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What changed in GREEN DOT CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GREEN DOT CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+334 added−325 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in GREEN DOT CORP's 2023 10-K

334 paragraphs added · 325 removed · 261 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

54 edited+12 added−10 removed143 unchanged
Biggest changeIn our Employer channel, we offer a comprehensive payroll platform to corporate enterprises to facilitate payments made for today’s workforce, including: • PayCard programs that help corporate enterprises eliminate paper checks, reduce costs and improve efficiency; • On demand employee wage access; and • Affordable instant digital pay options that replace slow and costly traditional pay methods. 2 Table of Contents Money Movement Services 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.
Biggest changeIn our Employer channel, we offer a comprehensive payroll platform to corporate enterprises to facilitate payments made for today’s workforce, including: • PayCard programs that help corporate enterprises eliminate paper checks, reduce costs and improve efficiency; • On demand employee wage access; and 2 Table of Contents • Affordable instant digital pay options that replace slow and costly traditional pay methods.
We compete primarily on the basis of the following: • breadth of distribution; • speed and quality of innovation; • reliability of system performance and security; 3 Table of Contents • scalability of platform services; • quality of service; • customer satisfaction; • compliance and regulatory capabilities; • brand recognition and reputation; and • pricing.
We compete primarily on the basis of the following: • breadth of distribution; • speed and quality of innovation; 3 Table of Contents • reliability of system performance and security; • scalability of platform services; • quality of service; • customer satisfaction; • compliance and regulatory capabilities; • brand recognition and reputation; and • pricing.
We and our subsidiaries are subject to supervision, regulation and examination by various federal and state regulators, including the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Utah Department of Financial Institutions (the “Utah DFI”), and various other state regulatory agencies.
We and our subsidiaries are subject to supervision, regulation and examination by various federal and state regulators, including the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Utah Department of Financial Institutions (the “Utah DFI”), and various other federal and state regulatory agencies.
This support may be required by the Federal Reserve at times when we might otherwise determine not to provide it or when doing so is not 8 Table of Contents otherwise in the interests of Green Dot Corporation or our shareholders or creditors.
This support may be required 8 Table of Contents by the Federal Reserve at times when we might otherwise determine not to provide it or when doing so is not otherwise in the interests of Green Dot Corporation or our shareholders or creditors.
Risk Factors.” Intellectual Property We rely on a combination of patent, trademark and copyright laws and trade secret protections in the United States, as well as confidentiality procedures and contractual provisions, to protect the intellectual property rights related to our products and services. We own several trademarks, including Green Dot and GO2bank.
Risk Factors.” Intellectual Property We rely on a combination of patent, trademark and copyright laws and trade secret protections in the United States, as well as confidentiality procedures and contractual provisions, to protect the intellectual property rights related to our products and services. We own several trademarks, including Green Dot.
The technology infrastructure supporting our platform is designed to minimize service disruptions, provide reasonable assurance of business continuity in the event of catastrophic occurrences and defend against data breaches and cyber security incidents. We continuously invest in security tools and other security technologies to protect our data and help keep our customers and partners safe.
The technology infrastructure supporting our platform is designed to minimize service disruptions, provide reasonable assurance of business continuity in the event of catastrophic occurrences and defend against data breaches and cybersecurity incidents. We continuously invest in security tools and other security technologies to protect our data and help keep our customers and partners safe.
Capital and Liquidity Requirements In General . Under the U.S. regulatory capital rules to implementing the Basel III regulatory capital framework, Green Dot Corporation and Green Dot Bank are required to maintain minimum risk-based and leverage capital ratios.
Capital and Liquidity Requirements In General . Under the U.S. regulatory capital rules to implement the Basel III regulatory capital framework, Green Dot Corporation and Green Dot Bank are required to maintain minimum risk-based and leverage capital ratios.
The Federal Reserve may require BHCs, including us, to maintain capital substantially in excess of mandated minimum levels, depending upon general economic conditions and a BHC’s particular condition, risk profile and growth plans. The Federal Reserve may also require BHCs or their subsidiaries to make other capital or liquidity commitments.
The Federal Reserve may require BHCs, which include us, to maintain capital substantially in excess of mandated minimum levels, depending upon general economic conditions and a BHC’s particular condition, risk profile and growth plans. The Federal Reserve may also require BHCs or their subsidiaries to make other capital or liquidity commitments.
This discussion is not intended to describe all laws and regulations applicable to Green Dot Corporation, Green 4 Table of Contents Dot Bank and our other subsidiaries and is qualified in its entirety by reference to the full text of the statutes, regulations, policies, interpretive letters and other written guidance that are described.
This discussion is not intended to describe all laws and regulations applicable to Green Dot Corporation, Green Dot Bank and our other subsidiaries and is qualified in its entirety by reference to the full text of the statutes, regulations, policies, interpretive letters and other written guidance that are described.
In 2023, we intend to launch a manager specific training that is designed to increase managerial capability in the areas of communication, engagement, coaching, inclusion and diversity, hiring and on-boarding, business skills, and ensuring an ethical and supportive work environment free from bias and harassment.
In 2023, we launched a manager specific training that is designed to increase managerial capability in the areas of communication, engagement, coaching, inclusion and diversity, hiring and on-boarding, business skills, and ensuring an ethical and supportive work environment free from bias and harassment.
B2B Services Our B2B Services segment consists of revenues and expenses derived from (i) our partnerships with some of the United States' most prominent consumer and technology companies that make our banking products and services available to their consumers, partners and workforce through integration with our banking platform (the "Banking-as-a-Service", or "BaaS channel"), and (ii) a comprehensive payroll platform that we offer to corporate enterprises (the "Employer channel"), to facilitate payments for today’s workforce.
B2B Services Our B2B Services segment consists of revenues and expenses derived from (i) our partnerships with prominent consumer and technology companies that make our banking products and services available to their consumers, partners and workforce through integration with our banking platform (the "Banking-as-a-Service", or "BaaS channel"), and (ii) a comprehensive payroll platform that we offer to corporate enterprises (the "Employer channel"), to facilitate payments for today’s workforce.
ITEM 1. Business Overview 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.
ITEM 1. Business Overview Founded in 1999, 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.
As of December 31, 2022, our and Green Dot Bank’s regulatory capital ratios were above the well-capitalized standards and met the then-applicable capital conservation buffer.
As of December 31, 2023, our and Green Dot Bank’s regulatory capital ratios were above the well-capitalized standards and met the then-applicable capital conservation buffer.
In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. The risks associated with patents and intellectual property are more fully discussed in “Item 1A. Risk Factors.” Regulation and Supervision General Our business is highly regulated under federal and state laws.
In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. The risks associated with patents and intellectual property are more fully discussed in “Part I, Item 1A. Risk Factors.” Regulation and Supervision General Our business is highly regulated under federal and state laws.
Under the Federal Reserve’s rules, investors 6 Table of Contents can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence. Utah Change in C o ntrol Restrictions .
Under the Federal Reserve’s rules, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence. Utah Change in C o ntrol Restrictions .
The final rule establishes a new framework for analyzing certain provisions of the “deposit broker” definition, including “placing deposits,” “facilitating 7 Table of Contents the placement of deposits” and “primary purpose,” for purposes of the classification of deposits as brokered deposits and exemptions from such a classification.
The final rule established a framework for analyzing certain provisions of the 7 Table of Contents “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 the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of noncontrol. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants.
As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of noncontrol. These indicia of control include nonvoting equity ownership, director representation, management 6 Table of Contents interlocks, business relationship and restrictive contractual covenants.
Depositor Preference The Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, including Green Dot Bank, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver would have priority over other general unsecured claims against the institution.
Depositor Preference The Bank Merger Act provides that, in the event of the liquidation or other resolution of an insured depository institution, including Green Dot Bank, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver would have priority over other general unsecured claims against the institution.
For fiscal year 2022 our voluntary turnover rate was less than 15%, which we believe demonstrates the strength of our culture and professional development programs. We offer industry specific training regarding regulatory standards and compliance, as well as self-directed learning through LinkedIn’s learning platform.
