:
Corporate bonds$— $9,626 $— $9,626 
Agency bond securities— 200,230 — 200,230 
Agency mortgage-backed securities— 2,003,510 — 2,003,510 
Municipal bonds— 23,635 — 23,635 
Loans held for sale— — 4,735 4,735 
Total assets$— $2,237,001 $4,735 $2,241,736 
We based the fair value of our fixed income securities held as of September 30, 2024 and December 31, 2023 on quoted prices in active markets for similar assets. We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three and nine months ended September 30, 2024 or 2023.
A reconciliation of changes in fair value for Level 3 assets or liabilities are not considered material to these consolidated financial statements and therefore are not presented for any of the periods presented.
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 15—Fair Value of Financial Instruments
The following describes the valuation technique for determining the fair value of financial instruments, whether or not such instruments are carried at fair value on our consolidated balance sheets.
Short-term Financial Instruments
Our short-term financial instruments consist principally of unrestricted and restricted cash and cash equivalents, settlement assets and obligations, and obligations to customers. These financial instruments are short-term in nature, and, accordingly, we believe their carrying amounts approximate their fair values. Under the fair value hierarchy, these instruments are classified as Level 1.
Investment Securities
The fair values of investment securities have been derived using methodologies referenced in 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, 2023. Under the fair value hierarchy, our investment securities are classified as Level 2.
Loans
We determined the fair values of loans by discounting both principal and interest cash flows expected to be collected using a discount rate commensurate with the risk that we believe a market participant would consider in determining fair value. Under the fair value hierarchy, our loans are classified as Level 3.
Deposits
The fair value of demand and interest checking deposits and savings deposits is the amount payable on demand at the reporting date. We determined the fair value of time deposits by discounting expected future cash flows using market-derived rates based on our market yields on certificates of deposit, by maturity, at the measurement date. Under the fair value hierarchy, our deposits are classified as Level 2.
Debt
The fair value of the Notes is based on borrowing rates currently available to a market participant for loans with similar terms, maturity and credit risk. The carrying amount of our outstanding Notes at September 30, 2024 approximates fair value because the interest rate charged is commensurate with current market rates for issuers of similar risk. The fair value of the Notes are classified as a Level 2 liability in the fair value hierarchy.
Fair Value of Financial Instruments
The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value, at September 30, 2024 and December 31, 2023 are presented in the table below.
September 30, 2024December 31, 2023
Carrying ValueFair ValueCarrying ValueFair Value
(In thousands)
Financial Assets
Loans to bank customers, net of allowance$33,380 $33,138 $30,534 $30,307 
Financial Liabilities
Deposits$3,837,906 $3,837,856 $3,293,603 $3,293,526 
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 16—Leases
Our leases consist of operating lease agreements principally related to our corporate and subsidiary office locations. Currently, we do not enter into any financing lease agreements. Our leases have remaining lease terms of less than 1 year to approximately 8 years, most of which generally include renewal options of varying terms.
Our total lease expense amounted to approximately $1.0 million and $0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $2.8 million for each of the nine months ended September 30, 2024 and 2023. Our lease expense is generally based on fixed payments stated within the agreements. Any variable payments for non-lease components and other short term lease expenses are not considered material.
Additional Information
Additional information related to our right of use assets and related lease liabilities is as follows:
 September 30, 2024
Cash paid for operating lease liabilities (in thousands)$2,689 
Weighted average remaining lease term (years)4.44
Weighted average discount rate5.1 %
Maturities of our operating lease liabilities as of September 30, 2024 are as follows:
Operating Leases
(In thousands)
Remainder of 2024$985 
20251,402 
2026476 
2027408 
2028275 
Thereafter1,175 
Total4,721 
Less: imputed interest(535)
Total lease liabilities$4,186 
Note 17—Commitments and Contingencies
In the ordinary course of business, we are a party to various legal proceedings, including, from time to time, regulatory, supervisory, and governmental matters as well as actions which are asserted to be maintainable as class action suits, employment claims, and or enforcement actions. We review these actions on an ongoing basis to determine whether it is probable and estimable that a loss has occurred and use that information when making accrual and disclosure decisions. We have provided reserves where necessary for all claims and, based on current knowledge and in part upon the advice of legal counsel, all matters are believed to be adequately covered by insurance, or, if not covered, would not be likely to have a material adverse impact on our financial condition or results of operations. Nonetheless, given the inherent unpredictability of these matters, an adverse outcome could, from time to time, have a material adverse impact on our financial condition or results of operations.
As previously disclosed, on July 19, 2024, we and our subsidiary bank received a consent order (the "Consent Order") from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations. Included in the Consent Order was a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. We previously accrued an estimated liability of $20 million related to the Consent Order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024.
Other Litigation and Claims
On December 18, 2019, an alleged class action entitled Koffsmon v. Green Dot Corp., et al., No. 19-cv-10701-DDP-E, was filed in the United States District Court for the Central District of California, against us and two of our former officers. The suit asserts purported claims under Sections 10(b) and 20(a) of the Exchange Act for allegedly misleading statements regarding our business strategy. Plaintiff alleges that defendants made statements that were
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 17—Commitments and Contingencies (continued)
misleading because they allegedly failed to disclose details regarding our customer acquisition strategy and its impact on our financial performance. The suit is purportedly brought on behalf of purchasers of our securities between May 9, 2018 and November 7, 2019, and seeks compensatory damages, fees and costs. On October 6, 2021, the Court appointed the New York Hotel Trades Council & Hotel Association of New York City, Inc. Pension Fund as lead plaintiff, and on April 1, 2022, plaintiff filed its First Amended Complaint. Defendants filed a motion to dismiss the First Amended Complaint on May 31, 2022, and the motion was denied on March 29, 2024.
On February 18, 2020, a putative shareholder derivative action entitled Hellman v. Streit, et al., No. 20-cv-01572-SVW-PVC was filed, purportedly on behalf of the company, in the United States District Court for the Central District of California, against certain of our current and former officers and directors. The suit asserts claims for breach of fiduciary duty and unjust enrichment, as well as claims under Sections 10(b), 14(a) and 20(a) of the Exchange Act, based largely on the allegations made in the Koffsmon action. The Hellman action seeks to recover, among other things, unspecified compensatory damages on behalf of the company. Pursuant to a stipulated agreement between the parties, the Hellman action is stayed through the close of discovery in the Koffsmon action.
On July 15, 2024, a putative shareholder derivative action entitled DiBlasio v. Streit, et al., No. 24-cv-05924 was filed, purportedly on behalf of the company, in the United States District Court for the Central District of California, against certain of our current and former officers and directors. A first amended complaint was filed on September 27, 2024. The suit asserts claims for breach of fiduciary duty, abuse of control, and unjust enrichment, as well as claims under Section 14(a) of the Exchange Act, based on the allegations made in Koffsmon action, and on the Consent Order from the Federal Reserve Board. The DiBlasio action seeks to recover, among other things, unspecified compensatory damages on behalf of the company. Pursuant to a stipulated agreement between the parties, the DiBlasio action is stayed through the close of discovery in the Koffsmon action.
Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of these matters. Given the uncertainty of litigation and the preliminary stage of these claims, we are currently unable to estimate the probability of the outcome of these actions or the range of reasonably possible losses, if any, or the impact on our results of operations, financial condition or cash flows, except as disclosed.
Other Legal Matters
We monitor the laws of all 50 states to identify state laws or regulations that apply (or may apply) to our products and services. We have obtained money transmitter licenses (or similar such licenses) where applicable, based on advice of counsel or when we have been requested to do so. If we were found to be in violation of any laws and regulations governing banking, money transmitters, electronic fund transfers, or money laundering in the United States or abroad, we could be subject to penalties or could be forced to change our business practices.
From time to time, we enter into contracts containing provisions that contingently require us to indemnify various parties against claims from third parties. These contracts primarily relate to: (i) contracts with our card issuing banks, under which we are responsible to them for any unrecovered overdrafts on accountholders’ balances; (ii) certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities, and other claims arising from our use of the premises; (iii) certain agreements with our officers, directors, and employees, under which we may be required to indemnify these persons for liabilities arising out of their relationship with us; and (iv) contracts under which we may be required to indemnify our retail distributors, suppliers, vendors and other parties with whom we have contracts against claims arising from certain of our actions, omissions, violations of law and/or infringement of patents, trademarks, copyrights and/or other intellectual property rights.
Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. With the exception of overdrafts on accountholders’ balances, historically, we have not been required to make payments under these and similar contingent obligations, and no liabilities have been recorded for these obligations in our consolidated balance sheets. For additional information regarding overdrafts on accountholders’ balances, refer to Note 5 — Accounts Receivable.
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 18—Significant Retailer and Partner Concentration
A credit concentration may exist if customers are involved in similar industries, economic sectors, and geographic regions. Our retail distributors operate in similar economic sectors, but diverse domestic geographic regions. The loss of a significant retail distributor could have a material adverse effect upon our card sales, profitability, and revenue growth.
Revenues derived from our products sold at retail distributors constituting at least 10% of our total operating revenues were as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Walmart10%17%10%17%
In addition, approximately 59% and 47% of our total operating revenues for the three months ended September 30, 2024 and 2023, respectively, and 53% and 39% for the nine months ended September 30, 2024 and 2023, respectively, were generated from a single BaaS partner, but without a corresponding concentration to our gross profit for the respective periods.
Note 19—Segment Information
Our Chief Operating Decision Maker (our "CODM" who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses. Our operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services, and 3) Money Movement Services.
Our Consumer Services segment consists of revenues and expenses derived from deposit account programs, such as consumer checking accounts, prepaid cards, secured credit cards, and gift cards that we offer to consumers (i) through distribution arrangements with more than 90,000 retail locations and thousands of neighborhood Financial Service Center locations (the "Retail channel"), and (ii) directly through various marketing channels, such as online search engine optimization, online displays, direct mail campaigns, mobile advertising, and affiliate referral programs (the "Direct channel").
Our B2B Services segment consists of revenues and expenses derived from (i) our partnerships with some of the United States' most prominent consumer and technology companies that make our banking products and services available to their consumers, partners and workforce through integration with our banking platform (the "Banking-as-a-Service", or "BaaS channel"), and (ii) a comprehensive payroll platform that we offer to corporate enterprises (the "Employer channel") to facilitate payments for today’s workforce. Our products and services in this segment include deposit account programs, such as consumer and small business checking accounts and prepaid cards, as well as our disbursements services utilized by our partners.
Our Money Movement Services segment consists of revenues and expenses generated on a per transaction basis from our services that specialize in facilitating the movement of cash on behalf of consumers and businesses, such as money processing services and tax refund processing services. Our money processing services, such as cash deposit and disbursements, are marketed to third-party banks, program managers, and other companies seeking cash deposit and disbursement capabilities for their customers. Those customers, including our own accountholders, can access our cash deposit and disbursement services at any of the locations within our network of retail distributors and neighborhood Financial Service Centers. We market our tax-related financial services through a network of tax preparation franchises, independent tax professionals and online tax preparation providers.
Our Corporate and Other segment primarily consists of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses, which include our fixed expenses such as salaries, wages and related benefits for our employees, professional services fees, software licenses, telephone and communication costs, rent, utilities, and insurance. These costs are not considered when our CODM evaluates the performance of our three reportable segments since they are not directly attributable to any reporting segment. Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges, and other non-recurring expenses that are not considered by our CODM when evaluating our overall consolidated financial results are excluded from our unallocated corporate expenses
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
Note 19—Segment Information (continued)
above. We do not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.
The following tables present financial information for each of our reportable segments for the periods then ended:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Segment Revenue(In thousands)
Consumer Services$98,046 $118,204 $295,278 $387,128 
B2B Services276,402 199,206 769,658 551,150 
Money Movement Services31,854 32,089 187,967 180,304 
Corporate and Other(283)(928)3,095 3,496 
Total segment revenues406,019 348,571 1,255,998 1,122,078 
BaaS commissions and processing expenses4,346 5,168 14,492 15,346 
Other income(622)(710)(1,638)(2,139)
Total operating revenues$409,743 $353,029 $1,268,852 $1,135,285 
Segment revenue adjustments represent commissions and certain processing-related costs associated with our BaaS products and services, which are netted against our B2B Services revenues when evaluating segment performance, as well as certain other investment income earned by our bank, which is included in Corporate and Other.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Segment Profit(In thousands)
Consumer Services$39,389 $42,426 $107,097 $139,450 
B2B Services27,736 18,883 65,097 58,808 
Money Movement Services12,717 12,850 113,855 103,650 
Corporate and Other(51,527)(50,424)(164,504)(156,761)
Total segment profit28,315 23,735 121,545 145,147 
Reconciliation to (loss) income before income taxes
Depreciation and amortization of property, equipment and internal-use software15,473 14,720 47,732 42,307 
Stock based compensation and related employer taxes8,210 7,966 24,429 28,255 
Amortization of acquired intangible assets5,246 5,648 16,295 18,593 
Impairment charges8 — 8,528 — 
Legal settlements and related expenses869 545 32,896 1,964 
Other expense1,441 1,695 7,710 5,086 
Operating (loss) income(2,932)(6,839)(16,045)48,942 
Interest expense, net1,577 239 4,306 2,121 
Other expense, net(3,705)(802)(10,045)(6,050)
(Loss) income before income taxes$(8,214)$(7,880)$(30,396)$40,771 
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, (the "Securities Act") and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified below, under “Part II, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.
In this Quarterly Report, unless otherwise specified or the context otherwise requires, “Green Dot,” “we,” “us,” and “our” refer to Green Dot Corporation and its consolidated subsidiaries.
Overview
Green Dot Corporation is a financial technology and registered bank holding company ("BHC") 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. Through Green Dot Bank, our wholly-owned subsidiary, we offer a suite of financial products to consumers and businesses including debit, prepaid, checking, credit and payroll cards, as well as robust money processing services, such as tax refund processing, cash deposits and disbursements.
Our Chief Operating Decision Maker (our "CODM" who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses. Our operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services, and 3) Money Movement Services. Net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses. Refer to our 2023 Annual Report on Form 10-K "Part I, Item 1. Business" for more detailed information about our operations and Note 19—Segment Information in the notes to the accompanying unaudited consolidated financial statements.
Consolidated Financial Results and Trends
Our consolidated results of operations for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20242023Change%20242023Change%
(In thousands, except percentages)
Total operating revenues$409,743 $353,029 $56,714 16.1 %$1,268,852 $1,135,285 $133,567 11.8 %
Total operating expenses412,675 359,868 52,807 14.7 %1,284,897 1,086,343 198,554 18.3 %
Net (loss) income(7,840)(6,265)(1,575)25.1 %(31,805)30,325 (62,130)(204.9)%
Refer to "Segment Results" below for a summary of financial results of each of our reportable segments.
