GlobeNewswire Inc | Jan 27, 2021 04:15PM EST

January 27, 2021

- Earnings Per Share Increased 50% Year-over-Year to $0.84

- Efficiency Ratio Improved 9% from Prior Year

SIOUX FALLS, S.D., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Meta Financial Group, Inc. (Nasdaq: CASH) (Meta or the Company) reported net income of $28.0 million, or $0.84 per share, for the three months ended December31, 2020, compared to net income of $21.1 million, or $0.56 per share, for the three months ended December31, 2019.

Solid revenues, lower expenses, and better efficiency ratios combined to deliver excellent results in the first quarter of fiscal year 2021. I am extremely proud of my team's ability to persevere during the pandemic, delivering significant value to customers and shareholders from a remote working environment," said President and CEO Brad Hanson. "During the quarter, we spent time getting ready for the upcoming tax season, implementing H&R Block, and preparing for the distribution of the second round of Economic Impact Payments while advancing our long-standing mission of Financial Inclusion for All, with increased resources and prioritization of Environmental, Social and Governance initiatives."

"Our quarterly results demonstrate ongoing progress in optimizing our business platforms, enabling us to improve our efficiency ratio by over 600 basis points compared with the prior year. Our loan portfolios continue to perform well, as our credit metrics demonstrate the Company's ability to weather the worst of the pandemic, leaving us well-positioned to continue to remix our balance sheet with higher yield and return earning assets," said Executive Vice President and CFO Glen Herrick.

Business Development Highlights for the 2021 Fiscal First Quarter

-- Began our new three-year program with Emerald Financial Services, LLC, a wholly-owned indirect subsidiary of H&R Block, Inc., which we announced in the fourth quarter of fiscal 2020. Have already moved more than $150 million in deposits and began issuing Emerald Prepaid Mastercard to applicants. -- Completed negotiations with the U.S. Department of the Treasury's Bureau of the Fiscal Service ("Fiscal Service") to disperse a second round of Economic Income Payment ("EIP") stimulus payments through the distribution of prepaid cards. The Company began distributing cards under this authorization January 4, 2021. -- Expanded our solar lending business, increasing our solar credit balance 29% to $323.9 million. -- Increased resources dedicated to our Environmental, Social, and Governance ("ESG") activities by hiring an experienced Vice President of ESG and Community Impact and forming a Board-level ESG committee to provide oversight.

Financial Highlights for the 2021 Fiscal First Quarter

-- Total revenue for the first quarter was $111.5 million, an increase of 9% compared to $102.1 million for the same quarter in fiscal 2020. -- Operating efficiency ratio improved to 62.2% at December31, 2020, compared to 68.2% at December 31, 2019. See non-GAAP reconciliation table below. -- Net interest income for the first quarter was $66.0 million, compared to $64.7 million in the comparable quarter last year. -- Net interest margin ("NIM") decreased to 4.65% for the first quarter from 4.94% during the same period of last year, while the tax-equivalent net interest margin ("NIM, TE") decreased to 4.67% from 4.99% for that same period in fiscal 2020. The decrease in NIM during the first quarter was primarily driven by excess cash associated with the Company's participation in the EIP program, as described further below. -- Total gross loans and leases at December31, 2020 decreased $143.7 million, or 4%, to $3.44 billion, compared to December31, 2019 and increased $125.4 million, or 4% when compared to September 30, 2020. -- Average deposits from the payments division for the fiscal 2021 first quarter increased nearly 83% to $5.07 billion when compared to the same quarter in fiscal 2020. A significant portion of the year-over-year increase reflected the Company's participation in the EIP program, as described further below. -- The Company repurchased 1,864,474 shares during the first quarter at an average price of $29.46. Through January 20, 2021, the Company repurchased an additional 300,000 of its shares, at a weighted average price of $38.73.

COVID-19 Business Update

As of December 31, 2020, the Company had 612 loans outstanding with total loan balances of $194.3 million originated as part of the Paycheck Protection Program ("PPP"), compared with 689 loans outstanding with total loan balances of $219.0 million for the quarter ended September 30, 2020.

As of December 31, 2020, $84.2 million of the loans and leases that were granted deferral payments by the Company were still in their deferment period. As of September 30, 2020, loans and leases totaling $170.0 million were within their deferment period. In addition, the Company has made other COVID-19 related modifications, of which $1.1 million were still active as of December 31, 2020 compared to $23.3 million at September 30, 2020. The majority of the other modifications were related to adjusting the type or amount of the customer's payments.

The Company's capital position remained strong as of December 31, 2020, even while absorbing the temporary impact resulting from the receipt of deposits in conjunction with EIP payments described below. In addition, the Company has options available that can be used to effectively manage capital levels, including a strong and flexible balance sheet.

EIP Program Update

The Bank is serving as the sole Financial Agent for distributing prepaid debit cards used in the EIP program. The Company's Payments division, in collaboration with Fiserv and Visa, is proud to have provided a safe and secure mechanism for individuals, including the underbanked, to receive their stimulus payments. Under the first round of EIP, approximately $6.42 billion in stimulus payments on 3.6 million prepaid cards were mailed to individuals across the United States. The total balances remaining on the first round of EIP cards were $605.1 million as of December 31, 2020 and $569.2 million as of January 20, 2021.

On December 27, 2020, the U.S. Congress, through the Consolidated Appropriations Act of 2021 (CAA), directed the Internal Revenue Service (IRS) to distribute a second round of EIP via the U.S. Treasury to persons in the U.S. eligible to receive them. The Bank entered into an amendment of its existing agreement with the U.S. Department of the Treasurys Bureau of the Fiscal Service ("Fiscal Service"), under which the Bank will act as a Financial Agent to Fiscal Service in connection with the provision of prepaid debit card services to disburse a portion of the EIP payments to eligible recipients via Bank-issued prepaid cards.

