UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34819

(Exact name of Registrant as specified in its charter)


Delaware						95-4766827
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

114 W 7th Street, Suite 240

Austin,

Texas

78701

(626)

765-2000

(Address of principal executive offices, including zip code)

(Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
Class A Common Stock, $0.001 par value	GDOT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

There were ~~53,750,176~~52,346,482 shares of Class A common stock outstanding, par value $0.001 per share as of July 31, ~~2022.~~2023.

GREEN DOT CORPORATION

TABLE OF CONTENTS


		Page

	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets – June 30,~~, 2022~~ 2023 and December 31, ~~2021~~2022	1
	Consolidated Statements of Operations – Three and Six Months Ended June 30,, 2023 and 2022 ~~and 2021~~	2
	Consolidated Statements of Comprehensive Income and Loss – Three and Six Months Ended June 30,, 2023 and 2022 ~~and 2021~~	3
	Consolidated Statements of Changes in Stockholders' Equity – Three and S i x Six Months Ended June 30,, 2023 and 2022 ~~and 2021~~	4
	Consolidated Statements of Cash Flows – Six Months Ended June 30,, 2023 and 2022 ~~and 2021~~	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4344
Item 4.	Controls and Procedures	4445

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	4546
Item 1A.	Risk Factors	4546
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5960
Item 5.	Other Information	60
Item 6.	Exhibits	6061
	Signature	6162

Table of Contents

PART I

ITEM 1. Financial Statements

GREEN DOT CORPORATION

CONSOLIDATED BALANCE SHEETS


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(unaudited)					(unaudited)
Assets	Assets	(In thousands, except par value)				Assets	(In thousands, except par value)
Current assets:	Current assets:					Current assets:
Unrestricted cash and cash equivalents	Unrestricted cash and cash equivalents	$	776,305	$	1,322,319	Unrestricted cash and cash equivalents	$	661,452	$	813,945
Restricted cash	Restricted cash	6,173		3,321		Restricted cash	4,000		5,900

Investment securities available-for-sale, at fair value						Investment securities available-for-sale, at fair value	15,556		—
Settlement assets	Settlement assets	498,061		320,377		Settlement assets	523,606		493,395
Accounts receivable, net	Accounts receivable, net	67,380		80,401		Accounts receivable, net	61,109		74,437
Prepaid expenses and other assets	Prepaid expenses and other assets	62,893		81,380		Prepaid expenses and other assets	57,123		78,155
Income tax receivable		644		1,354

Total current assets	Total current assets	1,411,456		1,809,152		Total current assets	1,322,846		1,465,832
Investment securities available-for-sale, at fair value	Investment securities available-for-sale, at fair value	2,391,350		2,115,501		Investment securities available-for-sale, at fair value	2,268,857		2,363,687
Loans to bank customers, net of allowance for loan losses of $10,204 and $5,555 as of June 30, 2022 and December 31, 2021, respectively		21,097		19,270
Loans to bank customers, net of allowance for loan losses of $12,641 and $9,078 as of June 30, 2023 and December 31, 2022, respectively						Loans to bank customers, net of allowance for loan losses of $12,641 and $9,078 as of June 30, 2023 and December 31, 2022, respectively	29,966		21,421
Prepaid expenses and other assets	Prepaid expenses and other assets	199,792		136,400		Prepaid expenses and other assets	221,175		192,901
Property, equipment, and internal-use software, net	Property, equipment, and internal-use software, net	138,645		135,341		Property, equipment, and internal-use software, net	171,589		160,222
Operating lease right-of-use assets	Operating lease right-of-use assets	9,158		10,967		Operating lease right-of-use assets	6,685		8,316
Deferred expenses	Deferred expenses	7,293		16,855		Deferred expenses	1,792		14,547
Net deferred tax assets	Net deferred tax assets	73,362		15,048		Net deferred tax assets	118,841		117,167
Goodwill and intangible assets	Goodwill and intangible assets	455,719		466,943		Goodwill and intangible assets	431,154		445,083
Total assets	Total assets	$	4,707,872	$	4,725,477	Total assets	$	4,572,905	$	4,789,176
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	87,140	$	51,353	Accounts payable	$	106,135	$	113,891
Deposits	Deposits	3,376,004		3,286,889		Deposits	3,234,606		3,450,105
Obligations to customers	Obligations to customers	182,507		124,221		Obligations to customers	236,068		218,239
Settlement obligations	Settlement obligations	15,017		15,682		Settlement obligations	31,368		40,691
Amounts due to card issuing banks for overdrawn accounts	Amounts due to card issuing banks for overdrawn accounts	396		513		Amounts due to card issuing banks for overdrawn accounts	137		328
Other accrued liabilities	Other accrued liabilities	97,800		128,294		Other accrued liabilities	91,932		98,580
Operating lease liabilities	Operating lease liabilities	4,540		6,918		Operating lease liabilities	3,151		3,167
Deferred revenue	Deferred revenue	15,096		28,903		Deferred revenue	7,990		25,029
Income tax payable	Income tax payable	12,106		291		Income tax payable	13,957		11,641
Total current liabilities	Total current liabilities	3,790,606		3,643,064		Total current liabilities	3,725,344		3,961,671
Other accrued liabilities	Other accrued liabilities	3,507		3,531		Other accrued liabilities	2,927		5,777
Operating lease liabilities	Operating lease liabilities	6,187		8,209		Operating lease liabilities	3,395		5,247

Line of credit						Line of credit	—		35,000

Total liabilities	Total liabilities	3,800,300		3,654,804		Total liabilities	3,731,666		4,007,695
Commitments and contingencies (Note 17)	Commitments and contingencies (Note 17)	0		0		Commitments and contingencies (Note 17)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2022 and December 31, 2021; 53,740 and 54,868 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		54		55
Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2023 and December 31, 2022; 52,341 and 51,674 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively						Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2023 and December 31, 2022; 52,341 and 51,674 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	52		52
Additional paid-in capital	Additional paid-in capital	376,902		401,055		Additional paid-in capital	360,812		340,575
Retained earnings	Retained earnings	753,002		699,370		Retained earnings	800,172		763,582
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(222,386)		(29,807)		Accumulated other comprehensive loss	(319,797)		(322,728)
Total stockholders’ equity	Total stockholders’ equity	907,572		1,070,673		Total stockholders’ equity	841,239		781,481
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	4,707,872	$	4,725,477	Total liabilities and stockholders’ equity	$	4,572,905	$	4,789,176

See notes to unaudited consolidated financial statements

Table of Contents

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(In thousands, except per share data)									(In thousands, except per share data)
Operating revenues:	Operating revenues:									Operating revenues:
Card revenues and other fees	Card revenues and other fees	$	218,574	$	197,937	$	431,402	$	383,949	Card revenues and other fees	$	242,107	$	218,574	$	481,973	$	431,402
Cash processing revenues	Cash processing revenues	57,467		66,825		157,495		157,740		Cash processing revenues	53,846		57,467		155,669		157,495
Interchange revenues	Interchange revenues	76,038		101,115		154,894		212,341		Interchange revenues	59,967		76,038		123,982		154,894
Interest income, net	Interest income, net	10,690		3,496		19,595		8,829		Interest income, net	9,956		10,690		20,632		19,595
Total operating revenues	Total operating revenues	362,769		369,373		763,386		762,859		Total operating revenues	365,876		362,769		782,256		763,386
Operating expenses:	Operating expenses:									Operating expenses:
Sales and marketing expenses	Sales and marketing expenses	77,376		96,507		160,902		215,410		Sales and marketing expenses	62,823		77,376		138,035		160,902
Compensation and benefits expenses	Compensation and benefits expenses	57,611		59,984		123,875		134,951		Compensation and benefits expenses	64,985		57,611		133,766		123,875
Processing expenses	Processing expenses	112,388		94,316		224,480		191,985		Processing expenses	153,126		112,388		298,180		224,480
Other general and administrative expenses	Other general and administrative expenses	91,455		86,763		178,598		154,725		Other general and administrative expenses	80,156		91,455		156,494		178,598
Total operating expenses	Total operating expenses	338,830		337,570		687,855		697,071		Total operating expenses	361,090		338,830		726,475		687,855
Operating income	Operating income	23,939		31,803		75,531		65,788		Operating income	4,786		23,939		55,781		75,531
Interest expense, net	Interest expense, net	29		38		116		75		Interest expense, net	238		29		1,882		116
Other (expense) income, net		(4,038)		1,633		(4,808)		547
Other expense, net										Other expense, net	(2,224)		(4,038)		(5,248)		(4,808)
Income before income taxes	Income before income taxes	19,872		33,398		70,607		66,260		Income before income taxes	2,324		19,872		48,651		70,607
Income tax expense	Income tax expense	4,864		8,465		16,975		15,592		Income tax expense	1,746		4,864		12,061		16,975
Net income	Net income	$	15,008	$	24,933	$	53,632	$	50,668	Net income	$	578	$	15,008	$	36,590	$	53,632

Basic earnings per common share:	Basic earnings per common share:	$	0.28	$	0.46	$	0.98	$	0.93	Basic earnings per common share:	$	0.01	$	0.28	$	0.70	$	0.98
Diluted earnings per common share:		$	0.27	$	0.45	$	0.97	$	0.91
Diluted earnings per common share										Diluted earnings per common share	$	0.01	$	0.27	$	0.70	$	0.97
Basic weighted-average common shares issued and outstanding:	Basic weighted-average common shares issued and outstanding:	53,928		54,005		54,240		53,829		Basic weighted-average common shares issued and outstanding:	52,193		53,928		52,004		54,240
Diluted weighted-average common shares issued and outstanding:	Diluted weighted-average common shares issued and outstanding:	54,389		55,061		54,855		55,059		Diluted weighted-average common shares issued and outstanding:	52,437		54,389		52,201		54,855

See notes to unaudited consolidated financial statements

Table of Contents

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND LOSS

(UNAUDITED)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(In thousands)									(In thousands)
Net income	Net income	$	15,008	$	24,933	$	53,632	$	50,668	Net income	$	578	$	15,008	$	36,590	$	53,632
Other comprehensive (loss) income
Unrealized holding (loss) gains, net of tax		(79,983)		8,652		(192,579)		(13,892)
Other comprehensive income (loss)										Other comprehensive income (loss)
Unrealized holding (loss) gain, net of tax										Unrealized holding (loss) gain, net of tax	(33,366)		(79,983)		2,931		(192,579)
Comprehensive (loss) income	Comprehensive (loss) income	$	(64,975)	$	33,585	$	(138,947)	$	36,776	Comprehensive (loss) income	$	(32,788)	$	(64,975)	$	39,521	$	(138,947)

See notes to unaudited consolidated financial statements

Table of Contents

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)


		Three Months Ended June 30, 2022																		Three Months Ended June 30, 2023
		Class A Common Stock			Additional Paid-in Capital				Retained Earnings			Accumulated Other Comprehensive Loss				Total Stockholders' Equity				Class A Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
		Shares	Amount								Shares								Amount
		(In thousands)																		(In thousands)
Balance at March 31, 2022		54,293	$	54			$	388,299						$	737,994			$	(142,403)		$	983,944
Balance at March 31, 2023																			Balance at March 31, 2023	51,994			$	52		$	347,385		$	799,594		$	(286,431)		$	860,600
Common stock issued under stock plans, net of withholdings and related tax effects	Common stock issued under stock plans, net of withholdings and related tax effects	292	1		2,013				—			—				2,014			Common stock issued under stock plans, net of withholdings and related tax effects	347			—		2,811			—			—			2,811
Stock-based compensation	Stock-based compensation	—	—		5,635				—			—				5,635			Stock-based compensation	—			—		10,616			—			—			10,616
Repurchases of Class A Common Stock		(845)	(1)		(19,045)				—			—				(19,046)

Net income	Net income	—	—		—				15,008			—				15,008			Net income	—			—		—			578			—			578
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(79,983)				(79,983)			Other comprehensive loss	—			—		—			—			(33,366)			(33,366)
Balance at June 30, 2022		53,740	$	54	$	376,902			$	753,002		$	(222,386)			$	907,572
Balance at June 30, 2023																			Balance at June 30, 2023	52,341			$	52	$	360,812		$	800,172		$	(319,797)		$	841,239


		Three Months Ended June 30, 2021																		Three Months Ended June 30, 2022
		Class A Common Stock			Additional Paid-in Capital				Retained Earnings			Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity				Class A Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
		Shares	Amount								Shares								Amount
		(In thousands)																		(In thousands)
Balance at March 31, 2021		54,389	$	54			$	364,926						$	677,625			$	(19,116)		$	1,023,489
Balance at March 31, 2022																			Balance at March 31, 2022	54,293			$	54		$	388,299		$	737,994		$	(142,403)		$	983,944
Common stock issued under stock plans, net of withholdings and related tax effects	Common stock issued under stock plans, net of withholdings and related tax effects	251	1		2,259				—			—				2,260			Common stock issued under stock plans, net of withholdings and related tax effects	292			1		2,013			—			—			2,014
Stock-based compensation	Stock-based compensation	—	—		8,366				—			—				8,366			Stock-based compensation	—			—		5,635			—			—			5,635
Repurchases of Class A Common Stock																			Repurchases of Class A Common Stock	(845)			(1)		(19,045)			—			—			(19,046)
Net income	Net income	—	—		—				24,933			—				24,933			Net income	—			—		—			15,008			—			15,008
Other comprehensive income		—	—		—				—			8,652				8,652
Balance at June 30, 2021		54,640	$	55	$	375,551			$	702,558		$	(10,464)			$	1,067,700
Other comprehensive loss																			Other comprehensive loss	—			—		—			—			(79,983)			(79,983)
Balance at June 30, 2022																			Balance at June 30, 2022	53,740			$	54	$	376,902		$	753,002		$	(222,386)		$	907,572

See notes to unaudited consolidated financial statements

Table of Contents

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

(UNAUDITED)

Six Months Ended June 30, 2022
Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity
Shares Amount
(In thousands)
Balance at December 31, 2021 54,868 $ 55 $ 401,055 $ 699,370 $ (29,807) $ 1,070,673
Common stock issued under stock plans, net of withholdings and related tax effects 498 1 (602) — — (601)
Stock-based compensation — — 20,493 — — 20,493
Repurchases of Class A Common Stock (1,626) (2) (44,044) — — (44,046)
Net income — — — 53,632 — 53,632
Other comprehensive loss — — — — (192,579) (192,579)
Balance at June 30, 2022 53,740 $ 54 $ 376,902 $ 753,002 $ (222,386) $ 907,572


	Six Months Ended June 30, 2023
	Class A Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount
	(In thousands)
Balance at December 31, 2022	51,674	$	52	$	340,575	$	763,582	$	(322,728)	$	781,481
Common stock issued under stock plans, net of withholdings and related tax effects	667	—		439		—		—		439
Stock-based compensation	—	—		19,798		—		—		19,798

Net income	—	—		—		36,590		—		36,590
Other comprehensive income	—	—		—		—		2,931		2,931
Balance at June 30, 2023	52,341	$	52	$	360,812	$	800,172	$	(319,797)	$	841,239


		Six Months Ended June 30, 2021																		Six Months Ended June 30, 2022
		Class A Common Stock			Additional Paid-in Capital				Retained Earnings			Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity				Class A Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
		Shares	Amount								Shares								Amount
		(In thousands)																		(In thousands)
Balance at December 31, 2020		54,034	$	54			$	354,460						$	651,890			$	3,428		$	1,009,832
Balance at December 31, 2021																			Balance at December 31, 2021	54,868			$	55		$	401,055		$	699,370		$	(29,807)		$	1,070,673
Common stock issued under stock plans, net of withholdings and related tax effects	Common stock issued under stock plans, net of withholdings and related tax effects	606	1		(4,512)				—			—				(4,511)			Common stock issued under stock plans, net of withholdings and related tax effects	498			1		(602)			—			—			(601)
Stock-based compensation	Stock-based compensation	—	—		25,603				—			—				25,603			Stock-based compensation	—			—		20,493			—			—			20,493
Repurchases of Class A Common Stock																			Repurchases of Class A Common Stock	(1,626)			(2)		(44,044)			—			—			(44,046)
Net income	Net income	—	—		—				50,668			—				50,668			Net income	—			—		—			53,632			—			53,632
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(13,892)				(13,892)			Other comprehensive loss	—			—		—			—			(192,579)			(192,579)
Balance at June 30, 2021		54,640	$	55	$	375,551			$	702,558		$	(10,464)			$	1,067,700
Balance at June 30, 2022																			Balance at June 30, 2022	53,740			$	54	$	376,902		$	753,002		$	(222,386)		$	907,572

See notes to unaudited consolidated financial statements

Table of Contents

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
		(In thousands)					(In thousands)
Operating activities	Operating activities					Operating activities
Net income	Net income	$	53,632	$	50,668	Net income	$	36,590	$	53,632
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and internal-use software	Depreciation and amortization of property, equipment and internal-use software	28,399		27,181		Depreciation and amortization of property, equipment and internal-use software	27,587		28,399
Amortization of intangible assets	Amortization of intangible assets	12,181		13,887		Amortization of intangible assets	12,945		12,181
Provision for uncollectible overdrawn accounts from purchase transactions	Provision for uncollectible overdrawn accounts from purchase transactions	7,407		10,213		Provision for uncollectible overdrawn accounts from purchase transactions	5,529		7,407
Provision for loan losses	Provision for loan losses	18,452		10,143		Provision for loan losses	15,731		18,452
Stock-based compensation	Stock-based compensation	20,493		25,603		Stock-based compensation	19,798		20,493
Losses (earnings) in equity method investments		6,647		(578)
Losses in equity method investments						Losses in equity method investments	7,611		6,647

Amortization of (discount) premium on available-for-sale investment securities		(544)		1,588
Amortization of discount on available-for-sale investment securities						Amortization of discount on available-for-sale investment securities	(1,129)		(544)

Impairment of long-lived assets	Impairment of long-lived assets	4,134		—		Impairment of long-lived assets	—		4,134
Other	Other	(1,445)		84		Other	(2,293)		(1,445)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	5,614		(757)		Accounts receivable, net	7,799		5,614
Prepaid expenses and other assets	Prepaid expenses and other assets	15,809		6,330		Prepaid expenses and other assets	16,023		15,809
Deferred expenses	Deferred expenses	9,562		9,644		Deferred expenses	12,755		9,562
Accounts payable and other accrued liabilities	Accounts payable and other accrued liabilities	12,046		(15,505)		Accounts payable and other accrued liabilities	(14,993)		12,046
Deferred revenue	Deferred revenue	(14,192)		(12,542)		Deferred revenue	(17,466)		(14,192)
Income tax receivable/payable	Income tax receivable/payable	11,968		(1,958)		Income tax receivable/payable	1,706		11,968
Other, net	Other, net	(2,709)		(4,545)		Other, net	(427)		(2,709)
Net cash provided by operating activities	Net cash provided by operating activities	187,454		119,456		Net cash provided by operating activities	127,766		187,454

Investing activities	Investing activities					Investing activities
Purchases of available-for-sale investment securities	Purchases of available-for-sale investment securities	(694,358)		(217,652)		Purchases of available-for-sale investment securities	—		(694,358)
Proceeds from maturities of available-for-sale securities	Proceeds from maturities of available-for-sale securities	165,635		72,666		Proceeds from maturities of available-for-sale securities	82,221		165,635
Proceeds from sales and calls of available-for-sale securities	Proceeds from sales and calls of available-for-sale securities	2,875		5,198		Proceeds from sales and calls of available-for-sale securities	56		2,875
Payments for acquisition of property and equipment	Payments for acquisition of property and equipment	(36,537)		(23,826)		Payments for acquisition of property and equipment	(38,120)		(36,537)
Net changes in loans	Net changes in loans	(18,732)		(16,487)		Net changes in loans	(17,866)		(18,732)
Investment in TailFin Labs, LLC	Investment in TailFin Labs, LLC	(35,000)		(35,000)		Investment in TailFin Labs, LLC	(35,000)		(35,000)
Purchases of other investments	Purchases of other investments	(31,934)		(50,000)		Purchases of other investments	—		(31,934)
Other investing activities	Other investing activities	(1,448)		(599)		Other investing activities	(872)		(1,448)
Net cash used in investing activities	Net cash used in investing activities	(649,499)		(265,700)		Net cash used in investing activities	(9,581)		(649,499)

Financing activities	Financing activities					Financing activities

Borrowings on revolving line of credit	Borrowings on revolving line of credit	50,000		—		Borrowings on revolving line of credit	83,000		50,000
Repayments on revolving line of credit	Repayments on revolving line of credit	(50,000)		—		Repayments on revolving line of credit	(118,000)		(50,000)
Proceeds from exercise of options and ESPP purchases	Proceeds from exercise of options and ESPP purchases	3,415		5,230		Proceeds from exercise of options and ESPP purchases	3,415		3,415
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(4,016)		(9,741)		Taxes paid related to net share settlement of equity awards	(2,976)		(4,016)
Net changes in deposits	Net changes in deposits	85,240		125,539		Net changes in deposits	(216,312)		85,240
Net changes in settlement assets and obligations to customers	Net changes in settlement assets and obligations to customers	(120,063)		425,821		Net changes in settlement assets and obligations to customers	(21,705)		(120,063)
Contingent consideration payments	Contingent consideration payments	(1,647)		(2,000)		Contingent consideration payments	—		(1,647)
Repurchase of Class A common stock	Repurchase of Class A common stock	(44,046)		—		Repurchase of Class A common stock	—		(44,046)

Net cash (used in) provided by financing activities		(81,117)		544,849
Net cash used in financing activities						Net cash used in financing activities	(272,578)		(81,117)

Net (decrease) increase in unrestricted cash, cash equivalents and restricted cash		(543,162)		398,605
Net decrease in unrestricted cash, cash equivalents and restricted cash						Net decrease in unrestricted cash, cash equivalents and restricted cash	(154,393)		(543,162)
Unrestricted cash, cash equivalents and restricted cash, beginning of period	Unrestricted cash, cash equivalents and restricted cash, beginning of period	1,325,640		1,496,701		Unrestricted cash, cash equivalents and restricted cash, beginning of period	819,845		1,325,640
Unrestricted cash, cash equivalents and restricted cash, end of period	Unrestricted cash, cash equivalents and restricted cash, end of period	$	782,478	$	1,895,306	Unrestricted cash, cash equivalents and restricted cash, end of period	$	665,452	$	782,478

Cash paid for interest	Cash paid for interest	$	326	$	274	Cash paid for interest	$	2,721	$	326
Cash paid for income taxes	Cash paid for income taxes	$	4,086	$	17,289	Cash paid for income taxes	$	9,289	$	4,086

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:	Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:					Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents	Unrestricted cash and cash equivalents	$	776,305	$	1,891,100	Unrestricted cash and cash equivalents	$	661,452	$	776,305
Restricted cash	Restricted cash	6,173		4,206		Restricted cash	4,000		6,173
Total unrestricted cash, cash equivalents and restricted cash, end of period	Total unrestricted cash, cash equivalents and restricted cash, end of period	$	782,478	$	1,895,306	Total unrestricted cash, cash equivalents and restricted cash, end of period	$	665,452	$	782,478

See notes to unaudited consolidated financial statements

Table of Contents

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1—Organization

Green Dot Corporation (“we,” “our,” or “us” refer to Green Dot Corporation and its consolidated subsidiaries) is a financial technology and registered bank holding company 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. We offer a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, such as tax refunds, cash deposits and disbursements.