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Total operating revenues
Our total operating revenues for the three and nine months ended September 30, 2024 increased $56.7 million or 16%, and $133.6 million, or 12%, respectively, over the prior year comparable periods, driven primarily by higher revenues in our B2B Services segment and to a lesser extent in our Money Movement Services segment, partially offset by lower revenues earned in our Consumer Services segment.
Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which generated an increase in our total gross dollar volume for the three and nine months ended September 30, 2024 of 35% and 32%, respectively. However, our total operating revenues were negatively impacted by several other factors impacting our deposit account programs, as discussed below, that impacted the number of consolidated active accounts, purchase volume, and number of cash transfers, each of which decreased for the three months ended September 30, 2024 by 6%, 9%, and 1% respectively. For the nine months ended September 30, 2024, purchase volume and the number of cash transfers decreased by 12% and 6%, respectively, over the prior year comparable period.
In our Consumer Services segment, revenues decreased during the three and nine months ended September 30, 2024 by 17% and 24%, respectively, over the prior year comparable periods. Gross dollar volume, the number of active accounts, the number of direct deposit active accounts and purchase volume each declined year-over-year for the three months ended September 30, 2024 by 14%, 18%, 15% and 18%, respectively. Similarly, gross dollar volume and purchase volume declined for the nine months ended September 30, 2024 by 19% and 22%, respectively. We believe these decreases in our Consumer Services segment are attributable to several factors, including our decision to wind-down many of our legacy accountholder programs in support of GO2bank, macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted acquisition at retail locations, and the non-renewal of one of our retail partner programs, as previously disclosed. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, new card fees, ATM fees and interchange fees. Revenues within this segment were also adversely impacted by a decrease in breakage revenue on our gift card portfolios for each of the comparable periods.
In our B2B Services segment, revenues increased by 39% and 40% during the three and nine months ended September 30, 2024, respectively, over the prior year comparable periods. The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during each of the three and nine months ended September 30, 2024 by 46%, and to a lesser extent, growth in purchase volume, which also increased during each of the respective periods by 10%. The number of active accounts for the three months ended September 30, 2024 increased by 11% over the prior year comparable period. The growth in gross dollar volume was driven primarily by certain BaaS programs that do not generate interchange fees and resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, partially offset by the non-renewals of certain other BaaS partners, as previously disclosed.
In our Money Movement Services segment, revenues decreased by less than 1% during the three months ended September 30, 2024 and increased by 4% during the nine months ended September 30, 2024 over the prior year comparable periods. The decrease in our Money Movement Services revenues during the three months ended September 30, 2024 was driven by a decrease in cash transfer revenues. Our cash transfer revenues decreased from the comparable prior year period primarily due to a 1% decrease in the number of cash transfers processed during the three months ended September 30, 2024, and an unfavorable mix of cash transfer types and locations where the transactions occurred, as the fees we receive vary depending on these factors. Our tax processing revenues during the three months ended September 30, 2024 remained consistent year over year. Due to the seasonal nature of our tax products and services, substantially all of our tax processing revenues are earned during the first half of each year.
The increase in our Money Movement Services segment during the nine months ended September 30, 2024 was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased for the nine months ended September 30, 2024 by 2%, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a 6% decline in the number of cash transfers processed for the nine months ended September 30, 2024 from the prior year comparable period. The decline in the number of cash transfers processed was due to a lower number of active accounts within our Consumer Services segment discussed above. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs.
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Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, increased for the three and nine months ended September 30, 2024 by 92% and 50%, respectively, over the prior year comparable periods. The increase in net interest income was primarily the result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).
Total operating expenses
Our total operating expenses for the three and nine months ended September 30, 2024 increased $52.8 million, or 15%, and $198.6 million, or 18%, respectively, over the prior year comparable periods.
The increase in our total operating expenses for the three months ended September 30, 2024 was driven primarily by an increase in processing expenses associated with the growth of certain BaaS account programs within our B2B Services segment as discussed above, partially offset by reductions in processor costs realized from the processor migration to our in-licensed card management platform. To a lesser extent, our total operating expenses also increased due to an increase in compensation and benefits expenses, driven primarily by an increase in third-party call center support costs associated with the growth of the BaaS account programs discussed above, partially offset by lower salary and wages driven by the reduction in employee workforce we initiated in February 2024, as previously disclosed (the "Headcount Reduction"). These increases were partially offset by lower sales and marketing expenses, principally due to decreases in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, and lower other general and administrative expenses, primarily driven by a decrease in transaction losses due to a decrease in the amount of customer dispute volume across our portfolios and favorable reductions in our dispute loss rates. This decrease in other general and administrative expenses was partially offset by higher professional services fees related to our anti-money laundering ("AML") programs, including improvements to our compliance controls, policies and procedures.
Our total operating expenses for the nine months ended September 30, 2024 increased over the prior year comparable period. Processing expenses increased during the nine months ended September 30, 2024 due to the same factors discussed above. Other general and administrative expenses increased due to penalties paid under the consent order (the "Consent Order") we received from the Federal Reserve Board, as previously disclosed and discussed further below, higher professional services fees related to our AML programs, and the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system, as previously disclosed during the first quarter of 2024. Other general and administrative expenses also increased during the nine months ended September 30, 2024 due to an increase in overall transaction losses attributable to an increase in the amount of customer dispute volume across our portfolios. These increases were partially offset by lower sales and marketing expenses due to the same factors discussed above, and lower compensation and benefits expenses, primarily due to lower salary and wages driven by the Headcount Reduction and lower employee stock-based compensation expense, primarily due to a higher number of forfeited awards.
As previously disclosed, on July 19, 2024, we and our subsidiary bank received a Consent Order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations. Included in the Consent Order was a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. We previously accrued an estimated liability of $20 million related to the Consent Order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024. For further discussion, see the headings "As a bank holding company, we are subject to extensive and potentially changing regulation and are required to serve as a source of strength for Green Dot Bank" and “Litigation or investigations could result in significant settlements, sanctions, fines or penalties” included as part of our risk factor disclosures in Part II, Item 1A, "Risk Factors."
Income taxes
Our income tax benefit for the three months ended September 30, 2024 decreased by $1.2 million, or 77%, from the prior year comparable period primarily due to the impact of the surrender of our existing bank owned life insurance policies, and our income tax expense for the nine months ended September 30, 2024 decreased by $9.0 million, or 87%, from the prior year comparable period primarily due to a decrease in our year-to-date taxable income.
Our effective tax rate for the nine months ended September 30, 2024 was 5%, a decrease from 26% for the comparable prior year period. The decrease in our effective tax rate was primarily due to a decrease in state income taxes expense, net of federal benefits, the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction in the amount of compensation expense that was subject to the Internal
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Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation. These decreases were partially offset by incremental taxes and penalties ("surrender penalties") we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies, an increase in tax expense associated with shortfalls from stock-based compensation, and an increase in tax expense due to nondeductible expenses and penalties. The increase in nondeductible expenses and penalties for the nine months ended September 30, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order.
In December 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules introducing a 15% global minimum tax rate for large multinational corporations ("Pillar Two"). Certain countries in which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. We are monitoring legislative developments and continuing to evaluate the potential impact of Pillar Two on our consolidated financial statements, but do not expect it will have a material impact on our results of operations in future periods.
Outlook and Other Trends Affecting Our Business
Based on the overall macro-economic environment, the effect of elevated inflation and interest rates, our commitment to making growth-oriented investments and the timing of the related expense savings from our processor migration to our in-licensed card management platform, the previously-disclosed non-renewals in our Consumer Services and B2B Services segments, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, trends occurring within our retail channel in our Consumer Services segment, and our investments in our compliance programs, we have experienced declining trends in our consolidated operating results in recent periods. However, we do not expect some of these trends or events to persist, such as partner non-renewals and the discontinuation of certain legacy accountholder programs. After taking into consideration the one-time nature of our Consent Order accrual and other charges, we expect our results of operations will stabilize on a year-over-year basis over the remainder of 2024 based on our anticipated initiatives and cost reduction measures we have implemented.
We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results. Our growth-oriented investments are focused on, among other things, cost-effectively re-engaging in strategic marketing initiatives in support of our GO2bank product and other initiatives across our account programs with the objective of returning to active account growth.
We have seen reductions in our processing expenses from our processor conversion and expect the implementation of our card management platform will allow us to continue to realize reductions in our processing expenses as we seek to expand account programs.
We have seen our cost reduction initiatives partially offset by increases in other areas, as we have incurred additional expenses in connection with our continued investments in our AML program, including improvements to our compliance controls, policies and procedures, which we believe will ultimately help us to continue to remediate matters identified in the Consent Order and mitigate and reduce our fraud losses over the long term.
In September 2024, the Federal Reserve decreased interest rates by 50 basis points, the first rate cut in over four years, and further reduced interest rates by an additional 25 basis points in early November 2024. Although we remain in an elevated interest rate environment, the general market consensus is that interest rates will gradually decrease further over the near term. The Federal Reserve's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future. In general, while increases in short-term interest rates benefit the yield we earn on our cash, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue in our consolidated financial statements), and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested. Accordingly, the net effect has had and may continue to have a negative impact on our consolidated financial statements and will be dependent upon future interest rate changes enacted by the Federal Reserve.
Further, the duration and magnitude of the continuing effects of macro-economic factors remain uncertain and dependent on various factors outside of our control. See Part II, Item 1A, "Risk Factors," for an additional discussion of risks related to macro-economic factors.
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Consolidated Key Metrics
We review a number of metrics to help us monitor the performance of, and identify trends affecting, our business. We believe the following measures are the primary indicators of our quarterly and annual revenues:
Three Months Ended September 30,Nine Months Ended September 30,
20242023Change%20242023Change%
(In millions, except percentages)
Gross dollar volume$33,473 $24,836 $8,637 34.8 %$96,358 $72,849 $23,509 32.3 %
Number of active accounts*3.46 3.67 (0.21)(5.7)%n/an/an/an/a
Purchase volume$4,887 $5,362 $(475)(8.9)%$15,173 $17,241 $(2,068)(12.0)%
Number of cash transfers8.22 8.31 (0.09)(1.1)%24.14 25.67 (1.53)(6.0)%
Number of tax refunds processed0.19 0.20 (0.01)(3.0)%13.67 13.98 (0.31)(2.2)%
* Represents the number of active accounts as of September 30, 2024 and 2023, respectively.
See “Segment Results” for additional information and discussion regarding key metrics performance by segment. The definitions of our key metrics are as follows:
Gross Dollar Volume — Represents the total dollar volume of funds loaded to our account products from direct deposit and non-direct deposit sources. A substantial portion of our gross dollar volume is generated from direct deposit sources. We use this metric to analyze the total amount of money moving onto our account programs, and to determine the overall engagement and usage patterns of our accountholder base. This metric also serves as a leading indicator of revenue generated through our Consumer Services and B2B Services segments, inclusive of fees charged to accountholders and interchange revenues generated through the spending of account balances.
Number of Active Accounts — Represents any bank account within our Consumer Services and B2B Services segments that is subject to the USA PATRIOT Act of 2001 compliance and, therefore, requires customer identity verification prior to use and is intended to accept ongoing customer cash or ACH deposits. This metric includes checking accounts, general purpose reloadable prepaid card accounts, and secured credit card accounts in our portfolio that had at least one purchase, deposit or ATM withdrawal transaction during the applicable quarter. We use this metric to analyze the overall size of our active customer base and to analyze multiple metrics expressed as an average across this active account base.
Our direct deposit active accounts within our Consumer Services segment, on average, have the longest tenure and generate the majority of our gross dollar volume in any period and thus, generate more revenue over their lifetime than other active accounts. Refer to sub-section entitled Consumer Services under “Segment Results” below for key metric results for direct deposit active accounts.
Purchase Volume — Represents the total dollar volume of purchase transactions made by our accountholders. This metric excludes the dollar volume of ATM withdrawals and volume generated by certain BaaS programs where the BaaS partner receives interchange fees and we earn a program management service fee. We use this metric to analyze interchange revenue, which is a key component of our financial performance.
Number of Cash Transfers — Represents the total number of cash transfer transactions conducted by consumers, such as a point-of-sale swipe reload transaction, the purchase of a MoneyPak or an e-cash mobile remittance transaction marketed under various brand names, that we conducted through our retail distributors in a specified period. This metric excludes disbursements made through our wage disbursement platform. We review this metric as a measure of the size and scale of our retail cash processing network, as an indicator of customer engagement and usage of our products and services, and to analyze cash transfer revenue, which is a key component of our financial performance.
Number of Tax Refunds Processed — Represents the total number of tax refunds processed in a specified period. The number of tax refunds processed is most concentrated during the first half of each year and is minimal during the second half of each year. We review this metric as a measure of the size and scale of our tax refund processing platform and as an indicator of customer engagement and usage of its products and services.
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Key components of our results of operations
Operating Revenues
We classify our operating revenues into the following four categories:
Card Revenues and Other Fees — Card revenues consist of monthly maintenance fees, ATM fees, new card fees and other revenues. We charge maintenance fees on prepaid cards, checking accounts and certain cash transfer products, such as MoneyPak, pursuant to the terms and conditions in our customer agreements. We charge ATM fees to accountholders when they withdraw money at certain ATMs in accordance with the terms and conditions in our accountholder agreements. We charge new card fees, if applicable, when a consumer purchases a prepaid card, gift card, or a checking account product through our Retail channel. Other revenues consist primarily of revenue associated with our gift card program, annual fees associated with our secured credit card portfolio, transaction-based fees, fees associated with optional products or services, such as our overdraft protection program, and cash-back rewards we offer to accountholders. Our cash-back rewards are recorded as a reduction to card revenues and other fees. Also included in card revenues and other fees are program management service fees earned from our BaaS partners for programs we manage on their behalf.
Our aggregate monthly maintenance fee revenues vary primarily based upon the number of active accounts in our portfolio and the average fee assessed per account. Our average monthly maintenance fee per active account depends upon the mix of products in our portfolio at any given point in time and upon the extent to which fees are waived based on various incentives provided to customers in an effort to encourage higher usage and retention. Our aggregate ATM fee revenues vary based upon the number of accountholder ATM transactions and the average fee per ATM transaction. The average fee per ATM transaction depends upon the mix of products in our portfolio at any given point in time and the extent to which accountholders use ATMs within our free network that carry no fee for cash withdrawal transactions. Our aggregate new card fee revenues vary based upon the number of prepaid cards and checking accounts activated and the average new card fee. The average new card fee depends primarily upon the mix of products that we sell since there are variations in new account fees based on the product and/or the location or source where our products are purchased. The revenue we earn from each of these fees may also vary depending upon the channel in which the active accounts were acquired. For example, certain BaaS programs may not assess monthly maintenance fees and as a result, these accounts may generate lower fee revenue than other active accounts. Our aggregate other fees vary primarily based upon account sales of all types, gift card sales, purchase transactions and the number of active accounts in our portfolio.