Under the second round, the Bank disbursed approximately $7.10 billion of EIP payments, with initial payments having begun January 4, 2021. The total balances remaining on the second round of EIP cards were $5.80 billion as of January 20, 2021.

While the EIP Program's impact to earnings is expected to be slightly positive, it continues to temporarily have a significant impact on cash and deposit balances, leading to a reduced NIM along with a corresponding impact on the Company's leverage capital ratios. In conjunction with the Program and its balance sheet impacts, the Bank was granted temporary exemption from its requirements to maintain minimum regulatory capital leverage ratios by the Officer of the Comptroller of the Currency due to deposits received as part of the EIP program. The influx of EIP deposits is not expected to have any material impact on the Company's risk-weighted capital ratios.

The Company is working with other banks to transfer deposits off-balance sheet in an effort to relieve the impact of the substantial influx of deposits related to the second round of EIP.

Net Interest IncomeNet interest income for the fiscal 2021 first quarter was $66.0 million, an increase of 2% from the same quarter in fiscal 2020. The increase was primarily driven by a reduction in total interest expense, partially offset by lower overall balances and yields realized on interest earning assets.

During the first fiscal quarter of 2021, loan and lease interest income decreased $7.0 million and investment securities interest income decreased $2.4 million, compared to the prior year quarter, while interest expense decreased $10.8 million over the same period. The quarterly average outstanding balance of loans and leases as a percentage of interest-earning assets for the first quarter decreased to 62%, from 72% for the comparable quarter last year, while the quarterly average balance of total investments as a percentage of interest-earning assets decreased to 23% from 26% over the same period. These decreases were primarily due to the increase in interest-earning cash balances related to the EIP program. The Companys average interest-earning assets for the fiscal 2021 first quarter increased by $432.9 million, to $5.64 billion compared with the first quarter in fiscal 2020, primarily due to the effects of the EIP program.

NIM decreased to 4.65% for the fiscal 2021 first quarter from 4.94% for the comparable quarter last year, primarily due to the effects of the EIP program.

The overall reported tax-equivalent yield (TEY) on average earning asset yields decreased by 116 basis points to 4.82% for the fiscal 2021 first quarter compared to the prior year quarter, driven primarily by excess low-yielding cash held at the Federal Reserve, as well as the lower interest rate environment. The fiscal 2021 first quarter TEY on the securities portfolio was 1.79% compared to 2.65% for the comparable period last year.

The Company's cost of funds for all deposits and borrowings averaged 0.15% during the fiscal 2021 first quarter, compared to 1.01% during the prior year quarter. This reflected primarily a decrease in overnight borrowings rates as well as an increase in the average balance of the Company's noninterest-bearing deposits, mainly due to the EIP program noted above. The Company's overall cost of deposits was 0.06% in the fiscal first quarter of 2021, compared to 0.81% in the same quarter last year.

Noninterest IncomeFiscal 2021 first quarter noninterest income increased to $45.5 million, compared with $37.5 million for the same period of the prior year. This was due primarily to an increase within gain on sale of other, an increase in other income, and an increase in payments cards and deposit fees, partially offset by a decrease in rental income. The increase within gain on sale of other was primarily due to a loss on sale of foreclosed and repossessed assets recognized during the first quarter of fiscal year 2020. The increase within other income was primarily due to the receipt of a portion of the Companys liquidation insurance claims of unearned premiums on the ReliaMax estate related to the Companys student loan portfolio. The amount received in the first quarter of fiscal 2021 was $3.5 million.

Noninterest ExpenseNoninterest expense decreased 4% to $72.6 million for the fiscal 2021 first quarter, from $75.8 million for the same quarter of last year, primarily driven by decreases in compensation and benefits, other expense, tax product expense, operating lease depreciation, and amortization expense, partially offset by increases within impairment expense, legal and consulting expense, and card processing expense.

Income Tax ExpenseThe Company recorded income tax expense of $3.5 million, representing an effective tax rate of 10.8%, for the fiscal 2021 first quarter, compared to an income tax expense of $0.7 million, representing an effective tax rate of 3.0%, for the first quarter last year.

The Company originated $38.5 million in solar leases during the fiscal 2021 first quarter, compared to $17.9 million during last year's first quarter. Investment tax credits related to solar leases are recognized ratably based on income throughout each fiscal year. The timing and impact of future solar tax credits are expected to vary from period to period, and Meta intends to undertake only those tax credit opportunities that meet the Company's underwriting and return criteria.

Investments, Loans and Leases

December 31, September 30, June 30, 2020 March 31, 2020 December 31, 2020 2020 2019Total $ 1,309,452 $ 1,360,712 $ 1,268,416 $ 1,310,476 $ 1,337,840 investments Loans held for saleConsumercredit 234 962 391 ? ? productsSBA/USDA 32,983 52,542 31,438 13,610 13,883 Community 100,442 130,073 48,076 ? 250,383 Bank^(1)Total loansheld for 133,659 183,577 79,905 13,610 264,266 sale National LendingTerm lending 881,306 805,323 738,454 725,581 695,347 Asset based 242,298 182,419 181,130 250,211 250,633 lendingFactoring 275,650 281,173 206,361 285,495 285,776 Lease 283,722 281,084 264,988 238,788 223,715 financingInsurancepremium 338,227 337,940 359,147 332,800 349,299 financeSBA/USDA 300,707 318,387 308,611 92,000 90,269 Othercommercial 101,209 101,658 100,214 101,472 99,617 financeCommercial 2,423,119 2,307,984 2,158,905 2,026,347 1,994,656 FinanceConsumercredit 88,595 89,809 102,808 113,544 115,843 productsOtherconsumer 162,423 134,342 138,777 144,895 154,772 financeConsumer 251,018 224,151 241,585 258,439 270,615 FinanceTax Services 92,548 3,066 19,168 95,936 101,739 Warehouse 318,937 293,375 277,614 333,829 272,522 FinanceTotalNationalLending 3,085,622 2,828,576 2,697,272 2,714,551 2,639,532 loans andleasesCommunity BankingCommercialreal estate 339,141 457,371 608,303 654,429 682,399 andoperatingConsumerone-to-fourfamily real 5,077 16,486 166,479 205,046 220,588 estate andotherAgriculturalreal estate 9,724 11,707 24,655 36,759 40,778 andoperatingTotalCommunity 353,942 485,564 799,437 896,234 943,765 BankingloansTotal grossloans and 3,439,564 3,314,140 3,496,709 3,610,785 3,583,297 leasesAllowancefor credit (72,389 ) (56,188 ) (65,747 ) (65,355 ) (30,176 ) lossesNet deferredloan andlease 9,111 8,625 5,937 8,139 7,177 originationfeesTotal loansand leases, $ 3,376,286 $ 3,266,577 $ 3,436,899 $ 3,553,569 $ 3,560,298 net ofallowance