We were incorporated in Delaware in 1999 and became a bank holding company under the Bank Holding Company Act and a member bank of the Federal Reserve System in December 2011.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP. We consolidated our wholly-owned subsidiaries and eliminated all significant intercompany balances and transactions.

We have also prepared the accompanying unaudited consolidated financial statements in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X and, consequently, they do not include all of the annual disclosures required by GAAP. Reference is made to our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for additional disclosures, including a summary of our significant accounting policies. There have been no material changes to our significant accounting policies during the six months ended June 30, ~~2022, other than the adoption of the accounting pronouncements discussed herein.~~2023. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal and recurring items, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These financial statements were prepared using information reasonably available as of June 30, ~~2022~~2023 and through the date of this report. The accounting estimates used in the preparation of our consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes. Actual results may differ from these estimates due to a variety of factors, including those identified under Part II, Item 1A. "Risk Factors" in this report.

~~Recent Accounting Pronouncements~~

~~Recently adopted accounting pronouncements~~

~~In August 2020, the FASB issued ASU No. 2020-06,~~ ~~Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)~~ (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We adopted the provisions of ASU 2020-06 on January 1, 2022, the results of which did not have a material impact on our consolidated financial statements.

Note 3—Revenues

As discussed in Note 19 — Segment Information, we determine our operating segments based on how our chief operating decision maker manages our operations, makes operating decisions and evaluates operating performance. Within our segments, we believe that the nature, amount, timing and uncertainty of our revenue and cash flows and how they are affected by economic factors can be further illustrated based on the timing in which revenue for each of our products and services is recognized. Our products and services are offered ~~only~~ to customers within the United ~~States.~~States and certain U.S. territories.

The following table disaggregates our revenues earned from external customers by each of our reportable segments:


	Three Months Ended June 30, 2023
	Consumer Services		B2B Services		Money Movement Services		Total
Timing of recognition	(In thousands)
Transferred point in time	$	85,971	$	34,074	$	49,179	$	169,224
Transferred over time	39,971		145,930		795		186,696
Operating revenues (1)	$	125,942	$	180,004	$	49,974	$	355,920

Table of Contents

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

~~The following table disaggregates our revenues earned from external customers by each of our reportable segments:~~


	Three Months Ended June 30, 2022
	Consumer Services		B2B Services		Money Movement Services		Total
Timing of recognition	(In thousands)
Transferred point in time	$	92,430	$	42,467	$	53,337	$	188,234
Transferred over time	53,971		109,068		806		163,845
Operating revenues (1)	$	146,401	$	151,535	$	54,143	$	352,079


		Three Months Ended June 30, 2021									Six Months Ended June 30, 2023
		Consumer Services		B2B Services		Money Movement Services		Total			Consumer Services		B2B Services		Money Movement Services		Total
Timing of recognition	Timing of recognition	(In thousands)								Timing of recognition	(In thousands)
Transferred point in time	Transferred point in time	$	113,924	$	43,016	$	64,715	$	221,655	Transferred point in time	$	176,778	$	68,362	$	146,702	$	391,842
Transferred over time	Transferred over time	62,506		80,412		1,304		144,222		Transferred over time	85,791		282,478		1,513		369,782
Operating revenues (1)	Operating revenues (1)	$	176,430	$	123,428	$	66,019	$	365,877	Operating revenues (1)	$	262,569	$	350,840	$	148,215	$	761,624


	Six Months Ended June 30, 2022
	Consumer Services		B2B Services		Money Movement Services		Total
Timing of recognition	(In thousands)
Transferred point in time	$	187,320	$	83,690	$	149,741	$	420,751
Transferred over time	113,500		207,822		1,718		323,040
Operating revenues (1)	$	300,820	$	291,512	$	151,459	$	743,791

Six Months Ended June 30, 2021
Consumer Services B2B Services Money Movement Services Total
Timing of recognition (In thousands)
Transferred point in time $ 226,576 $ 91,875 $ 153,835 $ 472,286
Transferred over time 128,532 150,661 2,551 281,744
Operating revenues (1)
$ 355,108 $ 242,536 $ 156,386 $ 754,030


(1)			Excludes net interest income, a component of total operating revenues, as it is outside the scope of ASC 606, Revenues. Also excludes the effects of ~~intersegment~~inter-segment revenues.

Revenues recognized at a point in time are comprised of interchange fees, ATM fees, overdraft protection fees, other similar cardholder transaction-based fees, and substantially all of our cash processing revenues. Revenues recognized over time consists of new card fees, monthly maintenance fees, revenue earned from gift cards and substantially all BaaS (as defined herein) partner program management fees.

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 ~~$9.0~~$7.6 million and ~~$9.1~~$9.0 million in revenue for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$25.5~~$22.0 million and ~~$26.6~~$25.5 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, 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 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.

Table of Contents

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities

Our available-for-sale investment securities were as follows:


		Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value			Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
		(In thousands)									(In thousands)
June 30, 2022
June 30, 2023										June 30, 2023
Corporate bonds	Corporate bonds	$	10,000	$	—	$	(726)	$	9,274	Corporate bonds	$	10,000	$	—	$	(642)	$	9,358

Agency bond securities	Agency bond securities	240,185		—		(35,777)		204,408		Agency bond securities	240,358		—		(45,237)		195,121
Agency mortgage-backed securities	Agency mortgage-backed securities	2,396,285		149		(249,534)		2,146,900		Agency mortgage-backed securities	2,430,788		4		(374,346)		2,056,446
Municipal bonds	Municipal bonds	30,251		—		(5,258)		24,993		Municipal bonds	29,547		—		(6,059)		23,488
Asset-backed securities		5,766		11		(2)		5,775

Total investment securities	Total investment securities	$	2,682,487	$	160	$	(291,297)	$	2,391,350	Total investment securities	$	2,710,693	$	4	$	(426,284)	$	2,284,413

December 31, 2021
December 31, 2022										December 31, 2022
Corporate bonds	Corporate bonds	$	10,000	$	—	$	(27)	$	9,973	Corporate bonds	$	10,000	$	—	$	(654)	$	9,346

Agency bond securities	Agency bond securities	230,841		—		(9,245)		221,596		Agency bond securities	240,272		—		(47,166)		193,106
Agency mortgage-backed securities	Agency mortgage-backed securities	1,879,793		806		(32,268)		1,848,331		Agency mortgage-backed securities	2,511,958		8		(373,704)		2,138,262
Municipal bonds	Municipal bonds	28,135		288		(243)		28,180		Municipal bonds	29,613		—		(6,640)		22,973
Asset-backed securities		7,326		99		(4)		7,421

Total investment securities	Total investment securities	$	2,156,095	$	1,193	$	(41,787)	$	2,115,501	Total investment securities	$	2,791,843	$	8	$	(428,164)	$	2,363,687

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 months				12 months or more				Total fair value					Total unrealized loss			Less than 12 months							12 months or more						Total fair value			Total unrealized loss
		Fair value		Unrealized loss		Fair value		Unrealized loss						Fair value					Unrealized loss				Fair value			Unrealized loss
		(In thousands)																(In thousands)
June 30, 2022
June 30, 2023																	June 30, 2023
Corporate bonds	Corporate bonds	$	9,274	$	(726)	$	—	$	—			$	9,274					$	(726)	Corporate bonds	$	—		$	—		$	9,358		$	(642)		$	9,358		$	(642)
Agency bond securities	Agency bond securities	9,221		(123)		195,188		(35,654)		204,409					(35,777)		Agency bond securities	—				—			195,121			(45,237)			195,121			(45,237)
Agency mortgage-backed securities	Agency mortgage-backed securities	1,688,226		(181,315)		440,726		(68,219)		2,128,952					(249,534)		Agency mortgage-backed securities	360,104				(17,449)			1,693,793			(356,897)			2,053,897			(374,346)
Municipal bonds	Municipal bonds	24,993		(5,258)		—		—		24,993					(5,258)		Municipal bonds	4,514				(486)			18,974			(5,573)			23,488			(6,059)
Asset-backed securities		—		—		774		(2)		774					(2)

Total investment securities	Total investment securities	$	1,731,714	$	(187,422)	$	636,688	$	(103,875)	$	2,368,402				$	(291,297)	Total investment securities	$	364,618			$	(17,935)		$	1,917,246		$	(408,349)		$	2,281,864		$	(426,284)

December 31, 2021
December 31, 2022																	December 31, 2022
Corporate bonds	Corporate bonds	$	9,973	$	(27)	$	—	$	—	$	9,973				$	(27)	Corporate bonds	$	—			$	—		$	9,346		$	(654)		$	9,346		$	(654)

Agency bond securities	Agency bond securities	$	52,865	$	(2,128)	$	168,730	$	(7,117)	$	221,595				$	(9,245)	Agency bond securities	8,972				(457)			184,133			(46,709)			193,105			(47,166)
Agency mortgage-backed securities	Agency mortgage-backed securities	1,661,091		(27,899)		106,510		(4,369)		1,767,601					(32,268)		Agency mortgage-backed securities	892,068				(67,569)			1,243,588			(306,135)			2,135,656			(373,704)
Municipal bonds	Municipal bonds	9,678		(243)		—		—		9,678					(243)		Municipal bonds	16,333				(3,370)			6,641			(3,270)			22,974			(6,640)
Asset-backed securities		2,358		(4)		—		—		2,358					(4)

Total investment securities	Total investment securities	$	1,735,965	$	(30,301)	$	275,240	$	(11,486)	$	2,011,205				$	(41,787)	Total investment securities	$	917,373			$	(71,396)		$	1,443,708		$	(356,768)		$	2,361,081		$	(428,164)

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 significant credit-related impairment losses during the three and six months ended June 30, ~~2022~~2023 or ~~2021~~2022 on our available-for-sale investment securities. Unrealized losses as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are the result of ~~recent fluctuations~~increases in interest rates as our investment portfolio is comprised predominantly of fixed rate securities. Substantially all of the underlying securities within our investment portfolio were in an unrealized loss position as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 due to the timing of our investment purchases, as a significant portion of our investments were purchased prior to recent increases in interest rates by the Federal ~~Reserve.~~

~~Table of Contents~~

~~GREEN DOT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)~~

~~Note 4—Investment Securities (continued)~~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.

Table of Contents

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of June 30, ~~2022,~~2023, the contractual maturities of our available-for-sale investment securities were as follows:


		Amortized cost		Fair value			Amortized cost		Fair value
		(In thousands)					(In thousands)

Due in one year or less						Due in one year or less	$	15,738	$	15,556
Due after one year through five years	Due after one year through five years	$	19,344	$	18,494	Due after one year through five years	51,135		45,765
Due after five years through ten years	Due after five years through ten years	190,841		163,523		Due after five years through ten years	174,223		140,826
Due after ten years	Due after ten years	70,251		56,658		Due after ten years	54,547		41,376
Mortgage and asset-backed securities	Mortgage and asset-backed securities	2,402,051		2,152,675		Mortgage and asset-backed securities	2,415,050		2,040,890
Total investment securities	Total investment securities	$	2,682,487	$	2,391,350	Total investment securities	$	2,710,693	$	2,284,413

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:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(In thousands)					(In thousands)
Trade receivables	Trade receivables	$	27,029	$	33,921	Trade receivables	$	20,342	$	26,083
Reserve for uncollectible trade receivables	Reserve for uncollectible trade receivables	(106)		(82)		Reserve for uncollectible trade receivables	(98)		(169)
Net trade receivables	Net trade receivables	26,923		33,839		Net trade receivables	20,244		25,914

Overdrawn cardholder balances from purchase transactions	Overdrawn cardholder balances from purchase transactions	4,787		5,395		Overdrawn cardholder balances from purchase transactions	4,040		3,821
Reserve for uncollectible overdrawn accounts from purchase transactions	Reserve for uncollectible overdrawn accounts from purchase transactions	(2,033)		(3,394)		Reserve for uncollectible overdrawn accounts from purchase transactions	(2,692)		(2,230)
Net overdrawn cardholder balances from purchase transactions	Net overdrawn cardholder balances from purchase transactions	2,754		2,001		Net overdrawn cardholder balances from purchase transactions	1,348		1,591

Cardholder fees	Cardholder fees	4,609		4,054		Cardholder fees	2,853		2,480
Receivables due from card issuing banks	Receivables due from card issuing banks	4,201		4,645		Receivables due from card issuing banks	10,045		3,211
Fee advances, net	Fee advances, net	1,983		20,643		Fee advances, net	4,043		28,924
Other receivables	Other receivables	26,910		15,219		Other receivables	22,576		12,317
Accounts receivable, net	Accounts receivable, net	$	67,380	$	80,401	Accounts receivable, net	$	61,109	$	74,437

Activity in the reserve for uncollectible overdrawn accounts from purchase transactions consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(In thousands)									(In thousands)
Balance, beginning of period	Balance, beginning of period	$	4,348	$	2,280	$	3,394	$	1,653	Balance, beginning of period	$	2,292	$	4,348	$	2,230	$	3,394
Provision for uncollectible overdrawn accounts from purchase transactions	Provision for uncollectible overdrawn accounts from purchase transactions	2,707		7,219		7,407		10,213		Provision for uncollectible overdrawn accounts from purchase transactions	4,341		2,707		5,529		7,407
Charge-offs	Charge-offs	(5,022)		(3,987)		(8,768)		(6,354)		Charge-offs	(3,941)		(5,022)		(5,067)		(8,768)
Balance, end of period	Balance, end of period	$	2,033	$	5,512	$	2,033	$	5,512	Balance, end of period	$	2,692	$	2,033	$	2,692	$	2,033

Table of Contents

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

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 Due			60-89 Days Past Due			90 Days or More Past Due			Total Past Due			Total Current or Less Than 30 Days Past Due			Total Outstanding				30-59 Days Past Due			60-89 Days Past Due			90 Days or More Past Due			Total Past Due			Total Current or Less Than 30 Days Past Due			Total Outstanding
		(In thousands)																			(In thousands)
June 30, 2022
June 30, 2023																				June 30, 2023
Residential	Residential	$	—		$	—		$	—		$	—		$	4,482		$	4,482		Residential	$	—		$	—		$	—		$	—		$	4,824		$	4,824
Commercial	Commercial	—			—			—			—			2,539			2,539			Commercial	—			—			—			—			2,530			2,530
Installment	Installment	—			—			—			—			1,320			1,320			Installment	—			—			—			—			4,132			4,132
Consumer	Consumer	2,887			—			—			2,887			13,490			16,377			Consumer	2,186			—			—			2,186			19,502			21,688
Secured credit card	Secured credit card	635			531			1,606			2,772			3,811			6,583			Secured credit card	798			781			1,956			3,535			5,898			9,433
Total loans	Total loans	$	3,522		$	531		$	1,606		$	5,659		$	25,642		$	31,301		Total loans	$	2,984		$	781		$	1,956		$	5,721		$	36,886		$	42,607

Percentage of outstanding	Percentage of outstanding	11.3		%	1.7		%	5.1		%	18.1		%	81.9		%	100.0		%	Percentage of outstanding	7.0		%	1.8		%	4.6		%	13.4		%	86.6		%	100.0		%

December 31, 2021
December 31, 2022																				December 31, 2022
Residential	Residential	$	—		$	—		$	—		$	—		$	3,722		$	3,722		Residential	$	—		$	—		$	—		$	—		$	4,264		$	4,264
Commercial	Commercial	—			—			—			—			3,392			3,392			Commercial	—			—			—			—			2,542			2,542
Installment	Installment	—			—			3			3			1,340			1,343			Installment	—			—			—			—			1,407			1,407
Consumer	Consumer	2,244			—			—			2,244			7,788			10,032			Consumer	2,261			—			—			2,261			12,185			14,446
Secured credit card	Secured credit card	43			98			853			994			5,342			6,336			Secured credit card	712			722			2,239			3,673			4,167			7,840
Total loans	Total loans	$	2,287		$	98		$	856		$	3,241		$	21,584		$	24,825		Total loans	$	2,973		$	722		$	2,239		$	5,934		$	24,565		$	30,499

Percentage of outstanding	Percentage of outstanding	9.2		%	0.4		%	3.5		%	13.1		%	86.9		%	100.0		%	Percentage of outstanding	9.8		%	2.4		%	7.3		%	19.5		%	80.5		%	100.0		%

We offer an optional overdraft protection program service on certain demand deposit account programs that allows ~~cardholders~~customers who opt-in and meet certain criteria to spend up to a pre-authorized amount in excess of their available ~~card~~ balance. When overdrawn, the purchase related balances due on these deposit accounts are reclassified as consumer loans. Fees due from our cardholders for our overdraft service are included as a component of accounts receivable. Overdrawn balances are unsecured and considered immediately due from the ~~cardholder.~~customer.

~~In December 2021, we made the determination to sell a~~A portion of our secured credit card portfolio ~~and reclassified these assets~~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. ~~Upon re-classification, we reversed any previous allowance for credit loss on these portfolios and recorded an estimated valuation allowance to reflect the portfolio at its estimated fair value.~~ Changes in valuation allowances are recorded as a component of other income and expenses on our consolidated statement of operations. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the fair value of the loans held for sale amounted to approximately $4.3 million and ~~$5.1~~$5.3 million, respectively.

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, ~~2021~~2022 for further information on the criteria for classification as nonperforming.