Cash Processing Revenues — Cash processing revenues consist of cash transfer revenues, tax refund processing service revenues, disbursement revenues and other tax processing service revenues. We earn cash transfer revenues when consumers fund their cards through a reload transaction at a Green Dot Network retail location. Our aggregate cash transfer revenues vary based upon the mix of locations where reload transactions occur, since reload fees vary by location. We earn tax refund processing service revenues at the point in time when a customer of a third-party tax preparation company chooses to pay his or her tax preparation fee through the use of our tax refund processing services. We earn disbursement fees from our business partners at the point in time payment disbursements are made.
Interchange Revenues — We earn interchange revenues from fees remitted by the merchant’s bank, which are based on rates established by the payment networks, at the point in time when customers make purchase transactions using our products. Our aggregate interchange revenues vary based primarily on the number of active accounts in our portfolio, the average transactional volume of the active accounts in our portfolio, the merchant category of spend, and on the mix of accountholder purchases between those using signature identification technologies and those using personal identification numbers and the corresponding rates.
Interest Income, net — Net interest income represents the difference between the interest income earned on our interest-earning assets and the interest expense on our interest-bearing liabilities held at Green Dot Bank. Interest-earning assets include cash from customer deposits, loans, and investment securities. Our interest-bearing liabilities held at Green Dot Bank include interest-bearing deposits. Our net interest income and our net interest margin fluctuate based on changes in the federal funds interest rates and changes in the amount and composition of our interest-bearing assets and liabilities.
Operating Expenses
We classify our operating expenses into the following four categories:
Sales and Marketing Expenses — Sales and marketing expenses consist primarily of the commissions we pay to our retail distributors, brokers and partners, advertising and marketing expenses, and the costs of manufacturing and distributing card packages, placards and promotional materials to our retail distributors and personalized debit
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cards to consumers who have activated their cards. We generally establish commission percentages in long-term distribution agreements with our retail distributors and partners. Aggregate commissions with our retail distributors are determined by the number of account products and cash transfers sold at their respective retail stores. Commissions with our partners and, in certain cases, our retail distributors are determined by the revenue generated from the ongoing use of the associated card programs. We incur advertising and marketing expenses for television, sponsorships, online and in-store promotions. Advertising and marketing expenses are recognized as incurred and typically deliver a benefit over an extended period of time. For this reason, these expenses do not always track changes in our operating revenues. Our manufacturing and distribution costs vary primarily based on the number of accounts activated by consumers.
Compensation and Benefits Expenses — Compensation and benefits expenses represent the compensation and benefits that we provide to our employees and the payments we make to third-party contractors. While we have an in-house customer service function, we employ third-party contractors to conduct call center operations, handle routine customer service inquiries and provide consulting support in the area of IT operations and elsewhere. Compensation and benefits expenses associated with our customer service and loss management functions generally vary in line with the size of our active account portfolio, while the expenses associated with other functions do not.
Processing Expenses — Processing expenses consist primarily of the fees charged to us by the payment networks, which process transactions for us, the third-party card processors that maintain the records of our customers' accounts and process transaction authorizations and postings for us and the third-party banks that issue our accounts. These costs generally vary based on the total number of active accounts in our portfolio and gross dollar volume transacted by those accounts. Also included in processing expenses are bank fees associated with our tax refund processing services and gateway and network fees associated with our disbursement services. Bank fees generally vary based on the total number of tax refund transfers processed and gateway and network fees vary based on the number of disbursements made.
Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional services fees, telephone and communication costs, depreciation and amortization of our property and equipment, amortization of our intangible assets, impairment charges of long-lived assets, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance. We incur telephone and communication costs primarily from customers contacting us through our toll-free telephone numbers. These costs vary with the total number of active accounts in our portfolio, as do losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud. Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, impairment charges of long-lived assets, rent and utilities vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics.
Income Tax Expense (Benefit)
Our income tax expense (benefit) consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services.
Critical Accounting Estimates
There have been no material changes during the nine months ended September 30, 2024 to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.
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Comparison of Consolidated Results for the Three Months Ended September 30, 2024 and 2023
Operating Revenues
The following table presents a breakdown of our operating revenues among card revenues and other fees, cash processing revenues, interchange revenues and net interest income:
 Three Months Ended September 30,
 20242023
Amount% of Total
Operating Revenues		Amount% of Total
Operating Revenues
 (In thousands, except percentages)
Operating revenues:    
Card revenues and other fees$310,372 75.8 %$253,407 71.7 %
Cash processing revenues34,897 8.5 36,256 10.3 
Interchange revenues48,397 11.8 54,968 15.6 
Interest income, net16,077 3.9 8,398 2.4 
Total operating revenues$409,743 100.0 %$353,029 100.0 %
Card Revenues and Other Fees — Card revenues and other fees totaled $310.4 million for the three months ended September 30, 2024, an increase of $57.0 million, or 22%, from the comparable prior year period. Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners. These increases were partially offset by decreases in accountholder fees, such as monthly maintenance fees, ATM fees and new card fees for the reasons discussed above in "Overview." In addition, the increase in card revenues and other fees was partially offset by a decrease in breakage revenue on our gift card portfolios.
Cash Processing Revenues — Cash processing revenues totaled $34.9 million for the three months ended September 30, 2024, a decrease of $1.4 million, or 4%, from the comparable prior year period. The decrease was driven by lower cash transfer revenues. Our cash transfer revenues decreased from the comparable prior year period primarily due to a 1% decrease in the number of cash transfers processed during the three months ended September 30, 2024, and an unfavorable mix of cash transfer types and locations where the transactions occurred, as the fees we receive vary depending on these factors.
Interchange Revenues — Interchange revenues totaled $48.4 million for the three months ended September 30, 2024, a decrease of $6.6 million, or 12%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 9% during the three months ended September 30, 2024, as well as a lower effective interchange rate earned for the comparable periods. Our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates. In addition, our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors.
Interest Income, net — Net interest income totaled $16.1 million for the three months ended September 30, 2024, an increase of $7.7 million, or 92%, from the comparable prior year period. The increase in net interest income was primarily the result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve, partially offset by an increase in interest shared with certain BaaS partners (a reduction of revenue).
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Operating Expenses
The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses:
 Three Months Ended September 30,
 20242023
Amount% of Total
Operating Revenues		Amount% of Total
Operating Revenues
 (In thousands, except percentages)
Operating expenses:    
Sales and marketing expenses$52,626 12.8 %$56,495 16.0 %
Compensation and benefits expenses61,795 15.1 59,168 16.8 
Processing expenses228,227 55.7 162,375 46.0 
Other general and administrative expenses70,027 17.1 81,830 23.2 
Total operating expenses$412,675 100.7 %$359,868 102.0 %
Sales and Marketing Expenses — Sales and marketing expenses totaled $52.6 million for the three months ended September 30, 2024, a decrease of $3.9 million, or 7%, from the comparable prior year period. This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $61.8 million for the three months ended September 30, 2024, an increase of $2.6 million, or 4%, from the comparable prior year period. The increase was driven primarily by third-party call center support costs associated with the growth of certain BaaS programs within our B2B Services segment, partially offset by lower salary and wages driven by the Headcount Reduction.
Processing Expenses — Processing expenses totaled $228.2 million for the three months ended September 30, 2024, an increase of $65.8 million, or 41%, from the comparable prior year period. This increase was principally due to growth in certain BaaS account programs within our B2B Services segment, partially offset by reductions in processor costs realized from the processor migration to our in-licensed card management platform.
Other General and Administrative Expenses — Other general and administrative expenses totaled $70.0 million for the three months ended September 30, 2024, a decrease of $11.8 million, or 14%, from the comparable prior year period. This decrease was primarily driven by a decrease in transaction losses due to a decrease in the amount of customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, partially offset by higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures.
Income Tax Expense (Benefit)
The following table presents a breakdown of our effective tax rate among federal, state, and other:
 Three Months Ended September 30,
 20242023
U.S. federal statutory tax rate21.0 %21.0 %
State income taxes, net of federal tax benefit(8.7)0.8 
Foreign tax rate differential(2.6)(0.5)
General business credits(24.4)2.8 
Stock-based compensation(2.6)(7.8)
IRC 162(m) limitation(6.3)5.0 
Bank owned life insurance income(13.0)(1.3)
Bank owned life insurance surrender(19.2)— 
Nondeductible expenses and penalties57.5 4.3 
Global intangible low-tax income tax3.0 (3.9)
Other(0.1)0.1 
Effective tax rate4.6 %20.5 %
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Our income tax benefit totaled $0.4 million for the three months ended September 30, 2024, compared to a $1.6 million income tax benefit for the three months ended September 30, 2023, representing a decrease of $1.2 million, or 77%, from the prior year comparable period, primarily due to the impact of the surrender of our existing bank owned life insurance policies, as discussed further below.
The decrease in our effective tax rate for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to the impact of general business credits, tax benefits from bank owned life insurance policies, and a decrease of $0.4 million in the tax expense associated with shortfalls from stock-based compensation.
These decreases in our effective tax rate were partially offset by an increase of $0.9 million in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation, incremental taxes of $1.1 million and surrender penalties of $0.5 million, and tax expense due to nondeductible expenses and penalties. The increase in nondeductible expenses and penalties for the three months ended September 30, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order.
The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.
Comparison of Consolidated Results for the Nine Months Ended September 30, 2024 and 2023
Operating Revenues
The following table presents a breakdown of our operating revenues among card revenues and other fees, cash processing revenues, interchange revenues and net interest income:
 Nine Months Ended September 30,
 20242023
Amount% of Total
Operating Revenues		Amount% of Total
Operating Revenues
 (In thousands, except percentages)
Operating revenues:    
Card revenues and other fees$878,002 69.2 %$735,380 64.8 %
Cash processing revenues198,447 15.6 191,925 16.9 
Interchange revenues148,950 11.8 178,950 15.7 
Interest income, net43,453 3.4 29,030 2.6 
Total operating revenues$1,268,852 100.0 %$1,135,285 100.0 %
Card Revenues and Other Fees — Card revenues and other fees totaled $878.0 million for the nine months ended September 30, 2024, an increase of $142.6 million, or 19%, from the comparable prior year period. This increase was driven principally by the same factors discussed above under “Comparison of Three-Month Periods Ended September 30, 2024 and 2023—Operating Revenues—Card Revenues and Other Fees."
Cash Processing Revenues — Cash processing revenues totaled $198.4 million for the nine months ended September 30, 2024, an increase of $6.5 million, or 3%, from the comparable prior year period. Although the number of tax refunds processed decreased by 2% during the nine months ended September 30, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a 6% decline in the number of cash transfers processed during the nine months ended September 30, 2024 due to a lower number of active accounts within our Consumer Services segment, as discussed above in "Overview."
Interchange Revenues — Interchange revenues totaled $149.0 million for the nine months ended September 30, 2024, a decrease of $30.0 million, or 17%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume and effective interchange rate earned as discussed under “Comparison of Three-Month Periods Ended September 30, 2024 and 2023—Operating Revenues—Interchange Revenues."
Interest Income, net — Net interest income totaled $43.5 million for the nine months ended September 30, 2024, an increase of $14.5 million, or 50%, from the comparable prior year period. The increase in net interest income was primarily the result of an increase in cash from deposit programs with our partners and increases in short-term interest rates for the comparable period, as discussed under “Comparison of Three-Month Periods Ended September 30, 2024 and 2023—Operating Revenues—Interest Income, net."

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Operating Expenses
The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses:
 Nine Months Ended September 30,
 20242023
Amount% of Total
Operating Revenues		Amount% of Total
Operating Revenues
 (In thousands, except percentages)
Operating expenses:    
Sales and marketing expenses$167,948 13.2 %$194,530 17.1 %
Compensation and benefits expenses189,967 15.0 192,934 17.0 
Processing expenses631,789 49.8 460,555 40.6 
Other general and administrative expenses295,193 23.3 238,324 21.0 
Total operating expenses$1,284,897 101.3 %$1,086,343 95.7 %
Sales and Marketing Expenses — Sales and marketing expenses totaled $167.9 million for the nine months ended September 30, 2024, a decrease of $26.6 million, or 14%, from the comparable prior year period. This decrease was primarily driven by a decrease in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, partially offset by higher supply chain expenses, which consist of debit card plastics and related materials costs, due to notifications of terms and conditions we mailed to accountholders in our B2B Services segment.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $190.0 million for the nine months ended September 30, 2024, a decrease of $2.9 million, or 2%, from the comparable prior year period. The decrease was driven primarily by lower salary and wages as a result of our Headcount Reduction and lower employee stock-based compensation expense, primarily due to a higher number of forfeited awards versus the prior year comparable period. These decreases were partially offset by third-party call center support costs associated with the growth of certain BaaS programs within our B2B Services segment and severance benefits associated with the Headcount Reduction.
Processing Expenses — Processing expenses totaled $631.8 million for the nine months ended September 30, 2024, an increase of $171.2 million, or 37%, from the comparable prior year period. This increase was driven primarily by the same factors as discussed above under “Comparison of Three-Month Periods Ended September 30, 2024 and 2023—Operating Expenses—Processing Expenses."
Other General and Administrative Expenses — Other general and administrative expenses totaled $295.2 million for the nine months ended September 30, 2024, an increase of $56.9 million, or 24%, from the comparable prior year period. This increase was primarily due to penalties paid under the Consent Order and higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures. Other general and administrative expenses also increased due to an increase in overall transaction losses attributable to an increase in the amount of customer dispute volume across our portfolios, and the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system, as previously disclosed during the first quarter of 2024.

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Income Tax Expense
The following table presents a breakdown of our effective tax rate among federal, state, and other:
 Nine Months Ended September 30,
 20242023
U.S. federal statutory tax rate21.0 %21.0 %
State income taxes, net of federal tax benefit6.1 1.7 
Foreign tax rate differential1.4 (0.6)
General business credits11.6 (4.5)
IRC 162(m) limitation(10.0)1.1 
Stock-based compensation3.8 7.1 
Bank owned life insurance income2.8 (1.5)
Bank owned life insurance surrender(7.4)— 
Nondeductible expenses and penalties(32.3)0.3 
Global intangible low-tax income tax(1.5)0.8 
Other(0.1)0.2 
Effective tax rate(4.6)%25.6 %
Our income tax expense totaled $1.4 million for the nine months ended September 30, 2024, compared to a $10.4 million income tax expense for the nine months ended September 30, 2023, representing a decrease of $9.0 million, or 87%, from the prior year comparable period, primarily due to a decrease in our year-to-date taxable income.