For fiscal year 2023 our voluntary turnover rate was less than 11%, which we believe demonstrates the strength of our culture and professional development programs. We offer industry specific training regarding regulatory standards and compliance, as well as self-directed learning through LinkedIn’s learning platform.
Our operating revenues derived from the several products and services we offer through Walmart stores and other Walmart distribution avenues in aggregate represented approximately 21%, 24%, and 27% of our total operating revenues for the years ended December 31, 2022, 2021, and 2020, respectively.
Our operating revenues derived from the several products and services we offer through Walmart stores and other Walmart distribution avenues in aggregate represented approximately 17%, 21%, and 24% of our total operating revenues for the years ended December 31, 2023, 2022, and 2021, respectively.
Green Dot Bank’s strategic plan for 2021 through 2023 is focused on supporting the credit needs of its defined assessment area primarily through direct community development lending and investment, small business lending, and services in Green Dot Bank’s designated CRA Assessment Area of Utah and Juab Counties, as well as the broader surrounding geographic region.
The proposed plan is focused on supporting the credit needs of its defined assessment area primarily through direct community development lending and investment, small business lending, and services in Green Dot Bank’s designated CRA Assessment Area of Utah and Juab Counties, as well as the broader surrounding geographic region.
We believe our products and services compete favorably with respect to these factors. The risks associated with our competitors are more fully discussed in “Item 1A.
We believe our products and services compete favorably with respect to these factors. The risks associated with our competitors are more fully discussed in “Part I, Item 1A.
For example, our deposit products and operations are subject to the following federal laws, among others: • the Truth in Savings Act and Regulation DD issued by the CFPB, which require disclosure of deposit terms to consumers; • Regulation CC issued by the Federal Reserve, which relates to the availability of deposit funds to consumers; • the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and • the Electronic Fund Transfer Act and Regulation E issued by the CFPB, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.
For example, our deposit products and operations are subject to the following federal laws, among others: • the Truth in Savings Act and Regulation DD issued by the CFPB, which require disclosure of deposit terms to consumers; • Regulation CC issued by the Federal Reserve, which relates to the availability of deposit funds to consumers; • the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and • the Electronic Fund Transfer Act and Regulation E issued by the CFPB, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. 11 Table of Contents The CFPB has also adopted amendments to Regulation E and Regulation Z to add protections for prepaid accounts (the “CFPB Prepaid Rule”).
As a result of the new rule, Green Dot Bank reclassified its deposits as non-brokered. The risks associated with the failure to properly classify deposits are more fully discussed in "Item 1A.
As a result of the final rule, Green Dot Bank reclassified most of its deposits as non-brokered. The risks associated with the failure to properly classify deposits are more fully discussed in "Part I, Item 1A.
In our BaaS channel, our partners make our banking products and services available to their consumers, partners and workforce through integration with our banking platform, and in doing so, our addressable market expands to a broader spectrum of consumers as well as small businesses. Our banking platform includes an integrated bank, full program management services and enterprise-grade technology.
In our BaaS channel, our partners make our banking products and services available to their consumers, partners and workforce in the United States through integration with our banking platform, expanding our addressable market to a broader spectrum of consumers as well as small businesses. Our banking platform includes an integrated bank, full program management services and enterprise-grade technology.
As employees advance in their careers, our training framework seeks to build new capabilities with foundational leadership skills. Our leaders are further empowered to design bespoke learning experiences catered to their specific needs.
As employees advance in their careers, our training framework seeks to build new capabilities with foundational leadership skills. Our leaders have and will continue to be further empowered to design bespoke learning experiences catered to their specific needs.
Our deposit account programs are generally issued by Green Dot Bank. We also manage programs issued by third-party issuing banks as a result of several acquisitions we have made over the past few years.
Our deposit account programs are generally issued by Green Dot Bank, but we also manage programs issued by third-party issuing banks as a result of several acquisitions we made several years ago.
Total Rewards To ensure our pay and benefits programs are consistent with our total rewards philosophy, we maintain best practices aimed at delivering fair and equitable compensation for employees based on their contribution and performance. We benchmark for market practices, and regularly review our compensation against the market to ensure it remains competitive.
Total Rewards To ensure our pay and benefits programs are consistent with our total rewards philosophy, we maintain best practices aimed at delivering fair and equitable compensation for employees based on their contribution and performance.
Consumer Protection Laws The CFPB has broad rulemaking authority over a wide range of federal consumer protection laws that apply to banks and other providers of financial products and services, including the authority to prohibit “unfair, deceptive or abusive” acts and practices.
Similar state laws may impose additional requirements on Green Dot Corporation and Green Dot Bank. Consumer Protection Laws The CFPB has broad rulemaking authority over a wide range of federal consumer protection laws that apply to banks and other providers of financial products and services, including the authority to prohibit “unfair, deceptive or abusive” acts and practices.
Some of our largest customers include Apple, Inc., Intuit, Inc., and Amazon.com, Inc., amongst others.
Our largest customers include Apple, Inc., Intuit, Inc., and Amazon.com, Inc., among others.
All Walmart MoneyCard products are reloadable exclusively on the Green Dot Network. Additionally, Walmart enables cash transfer services for our deposit account programs and third-party programs through the Green Dot Network.
Additionally, Walmart enables cash transfer services for our deposit account programs and third-party programs through the Green Dot Network.
We are also subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act both as administered by the Securities and Exchange Commission ("SEC"), as well as the rules of the New York Stock Exchange ("NYSE") that apply to companies with securities listed on the NYSE.
We are also subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act both as administered by the Securities and Exchange Commission ("SEC"), as well as the rules of the New York Stock Exchange ("NYSE") that apply to companies with securities listed on the NYSE. 4 Table of Contents The following discussion describes certain elements of the comprehensive regulatory framework applicable to us.
To reinforce a deep connection and establish clear direction with our employees, we continue to provide regular leadership updates and management outreach. 13 Table of Contents Organizational Culture and Ethics To promote the highest standards of honest and ethical business conduct and compliance with applicable laws, we have adopted codes of business conduct and ethics that apply to all of our board members, officers and employees and which are posted on the Investor Relations section of our website located at http://ir.greendot.com, by clicking on “Governance.” In 2022, we launched GO2give, an employee giving (donation and volunteerism) platform that provides resources and opportunities for employees to support charitable causes that are meaningful to them.
Organizational Culture and Ethics To promote the highest standards of honest and ethical business conduct and compliance with applicable laws, we have adopted codes of business conduct and ethics that apply to all of our board members, officers and employees and which are posted on the Investor Relations section of our website located at http://ir.greendot.com, by clicking on “Governance.” In 2023, we continued our philanthropic giving program launched in 2022, "Green Dot Gives," an employee giving (donation and volunteerism) platform that provides resources and opportunities for employees to support charitable causes that are meaningful to them.
Through agreements with our network acceptance members, retail distributors and customers, we authorize and monitor the use of our trademarks in connection with their activities with us. Our patent portfolio currently consists of 13 issued patents, 2 published patents and 1 patent application pending.
Through agreements with our network acceptance members, retail distributors and customers, we authorize and monitor the use of our trademarks in connection with their activities with us. Our patent portfolio currently consists of 17 issued patents and 1 patent application pending. The current remaining terms for the patents we hold vary between approximately 2 and 16 years .
Our Products and Services 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 movement services, such as tax refunds, cash deposits and disbursements.
Green Dot Bank is a wholly owned subsidiary of Green Dot Corporation and member of the Federal Deposit Insurance Corporation. Our Products and Services 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 movement services, such as tax refunds, cash deposits and disbursements.
In addition to Walmart MoneyCard products, we offer our Green Dot-branded and GO2bank deposit account products at Walmart, providing consumers the choice to purchase either Green Dot-branded products or Walmart MoneyCard products. We are also the provider of certain Walmart-branded open loop gift cards. Walmart provides us with shelf space to display and offer the deposit accounts to consumers.
In addition to Walmart MoneyCard products, we offer our Green Dot-branded and GO2bank deposit account products at Walmart, providing consumers the choice to purchase either Green Dot-branded products or Walmart MoneyCard products. Walmart provides us with shelf space to display and offer the deposit accounts to consumers. All Walmart MoneyCard products are reloadable exclusively on the Green Dot Network.