(1) The December31, 2020 balance included approximately $95.5 million of commercial real estate and operating loans, $3.5 million of consumer one-to-four family real estate and other loans, and $1.4 million of agricultural real estate and operating loans. The September 30, 2020 balance included approximately $77.5 million of commercial real estate and operating loans, $50.1 million of consumer one-to-four family real estate and other loans, and $2.5 million of agricultural real estate and operating loans. The June 30, 2020 balance included approximately $28.7 million of commercial real estate and operating loans, $11.3 million of consumer one-to-four family real estate and other loans, and $8.1 million of agricultural real estate and operating loans. The December 31, 2019 balance included approximately $197.5 million of commercial real estate and operating loans, $40.4 million of consumer one-to-four family real estate and other loans, and $12.7 million of agricultural real estate and operating loans.

The Company's investment security balances at December31, 2020 totaled $1.31 billion, as compared to $1.36 billion at September 30, 2020 and $1.34 billion at December31, 2019.

Total gross loans and leases decreased $143.7 million, or 4%, to $3.44 billion at December31, 2020, from $3.58 billion at December31, 2019, with most of the decline attributable to the sale of community bank loan balances during the second and fourth quarters of fiscal 2020 and first quarter of fiscal 2021, along with a decrease in the consumer finance portfolio, partially offset by growth in the commercial finance and warehouse finance portfolios.

At December31, 2020, commercial finance loans, which comprised 70% of the Company's gross loan and lease portfolio, totaled $2.42 billion, reflecting growth of $115.1 million, or 5%, from September 30, 2020. The increase in commercial finance loans was primarily due to increases in term lending and asset based lending loans of $76.0 million and $59.9 million, respectively, partially offset by a $17.7 million decrease in SBA/USDA loans.

Consumer finance loans totaled $251.0 million at December 31, 2020, increasing from $224.2 million at September 30, 2020. This increase was primarily driven by seasonal lending products for tax customers associated with the aforementioned three-year program with Emerald Financial Services.

Tax services loans totaled $92.5 million at December31, 2020, increasing from $3.1 million at September 30, 2020, as the Company began originating taxpayer advances and ERO loans in preparation of the 2020 tax season during the fiscal 2021 first quarter. Warehouse finance loans totaled $318.9 million at December31, 2020, a 9% increase from September 30, 2020.

Community bank loans held for investment totaled $353.9 million as of December31, 2020, as compared to $485.6 million at September 30, 2020 and $943.8 million at December 31, 2019. On November 18, 2020, the Company sold an additional $129.8 million of the retained Community Bank portfolio to Central Bank. The sale did not result in any material gain to the Company. As of December31, 2020, the Company had $100.4 million of community bank loans classified as held for sale and expects to sell those loans during the second quarter of fiscal year 2021.

Asset QualityAdoption of Current Expected Credit Losses ("CECL") Accounting StandardThe Company adopted CECL effective October 1, 2020, and its day one entry to increase the allowance for credit losses was $12.8 million. Aside from the loan and lease portfolio, management does not expect any other meaningful impacts on the balance sheet or regulatory capital ratios in the near term based on the election of the two-year delay and the five-year total transition period as allowed by the Office of the Comptroller of the Currency and the Federal Reserve.

Of the total $12.8 million CECL impact to the Company's allowance, $12.7 million and $6.0 million were within the commercial and consumer finance portfolios, respectively. These increases were partially offset by a reduction in retained community bank's allowance of $5.9 million.

The Companys allowance for credit losses was $72.4 million at December31, 2020, compared to $56.2 million at September 30, 2020 and $30.2 million at December31, 2019. The increase in the allowance at December 31, 2020 when compared to September 30, 2020, was primarily due to the adoption of the CECL accounting standard noted above, as well as additional increases during the fiscal 2021 first quarter in the commercial finance portfolio of $2.8 million, tax services portfolio of $1.4 million, and consumer finance portfolio of $1.4 million, partially offset by an additional decrease within the retained community bank portfolio of $2.2 million.

The year over year increase in the allowance was primarily driven by a $29.6 million increase within the commercial finance portfolio, $7.8 million increase within the retained community banking portfolio, and an increase in the consumer lending portfolio of $5.0 million.

The following table presents the Company's allowance for credit losses as a percentage of its total loans and leases.

As of the Period Ended(Unaudited) December 31, October 1, 2020 September 30, December 31, 2020 ^(1) 2020 2019 Commercial 1.88 % 1.85 % 1.30 % 0.80 %financeConsumer finance 4.39 % 4.31 % 1.64 % 2.22 %Tax services 1.53 % 0.06 % 0.06 % 1.62 %Warehouse finance 0.10 % 0.10 % 0.10 % 0.10 %National Lending 1.89 % 1.86 % 1.20 % 0.90 %Community Bank 4.01 % 3.37 % 4.59 % 0.68 %Total loans and 2.10 % 2.08 % 1.70 % 0.84 %leases

(1) Represents the Company's allowance coverage ratio upon the adoption of the Accounting Standards Update 2016-13 using September 30, 2020 loan and lease and allowance balances plus the CECL allowance adjustment.