The decrease in our effective tax rate for the nine months ended September 30, 2024 from the prior year comparable period was primarily due to a decrease in state income tax expense, net of federal benefits, the impact of general business credits, tax benefits from bank owned life insurance policies, and a reduction of $1.6 million in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation.
These decreases in our effective tax rate were partially offset by an increase of $0.2 million in the tax expense associated with shortfalls from stock-based compensation, an increase in tax expense due to nondeductible expenses and penalties, and a tax charge of $1.5 million and a surrender penalty of $0.7 million. The increase in nondeductible expenses and penalties for the nine months ended September 30, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order.
The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.
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Segment Results
Consumer Services
The results of operations and key metrics of our Consumer Services segment for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20242023Change%20242023Change%
(In thousands, except percentages)
Financial Results
Segment revenues$98,046 $118,204 $(20,158)(17.1)%$295,278 $387,128 $(91,850)(23.7)%
Segment expenses58,657 75,778 (17,121)(22.6)%188,181 247,678 (59,497)(24.0)%
Segment profit$39,389 $42,426 $(3,037)(7.2)%$107,097 $139,450 $(32,353)(23.2)%
Key Metrics(In millions, except percentages)
Gross dollar volume$3,983 $4,619 $(636)(13.8)%$12,497 $15,418 $(2,921)(18.9)%
Number of active accounts*1.78 2.16 (0.38)(17.6)%n/an/an/an/a
Direct deposit active accounts*0.44 0.52 (0.08)(15.4)%n/an/an/an/a
Purchase volume$2,904 $3,553 $(649)(18.3)%$9,279 $11,881 $(2,602)(21.9)%
* Represents total number of active and direct deposit active accounts as of September 30, 2024 and 2023, respectively.
As additional supplemental information, our key metrics within our Consumer Services segment is presented on a quarterly basis as follows:
20242023
Q3Q2Q1Q4Q3Q2Q1
(In millions)
Key Metrics
Gross dollar volume$3,983 $4,014 $4,500 $4,290 $4,619 $5,122 $5,677 
Number of active accounts *1.78 1.76 1.93 2.05 2.16 2.35 2.41 
Direct deposit active accounts *0.44 0.45 0.46 0.49 0.52 0.59 0.60 
Purchase volume$2,904 $3,036 $3,339 $3,312 $3,553 $3,984 $4,344 
* Represents total number of active accounts as of the end of each quarter.
Segment revenues within Consumer Services for the three and nine months ended September 30, 2024 decreased $20.2 million, or 17%, and $91.9 million, or 24%, respectively, from the prior year comparable periods, while our segment expenses for the three and nine months ended September 30, 2024 decreased by $17.1 million, or 23%, and $59.5 million, or 24%, respectively.
Our gross dollar volume, number of active accounts, number of direct deposit active accounts and purchase volume each decreased during the three months ended September 30, 2024 by 14%, 18%, 15% and 18%, respectively, from the comparable prior year period, primarily due to each of the several factors discussed above in "Overview." These factors include macro-economic factors leading to economic challenges for consumers and other competitive trends that have impacted acquisition at retail locations, our decision to wind-down many of our legacy accountholder programs in support of GO2bank, as well as the non-renewal of one of our retail partner programs, as previously disclosed. Our gross dollar volume and purchase volume decreased year-over-year by similar levels during the nine months ended September 30, 2024 for the same reasons discussed above. As a result of these decreases in each of our key metrics, our monthly maintenance fee revenues, new card fee revenues, ATM fee revenues and interchange revenues decreased year-over-year. In addition, our interchange rate declined due to a mix-shift toward categories of consumer purchases with lower effective rates, as well as a decrease in breakage revenue on our gift card portfolios for each of the comparable periods.
Consumer Services segment expenses for the three and nine months ended September 30, 2024 decreased from the comparable prior year periods due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, and a decrease in processing expenses from lower volumes in this segment, as well as our processor migration, as discussed above in "Overview." Transactions losses for the three and nine months ended September 30, 2024 decreased from the prior year
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comparable periods, attributable to a decrease in the amount of customer dispute volume across our portfolios in this segment and favorable reductions in our dispute loss rates. Overall, segment profit decreased for the three and nine months ended September 30, 2024 by approximately 7% and 23%, respectively, from the prior year comparable periods.
B2B Services
The results of operations and key metrics of our B2B Services segment for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20242023Change%20242023Change%
(In thousands, except percentages)
Financial Results
Segment revenues$276,402 $199,206 $77,196 38.8 %$769,658 $551,150 $218,508 39.6 %
Segment expenses248,666 180,323 68,343 37.9 %704,561 492,342 212,219 43.1 %
Segment profit$27,736 $18,883 $8,853 46.9 %$65,097 $58,808 $6,289 10.7 %
Key Metrics(In millions, except percentages)
Gross dollar volume$29,490 $20,217 $9,273 45.9 %$83,861 $57,431 $26,430 46.0 %
Number of active accounts*1.68 1.51 0.17 11.3 %n/an/an/an/a
Purchase volume$1,983 $1,809 $174 9.6 %$5,894 $5,360 $534 10.0 %
* Represents total number of active accounts as of September 30, 2024 and 2023, respectively.
As additional supplemental information, our key metrics within our B2B Services segment is presented on a quarterly basis as follows:
20242023
Q3Q2Q1Q4Q3Q2Q1
(In millions)
Key Metrics
Gross dollar volume$29,490 $28,116 $26,255 $22,065 $20,217 $19,602 $17,612 
Number of active accounts*1.68 1.65 1.58 1.52 1.51 1.36 1.43 
Purchase volume$1,983 $1,976 $1,935 $1,961 $1,809 $1,750 $1,801 
* Represents total number of active accounts as of the end of each quarter.
Segment revenues within our B2B Services for the three and nine months ended September 30, 2024 increased $77.2 million, or 39%, and $218.5 million, or 40%, respectively, compared to the prior year periods, while our segment expenses for the three and nine months ended September 30, 2024 increased $68.3 million, or 38% and $212.2 million, or 43%, respectively.
Our gross dollar volume, number of active accounts and purchase volume each increased during the three months ended September 30, 2024 by 46%, 11% and 10%, respectively, from the prior year comparable period. We have continued to experience organic growth from both new and existing users concentrated in certain BaaS programs that tend to yield higher gross dollar volume per active user but do not generate comparable levels of interchange fees. The growth in gross dollar volume from these BaaS programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners. This increase was partially offset by the non-renewals of certain other BaaS partners, as previously disclosed. Our gross dollar volume and purchase volume increased year-over-year by similar levels during the nine months ended September 30, 2024 for the same reasons discussed above.
B2B Services segment expenses increased for the three and nine months ended September 30, 2024 from the comparable prior year periods, principally due to higher processing expenses with the growth of certain BaaS account programs, as well as higher third-party call center support costs as a result of an increase in gross dollar volume and the number of active accounts. Transaction losses decreased during the three months ended September 30, 2024 due to favorable reductions in our dispute loss rates, and increased during the nine months ended September 30, 2024 on a year over year basis. Overall, our segment profit increased for the three and nine months ended September 30, 2024 by approximately 47% and 11%, respectively, from the prior year comparable periods. This segment also experienced margin compression during each period because certain BaaS
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partnerships are structured based on a fixed profit and, therefore, our segment profit for certain arrangements will not scale with revenue growth.
Money Movement Services
The results of operations and key metrics of our Money Movement Services segment for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20242023Change%20242023Change%
(In thousands, except percentages)
Financial Results
Segment revenues$31,854 $32,089 $(235)(0.7)%$187,967 $180,304 $7,663 4.3 %
Segment expenses19,137 19,239 (102)(0.5)%74,112 76,654 (2,542)(3.3)%
Segment profit$12,717 $12,850 $(133)(1.0)%$113,855 $103,650 $10,205 9.8 %
Key Metrics(In millions, except percentages)
Number of cash transfers8.22 8.31 (0.09)(1.1)%24.14 25.67 (1.53)(6.0)%
Number of tax refunds processed0.19 0.20 (0.01)(3.0)%13.67 13.98 (0.31)(2.2)%
As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows:
20242023
Q3Q2Q1Q4Q3Q2Q1
(In millions)
Key Metrics
Number of cash transfers8.22 8.15 7.77 8.19 8.31 8.66 8.70 
Number of tax refunds processed0.19 4.20 9.28 0.16 0.20 3.87 9.91 
Segment revenues within our Money Movement services for the three and nine months ended September 30, 2024 decreased $0.2 million, or 1%, and increased $7.7 million, or 4%, respectively, from the comparable prior year periods. Segment expenses for the three and nine months ended September 30, 2024 decreased $0.1 million, or 1%, and $2.5 million, or 3%, respectively.
The decrease in segment revenues for the three months ended September 30, 2024 was driven by lower cash transfer revenues. Our cash transfer revenues decreased from the comparable prior year period primarily due to a 1% decrease in the number of cash transfers processed during the three months ended September 30, 2024, and an unfavorable mix of cash transfer types and locations where the transactions occurred, as the fees we receive vary depending on these factors. Our tax processing revenues during the three months ended September 30, 2024 remained consistent year over year. Due to the seasonal nature of our tax products and services, substantially all of our tax processing revenues are earned during the first half of each year.
The increase in segment revenues for the nine months ended September 30, 2024 was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. While the number of tax refunds processed decreased by 2% during the nine months ended September 30, 2024, our tax processing revenues increased due to a favorable mix-shift in the distribution channel in which the tax refund was processed and from the expansion of our taxpayer advance programs. These increases were partially offset by a 6% decline in the number of cash transfers processed during the nine months ended September 30, 2024. This decline was due to a lower number of active accounts within our Consumer Services segment discussed above. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs.
Segment expenses decreased during the three and nine months ended September 30, 2024 primarily from decreases in sales commissions from lower cash transfer revenues, partially offset by third-party costs and related expenses due to growth across our tax processing services.

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Corporate and Other
The results of operations and key metrics of our Corporate and Other segment for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20242023Change%20242023Change%
(In thousands, except percentages)
Financial Results
Unallocated revenue and inter-segment eliminations$(283)$(928)$645 (69.5)%$3,095 $3,496 $(401)(11.5)%
Unallocated corporate expenses and inter-segment eliminations51,244 49,496 1,748 3.5 %167,599 160,257 7,342 4.6 %
Total$(51,527)$(50,424)$(1,103)2.2 %$(164,504)$(156,761)$(7,743)4.9 %
Revenues within Corporate and Other are comprised of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue) and eliminations of inter-segment revenues. Unallocated corporate expenses include eliminations of inter-segment expenses and our fixed expenses such as salaries, wages and related benefits for our employees, professional services fees, software licenses, telephone and communication costs, rent, utilities and insurance. These costs are not considered when our CODM evaluates the performance of our three reportable segments since they are not directly attributable to any reporting segment. Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges and other non-recurring expenses that are not considered by our CODM when evaluating our overall consolidated financial results are excluded from our unallocated corporate expenses above. Refer to Note 19—Segment Information to the Consolidated Financial Statements included herein for a summary reconciliation.
Revenues within our Corporate and Other segment were driven primarily by an increase in net interest income for the three and nine months ended September 30, 2024 by 92% and 50%, respectively, over the prior year comparable periods, partially offset by the portion of interest shared with certain BaaS partners (a reduction of revenue). Net interest income increased as a result of an increase in cash from deposit programs with our partners and yields earned at the Federal Reserve.
Unallocated corporate expenses for the three and nine months ended September 30, 2024 increased by approximately 4% and 5%, respectively, over the prior year comparable periods. The increases were driven primarily from higher professional services fees related to our AML program, including improvements to our compliance controls, policies and procedures, partially offset by lower salary and wages from the Headcount Reduction.
Liquidity and Capital Resources
The following table summarizes our major sources and uses of cash for the periods presented:
 Nine Months Ended September 30,
 20242023
 (In thousands)
Total cash provided by (used in)
Operating activities$104,395 $132,448 
Investing activities85,818 18,420 
Financing activities576,878 (255,278)
Increase (decrease) in unrestricted cash, cash equivalents and restricted cash$767,091 $(104,410)
For the nine months ended September 30, 2024 and 2023, we financed our operations primarily through our cash flows provided by operating activities, and from time to time, our short-term working capital activities through our borrowings under our credit facility. As of September 30, 2024, our primary source of liquidity was unrestricted cash and cash equivalents totaling $1.5 billion. We also consider our $2.2 billion of available-for-sale investment securities to be highly liquid instruments.
We use trend and variance analysis as well as our detailed budgets and forecasts to project future cash needs, making adjustments to the projections when needed. We believe that our current unrestricted cash and cash equivalents, cash flows from operations, and net proceeds from the issuance and sale of our senior unsecured
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notes will be sufficient to meet our working capital, capital expenditures, and any other capital needs for at least the next 12 months. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. We continue to monitor the impact of material trends on our business to ensure our liquidity and capital resources remain appropriate throughout this period of uncertainty.
Cash Flows from Operating Activities
Our $104.4 million of net cash provided by operating activities during the nine months ended September 30, 2024 was the result of $31.8 million of net losses, adjusted for certain non-cash operating items of $139.5 million and decreases in net changes in our working capital assets and liabilities of $3.3 million, which includes the payment of $44 million for the civil money penalty included in our Consent Order.
Our $132.4 million of net cash provided by operating activities during the nine months ended September 30, 2023 was the result of $30.3 million of net income, adjusted for certain non-cash operating items of $121.8 million and decreases in net changes in our working capital assets and liabilities of $19.7 million.
Cash Flows from Investing Activities
Our $85.8 million of net cash provided by investing activities during the nine months ended September 30, 2024 was primarily due to proceeds from maturities of available-for-sale securities, net of purchases, of $143.1 million and the surrender of a portion of our bank-owned life insurance policies of $55.1 million, partially offset by capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, the acquisition of property and equipment of $52.2 million and net changes in loans of $24.4 million. Our final payment under our commitment with TailFin Labs, LLC was made in January 2024.
Our $18.4 million of net cash provided by investing activities during the nine months ended September 30, 2023 was primarily due to proceeds from maturities of available-for-sale securities of $131.8 million, partially offset by capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, the acquisition of property and equipment of $55.5 million and net changes in loans of $21.6 million.
Cash Flows from Financing Activities
Our $576.9 million of net cash provided by financing activities during the nine months ended September 30, 2024 was principally the result of a net increase in customer deposits of $547.5 million and in obligations to customers of $46.0 million. Refer to additional discussion below for our borrowings and repayments of debt.
Our $255.3 million of net cash used in financing activities during the nine months ended September 30, 2023 was principally the result of a net decrease in customer deposits of $238.4 million and a net decrease of $8.8 million in obligations to customers. We also repaid $8.0 million, net of borrowings, on our revolving line of credit during the nine months ended September 30, 2023.