In certain instances, a BHC may be required to guarantee the performance of an undercapitalized subsidiary bank’s capital restoration plan. Brokered Deposits The FDIC issued a final rule relating to the classification of brokered deposits, which became effective on April 1, 2021, with full compliance with certain provisions extended to January 1, 2022.
In certain instances, a BHC may be required to guarantee the performance of an undercapitalized subsidiary bank’s capital restoration plan. Brokered Deposits The FDIC issued a final rule relating to the classification of brokered deposits, with full compliance required in the beginning of fiscal year 2022.
The NCG Committee’s duties in this regard include reviewing and evaluating the company’s programs, policies and practices relating to ESG issues and related disclosures and recommending to the Board of Directors the company’s overall strategy with respect to ESG matters. In 2022, we continued to advance our ESG strategy by establishing a management-level ESG Steering Committee (the "ESG Steering Committee").
The NCG Committee’s duties in this regard include reviewing and evaluating our programs, policies and practices relating to ESG issues and related disclosures and recommending to our Board of Directors (our "Board of Directors" or "Board") our overall strategy with respect to ESG matters.
Throughout our history, we have offered several branded deposit programs through our various channels, however, beginning in 2021 we have focused our consumer deposit account programs on our flagship product, GO2bank, offering consumers simple and accessible mobile banking designed to help improve financial health over time.
While we continue to offer several legacy branded deposit programs, since 2021 we have focused our consumer deposit account programs on our flagship product, GO2bank, offering consumers simple and accessible mobile banking designed to help improve financial health over time.
The industries in which we compete are characterized by rapidly changing technology, a large number of patents, and frequent claims and related litigation regarding patent and other intellectual property rights.
We feel many of our patents and applications are important to our business and help to differentiate our products and services from those of our competitors. The industries in which we compete are characterized by rapidly changing technology, a large number of patents, and frequent claims and related litigation regarding patent and other intellectual property rights.
We refer to this retail cash transaction network as the Green Dot Network; and • Simply Paid Disbursement services that enable wages and any type of authorized funds disbursement to be sent to our deposit account programs and accounts issued by any third-party bank or program manager.
We refer to this retail cash transaction network as the Green Dot Network; and • Simply Paid Disbursement services that enable wages and any type of authorized funds disbursement to be sent to our deposit account programs and accounts issued by any third-party bank or program manager. 1 Table of Contents Our tax processing services are designed for participants in the tax industry and include: • Tax refund transfers that provide the processing technology to facilitate receipt of a taxpayer's refund proceeds.
We cannot predict whether any changes will be made to applicable CRA requirements, and what impact any such changes will have on our CRA strategic plan. Insurance of Deposit Accounts The deposits of Green Dot Bank are insured by the DIF up to the standard maximum deposit insurance amount of $250,000 per depositor.
As most of the changes implemented by the new rule will not take effect until January 1, 2026, we cannot yet predict what impact such changes will have on our CRA strategic plan. Insurance of Deposit Accounts The deposits of Green Dot Bank are insured by the DIF up to the standard maximum deposit insurance amount of $250,000 per depositor.
Use of such data is regulated under the Fair Credit Reporting Act (the “FCRA”), and the FCRA also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates and using affiliate data for marketing purposes. Similar state laws may impose additional requirements on Green Dot Corporation and Green Dot Bank.
Like other lenders, Green Dot Bank and other of our subsidiaries use credit bureau data in their underwriting activities. Use of such data is regulated under the Fair Credit Reporting Act (the “FCRA”), and the FCRA also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates and using affiliate data for marketing purposes.
On February 1, 2023, the CFPB proposed a rule that, if adopted, would further limit credit card late fees. 11 Table of Contents Because Green Dot Bank has less than $10 billion in total consolidated assets, the Federal Reserve, and not the CFPB, is responsible for examining and supervising Green Dot Bank’s compliance with these and other federal consumer financial laws and regulations.
Because Green Dot Bank has less than $10 billion in total consolidated assets, the Federal Reserve, and not the CFPB, is responsible for examining and supervising Green Dot Bank’s compliance with these and other federal consumer financial laws and regulations.
The CFPB has also adopted amendments to Regulation E and Regulation Z to add protections for prepaid accounts (the “CFPB Prepaid Rule”). The CFPB Prepaid Rule includes requirements related to treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts.
The CFPB Prepaid Rule includes requirements related to treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts. On February 1, 2023, the CFPB proposed a rule that, if adopted, would further limit credit card late fees.
The Federal Reserve and Utah DFI have broad supervisory and enforcement authority with regard to BHCs and banks, including the power to conduct examinations and investigations, impose nonpublic supervisory agreements, issue cease and desist orders, impose fines and other civil and criminal penalties, terminate deposit insurance and appoint a conservator or receiver.
The Federal Reserve and Utah DFI have broad supervisory and enforcement authority with regard to BHCs and banks, including the power to conduct examinations and investigations, impose nonpublic supervisory agreements, issue cease and desist orders, impose fines and other civil and criminal penalties, terminate deposit insurance and appoint a conservator or receiver. 5 Table of Contents Bank regulators have various remedies available if they determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of a banking organization’s operations are unsatisfactory.
We offer a comprehensive and tailored set of benefits for employees and their families, providing protection from unexpected losses or medical expenses.
We benchmark against market practices, and regularly review our compensation against the market to ensure it remains competitive. 13 Table of Contents We offer a comprehensive and tailored set of benefits for employees and their families, providing protection from unexpected losses or medical expenses.
We also believe that ongoing employee performance feedback encourages greater engagement in our business and improved individual performance. Diversity, Equity, Inclusion, and Belonging We believe that a diverse, equitable and inclusive working environment with high belonging helps drive our mission and provides our workforce with the best opportunities for success.
Diversity, Equity, Inclusion, and Belonging We believe that a diverse, equitable and inclusive working environment with high belonging helps drive our mission and provides our workforce with the best opportunities for success. We are committed to improving representation and inclusion for employees at all levels of the organization.
We will endeavor to provide transparent disclosures on the progress of this work. Human Capital As of December 31, 2022, we had approximately 1,200 full-time employees globally, of which approximately 74% are located in the United States, and 26% are located in China.
The information in the ESG report and on our website is not part of this report or incorporated in this report by reference. 12 Table of Contents Human Capital As of December 31, 2023, we had approximately 1,200 full-time employees globally, of which approximately 74% are located in the United States, and 26% are located in China.
Our focus on employee engagement occurs in three foundational areas: recruiting and retaining a diverse and talented workforce, enhancing employee experience, and management that reiterates purpose and ensures commitment for continuous growth and development. 12 Table of Contents Talent Retention and Development We strive to maintain a workforce that is representative of the industry we serve, comprised of highly technical individuals, who enjoy pushing the boundaries of what is possible and are individually innovative.
Talent Retention and Development We strive to maintain a workforce that is representative of the industry we serve, comprised of highly technical individuals, who enjoy pushing the boundaries of what is possible and are individually innovative.
In 2023, we intend to further our diversity through hiring, career development, succession planning and leadership education. We also intend to introduce an educational platform for all employees to access that includes a variety of educational topics related to DEIB.
We also introduced an educational platform for all employees to access that includes a variety of educational topics related to DEIB. In 2024, we intend to continue to pursue enterprise efforts in DEIB, employee lifecycle design, talent development and culture transformation.
Bank regulators have various remedies available if they determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of a banking organization’s operations are 5 Table of Contents unsatisfactory. The regulators may also take action if they determine that the banking organization or its management is violating or has violated any law or regulation.
The regulators may also take action if they determine that the banking organization or its management is violating or has violated any law or regulation.
We use annual employee engagement surveys to track and enhance employee sentiment and satisfaction; identify opportunities to instill our mission, vision, values, and business objectives throughout the organization; and build a performance-driven culture in a continually evolving remote and virtual environment.
We continuously seek to identify ways to instill our mission, vision, values, and business objectives throughout our organization, and build a performance-driven culture in a continually evolving remote and virtual environment. We use these surveys to solicit feedback about members of our senior leadership up to and including our Chief Executive Officer from employees at all levels of our organization.
