EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Investor Relations
Telephone: 712.732.4117
META FINANCIAL GROUP, INC. (R) REPORTS RESULTS FOR THE QUARTER
ENDED MARCH 31, 2007
STORM LAKE, IOWA - (April 20, 2007) Meta Financial Group, Inc. (NASDAQ-Global
Market: "CASH") today reported net income of $603,000, or $0.23 per diluted
share, for the 2007 fiscal year second quarter ended March 31, 2007, compared to
net income of $261,000, or $0.10 per diluted share, for the 2006 fiscal year
second quarter. Higher net interest income and non-interest income contributed
to the increase, offset in part by higher non-interest expense.
"We had a good quarter," remarked J. Tyler Haahr, President and Chief Executive
Officer. "We continue to be pleased with the progress we are making in executing
our strategic plan. Low- and no-cost deposit growth has exceeded our
expectations this year, driven largely by continued development and expansion of
our client base at Meta Payment Systems.(R) Overall credit quality continues to
improve, as both our level of classified assets and our loan delinquency rates
are declining. In addition, we are now beginning to reap the rewards of many of
the initiatives we have undertaken in recent quarters. We are very excited about
the future."
Financial Summary
The Company's financial performance improved significantly in the second quarter
of fiscal year 2007 as compared to the same quarter in fiscal year 2006.
Earnings per diluted share rose 130 percent, from $0.10 to $0.23, return on
average equity more than doubled from 2.47 percent to 5.53 percent, and return
on average assets rose from 0.14 percent to 0.33 percent. "We are pleased with
our results for the March quarter," commented Jonathan M. Gaiser, Senior Vice
President and Chief Financial Officer. "Our results show meaningful progress
toward our long term goal of superior financial performance."
Revenue
Total revenue for the second quarter of fiscal year 2007 increased by 38 percent
from the same quarter in 2006. Revenues improved primarily due to higher net
interest income and significant growth in card fee income. Total revenue was
$9.91 million for the quarter, up $2.72 million from $7.19 million a year ago.
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Net Interest Income
Net interest income for the second quarter was $5.67 million, which represents
growth of nearly 14 percent from $4.99 million for the same quarter last year.
Higher asset yields and lower liability costs offset shrinkage in the total
earning asset base year over year. Asset yields rose 24 basis points from 5.86
percent in the second quarter of fiscal year 2006 to 6.10 percent in the current
quarter. The rise in short term interest rates during the past year contributed
to both higher loan and investment yields. Liability costs fell 24 basis points
over the same period from 2.98 percent to 2.74 percent. Despite rising retail
deposit and borrowing costs, overall liability costs fell as a result of the
significant growth in low- and no-cost checking deposits generated primarily by
the Meta Payment Systems (MPS) division. Overall net interest margin rose 49
basis points from 2.87 percent to 3.36 percent.
Non-Interest Income
Non-interest income continues to exhibit dramatic growth resulting from higher
fees on prepaid debit cards and other payment systems products and services.
Non-interest income for the second quarter was $4.23 million, up 93% from $2.20
million from the same quarter last year.
Credit Quality
For the second fiscal quarter of 2007, the Company reversed $280,000 in its
provision for loan losses. This compares to a reversal of $350,000 for the same
quarter last year. The current quarter's reversal was driven primarily by a
reduction in the amount of classified loans during the period. During the
quarter, the Company also charged-off $4.77 million of loans secured primarily
by stock in a charter airline company. The Company participated with over 20
other financial institutions in this lending relationship and was not the lead
lender or servicer. The Company had previously established a specific allowance
against the entire balance of these credits during the first fiscal quarter of
2007. As a result, current period earnings were not impacted by this charge-off.
Non-Interest Expense
Non-interest expense for the second quarter of fiscal year 2007 was $9.19
million, which represents an increase of $1.99 million from $7.20 million during
the same quarter in fiscal year 2006. The bulk of the increase occurred in
compensation and card processing expense and was primarily the result of
continued growth in the MPS division.
Compensation expense rose $1.53 million to $4.53 million on a linked quarter
basis. The increase represents the addition of both sales and support
professionals at MPS, additional IT support staff, and other administrative
support within the Company. Many of the new employees at MPS and in IT will be
focused on
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developing new product lines and increasing market penetration of the Company's
payments systems products and services. Card processing expense rose $647,000
over the same time period. Due to the significantly higher level of active cards
and transaction volume compared to a year ago. The increase demonstrates both
growth in the prepaid industry in general, as well as the Company's penetration
of related markets.