Other Sources of Liquidity
Senior Unsecured Notes
In September 2024, we issued and sold senior unsecured notes (the "Notes") in an aggregate principal amount of $45 million. The Notes have a five-year term, maturing September 15, 2029. The principal amounts bear interest at a fixed rate of 8.75% per annum, payable semi-annually in arrears. The net proceeds of the offering were used to repay outstanding indebtedness under our revolving credit facility discussed below, and for general corporate purposes. In October 2024, we issued and sold additional Notes in an aggregate principal amount of $5 million.
2019 Revolving Facility
In October 2019, we entered into a secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto. The credit agreement provided for a $100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), which matured in October 2024. The proceeds of any borrowings under the 2019 Revolving Facility were used for working capital and other general corporate purposes, subject to the terms and conditions set forth in the credit agreement. As of September 30, 2024, the then-outstanding balance on the 2019 Revolving Facility was repaid in full, and the 2019 Revolving Facility terminated at its maturity date.
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Material Cash Requirements
While the overall macro-economic environment, the effect of high inflation and interest rates, and other factors described in "Outlook and Other Trends Affecting Our Business" above have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and invest in property, equipment and internal-use software as necessary in the normal course of our business. The amount and timing of these payments and the related cash outflows in future periods is difficult to predict and is dependent on a number of factors including the rate of change of computer hardware and software used in our business and our business outlook as a result of macro-economic uncertainties. We intend to continue to invest in new products and programs, including GO2bank, new features for our existing products and IT infrastructure in order to scale and operate effectively to meet our strategic objectives. We expect our capital expenditures in 2024 to be lower compared to our capital expenditures in 2023, but at similar levels compared to our annual investments in recent years. We expect to fund these capital expenditures primarily through our cash flows provided by operating activities.
We have used cash to acquire businesses and technologies and we anticipate that we may continue to do so in the future. The nature of these transactions, however, makes it difficult to predict the amount and timing of such cash requirements.
Additionally, we may make periodic cash contributions to our subsidiary bank, Green Dot Bank, to maintain its capital, leverage and other financial commitments at levels we have agreed to with our regulators. If another economic relief package is signed into law that provides for substantial additional direct payments and unemployment benefits, we may need to increase the size of our cash contributions to Green Dot Bank to maintain its capital, leverage and other financial commitments.
Contractual Obligations
There have been no material changes during the nine months ended September 30, 2024 to our contractual obligations disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.
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Capital Requirements for Bank Holding Companies
Our subsidiary bank, Green Dot Bank, is a member bank of the Federal Reserve System and our primary regulators are the Federal Reserve Board and the Utah Department of Financial Institutions. We and Green Dot Bank are subject to various regulatory capital requirements administered by the banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines, we and Green Dot Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
The Basel III rules, which were promulgated by the Federal Reserve and other U.S. banking regulators, provide for risk-based capital, leverage and liquidity standards. Under the Basel III rules, we must maintain a ratio of common equity Tier 1 capital to risk-weighted assets of at least 4.5%, a ratio of Tier 1 capital to risk-weighted assets of at least 6%, a ratio of total capital to risk-weighted assets of at least 8% and a minimum Tier 1 leverage ratio of 4.0%. Either or both of Green Dot Corporation and Green Dot Bank may qualify for and opt to use, from time to time, the community bank leverage ratio framework under the Federal Reserve’s version of the U.S. Basel III Rules. Under the community bank leverage ratio framework, a qualifying community banking organization may generally satisfy its capital requirements (and capital conservation buffer) under the U.S. Basel III rules provided that it has a Tier 1 leverage ratio greater than 9% and satisfies other applicable conditions. Green Dot Corporation and Green Dot Bank qualify for and opt into use of the community bank leverage ratio framework. We expect that Green Dot Corporation will continue to qualify for and use the community bank leverage ratio framework, and that Green Dot Bank will calculate and disclose its risk-based capital ratios and Tier 1 leverage ratio under standardized approach of the U.S. Basel III Rules.
As of September 30, 2024 and December 31, 2023, we and Green Dot Bank were categorized as "well capitalized" under applicable regulatory standards. To be categorized as "well capitalized," we and Green Dot Bank must maintain specific total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There were no conditions or events since September 30, 2024 which management believes would have changed our category as "well capitalized."
The definitions associated with the amounts and ratios below are as follows:
RatioDefinition
Tier 1 leverage ratio
Tier 1 capital divided by average total assets
Common equity Tier 1 capital ratio
Common equity Tier 1 capital divided by risk-weighted assets
Tier 1 capital ratio
Tier 1 capital divided by risk-weighted assets
Total risk-based capital ratio
Total capital divided by risk-weighted assets
TermsDefinition
Tier 1 capital and
Common equity Tier 1 capital
Includes common stock and retained earnings, adjusted for items primarily related to accumulated OCI, goodwill, deferred tax assets and intangibles.
Total capital
Tier 1 capital plus supplemental capital items such as the allowance for credit losses, subject to certain limits
Average total assets
Average total consolidated assets during the period less deductions and adjustments primarily related to goodwill, deferred tax assets and intangibles assets
Risk-weighted assets
Represents the amount of assets or exposure multiplied by the standardized risk weight (%) associated with that type of asset or exposure. The standardized risk weights are prescribed in the bank capital rules and reflect regulatory judgment regarding the riskiness of a type of asset or exposure

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The actual amounts and ratios, and required "well capitalized" minimum capital amounts and ratios at September 30, 2024 and December 31, 2023 were as follows:
September 30, 2024
AmountRatioRegulatory Minimum"Well-capitalized" Minimum
(In thousands, except ratios)
Green Dot Corporation:
Tier 1 leverage$740,637 15.6 %4.0 %n/a
Common equity Tier 1 capital$740,637 44.6 %4.5 %n/a
Tier 1 capital $740,637 44.6 %6.0 %6.0 %
Total risk-based capital$763,352 46.0 %8.0 %10.0 %
Green Dot Bank:
Tier 1 leverage$349,469 7.5 %4.0 %5.0 %
Common equity Tier 1 capital$349,469 29.6 %4.5 %6.5 %
Tier 1 capital$349,469 29.6 %6.0 %8.0 %
Total risk-based capital$357,295 30.3 %8.0 %10.0 %
December 31, 2023
AmountRatioRegulatory Minimum"Well-capitalized" Minimum
(In thousands, except ratios)
Green Dot Corporation:
Tier 1 leverage$730,459 17.9 %4.0 %n/a
Common equity Tier 1 capital$730,459 38.0 %4.5 %n/a
Tier 1 capital$730,459 38.0 %6.0 %6.0 %
Total risk-based capital$749,623 39.0 %8.0 %10.0 %
Green Dot Bank:
Tier 1 leverage$404,559 9.8 %4.0 %5.0 %
Common equity Tier 1 capital$404,559 27.8 %4.5 %6.5 %
Tier 1 capital$404,559 27.8 %6.0 %8.0 %
Total risk-based capital$412,966 28.4 %8.0 %10.0 %

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the potential for economic losses from changes in market factors such as foreign currency exchange rates, credit, interest rates and equity prices. We believe that we have limited exposure to risks associated with changes in foreign currency exchange rates, interest rates and equity prices. We have no significant foreign operations. We do not hold or enter into derivatives or other financial instruments for trading or speculative purposes.
Interest rates
While operating net interest income is a meaningful component to our consolidated operating results, we do not consider our investment portfolio to be subject to material interest rate risk since it is comprised predominantly of fixed rate securities. The composition of our portfolio is price sensitive to rate changes, which can impact unrealized gains or losses in our portfolio. However, we have the ability, liquidity and intent to hold these instruments until such securities in our portfolio recover their amortized cost bases, which may be at maturity. Our cash and cash equivalents are also subject to changes in short-term rates. The Federal Open Market Committee ("FOMC") decreased the federal funds target rate in September 2024 to a range of 4.75%-5.0%, the first rate cut in over four years, and further reduced interest rates by an additional 25 basis points in early November 2024. Although the general market consensus is that interest rates will gradually decrease further over the near term, there remains a possibility that an elevated interest rate environment may persist for the foreseeable future. The FOMC's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future. In addition, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue) and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested. Accordingly, the net effect has had and we expect may continue to have a negative impact on our consolidated financial statements.
In September and October 2024, we issued and sold Notes in an aggregate principal amount of $50 million. The principal amounts of the Notes bear interest at a fixed rate of 8.75% per annum, payable semi-annually in arrears and maturing in September 2029. Refer to Note 9 — Debt to the Consolidated Financial Statements included herein for additional information. Should we require additional liquidity, our borrowings are expected to be at then current market rates of interest and may expose us to interest rate risk. Although any short-term borrowings would likely be insensitive to interest rate changes, interest expense on short-term borrowings will increase and decrease with changes in the underlying short-term interest rates.
We actively monitor our interest rate exposure and our objective is to reduce, where we deem appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. In order to accomplish this objective, we may enter into derivative financial instruments, such as forward contracts and interest rate hedge contracts only to the extent necessary to manage our exposure. We do not hold or enter into derivatives or other financial instruments for trading or speculative purposes.
Inflation risks
It is difficult to assess whether inflation has or will have a material effect on our business, financial condition or results of operations. Nonetheless, if our borrowing rates were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through rate increases. Our inability or failure to do so could harm our business, financial condition and results of operations. Additionally, interest rate increases may adversely impact our customers’ spending levels or our customers’ ability to pay outstanding amounts owed to us. However, we believe this risk is largely offset by the higher interest rate yields on our cash and investment portfolios as well as anticipated increases in consumer spending caused by inflation that would result in increased interchange revenue. Further, because the majority of our investment portfolio is subject to longer maturity dates, we believe the risk of realized losses from selling fixed income securities at a discount to the market is immaterial.
Credit and liquidity risks
We are exposed to credit and liquidity risks associated with the financial institutions that hold our cash and cash equivalents, restricted cash, available-for-sale investment securities, settlement assets due from retail distributors, third-party payment processors and other partners that collect funds and fees from our customers, and amounts due from our issuing banks for fees collected on our behalf.
We manage the credit and liquidity risks associated with our cash and cash equivalents, available-for-sale investment securities, loans and amounts due from issuing banks by maintaining an investment policy that restricts our correspondent banking relationships to approved, well capitalized institutions and restricts investments to highly liquid, low credit risk assets. Our policy has limits related to liquidity ratios, the concentration that we may have with
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a single institution or issuer and effective maturity dates as well as restrictions on the type of assets that we may invest in. The management Asset Liability Committee is responsible for monitoring compliance with our Capital Asset Liability Management policy and related limits on an ongoing basis, and reports regularly to the risk committee of our Board of Directors.
Our exposure to credit risk associated with settlement assets is mitigated due to the short time period, currently an average of two days that settlement assets are outstanding. We perform an initial credit review and assign a credit limit to each new retail distributor, third-party payment processors and other partners. We monitor each partner's settlement asset exposure and its compliance with its specified contractual settlement terms on a daily basis and assess their credit limit and financial condition on a periodic basis. Our management's Enterprise Risk Management Committee is responsible for monitoring partner exposure and assigning credit limits and reports regularly to the risk committee of our Board of Directors. We continue to monitor our exposure to credit risk with our retail distributors and other business partners in light of the current macro-economic uncertainties.
ITEM 4. Controls and Procedures
Disclosure controls and procedures — Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 13d-15(e)) at the end of the period covered by this report. Based on such evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, at the end of such period, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Change in internal control over financial reporting — There was no material change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any significant impact to our internal controls over financial reporting despite the fact that most of our employees have shifted to a remote workforce strategy in the U.S. The design of our processes and controls allows for remote execution with accessibility to secure data. We are continually monitoring and assessing our remote work environment to minimize the impact, if any, on the design and operating effectiveness on our internal controls.
Limitations on Effectiveness of Controls — Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
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PART II
ITEM 1. Legal Proceedings
Refer to Note 17 — Commitments and Contingencies to the Consolidated Financial Statements included herein for information regarding our legal proceedings, which information is incorporated into this Item 1 by reference.
ITEM 1A. Risk Factors
RISKS RELATED TO OUR BUSINESS
The loss of operating revenues from our BaaS partners and Walmart or any of our largest retail distributors as well as third-party processors or other major consumers would adversely affect our business.
A significant portion of our operating revenues are derived from our BaaS partners and the products and services sold at our largest retail distributors. Approximately 59% and 53% of our total operating revenues for the three and nine months ended September 30, 2024, respectively, was generated from a single BaaS partner. Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 10% for each of the three and nine months ended September 30, 2024, respectively. We expect that Walmart will continue to have a significant impact on our operating revenues in future periods, particularly in our Consumer Services segment. It would be difficult to replace Walmart and the operating revenues derived from products and services sold at their stores. Accordingly, the loss of Walmart or any significant decrease in customers’ spending levels and ability or willingness to purchase our account products through Walmart, for any reason, including inflation, would have a material adverse effect on our business and results of operations. In addition, any publicity associated with the loss of any of our large retail distributors, significant BaaS partner or third-party processors could harm our reputation, making it more difficult to attract and retain consumers, BaaS partners, third-party processors and other retail distributors, and could lessen our negotiating power with our remaining and prospective retail distributors, BaaS partners and third-party processors.
The term of our Walmart MoneyCard agreement (which governs the MoneyCard program) expires on January 31, 2027, unless renewed under its automatic renewal provision, which provides for a one-year extension. Our contracts with Walmart and our other largest retail distributors can in limited circumstances, such as our material breach or insolvency or, in the case of Walmart, our failure to meet agreed-upon service levels, certain changes in control, and our inability or unwillingness to agree to requested pricing changes, be terminated by these retail distributors on relatively short notice. There can be no assurance that we will be able to continue our relationships with our largest retail distributors, significant BaaS partner or third-party processors on the same or more favorable terms in future periods or that our relationships will continue beyond the terms of our existing contracts with them. Our operating revenues and results of operations could suffer if, among other things, any of our retail distributors, significant BaaS partners or third-party processors renegotiates, terminates or fails to renew, or to renew on similar or favorable terms, its agreement with us or otherwise chooses to modify the level of support it provides for our products.
Our base of tax preparation partners is concentrated, and the performance of our Money Movement Services segment depends in part on our ability to retain existing partners.
If one or more of our major tax preparation partners were to substantially reduce or stop offering our services to their customers, our tax refund processing services business, a component of our Money Movement Services segment, would be harmed. Substantially all the revenues we generate from our tax refund processing services business have come from sales through a relatively small number of tax preparation firms. We do not have long-term contractual commitments from most of our current tax preparation partners and our tax preparation partners for any reason may elect to not renew their contracts with us with little or no advance notice. As a result, we cannot be certain that any of our current tax preparation partners will continue to partner with us past the terms in their current agreements. A termination of our relationships with certain tax preparation partners that provide commercial tax preparation software would result in lost revenue and the loss of the ability to secure future relationships with new or existing tax preparation firms that use such tax software.