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(In thousands)					(In thousands)
Residential	Residential	$	172	$	195	Residential	$	140	$	153
Installment	Installment	105		115		Installment	87		96
Secured credit card	Secured credit card	1,606		853		Secured credit card	1,956		2,239
Total loans	Total loans	$	1,883	$	1,163	Total loans	$	2,183	$	2,488

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6—Loans to Bank Customers (continued)

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 cardholder 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:


		June 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
		Non-Classified		Classified		Non-Classified		Classified			Non-Classified		Classified		Non-Classified		Classified
		(In thousands)									(In thousands)
Residential	Residential	$	4,241	$	241	$	3,481	$	241	Residential	$	4,761	$	63	$	4,035	$	229
Commercial	Commercial	2,539		—		3,392		—		Commercial	2,530		—		2,542		—
Installment	Installment	1,205		115		1,228		115		Installment	4,044		88		1,306		101
Consumer	Consumer	16,377		—		10,032		—		Consumer	21,688		—		14,446		—
Secured credit card	Secured credit card	4,977		1,606		5,483		853		Secured credit card	7,477		1,956		5,601		2,239
Total loans	Total loans	$	29,339	$	1,962	$	23,616	$	1,209	Total loans	$	40,500	$	2,107	$	27,930	$	2,569

Allowance for Credit Losses

Activity in the allowance for credit losses on our loan portfolio consisted of the following:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
(In thousands)
Balance, beginning of period $ 9,058 $ 1,531 $ 5,555 $ 757
Provision for loans 7,953 8,733 18,452 10,143
Loans charged off (6,807) (3,645) (13,803) (4,352)
Recoveries of loans previously charged off — 74 — 145
Balance, end of period $ 10,204 $ 6,693 $ 10,204 $ 6,693

Activity within our allowance for credit losses increased during the comparable periods principally due to the introduction of our optional overdraft protection program services on certain demand deposit accounts and other consumer advances related to our tax processing services.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In thousands)
Balance, beginning of period	$	13,254	$	9,058	$	9,078	$	5,555
Provision for loans	5,480		7,953		15,731		18,452
Loans charged off	(6,146)		(6,807)		(12,246)		(13,803)
Recoveries of loans previously charged off	53		—		78		—
Balance, end of period	$	12,641	$	10,204	$	12,641	$	10,204

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.

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

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~~GREEN DOT CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)~~

~~Note 7—Equity Method Investments (continued)~~

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.

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7—Equity Method Investments (continued)

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 June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, our net investment in TailFin Labs amounted to approximately ~~$89.4~~$110.2 million and ~~$61.5~~$82.4 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 ~~approximately $5.0~~$3.1 million and ~~$0.7~~$5.0 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$7.1~~$7.2 million and ~~$2.3~~$7.1 million for the six months ended June 30, 2023 and 2022, ~~and 2021, respectively, which~~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 ~~$6.8~~$4.4 million and ~~$6.4~~$4.8 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Equity in earnings from this investment ~~were de minimis~~ for the three ~~months ended June 30, 2022~~ and ~~approximately $2.1 million for the three months ended June 30, 2021. We recorded equity in earnings of approximately $0.4 million and $2.9 million for the~~ six months ended June 30, 2023 and 2022 ~~and 2021, respectively.~~were de minimis.

Note 8—Deposits

Deposits are categorized as non-interest bearing or interest-bearing ~~deposits~~deposit accounts as follows:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(In thousands)					(In thousands)
Non-interest bearing deposit accounts	Non-interest bearing deposit accounts	$	3,350,756	$	3,258,650	Non-interest bearing deposit accounts	$	3,214,944	$	3,427,799
Interest-bearing deposit accounts	Interest-bearing deposit accounts					Interest-bearing deposit accounts
Checking accounts	Checking accounts	3,706		5,900		Checking accounts	1,494		2,461
Savings	Savings	8,063		7,398		Savings	7,243		7,899
Secured card deposits	Secured card deposits	8,338		9,673		Secured card deposits	5,899		6,933
Time deposits, denominations greater than or equal to $250	Time deposits, denominations greater than or equal to $250	2,258		2,497		Time deposits, denominations greater than or equal to $250	788		2,275
Time deposits, denominations less than $250	Time deposits, denominations less than $250	2,883		2,771		Time deposits, denominations less than $250	4,238		2,738
Total interest-bearing deposit accounts	Total interest-bearing deposit accounts	25,248		28,239		Total interest-bearing deposit accounts	19,662		22,306
Total deposits	Total deposits	$	3,376,004	$	3,286,889	Total deposits	$	3,234,606	$	3,450,105

The scheduled contractual maturities for total time deposits are presented in the table below:


	June 30, ~~2022~~2023
	(In thousands)
Due in ~~2022~~2023	$	~~2,016~~
~~Due in 2023~~	~~1,189~~1,020
Due in 2024	~~541~~539
Due in 2025	~~483~~1,031
Due in 2026	~~746~~531
Due in 2027	1,073
Thereafter	~~166~~832
Total time deposits	$	~~5,141~~5,026

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9—Debt

~~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 ~~facility~~agreement provides for a $100.0 million five-year revolving line of credit (the "2019 Revolving Facility"), maturing in October 2024. We use the proceeds of any borrowings under the 2019 Revolving Facility for working capital and other general corporate purposes, subject to the terms and conditions set forth in the credit agreement. We classify amounts outstanding as long-term on our consolidated balance sheets; however, we may make voluntary repayments at any time prior to maturity. As of June 30, ~~2022,~~2023, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

In March 2023, we amended the terms of our agreement to replace LIBOR with the Secured Overnight Financing Rate ("SOFR"). At our election, loans made under the credit agreement bear interest at 1) ~~a LIBOR~~an adjusted SOFR rate (the ~~“LIBOR~~“SOFR Rate") or 2) a base rate determined by reference to the highest of (a) the United States federal funds rate plus 0.50%, (b) the Wells Fargo prime rate, and (c) ~~a daily rate equal to one-month LIBOR~~an adjusted SOFR rate plus 1.0% (the “Base Rate"), plus in either case, an applicable margin. The applicable margin ~~is dependent upon~~for borrowings depends on our total leverage ratio and varies from 1.25% to 2.00% for ~~LIBOR~~SOFR Rate loans and 0.25% to 1.00% for Base Rate loans. We also pay a commitment fee, which varies from 0.20% to 0.35% per annum on the actual daily unused portions of the 2019 Revolving Facility. Letter of credit fees are payable in respect of outstanding letters of credit at a rate per annum equal to the applicable margin for ~~LIBOR~~SOFR Rate loans.

The terms of our existing agreement also provide for a method to determine an alternative benchmark interest rate, which will apply when the LIBOR rates cease to be available in June 2023. This alternative benchmark rate will be selected between the parties taking into consideration recommendations from regulatory bodies or based on prevailing market conventions at the time the alternative rate is established, and may include the Secured Overnight Financing Rate.

The 2019 Revolving Facility contains certain affirmative and negative covenants including negative covenants that limit or restrict, among other things, liens, indebtedness, investments and acquisitions, mergers and fundamental changes, asset sales, restricted payments, changes in the nature of the business, transactions with affiliates and other matters customarily restricted in such agreements. We must also maintain a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio at the end of each fiscal quarter, as set forth in the credit agreement. At June 30, ~~2022,~~2023, we were in compliance with all such covenants.

If an event of default shall occur and be continuing under the facility, the commitments may be terminated and the principal amounts outstanding under the 2019 Revolving Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

We ~~did not incur any meaningful~~incurred total cash interest expense ~~related to our debt~~ during the three and six months ended June 30, ~~2022~~2023 of approximately $0.2 million and ~~2021.~~$1.8 million, respectively. We did not incur any interest expense during the three and six months ended June 30, 2022.

Note 10—Income Taxes

Income tax expense for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 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:


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
U.S. federal statutory tax rate	U.S. federal statutory tax rate	21.0	%	21.0	%	U.S. federal statutory tax rate	21.0	%	21.0	%
State income taxes, net of federal tax benefit	State income taxes, net of federal tax benefit	0.8		1.1		State income taxes, net of federal tax benefit	1.5		0.8
General business credits	General business credits	(1.7)		(1.9)		General business credits	(3.3)		(1.7)
Employee stock-based compensation		1.7		(2.9)
Stock-based compensation						Stock-based compensation	4.7		1.7
IRC 162(m) limitation	IRC 162(m) limitation	2.3		6.4		IRC 162(m) limitation	1.8		2.3
Bank owned life insurance						Bank owned life insurance	(1.4)		(0.7)
Nondeductible expenses	Nondeductible expenses	0.4		0.1		Nondeductible expenses	1.0		0.4

Other	Other	(0.5)		(0.3)		Other	(0.5)		0.2
Effective tax rate	Effective tax rate	24.0	%	23.5	%	Effective tax rate	24.8	%	24.0	%

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10—Income Taxes (continued)

The effective tax rate for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, ~~employee~~ stock-based compensation, cash value growth in bank owned life insurance policies, and the Internal Revenue Code ~~(IRC)~~(the "IRC") 162(m) limitation on the deductibility of executive compensation. The net increase in the effective tax rate for the six months ended June 30, ~~2022~~2023 as compared to the six months ended June 30, ~~2021~~2022 is primarily due to the impact of an increase of $0.2 million in state income taxes, net of federal benefits, and the impact of a ~~$3.1~~$1.1 million ~~decline~~increase in ~~excess~~ tax ~~benefits~~expense associated with shortfalls from stock-based compensation. We recognized a discrete tax expense related to tax shortfalls from ~~stock based-compensation~~stock-based compensation of ~~$1.2~~$2.3 million for the six months ended June 30, ~~2022,~~2023, compared to a ~~$1.9~~$1.2 million ~~excess~~discrete tax ~~benefit~~expense for the prior year comparable period. These increases were partially offset by the impact of ~~general business credits and~~an increase of $0.2 million in tax benefits from bank owned life insurance policies, a decrease of ~~$2.7~~$0.7 million subject to the IRC 162(m) limitation on the deductibility of certain executive ~~compensation.~~compensation, and the impact of general business credits.

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. The IRA contains a number of revisions to the IRC, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022. To date, these tax law revisions have had no immediate effect and we do not expect that they will have a material impact on our results of operations in the future.

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 six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, 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 June 30, ~~2022~~2023 and ~~2021,~~2022, 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, or IRS, and various state tax authorities. We remain subject to examination of our federal income tax return for the years ended December 31, 2017 through ~~2021.~~2022. 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 June 30, ~~2022.~~2023. We do not expect the outcome of these examinations will have any material impact on our consolidated financial statements.

As of June 30, ~~2022,~~2023, we have federal net operating loss carryforwards of approximately ~~$17.2~~$15.2 million and state net operating loss carryforwards of approximately ~~$89.1~~$102.3 million, which will be available to offset future income. If not used, the federal net operating losses will expire between 2029 and 2034. Of our total state net operating loss carryforwards, approximately ~~$57.3~~$59.0 million will expire between 2026 and ~~2041,~~2042, while the remaining balance of approximately ~~$31.8~~$43.3 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 ~~$20.7~~$20.9 million that can be carried forward indefinitely and other state business tax credits of approximately $1.1 million that will start to expire ~~between~~on December 31, 2023 and continue to expire through December 31, 2027.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had a liability of ~~$12.4~~$12.3 million and ~~$11.0~~$11.2 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:

Six Months Ended June 30,
2022 2021
(In thousands)
Beginning balance $ 10,972 $ 9,518
Increases related to positions taken during prior years — —
Increases related to positions taken during the current year 1,410 1,470
Ending balance $ 12,382 $ 10,988
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 12,055 $ 10,801

~~As of June 30, 2022 and 2021, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $1.0 million and $0.6 million, respectively.~~

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10—Income Taxes (continued)


	Six Months Ended June 30,
	2023		2022
	(In thousands)
Beginning balance	$	11,178	$	10,972
Increases related to positions taken during prior years	1,260		—
Increases related to positions taken during the current year	—		1,410
Decreases related to positions settled with tax authorities	(90)		—

Ending balance	$	12,348	$	12,382

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate	$	11,899	$	12,055

As of June 30, 2023 and 2022, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $1.2 million and $1.0 million, respectively.

Note 11—Stockholders' Equity

Stock Repurchase Program

In ~~May 2017, our Board of Directors authorized, subject to regulatory approval, $150 million for our stock repurchase program under which we repurchased $100 million of shares in 2019. In~~ February 2022, our Board of Directors ~~provided authorization~~authorized a $100 million increase to ~~increase~~ our ~~remaining~~ stock repurchase ~~limit to $100~~program. As of June 30, 2023, we had an authorized $4.5 million remaining under our stock repurchase program for ~~any future~~additional repurchases.

Accelerated Share Repurchases

In March 2022, we entered into an accelerated share repurchase arrangement ("ASR") with a financial ~~institution. Pursuant to the terms of the ASR agreement and in exchange~~institution for an up-front payment of $25 ~~million, we received an initial 781,555 shares of our Class A Common Stock.~~million. Final settlement of the ASR was completed in April ~~2022, at which point we received an additional 132,482 shares from the financial institution.~~2022. The final number of shares received upon settlement for the ASR was determined based on the volume-weighted average price of our common stock over the term of the agreement less an agreed upon discount and subject to adjustments pursuant to the terms and conditions of the ASR. Total shares repurchased under the ASR amounted to 914,037 shares at ana volume-weighted average price of $27.35.

The up-front payments were accounted for as a reduction to shareholders’ equity on our consolidated balance sheets in the period the payments were made. The ASR was accounted for in two separate transactions: 1) a treasury stock repurchase for the initial shares received and 2) a forward stock purchase contract indexed to our own stock for the unsettled portion of the ASR. The par value of the shares received were recorded as a reduction to common stock with the remainder recorded as a reduction to additional paid-in capital. The ASR met all of the applicable criteria for equity classification, and therefore was not accounted for as a derivative instrument. The initial repurchase of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. The shares were retired upon repurchase, but remain authorized for registration and issuance in the future.

Other Repurchases

In March 2022, we also entered into a repurchase plan under Rule 10b5-1 of the Exchange Act for $75 million that went into effect at the conclusion of the ASR. The agreement ~~allows~~allowed for $10 million of monthly share repurchases through ~~the remainder of~~December 31, 2022 until the contract amount ~~is reached. The timing and amount of purchases depend on a variety of factors, including market conditions and the volume limit defined by Rule 10b-18. As of June 30,~~was reached, unless otherwise terminated. In December 2022, we ~~have~~early terminated the agreement just prior to completing the entire $75 million of repurchases. We repurchased ~~712,057~~3,150,181 shares at ana volume-weighted average price of ~~$26.75~~$22.39 under ~~our~~the 10b5-1 ~~plan, with approximately $56 million available for additional purchases.~~plan.

Walmart Restricted Shares

On January 2, 2020, we issued Walmart, in a private placement, 975,000 restricted shares of our Class A Common Stock. The shares ~~vest~~vested in equal monthly increments through December 1, 2022; however, Walmart iswas entitled to voting rights and to participate in any dividends paid from the issuance date on the unvested balance. As such, the total amount of restricted shares issued ~~are~~were included in our total Class A shares outstanding. AsAll shares issued to Walmart were fully vested as of ~~June 30, 2022, there were 162,502 unvested shares outstanding.~~December 31, 2022.

The estimated grant-date fair value of the restricted shares is recorded as a component of stock-based compensation expense over the related period we expect to benefit under the term of our relationship with Walmart.

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 ~~$5.6~~$10.6 million and ~~$8.4~~$5.6 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$20.5~~$19.8 million and ~~$25.6~~$20.5 million for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively.

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12—Stock-Based Compensation (continued)

Restricted Stock Units

Restricted stock unit activity for awards subject to only service conditions was as follows for the six months ended June 30, ~~2022:~~2023:


		Shares	Weighted-Average Grant-Date Fair Value			Shares	Weighted-Average Grant-Date Fair Value
		(In thousands, except per share data)				(In thousands, except per share data)
Outstanding at December 31, 2021		1,596	$	42.71
Outstanding at December 31, 2022					Outstanding at December 31, 2022	1,555	$	34.08
Restricted stock units granted	Restricted stock units granted	725	29.88		Restricted stock units granted	1,332	18.15
Restricted stock units vested	Restricted stock units vested	(430)	38.94		Restricted stock units vested	(507)	33.29
Restricted stock units canceled	Restricted stock units canceled	(122)	43.14		Restricted stock units canceled	(119)	32.45
Outstanding at June 30, 2022		1,769	$	38.34
Outstanding at June 30, 2023					Outstanding at June 30, 2023	2,261	$	24.96

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity for the six months ended June 30, ~~2022~~2023 was as follows:


		Shares	Weighted-Average Grant-Date Fair Value			Shares	Weighted-Average Grant-Date Fair Value
		(In thousands, except per share data)				(In thousands, except per share data)
Outstanding at December 31, 2021		1,377	$	35.36
Outstanding at December 31, 2022					Outstanding at December 31, 2022	644	$	32.40
Performance restricted stock units granted	Performance restricted stock units granted	115	32.75		Performance restricted stock units granted	724	18.13
Performance restricted stock units vested	Performance restricted stock units vested	(53)	49.78		Performance restricted stock units vested	(92)	34.91
Performance restricted stock units canceled	Performance restricted stock units canceled	(246)	34.15		Performance restricted stock units canceled	(40)	27.01

Outstanding at June 30, 2022		1,193	$	34.72
Adjustment for completed performance periods					Adjustment for completed performance periods	15	46.82
Outstanding at June 30, 2023					Outstanding at June 30, 2023	1,251	$	24.30

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. These awards generally contain an additional service component after each performance period is concluded and the unvested balance of the shares after the performance metrics are achieved will vest over the remaining requisite service period. 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 six months ended June 30, ~~2022~~2023 was as follows:

Options Weighted-Average Exercise Price
(In thousands, except per share data)
Outstanding at December 31, 2021 1,204 $ 26.62
Options exercised (4) 22.06
Outstanding at June 30, 2022 1,200 $ 26.63
Exercisable at June 30, 2022 951 $ 27.37


	Options	Weighted-Average Exercise Price
	(In thousands, except per share data)
Outstanding at December 31, 2022	1,171	$	26.97

Options exercised	(8)	16.34
Options canceled	(139)	50.89
Outstanding at June 30, 2023	1,024	$	23.81
Exercisable at June 30, 2023	1,024	$	23.81

We ~~have~~did not ~~issued~~issue any stock option awards from our 2010 Equity Incentive Plan for the periods presented in these consolidated financial statements.

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13—Earnings per Common Share

The calculation of basic and diluted earnings per share (EPS) was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(In thousands, except per share data)									(In thousands, except per share data)
Basic earnings per Class A common share	Basic earnings per Class A common share									Basic earnings per Class A common share
Numerator:	Numerator:									Numerator:
Net income	Net income	$	15,008	$	24,933	$	53,632	$	50,668	Net income	$	578	$	15,008	$	36,590	$	53,632
Amount attributable to unvested Walmart restricted shares	Amount attributable to unvested Walmart restricted shares	(53)		(235)		(226)		(517)		Amount attributable to unvested Walmart restricted shares	—		(53)		—		(226)
Net income allocated to Class A common stockholders	Net income allocated to Class A common stockholders	$	14,955	$	24,698	$	53,406	$	50,151	Net income allocated to Class A common stockholders	$	578	$	14,955	$	36,590	$	53,406
Denominator:	Denominator:									Denominator:
Weighted-average Class A shares issued and outstanding	Weighted-average Class A shares issued and outstanding	53,928		54,005		54,240		53,829		Weighted-average Class A shares issued and outstanding	52,193		53,928		52,004		54,240
Basic earnings per Class A common share	Basic earnings per Class A common share	$	0.28	$	0.46	$	0.98	$	0.93	Basic earnings per Class A common share	$	0.01	$	0.28	$	0.70	$	0.98

Diluted earnings per Class A common share	Diluted earnings per Class A common share									Diluted earnings per Class A common share
Numerator:	Numerator:									Numerator:
Net income allocated to Class A common stockholders	Net income allocated to Class A common stockholders	$	14,955	$	24,698	$	53,406	$	50,151	Net income allocated to Class A common stockholders	$	578	$	14,955	$	36,590	$	53,406
Re-allocated earnings	Re-allocated earnings	1		4		3		11		Re-allocated earnings	—		1		—		3
Diluted net income allocated to Class A common stockholders	Diluted net income allocated to Class A common stockholders	$	14,956	$	24,702	$	53,409	$	50,162	Diluted net income allocated to Class A common stockholders	$	578	$	14,956	$	36,590	$	53,409
Denominator:	Denominator:									Denominator:
Weighted-average Class A shares issued and outstanding	Weighted-average Class A shares issued and outstanding	53,928		54,005		54,240		53,829		Weighted-average Class A shares issued and outstanding	52,193		53,928		52,004		54,240
Dilutive potential common shares:	Dilutive potential common shares:									Dilutive potential common shares:
Stock options	Stock options	121		446		169		477		Stock options	—		121		—		169
Service-based restricted stock units	Service-based restricted stock units	182		362		191		453		Service-based restricted stock units	192		182		135		191
Performance-based restricted stock units	Performance-based restricted stock units	148		242		243		293		Performance-based restricted stock units	41		148		52		243
Employee stock purchase plan	Employee stock purchase plan	10		6		12		7		Employee stock purchase plan	11		10		10		12
Diluted weighted-average Class A shares issued and outstanding	Diluted weighted-average Class A shares issued and outstanding	54,389		55,061		54,855		55,059		Diluted weighted-average Class A shares issued and outstanding	52,437		54,389		52,201		54,855
Diluted earnings per Class A common share	Diluted earnings per Class A common share	$	0.27	$	0.45	$	0.97	$	0.91	Diluted earnings per Class A common share	$	0.01	$	0.27	$	0.70	$	0.97

The restricted shares issued to Walmart ~~contain~~contained non-forfeitable rights to dividends and ~~are~~were considered participating securities for purposes of computing EPS pursuant to the two-class method. The computation above excludes income attributable to the unvested restricted shares from the numerator and excludes the dilutive impact of those underlying shares from the denominator.