We are committed to improving representation and inclusion for employees at all levels of the organization. We conducted a DEIB analysis of our workforce in 2022 and are actively working to further enhance recruitment strategies and career development strategies in support of our initiatives.
We conducted a DEIB analysis of our workforce in 2022 and since then have been actively working to further enhance recruitment strategies and career development strategies in support of our initiatives. We made additional improvements in closing the gender gap in 2023, ending the year with a workforce comprised of 55% male and 45% female employees.
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Our tax processing services are designed for participants in the tax industry and include: 1 Table of Contents • Tax refund transfers that provide the processing technology to facilitate receipt of a taxpayers' refund proceeds.
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Money Movement Services 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.
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The current remaining terms for the patents we hold vary between approximately 4 and 20 years . We feel our patents and applications are important to our business and help to differentiate our products and services from those of our competitors.
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Green Dot Bank is currently seeking regulatory approval for a new strategic plan covering the period from 2024 through 2028.
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The following discussion describes certain elements of the comprehensive regulatory framework applicable to us.
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On October 24, 2023, the Federal Reserve Board joined the FDIC and Office of the Comptroller of the Currency in issuing a new final rule seeking to strengthen and modernize the regulations that implement the CRA.
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The federal banking agencies have indicated their support for revising the CRA regulatory framework. On September 21, 2020, the Federal Reserve issued an Advance Notice of Proposed Rulemaking to modernize the regulations that implement the CRA, and the public comment period ended on February 16, 2021.
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For example, effective January 1, 2023, the California Privacy Rights Act (the "CPRA") amended and significantly expanded the California Consumer Privacy Act (the “CCPA”), which originally provided California residents certain privacy rights in the collection and disclosure of their personal information and required businesses to make certain disclosures and take certain other acts in furtherance of those rights.
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The Federal Reserve Board, along with the FDIC and the Office of the Comptroller of the Currency, issued a Notice of Proposed Rulemaking (“NPR”) on May 5, 2022. The deadline for submitting comments on the NPR was August 5, 2022.
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The CPRA also created a new agency, the California Privacy Protection Agency, authorized to implement and enforce the CCPA and the CPRA, which could result in increased privacy and information security regulatory actions. Other U.S. states have considered and/or enacted similar privacy laws.
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For example, in November 2020, a ballot initiative called the California Privacy Rights Act (the "CPRA"), passed in California which amended the California Consumer Privacy Act (the “CCPA”) as of January 1, 2023. Enforcement of these changes to the CCPA are scheduled to begin July 1, 2023. We will continue to monitor developments related to the CPRA.
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For example, Virginia, Utah, Connecticut, and Colorado have passed new consumer privacy laws with effective dates in 2023, and Delaware, Indiana, Iowa, Montana, Oregon, Tennessee, and Texas have passed consumer privacy laws that will become effective in 2024, 2025, or 2026. In addition, the federal government may also pass data privacy or data security legislation.
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In addition, laws similar to the CPRA may be adopted by other states where we do business and the federal government may also pass data privacy or data security legislation. Like other lenders, Green Dot Bank and other of our subsidiaries use credit bureau data in their underwriting activities.
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In 2022, we continued to advance our ESG strategy by establishing a management-level ESG Steering Committee comprised of employees across our company from human resources to legal to business development (the "ESG Steering Committee").
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We use these surveys to solicit feedback about members of our senior leadership up to and including our Chief Executive Officer from employees at all levels of our organization. The three highest rated categories were how employees felt about their managers, DEIB, and overall job satisfaction.
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We will endeavor to provide transparent disclosures on the progress of this work and to this end we published our inaugural Environmental, Social and Governance Report in 2023. More detailed information about the progress of our work can be found in that report located at https://ir.greendot.com/corporate-governance/highlights.
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We made additional improvements in closing the gender gap in 2022, ending the year with a workforce comprised of 55% male and 45% female employees. We grew our Employee Resources Groups by over 200% and implemented enterprise-wide events to create new levels of knowledge, empathy and community connection for our people.
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Our focus on employee engagement occurs in three foundational areas: recruiting and retaining a diverse and talented workforce, enhancing employee experience, and management that reiterates purpose and ensures commitment for continuous growth and development.
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Employee Health and Safety The health and well-being of our workforce is one of our top priorities. Our team members in Shanghai, China experienced the strictest COVID measures throughout the pandemic. Our office in China reopened in June 2022 and we continue to comply with local health and safety guidelines.
Added
We have historically used annual employee engagement surveys to track and enhance employee sentiment and satisfaction, and in 2023 added monthly climate surveys to better understand employee well-being and leadership opportunities.
Added
The three highest rated categories were manager respect and trust for their teams, meaningful work, and organizational equality. We also believe that ongoing employee performance feedback encourages greater engagement in our business and improved individual performance.
Added
We grew our Employee Resources Group memberships by 24%, and the number of groups increased approximately 29%. We also delivered 10 enterprise-wide events to create new levels of knowledge, empathy and community connection for our people. We focused on furthering diversity through hiring, career development, succession planning and leadership education.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

84 edited+16 added−16 removed129 unchanged
Biggest changeFrom 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.
Biggest changeFailure to fully comply with these requirements exposes us to the risk of being required to undertake substantial remediation efforts and to the risk of, among other things, enforcement actions, lawsuits, monetary damages, fines, penalties and reputational harm, any one of which could have a material adverse impact on our results of operations, financial condition or business prospects. 22 Table of Contents From time to time, federal and state legislators and regulatory authorities, including state attorney generals, increase their focus on the banking, consumer financial services and tax preparation industries and have in the past and may in the future propose and adopt new legislation or guidance that could result in significant adverse changes in the regulatory landscape for financial institutions and financial services companies.
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, 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.
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.
The restriction on our ability to commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval would also generally apply if Green Dot Bank received a CRA rating of less than “Satisfactory.” Currently, under the BHC Act, we may not be able to engage in new activities or acquire shares or control of other businesses.
The restriction on our ability to commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval would also generally apply if Green Dot Bank received a CRA rating of less than “Satisfactory.” Currently, under the Bank Holding Company Act (the "BHC Act"), we may not be able to engage in new activities or acquire shares or control of other businesses.
Fluctuations in our quarterly or annual results of operations might result from a number of factors including the occurrence of one or more of the events or circumstances described in these risk factors, many of which are outside of our control, including, but not limited to: • the timing and volume of purchases and use of our products and services; • the timing and volume of tax refunds or other government payments processed by us; • the timing and success of new product or service introductions by us or our competitors; • fluctuations in customer retention rates; 25 Table of Contents • 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.
Fluctuations in our quarterly or annual results of operations might result from a number of factors including the occurrence of one or more of the events or circumstances described in these risk factors, many of which are outside of our control, including, but not limited to: • the timing and volume of purchases and use of our products and services; • the timing and volume of tax refunds or other government payments processed by us; • the timing and success of new product or service introductions by us or our competitors; • 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; 25 Table of Contents • costs associated with significant changes in our risk policies and controls; • the amount and timing of major advertising campaigns, including sponsorships; • the amount and timing of capital expenditures and operating costs; • interest rate volatility; • our ability to control costs, including third-party service provider costs and sales and marketing expenses; • volatility in the trading price of our Class A common stock; • changes in the political or regulatory environment affecting the industries in which we operate; • economic recessions or uncertainty in financial markets, and the uncertainty regarding the impact of inflation; and • other factors beyond our control, such as terrorism, war, natural disasters and pandemics as well as the other items included in these risk factors.
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.
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 competitors offering free or low-cost alternatives to our products and services.
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.
In addition, the revenues we generate from our tax refund processing services are largely derived from products and services sold through retail tax preparation businesses and income tax software providers. Revenues from our BaaS partners, retail distributors and tax preparation partners depend on a number of factors outside our control and may vary from period to period.
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.
Given the possibility of recurring volatility in global financial markets, the approaches we use to assess and monitor the creditworthiness of our retail distributors or other banking partners may be inadequate, and we may be unable to detect and take steps to mitigate an increased credit risk in a timely manner.
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.