Our future success depends upon the active and effective promotion of our products and services by our BaaS partners, retail distributors and tax preparation partners.
Most of our operating revenues are derived from platform management fees that we earn from our BaaS partners and products and services sold at the stores of our retail distributors. In addition, the revenues we generate from our tax refund processing services are largely derived from products and services sold through retail tax preparation businesses and income tax software providers. Revenues from our BaaS partners, retail distributors
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and tax preparation partners depend on a number of factors outside our control and may vary from period to period. Our platform management fees depend upon the success of our BaaS partners' efforts to promote their own products and services which incorporate our products and services. Additionally, because we compete with many other providers of products and services for placement and promotion of products in the stores of our retail distributors or in conjunction with the delivery of tax preparation services by our tax preparation providers, our success depends on the willingness of our retail distributors and tax preparation partners to promote our products and services successfully. In general, our contracts with these third parties allow them to exercise significant discretion over the placement and promotion of our or their products and services, and for a variety of reasons they could give higher priority to other products or services they are offering or the products and services of other companies. Accordingly, losing the commitment of our BaaS partners, retail distributors and tax preparation partners might limit or reduce platform management fees and the sales of our products and services. Our operating revenues and operating expenses may also be negatively affected by the operational decisions of our BaaS partners, retail distributors and tax preparation partners. For example, if a retail distributor reduces shelf space for our products or implements changes in its systems that disrupt the integration between its systems and ours, our product sales could be reduced or decline, and we may incur additional merchandising costs to ensure our products are appropriately stocked. Similarly, for a variety of reasons, many of our tax preparation partners that provide commercial income tax preparation software offer their customers several alternatives for tax refund processing services, including those of our competitors. Even if our BaaS partners, retail distributors and tax preparation partners actively and effectively promote our or their products and services, there can be no assurance that their efforts will maintain or result in growth of our operating revenues.
Future revenue growth depends on our ability to retain and attract new long-term users of our products.
Our ability to increase account usage and accountholder retention and to attract new long-term users of our products can have a significant impact on our operating revenues. We may be unable to generate increases in account usage, accountholder retention or attract new long-term users of our products for a number of reasons, including if we are unable to maintain our existing distribution channels, predict accurately consumer preferences or industry changes and modify our products and services on a timely basis in response thereto, produce new features and services that appeal to existing and prospective customers, and influence accountholder behavior through accountholder retention and usage incentives. Our results of operations could vary materially from period to period based on the degree to which we are successful in increasing usage and retention and attracting long-term users of our products.
Seasonal fluctuations in the use of our products and services impact our results of operations and cash flows.
Our results of operations and cash flows vary from quarter to quarter, and periodically decline, due to the seasonal nature of the use of our products and services. For example, our results of operations for the first half of each year have been favorably affected by large numbers of taxpayers electing to receive their tax refunds via direct deposit on our accounts, which caused our operating revenues to be typically higher in the first half of those years than they were in the corresponding second half of those years. Our tax refund processing services business is also highly seasonal as it generates the substantial majority of its revenue in the first quarter, and substantially all of its revenue in the first half of each calendar year. To the extent that seasonal fluctuations become more pronounced, or are not offset by other factors, our results of operations and cash flows from operating activities could fluctuate materially from period to period.
The industries in which we compete are highly competitive.
The industries in which we compete are highly competitive and subject to rapid and significant changes. We compete against companies and financial institutions across the retail banking, financial services, transaction processing, consumer technology and financial technology services industries, and may compete with others in the market who may in the future provide offerings similar to ours, particularly vendors which provide program management and other services though a platform similar to our banking platform. These and other competitors in the banking and electronic payments industries are introducing innovative products and services that directly compete or may compete with ours. We expect that this competition will continue as banking and electronic payments industries continue to evolve, particularly if non-traditional payments processors and other parties gain greater market share in these industries. If we are unable to differentiate our products and platform from and/or successfully compete with those of our competitors, our revenues, results of operations, prospects for future growth and overall business could be materially and adversely affected.
Many existing and potential competitors are entities substantially larger in size, more highly diversified in revenue and substantially more established with significantly more broadly known brand awareness than ours. As
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such, many of our competitors can leverage their size, robust networks, financial wherewithal, brand awareness, pricing power and technological assets to compete with us. Additionally, some of our current and potential competitors are subject to fewer regulations and restrictions than we are, and thus may be able to respond more quickly in the face of regulatory and technological changes.
We are also experiencing competition as a result of relatively new competitors offering free or low-cost alternatives to our products and services. Digital-centric financial services platforms have gained market share through the marketing of their largely free bank account offerings. To the extent these competitors continue to take market share at our expense, we expect that the purchase and use of our products and services would decline. In order to compete across the markets served by our Consumer Services and Money Movement Services segments, we may have to increase the incentives that we offer to our retail distributors and our tax preparation partners, or directly to consumers, and decrease the prices of our products and services, any of which would likely adversely impact our results of operations.
We may not keep pace with the rapid technological developments in the industries in which we compete and the larger electronic payments industry.
The electronic payments industry is subject to rapid and significant technological changes. We cannot predict the effect of technological changes on our business. We rely in part on third parties for the development of, and access to, new technologies. We expect that new services and technologies applicable to our industry will continue to emerge, and these new services and technologies may be superior to, or render obsolete, the technologies we currently utilize in our products and services. Additionally, we may make future investments in, or enter into strategic alliances to develop, new technologies and services or to implement infrastructure change to further our strategic objectives, strengthen our existing businesses and remain competitive. However, our ability to develop or transition to new services and technologies may be inhibited by a lack of industry-wide standards, by difficulties encountered in our development of new services and technologies, by resistance from our retail distributors, BaaS partners, third-party processors or consumers to these changes, or by the intellectual property rights of third parties. Investments in new services and technologies or enhancements are inherently risky, and may not be successful or may have an adverse effect on our business, financial condition and results of operations.
Fraudulent and other illegal activity involving our products and services could adversely affect our financial position and results of operations.
Criminals are using increasingly sophisticated methods to engage in illegal activities using deposit account products (including demand deposit accounts and prepaid cards), reload products, or customer information and may see their effectiveness enhanced by the use of Artificial Intelligence. Illegal activities involving our products and services often include malicious social engineering schemes. Fraudulent activity related to tax and other governmental benefits continues to persist at elevated levels. This transaction fraud has negatively impacted and is expected to continue to impact many financial services companies including us in relation to our products.
Illegal activities may also include fraudulent payment or refund schemes and identity theft. We rely upon third parties for transaction processing services, which subjects us and our customers to risks related to the vulnerabilities of those third parties. A single significant incident of fraud, or increases in the overall level of fraud, involving our deposit account products, and other products and services, have in the past and could in the future, result in reputational damage to us in addition to losses. Such damage could reduce the use and acceptance of our deposit account products and other products and services, cause retail distributors to cease doing business with us, or lead to greater regulation that would increase our compliance costs. Fraudulent activity could also result in the imposition of regulatory sanctions, including significant monetary fines, which could adversely affect our business, results of operations and financial condition.
To address the challenges that we face with respect to fraudulent activity, we have implemented risk control mechanisms that have made it more difficult for all customers, including legitimate customers, to obtain and use our products and services. We believe it is likely that our risk control mechanisms may continue to adversely affect our new account and card activations for the foreseeable future and that our operating revenues may be negatively impacted as a result. Further, implementing such risk control mechanisms can be costly and has and may continue to negatively impact our operating margins as we continuously seek to enhance our risk controls.
We are exposed to losses from customer accounts.
Fraudulent activity involving our products may lead to customer disputed transactions, for which we may be liable under banking regulations and payment network rules. Our fraud detection and risk control mechanisms may not prevent all fraudulent or illegal activity. To the extent we incur losses from disputed transactions, our business, results of operations and financial condition could be materially and adversely affected. Additionally, our
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accountholders can incur charges in excess of the funds available in their accounts, and we may become liable for these overdrafts. We offer an optional overdraft protection program service on certain demand deposit account programs that allows eligible accountholders who opt-in to spend up to a pre-authorized amount in excess of their available account balance. For accountholders who are not enrolled or do not meet the eligibility requirements of our overdraft protection program, we generally decline authorization attempts for amounts that exceed the available accountholder’s balance, however, the application of card association rules, the timing of the settlement of transactions and the assessment of the account’s monthly maintenance fee, among other things, can still result in overdrawn accounts. Our overdraft exposure in these instances arises primarily from late-posting. A late-post occurs when a merchant posts a transaction within a payment network-permitted time frame, but subsequent to our release of the authorization for that transaction, as permitted by card association rules. Under card association rules, we may be liable for the transaction amount even if the accountholder has made additional purchases in the intervening period and funds are no longer available in the account at the time the transaction is posted.
We maintain reserves to cover the risk that we may not recover these amounts due from our accountholders, but our exposure may increase above these reserves for a variety of reasons, including our failure to predict the actual recovery rate accurately. To the extent we incur losses from overdrafts above our reserves or we determine that it is necessary to increase our reserves substantially, our business, results of operations and financial condition could be materially and adversely affected.
We face settlement risks from our retail distributors and banking partners, which may increase during an economic recession.
A large portion of our business is conducted through retail distributors that sell our products and services to consumers at their store locations or other banking partners that collect funds and fees from our customers on our behalf. Our retail distributors and banking partners collect funds from the consumers who purchase our products and services and then must remit these funds directly to our subsidiary bank. While the remittance of these funds by the retail distributor or banking partner takes on average two business days, we have in the past and may in the future experience lengthy delays. Such delays or refusal to pay exposes us to increased settlement risk. If a retail distributor or other banking partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuing bank from the sales of our products and services, we are liable for any amounts owed to our customers. As of September 30, 2024, we had assets subject to settlement risk of $587.1 million. Given the possibility of recurring volatility in global financial markets, the approaches we use to assess and monitor the creditworthiness of our retail distributors or other banking partners may be inadequate, and we may be unable to detect and take steps to mitigate an increased credit risk in a timely manner. Economic recessions could result in settlement losses, whether or not directly related to our business. We are not insured against these risks. Significant settlement losses could have a material adverse effect on our business, results of operations and financial condition.
Worsening economic conditions, high rates of inflation, or other potential causes of economic distress could materially and adversely impact our business and financial results.
Global and macro-economic factors have resulted and may continue to result in high inflation rates, interest rates, or unemployment rates, leading to economic challenges for consumers and our retail distributors and other partners as well as reduced transaction and spending volumes on accounts. Additionally, these effects increase the settlement risk from our retail distributors and banking partners and could cause us to experience contraction in the number of locations within our network of retail distributors due to store closures or other developments, with attendant negative impacts to our operating revenues and results of operations. If current market conditions persist or deteriorate, we may decide to adjust pricing to account for an increasing cost of funds and increased credit risk, and thereby erode our margins and negatively impact our future financial performance and the price of our Class A common stock. Additionally, significant inflationary pressure increases borrowing rates, and we may not be able to fully offset such higher costs through rate increases. Our inability or failure to do so could harm our business, financial condition and results of operations. Additionally, increased interest rates may adversely impact our customers’ spending levels or our customers’ ability to pay outstanding amounts owed to us.
Please see “Quantitative and Qualitative Disclosures about Market Risk” for more information regarding the potential impact of the various market risks on our business.
Economic, political and other conditions may adversely affect trends in consumer spending.
The electronic payments industry, including the prepaid and debit card financial services segment within that industry, depends heavily upon the overall level of consumer spending. An economic recession may result in us experiencing a reduction in the number of our accounts that are purchased or reloaded, the number of transactions involving our cards and the use of our reload network and related services. A sustained reduction in the use of our
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products and related services, either as a result of a general reduction in consumer spending or as a result of a disproportionate reduction in the use of card-based payment systems, would materially harm our business, results of operations and financial condition.
We must be able to operate and scale our technology effectively.
Our ability to continue to provide our products and services to network participants, as well as to enhance our existing products and services and offer new products and services, is dependent on our information technology systems. If we are unable to manage and scale the technology associated with our business effectively, we could experience increased costs, reductions in system availability and losses of our network participants. Any failure of our systems in scalability and functionality would adversely impact our business, financial condition and results of operations.
We make significant investments in products and services that may not be successful.
Our prospects for growth depend on our ability to innovate by offering new, and adding value to our existing, product and service offerings and on our ability to effectively commercialize such innovations. While we will continue to make investments in research, development, and marketing for new products and services, if customers do not perceive our new offerings as providing significant value, they may fail to accept our new products and services, which would negatively impact our operating revenues. We may not achieve significant operating revenues from new product and service investments for a number of years, if at all. Moreover, new products and services may not be profitable, and even if they are profitable, operating margins for new products and services may not be as high as the margins we have experienced in the past.
Our business could suffer if there is a decline in the use of prepaid cards or demand deposit accounts as a payment mechanism or there are adverse developments with respect to the financial services industry in general.
As the financial services industry evolves, consumers may find prepaid financial services or demand deposit accounts to be less attractive than other financial services. Consumers might not use prepaid financial services or demand deposit accounts for any number of reasons, including the general perception of our industry, new technologies, a decrease in our distribution partners’ willingness to sell these products as a result of a more challenging regulatory environment or other factors outside of our control. If consumers do not continue or increase their usage of prepaid cards or demand deposit accounts, including making changes in the way such products are funded, our operating revenues may decline. Any projected growth for the industry may not occur or may occur more slowly than estimated. If there is a shift in the mix of payment forms, such as cash, credit cards, traditional debit cards and prepaid cards, away from our products and services, it could have a material adverse effect on our financial position and results of operations.
RISKS RELATED TO OUR OPERATIONS
Our business is dependent on the efficient and uninterrupted operation of computer network systems and data centers, including third party systems.
Our ability to provide reliable service to customers and other network participants depends on the efficient and uninterrupted operation of our computer network systems and data centers as well as those of our retail distributors, network acceptance members and third-party processors. Our business involves the movement of large sums of money, the processing of large numbers of transactions and the management of the data necessary to do both. Our success in our account programs, including our BaaS programs, as well as our money movement services, depends upon the efficient and error-free handling of the money that is collected, remitted or deposited in connection with the provision of our products and services. We rely on the ability of our employees, systems and processes and those of the banks that issue our cards, our retail distributors, tax refund preparation partners, other business partners and third-party processors to process and facilitate these transactions in an efficient, uninterrupted and error-free manner. Their failure to do so could materially and adversely impact our operating revenues and results of operations, particularly during the tax season, when we derive substantially all of our operating revenues for our tax refund processing services and a significant portion of our other operating revenues.