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 June 30,		Six Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
		(In thousands)					(In thousands)
Class A common stock	Class A common stock					Class A common stock
Options to purchase Class A common stock	Options to purchase Class A common stock	139	139	139	139	Options to purchase Class A common stock	1,027	139	1,094	139
Service-based restricted stock units	Service-based restricted stock units	1,256	562	1,204	320	Service-based restricted stock units	754	1,256	866	1,204
Performance-based restricted stock units	Performance-based restricted stock units	867	829	822	742	Performance-based restricted stock units	444	867	332	822
Unvested Walmart restricted shares	Unvested Walmart restricted shares	190	515	230	555	Unvested Walmart restricted shares	—	190	—	230
Total	Total	2,452	2,045	2,395	1,756	Total	2,225	2,452	2,292	2,395

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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, ~~2021.~~2022.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, our assets ~~and liabilities~~ carried at fair value on a recurring basis were as follows:


		Level 1		Level 2		Level 3		Total Fair Value			Level 1		Level 2		Level 3		Total Fair Value
June 30, 2022		(In thousands)
June 30, 2023										June 30, 2023	(In thousands)
Assets	Assets									Assets
Investment securities:	Investment securities:									Investment securities:
Corporate bonds	Corporate bonds	$	—	$	9,274	$	—	$	9,274	Corporate bonds	$	—	$	9,358	$	—	$	9,358

Agency bond securities	Agency bond securities	—		204,408		—		204,408		Agency bond securities	—		195,121		—		195,121
Agency mortgage-backed securities	Agency mortgage-backed securities	—		2,146,900		—		2,146,900		Agency mortgage-backed securities	—		2,056,446		—		2,056,446
Municipal bonds	Municipal bonds	—		24,993		—		24,993		Municipal bonds	—		23,488		—		23,488
Asset-backed securities		—		5,775		—		5,775

Loans held for sale	Loans held for sale	—		—		4,313		4,313		Loans held for sale	—		—		4,343		4,343
Total assets	Total assets	$	—	$	2,391,350	$	4,313	$	2,395,663	Total assets	$	—	$	2,284,413	$	4,343	$	2,288,756

December 31, 2021
December 31, 2022										December 31, 2022
Assets	Assets									Assets
Investment securities:	Investment securities:									Investment securities:
Corporate bonds	Corporate bonds	$	—	$	9,973	$	—	$	9,973	Corporate bonds	$	—	$	9,346	$	—	$	9,346

Agency bond securities	Agency bond securities	—		221,596		—		221,596		Agency bond securities	—		193,106		—		193,106
Agency mortgage-backed securities	Agency mortgage-backed securities	—		1,848,331		—		1,848,331		Agency mortgage-backed securities	—		2,138,262		—		2,138,262
Municipal bonds	Municipal bonds	—		28,180		—		28,180		Municipal bonds	—		22,973		—		22,973
Asset-backed securities		—		7,421		—		7,421

Loans held for sale	Loans held for sale	—		—		5,148		5,148		Loans held for sale	—		—		5,324		5,324
Total assets	Total assets	$	—	$	2,115,501	$	5,148	$	2,120,649	Total assets	$	—	$	2,363,687	$	5,324	$	2,369,011

Liabilities
Contingent consideration		$	—	$	—	$	1,347	$	1,347

We based the fair value of our fixed income securities held as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 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 six months ended June 30, ~~2022~~2023 or ~~2021.~~2022.

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, ~~2021~~2022. 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.

~~Contingent Consideration~~

The fair value of contingent consideration obligations, such as the earn-out associated with our acquisition of UniRush LLC ("UniRush") in 2017, is estimated through valuation models designed to estimate the probability of such contingent payments based on various assumptions. Estimated payments are discounted using present value techniques to arrive at an estimated fair value. Our contingent consideration payable is classified as Level 3 because we use unobservable inputs to estimate fair value, including the probability of achieving certain earnings thresholds and appropriate discount rates. Changes in fair value of contingent consideration are recorded through operating expenses.

Debt

The fair value of our revolving line of credit is based on borrowing rates currently available to a market participant for loans with similar terms or maturity. The carrying amount of our outstanding revolving line of credit approximates fair value because the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. The fair value of the revolving line of credit is 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 June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are presented in the table below.


		June 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
		(In thousands)									(In thousands)
Financial Assets	Financial Assets									Financial Assets
Loans to bank customers, net of allowance	Loans to bank customers, net of allowance	$	21,097	$	20,910	$	19,270	$	17,481	Loans to bank customers, net of allowance	$	29,966	$	28,844	$	21,421	$	18,201

Financial Liabilities	Financial Liabilities									Financial Liabilities
Deposits	Deposits	$	3,376,004	$	3,375,929	$	3,286,889	$	3,286,837	Deposits	$	3,234,606	$	3,234,513	$	3,450,105	$	3,450,017

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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 510 years, ~~many~~most of which generally include renewal options of varying terms.

Our total lease expense amounted to approximately ~~$1.2~~$0.9 million and ~~$0.6~~$1.2 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$2.3~~$1.9 million and ~~$1.8~~$2.3 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. 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 ~~ROU~~right of use assets and related lease liabilities is as follows:


	June 30, ~~2022~~2023

Cash paid for operating lease liabilities (in thousands)	$	~~4,275~~1,985
Weighted average remaining lease term (years)	~~2.66~~3.0
Weighted average discount rate	~~4.8~~5.0		%

Maturities of our operating lease liabilities as of June 30, ~~2022 is~~2023 are as follows:


		Operating Leases			Operating Leases
		(In thousands)			(In thousands)
Remainder of 2022		$	3,596
2023		3,786
Remainder of 2023				Remainder of 2023	$	2,925
2024	2024	3,704		2024	3,935
2025	2025	1,051		2025	1,288
2026	2026	38		2026	280
		12,175
2027				2027	248
Thereafter				Thereafter	1,386
Total				Total	10,062
Less: imputed interest	Less: imputed interest	(1,448)		Less: imputed interest	(3,516)
Total lease liabilities	Total lease liabilities	$	10,727	Total lease liabilities	$	6,546

Note 17—Commitments and Contingencies

Financial Commitments

As discussed in Note 7 — Equity Method Investments, we are committed to making annual capital contributions in TailFin Labs ~~LLC~~ of $35.0 million per year from January 2020 through January 2024.

Our definitive agreement to acquire all of the equity interests of UniRush provided for a minimum $4.0 million annual earn-out payment for five years following the closing, and ended in February 2022. The final earn-out payment was made in April 2022.

Litigation and Claims

In the ordinary course of business, we are a party to various legal proceedings, including, from time to time, regulatory and governmental matters as well as actions which are asserted to be maintainable as class action suits. 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, we do not expect the outcome in any legal proceedings, individually or collectively, to have a material adverse impact on our financial condition or results of operations.

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 2two 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 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.

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

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 ~~is scheduled to be~~was heard on ~~November 7,~~December 12, 2022. On February 18, 2020, a shareholder derivative suit and securities class action entitled Hellman v. Streit, et al., No. 20-cv-01572-SVW-PVC was filed in United States District Court for the Central District of California, against us and certain of our officers and directors. The suit avers purported breach of fiduciary duty and unjust enrichment claims, as well as claims under Sections 10(b), 14(a) and 20(a) of the Exchange Act, on the basis of the same wrongdoing alleged in the first lawsuit described above. The suit does not define the purported class allegedly damaged. These cases have been related and, pursuant to a stipulated agreement between the parties, the Hellman suit is stayed pending resolution of any motions to dismiss in the ~~Koffsman~~Koffsmon case reference above, after which time the parties will meet and confer on a case schedule, including the schedule for defendants to respond to the complaint. We have not yet responded to the complaints in these matters.

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.

~~Settlement~~

In May 2021, we announced that we entered into a definitive agreement to purchase the assets and operations of Tax Refund Solutions (“TRS”), a business segment of Republic Bank & Trust Company ("Republic Bank"), subject to customary closing conditions. Pursuant to the terms of the definitive agreement, we agreed to pay Republic Bank approximately $165.0 million in cash for the TRS assets. On October 4, 2021, we announced that we had been unable to obtain the Federal Reserve’s approval of or non-objection to the transaction, and therefore, the transaction would not be consummated. The agreement provided for a termination fee payable by us of $5.0 million, which we recorded in the fourth quarter of 2021 and paid in January 2022 (the "Termination Fee"). On October 5, 2021, Republic Bank filed a claim against us in the Court of Chancery of the State of Delaware. The lawsuit claimed that we had breached the contract in which we agreed, subject to certain conditions, to purchase the TRS business. On June 3, 2022, Republic Bank agreed to settle its claims in exchange for a $13.0 million payment (which amount was in addition to the Termination Fee) by us to Republic Bank, which we recorded during three months ended June 30, 2022 and is included as a component of other general and administrative expenses on our consolidated statements of operations.

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 cardholders’ accounts; (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 cardholders’ accounts, 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 cardholders’ accounts, 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 greater than 10% of our total operating revenues were as follows:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Walmart 21% 23% 21% 24%


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Walmart	17%	21%	17%	21%

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 18—Significant Retailer and Partner Concentration (continued)

In addition, approximately ~~29%~~41% and ~~20%~~29% of our total operating revenues for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~26%~~36% and ~~18%~~26% for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, were generated from a single BaaS partner, but without a corresponding concentration to gross profit for the periods.

Note 19—Segment Information

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)~~"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)~~"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)~~"BaaS channel"), and (ii) a comprehensive payroll platform that we offer to corporate enterprises (the ~~"Employer" channel)~~"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 Simply Paid 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 cardholders, 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.

~~Revenues within~~Our Corporate and Other ~~are comprised~~segment primarily consists of net interest income, ~~and~~ 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 ~~inter-segment eliminations. Unallocated~~expenses, and unallocated corporate expenses, which include our fixed expenses such as salaries, wages and related benefits for our employees, professional ~~service~~services fees, software licenses, telephone and communication costs, rent, utilities, and ~~utilities, insurance and inter-segment eliminations.~~insurance. These costs are not considered when our CODM evaluates the performance of our 3three 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. We do not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

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GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 19—Segment Information (continued)

The following tables present financial information for each of our reportable segments for the periods then ended:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Segment Revenue	Segment Revenue	(In thousands)								Segment Revenue	(In thousands)
Consumer Services	Consumer Services	$	150,959	$	182,093	$	309,716	$	366,434	Consumer Services	$	129,091	$	150,959	$	268,924	$	309,716
B2B Services	B2B Services	143,514		112,589		277,414		218,564		B2B Services	180,652		143,514		351,944		277,414
Money Movement Services	Money Movement Services	54,143		66,019		151,459		156,386		Money Movement Services	49,974		54,143		148,215		151,459
Corporate and Other	Corporate and Other	6,485		(2,763)		11,190		(3,641)		Corporate and Other	1,427		6,485		4,424		11,190
Total segment revenues	Total segment revenues	355,101		357,938		749,779		737,743		Total segment revenues	361,144		355,101		773,507		749,779
BaaS commissions and processing expenses	BaaS commissions and processing expenses	8,429		11,435		14,941		25,116		BaaS commissions and processing expenses	5,418		8,429		10,178		14,941
Other income	Other income	(761)		—		(1,334)		—		Other income	(686)		(761)		(1,429)		(1,334)
Total operating revenues	Total operating revenues	$	362,769	$	369,373	$	763,386	$	762,859	Total operating revenues	$	365,876	$	362,769	$	782,256	$	763,386

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 June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Segment Profit	Segment Profit	(In thousands)								Segment Profit	(In thousands)
Consumer Services	Consumer Services	$	60,376	$	55,790	$	114,664	$	109,317	Consumer Services	$	44,272	$	60,376	$	97,024	$	114,664
B2B Services	B2B Services	22,775		18,174		45,039		35,707		B2B Services	17,706		22,775		39,925		45,039
Money Movement Services	Money Movement Services	30,151		38,192		91,611		87,006		Money Movement Services	29,774		30,151		90,800		91,611
Corporate and Other	Corporate and Other	(45,754)		(49,232)		(93,440)		(95,746)		Corporate and Other	(52,883)		(45,754)		(106,337)		(93,440)
Total segment profit	Total segment profit	67,548		62,924		157,874		136,284		Total segment profit	38,869		67,548		121,412		157,874

Reconciliation to income before income taxes	Reconciliation to income before income taxes									Reconciliation to income before income taxes
Depreciation and amortization of property, equipment and internal-use software	Depreciation and amortization of property, equipment and internal-use software	14,595		13,981		28,399		27,181		Depreciation and amortization of property, equipment and internal-use software	13,886		14,595		27,587		28,399
Stock based compensation and related employer taxes	Stock based compensation and related employer taxes	5,770		8,444		20,939		25,626		Stock based compensation and related employer taxes	10,740		5,770		20,289		20,939
Amortization of acquired intangible assets	Amortization of acquired intangible assets	5,664		6,943		12,181		13,887		Amortization of acquired intangible assets	7,281		5,664		12,945		12,181
Impairment charges	Impairment charges	1,871		—		4,134		—		Impairment charges	—		1,871		—		4,134
Legal settlement expenses		13,921		—		13,495		10
Legal settlements and related expenses										Legal settlements and related expenses	1,319		13,921		1,419		13,495
Other expense	Other expense	1,788		1,753		3,195		3,792		Other expense	857		1,788		3,391		3,195
Operating income	Operating income	23,939		31,803		75,531		65,788		Operating income	4,786		23,939		55,781		75,531
Interest expense, net	Interest expense, net	29		38		116		75		Interest expense, net	238		29		1,882		116
Other (expense) income, net		(4,038)		1,633		(4,808)		547
Other expense, net										Other expense, net	(2,224)		(4,038)		(5,248)		(4,808)
Income before income taxes	Income before income taxes	$	19,872	$	33,398	$	70,607	$	66,260	Income before income taxes	$	2,324	$	19,872	$	48,651	$	70,607

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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 ~~the continuing impact of the coronavirus ("COVID-19") pandemic~~increasing inflation and interest rates and other macro-economic impacts on our business, results of operations and financial condition and governmental and our ~~further~~ responses to ~~it, and~~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 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 our bank, 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, ~~and~~ certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of ~~intersegment~~inter-segment revenues and expenses, and unallocated corporate expenses ~~and other costs~~ 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 ~~2021~~2022 Annual Report on Form 10-K "Part 1, 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 six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
		2022		2021		Change		%		2022		2021		Change		%			2023		2022		Change		%		2023		2022		Change		%
		(In thousands, except percentages)																	(In thousands, except percentages)
Total operating revenues	Total operating revenues	$	362,769	$	369,373	$	(6,604)	(1.8)	%	$	763,386	$	762,859	$	527	0.1	%	Total operating revenues	$	365,876	$	362,769	$	3,107	0.9	%	$	782,256	$	763,386	$	18,870	2.5	%
Total operating expenses	Total operating expenses	338,830		337,570		1,260		0.4	%	687,855		697,071		(9,216)		(1.3)	%	Total operating expenses	361,090		338,830		22,260		6.6	%	726,475		687,855		38,620		5.6	%
Net income	Net income	15,008		24,933		(9,925)		(39.8)	%	53,632		50,668		2,964		5.8	%	Net income	578		15,008		(14,430)		(96.1)	%	36,590		53,632		(17,042)		(31.8)	%

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 six months ended June 30, ~~2022 decreased $6.6~~2023 increased $3.1 million, or 2%0.9%, and ~~increased $0.5~~$18.9 million, or ~~0.1%~~2.5%, respectively, over the prior year comparable ~~periods. Net changes within each of these~~ periods, ~~were~~ driven ~~by lower revenues earned from our Consumer Services and Money Movement Services segments, partially offset~~primarily by higher revenues in our B2B Services segment, ~~and higher net interest income~~partially offset by lower revenues earned in ~~our Corporate and Other segment.~~

~~Our deposit account programs within~~ our Consumer Services and ~~B2B~~Money Movement Services ~~segments have previously benefited from shifts~~segments.

Our consolidated total operating revenues increased year-over-year due to the continued growth of certain BaaS partner programs, which generated an increase in ~~consumer behavior towards electronic payments throughout~~our total gross dollar volume of 42% and 38% for the ~~COVID-19 pandemic, which created a higher demand~~three and ~~usage of~~six months ended June 30, 2023, respectively. However, our ~~products and services. In part, this was driven~~total operating revenues were negatively impacted by the economic stimulus funds and incremental unemployment benefits enacted by the U.S. federal government distributed to new and existing customers. In March 2021, an additional $1.9 trillion economic package was authorized under the American Rescue Plan Act of 2021, which provided for additional direct payments, enhanced unemployment benefits that expired in September 2021 and monthly child tax credit payments that expired in December 2021. No such economic stimulus packages have been enacted to date in 2022 and as a result,several other factors impacting our ~~key metrics have normalized, creating more challenging year-over-year comparisons. The timing and magnitude of these federal relief~~deposit account programs, including our strategic decision in the ~~prior year, as well as our strategic decision~~short-term to reduce marketing spend on GO2bank during the first half of the year ~~due~~in response to ~~higher than expected~~market trends, our decision to de-emphasize many of our legacy cardholder programs in support of GO2bank, macro-economic factors leading to economic challenges for consumers and other trends that have impacted acquisition ~~costs per account, have resulted in a decrease in our~~at retail locations, and the non-renewal of certain BaaS partner programs as previously disclosed. These factors impacted the number of consolidated active accounts, ~~year over year by 24% as~~purchase volume and number of ~~June 30, 2022. These factors have also impacted gross dollar volume,~~cash transfers, each of which decreased ~~0.2% and 9%~~ for the three ~~and six~~ months ended June 30, ~~2022, respectively,~~2023 by 20%, 15% and ~~purchase volume, which decreased 24% and 28% for the three and six months ended June 30, 2022,~~4%, respectively, over the prior year comparable periods. ~~The impact~~Similarly, our purchase volume and number of ~~further governmental actions~~cash transfers decreased for the six months ended June 30, 2023 by 15% and ~~whether or not any of these benefits are reinstituted may impact our future results. We expect our key performance indicators to continue to normalize on a year-over-year basis as~~3%, respectively, from the ~~effect of federal and state governmental actions continues to lessen.~~prior year comparable period.