A large portion of our business is conducted through retail distributors that sell our products and services to consumers at their store locations or other banking partners that collect funds and fees from our customers on our behalf.
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.
As a result, our total operating revenues, operating results, prospects for future growth and overall business could be materially and adversely affected. Litigation or investigations could result in significant settlements, sanctions, fines or penalties.
The final rule 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 reclassified its deposits as non-brokered.
The final rule established a framework for analyzing certain provisions of the “deposit broker” definition, including “placing deposits,” “facilitating the placement of deposits” and “primary purpose,” for purposes of the classification of deposits as brokered deposits and exemptions from such a classification. As a result of the final rule, Green Dot Bank reclassified most of its deposits as non-brokered.
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 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.
There can be no assurance that we will be able to continue our relationships with our largest retail distributors, significant BaaS partner or third-party processors on the same or more favorable terms in future periods or that our relationships will continue beyond the terms of our existing contracts with them.
We are subject to regulatory oversight in the normal course of our business and have been and from time to time 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.
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.
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.
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 24 Table of Contents may not be protected by intellectual property laws, particularly in foreign jurisdictions.
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.
Consumers might not use prepaid financial services or demand deposit accounts for any number of reasons, including the general perception of our industry, new technologies, a decrease in our distribution partners’ willingness to sell these products as a result of a more challenging regulatory environment or other factors outside of our control such as an economic recession.
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.
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 23 Table of Contents changes is limited by the terms of our contracts and other commercial factors, such as price competition.
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 24 Table of Contents 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.
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.
Refer to Note 21—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.
Refer to Note 21—Commitments and Contingencies to the Consolidated Financial Statements included herein for further information regarding certain of our legal and other proceedings. We may be unable to adequately protect our brand and our intellectual property rights related to our products and services or third parties may allege that we are infringing their intellectual property rights.
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.
If we are unable to manage and scale the technology associated with our business effectively, we could 18 Table of Contents 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.
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. 23 Table of Contents Furthermore, a substantial portion of our operating revenues is derived from interchange fees.
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.
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 27 Table of Contents the attention of our management and employees and increase the volatility of our stock.
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.
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.
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 17 Table of Contents that transaction, as permitted by card association rules.
Regardless of whether or not we are sued or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack. Depending 20 Table of Contents on the nature and magnitude of the accessed data, this effort may require substantial resources.
Regardless of whether or not we are sued or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack. Depending on the nature and magnitude of the accessed data, this effort may require substantial resources.
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.
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 27 Table of Contents acquiring control of a bank or bank holding company, subject to certain exceptions.
To the extent we incur losses from overdrafts above our reserves or we determine that it is 18 Table of Contents 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.
To the extent we incur losses from overdrafts above our reserves or we determine that it is necessary to increase our reserves substantially, our business, results of operations and financial condition could be materially and adversely affected. We face settlement risks from our retail distributors and banking partners, which may increase during an economic recession.
Our success in our account programs, including our BaaS programs, as well as our money movement services, 19 Table of Contents 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.
Our success in our account programs, including our BaaS programs, as well as our money movement services, depends upon the efficient and error-free handling of the money that is collected, remitted or deposited in connection with the provision of our products and services.
We do not have long-term contractual commitments from most of our current tax preparation partners and our tax preparation partners may elect to not renew their contracts with us with little or no advance notice.
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.
In addition, any publicity associated with the loss of any of our large retail distributors, significant BaaS partners or third-party processors could harm our reputation, making it more difficult to attract and retain consumers, BaaS partners, third-party processors and other retail distributors, and could lessen 15 Table of Contents our negotiating power with our remaining and prospective retail distributors, BaaS partners and third-party processors.
In addition, any publicity associated with the loss of any of our large retail distributors, significant BaaS partner or third-party processors could harm our reputation, making it more difficult to attract and retain consumers, BaaS partners, third-party processors and other retail distributors, and could lessen our negotiating power with our remaining and prospective retail distributors, BaaS partners and third-party processors.
For the year ended December 31, 2022, interchange revenues represented 20% 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.
For the year ended December 31, 2023, interchange revenues represented 15% 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.
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 13 issued patents, 2 published patents and 1 patent application pending.
We also rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to protect the intellectual property rights related to our products and services. We currently have 17 issued patents and 1 patent application pending.
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.
Additionally, because we compete with many other providers of products and services for placement and promotion of products in the stores of our retail distributors or in conjunction with the delivery of tax preparation services by our tax preparation providers, our success depends on the willingness of our retail distributors and tax preparation partners to promote our products 15 Table of Contents 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.
In general, our contracts with these third parties allow them to exercise significant discretion over the placement and promotion of our or their products and services, and for a variety of reasons they could give higher priority to other products or services they are offering or the products and services of other companies.
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 PTS.
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.
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. ITEM 1B. Unresolved Staff Comments None. ITEM 2. Properties Not applicable.
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. ITEM 1B. Unresolved Staff Comments None.
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 DFI.
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.
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.
Accordingly, the loss of Walmart or any significant decrease in customers’ spending levels and ability or willingness to purchase our account products through Walmart, for any reason, including inflation, would have a material adverse effect on our business and results of operations.
We will continue to make investments in research, development, and marketing for new products and services. If customers do not perceive our new offerings as providing significant 16 Table of Contents value, they may fail to accept our new products and services, which would negatively impact our operating revenues.
While we will continue to make investments in research, development, and marketing for new products and services, if customers do not perceive our new offerings as providing significant value, they may fail to accept our new products and services, which would negatively impact our operating revenues.
As a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 21.0% for the year ended December 31, 2022. We expect that Walmart will continue to have a significant impact on our operating revenues in future periods, particularly in our Consumer Services segment.
Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 17% for the year ended December 31, 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.
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 consumers do not continue or increase their usage of prepaid cards or demand deposit accounts, including making changes in the way such products are loaded, our operating revenues may decline. Any projected growth for the industry may not occur or may occur more slowly than estimated.
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.
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.
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 December 31, 2022, we had assets subject to settlement risk of $493.4 million.
If a retail distributor or other banking partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuing bank from the sales of our products and services, we are liable for any amounts owed to our customers. As of December 31, 2023, we had assets subject to settlement risk of $738.0 million.
Additionally, 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, significant inflationary pressure increases borrowing rates, and we may not be able to fully offset such higher costs through rate increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
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 regulations and other commitments we have agreed to, including financial commitments with respect to minimum capital and leverage requirements.
As a bank holding company, we, along with Green Dot Bank, are subject to comprehensive supervision and examination by the Federal Reserve Board and the State of Utah Department of Financial Institutions and must comply with applicable laws and regulations and other commitments we have agreed to, including financial 21 Table of Contents commitments with respect to minimum capital and leverage requirements.
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 $445.1 million as of December 31, 2022.
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 $420.5 million as of December 31, 2023.
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 21 Table of Contents 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 adversely affect our business.
A prolonged disruption at our China facility for any reason due to natural- or man-made disasters, outbreaks of disease, climate change or other events outside of our control, such as equipment malfunction or large-scale outages or interruptions of service from utilities or telecommunications providers, could potentially delay our ability to launch new products or services or impact our ability to deliver current products and services, which could materially and adversely affect our business.
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.
Our retail distributors and banking partners collect funds from the consumers who purchase our products and services and then must remit these funds directly to our subsidiary bank. While the remittance of these funds by the retail distributor or banking partner takes on average two business days, we may experience lengthy delays.
Accordingly, losing the support of our retail distributors and tax preparation partners might limit or reduce the sales 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.
Accordingly, losing the commitment of our BaaS partners, retail distributors and tax preparation partners might limit or reduce platform management fees and the sales of our products and services. Our operating revenues and operating expenses may also be negatively affected by the operational decisions of our BaaS partners, retail distributors and tax preparation partners.
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.
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 experience difficulty in managing transitions, such as the changes in our Chief Executive Officer in 2020 and 2022, 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.
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.
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.
As a result, some customers may experience disruptions in service in connection with such projects despite significant investments in planning and testing on the part of us and our technology partners.
The FDIC issued a final rule relating to the classification of brokered deposits, with full compliance required by January 1, 2022.
The FDIC issued a final rule relating to the classification of brokered deposits, with full compliance required in 2022.