Our systems and the systems of third-party processors are susceptible to outages and interruptions due to fire, natural disaster, cyber-attacks, power loss, telecommunications failures, software or hardware defects, terrorist attacks, pandemics and similar events. We use both internally developed and third-party systems, including cloud computing and storage systems, for our services and certain aspects of transaction processing. Interruptions in our service may result for a number of reasons. Additionally, the data center hosting facilities that we use could be closed without adequate notice or suffer unanticipated problems resulting in lengthy interruptions in our service.
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Moreover, as we continue to add cloud based solutions or additional capacity to our existing data centers, we could experience problems transferring customer accounts and data, impairing the delivery of our service.
Our technology platforms continue to evolve as we regularly invest in enhancing our systems. As a result, some customers may experience disruptions in service despite significant investments in planning and testing on the part of us and our technology partners. In addition, the implementation of technological changes could cause significant disruptions to our customers and our business and may cause processing errors.
Any damage to, or failure of, or delay in our processes or systems generally, or those of our vendors (including as a result of disruptions at our third-party data center hosting facilities and cloud providers), or an improper action by our employees, agents or third-party vendors, could result in interruptions in our service, causing customers, retail distributors and other partners to become dissatisfied with our products and services or obligate us to issue credits or pay fines or other penalties to them. Sustained or repeated process or system failures could reduce the attractiveness of our products and services, including our banking platform, and result in contract terminations, thereby reducing operating revenue and harming our results of operations. Further, negative publicity arising from these types of disruptions could damage our reputation and may adversely impact use of our products and services, including our banking platform, and adversely affect our ability to attract new customers and business partners. Additionally, some of our contracts with retail distributors, including our contract with Walmart, contain service level standards pertaining to the operation of our systems, and provide the retail distributor with the right to collect damages and to potentially terminate its contract with us for system downtime exceeding stated limits. If we face system interruptions or failures, our business interruption insurance may not be adequate to cover the losses or damages that we incur. In addition, our insurance costs may also increase substantially in the future to cover the costs our insurance carriers may incur.
A cyber-attack, incident or security breach could expose us to liability and protracted and costly litigation, regulatory penalties, and could adversely affect our reputation and operating revenues.
We and our retail distributors, tax preparation partners, network acceptance members, third-party processors and the merchants that accept our cards receive, transmit and store confidential customer and other information, including personal information, in connection with the sale and use of our products and services. Despite the encryption software and the other technologies and systems we use to provide security for storage, processing and transmission of confidential customer and other information these technologies or systems have been, and continue to be, vulnerable to cyber-attacks, incidents and data security breaches by third parties and we have experienced, and may in the future experience, successful attacks, incidents and breaches. The risk of unauthorized circumvention of our security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers, including state sponsored hackers. Our retail distributors, tax preparation partners, network acceptance members, other business partners, third-party processors and the merchants that accept our cards also may experience similar cyber-attacks, incidents or security breaches or discover securities vulnerabilities involving the receipt, transmission and storage of our confidential customer and other information. Improper access to our or these third parties’ systems or databases could result in the theft, publication, deletion or modification of confidential customer and other information.
A data security breach of the systems on which sensitive accountholder or other customer or end-customer data and account information are stored have led, and could in the future lead, to fraudulent activity involving our products and services, reputational damage and claims, and could lead to regulatory actions, including penalties, against us. Further, a cyber-attack or other incident could go undetected and persist in our systems for extended periods. Regardless of whether or not we are sued or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack or other incident. Depending on the nature and magnitude of the accessed data, this effort may require substantial resources. If we are sued in connection with any data security breach, we could be involved in protracted and costly litigation and might be forced to pay damages and/or change our business practices, any of which could have a material adverse effect on our operating revenues and profitability. We would also likely have to pay (or indemnify the banks that issue our products and services which includes cards) fines, penalties and/or other assessments imposed by Visa or Mastercard as a result of any data security breach. Further, a significant data security breach could lead to additional regulation, which could impose new and costly compliance obligations. In addition, a data security breach or perceived security vulnerability at any of the third-party banks that issue our cards or at any of our retail distributors, tax preparation partners, network acceptance members, other business partners, third-party processors or the merchants that accept our cards could result in significant reputational harm to us and cause the use and acceptance of our cards or other products and services to decline, either of which could have a significant adverse impact on our operating revenues and future growth prospects. Moreover, it may require substantial financial resources to address and remediate any such breach, including additional costs for hiring an external party to conduct a forensic investigation, replacement cards, manufacturing, distribution, re-stocking fees, fraud monitoring, and other added security measures, among others, which could have a significant adverse impact on our operating results.
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Additionally, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on reasonable terms, or that any insurer will not deny coverage as to any future claim. The assertion of large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
Failure to maintain satisfactory compliance with certain privacy and data protection laws and regulations may subject us to substantial negative financial consequences, civil or criminal penalties and business reputation risk.
Complex existing and emerging local, state, and federal laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal information. These privacy laws and regulations are quickly evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subject to new or different interpretations. Complying with these laws and regulations can be costly and can impede the development and offering of new products and services. In addition, our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal information, or to protect personal information from unauthorized access, use, or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, damage to our reputation, and loss of goodwill, any of which could have a material adverse effect on our operations, financial performance, and business.
Replacing third-party vendors would be difficult and disruptive to our business.
Some services relating to our business, including fraud management and other customer verification services, cash processing, card production, and customer service, are outsourced to third-party vendors. We also depend on third-party banks to assist with our tax refund processing services. It would be difficult to replace some of our third-party vendors in a timely manner if they were unwilling or unable to provide us with these services during the term of their agreements with us or if they elected not to renew their contracts with us, and our business and operations would be adversely affected. Additionally, replacing third-party vendors with in-house solutions may lead to unanticipated operating costs and potential exposure to increased regulatory scrutiny. In particular, due to the seasonality in our business, any material service interruptions, service delays or changes in service contracts with key vendors during the tax season would result in losses that have an even greater adverse effect on that business than would be the case with our overall business.
Further, we have in the past and may in the future experience operational issues with the third-party call centers that we rely on to provide customer support. Any prolonged closure or disruption in the services provided by such call centers would have an adverse effect on our business.
Some of our operations, including a significant portion of our software development operations, are located outside of the United States, which subjects us to additional risks.
A significant portion of our software development operations are based in Shanghai, China. A prolonged disruption at our China facility for any reason due to natural or man-made disasters, outbreaks of disease, climate change or other events outside of our control, such as equipment malfunction or large-scale outages or interruptions of service from utilities or telecommunications providers, could potentially delay our ability to launch new products or services or impact our ability to deliver current products and services, which could materially and adversely affect our business. Additionally, as a result of our international operations, we face numerous other challenges and risks, including:
•increased complexity and costs of managing international operations;
•regional economic and geopolitical instability and military conflicts;
•limited protection of our intellectual property and other assets;
•compliance with and unanticipated changes in local laws and regulations, including tax laws and regulations;
•foreign currency exchange fluctuations relating to our international operating activities;
•local business and cultural factors that differ from our normal standards and practices; and
•differing employment practices and labor relations.
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REGULATORY AND LEGAL RISKS
As a bank holding company, we are subject to extensive and potentially changing regulation and are required to serve as a source of strength for Green Dot Bank.
As a bank holding company, we, along with Green Dot Bank, are subject to comprehensive supervision and examination by the Federal Reserve Board and the State of Utah Department of Financial Institutions and must comply with applicable laws and regulations and other commitments we have agreed to, including financial commitments with respect to minimum capital and leverage requirements. If regulators believe that we or Green Dot Bank have not complied with any of these requirements, we may become subject to formal or informal enforcement actions, proceedings, or investigations, which could result in regulatory orders, penalties, restitution, restrictions on our business operations or requirements to take corrective actions, which may, individually or in the aggregate, affect our results of operations and restrict our ability to grow. For example, in July 2024 we and our subsidiary bank received the Consent Order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations. The Consent Order included a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. We previously accrued an estimated liability of $20 million related to the Consent Order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024. Additionally, in response to enhanced regulatory scrutiny, we have increased our investment in our regulatory and compliance infrastructure and will continue with further increases. If we fail to comply with the applicable capital and leverage requirements, or if Green Dot Bank fails to comply with its applicable capital and leverage requirements, the Federal Reserve Board may limit our or Green Dot Bank's ability to pay dividends or fund stock repurchases, or if we become less than adequately capitalized, require us to raise additional capital. In addition, if at any time we or Green Dot Bank fail to be “well capitalized” or “well managed,” we may not commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval.
The restriction on our ability to commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval would also generally apply if Green Dot Bank received a CRA rating of less than “Satisfactory.” Currently, under the Bank Holding Company Act (the "BHC Act"), we may not be able to engage in new activities or acquire shares or control of other businesses. Such restrictions might limit our ability to pursue future business opportunities which we might otherwise consider, but which might fall outside the scope of permissible activities. U.S. bank regulatory agencies from time to time take supervisory actions under certain circumstances that restrict or limit a financial institution's activities, including in connection with examinations, which take place on a continual basis. We are subject to significant legal restrictions on our ability to publicly disclose the existence of these actions or any of the related details. In addition, as part of the regular examination process, our and Green Dot Bank's regulators may direct us or our subsidiaries to operate under various restrictions as a prudential matter. Such restrictions may include not being able to engage in certain categories of new activities or acquire shares or control of other companies.
The failure by Green Dot Bank to properly classify its deposits could have an adverse effect on our financial condition.
The FDIC issued a final rule relating to the classification of brokered deposits, with full compliance required in 2022. The final rule established a framework for analyzing certain provisions of the “deposit broker” definition, including “placing deposits,” “facilitating the placement of deposits” and “primary purpose,” for purposes of the classification of deposits as brokered deposits and exemptions from such a classification. As a result of the final rule, Green Dot Bank reclassified most of its deposits as non-brokered. If our reclassification is deemed non-compliant, we could be subject to regulatory fines and penalties, increased regulatory oversight, restrictions on our activities, and increased litigation risk.
Failure by us and our business partners to comply with applicable laws and regulations could have an adverse effect on our business, financial position and results of operations.
The banking, financial technology, transaction processing and tax refund processing services industries are highly regulated, and failure by us, the banks that issue our cards or the businesses that participate in our reload network or other business partners to comply with the laws and regulations to which we are subject could negatively impact our business. We are subject to state money transmission licensing requirements and a wide range of federal and other state laws and regulations. In particular, our products and services are subject to an increasingly strict set of legal and regulatory requirements intended to protect consumers, such as various disclosure and consent requirements, mandated or prohibited terms and conditions, prohibitions on discrimination based on certain prohibited bases, prohibitions on unfair, deceptive or abusive acts or practices, or to help detect and prevent money
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laundering, terrorist financing and other illicit activities. For example, we are subject to the AML reporting and recordkeeping requirements of the BSA, as amended by the PATRIOT Act. Monitoring and complying with all applicable laws, regulations and licensing requirements can be difficult and costly. Failure to fully comply with these requirements exposes us to the risk of being required to undertake substantial remediation efforts and to the risk of, among other things, enforcement actions, lawsuits, monetary damages, fines, penalties and reputational harm, any one of which could have a material adverse impact on our results of operations, financial condition or business prospects.
From time to time, federal and state legislators and regulatory authorities, including state attorney generals, increase their focus on the banking, consumer financial services and tax preparation industries and have in the past and may in the future propose and adopt new legislation or guidance that could result in significant adverse changes in the regulatory landscape for financial institutions and financial services companies. Accordingly, changes in laws and regulations or the interpretation or enforcement thereof may occur that could increase our compliance and other costs of doing business, require significant systems redevelopment, or render our products or services less profitable or obsolete, any of which could have an adverse effect on our results of operations. For example, we could face more stringent AML rules and regulations, as well as more stringent licensing rules and regulations, compliance with which could be expensive and time consuming. In addition, adverse rulings relating to the industries in which we participate could cause our products and services to be subject to additional laws and regulations, which could make our products and services less profitable. Further, with the current administration and leadership at federal agencies such as the CFPB, we expect that financial institutions will remain heavily regulated in the near future and that additional laws or regulations may be adopted that further regulate specific banking practices, including with respect to the fees we are permitted to charge to customers.
If additional regulatory requirements were imposed on our bank or the sale of our products and services, the requirements could lead to a loss of retail distributors, network participants, tax preparation partners or other business partners, which could materially and adversely impact our operations. Moreover, if our products are adversely impacted by the interpretation or enforcement of these regulations or if we or any of our retail distributors or tax preparation partners were unwilling or unable to make such operational changes to comply with the interpretation or enforcement thereof, we would no longer be able to sell our products and services through that noncompliant retail distributor or tax preparation partner, which could materially and adversely affect our business, financial position and operating results.
Failure by us or those businesses to comply with the laws and regulations to which we are or may become subject could result in fines, penalties or limitations on our ability to conduct our business, or federal or state actions, any of which could significantly harm our reputation with consumers, banks that issue our cards and regulators, and could materially and adversely affect our business, operating results and financial condition. Many of these laws can be unclear and inconsistent across various jurisdictions and ensuring compliance with them could be difficult and costly. If new regulations or laws result in changes in the way we are regulated, these regulations could expose us to increased regulatory oversight, more burdensome regulation of our business, and increased litigation risk, each of which could increase our costs and decrease our operating revenues. Furthermore, limitations placed on the fees we charge or the disclosures that must be provided with respect to our products and services could increase our costs and decrease our operating revenues.
Changes in rules or standards set by the payment networks, or changes in debit network fees or products or interchange rates, could adversely affect our business, financial position and results of operations.
We are subject to association rules that could subject us to a variety of fines or penalties that may be levied by the card associations or networks for acts or omissions by us or businesses that work with us, including card processors. The termination of the card association registrations held by us or any changes in card association or other debit network rules or standards, including interpretation and implementation of existing rules or standards, that increase the cost of doing business or limit our ability to provide our products and services could have an adverse effect on our business, operating results and financial condition. In addition, from time to time, card associations may increase the fees that they charge, which could increase our operating expenses, reduce our profit margin and adversely affect our business, results of operations and financial condition.
Furthermore, a material portion of our operating revenues is derived from interchange fees. For each of the three and nine months ended September 30, 2024, interchange revenues represented 12% of our total operating revenues, and we expect interchange revenues to continue to represent a significant percentage of our total operating revenues. The amount of interchange revenues that we earn is highly dependent on the interchange rates that the payment networks set and adjust from time to time.