In our Consumer Services segment, revenues decreased during the three and six months ended June 30, ~~2022~~2023 by ~~17%~~ 14%and ~~15%~~13%, 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 declined year-over-year for the three months ended June 30, ~~2022~~2023 by ~~30%~~10%, ~~30%~~15%, ~~27%~~12% and ~~29%~~13%, respectively. Gross dollar volume and purchase volume ~~decreased~~declined year-over-year by ~~33%~~similar levels of 12% and ~~29%~~13%, respectively, for the six months ended June 30, ~~2022.~~2023. We believe these decreases are ~~primarily~~ attributable to the ~~timing of stimulus payments and other federal benefits received by our cardholders in 2021 as~~factors discussed above, ~~as well as~~including lower account acquisition from reduced marketing spend ~~which has impacted~~on GO2bank during the first half of 2023, observed changes in consumer traffic within our retail locations and the non-renewal of one of our retail partner programs. These factors had a corresponding impact on the amount of revenue we earn ~~such as~~from accounts, including through monthly maintenance fees, ATM fees and ~~interchange.~~interchange fees. These ~~revenue~~ declines in revenue from our Consumer Services segment were partially offset by the ~~customer~~continued adoption of ~~recent features, such as~~ our optional overdraft protection program services ~~made~~ available to ~~cardholders~~accountholders across our ~~portfolios, and favorable decreases in the amount of cash back rewards on our legacy card programs due to changes in consumer behavioral trends and the estimated redemption amounts.~~portfolios.

~~Within~~In our B2B Services segment, revenues increased during the three and six months ended June 30, ~~2022~~2023 by 26% and 27%, respectively, over the prior year comparable periods. ~~Gross~~The increase was driven by strong year-over-year growth in our gross dollar volume, ~~grew overall~~which increased during the three ~~months ended June 30, 2022 by 26% year-over-year, while active accounts~~ and ~~purchase volume decreased by 11% and 10%, respectively. For the~~ six months ended June 30, ~~2022, gross dollar volume increased~~2023 by ~~14%~~68% and 66%, respectively, despite reductions in purchase volume of 19% and 18%, respectively, and a decline in the number of active accounts. The number of active accounts decreased by ~~24% over~~26% from the comparable prior year ~~comparable~~ periods. ~~Overall, many of our BaaS partners within our B2B Services segment were impacted by similar trends seen in our Consumer Services segment; however, growth~~Growth in gross dollar volume concentrated from certain BaaS programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, ~~despite a lower number~~partially offset by the non-renewals of ~~active accounts and lower purchase volume. During the second quarter of 2022, we also engaged in contract renewal negotiations with several~~other BaaS partners but after extensive negotiations, could not agree upon terms that would best serve the long-term interests of both us and our BaaS partners. We expect these non-renewals to have a modest impact on our B2B Services segment key metrics and financial results in the second half of 2022.as previously disclosed.

~~Total~~Our Money Movement Services segment revenues decreased for the three and six months ended June 30, ~~2022 decreased~~2023 by ~~18%~~8% and 3%2%, respectively, over the prior year comparable ~~periods, driven~~periods. The decrease in our Money Movement Services segment was primarily byattributable to a decrease in the number of cash transfers processed, which decreased for the three and six months ended June 30, 2023 by 4% and 3%, respectively, from the prior year comparable periods. The decrease in cash transfers was the result of ~~12%~~fewer active accounts within our Consumer Services and ~~13%, respectively.~~B2B Services segments discussed above. The Green Dot Network is a service provider to accountholders in our Consumer Services and B2B Services segments, as well as third-party programs. ~~The decrease in cash transfers was the result of lower active accounts within our Consumer Services and B2B Services segments discussed above.~~ In addition, ~~for~~ the ~~three months ended June 30, 2022, despite a higher~~ number of tax ~~refund transfers~~refunds processed ~~for~~during the ~~comparable periods, the amount of tax processing revenues decreased due to a mix-shift between our professional~~three and ~~consumer tax channels, which generated a lower revenue per refund transfer. For the~~ six months ended June 30, ~~2022, segment~~2023 decreased by 14% and 2%, respectively, compared with the prior year periods, which further reduced revenues ~~were partially offset by an overall increase in~~

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~~our tax processing revenues, driven by an overall increase~~generated from this segment. The decrease in the number of tax refunds processed ~~which increased by 22% over~~during three months ended June 30, 2023 was primarily due to a timing shift between the first ~~half~~and second quarters of the ~~prior year~~ tax season.

Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, decreased by 7% for the three months ended June 30, 2023, and increased by 5% during the ~~three and~~ six months ended June 30, ~~2022 by 206% and 123%, respectively. The increase~~2023, in each case from the prior year comparable periods. Changes in net interest income ~~was~~were attributable to ~~the increase~~fluctuations in the overall size of our cash and investment securities portfolio, ~~as well as an increase~~and the timing of increases in short-term interest rates by the Federal ~~Reserve, which are expected to result in an increase in net~~Reserve. Revenues within our Corporate and Other segment were offset by the portion of interest ~~income compared to 2021 levels for the remainder~~we share with certain BaaS partners.

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Total operating expenses

Our total operating expenses for the three ~~months ended June 30, 2022 were roughly flat relative to the prior year comparable period~~ and ~~decreased by $9.2 million, or 1%, for the~~ six months ended June 30, ~~2022 year-over-year.~~2023 increased $22.3 million, or 7%, and $38.6 million, or 6%, respectively, over the prior year comparable periods. The ~~decrease~~increase in our total operating expenses for the ~~six months ended June 30, 2022~~comparable periods was a result of several factors, including lower sales and marketing expenses principally due to a decrease in sales commissions from lower revenues on products subject to revenue-sharing agreements and reduced marketing spend associated with GO2bank, and lower compensation and benefits expenses principally due to lower employee stock-based compensation and third-party call center support costs within our Consumer Services and B2B Services segments.

Our third-party call center support costs have decreased in part due to a decline in active accounts, but also as a result of our efforts to improve our customer service over the course of 2021. In 2021, we increased our third-party call center support costs to meet the increased demand in our customer service center in an effort to improve our customers' overall experience. Benefits from these improvements with our customers included reduced third-party call center costs in the first half of 2022.

During the three months ended June 30, 2022, we have also seen meaningful improvements in overall transaction losses (a component within other general and administrative expenses) compared to the prior year period, in part as a result of decreases in gross dollar volume across the enterprise, but also from improvements in operational efficiencies to more effectively manage customer disputes and fraud. These decreases were offsetdriven primarily ~~due to~~by an increase in processing expenses within our B2B Services segment associated with the growth of certain BaaS account programs discussed above, and to a lesser extent, an increase in compensation and benefits expenses. Our compensation and benefits expenses increased primarily due to an increase in third-party call center support costs associated with the growth of certain programs also within our B2B Services segment, and higher stock-based compensation expense, primarily due to reversals recorded in the prior year comparable period for certain performance-based equity incentive awards that were not expected to be achieved. These increases in operating expenses for the three and six months ended June 30, 2023 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, as well as reduced marketing spend associated with GO2bank in the first half of the year, and lower other general and administrative expenses. Other general and administrative expenses decreased during the three and six months ended June 30, 2023 primarily due to a $13 million legal settlement ~~agreed~~and certain impairment charges of internal-use software we recorded in the prior year comparable period that in each case did not recur, as well as reductions in professional services fees, partially offset by higher overall transaction losses, attributable in part to an increase in dispute volume associated with ~~Republic Bank as~~tax refund deposits.

Income taxes

Our income tax expense for the three and six months ended June 30, 2023 decreased by $3.1 million, or 64%, and $4.9 million, or 29%, respectively, from the prior year comparable periods. The decrease in our income tax expense was primarily due to a ~~result~~decrease in our taxable income, partially offset by a higher effective tax rate. Our effective tax rate for the six months ended June 30, 2023 was 24.8%, compared to 24.0% for the same period in the prior year. The increase in our effective tax rate was primarily due to an increase in state income taxes expense, net of federal benefits, and an increase in tax expense associated with shortfalls from stock-based compensation. These increases were partially offset by 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 Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation.

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. The IRA contains a number of revisions to the IRC, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022. To date, these tax law changes have had no immediate effect and we do not expect that they will have a material impact on our ~~inability to consummate the Tax Refund Solutions acquisition (a component within other general~~results of operations in future periods.

Outlook and ~~administrative expenses).~~Other Trends Affecting Our Business

We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial ~~results in 2022 and beyond.~~results. Our growth-oriented investments are focused on ~~increasing~~cost-effectively re-engaging in strategic marketing initiatives in support of our GO2bank product ~~for the remainder of the year~~when it is effective to do so and building a modern and scalable core banking and card management platform that reduces our reliance on third-party processors and increases our ability to innovate and preserve margins. To support our efforts in building a modern banking platform, ~~we expect~~ our ~~software license and~~ hosting costs and software licenses, a component of other general and administrative expenses, and salary and wage expenses, a component of compensation and benefits expenses, have increased and we expect will continue to increase ~~year-over-year.~~year-over-year in 2023. We also expect to continue to incur duplicative processing and other costs associated with the implementation of our modern banking platform as we expect to continue to operate redundant platforms until our technology transformation is completed. Once the implementation is completed, we expect a portion of our processing expenses to reduce and have a favorable impact to our margins. In addition, while we expect to continue to invest in and incur additional expenses in connection with our anti-money laundering ("AML") program, including improvements to our compliance controls, policies and ~~procedures.~~

~~Income taxes~~

~~Our income tax expense for~~procedures throughout 2023, we believe these investments will ultimately help mitigate and reduce our fraud losses over the six months ended June 30, 2022 increased $1.4 million, or 9%, on a year-over-year basis. The increase in our income tax expense was primarily due to an increase in our taxable income and an increase in our effective tax rate. Our effective tax rate for the six months ended June 30, 2022 was 24.0%, compared to 23.5% for the prior year period. The increase in our effective rate was primarily due to a decline in excess tax benefits from stock-based compensation, partially offset by a decrease in state income taxes expense and a reduction in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation.

~~COVID-19 Update~~

The health and safety of our employees remains a top priority for our business and in the U.S., we have closed most of our U.S. leased office locations and shifted to a remote working strategy. However, we will be required to continue making our contractual payments until our operating leases are formally terminated or expire. As a result of the resurgence of the COVID-19 pandemic’s Omicron variant in China during the first quarter of 2022, we closed our offices again in China and shifted to a remote workforce strategy in China. While we have resumed normal operations in China, it is possible that we may continue to experience similar issues in the future due to the pandemic.

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long term.

In response to the economic impact caused by COVID-19, the Federal Reserve announced reductions in short-term interest rates in March 2020, which in recent years has impacted the yields on our cash and investment balances. ~~Recently,~~Since then, the Federal Reserve has announced ~~several~~a number of increases in the federal funds rate, resulting in a current range ~~currently~~ of ~~2.25%~~5.25% to ~~2.50%~~5.50%. It is widely expected that the Federal Reserve will continue to ~~increase~~maintain elevated interest rates ~~in 2022 to control~~until the effects of economic ~~inflation.~~inflation are abated. 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.

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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 we expect will continue to have a negative impact on our consolidated financial statements in 2023 compared to 2022.

Based on the overall macro-economic environment, expected interest rate impacts, our commitment to making growth-oriented investments and the timing of the related expense savings from our technology transformation, the non-renewals in our Consumer Services and B2B Services segments, and trends occurring within our retail channel in our Consumer Services segment, our consolidated operating profit has declined and we expect it will continue to decline year-over-year in fiscal year 2023.

Further, the duration and magnitude of the continuing effects of ~~COVID-19~~macro-economic factors remain uncertain and dependent on various factors. See Part II, Item 1A, ~~Risk~~"Risk Factors,," for an additional discussion of ~~risk~~risks related to ~~the COVID-19 pandemic.~~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 June 30, Six Months Ended June 30,
2022 2021 Change % 2022 2021 Change %
(In millions, except percentages)
Gross Dollar Volume $ 17,356 $ 17,399 $ (43) (0.2) % $ 34,792 $ 38,065 $ (3,273) (8.6) %
Number of Active Accounts* 4.61 6.03 (1.42) (23.5) % n/a n/a n/a n/a
Purchase Volume $ 6,760 $ 8,870 $ (2,110) (23.8) % $ 13,952 $ 19,315 $ (5,363) (27.8) %
Cash Transfers 9.00 10.19 (1.19) (11.7) % 17.87 20.51 (2.64) (12.9) %
Tax Refunds Processed 4.48 4.15 0.33 8.0 % 14.09 11.59 2.5 21.6 %


	Three Months Ended June 30,								Six Months Ended June 30,
	2023		2022		Change		%		2023		2022		Change		%
	(In millions, except percentages)
Gross dollar volume	$	24,724	$	17,356	$	7,368	42.5	%	$	48,013	$	34,792	$	13,221	38.0	%
Number of active accounts*	3.71		4.61		(0.9)		(19.5)	%	n/a		n/a		n/a		n/a
Purchase volume	$	5,734	$	6,760	$	(1,026)	(15.2)	%	$	11,879	$	13,952	$	(2,073)	(14.9)	%
Number of cash transfers	8.66		9.00		(0.34)		(3.8)	%	17.36		17.87		(0.51)		(2.9)	%
Number of tax refunds processed	3.87		4.48		(0.61)		(13.6)	%	13.78		14.09		(0.31)		(2.2)	%

* Represents the number of active accounts as of June 30, ~~2022~~2023 and ~~2021,~~2022, 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 account holder 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 account holders 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 account holders. 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 platform 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 Simply Paid 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.

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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 cardholders when they withdraw money at certain ATMs in accordance with the terms and conditions in our cardholder 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 cardholders. 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 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 cardholder 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 cardholders 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 (which we have previously referred to as processing and settlement services revenues) consist of cash transfer revenues, tax refund processing service revenues, Simply Paid 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 Simply Paid 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 and on the mix of cardholder 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.

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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

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and distributing card packages, placards and promotional materials to our retail distributors and personalized debit 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 Simply Paid 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 numbers of disbursements made.

Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional ~~service~~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

Our income tax expense consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services. As discussed above, while the IRA includes a number of revisions to the IRC, to date, these tax law revisions have had no immediate effect and we do not expect that they will have a material impact on our results of operations going forward.

Critical Accounting Estimates

Reference is made 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, ~~2021.~~2022.

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Comparison of Three-Month Periods Ended June 30, ~~2022~~2023 and ~~2021~~2022

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 June 30,									Three Months Ended June 30,
		2022				2021					2023				2022
		Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues			Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues
		(In thousands, except percentages)									(In thousands, except percentages)
Operating revenues:	Operating revenues:									Operating revenues:
Card revenues and other fees	Card revenues and other fees	$	218,574	60.3	%	$	197,937	53.6	%	Card revenues and other fees	$	242,107	66.2	%	$	218,574	60.3	%
Cash processing revenues	Cash processing revenues	57,467		15.8		66,825		18.1		Cash processing revenues	53,846		14.7		57,467		15.8
Interchange revenues	Interchange revenues	76,038		21.0		101,115		27.4		Interchange revenues	59,967		16.4		76,038		21.0
Interest income, net	Interest income, net	10,690		2.9		3,496		0.9		Interest income, net	9,956		2.7		10,690		2.9
Total operating revenues	Total operating revenues	$	362,769	100.0	%	$	369,373	100.0	%	Total operating revenues	$	365,876	100.0	%	$	362,769	100.0	%

Card Revenues and Other Fees — Card revenues and other fees totaled ~~$218.6~~$242.1 million for the three months ended June 30, ~~2022,~~2023, an increase of ~~$20.7~~$23.5 million, or ~~10.5%~~10.8%, 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. In addition, card revenues and other fees also increased due to customer adoption of optional features launched on our card programs, such as our overdraft protection ~~program, as well as an increase in gift card breakage revenue relative to the prior year period.~~program. These increases were partially offset by decreases in cardholder fees, such as monthly maintenance fees, ATM fees and ~~ATM~~new card fees for the reasons discussed above in ~~our~~ "Overview."

Cash Processing Revenues — Cash processing revenues totaled ~~$57.5~~$53.8 million for the three months ended June 30, ~~2022,~~2023, a decrease of ~~$9.3~~$3.7 million, or ~~14%~~6%, from the comparable prior year period. The decrease ~~is primarily~~was due to lower tax processing revenues as a result of a 14% decrease in the number of tax refunds processed, and lower cash transfer revenues as a result of a decline of 4% in the number of cash transfers processed ~~as a result of lower~~due to fewer active accounts within our Consumer Services and B2B Services segments ~~and lower overall tax processing revenues. Despite a higher~~discussed above in "Overview." The decrease in the number of tax ~~refund transfers~~refunds processed ~~for the comparable periods, the amount of tax processing revenues decreased~~during three months ended June 30, 2023 was primarily due to a ~~mix-shift~~timing shift between ~~our professional~~the first and ~~consumer~~second quarters of the tax ~~channels, which generated a lower revenue per refund transfer.~~season.

Interchange Revenues — Interchange revenues totaled ~~$76.0~~$60.0 million for the three months ended June 30, ~~2022,~~2023, a decrease of ~~$25.1~~$16.0 million, or ~~25%~~21%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 15% during the three months ended June 30, ~~2022,~~2023, as ~~the~~well as a lower effective interchange rate earned ~~remained consistent~~ for the comparable periods. 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, ~~amongst~~among other factors.

Interest Income, net — Net interest income totaled ~~$10.7~~$10.0 million for the three months ended June 30, ~~2022, an increase~~2023, a decrease of ~~$7.2~~$0.7 million, or ~~206%~~7%, from the comparable prior year period. The ~~increase~~decrease in net interest income earned was the result of ~~an increase~~a decrease in the overall size of our cash and investment securities ~~portfolio, funded primarily from the use~~portfolio. The reduction in size of our ~~cardholder deposit account programs. In addition,~~interest-bearing assets was partially offset by increases in short-term interest rates, as the Federal Reserve has instituted several increases in ~~interest~~short-term rates inover the course of 2022 and 2023 to manage the effects of ~~recent economic inflation, which has also increased the amount of interest income we earn on our deposits and recent investments.~~inflation.

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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 June 30,									Three Months Ended June 30,
		2022				2021					2023				2022
		Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues			Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues
		(In thousands, except percentages)									(In thousands, except percentages)
Operating expenses:	Operating expenses:									Operating expenses:
Sales and marketing expenses	Sales and marketing expenses	$	77,376	21.3	%	$	96,507	26.1	%	Sales and marketing expenses	$	62,823	17.2	%	$	77,376	21.3	%
Compensation and benefits expenses	Compensation and benefits expenses	57,611		15.9		59,984		16.2		Compensation and benefits expenses	64,985		17.8		57,611		15.9
Processing expenses	Processing expenses	112,388		31.0		94,316		25.5		Processing expenses	153,126		41.9		112,388		31.0
Other general and administrative expenses	Other general and administrative expenses	91,455		25.2		86,763		23.5		Other general and administrative expenses	80,156		21.9		91,455		25.2
Total operating expenses	Total operating expenses	$	338,830	93.4	%	$	337,570	91.3	%	Total operating expenses	$	361,090	98.8	%	$	338,830	93.4	%

Sales and Marketing Expenses — Sales and marketing expenses totaled ~~$77.4~~$62.8 million for the three months ended June 30, ~~2022,~~2023, a decrease of ~~$19.1~~$14.6 million, or ~~20%~~19% 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, and ~~a decrease in marketing~~lower supply chain expenses ~~as a result of our strategic decision to reduce marketing spend on GO2bank during the first half of the year~~ due to ~~higher than expected acquisition costs per account.~~a decline in the number of active accounts over the comparable prior year period and the non-renewal of certain partner programs previously announced.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled ~~$57.6~~$65.0 million for the three months ended June 30, ~~2022, a decrease~~2023, an increase of ~~$2.4~~$7.4 million or 4%13% from the comparable prior year period. The ~~decrease~~increase was primarily ~~due to lower employee stock-based compensation~~ driven by ~~fluctuations in the expected achievement of certain performance-based awards and a reduction~~an increase in third-party call center support costs ~~due to a decline in active accounts~~associated with the growth of certain programs within our B2B Services segment, and ~~our efforts to improve customer service over the course of 2021. These decreases were partially offset by~~ an increase in ~~salary and wage expenses and related benefits as a result of our growth-oriented initiatives discussed above~~stock-based compensation expense, primarily due to reversals recorded in ~~our "Overview."~~the prior year comparable period for certain performance-based equity incentive awards that were not expected to be achieved.

Processing Expenses — Processing expenses totaled ~~$112.4~~$153.1 million for the three months ended June 30, ~~2022,~~2023, an increase of ~~$18.1~~$40.7 million or ~~19%~~36% from the comparable prior year period. This increase was principally due to growth in certain BaaS account programs within our B2B Services segment and overall volume of transactions processed through our consolidated platform.