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.
Our brands and marks are important to our business, and we utilize trademark registrations and other means to protect them. Our business would be harmed if we were unable to protect our brand against infringement.
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.
In addition, the implementation of technological changes could cause significant disruptions to our customers and our business and may cause processing errors. 19 Table of Contents 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.
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.
Our future success depends upon the active and effective promotion of our products and services by our BaaS partners, retail distributors and tax preparation partners. Most of our operating revenues are derived from platform management fees that we earn from our BaaS partners and products and services sold at the stores of our retail distributors.
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.
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.
In some instances, we are subject to significant legal restrictions on our ability to publicly disclose these actions or the full details of these actions, including those in examination reports. In addition, as part of the regular examination process, our and Green Dot Bank's regulators may advise us or our subsidiaries to operate under various restrictions as a prudential matter.
We are subject to significant legal restrictions on our ability to publicly disclose the existence of these actions or any of the related details. In addition, as part of the regular examination process, our and Green Dot Bank's regulators may direct us or our subsidiaries to operate under various restrictions as a prudential matter.
Failure to complete an acquisition could adversely affect our business as we could be required to pay a termination fee under certain circumstances or be subject to litigation, and our stock price may also suffer as the failure to consummate such an acquisition may result in negative perception in the investment community. 26 Table of Contents Further, the process of integrating an acquired business, product, service or technology can involve a number of special risks and challenges, including: • increased regulatory and compliance requirements; • implementation or remediation of controls, procedures and policies at the acquired company; • 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.
Further, the process of integrating an acquired business, product, service or technology can involve a number of special risks and challenges, including: • increased regulatory and compliance requirements; • implementation or remediation of controls, procedures and policies at the acquired company; • 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; 26 Table of Contents • 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.
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.
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 may be negatively impacted as a result.
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.
Additionally, increased interest rates may adversely impact our customers’ spending levels or our customers’ ability to pay outstanding amounts owed to us. Please see “Quantitative and Qualitative Disclosures about Market Risk” for more information regarding the potential impact of the various market risks on our business. Economic, political and other conditions may adversely affect trends in consumer spending.
If we fail to comply with any of these requirements, we may become subject to formal or informal enforcement actions, proceedings, or investigations, which could result in regulatory orders, 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 regulators believe that we or Green Dot Bank have not complied with any of these requirements, we may become subject to formal or informal enforcement actions, proceedings, or investigations, which could result in regulatory orders, penalties, restitution, restrictions on our business operations or requirements to take corrective actions, which may, individually or in the aggregate, affect our results of operations and restrict our ability to grow.
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 impact our results of operations. 17 Table of Contents We may not keep pace with the rapid technological developments in the industries in which we compete and the larger electronic payments industry.
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 impact our results of operations.
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.
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.
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.
Criminals are using increasingly sophisticated methods to engage in illegal activities using deposit account products (including prepaid cards), reload products, or customer information and may see their effectiveness enhanced by the use of Artificial Intelligence. Illegal activities involving our products and services often include malicious social engineering schemes.
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.
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.
In recent years, “challenger” banks 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, we launched GO2bank.
In recent years, digital-centric financial services platforms have gained 16 Table of Contents 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.
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.
ITEM 1A. Risk Factors RISKS RELATED TO OUR BUSINESS The loss of operating revenues from our BaaS partners and Walmart or any of our largest retail distributors as well as third-party processors or other major consumers would adversely affect our business.
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.
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.
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.
Our business could suffer if there is a decline in the use of prepaid cards or demand deposit accounts as a payment mechanism or there are adverse developments with respect to the financial services industry in general.
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.
We have in the past acquired, and we may acquire in the future, other businesses and technologies. Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to identify suitable candidates or successfully complete identified acquisitions.
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.
Additionally, our U.S.-based employees, including our senior management team, work for us on an at-will basis and there is no assurance that any such employee will remain with us. Acquisitions or investments, or the failure to consummate such transactions, could disrupt our business and harm our financial condition.
We 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.
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.
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.
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. 20 Table of Contents Failure to maintain satisfactory compliance with certain privacy and data protection laws and regulations may subject us to substantial negative financial consequences, civil or criminal penalties and business reputation risk.
For example, we are subject to the AML reporting and recordkeeping requirements of the BSA, as amended by the PATRIOT Act.
For example, we are subject to the AML reporting and recordkeeping requirements of the BSA, as amended by the PATRIOT Act. Monitoring and complying with all applicable laws, regulations and licensing requirements can be difficult and costly.
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.
Even if our BaaS partners, retail distributors and tax preparation partners actively and effectively promote our or their products and services, there can be no assurance that their efforts will maintain or result in growth of our operating revenues. Future revenue growth depends on our ability to retain and attract new long-term users of our products.
Our 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.
Our systems and the systems of third-party processors are susceptible to outages and interruptions due to fire, natural disaster, cyber-attacks, power loss, telecommunications failures, software or hardware defects, terrorist attacks, pandemics and similar events. We use both internally developed and third-party systems, including cloud computing and storage systems, for our services and certain aspects of transaction processing.
The effects of the continued economic downturn associated with the COVID-19 pandemic and other global and economic factors have resulted and may continue to result in rising inflation rates, interest rates, and unemployment rates, leading to economic challenges for consumers and reduced transaction and spending volumes on accounts.
Global and macro-economic factors have resulted and may continue to result in high inflation rates, interest rates, and unemployment rates, leading to economic challenges for consumers and our retail distributors and other partners as well as reduced transaction and spending volumes on accounts.
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.
Complying with these laws and regulations can be costly and can impede the development and offering of new products and services.
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 may not keep pace with the rapid technological developments in the industries in which we compete and the larger electronic payments industry. The electronic payments industry is subject to rapid and significant technological changes. We cannot predict the effect of technological changes on our business.
If the FDIC determines that Green Dot Bank’s deposits should actually be classified as brokered, such a finding could have an adverse impact on our financial condition. 22 Table of Contents 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.
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.
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 and to help detect and prevent money laundering, terrorist financing and other illicit activities.
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.
Failure to maintain satisfactory compliance with certain privacy and data protection laws and regulations may subject us to substantial negative financial consequences, civil or criminal penalties and business reputation risk. Complex existing and emerging local, state, and federal laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal information.
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.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. Legal Proceedings Information with respect to this item may be found under the caption "Litigation and Claims" in Note 21—Commitments and Contingencies to the Consolidated Financial Statements included herein, which information is incorporated into this Item 3 by reference. ITEM 4. Mine Safety Disclosures Not applicable. 28 Table of Contents PART II
Biggest changeITEM 3. Legal Proceedings Information with respect to this item may be found under the caption "Litigation and Claims" in Note 21—Commitments and Contingencies to the Consolidated Financial Statements included herein, which information is incorporated into this Item 3 by reference. ITEM 4. Mine Safety Disclosures Not applicable. 29 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Return to Shareholders (Includes reinvestment of dividends) Company/ Index Base Period 12/31/17 2018 2019 2020 2021 2022 Green Dot Corporation $ 100 $ 132 $ 39 $ 93 $ 60 $ 26 Russell 2000 $ 100 $ 89 $ 112 $ 134 $ 154 $ 122 S&P Smallcap 600 $ 100 $ 92 $ 112 $ 125 $ 159 $ 133 S&P Financials $ 100 $ 87 $ 115 $ 113 $ 153 $ 136 S&P Composite 1500 Financials $ 100 $ 87 $ 114 $ 112 $ 151 $ 135 30 Table of Contents ITEM 6. [Reserved]
Biggest changeTotal Return to Stockholders (Includes reinvestment of dividends) Company/ Index Base Period 12/31/18 2019 2020 2021 2022 2023 Green Dot Corporation $ 100 $ 29 $ 70 $ 46 $ 20 $ 12 Russell 2000 $ 100 $ 126 $ 151 $ 173 $ 138 $ 161 S&P Smallcap 600 $ 100 $ 123 $ 137 $ 173 $ 145 $ 169 S&P Composite 1500 Financials $ 100 $ 131 $ 129 $ 173 $ 156 $ 174 31 Table of Contents ITEM 6. [Reserved]
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. 29 Table of Contents Stock Performance Graph This performance graph shall not be deemed “filed” for purposes of section 18 of the Exchange Act, or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing of Green Dot Corporation under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
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. 30 Table of Contents Stock Performance Graph This performance graph shall not be deemed “filed” for purposes of section 18 of the Exchange Act, or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing of Green Dot Corporation under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock is listed on the NYSE under the symbol “GDOT.” Holders of Record As of January 31, 2023, we had 50 holders of record of our Class A common stock.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock is listed on the NYSE under the symbol “GDOT.” Holders of Record As of January 31, 2024, we had 43 holders of record of our Class A common stock.