Many other expenses actually declined on a linked quarter basis, most notably
legal and consulting expense. During the second quarter of fiscal year 2006 the
Company incurred higher expenses related to legal matters surrounding its loans
to a group of automobile sales, service, and financing companies. Most of these
legal expenses have now subsided. Furthermore, management believes the bulk of
further legal expenses related to this matter will be borne by the Company's
insurance carrier.
Loans
Total loans, net of allowance for loan losses, grew $4.5 million during the
quarter ended March 31, 2007 to $374.9 million. Seasonal influences and lending
efforts contributed to this increase. During the first six months of fiscal year
2007, the Company's loan portfolio decreased $14.4 million. Over the past year,
the Company has experienced pay downs and payoffs mainly in its originated and
purchased commercial and commercial real estate portfolios. Management believes
this decrease is driven in part by a decrease in the overall demand for credit
and competition from secondary market investors.
Deposits
During the first six months of fiscal year 2007, total deposit balances rose
$13.9 million to $579.6 million. This growth has been led by low- and no-cost
checking deposits. During the second quarter, total deposits fell $20.1 million.
Approximately half of this decrease was related to MPS deposits, while the other
half was related to a decline in higher costing certificates of deposit. The
bulk of the MPS decrease was driven by "spend" on prepaid gift cards which had
been sold during the 2006 holiday season. The decrease in deposits for the
quarter was in line with management's expectations.
Long term growth rates in the Company's checking portfolio have been
substantial. As of March 31, 2007, checking deposits totaled $278.0 million, up
$109.2 million, or 65 percent, from $168.8 million as of March 31, 2006.
Checking deposits now represent the largest single component of the Company's
liability portfolio, and the company plans to continue to shift its liability
mix away from higher costing funding sources.
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Business Segment Performance
Meta Payment Systems
MPS recorded net income of $539,000, or $0.21 per diluted share, for the second
quarter of fiscal year 2007, compared to $356,000, or $0.14 per diluted share,
for the same period last year. The growth was driven mainly by increased
interest income generated from checking deposits and increased fee income from
card sales and payment transactions. "Our progress at MPS continues to be
remarkable," said Brad Hanson, President of Meta Payment Systems. "We issued
over five million cards in the March quarter, roughly the same number as we did
in the December quarter, which is typically stronger due to holiday sales. This
strength is directly related to our success in signing new clients and
establishing new programs. We are excited about the implications these
developments have for our future growth."
Traditional Banking
The Traditional Banking segment recorded net income of $477,000, or $0.18 per
diluted share, for the second quarter of fiscal year 2007, compared to $119,000,
or $0.05 per diluted share for the same period last year. Higher net interest
income and lower non-interest expenses were the primary drivers of this
increase. Meta Financial Group, MetaBank, and MetaBank West Central meet
regulatory requirements for classification as well-capitalized institutions.
Subsequent Event
On April 13, 2007, MetaBank consummated the previously announced sale of its
branch office in Laurens, Iowa to Iowa Trust and Savings Bank. The Company
expects to record a pre-tax gain on sale of approximately $1.0 million as a
result of this transaction. The Company expects that the previously announced
sale of its branch offices in Sac City, Odebolt, and Lake View, Iowa to Iowa
State Bank, will close in May 2007. The Company expects to record a pre-tax gain
on sale of approximately $2.4 million as a result of this transaction.
This press release and other important information about the Company are
available at www.metacash.com.
Corporate Profile: Meta Financial Group, Inc. (doing business as Meta Financial
Group) is the holding company for MetaBank, MetaBank West Central, and Meta
Trust Company(R). MetaBank is a federally-chartered savings bank with four
market areas: Northwest Iowa Market, Brookings Market, Central Iowa Market,
Sioux Empire Market; and the Meta Payment Systems prepaid debit card division.
MetaBank West Central is a state-chartered commercial bank in the West Central
Iowa Market. Eighteen banking offices support customers throughout northwest and
central Iowa, and in Brookings and Sioux Falls, South Dakota.