Other General and Administrative Expenses — Other general and administrative expenses totaled ~~$91.5~~$80.2 million for the three months ended June 30, ~~2022, an increase~~2023, a decrease of ~~$4.7~~$11.3 million or 5%12%, from the comparable prior year period. The ~~increase~~decrease in other general and administrative expenses was primarily due to ~~the~~a $13 million legal settlement ~~associated with our inability to consummate~~and certain impairment charges of internal-use software in the ~~Tax Refund Solutions acquisition,~~prior year period that in each case did not recur, as well as reductions in professional services fees. These decreases were partially offset by ~~decreases~~an increase in overall transaction losses, ~~as a result of lower gross dollar~~attributable in part to an increase in dispute volume ~~in our Consumer Services segment and improvements in operational efficiencies over how we manage customer disputes and fraud.~~associated with tax refund deposits.

Income Taxes

The following table presents a breakdown of our effective tax rate among federal, state, and other:


		Three Months Ended June 30,					Three Months Ended June 30,
		2022		2021			2023		2022
U.S. federal statutory tax rate	U.S. federal statutory tax rate	21.0	%	21.0	%	U.S. federal statutory tax rate	21.0	%	21.0	%
State income taxes, net of federal tax benefit	State income taxes, net of federal tax benefit	(0.7)		1.5		State income taxes, net of federal tax benefit	15.2		(0.7)
General business credits	General business credits	(1.8)		(1.7)		General business credits	(0.5)		(1.8)
Employee stock-based compensation		2.9		0.3
Stock-based compensation						Stock-based compensation	23.5		2.9
IRC 162(m) limitation	IRC 162(m) limitation	1.6		4.5		IRC 162(m) limitation	5.0		1.6
Bank owned life insurance						Bank owned life insurance	1.6		(0.7)
Nondeductible expenses	Nondeductible expenses	0.9		(0.2)		Nondeductible expenses	9.1		0.9

Other	Other	0.6		(0.1)		Other	0.2		1.3
Effective tax rate	Effective tax rate	24.5	%	25.3	%	Effective tax rate	75.1	%	24.5	%

Our income tax expense totaled ~~$4.9~~$1.7 million for the three months ended June 30, ~~2022,~~2023, a decrease of ~~$3.6~~$3.1 million or ~~43%~~64% from the prior year comparable period, primarily due to a decrease in our taxable ~~income and our effective tax rate.~~income. The ~~decrease~~increase in our effective tax rate for the three months ended June 30, ~~2022~~2023 as compared to the three months ended

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~~the three months ended~~ June 30, ~~2021 is~~2022 was primarily due to ~~a decrease~~an increase in state income taxes, net of federal benefits, an increase in tax expense ~~and a reduction~~associated with shortfalls from stock-based compensation, an increase in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive ~~compensation.~~compensation, and nondeductible expenses. These ~~decreases~~increases to our effective tax rate were partially offset by the ~~decline in excess~~impact of general business credits and tax benefits from ~~stock-based compensation and higher nondeductible expenses during the quarter.~~bank owned life insurance policies.

The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.

Comparison of ~~Six-Month Periods~~Six Months Ended June 30, 2023 and 2022 an~~d 2021~~

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:


		Six Months Ended June 30,									Six Months Ended June 30,
		2022				2021					2023				2022
		Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues			Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues
		(In thousands, except percentages)									(In thousands, except percentages)
Operating revenues:	Operating revenues:									Operating revenues:
Card revenues and other fees	Card revenues and other fees	$	431,402	56.5	%	$	383,949	50.3	%	Card revenues and other fees	481,973		61.6	%	431,402		56.5	%
Cash processing revenues	Cash processing revenues	157,495		20.6		157,740		20.7		Cash processing revenues	155,669		19.9		157,495		20.6
Interchange revenues	Interchange revenues	154,894		20.3		212,341		27.8		Interchange revenues	123,982		15.9		154,894		20.3
Interest income, net	Interest income, net	19,595		2.6		8,829		1.2		Interest income, net	20,632		2.6		19,595		2.6
Total operating revenues	Total operating revenues	$	763,386	100.0	%	$	762,859	100.0	%	Total operating revenues	$	782,256	100.0	%	$	763,386	100.0	%

Card Revenues and Other Fees — Card revenues and other fees totaled ~~$431.4~~$482.0 million for the six months ended June 30, ~~2022,~~2023, an increase of ~~$47.5~~$50.6 million, or 12%, from the comparable prior year period. This increase was driven principally by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, ~~2022~~2023 and ~~2021—~~2022—Operating Revenues—Card Revenues and Other Fees."

Cash Processing Revenues — Cash processing revenues totaled ~~$157.5~~$155.7 million for the six months ended June 30, ~~2022, and remained consistent~~2023, a decrease of $1.8 million, or 1%, from the comparable prior year period. Cash processing revenues decreased as a result of a decline in the number of cash transfers processed, which decreased by 3% due to ~~lower~~declines in the number of active accounts within our Consumer Services and B2B Services segments over the comparable prior year period, partially offset by an increase in tax refund processing revenues. Despite a decline in the number of tax refunds ~~processed.~~processed, which decreased by 2% for the comparable periods, our total tax processing revenues increased modestly for the first half of the year due to additional ancillary tax services offered to taxpayers.

Interchange Revenues — Interchange revenues totaled ~~$154.9~~$124.0 million for the six months ended June 30, ~~2022,~~2023, a decrease of ~~$57.4~~$30.9 million, or ~~27%~~20%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume ~~during the six months ended~~and effective interchange rate earned as discussed under “Comparison of Three-Month Periods Ended June 30, ~~2022.~~2023 and 2022—Operating Revenues—Interchange Revenues."

Interest Income, net — Net interest income totaled ~~$19.6~~$20.6 million for the six months ended June 30, ~~2022,~~2023, an increase of ~~$10.8~~$1.0 million, or ~~123%~~5%, from the comparable prior year period. This increase was driven ~~principally~~ by increases in short-term interest rates for the ~~same factors~~comparable period, as discussed ~~above~~ under “Comparison of Three-Month Periods Ended June 30, ~~2022~~2023 and ~~2021—~~2022—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:


		Six Months Ended June 30,									Six Months Ended June 30,
		2022				2021					2023				2022
		Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues			Amount		% of Total Operating Revenues		Amount		% of Total Operating Revenues
		(In thousands, except percentages)									(In thousands, except percentages)
Operating expenses:	Operating expenses:									Operating expenses:
Sales and marketing expenses	Sales and marketing expenses	$	160,902	21.1	%	$	215,410	28.2	%	Sales and marketing expenses	138,035		17.6	%	160,902		21.1	%
Compensation and benefits expenses	Compensation and benefits expenses	123,875		16.2		134,951		17.7		Compensation and benefits expenses	133,766		17.1		123,875		16.2
Processing expenses	Processing expenses	224,480		29.4		191,985		25.2		Processing expenses	298,180		38.1		224,480		29.4
Other general and administrative expenses	Other general and administrative expenses	178,598		23.4		154,725		20.3		Other general and administrative expenses	156,494		20.0		178,598		23.4
Total operating expenses	Total operating expenses	$	687,855	90.1	%	$	697,071	91.4	%	Total operating expenses	$	726,475	92.8	%	$	687,855	90.1	%

Sales and Marketing Expenses — Sales and marketing expenses totaled ~~$160.9~~$138.0 million for the six months ended June 30, ~~2022,~~2023, a decrease of ~~$54.5~~$22.9 million, or ~~25%~~14% from the comparable prior year period. This decrease was driven primarily by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Expenses—Sales and Marketing Expenses." In addition, sales and marketing expenses decreased further as a result our strategic decision in the short-term to reduce marketing spend on GO2bank during the first half of the year in response to market trends.

Compensation and Benefits Expenses — Compensation and benefits expenses totaled $133.8 million for the six months ended June 30, 2023, an increase of $9.9 million, or 8% from the comparable prior year period. The increase was primarily due to an increase in third-party call center support costs associated with the growth of certain programs within our B2B Services segment, as well as higher sales and wages and related expenses, in part due to our growth-oriented investments discussed in our "Overview."

Processing Expenses — Processing expenses totaled $298.2 million for the six months ended June 30, 2023, an increase of $73.7 million, or 33% from the comparable prior year period. This increase was driven by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2023 and 2022—Operating Expenses—Processing Expenses."

Other General and Administrative Expenses — Other general and administrative expenses totaled $156.5 million for the six months ended June 30, 2023, a decrease of $22.1 million, or 12%, from the comparable prior year period. This decrease was driven by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, ~~2022~~2023 and ~~2021—~~2022—Operating Expenses—~~Sales and Marketing Expenses."~~

~~Compensation and Benefits Expenses~~ — Compensation and benefits expenses totaled $123.9 million for the six months ended June 30, 2022, a decrease of $11.1 million or 8% from the comparable prior year period. The decrease was primarily due to a reduction in third-party call center support costs due to a decline in active accounts and our efforts to improve customer service over the course of 2021, as well as lower employee stock-based compensation driven by fluctuations in the expected achievement of certain performance-based awards for the comparable periods.

~~Processing Expenses~~ — Processing expenses totaled $224.5 million for the six months ended June 30, 2022, an increase of $32.5 million or 17% from the comparable prior year period. This increase was driven by the same factors as discussed above under “Comparison of Three-Month Periods Ended June 30, 2022 and 2021—Operating Expenses—Processing Expenses."

Other General and Administrative ~~Expenses~~Expenses." — Other general and administrative expenses totaled $178.6 million for the six months ended June 30, 2022, an increase of $23.9 million or 15%, from the comparable prior year period. This increase was primarily due to the $13 million legal settlement associated with our inability to consummate the Tax Refund Solutions acquisition, as well as higher professional fees and software license expenses as a result of our investments in our modern banking platform and higher impairment charges associated with certain capitalized internal-use software. These increases were partially offset by lower telephone and communication expenses as a result of decreases in third-party call center support.

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Income Taxes

The following table presents a breakdown of our effective tax rate among federal, state, and other:


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
U.S. federal statutory tax rate	U.S. federal statutory tax rate	21.0	%	21.0	%	U.S. federal statutory tax rate	21.0	%	21.0	%
State income taxes, net of federal tax benefit	State income taxes, net of federal tax benefit	0.8		1.1		State income taxes, net of federal tax benefit	1.5		0.8
General business credits	General business credits	(1.7)		(1.9)		General business credits	(3.3)		(1.7)
Employee stock-based compensation		1.7		(2.9)
Stock-based compensation						Stock-based compensation	4.7		1.7
IRC 162(m) limitation	IRC 162(m) limitation	2.3		6.4		IRC 162(m) limitation	1.8		2.3
Bank owned life insurance						Bank owned life insurance	(1.4)		(0.7)
Nondeductible expenses	Nondeductible expenses	0.4		0.1		Nondeductible expenses	1.0		0.4

Other	Other	(0.5)		(0.3)		Other	(0.5)		0.2
Effective tax rate	Effective tax rate	24.0	%	23.5	%	Effective tax rate	24.8	%	24.0	%

Our income tax expense totaled ~~$17.0~~$12.1 million for the six months ended June 30, ~~2022, an increase~~2023, a decrease of ~~$1.4~~$4.9 million or 9%29% from the prior year comparable period primarily due to a decrease in our taxable income, partially offset by an increase in ~~taxable income and~~ our effective tax rate. The increase in the effective tax rate for the six months ended June 30, ~~2022 as compared to~~2023 from the ~~six months ended June 30, 2021 is~~prior year comparable period was primarily due to ~~a decline in excess tax benefits from stock-based compensation and~~ an increase in state income taxes ~~expense.~~expense, net of federal benefits, and an increase in tax expense associated with shortfalls from stock-based compensation. These increases were partially offset by the impact of general business credits, tax benefits from bank owned life

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insurance policies, and a reduction in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensation.

The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.

Segment Results

Consumer Services

The results of operations and key metrics of our Consumer Services segment for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
		2022		2021		Change		%		2022		2021		Change		%			2023		2022		Change		%		2023		2022		Change		%
		(In thousands, except percentages)																	(In thousands, except percentages)
Financial Results	Financial Results																	Financial Results
Segment revenues	Segment revenues	$	150,959	$	182,093	$	(31,134)	(17.1)	%	$	309,716	$	366,434	$	(56,718)	(15.5)	%	Segment revenues	$	129,091	$	150,959	$	(21,868)	(14.5)	%	$	268,924	$	309,716	$	(40,792)	(13.2)	%
Segment expenses	Segment expenses	90,583		126,303		(35,720)		(28.3)	%	195,052		257,117		(62,065)		(24.1)	%	Segment expenses	84,819		90,583		(5,764)		(6.4)	%	171,900		195,052		(23,152)		(11.9)	%
Segment profit	Segment profit	$	60,376	$	55,790	$	4,586	8.2	%	$	114,664	$	109,317	$	5,347	4.9	%	Segment profit	$	44,272	$	60,376	$	(16,104)	(26.7)	%	$	97,024	$	114,664	$	(17,640)	(15.4)	%

Key Metrics	Key Metrics	(In millions, except percentages)																Key Metrics	(In millions, except percentages)
Gross Dollar Volume		$	5,715	$	8,188	$	(2,473)	(30.2)	%	$	12,336	$	18,344	$	(6,008)	(32.8)	%
Active Accounts*		2.78		3.97		(1.19)		(30.0)	%	n/a		n/a		n/a		n/a
Direct Deposit Active Accounts*		0.67		0.92		(0.25)		(27.2)	%	n/a		n/a		n/a		n/a
Purchase Volume		$	4,588	$	6,455	$	(1,867)	(28.9)	%	$	9,605	$	13,593	$	(3,988)	(29.3)	%
Gross dollar volume																		Gross dollar volume	$	5,122	$	5,715	$	(593)	(10.4)	%	$	10,799	$	12,336	$	(1,537)	(12.5)	%
Number of active accounts*																		Number of active accounts*	2.35		2.78		(0.43)		(15.5)	%	n/a		n/a		n/a		n/a
Direct deposit active accounts*																		Direct deposit active accounts*	0.59		0.67		(0.08)		(11.9)	%	n/a		n/a		n/a		n/a
Purchase volume																		Purchase volume	$	3,984	$	4,588	$	(604)	(13.2)	%	$	8,328	$	9,605	$	(1,277)	(13.3)	%

* Represents total number of active and direct deposit active accounts as of June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

As additional supplemental information, our key metrics within our Consumer Services segment is presented on a quarterly basis as follows:

2022 2021
Q2 Q1 Q4 Q3 Q2 Q1
(In millions)
Key Metrics
Gross dollar volume $ 5,715 $ 6,621 $ 6,300 $ 6,811 $ 8,188 $ 10,156
Number of active accounts 2.78 3.04 3.10 3.38 3.97 4.07
Direct deposit active accounts 0.67 0.69 0.76 0.83 0.92 0.97
Purchase volume $ 4,588 $ 5,017 $ 4,881 $ 5,166 $ 6,455 $ 7,138

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	2023				2022
	Q2		Q1		Q4		Q3		Q2		Q1
	(In millions)
Key Metrics
Gross dollar volume	$	5,122	$	5,677	$	5,426	$	5,495	$	5,715	$	6,621
Number of active accounts	2.35		2.41		2.37		2.51		2.78		3.04
Direct deposit active accounts	0.59		0.60		0.63		0.66		0.67		0.69
Purchase volume	$	3,984	$	4,344	$	4,229	$	4,302	$	4,588	$	5,017

Segment revenues within Consumer Services for the three and six months ended June 30, ~~2022~~2023 decreased ~~$31.1~~$21.9 million, or ~~17%~~14%, and ~~$56.7~~$40.8 million, or ~~15%~~13%, respectively, ~~compared to~~from the prior year comparable periods, while our segment expenses for the three and six months ended June 30, ~~2022~~2023 decreased ~~$35.7~~$5.8 million, or ~~28%,~~6% and ~~$62.1~~$23.2 million, or ~~24%~~12%, respectively.

Our gross dollar volume, ~~purchase volume,~~ total number of active accounts, ~~and~~ direct deposit active accounts and purchase volume decreased during the three months ended June 30, ~~2022~~2023 by ~~30%~~10%, ~~29%~~15%, ~~30%~~12%, and ~~27%,~~13% respectively, primarily from each of the ~~comparable prior~~several factors discussed in our "Overview," including our strategic decision in the short-term to reduce marketing spend on GO2bank during the first half of the year ~~period primarily due~~in response to market trends and observed changes in consumer traffic within our retail locations, both of which have negatively impacted account acquisition, as well as the ~~timing~~non-renewal of ~~stimulus payments and other federal benefits received by~~one of our ~~cardholders in 2021. No such economic stimulus packages have been enacted to date in 2022. For similar reasons,~~partner programs previously announced. Our gross dollar volume and purchase volume decreased ~~for~~year-over-year by similar levels during the six months ended June 30, ~~2022 from the prior year comparable period.~~2023.

Our monthly maintenance fees, ATM revenue and interchange revenues decreased as a result of the decreases in each of our key metrics stated above. These decreases were partially offset by ~~increasing~~continued customer adoption of optional features ~~recently launched~~ on our card programs, such as our overdraft protection ~~program, as well as a favorable decrease in the estimated accrual of cash back rewards, which we record as a reduction to revenue.~~program.

Consumer Services expenses decreased for the three and six months ended June 30, ~~2022~~2023 from the comparable prior year ~~period~~periods due to several factors, including a decrease in sales commissions from lower revenues on products subject to tiered revenue-sharing agreements, a decrease in third-party call center support costs in part due to a decline in active accounts, but also as a result of our efforts to improve our customer service over the course of 2021, a decrease in transactions losses due to lower gross dollar volume and improvement in loss rates, and a decrease in marketing ~~and supply chain expenses~~spend on

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GO2bank as discussed above, partially offset by an increase in ~~connection~~transactions losses that was attributable in part to an increase in dispute volume associated with ~~GO2bank.~~ tax refund deposits.

As a result ~~despite lower revenues,~~of these multiple factors, our segment profit ~~increased~~decreased for the three and six months ended June 30, ~~2022~~2023 by 8%approximately 27% and 5%15%, respectively.

B2B Services

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change % 2022 2021 Change %
(In thousands, except percentages)
Financial Results
Segment revenues $ 143,514 $ 112,589 $ 30,925 27.5 % $ 277,414 $ 218,564 $ 58,850 26.9 %
Segment expenses 120,739 94,415 26,324 27.9 % 232,375 182,857 49,518 27.1 %
Segment profit $ 22,775 $ 18,174 $ 4,601 25.3 % $ 45,039 $ 35,707 $ 9,332 26.1 %
Key Metrics (In millions, except percentages)
Gross Dollar Volume $ 11,641 $ 9,211 $ 2,430 26.4 % $ 22,456 $ 19,721 $ 2,735 13.9 %
Active Accounts* 1.83 2.06 (0.23) (11.2) % n/a n/a n/a n/a
Purchase Volume $ 2,172 $ 2,415 $ (243) (10.1) % $ 4,347 $ 5,722 $ (1,375) (24.0) %
The results of operations and key metrics of our B2B Services segment for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,								Six Months Ended June 30,
	2023		2022		Change		%		2023		2022		Change		%
	(In thousands, except percentages)
Financial Results
Segment revenues	$	180,652	$	143,514	$	37,138	25.9	%	$	351,944	$	277,414	$	74,530	26.9	%
Segment expenses	162,946		120,739		42,207		35.0	%	312,019		232,375		79,644		34.3	%
Segment profit	$	17,706	$	22,775	$	(5,069)	(22.3)	%	$	39,925	$	45,039	$	(5,114)	(11.4)	%

Key Metrics	(In millions, except percentages)
Gross dollar volume	$	19,602	$	11,641	$	7,961	68.4	%	$	37,214	$	22,456	$	14,758	65.7	%
Number of active accounts*	1.36		1.83		(0.47)		(25.7)	%	n/a		n/a		n/a		n/a
Purchase volume	$	1,750	$	2,172	$	(422)	(19.4)	%	$	3,551	$	4,347	$	(796)	(18.3)	%

* Represents total number of active accounts as of June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

As additional supplemental information, our key metrics within our B2B Services segment is presented on a quarterly basis as follows:


		2022				2021									2023				2022
		Q2		Q1		Q4		Q3		Q2		Q1			Q2		Q1		Q4		Q3		Q2		Q1
		(In millions)													(In millions)
Key Metrics	Key Metrics									Key Metrics
Gross dollar volume	Gross dollar volume	$	11,641	$	10,815	$	10,053	$	9,593	$	9,211	$	10,510	Gross dollar volume	$	19,602	$	17,612	$	14,584	$	13,187	$	11,641	$	10,815
Number of active accounts		1.83		1.89		1.97		1.99		2.06		2.28
Number of active accounts*														Number of active accounts*	1.36		1.43		1.78		1.82		1.83		1.89
Purchase volume	Purchase volume	$	2,172	$	2,175	$	2,184	$	2,190	$	2,415	$	3,307	Purchase volume	$	1,750	$	1,801	$	2,063	$	2,141	$	2,172	$	2,175

* Represents total number of active accounts as of the end of each quarter.