The graph and table below compare the cumulative total stockholder return of Green Dot Corporation Class A common stock, the Russell 2000 Index, the S&P Small Cap 600 Index, the S&P Composite 1500 Financials Index, and the S&P 500 Financials Index for the period beginning on the close of trading on the NYSE on December 31, 2017 and ending on the close of trading on the NYSE on December 31, 2022.
The graph and table below compare the cumulative total stockholder return of Green Dot Corporation Class A common stock, the Russell 2000 Index, the S&P Small Cap 600 Index, and the S&P Composite 1500 Financials Index for the period beginning on the close of trading on the NYSE on December 31, 2018 and ending on the close of trading on the NYSE on December 31, 2023.
For the majority of restricted stock units (including 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.
No shares of our Class A common stock were repurchased during the fourth quarter of 2023. For the majority of restricted stock units (including 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.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers In February 2022, our Board of Directors provided authorization to increase our stock repurchase limit to $100 million for any future repurchases. The following is a summary of issuer purchases of equity securities during the quarter ended December 31, 2022 (in thousands, except per share amounts).
Purchases of Equity Securities by the Issuer and Affiliated Purchasers In February 2022, our Board of Directors provided authorization to increase our stock repurchase limit to $100 million for any future repurchases. As of December 31, 2023, the remaining amount available under the current authorization totaled $4.5 million with no expiration date.
Removed
See Note 12—Stockholders' Equity of our notes to our consolidated financial statements for information regarding our stock repurchase program.
Removed
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 October 1, 2022 - October 31, 2022 522 $ 19.15 522 $ 15,949 November 1, 2022 - November 30, 2022 533 18.77 533 5,950 December 1, 2022 - December 31, 2022 74 19.91 74 4,479 Total 1,129 $ 19.02 1,129 $ 4,479 After giving effect to our share repurchases during the three months ended December 31 2022, the remaining amount available under the current authorization totaled $4.5 million with no expiration date.
Removed
In 2023, we elected to replace the S&P 500 Financials Index with the S&P Composite 1500 Financials Index as we are currently a member of the S&P Composite 1500 Financials Index and not a member of the S&P 500 Financials Index and because we believe the S&P Composite 1500 Financials Index contains companies that represent our primary competitors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncome Tax Expense The following table presents a breakdown of our effective tax rate among federal, state and other: Year Ended December 31, 2022 2021 U.S. federal statutory tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.2 1.2 General business credits (3.2) (2.2) Stock-based compensation 3.2 (2.6) IRC 162(m) limitation 0.8 8.0 Other (0.5) 0.1 Effective tax rate 23.5 % 25.5 % 41 Table of Contents Our income tax expense totaled $19.7 million for the year ended December 31, 2022, representing an increase of $3.5 million from the comparable prior year period.
Biggest changeThe increase in other general and administrative expenses during the year ended December 31, 2023 was in part due to an estimated accrual we recorded based on a proposed consent order we and our subsidiary bank received from the Federal Reserve Board, as discussed above in "Overview." Other general and administrative expenses also increased due to an increase in overall transaction losses attributable to an increase in the amount of customer dispute volume across our portfolios and higher professional services fees related to our AML program, partially offset by a $13 million legal settlement and certain impairment charges of internal-use software that were recorded in the prior year comparable period, which in each case did not recur in 2023. 42 Table of Contents Income Tax Expense The following table presents a breakdown of our effective tax rate among federal, state and other: Year Ended December 31, 2023 2022 U.S. federal statutory tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.0 2.2 Foreign tax rate differential (1.5) (0.3) General business credits (25.0) (3.2) Stock-based compensation 28.8 3.2 IRC 162(m) limitation 0.4 0.8 Bank owned life insurance (4.2) (0.7) Nondeductible penalties 29.1 0.1 Global intangible low-taxed income tax 2.0 0.3 Other 1.5 0.1 Effective tax rate 54.1 % 23.5 % Our income tax expense totaled $7.9 million for the year ended December 31, 2023, representing a decrease of $11.8 million from the comparable prior year period.
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.
Also included in card revenues and other fees are program management service fees earned from our BaaS partners for programs we manage on their behalf. Our aggregate monthly maintenance fee revenues vary primarily based upon the number of active accounts in our portfolio and the average fee assessed per account.
Cash Flows from Operating Activities Our $277.7 million of net cash provided by operating activities during the year ended December 31, 2022 principally resulted from $64.2 million of net income, adjusted for certain non-cash operating expenses of $168.7 million, and an increase in net working capital assets and liabilities of $44.8 million.
Our $277.7 million of net cash provided by operating activities during the year ended December 31, 2022 principally resulted from $64.2 million of net income, adjusted for certain non-cash operating expenses of $168.7 million, and an increase in net working capital assets and liabilities of $44.8 million.
The preparation of our consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, current circumstances and various other assumptions that our management believes to be reasonable under the circumstances.
GAAP. The preparation of our consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, current circumstances and various other assumptions that our management believes to be reasonable under the circumstances.
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. 36 Table of Contents Operating Expenses We classify our operating expenses into the following four categories: Sales and Marketing Expenses — Sales and marketing expenses consist primarily of the commissions we pay to our retail distributors, brokers and partners, advertising and marketing expenses, and the costs of manufacturing and distributing card packages, placards and promotional materials to our retail distributors and personalized debit cards to consumers who have activated their cards.
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. 37 Table of Contents Operating Expenses We classify our operating expenses into the following four categories: Sales and Marketing Expenses — Sales and marketing expenses consist primarily of the commissions we pay to our retail distributors, brokers and partners, advertising and marketing expenses, and the costs of manufacturing and distributing card packages, placards and promotional materials to our retail distributors and personalized debit cards to consumers who have activated their cards.
Cash Flows from Financing Activities Our $36.7 million of net cash provided by financing activities for the year ended December 31, 2022 was principally the result of a net increase in customer deposits of $157.1 million and net borrowings on our revolving credit facility of $35.0 million, partially offset by share repurchases of our Class A common stock of $95.5 million and a net decrease in obligations to customers of $54.0 million.
Our $36.7 million of net cash provided by financing activities for the year ended December 31, 2022 was principally the result of a net increase in customer deposits of $157.1 million, and net borrowings on our revolving credit facility of $35.0 million, partially offset by share repurchases of our Class A common stock of $95.5 million and a net decrease in obligations to customers of $54.0 million.
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. 35 Table of Contents 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 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. 36 Table of Contents 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.
The estimate of fair value requires management to make a number of assumptions and projections, which could include, but would not be limited to, future revenues, earnings and the probability of certain outcomes. We completed our annual goodwill impairment test as of September 30, 2022 and concluded there was no impairment in any of our reporting units.
The estimate of fair value requires management to make a number of assumptions and projections, which could include, but would not be limited to, future revenues, earnings and the probability of certain outcomes. We completed our annual goodwill impairment test as of September 30, 2023 and concluded there was no impairment in any of our reporting units.
For example, on our Green Dot Unlimited product, a combination of a 1% increase in cardholder eligibility and a $1 increase in the average redemption amount would translate to additional cash rewards of approximately $0.7 million. Differences between actual results and our estimates are adjusted in the period that each cardholder's annual rewards cycle is completed.
For example, on our Green Dot Unlimited product, a combination of a 1% increase in cardholder eligibility and a $1 increase in the average redemption amount would translate to additional cash rewards of approximately $0.5 million. Differences between actual results and our estimates are adjusted in the period that each cardholder's annual rewards cycle is completed.