The Company's allowance for credit losses as a percentage of total loans and leases increased to 2.10% at December 31, 2020 from 1.70% at September 30, 2020. The increase in the coverage ratio was primarily related to the CECL adoption, along with the Company's continued assessment of the risks associated with the ongoing COVID-19 pandemic. Warehouse finance remained largely unchanged due in part to the structure of the credit protections in place. The Company expects to continue to diligently monitor the allowance for credit losses and adjust as necessary in future periods to maintain an appropriate and supportable level.

Activity in the allowance for credit losses for the periods presented was as follows.

(Unaudited) Three Months Ended December 31, September 30, December 31, 2020 2020 2019(Dollars in thousands) Beginning balance $ 56,188 $ 65,747 $ 29,149 Adoption of CECL accounting 12,773 ? ? standardProvision - tax services loans 454 1,599 911 Provision - all other loans and 5,810 7,381 2,496 leasesCharge-offs - tax services ? (13,037 ) ? loansCharge-offs - all other loans (5,675 ) (6,015 ) (3,918 ) and leasesRecoveries - tax services loans 956 3 739 Recoveries - all other loans 1,883 510 799 and leasesEnding balance $ 72,389 $ 56,188 $ 30,176

Provision for credit losses was $6.1 million for the quarter ended December31, 2020, compared to $3.4 million for the comparable period in the prior fiscal year. The increase in provision was primarily within the commercial finance and consumer finance portfolios, partially offset by a decrease within the retained community bank portfolio. Net charge-offs were $2.8 million for the quarter ended December31, 2020 compared to $2.4 million for the quarter ended December31, 2019.

The Company's past due loans and leases were as follows for the periods presented.

As ofDecember Accruing and Nonaccruing Loans and Leases Nonperforming Loans and Leases31, 2020(Dollars Total Loans > 89 Daysin 30-59 Days 60-89 Days > 89 Days Total Past Current and Leases Past Due Non-accrual TotalThousands) Past Due Past Due Past Due Due Receivable and balance Accruing Commercial $ 23,448 $ 7,358 $ 14,900 $ 45,706 $ 2,377,413 $ 2,423,119 $ 2,092 $ 18,707 $ 20,799 financeConsumer 1,415 404 1,132 2,951 248,067 251,018 1,132 ? 1,132 financeTax ? ? ? ? 92,548 92,548 ? ? ? servicesWarehouse ? ? ? ? 318,937 318,937 ? ? ? financeTotalNational 24,863 7,762 16,032 48,657 3,036,965 3,085,622 3,224 18,707 21,931 LendingTotalCommunity 13 ? 2,379 2,392 351,550 353,942 ? 20,389 20,389 BankingTotalloans andleases $ 24,876 $ 7,762 $ 18,411 $ 51,049 $ 3,388,515 $ 3,439,564 $ 3,224 $ 39,096 $ 42,320 held forinvestment

As ofSeptember Accruing and Nonaccruing Loans and Leases Nonperforming Loans and Leases30, 2020(Dollars 30-59 Days 60-89 Days > 89 Days Total Past Total Loans > 89 Days Non-accrualin Past Due Past Due Past Due Due Current and Leases Past Due and balance TotalThousands) Receivable Accruing Commercial $ 13,338 $ 14,345 $ 16,663 $ 44,346 $ 2,263,638 $ 2,307,984 $ 7,400 $ 21,553 $ 28,953 financeConsumer 977 894 872 2,743 221,408 224,151 872 ? 872 financeTax ? ? 1,743 1,743 1,323 3,066 1,744 ? 1,744 servicesWarehouse ? ? ? ? 293,375 293,375 ? ? ? financeTotalNational 14,315 15,239 19,278 48,832 2,779,744 2,828,576 10,016 21,553 31,569 LendingTotalCommunity 905 114 2,449 3,468 482,096 485,564 50 2,399 2,449 BankingTotalloans andleases $ 15,220 $ 15,353 $ 21,727 $ 52,300 $ 3,261,840 $ 3,314,140 $ 10,066 $ 23,952 $ 34,018 held forinvestment

The Company's nonperforming assets at December31, 2020, were $53.2 million, representing 0.73% of total assets, compared to $48.0 million, or 0.79% of total assets at September 30, 2020 and $29.8 million, or 0.48% of total assets at December31, 2019. The increase in nonperforming assets on a linked quarter basis was primarily driven by an increase in community bank nonperforming loans, partially offset by decreases in commercial finance and tax services nonperforming loans and leases, and a decrease in nonperforming operating leases. The year-over-year increase in nonperforming assets was primarily within the community bank portfolio, as well as an increase in foreclosed and repossessed assets, partially offset by a reduction within the commercial and consumer finance portfolios. The increase in nonaccrual balances was driven by one Community Bank relationship operating in the movie theater industry that moved to nonaccrual status in the fiscal 2021 first quarter. The overall decrease in nonperforming assets as a percentage of total assets at December 31, 2020 was primarily due to higher period-end assets, when compared to September 30, 2020.

The Company's nonperforming loans and leases at December31, 2020, were $42.3 million, representing 1.18% of total gross loans and leases, compared to $34.0 million, or 0.97% of total gross loans and leases at September 30, 2020 and $24.0 million, or 0.62% of total gross loans and leases at December31, 2019.

At December31, 2020, the balance of the Company's loans and leases past due 30 days or greater decreased 2% to $51.0 million when compared to September 30, 2020. When excluding tax services loans, the balance of loans and leases past due 30 days or greater increased to $51.0 million at December31, 2020 from $50.6 million at September 30, 2020. Loan and lease balances that were within their active deferment period decreased to $84.2 million at December31, 2020 from $170.0 million at September 30, 2020.