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The enactment of the Dodd-Frank Act required the Federal Reserve Board to implement regulations that have substantially limited interchange fees for many issuers. While the interchange rates that may be earned by us and Green Dot Bank are exempt from the limitations imposed by the Dodd-Frank Act, federal legislators and regulatory authorities have become increasingly focused on interchange fees, and continue to propose new legislation that could result in significant adverse changes to the rates we are able to charge and there can be no assurance that future regulation or changes by the payment networks will not substantially impact our interchange revenues. If interchange rates decline, whether due to actions by the payment networks or future regulation, we would likely need to change our fee structure to offset the loss of interchange revenues. However, our ability to make these changes is limited by the terms of our contracts and other commercial factors, such as price competition. To the extent we increase the pricing of our products and services, we might find it more difficult to acquire consumers and to maintain or grow card usage and customer retention, and we could suffer reputational damage and become subject to greater regulatory scrutiny. We also might have to discontinue certain products or services. As a result, our total operating revenues, operating results, prospects for future growth and overall business could be materially and adversely affected.
Litigation or investigations could result in significant settlements, sanctions, fines or penalties.
We are subject to regulatory oversight in the normal course of our business and have been, currently are and from time to time in the future may be subject to securities class actions, commercial and other litigation or regulatory or judicial proceedings or investigations. The outcome of litigation and regulatory or judicial proceedings or investigations is difficult to predict. Plaintiffs or regulatory agencies or authorities in these matters have sought and may seek recovery of very large or indeterminate amounts, seek to have aspects of our business suspended or modified or seek to impose sanctions, including significant monetary fines. For example, in July 2024 we and our subsidiary bank received the Consent Order from the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations. The Consent Order included a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. We previously accrued an estimated liability of $20 million related to the Consent Order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024. Additionally, the monetary and other impacts of these actions, litigations, proceedings or investigations may remain unknown for substantial periods of time. The cost to defend, settle or otherwise resolve these matters have been and may be significant. Further, an unfavorable resolution of litigation, proceedings or investigations against us could have a material adverse effect on our business, operating results, or financial condition. In this regard, such costs could make it more difficult to maintain the capital, leverage and other financial commitments at levels we have agreed to with the Federal Reserve Board and the Utah Department of Financial Institutions. If regulatory or judicial proceedings or investigations were to be initiated against us by private or governmental entities, adverse publicity that may be associated with these proceedings or investigations could negatively impact our relationships with retail distributors, tax preparation partners, network acceptance members, financial institutions and other lending partners, other business partners and card processors and decrease acceptance and use of, and loyalty to, our products and related services, and could impact the price of our Class A common stock. In addition, such proceedings or investigations could increase the risk that we will be involved in litigation. For the foregoing reasons, any regulatory or judicial proceedings or investigations that are initiated against us by private or governmental entities, could adversely affect our business, results of operations and financial condition or could cause our stock price to decline. Refer to Note 17—Commitments and Contingencies to the Consolidated Financial Statements included herein for further information regarding certain of our legal and other proceedings.
We may be unable to adequately protect our brand and our intellectual property rights related to our products and services or third parties may allege that we are infringing their intellectual property rights.
Our brands and marks are important to our business, and we utilize trademark registrations and other means to protect them. Our business would be harmed if we were unable to protect our brand against infringement. We also rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to protect the intellectual property rights related to our products and services. We currently have 17 issued patents and 1 patent application pending. Although we generally seek patent protection for inventions and improvements that we anticipate will be incorporated into our products and services, there is always a chance that our patents or patent applications could be challenged, invalidated or circumvented, or that an issued patent will not adequately cover the scope of our inventions or improvements incorporated into our products or services. Additionally, our patents could be circumvented by third parties.
We may unknowingly violate the intellectual property or other proprietary rights of others and, thus, may be subject to claims by third parties. Because of the existence of a large number of patents in the mobile technology
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field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its elements infringes or will infringe on the patent rights of others. Regardless of the merit of these claims, we may be required to devote significant time and resources to defending against these claims or to protecting and enforcing our own rights. We might also be required to develop a non-infringing technology or enter into license agreements and there can be no assurance that licenses will be available on acceptable terms and conditions, if at all. Some of our intellectual property rights may not be protected by intellectual property laws, particularly in foreign jurisdictions. The loss of our intellectual property or the inability to secure or enforce our intellectual property rights or to defend successfully against an infringement action could harm our business, results of operations, financial condition and prospects.
RISKS RELATED TO OUR CAPITAL NEEDS AND INDEBTEDNESS
We might require additional capital to support our business in the future, and this capital might not be available on acceptable terms, or at all.
If our unrestricted cash and cash equivalents balances and any cash generated from operations are not sufficient to meet our future cash requirements, we will need to access additional capital to fund our operations. We may also need to raise additional capital to take advantage of new business or acquisition opportunities. However, we may not be able to raise needed cash in a timely basis on terms acceptable to us or at all. Financings, if available, may be on terms that are dilutive or potentially dilutive to our stockholders. The holders of new securities may also receive rights, preferences or privileges that are senior to those of existing holders of our Class A common stock. In addition, if we were to raise cash through a debt financing, the terms of the financing might impose additional conditions or restrictions on our operations that could adversely affect our business. If we require new sources of financing but they are insufficient or unavailable, we would be required to modify our operating plans to take into account the limitations of available funding, which would harm our ability to maintain or grow our business. Should we require additional credit at levels we are unable to access, the cost of credit is greater than expected, or our cost-savings measures are ineffective or result in us incurring greater costs, our operating results could be adversely affected.
We have increased debt service obligations as a result of the issuance of our senior unsecured notes.
In September and October 2024, we issued and sold senior unsecured notes in an aggregate principal amount of $50.0 million that mature in September 2029. As a result of these transactions, we have incurred additional debt service obligations in addition to normal operating expenses and planned capital expenditures. Our increased level of indebtedness may have several important effects on our future operations, including, without limitation, a portion of our cash flow must be dedicated to the payment of interest and principal on the senior unsecured notes, reducing funds available for distribution to stockholders and limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes. Our ability to meet our debt service obligations and to reduce our total indebtedness will be dependent upon our future performance, as well as Green Dot Bank and its ability to pay dividends to us, which will be subject to regulatory restrictions, general economic, industry and competitive conditions and to financial, business and other factors affecting us and Green Dot Bank, many of which are beyond our control. In addition, the senior unsecured notes contain certain affirmative and negative non-financial covenants applicable to us and Green Dot Bank that could limit our ability to take advantage of financing, merger, acquisition or other opportunities, to fund our business operations or to fully implement our current and future operating strategies.
We cannot assure you that we will be able to continue to generate cash flow at or above its current level and that we will be able to pay principal and interest on the senior unsecured notes as they become due. Further, we cannot assure you that our maintenance of our indebtedness or occurrence of future indebtedness will not adversely affect our operating results or financial condition.
GENERAL RISKS
Our operating results may fluctuate in the future, which could cause our stock price to decline.
If our quarterly and annual results of operations fall below the expectations of investors or any securities analysts who follow our Class A common stock, the trading price of our Class A common stock could decline substantially. Fluctuations in our quarterly or annual results of operations might result from a number of factors including the occurrence of one or more of the events or circumstances described in these risk factors, many of which are outside of our control, including, but not limited to:
•the timing and volume of purchases and use of our products and services;
•the timing and volume of tax refunds or other government payments processed by us;
•the timing and success of new product or service introductions by us or our competitors;
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•fluctuations in customer retention rates;
•changes in the mix of products and services that we sell or changes in the mix of our client retail distributors;
•the timing of commencement of new and existing product roll outs, developments and initiatives and the lag before those new products, channels or retail distributors generate material operating revenues;
•our ability to effectively sell our products through direct-to-consumer initiatives;
•costs associated with significant changes in our risk policies and controls;
•the amount and timing of major advertising campaigns, including sponsorships;
•the amount and timing of capital expenditures and operating costs;
•interest rate volatility;
•our ability to control costs, including third-party service provider costs and sales and marketing expenses;
•volatility in the trading price of our Class A common stock;
•changes in the political or regulatory environment affecting the industries in which we operate;
•economic recessions or uncertainty in financial markets, and the uncertainty regarding the impact of inflation; and
•other factors beyond our control, such as terrorism, war, natural disasters and pandemics as well as the other items included in these risk factors.
Our actual operating results may differ significantly from our guidance.
From time to time, we issue guidance in our quarterly earnings conference calls, or otherwise, regarding our future performance that represents our management’s estimates as of the date of release. Guidance is necessarily speculative in nature, and is only an estimate of what management believes is realizable as of the date of release, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will prove to be incorrect or will vary significantly from actual results. Actual results will vary from our guidance and the variations may be material, especially in times of economic uncertainty.
Our future success depends on our ability to attract, integrate, retain and incentivize key personnel.
Our ability to manage and grow our business will depend, to a significant extent, on our ability to attract, integrate, retain and recognize key personnel, namely our management team and experienced sales, marketing and program and technology development personnel. We may experience difficulty in managing transitions and assimilating newly-hired personnel, and if we fail to manage these transitions successfully, we could experience significant delays or difficulty in the achievement of our development and strategic objectives and our business, financial condition and results of operations could be materially and adversely harmed. Competition for qualified management, sales, marketing and program and technology development personnel can be intense. Competitors have in the past and may in the future attempt to recruit our top management and employees. In order to attract and retain personnel in a competitive marketplace, we must provide competitive pay packages, including cash and equity-based compensation and the volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. Additionally, our U.S.-based employees, including our senior management team, work for us on an at-will basis and there is no assurance that any such employee will remain with us.
Acquisitions or investments, or the failure to consummate such transactions, could disrupt our business and harm our financial condition.
We have in the past acquired, and we may acquire in the future, other businesses and technologies. Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to identify suitable candidates or successfully complete identified acquisitions. Failure to complete an acquisition could adversely affect our business as we could be required to pay a termination fee under certain circumstances or be subject to litigation, and our stock price may also suffer as the failure to consummate such an acquisition may result in negative perception in the investment community.
Further, the process of integrating an acquired business, product, service or technology can involve a number of special risks and challenges, including:
•increased regulatory and compliance requirements;
•implementation or remediation of controls, procedures and policies at the acquired company;
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•diversion of management time and focus from operation of our then-existing business;
•integration and coordination of product, sales, marketing, program and systems management functions;
•transition of the acquired company’s users and customers onto our systems;
•integration of the acquired company’s systems and operations generally with ours;
•integration of employees from the acquired company into our organization;
•loss or termination, including costs associated with the termination or replacement of employees;
•liability for activities of the acquired company prior to the acquisition, including violations of law, commercial disputes, and tax and other known and unknown liabilities; and
•increased litigation or other claims in connection with the acquired company, including claims brought by terminated employees, customers, former stockholders or other third parties.
If we are unable to successfully integrate an acquired business or technology or otherwise address these special risks and challenges or other problems encountered in connection with an acquisition, we might not realize the anticipated benefits of that acquisition, we might incur unanticipated liabilities, or we might otherwise suffer harm to our business generally. Furthermore, acquisitions and investments are often speculative in nature and the actual benefits we derive from them could be lower or take longer to materialize than we expect. In addition, to the extent we pay the consideration for any future acquisitions or investments in cash, it would reduce the amount of cash available to us for other purposes. Future acquisitions or investments could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses, or goodwill impairment charges, any of which could harm our financial condition and negatively impact our stockholders.
An impairment charge of goodwill or other intangible assets could have a material adverse impact on our financial condition and results of operations.
Our net goodwill and intangible assets represent a significant portion of our consolidated assets. Our net goodwill and intangible assets were $403.3 million as of September 30, 2024. Under generally accepted accounting principles in the United States, or ("U.S. GAAP"), we are required to test the carrying value of goodwill at least annually or sooner if events occur that indicate impairment could exist, such as a significant change in the business climate, including a significant sustained decline in a reporting unit’s fair value, legal and regulatory factors, operating performance indicators, competition and other factors. The amount of any impairment charge could be significant and could have a material adverse impact on our financial condition and results of operations for the period in which the charge is taken.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. We have in the past and may in the future discover areas of our internal financial and accounting controls and procedures that need improvement. If we are unable to maintain proper and effective internal controls, we may not be able to produce accurate financial statements on a timely basis and might suffer adverse regulatory consequences or violate NYSE listing standards, which could adversely affect our ability to operate our business and could result in regulatory action, and could require us to restate our financial statements. Any such restatement could result in a loss of public confidence in the reliability of our financial statements and sanctions imposed on us by the SEC.
Our business could be negatively affected by actions of stockholders.
The actions of stockholders could adversely affect our business. Specifically, certain actions of certain types of stockholders, including without limitation public proposals, requests to pursue a strategic combination or other transaction or special demands or requests, could disrupt our operations, be costly and time-consuming or divert the attention of our management and employees and increase the volatility of our stock. In addition, perceived uncertainties as to our future direction in relation to the actions of our stockholders may result in the loss of potential business opportunities or the perception that we are unstable and need to make changes, which may be exploited by our competitors and make it more difficult to attract and retain personnel as well as customers, service providers and partners. Actions by our stockholders may also cause fluctuations in our stock price based on speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
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Our charter documents, Delaware law and our status as a bank holding company could discourage, delay or prevent a takeover that stockholders consider favorable.
Provisions in our certificate of incorporation and bylaws, as well as provisions under Delaware law, could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our Class A common stock, and result in the trading price of our Class A common stock being lower than it otherwise would be. In addition to the foregoing, under the BHC Act and the Change in Bank Control Act, and their respective implementing regulations, Federal Reserve Board approval is necessary prior to any person or company acquiring control of a bank or bank holding company, subject to certain exceptions. Control, among other considerations, exists if an individual or company acquires 25% or more of any class of voting securities, and may be presumed to exist if a person acquires 10% or more of any class of voting securities. These restrictions could affect the willingness or ability of a third party to acquire control of us for so long as we are a bank holding company.
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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
ITEM 5. Other Information
Insider Adoption or Termination of Trading Arrangements
During the fiscal quarter ended September 30, 2024, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.
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ITEM 6. Exhibits
The following documents are filed as exhibits to this report:
Exhibit NumberDescription of Exhibits
4.1(1)
10.1(2)†
31.1
31.2
32.1
32.2
101
The following financial statements from the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income and Loss, (iv) Consolidated Statements of Changes in Stockholders' Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
_____________
*    Furnished, not filed.
(1)    Exhibit 4.1 is incorporated by reference to Exhibit 4.1 filed with the Registrant's current report on Form 8-K, filed with the Commission on September 6, 2024.
(2)    Exhibit 10.1 is incorporated by reference to Exhibit 10.1 filed with the Registrant's current report on Form 8-K, filed with the Commission on September 6, 2024.
†    Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Green Dot Corporation
Date:November 8, 2024By:/s/ George Gresham
Name:George Gresham
 Title:President and Chief Executive Officer
(Duly Authorized Officer and Principal Executive Officer)

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