The Company, and its wholly-owned subsidiaries, MetaBank, MetaBank WC, and Meta
Trust Company may from time to time make written or oral "forward-looking
statements," including statements contained in this release and in its filings
with the Securities and
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Exchange Commission, in its reports to shareholders, and in other communications
by the Company, which are made in good faith by the Company pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995.
These forward-looking statements include statements with respect to the
Company's beliefs, expectations, estimates and intentions that are subject to
significant risks and uncertainties, and are subject to change based on various
factors, some of which are beyond the Company's control. Such statements address
the following subjects: future operating results; customer growth and retention;
loan and other product demand; earnings growth and expectations; new products
and services, such as those offered by the Meta Payment Systems division; credit
quality and adequacy of reserves; technology; and our employees. The following
factors, among others, could cause the Company's financial performance to differ
materially from the expectations, estimates, and intentions expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary, and fiscal policies
and laws, including interest rate policies of the Federal Reserve Board;
inflation, interest rate, market, and monetary fluctuations; the timely
development of and acceptance of new products and services of the Company and
the perceived overall value of these products and services by users; the impact
of changes in financial services laws and regulations; technological changes;
acquisitions; litigation; changes in consumer spending and saving habits; and
the success of the Company at managing and collecting assets of borrowers in
default and managing the risks involved in the foregoing.
The foregoing list of factors is not exclusive. Additional discussion of factors
affecting the Company's business and prospects is contained in the Company's
periodic filings with the SEC. The Company does not undertake, and expressly
disclaims any intent or obligation, to update any forward-looking statement,
whether written or oral, that may be made from time to time by or on behalf of
the Company.
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Financial Highlights
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Consolidated Statement of Financial Condition
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(Dollars In Thousands)
Assets Mar. 31, 2007 Sept. 30, 2006
<s> <c> <c>
Cash and cash equivalents $ 129,485 $ 109,353
Investments and mortgage-backed securities 175,188 192,067
Loans receivable, net 374,869 389,270
Other assets 49,884 50,921
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Total assets $ 729,426 $ 741,611
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Liabilities
Deposits $ 579,579 $ 565,711
Other borrowings 101,142 125,054
Other liabilities 3,983 5,514
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Total liabilities $ 684,704 $ 696,279
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Shareholders' equity $ 44,722 $ 45,332
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Total liabilities and shareholders' equity $ 729,426 $ 741,611
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Consolidated Statements of Income
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For the 3 Months For the 6 Months
Ended Mar. 31: Ended Mar. 31:
(Dollars In Thousands, except per share data) 2007 2006 2007 2006
<s> <c> <c> <c> <c>
Interest income $ 10,290 $ 10,195 $ 20,667 $ 20,372
Interest expense 4,615 5,206 9,733 10,663
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Net interest income 5,675 4,989 10,934 9,709
Provision for loan losses (280) (350) 5,185 (310)
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Net interest income (expense) after
provision for loan losses 5,955 5,339 5,749 10,019
Non-interest income 4,232 2,197 8,193 4,043
Non-interest expense 9,193 7,200 18,023 12,991
-------- -------- -------- --------
Net income (loss) before income tax expense (benefit) 994 336 (4,081) 1,071
Income tax expense (benefit) 391 75 (1,430) 294
-------- -------- -------- --------
Net income (loss) $ 603 $ 261 $ (2,651) $ 777
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Earnings (loss) per common share
Basic $ 0.24 $ 0.10 $ (1.05) $ 0.31
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Diluted $ 0.23 $ 0.10 $ (1.05) $ 0.31
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Selected Financial Information
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For the 6 Months Ended March 31, 2007 2006
<s> <c> <c>
Return on average assets -0.72% 0.22%
Return on average equity -11.87% 3.83%
Average shares outstanding for diluted earnings per share 2,515,266 2,505,093
At Period Ended: Mar. 31, 2007 Sep. 30, 2006
Equity to total assets 6.13% 6.11%
Book value per common share outstanding $17.47 $17.89
Tangible book value per common share outstanding $16.14 $16.54
Common shares outstanding 2,559,830 2,534,367
Non-performing assets to total assets 0.55% 0.58%
Meta Financial Group, Inc. (R) \ 121 East Fifth Street \ P.O. Box 1307 \ Storm Lake, Iowa 50588
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