Deposits, Borrowings and Other LiabilitiesTotal average deposits for the fiscal 2021 first quarter increased by $813.6 million to $5.43 billion compared to the same period in fiscal 2020, primarily due to the effects of the EIP program. Average noninterest-bearing deposits increased $2.15 billion, or 79%, for the fiscal 2021 first quarter when compared to the same period in fiscal 2020, while average wholesale deposits decreased $1.21 billion, or 82%. Average deposits from the payments division increased 83% to $5.07 billion for the fiscal 2021 first quarter when compared to the same period in fiscal 2020. Excluding the balances on the EIP cards, average payments deposits for the fiscal 2021 first quarter were $4.32 billion, representing an increase of 55% compared to the same period of the prior year, which was largely driven by stimulus payments loaded on various partner cards along with lower levels of consumer spending.

The average balance of total deposits and interest-bearing liabilities was $5.52 billion for the three-month period ended December31, 2020, compared to $5.13 billion for the same period in the prior fiscal year, representing an increase of 8%.

Total end-of-period deposits increased 37% to $6.21 billion at December31, 2020, compared to $4.52 billion at December31, 2019. The increase in end-of-period deposits was primarily driven by an increase in noninterest-bearing deposits of $2.65 billion, of which $605.1 million was attributable to the balances on the EIP cards. The increase in total end-of-period deposits was partially offset by a decrease of $1.21 billion in wholesale deposits, as well as the sale of $290.5 million of community bank deposits during the second quarter of fiscal 2020.

Regulatory Capital

The Company and MetaBank remained above the federal regulatory minimum capital requirements at December31, 2020 and continued to be classified as well-capitalized institutions. Regulatory capital ratios of the Company and the Bank are stated in the table below.

The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analysis.

As of the dates December September June 30, March 31, Decemberindicated 31, 2020^ 30, 2020 2020 31, (1) 2020 2019Company Tier 1 leverage 7.40 % 6.58 % 5.91 % 7.28 % 8.28 %capital ratioCommon equityTier 1 capital 10.76 % 11.78 % 11.51 % 10.27 % 10.10 %ratioTier 1 capital 11.11 % 12.18 % 11.90 % 10.63 % 10.46 %ratioTotal capital 14.18 % 15.30 % 14.99 % 13.61 % 12.74 %ratioMetaBank Tier 1 leverage 8.62 % 7.56 % 6.89 % 8.52 % 9.70 %capital ratioCommon equityTier 1 capital 12.91 % 13.96 % 13.82 % 12.39 % 12.18 %ratioTier 1 capital 12.93 % 14.00 % 13.86 % 12.44 % 12.24 %ratioTotal capital 14.19 % 15.26 % 15.12 % 13.69 % 12.90 %ratio

(1) December 31, 2020 amounts are preliminary pending completion and filing of the Company's regulatory reports. Regulatory capital presented for periods in fiscal year 2021 reflect the Company's election of the five-year CECL transition for regulatory capital purposes.

The following table provides the non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP:

Standardized December 31, September June 30, March 31, December 31,Approach^(1) 2020 30, 2020 2020 2019 2020(Dollars in Thousands)Totalstockholders' $ 813,210 $ 847,308 $ 829,909 $ 805,074 $ 837,068 equityAdjustments: LESS: Goodwill,net of associated 301,999 302,396 302,814 303,625 304,020 deferred taxliabilitiesLESS: Certainother intangible 39,403 40,964 42,865 44,909 47,855 assetsLESS: Net deferredtax assets fromoperating loss and 24,105 18,361 10,360 11,589 16,876 tax creditcarry-forwardsLESS: Netunrealized gains(losses) on 19,894 17,762 8,382 2,337 3,897 available-for-salesecuritiesLESS:Non-controlling 1,536 3,603 3,787 3,762 4,305 interestADD: Adoption ofAccounting 10,804 ? ? ? ? Standards Update2016-13Common Equity Tier 437,077 464,222 461,701 438,852 460,115 1^(1)Long-termborrowings andother instruments 13,661 13,661 13,661 13,661 13,661 qualifying as Tier1Tier 1 minorityinterest notincluded in common 749 1,894 1,894 2,036 2,372 equity tier 1capitalTotal Tier 1 451,487 479,777 477,256 454,549 476,148 CapitalAllowance for 51,070 49,343 50,338 53,580 30,239 credit lossesSubordinateddebentures (net of 73,850 73,807 73,765 73,724 73,684 issuance costs)Total qualifying $ 576,407 $ 602,927 $ 601,359 $ 581,853 $ 580,071 capital

(1) Capital ratios were determined using the Basel III capital rules that became effective on January 1, 2015. Basel III revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio; those changes are being fully phased in through the end of 2021.

The following table provides a reconciliation of tangible common equity and tangible common equity excluding accumulated other comprehensive income ("AOCI"), each of which is used in calculating tangible book value data, to Total Stockholders' Equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.

December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019(Dollars in Thousands)TotalStockholders' $ 813,210 $ 847,308 $ 829,909 $ 805,074 $ 837,068 EquityLess: 309,505 309,505 309,505 309,505 309,505 GoodwillLess:Intangible 39,660 41,692 43,974 46,766 50,151 assetsTangible 464,045 496,111 476,430 448,803 477,412 common equityLess:Accumulatedother 20,119 17,542 7,995 1,654 3,895 comprehensiveincome (loss)("AOCI")Tangiblecommon equity $ 443,926 $ 478,569 $ 468,435 $ 447,149 $ 473,517 excludingAOCI

Conference Call

The Company will host a conference call and earnings webcast at 4:00 p.m. Central Standard Time (5:00 p.m. Eastern Time) on Wednesday, January27, 2021. The live webcast of the call can be accessed from Metas Investor Relations website at www.metafinancialgroup.com.Telephone participants may access the live conference call by dialing (844) 461-9934 beginning approximately 10 minutes prior to start time. Please ask to join the Meta Financial conference call, and provide conference ID 1904899 upon request. International callers should dial (636) 812-6634. A webcast replay will also be archived at www.metafinancialgroup.com for one year.