Segment revenues within our B2B Services for the three and six months ended June 30, ~~2022~~2023 increased ~~$30.9~~$37.1 million, or ~~27%,~~25.9% and ~~$58.9~~$74.5 million, or 27%, respectively, compared to the prior year periods, while our segment expenses for the three and six months ended June 30, ~~2022~~2023 increased ~~$26.3~~$42.2 million, or ~~28%~~35.0%, and ~~$49.5~~$79.6 million, or ~~27%~~34%, respectively.

Our ~~total~~ gross dollar volume during the three and six months ended June 30, ~~2022~~2023 increased ~~26%~~68% and ~~14%~~66%, respectively, from the comparable prior year periods, ~~as we~~despite the number of active accounts within this segment decreasing by 26% year-over-year. We have continued to experience organic growth from both new

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and existing users concentrated in certain BaaS programs ~~as the demand for digital payments continues. Total~~that tend to yield higher gross dollar volume ~~increased despite the number of~~per active accounts decreasing within this segment by 11% year-over-year and purchase volume decreasing for the three and six months ended June 30, 2022 by approximately 10% and 24% respectively, from the comparable prior year periods.

~~Overall, many of our BaaS partners within our B2B Services segment were impacted by similar trends seen in our Consumer Services segment, however,~~user. The growth in gross dollar volume from ~~certain~~these programs resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS ~~partners, despite a lower number of active accounts and lower purchase volume.~~partners. This increase was partially offset by a decrease in active accounts and the associated purchase volume, which decreased during the three and six months ended 19% and 18%, respectively, due to the non-renewals of certain BaaS partners as previously disclosed, resulting in a lower amount of interchange revenue earned ~~associated with~~from the ~~decrease in purchase volume.~~prior year comparable periods.

B2B Services expenses increased for the three and six months ended June 30, ~~2022~~2023 from the comparable prior year ~~period,~~periods, principally due to higher processing expenses with the growth of certain BaaS account programs and higher ~~overall transaction losses~~third-party call center support costs as a result of the increase in gross dollar volume.

This segment also experienced margin compression because certain BaaS partnerships were structured based on a fixed profit and, therefore, our segment profit for certain arrangements will not scale with revenue growth.

~~During the second quarter~~

Table of 2022, we also engaged in contract renewal negotiations with several BaaS partners, but after extensive negotiations, could not agree upon terms that would best serve the long-term interests of both us and our BaaS partners. We expect these non-renewals to have a modest impact on our B2B Services segment key metrics and financial results in the second half of 2022. BaaS is our newest channel of business and we remain focused on investing in it and exploring new partnership agreements moving forward.Contents

Money Movement Services

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change % 2022 2021 Change %
(In thousands, except percentages)
Financial Results
Segment revenues $ 54,143 $ 66,019 $ (11,876) (18.0) % $ 151,459 $ 156,386 $ (4,927) (3.2) %
Segment expenses 23,992 27,827 (3,835) (13.8) % 59,848 69,380 (9,532) (13.7) %
Segment profit $ 30,151 $ 38,192 $ (8,041) (21.1) % $ 91,611 $ 87,006 $ 4,605 5.3 %
Key Metrics (In millions, except percentages)
Cash Transfers 9.00 10.19 (1.19) (11.7) % 17.87 20.51 (2.64) (12.9) %
Tax Refunds Processed 4.48 4.15 0.33 8.0 % 14.09 11.59 2.5 21.6 %
The results of operations and key metrics of our Money Movement Services segment for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,								Six Months Ended June 30,
	2023		2022		Change		%		2023		2022		Change		%
	(In thousands, except percentages)
Financial Results
Segment revenues	$	49,974	$	54,143	$	(4,169)	(7.7)	%	$	148,215	$	151,459	$	(3,244)	(2.1)	%
Segment expenses	20,200		23,992		(3,792)		(15.8)	%	57,415		59,848		(2,433)		(4.1)	%
Segment profit	$	29,774	$	30,151	$	(377)	(1.3)	%	$	90,800	$	91,611	$	(811)	(0.9)	%

Key Metrics	(In millions, except percentages)
Number of cash transfers	8.66		9.00		(0.34)		(3.8)	%	17.36		17.87		(0.51)		(2.9)	%
Number of tax refunds processed	3.87		4.48		(0.61)		(13.6)	%	13.78		14.09		(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:


		2022		2021					2023		2022
		Q2	Q1	Q4	Q3	Q2	Q1		Q2	Q1	Q4	Q3	Q2	Q1
		(In millions)							(In millions)
Key Metrics	Key Metrics					Key Metrics
Number of cash transfers	Number of cash transfers	9.00	8.87	9.95	10.05	10.19	10.32	Number of cash transfers	8.66	8.70	9.03	9.16	9.00	8.87
Number of tax refunds processed	Number of tax refunds processed	4.48	9.61	0.12	0.43	4.15	7.44	Number of tax refunds processed	3.87	9.91	0.20	0.28	4.48	9.61

Segment revenues within our Money Movement services for the three and six months ended June 30, ~~2022~~2023 decreased ~~$11.9~~$4.2 million, or ~~18%,~~8% and ~~$4.9~~$3.2 million, or 3%2%, respectively, from the comparable prior year ~~periods, and segment~~periods. Segment expenses for the three and six months ended June 30, ~~2022~~2023 decreased $3.8 million, or ~~14%~~16%, and ~~$9.5~~$2.4 million, or ~~14%~~4%, respectively.

The decrease in segment revenues for the three and six months ended June 30, ~~2022~~2023 was driven primarily by a ~~lower~~decline in the number of cash transfers processed, which decreased by ~~12%~~4% and ~~13%~~3%, respectively, from the prior year comparable periods. The Green Dot Network is a service provider to accountholders in our Consumer Services and B2B Services segments, as well as third-party programs. The decrease in the number of cash transfers was the result of ~~lower~~fewer active accounts within our Consumer Services and B2B Services segments discussed above.

~~Segment~~ In addition, our tax processing revenues ~~for~~decreased during the three months ended June 30, ~~2022 also~~2023 due to a decline in the number of tax refunds processed, which decreased by 14% from the prior year comparable ~~period as a result of lower tax processing revenues. Despite a higher~~period. The decrease in the number of tax ~~refund transfers~~refunds processed ~~for the comparable periods, the amount of tax processing revenues decreased~~during three months ended June 30, 2023 was primarily due to a ~~mix-shift~~timing shift between ~~our~~

~~Table~~the first and second quarters of ~~Contents~~

~~professional and consumer~~the tax ~~channels, which generated~~season. Despite a ~~lower revenue per refund transfer. Our~~decline in the number of tax ~~processing revenues increased~~refunds processed for the six months ended June 30, ~~2022, due to an increase in~~2023, which decreased by 2% from the ~~number of~~prior year comparable period, our total tax ~~refunds processed. The number of tax refunds processed during the first half of 2022~~processing revenues increased ~~by 22% over~~modestly for the first half of the ~~prior~~ year due to additional ancillary tax ~~season.~~services offered to taxpayers.

~~Segment~~Money Movement Services expenses decreased during the three and six months ended June 30, ~~2022,~~2023, primarily due to a decrease in third-party call center support costs as a result of lower volumes from our tax refund processing services, and decreases in sales commissions from lower cash transfer ~~revenues and lower third-party costs in support of our tax refund processing services.~~revenues.

Corporate and Other

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change % 2022 2021 Change %
(In thousands, except percentages)
Financial Results
Unallocated revenue and intersegment eliminations $ 6,485 $ (2,763) $ 9,248 (334.7) % $ 11,190 $ (3,641) $ 14,831 (407.3) %
Unallocated corporate expenses and intersegment eliminations 52,239 46,469 5,770 12.4 % 104,630 92,105 12,525 13.6 %
$ (45,754) $ (49,232) $ 3,478 (7.1) % $ (93,440) $ (95,746) $ 2,306 (2.4) %
The results of operations and key metrics of our Corporate and Other segment for the three and six months ended June 30, 2023 and 2022 were as follows:

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	Three Months Ended June 30,								Six Months Ended June 30,
	2023		2022		Change		%		2023		2022		Change		%
	(In thousands, except percentages)
Financial Results
Unallocated revenue and inter-segment eliminations	$	1,427	$	6,485	$	(5,058)	(78.0)	%	$	4,424	$	11,190	$	(6,766)	(60.5)	%
Unallocated corporate expenses and inter-segment eliminations	54,310		52,239		2,071		4.0	%	110,761		104,630		6,131		5.9	%
Total	$	(52,883)	$	(45,754)	$	(7,129)	15.6	%	$	(106,337)	$	(93,440)	$	(12,897)	13.8	%

Revenues within Corporate and Other are comprised of net interest income, ~~and~~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 ~~eliminations.~~revenues. Unallocated corporate expenses include our fixed expenses such as salaries, wages and related benefits for our employees, professional ~~service~~services fees, software licenses, telephone and communication costs, rent, ~~and~~ utilities, insurance and eliminations of inter-segment ~~eliminations.~~expenses. 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.

~~Net~~Total net interest income ~~increased year-over-year~~decreased by 7% for the three months ended June 30, 2023, and increased by 5% during the six months ended June 30, ~~2022 as a result of an increase~~2023 from the prior year comparable periods. Changes in net interest income are attributable to fluctuations in the overall size of our cash and investment securities portfolio, and ~~recent~~the timing of increases in short-term interest rates by the Federal Reserve. Revenues within our Corporate and Other segment were offset by the portion of interest we share with certain BaaS partners.

Unallocated corporate expenses for the three and six months ended June 30, ~~2022~~2023 increased year-over-year by approximately ~~12%~~4% and ~~14%~~6%, respectively, as a result of higher ~~salaries~~software licenses, and ~~wages, professional services~~to a lesser extent, an increase in salary and wage expenses and ~~software licenses,~~related benefits, each in support of our investments to build a modern and scalable core banking and card management platform, as well as other growth ~~initiatives.~~initiatives as discussed above in "Overview." These increases were partially offset by reductions in professional services fees, which did not recur at similar levels to the prior year comparable periods.

Liquidity and Capital Resources

The following table summarizes our major sources and uses of cash for the periods presented:


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
		(In thousands)					(In thousands)
Total cash provided by (used in)	Total cash provided by (used in)					Total cash provided by (used in)
Operating activities	Operating activities	$	187,454	$	119,456	Operating activities	$	127,766	$	187,454
Investing activities	Investing activities	(649,499)		(265,700)		Investing activities	(9,581)		(649,499)
Financing activities	Financing activities	(81,117)		544,849		Financing activities	(272,578)		(81,117)
(Decrease) increase in unrestricted cash, cash equivalents and restricted cash		$	(543,162)	$	398,605
Decrease in unrestricted cash, cash equivalents and restricted cash						Decrease in unrestricted cash, cash equivalents and restricted cash	$	(154,393)	$	(543,162)

For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we financed our operations primarily through our cash flows generated from operations. From time to time, we may also finance short-term working capital activities through our borrowings under our credit facility. As of June 30, ~~2022,~~2023, our primary source of liquidity was unrestricted cash and cash equivalents totaling ~~$776.3~~$661.5 million. We also consider our ~~$2.4~~$2.3 billion of available-for-sale investment securities to be ~~highly-liquid~~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

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equivalents, cash flows from operations and borrowing capacity under our credit facility will be sufficient to meet our working capital, capital expenditures, equity method investee capital commitments, 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

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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 $127.8 million of net cash provided by operating activities during the six months ended June 30, 2023 was the result of $36.6 million of net income, adjusted for certain non-cash operating items of $85.8 million and increases in net changes in our working capital assets and liabilities of $5.4 million. Our $187.5 million of net cash provided by operating activities during the six months ended June 30, 2022 was the result of $53.6 million of net income, adjusted for certain non-cash operating items of $95.7 million and ~~increases in~~ net changes in our working capital assets and liabilities of $38.1 million.

Cash Flows from Investing Activities

Our ~~$119.5~~$9.6 million of net cash ~~provided by operating~~used in investing activities during the six months ended June 30, ~~2021~~2023 was primarily due to capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, the ~~result~~acquisition of ~~$50.7 million~~property and equipment of ~~net income, adjusted for certain non-cash operating items of $88.1~~$38.1 million and ~~decreases in~~ net changes in ~~our working capital assets and liabilities~~loans of ~~$19.3~~$17.9 million, partially offset by proceeds from maturities of available-for-sale securities of $82.3 million.

~~Cash Flows from Investing Activities~~

Our $649.5 million of net cash used in investing activities during the six months ended June 30, 2022 was primarily due to purchases of available-for-sale investment securities, net of proceeds from sales and maturities, of $525.8 million, the purchase of other bank investments of $31.9 million, capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, and the acquisition of property and equipment of $36.5 million.

Cash Flows from Financing Activities

Our ~~$265.7~~$272.6 million of net cash used in ~~investing~~financing activities during the six months ended June 30, ~~2021~~2023 was ~~primarily due~~principally the result of a net decrease in customer deposits of $216.3 million and a decrease of $21.7 million in obligations to ~~purchases of available-for-sale investment securities,~~customers. We also repaid $35.0 million, net of ~~proceeds from sales and maturities,~~borrowings, on our revolving line of ~~$139.8 million,~~credit during the purchase of other bank investments of $50.0 million, capital contributions related to our investment in TailFin Labs, LLC of $35.0 million, and the acquisition of property and equipment of $23.8 million.

~~Cash Flows from Financing Activities~~

six months ended June 30, 2023. Our ~~$81.1~~$81.8 million of net cash ~~used in~~provided from financing activities during the six months ended June 30, 2022 was principally the result of a decrease of $120.1 million in obligations to customers and share repurchases of our Class A common stock of $44.0 million, partially offset by a net increase in customer deposits of $85.2 million. We also borrowed and ~~have~~ repaid $50.0 million on our revolving line of credit during the six months ended June 30, 2022.

Our $544.8 million of net cash provided from financing activities during the six months ended June 30, 2021 was principally the result of a net increase in customer deposits of $125.5 million and a net increase of $425.8 million in obligations to customers. Total customer deposit balances increased year-over-year, principally as a result of additional economic stimulus funds and other government benefits received by our cardholders.

Other Sources of Liquidity: 2019 Revolving Facility

In October 2019, we entered into a ~~revolving~~secured credit agreement with Wells Fargo Bank, National Association, and other lenders party thereto. The credit agreement provides for a $100.0 million five-year revolving ~~facility and matures~~line of credit (the "2019 Revolving Facility"), maturing in October 2024. In March 2023, we amended the terms of our agreement to replace LIBOR with the Secured Overnight Financing Rate ("SOFR"). At our election, loans made under the credit agreement bear interest at 1) ~~a LIBOR~~an adjusted SOFR rate (the ~~“LIBOR~~“SOFR Rate") or 2) a base rate determined by reference to the highest of (a) the United States federal funds rate plus 0.50%, (b) the Wells Fargo prime rate, and (c) ~~one-month LIBOR~~an adjusted SOFR rate plus 1.0% (the “Base Rate"), plus in either case, an applicable margin. The applicable margin for borrowings depends on our total leverage ratio and varies from 1.25% to 2.00% for ~~LIBOR~~SOFR Rate loans and 0.25% to 1.00% for Base Rate loans.

~~The terms~~ As of ~~our existing agreement also provide~~June 30, 2023, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for a method to determine an alternative benchmark interest rate in anticipation of the discontinuation of LIBOR under reference rate reform. This alternative benchmark rate will be selected between the parties taking into consideration recommendations from regulatory bodies or based on prevailing market conventions at the time the alternative rate is established, and may include the Secured Overnight Financing Rate.use.

We are also subject to certain financial covenants, which include maintaining a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio at the end of each fiscal quarter, as defined in the agreement. At June 30, ~~2022,~~2023, we were in compliance with all such covenants.

Material Cash Requirements

While the lasting effect of COVID-19, ~~has~~increasing inflation and interest rates and other macro-economic factors have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and ~~purchase~~invest in property and equipment as necessary in the normal course of our business. The amount and timing of these payments and the related cash

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outflows in future periods is difficult to predict and is dependent on a number of factors including the hiring of new employees, the rate of change of computer hardware and software used in our business and our business outlook as a result of ~~the COVID-19 pandemic.~~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 such as our core banking and card management systems in order to scale and operate effectively to meet our strategic objectives. While we expect these capital expenditures in 2023 will ~~exceed the amount of~~be at similar levels to our capital expenditures in ~~2021,~~2022, we expect to fund these capital expenditures primarily through our cash flows provided by operating activities.

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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.

~~We also have certain contractual payment obligations, in each case, as described in more detail below.~~

Contractual Obligations

There have been no material changes in 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, ~~2021.~~2022.

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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. InCommencing in 2021, Green Dot Corporation and Green Dot Bank qualified for (including, in the case of Green Dot Bank, through grace periods) and opted to use the community bank leverage ratio framework. ~~Going forward, we~~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 June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 June 30, ~~2022~~2023 which management believes would have changed our category as "well capitalized."

The definitions associated with the amounts and ratios below are as follows:


Ratio						Definition
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

Terms						Definition
Tier 1 capital and Common equity Tier 1 capital						~~Primarily includes~~Includes common stock and retained earnings, ~~and accumulated OCI, net of deductions and adjustments~~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 June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:


		June 30, 2022									June 30, 2023
		Amount		Ratio		Regulatory Minimum		"Well-capitalized" Minimum			Amount		Ratio		Regulatory Minimum		"Well-capitalized" Minimum
		(In thousands, except ratios)									(In thousands, except ratios)
Green Dot Corporation:	Green Dot Corporation:									Green Dot Corporation:
Tier 1 leverage	Tier 1 leverage	$	644,801	15.2	%	4.0	%	n/a		Tier 1 leverage	$	732,168	18.6	%	4.0	%	n/a
Common equity Tier 1 capital	Common equity Tier 1 capital	$	644,801	46.0	%	4.5	%	n/a		Common equity Tier 1 capital	$	732,168	44.4	%	4.5	%	n/a
Tier 1 capital	Tier 1 capital	$	644,801	46.0	%	6.0	%	6.0	%	Tier 1 capital	$	732,168	44.4	%	6.0	%	6.0	%
Total risk-based capital	Total risk-based capital	$	658,893	47.0	%	8.0	%	10.0	%	Total risk-based capital	$	749,835	45.5	%	8.0	%	10.0	%

Green Dot Bank:	Green Dot Bank:									Green Dot Bank:
Tier 1 leverage	Tier 1 leverage	$	332,208	8.1	%	4.0	%	5.0	%	Tier 1 leverage	$	388,909	10.0	%	4.0	%	5.0	%
Common equity Tier 1 capital	Common equity Tier 1 capital	$	332,208	32.6	%	4.5	%	6.5	%	Common equity Tier 1 capital	$	388,909	31.8	%	4.5	%	6.5	%
Tier 1 capital	Tier 1 capital	$	332,208	32.6	%	6.0	%	8.0	%	Tier 1 capital	$	388,909	31.8	%	6.0	%	8.0	%
Total risk-based capital	Total risk-based capital	$	339,999	33.3	%	8.0	%	10.0	%	Total risk-based capital	$	396,798	32.5	%	8.0	%	10.0	%

		December 31, 2021									December 31, 2022
		Amount		Ratio		Regulatory Minimum		"Well-capitalized" Minimum			Amount		Ratio		Regulatory Minimum		"Well-capitalized" Minimum
		(In thousands, except ratios)									(In thousands, except ratios)
Green Dot Corporation:	Green Dot Corporation:									Green Dot Corporation:
Tier 1 leverage	Tier 1 leverage	$	637,338	15.9	%	4.0	%	n/a		Tier 1 leverage	$	661,404	16.6	%	4.0	%	n/a
Common equity Tier 1 capital	Common equity Tier 1 capital	$	637,338	54.0	%	4.5	%	n/a		Common equity Tier 1 capital	$	661,404	40.1	%	4.5	%	n/a
Tier 1 capital	Tier 1 capital	$	637,338	54.0	%	6.0	%	6.0	%	Tier 1 capital	$	661,404	40.1	%	6.0	%	6.0	%
Total risk-based capital	Total risk-based capital	$	648,038	54.9	%	8.0	%	10.0	%	Total risk-based capital	$	675,043	40.9	%	8.0	%	10.0	%

Green Dot Bank:	Green Dot Bank:									Green Dot Bank:
Tier 1 leverage	Tier 1 leverage	$	329,162	9.1	%	4.0	%	5.0	%	Tier 1 leverage	$	389,541	9.6	%	4.0	%	5.0	%
Common equity Tier 1 capital	Common equity Tier 1 capital	$	329,162	40.7	%	4.5	%	6.5	%	Common equity Tier 1 capital	$	389,541	31.2	%	4.5	%	6.5	%
Tier 1 capital	Tier 1 capital	$	329,162	40.7	%	6.0	%	8.0	%	Tier 1 capital	$	389,541	31.2	%	6.0	%	8.0	%
Total risk-based capital	Total risk-based capital	$	336,461	41.6	%	8.0	%	10.0	%	Total risk-based capital	$	397,870	31.8	%	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 has become 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. ~~This~~The composition of our portfolio is price sensitive to rate changes, which can impact ~~the associated~~ unrealized ~~gain~~gains or ~~loss.~~losses in our portfolio. However, we have the ability, liquidity and intent to hold these instruments until ~~the~~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") again increased the federal funds target rate in ~~June 2022~~July 2023 to a range of ~~2.25%-2.50%~~5.25%-5.50%, which will continue to impact the amount of net interest income we earn. While it is expected that the FOMC ~~will~~may continue to ~~increase~~maintain elevated interest rates ~~throughout 2022 to slow~~until the effects of economic inflation are abated, it is uncertain when or how many times interest rates will be increased. 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 will continue to have a negative impact on our consolidated financial statements in 2023 compared to 2022.