Annual Meeting of Shareholders

The Annual Meeting of Shareholders will convene at 9:00 a.m. Central Standard Time on Tuesday, February 23, 2021. The meeting will be held virtually via the internet for the safety of the Company's directors, employees, and stockholders in light of the COVID-19 pandemic. Further information with regard to this meeting can be found in the proxy statement filed with the Securities and Exchange Commission (the "SEC") on January 14, 2021. Copies of the Company's Annual Report on Form 10-K for the year ended September 30, 2020 (excluding exhibits thereto) may be obtained from www.metafinancialgroup.com.

Upcoming Investor Events

-- KBW Winter Financial Services Symposium, February 10 - February 12, 2021 | Virtual -- KBW Fintech Payments Conference, February 23 - February 25, 2021 | Virtual -- Piper Sandler Western Financial Services Conference, March 2, 2021 | Virtual

Forward-Looking Statements

The Company and MetaBank may from time to time make written or oral forward-looking statements, including statements contained in this press release, the Companys filings with the SEC, the Companys reports to stockholders, and in other communications by the Company and MetaBank, which are made in good faith by the Company pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

You can identify forward-looking statements by words such as may, hope, will, should, expect, plan, anticipate, intend, believe, estimate, predict, potential, continue, could, future, or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other forward-looking information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Companys beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Companys control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results; expectations in connection with the impact of the ongoing COVID-19 pandemic and related government actions on our business, our industry and the capital markets; customer retention; loan and other product demand; expectations concerning acquisitions and divestitures; new products and services, including those offered by Meta Payment Systems, Refund Advantage, EPS Financial and Specialty Consumer Services divisions; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; technology; and the Company's employees. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto including the deployment and efficacy of the COVID-19 vaccines, or other unusual and infrequently occurring events; actual changes in interest rates and the Fed Funds rate; additional changes in tax laws; the strength of the United States' economy, in general, and the strength of the local economies in which the Company operates; changes in trade, monetary, and fiscal policies and laws, including interest rate policies of the Federal Reserve; inflation, market, and monetary fluctuations; the timely and efficient development of, and acceptance of, new products and services offered by the Company or its strategic partners, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value of these products and services by users; the risks of dealing with or utilizing third parties, including, in connection with the Companys refund advance business, the risk of reduced volume of refund advance loans as a result of reduced customer demand for or usage of Metas strategic partners refund advance products; our relationship with, and any actions which may be initiated by, our regulators; the impact of changes in financial services laws and regulations, including, but not limited to, laws and regulations relating to the tax refund industry and the insurance premium finance industry and recent and potential changes in response to the COVID-19 pandemic such as the CARES Act and the rules and regulations that may be promulgated thereunder; technological changes, including, but not limited to, the protection of our electronic systems and information; the impact of acquisitions and divestitures; litigation risk; the growth of the Companys business, as well as expenses related thereto; continued maintenance by MetaBank of its status as a well-capitalized institution, particularly in light of our deposit base, a portion of which has been characterized as brokered; changes in consumer spending and saving habits; the impact of our participation as prepaid card issuer for the EIP program and potentially similar programs in the future; losses from fraudulent or illegal activity; technological risks and developments and cyber threats, attacks, or events; and the success of the Company at maintaining its high quality asset level and managing and collecting assets of borrowers in default should problem assets increase.

The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. Additional discussions of factors affecting the Companys business and prospects are reflected under the caption Risk Factors and in other sections of the Companys Annual Report on Form 10-K for the Companys fiscal year ended September 30, 2020, and in other filings made with the SEC. The Company expressly disclaims any intent or obligation to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changed circumstances, or future events or for any other reason.

Condensed Consolidated Statements of Financial Condition (Unaudited)(Dollars in Thousands, Except Share Data)

ASSETS December 31, September 30, June 30, 2020 March 31, 2020 December 31, 2020 2020 2019Cash and cash $ 1,586,451 $ 427,367 $ 3,108,141 $ 108,733 $ 152,189 equivalentsInvestmentsecurities 797,363 814,495 825,579 840,525 852,603 available for sale,at fair valueMortgage-backedsecurities 430,761 453,607 338,250 355,094 362,120 available for sale,at fair valueInvestmentsecurities held to 76,176 87,183 98,205 108,105 116,313 maturity, at costMortgage-backedsecurities held to 5,152 5,427 6,382 6,752 6,804 maturity, at costLoans held for sale 133,659 183,577 79,905 13,610 264,266 Loans and leases 3,448,675 3,322,765 3,502,646 3,618,924 3,590,474 Allowance for (72,389 ) (56,188 ) (65,747 ) (65,355 ) (30,176 ) credit lossesFederal ReserveBank and Federal 27,138 27,138 31,836 29,944 13,796 Home Loan Bankstocks, at costAccrued interest 17,133 16,628 17,545 16,958 18,687 receivablePremises,furniture, and 39,932 41,608 40,361 38,871 38,671 equipment, netRental equipment, 206,732 205,964 216,336 200,837 211,673 netBank-owned life 92,937 92,315 91,697 91,081 90,458 insuranceForeclosed realestate and 7,186 9,957 6,784 7,249 1,328 repossessed assetsGoodwill 309,505 309,505 309,505 309,505 309,505 Intangible assets 39,660 41,692 43,974 46,766 50,151 Prepaid assets 11,270 8,328 6,806 9,727 14,813 Deferred taxes 24,411 17,723 15,944 20,887 19,752 Other assets 82,763 82,983 104,877 85,652 97,499 Total assets $ 7,264,515 $ 6,092,074 $ 8,779,026 $ 5,843,865 $ 6,180,926 LIABILITIES ANDSTOCKHOLDERS? EQUITY LIABILITIES Deposits held for $ ? $ ? $ ? $ ? $ 288,975 saleDeposits: Noninterest-bearing 5,581,597 4,356,630 6,537,809 2,900,484 2,927,967 checkingInterest-bearing 274,504 157,571 187,003 152,504 67,642 checkingSavings deposits 54,080 47,866 55,896 37,615 17,436 Money market 56,440 48,494 40,811 37,266 42,286 depositsTime certificates 13,522 20,223 25,000 25,492 23,454 of depositWholesale deposits 227,648 348,416 743,806 809,043 1,438,820 Total deposits 6,207,791 4,979,200 7,590,325 3,962,404 4,517,605 Short-term ? ? ? 717,000 194,000 borrowingsLong-term 96,760 98,224 209,781 211,353 213,070 borrowingsAccrued interest 2,068 1,923 4,332 3,607 6,620 payableAccrued expensesand other 144,686 165,419 144,679 144,427 123,588 liabilitiesTotal liabilities 6,451,305 5,244,766 7,949,117 5,038,791 5,343,858 STOCKHOLDERS? EQUITYPreferred stock ? ? ? ? ? Common stock, $.01 326 344 346 346 372 par valueCommon stock,Nonvoting, $.01 par ? ? ? ? ? valueAdditional paid-in 598,669 594,569 592,693 590,682 587,678 capitalRetained earnings 198,000 234,927 228,500 212,027 244,005 Accumulated othercomprehensive 20,119 17,542 7,995 1,654 3,895 incomeTreasury stock, at (5,440 ) (3,677 ) (3,412 ) (3,397 ) (3,187 ) costTotal equityattributable to 811,674 843,705 826,122 801,312 832,763 parentNoncontrolling 1,536 3,603 3,787 3,762 4,305 interestTotal stockholders? 813,210 847,308 829,909 805,074 837,068 equity Total liabilitiesand stockholders? $ 7,264,515 $ 6,092,074 $ 8,779,026 $ 5,843,865 $ 6,180,926 equity

Consolidated Statements of Operations (Unaudited)(Dollars in Thousands, Except Share and Per Share Data)

Three Months Ended December 31, September 30, December 31, 2020 2020 2019Interest and dividend income: Loans and leases, including $ 61,655 $ 62,022 $ 68,702 feesMortgage-backed securities 2,123 1,877 2,389 Other investments 4,368 4,508 6,534 68,146 68,407 77,625 Interest expense: Deposits 797 1,904 9,340 FHLB advances and other 1,350 1,990 3,634 borrowings 2,147 3,894 12,974 Net interest income 65,999 64,513 64,651 Provision for credit losses 6,089 8,980 3,407 Net interest income afterprovision for loan and lease 59,910 55,533 61,244 losses Noninterest income: Refund transfer product fees 647 2,335 192 Tax advance product fees 1,960 (14 ) 2,276 Payments card and deposit 22,564 21,422 21,499 feesOther bank and deposit fees 237 228 487 Rental income 9,885 10,144 12,351 Gain on sale of securities ? 51 ? available-for-sale, netGain (loss) on sale of other 2,847 3,455 (2,568 ) Other income 7,315 3,129 3,246 Total noninterest income 45,455 40,750 37,483 Noninterest expense: Compensation and benefits 32,331 35,616 34,268 Refund transfer product 61 162 173 expenseTax advance product expense 370 (97 ) 1,132 Card processing 6,117 6,524 5,607 Occupancy and equipment 6,888 6,826 6,655 expenseOperating lease equipment 7,581 7,594 8,280 depreciationLegal and consulting 5,247 5,615 4,674 Intangible amortization 2,013 2,283 2,676 Impairment expense 1,159 1,232 242 Other expense 10,808 14,528 12,091 Total noninterest expense 72,575 80,283 75,798 Income before income tax 32,790 16,000 22,929 expense Income tax expense 3,533 1,791 680 Net income before 29,257 14,209 22,249 noncontrolling interestNet income attributable to 1,220 1,051 1,181 noncontrolling interestNet income attributable to $ 28,037 $ 13,158 $ 21,068 parent Earnings per common share Basic $ 0.84 $ 0.38 $ 0.56 Diluted $ 0.84 $ 0.38 $ 0.56 Shares used in computing earnings per common shareBasic 32,782,285 33,783,659 36,613,699 Diluted 32,790,895 33,783,659 36,647,789

Average Balances, Interest Rates and Yields

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and in rates. Only the yield/rate reflects tax-equivalent adjustments. Nonaccruing loans and leases have been included in the table as loans carrying a zero yield.