As of June 30, ~~2022,~~2023, we had no balances outstanding under our $100.0 million line of credit agreement. Refer to Note 9 — Debt to the Consolidated Financial Statements included herein for additional information. Should we require additional liquidity from our line of credit, our borrowings are expected to be at variable rates of interest and would expose us to interest rate risk. Although any short-term borrowings under our revolving credit facility 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. For example, assuming our credit agreement is drawn up to its maximum borrowing capacity of $100.0 million, based on the applicable ~~LIBOR~~SOFR and margin in effect as of June 30, ~~2022,~~2023, each quarter point of change in interest rates would result in a $0.3 million change in our annual interest expense.

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

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liquid, low credit risk assets. Our policy has limits related to liquidity ratios, the concentration that we may have with 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

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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 ~~COVID-19 pandemic.~~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 June 30, ~~2022~~2023 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 wemost 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 ~~the COVID-19 situation~~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.

ITEM 1A. Risk Factors

~~COVID-19~~MACROECONOMIC RISKS

~~The COVID-19 pandemic has~~External factors have affected and may continue to significantly affect how we and our retail distributors are operating our businesses.

Our operations have and may continue to be negatively affected by a range of external factors ~~related to the COVID-19 pandemic~~ that are not within our ~~control.~~control which may continue to include factors related to the COVID-19 pandemic. We ~~have shifted to~~maintain a remote workforce strategy for our employees in the U.S. ~~and we have~~, having closed most of our leased office locations in the U.S., beginning in fiscal 2021, which could result in a less effective workforce in the long-term. As a result of ~~the resurgence of the~~surges in COVID-19 ~~pandemic’s Omicron variant~~variants in China ~~during the first quarter of~~throughout 2022, we ~~closed~~were previously forced to intermittently close our offices ~~again~~ in China and ~~shifted~~shift to a remote workforce ~~strategy in China.~~strategy. While we have resumed normal operations in China, it is possible that we may continue to experience similar issues in the future due to the pandemic, which over a prolonged period of time, could potentially delay our ability to launch new products or services. In addition, many of the third-party call centers we rely on to provide customer support experienced periodic disruptions in 2021 due to the ongoing pandemic, which resulted in delayed responses to customers and a higher usage of automated services, and contributed to higher costs and transaction losses compared to prior periods. The business and operations of our retail distributors and our BaaS and other partners were likewise disrupted, with many having experienced reduced foot traffic or usage of their services. We may continue to experience increased costs, which could continue to adversely affect our business, results of operations, and financial condition in future periods.

~~Despite widespread vaccination efforts as well as dropping infection and hospitalization rates~~We could experience other, similar adverse impacts on our business in the ~~United States, COVID-19 could still have an adverse impact on our business~~future as the duration and magnitude of the continuing effects of COVID-19 remain uncertain and dependent on various factors, including the continued severity and transmission rates of the virus and variants of the virus, the effectiveness of COVID-19 vaccines against such variants, the ~~nature and duration of future preventative measures, the~~ extent and effectiveness of future containment and mitigation efforts, ~~including vaccination programs and mandates,~~ the type of stimulus measures and other policy responses that the U.S. government or regulators may further adopt, ~~including interest rate increases, if any,~~ and the impact of these and other factors on our employees, customers, retail distributors, partners and vendors. Governmental actions such as the American Rescue Plan of 2021 helped mitigate the effects of COVID-19 on our business in 2021 but have since expired, and our income has and could continue to be impacted as a result.

Concerns over the economic impact of the COVID-19 pandemic have caused extreme volatility in financial and other capital markets, which may adversely affect our stock price and our ability to access capital markets in the future.

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information regarding the potential impact of the COVID-19 pandemic on our business.

Worsening economic conditions, a rising rate of inflation, or other potential causes of economic distress could materially and adversely impact our business and financial results.

~~The~~Long term effects of the economic downturn associated with the COVID-19 pandemic and other ~~economic~~global and macro-economic factors have resulted and may continue to result in ~~a significant increase in the rate of~~rising inflation ~~rising~~rates, interest rates, and unemployment rates, leading to economic challenges for consumers and reduced transaction and spending volumes on accounts. If current market conditions persist or deteriorate, we may ~~further increase unemployment, all of which could reduce consumer credit ratings and credit availability, which may adversely affect our operations. Such an outcome could cause us~~decide to adjust pricing to account for an increasing cost of funds and increased credit risk in a down economy, and thereby erode our margins and negatively impact our future financial performance and the price of our Class A Common Stock. Additionally, ~~if our~~significant inflationary pressure increases borrowing rates, ~~were to become subject to significant inflationary pressures,~~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, interest rate increases 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.

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RISKS RELATED TO OUR BUSINESS

The loss of operating revenues from Walmart or any of our largest retail distributors as well as our significant BaaS partners, third-party processors or other major consumers would adversely affect our business.

A significant portion of our operating revenues are derived from the products and services sold at our largest retail distributors. As a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart ~~were~~was approximately ~~21.0%~~17% for the three and six months ended June 30, ~~2022, respectively.~~2023. 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 ~~due to the COVID-19 pandemic and~~ rising inflation, would have a material adverse effect on our business and results of operations. In

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addition, any publicity associated with the loss of any of our large retail distributors, significant BaaS partners or third-party processors ~~or other major consumers~~ 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 and consumers.~~processors.

The term of our Walmart Money Card 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 partners or third-party processors ~~or consumers~~ 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. For example, during the three months ended June 30, 2022, we and several business partners failed to reach an agreement on the renewal of their agreements with ~~us, and we are also in the midst of a dispute with Uber over their obligations under our agreements with them.~~us. 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 ~~or consumers~~ 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 retail distributors and tax preparation partners.

Most of our operating revenues are derived from our 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 retail distributors and tax preparation partners depend on a number of factors outside our control and may vary from period to period. 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 products and services, and they could give higher priority to the products and services of other companies for a variety of reasons. Accordingly, losing the support of our retail distributors and tax preparation partners might limit or reduce the sales

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of our products and services. Our operating revenues and operating expenses may also be negatively affected by the operational decisions of our 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 retail distributors and tax preparation partners actively and effectively promote our products and services, there can be no assurance that their efforts will maintain or result in growth of our operating revenues.

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. ~~For example, in 2021,~~While we ~~launched GO2bank, a mobile bank account aimed at serving the low-and moderate-income market and continue to enhance its features and functionality. We~~ will continue to make investments in research, development, and marketing for new products and ~~services. If~~services, if customers do not

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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.

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 account holder 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, account holder 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 account holder behavior through cardholder 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 ~~who~~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.

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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 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 increased competition as a result of new entrants offering free or low-cost alternatives to our products and services. In recent years, ~~“challenger” banks~~digital-centric financial services platforms have gained market share through the marketing of their largely free bank account offerings. To the extent these new entrants continue to take market share at our expense, we expect that the purchase and use of our products and services would decline. In response to such ~~challenger banks,~~competition, we launched ~~GO2bank, a mobile bank account aimed at serving the low-and moderate-income market with tools that help address common financial challenges and opportunities to improve long-term financial health.~~GO2bank. If GO2bank is not successful in the long-term or our competitive position deteriorates further, 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 ~~affect~~impact our results of operations.

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We may not keep pace with the rapid technological developments in ~~our industry~~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 transition to new services and technologies that we develop may be inhibited by a lack of industry-wide standards, 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. These initiatives are inherently risky, and they 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 prepaid cards), reload products, or customer information. Illegal activities involving our products and services often include malicious social engineering schemes. Further, ~~in connection with the COVID-19 pandemic,~~ there ~~has been and may continue to be~~was a significant amount of transaction fraud with respect to ~~prepaid cards~~card products used to ~~deliver~~receive stimulus and unemployment benefits ~~which~~in 2021 and into 2022. In 2023, we continue to see significant fraud related to tax and other governmental benefits. This transaction fraud with respect to our products has negatively impacted many financial services ~~companies.~~companies including us.

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 cards and other products and services, have in the past and could in the future, result in reputational damage to us. Such damage could reduce the use and acceptance of our cards 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 card activations for the foreseeable future and that our operating revenues will 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.

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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 cardholders 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 cardholders who opt-in to spend up to a pre-authorized amount in excess of their available card balance. For cardholders 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 balance in a cardholder’s account, however, the application of card association rules, the timing of the settlement of transactions and the assessment of the card’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 cardholder has made additional purchases in the intervening period and funds are no longer available on the card at the time the transaction is posted.

Additionally, in 2021, we introduced an optional overdraft protection program service on certain demand deposit account programs that allows eligible cardholders who opt-in to spend up to a pre-authorized amount in excess of their available card balance.

We maintain reserves to cover the risk that we may not recover these amounts due from our cardholders, but our exposure may increase above these reserves for a variety of reasons, including our failure to predict the actual

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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 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 partners that collect funds and fees from our customers on our behalf. Our retail distributors and partners collect funds from the consumers who purchase our products and services and then must remit these funds directly to our subsidiary bank. The remittance of these funds by the retail distributor or partner takes on average two business days. If a retail distributor or other 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 June 30, ~~2022,~~2023, we had assets subject to settlement risk of ~~$498.1~~$523.6 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 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.

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 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.

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Our business could suffer if there is a decline in the use of prepaid cards as a payment mechanism or there are adverse developments with respect to the prepaid financial services industry in general.

As the prepaid financial services industry evolves, consumers may find prepaid financial services to be less attractive than traditional or other financial services. Consumers might not use prepaid financial services 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 such as an economic recession. If consumers do not continue or increase their usage of prepaid cards, including making changes in the way prepaid cards are loaded, our operating revenues may decline. Any projected growth for the industry may not occur or may occur more slowly than estimated. If consumer acceptance of prepaid financial services does not continue to develop or develops more slowly than expected or 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

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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 such as the COVID-19 pandemic 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. Moreover, as we continue to add ~~data centers and add~~cloud based solutions or additional capacity into our existing data centers, we could experience problems transferring customer accounts and data, impairing the delivery of our service.

We are ~~currently~~ in the process of ~~bringing~~migrating processing in-house to an in-licensed solution that we operate instead of using third-party ~~processors.~~processors and currently anticipate completing the migration during the third quarter of 2023, but we may not meet this timing. As a result, some customers may experience disruptions in service in connection with this ongoing project despite significant investments in planning and testing on the part of us and our processing technology partners. In addition, our inability to transition to in-house processing, or any failure by us to process transactions in a timely manner once we begin processing transactions, could cause significant disruptions to our customers and our business.

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 be damaging to 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

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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 data 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. Our encryption software and the other technologies we use to provide security for storage, processing and transmission of confidential customer and other information may not be effective to protect against data security breaches by third parties. 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 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 cardholder or other customer or end-customer data and account information are stored could lead to fraudulent activity involving our products and services, reputational damage and claims or regulatory actions, including penalties, against us. Regardless of whether or not we are sued

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or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack. 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. If we are unsuccessful in defending that~~ litigation weand 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 cards for) fines, penalties and/or other assessments imposed by Visa or ~~MasterCard~~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 ~~one~~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.

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, ~~and~~ civil or criminal ~~penalties.~~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

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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. For example, many of our U.S. and international third-party call centers experienced periodic disruptions in 2021 due to the ongoing pandemic, which resulted in delayed responses to customers and a higher usage of automated services. While such issues have largely been resolved, these conditions contributed to higher costs and transaction losses as compared to prior periods. 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.

We have significantly expanded our software development operations in Shanghai, China ~~and we expect to continue to increase headcount and infrastructure as we scale our operations in this region.~~over the years. A prolonged disruption at our China facility for any reason due to natural- or man-made disasters, outbreaks of disease, such as the COVID-19 pandemic, 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, which could materially and

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adversely affect our business. For example, as a result of the resurgence of the COVID-19 pandemic's Omicron variant in China, our offices in Shanghai, China were closed during the first quarter of 2022 and shifted to a remote workforce strategy. 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, including between Russia and Ukraine;~~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.

REGULATORY AND LEGAL RISKS

As a bank holding company, we are subject to extensive and potentially changing regulation and ~~may be~~are required to serve as a source of strength for Green Dot Bank.

As a bank holding company, we 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 ~~fail to comply~~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. 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. ~~As a bank holding company and an FHC, we are generally prohibited from engaging, directly or indirectly, in any activities other than those permissible for bank holding companies and FHCs.~~ 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

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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 ~~BHC~~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. ~~In some instances, we~~We are subject to significant legal restrictions on our ability to publicly disclose the existence of these actions or any of the ~~full details of these actions, including those in examination reports.~~related details. In addition, as part of the regular examination process, our and Green Dot Bank's regulators may ~~advise~~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 by January 1, 2022. The final rule ~~establishes~~established a new 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 new rule,~~ Green Dot Bank has reclassified most of its deposits as non-brokered. We cannot predict how the FDIC will interpret the new rule and whether it will result in a change in the way our deposits are classified. If the FDIC determines that some or all of Green Dot Bank’s deposits should ~~actually~~ be classified as brokered, such a finding could have an adverse impact on our financial condition.

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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 laundering, terrorist financing and other illicit activities. For example, we are subject to the ~~anti-money laundering~~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, ~~either~~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 may 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 ~~anti-money laundering~~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, 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.

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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, such as ~~MasterCard~~Mastercard PTS. 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

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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 substantial portion of our operating revenues is derived from interchange fees. For the three months ended June 30, ~~2022,~~2023, interchange revenues represented ~~21%~~16% 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.

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 substantially.~~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, 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. 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, 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

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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 -~~ 17—Commitments and Contingencies to the Consolidated Financial Statements for further information regarding certain of our legal 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.

The Green Dot, GO2bank, MoneyPak, TPG and other 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 and its value was to decrease as a result.~~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 1314 issued patents, 21 published ~~patents~~patent 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

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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 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.

Our debt agreements contain restrictive covenants and financial ratio tests that restrict or prohibit our ability to engage in or enter into a variety of transactions.

Under our $100 million five-year revolving facility, we are subject to various covenants that may have the effect of limiting, among other things, our ability and the ability of certain of our subsidiaries to: merge with other entities, enter into a transaction resulting in a change in control, create new liens, incur additional indebtedness, sell assets outside of the ordinary course of business, enter into transactions with affiliates (other than subsidiaries) or substantially change the general nature of our and our subsidiaries’ business, taken as a whole, make certain investments, enter into restrictive agreements, or make certain dividends or other distributions. These restrictions 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 must also maintain compliance with a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio of 2.50 and 1.25, respectively, at the end of any fiscal quarter. Our ability to meet these financial ratios and tests will be dependent

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upon our future performance and may be affected by events beyond our control (including factors discussed in this “Risk Factors" section). If we fail to satisfy these requirements, our indebtedness under these agreements could become accelerated and payable at a time when we are unable to pay them. This would adversely affect our ability to implement our operating strategies and would have a material adverse effect on our 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;

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•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;

•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, including the COVID-19 pandemic 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

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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. Further, in 2021, the labor market in the U.S. began experiencing a significant increase in workers leaving their positions (often referred to as the “Great Resignation”), which has made the market to replace these individuals increasingly competitive and has resulted in significant wage inflation in response to labor shortages, and may further increase the challenge of employee attraction and retention for companies like ours.

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 ~~expect to~~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, ~~(such as the recent lawsuit filed by Republic Bank),~~ 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:

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•increased regulatory and compliance requirements;

•implementation or remediation of controls, procedures and policies at the acquired company;

•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 ~~$455.7~~$431.2 million as of June 30, ~~2022.~~2023. 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.

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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

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market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

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

~~The following is a summary~~None.

ITEM 5. Other Information

Insider Adoption or Termination of ~~issuer purchases of equity securities during~~Trading Arrangements

During the fiscal quarter ended June 30, ~~2022 (in thousands, except per share amounts). See~~ ~~Note 11~~ — ~~Stockholders Equity~~ 2023, none of our ~~notes to our consolidated financial statements~~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.

Other Information

The information below is reported in lieu of information that would be reported under Items 5.02 under Form 8-K.

On August 7, 2023, the Company and Amit Parikh, the Company's Executive Vice President of Banking Platform Services, mutually agreed that Mr. Parikh would step down from his current role and end his employment, effective August 25, 2023, as part of internal organizational changes. In connection with his separation of employment with the Company, following his execution of a release of claims, Mr. Parikh will receive the following benefits: (i) a severance in the amount of $225,000; (ii) a prorated target bonus for ~~information regarding our stock repurchase program.~~

Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 1, 2022 - April 30, 2022 148 (1) $ 27.23 148 $ 74,581
May 1, 2022 - May 31, 2022 321 27.29 321 65,819
June 1, 2022 - June 30, 2022 375 26.30 375 55,956
Total 845 $ 26.84 845 $ 55,956


~~(1)~~			~~Includes the settlement of 132 shares received from our March 2022 accelerated share repurchase arrangement at an average price per share of $27.35.~~

~~After giving effect to our share repurchases during~~2023 in the ~~three~~amount of $219,143.84; (iii) COBRA premium payments for 6 months ~~ended June 30, 2022,~~in the ~~remaining~~ amount ~~available under the current authorization totaled $56.0 million with no expiration date.~~

~~For the majority~~ of $10,901.76; (iv) 12,680 unvested restricted stock units ~~(including~~will vest; and (v) 7,174 unvested performance-based restricted stock ~~units) granted, the number of shares issued on the date the restricted stock~~ units vest is net of shares withheld to meet applicable tax withholding requirements. Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting.will vest.

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ITEM 6. Exhibits

The following documents are filed as exhibits to this report:


Exhibit Number						Description of Exhibits

10.1						Amended and Restated Green Dot Corporation 2010 Equity Incentive Plan.

31.1						Certification of ~~Dan Henry,~~George Gresham, Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of ~~George Gresham,~~Jess Unruh, Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of ~~Dan Henry,~~George Gresham, Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2						Certification of ~~George Gresham,~~Jess Unruh, Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

101						The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022,~~2023, 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~~tags.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_____________

* Furnished and not filed.

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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:

August ~~5, 2022~~8, 2023

By:

/s/ George Gresham

Name:

George Gresham

Title:

~~Chief Financial Officer~~President and Chief ~~Operating~~Executive Officer ~~(Duly~~
(Duly Authorized Officer and Principal ~~Financial~~Executive Officer)

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Period	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 1, 2022 - April 30, 2022	148	(1)	$	27.23	148	$	74,581
May 1, 2022 - May 31, 2022	321		27.29		321	65,819
June 1, 2022 - June 30, 2022	375		26.30		375	55,956
Total	845		$	26.84	845	$	55,956