Three Months Ended 2020 2019December 31,(Dollars in Average Interest Yield / Average Interest Yield /Thousands) Outstanding Earned / Rate^ Outstanding Earned / Rate^ Balance Paid (1) Balance Paid (1)Interest-earning assets:Cash and fed funds $ 820,108 $ 842 0.41 % $ 99,597 $ 412 1.65 %soldMortgage-backed 438,610 2,123 1.92 % 376,358 2,389 2.53 %securitiesTax exemptinvestment 333,729 1,215 1.83 % 490,982 2,339 2.40 %securitiesAsset-backed 326,315 1,200 1.46 % 303,885 2,354 3.08 %securitiesOther investment 221,986 1,111 1.98 % 197,513 1,429 2.88 %securitiesTotal investments 1,320,640 5,649 1.79 % 1,368,738 8,511 2.65 %Commercial finance 2,417,691 45,630 7.49 % 1,980,509 44,781 9.00 %loans and leasesConsumer finance 239,618 4,748 7.86 % 270,612 5,790 8.51 %loansTax services loans 25,104 8 0.13 % 24,429 33 0.54 %Warehouse finance 284,199 4,933 6.89 % 265,564 4,174 6.25 %loansNational lending 2,966,612 55,319 7.40 % 2,541,114 54,778 8.58 %loans and leasesCommunity banking 529,085 6,336 4.75 % 1,194,082 13,924 4.64 %loansTotal loans and 3,495,697 61,655 7.00 % 3,735,196 68,702 7.32 %leasesTotalinterest-earning $ 5,636,445 $ 68,146 4.82 % $ 5,203,531 $ 77,625 5.98 %assetsNon-interest-earning 845,378 918,973 assetsTotal assets $ 6,481,823 $ 6,122,504 Interest-bearing liabilities:Interest-bearing $ 162,748 $ ? ? % $ 163,693 $ 153 0.37 %checking^(2)Savings deposits 52,198 2 0.01 % 48,776 9 0.08 %Money market 52,620 39 0.30 % 80,528 205 1.01 %depositsTime certificates of 17,390 57 1.30 % 114,924 595 2.06 %depositWholesale deposits 261,136 699 1.06 % 1,472,820 8,378 2.26 %Totalinterest-bearing 546,092 797 0.58 % 1,880,741 9,340 1.98 %depositsOvernight fed funds 11 ? 0.25 % 302,804 1,450 1.91 %purchasedFHLB advances ? ? ? % 110,000 678 2.45 %Subordinated 73,822 1,147 6.16 % 73,658 1,160 6.26 %debenturesOther borrowings 23,870 203 3.37 % 33,589 346 4.10 %Total borrowings 97,703 1,350 5.48 % 520,051 3,634 2.78 %Totalinterest-bearing 643,795 2,147 1.32 % 2,400,792 12,974 5.15 %liabilitiesNoninterest-bearing 4,880,352 ? ? % 2,732,062 ? ? %depositsTotal deposits andinterest-bearing $ 5,524,147 $ 2,147 0.15 % $ 5,132,854 $ 12,974 1.01 %liabilitiesOthernoninterest-bearing 151,528 150,319 liabilitiesTotal liabilities 5,675,675 5,283,173 Shareholders' equity 806,148 839,331 Total liabilitiesand shareholders' $ 6,481,823 $ 6,122,504 equityNet interest incomeand net interestrate spread $ 65,999 4.67 % $ 64,651 4.97 %includingnoninterest-bearingdeposits Net interest margin 4.65 % 4.94 %Tax-equivalent 0.02 % 0.05 %effectNet interest margin, 4.67 % 4.99 %tax-equivalent^(3)

(1) Tax rate used to arrive at the TEY for the three months ended December 31, 2020 and 2019 was 21%.(2) Of the total balance, $162.5 million are interest-bearing deposits where interest expense is paid by a third party and not by the Company.

(3) Net interest margin expressed on a fully-taxable-equivalent basis ("net interest margin, tax-equivalent") is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.

Selected Financial Information

As of and For December 31, September 30, June 30, March 31, December 31,the Three 2020 2020 2020 2020 2019Months EndedEquity to 11.19 % 13.91 % 9.45 % 13.78 % 13.54 %total assetsBook value percommon share $ 24.93 $ 24.66 $ 23.96 $ 23.26 $ 22.52 outstandingTangible bookvalue per $ 14.23 $ 14.44 $ 13.76 $ 12.97 $ 12.84 common shareoutstandingTangible bookvalue percommon share $ 13.61 $ 13.93 $ 13.53 $ 12.92 $ 12.74 outstandingexcluding AOCICommon shares 32,620,251 34,360,890 34,631,160 34,607,962 37,172,081 outstandingNonperformingassets to 0.73 % 0.79 % 0.64 % 0.67 % 0.48 %total assetsNonperformingloans andleases to 1.18 % 0.97 % 1.10 % 0.87 % 0.62 %total loansand leasesNet interest 4.65 % 3.77 % 3.28 % 4.78 % 4.94 %marginNet interestmargin, 4.67 % 3.79 % 3.31 % 4.82 % 4.99 %tax-equivalentReturn on 1.73 % 0.69 % 0.86 % 3.16 % 1.38 %average assetsReturn on 13.91 % 6.21 % 8.83 % 25.15 % 10.04 %average equityFull-timeequivalent 1,038 1,015 999 992 1,088 employees

Non-GAAP Reconciliation

Efficiency For the last twelve months endedRatio(Dollars in December 31, September 30, June 30, March 31, December 31,Thousands) 2020 2020 2020 2020 2019NoninterestExpense - $ 315,828 $ 319,051 $ 314,911 $ 316,138 $ 334,663 GAAPNetInterest 260,386 259,038 260,142 264,973 268,586 IncomeNoninterest 247,766 239,794 235,024 237,766 222,278 IncomeTotalRevenue: $ 508,152 $ 498,832 $ 495,166 $ 502,739 $ 490,864 GAAPEfficiencyRatio, last 62.15 % 63.96 % 63.60 % 62.88 % 68.18 %twelvemonths

About Meta Financial Group, Inc. Meta Financial Group, Inc.(Nasdaq: CASH) is a South Dakota-based financial holding company. Meta Financial Groups subsidiary, MetaBank, N.A., is a financial enablement company that works with innovators to increase financial availability, choice, and opportunity for all. MetaBank strives to remove barriers that traditional institutions put in the way of financial access, and promote economic mobility by providing responsible, secure, high quality financial products that contribute to individuals and communities at the core of the real economy. Additional information can be found by visiting www.metafinancialgroup.com or www.metabank.com.

Investor Relations Contact: Brittany Kelley Elsasser Director of Investor Relations 605-362-2423 bkelley@metabank.com Media Relations: mediarelations@metabank.com