The estimate of fair value requires management to make a number of assumptions and projections, which could include, but would not be limited to, future revenues, earnings and the probability of certain outcomes. No impairment charges were recognized related to our intangible assets for the years ended December 31, 2022 and 2021.
The estimate of fair value requires management to make a number of assumptions and projections, which could include, but would not be limited to, future revenues, earnings and the probability of certain outcomes. No impairment charges were recognized related to our intangible assets for the years ended December 31, 2023 and 2022.
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 December 31, 2022, we were in compliance with all such covenants.
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 December 31, 2023, we were in compliance with all such covenants.
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.
Bank fees generally vary based on the total number of tax refund transfers processed and gateway and network fees vary based on the number of disbursements made.
As of December 31, 2022 and 2021, 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.
As of December 31, 2023 and 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.
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 fewer active accounts within our Consumer Services and 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.
The probability of recovering these amounts is primarily related to the 38 Table of Contents number of days that have elapsed since an account had transaction activity, such as a purchase, ATM transaction or fee assessment.
The probability of recovering these amounts is primarily related to the number of days that have elapsed since an account had transaction activity, such as a purchase, ATM transaction or 39 Table of Contents fee assessment.
To the extent that there are differences between our estimates and actual results, our future financial 37 Table of Contents statement presentation, financial condition, results of operations and cash flows will be affected.
To the extent that there are differences between our estimates and actual results, our future financial 38 Table of Contents statement presentation, financial condition, results of operations and cash flows will be affected.
The amount and timing of these payments and the related cash outflows in future periods is difficult to predict and is dependent on a number of factors including the 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 macro-economic uncertainties.
The amount and timing of these payments and the related cash outflows in future periods is difficult to predict and is dependent on a number of factors including the rate of change of computer hardware and software used in our business and our business outlook as a result of macro-economic uncertainties.
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.
Our aggregate interchange revenues vary based primarily on the number of active accounts in our portfolio, the average transactional volume of the active accounts in our portfolio, the merchant category of spend, and on the mix of cardholder purchases between those using signature identification technologies and those using personal identification numbers and the corresponding rates.
There were no conditions or events since December 31, 2022 which management believes would have changed our category as "well capitalized." 45 Table of Contents 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 Includes common stock and retained earnings, adjusted for items primarily related to accumulated OCI, goodwill, deferred tax assets and intangibles.
There were no conditions or events since December 31, 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 Includes common stock and retained earnings, adjusted for items primarily related to accumulated OCI, goodwill, deferred tax assets and intangibles.
While our contractual commitments will have an impact on our future liquidity, we believe that we will be able to adequately fulfill these obligations through cash generated from operations and from our existing cash balances. Statistical Disclosure by Bank Holding Companies The following section presents supplemental information for Bank Holding Companies.
While our contractual commitments will have an impact on our future liquidity, we believe that we will be able to adequately fulfill these obligations through cash generated from operations and from our existing cash balances. 50 Table of Contents Statistical Disclosure by Bank Holding Companies The following section presents supplemental information for Bank Holding Companies.
Unallocated corporate expenses include eliminations of inter-segment expenses and our fixed expenses such as salaries, wages and related benefits for our employees, professional 44 Table of Contents services fees, software licenses, telephone and communication costs, rent, utilities and insurance.
Unallocated corporate expenses include eliminations of inter-segment expenses and our fixed expenses such as salaries, wages and related benefits for our employees, professional services fees, software licenses, telephone and communication costs, rent, utilities and insurance.
We believe that our current unrestricted cash and cash 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 believe that our current unrestricted cash and cash equivalents, cash flows from operations and borrowing capacity under our credit facility will be sufficient to meet our 48 Table of Contents working capital, capital expenditures, equity method investee capital commitments, and any other capital needs for at least the next 12 months.
Cash Flows from Investing Activities Our $820.2 million of net cash used in investing activities during the year ended December 31, 2022 primarily reflects purchases of available-for-sale investment securities, net of proceeds from sales and maturities of $634.3 million, payments for the development and acquisition of property and equipment of $84.3 million, net changes in loans of $32.1 million, purchases of bank-owned life insurance policies of $31.9 million, and capital contributions related to our investment in TailFin Labs, LLC of $35.0 million.
Our $820.2 million of net cash used in investing activities during the year ended December 31, 2022 primarily reflects purchases of available-for-sale investment securities, net of proceeds from sales and maturities of $634.3 million, payments for property, equipment and internal-use software of $84.3 million, net changes in loans of $32.1 million, purchases of bank-owned life insurance policies of $31.9 million and capital contributions related to our investment in TailFin Labs, LLC of $35.0 million.
The increase in income tax expense was primarily driven by the increase in our operating income, partially offset by a decrease in our effective tax rate.
The decrease in income tax expense was primarily driven by the decrease in our operating income, partially offset by an increase in our effective tax rate.
Our time deposits portfolio in excess of FDIC limits is not material at December 31, 2022.
Our time deposits portfolio in excess of FDIC limits is not material at December 31, 2023.
Cash rewards have decreased by approximately 36% for the year ended December 31, 2022 compared to the prior year period, as our cash-back programs have declined, principally from our decision to shift from our legacy products to our GO2bank product which does not have a cash rewards feature.
Cash rewards have decreased by approximately 13% for the year ended December 31, 2023 compared to the prior year period, as our cash-back programs have declined, principally from our shift from our legacy products to our GO2bank product which does not have a cash rewards feature.
From time to time, we may also finance short-term working capital activities through our borrowings under our credit facility. As of December 31, 2022, our primary source of liquidity was unrestricted cash and cash equivalents totaling $813.9 million. We also consider our $2.4 billion of investment securities available-for-sale to be highly-liquid instruments.
From time to time, we may also finance short-term working capital activities through our borrowings under our credit facility. As of December 31, 2023, our primary source of liquidity was unrestricted cash and cash equivalents totaling $682.3 million. We also consider our $2.2 billion of investment securities available-for-sale to be highly-liquid instruments.
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 and we earn a platform fee.
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 program management service fee.
At our election, loans made under the credit agreement bear interest at 1) a LIBOR rate (the “LIBOR 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 rate plus 1.0% (the “Base Rate"), plus in either case an applicable margin.
At our election, loans made under the credit agreement bear interest at 1) an adjusted SOFR rate (the “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) an adjusted SOFR rate plus 1.0% (the “Base Rate"), plus in either case, an applicable margin.
As discussed above, while the recently enacted IRA includes a number of revisions to the IRC, these tax law revisions have 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 We prepare our consolidated financial statements in accordance with U.S. GAAP.
As discussed above, while the IRA includes a number of revisions to the Internal Revenue Code ("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 We prepare our consolidated financial statements in accordance with U.S.
Such omitted discussion can be found under "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 28, 2022.
Such omitted discussion can be found under "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023.
These increases were partially offset by decreases in cardholder fees, such as monthly maintenance fees and ATM fees for the reasons discussed above in our "Overview." Cash Processing Revenues — Cash processing revenues totaled $235.4 million for the year ended December 31, 2022, a decrease of $10.1 million, or 4%, from the comparable prior year period.
These increases were partially offset by decreases in cardholder fees, such as monthly maintenance fees, new card fees and ATM fees for the reasons discussed above in "Overview." Cash Processing Revenues — Cash processing revenues totaled $225.4 million for the year ended December 31, 2023, a decrease of $10.0 million, or 4%, from the comparable prior year period.
Our total gross dollar volume during the year ended December 31, 2022 increased by 28% from the comparable prior year period, despite the average number of active accounts across the year decreasing by 12% year-over-year.
Our total gross dollar volume during the year ended December 31, 2023 increased by 58% from the prior year comparable period, despite the average number of active accounts across the year decreasing by 20% year-over-year.
See Note 9—Goodwill and Intangible Assets for more information. 39 Table of Contents Results of Operations Pursuant to instruction 1 of the instructions to paragraph 303(b) of Regulation S-K, discussion of the results of operations for the fiscal year ended December 31, 2021 to fiscal year ended December 31, 2020 has been omitted.
See Note 9—Goodwill and Intangible Assets to the Consolidated Financial Statements included herein for more information. 40 Table of Contents Results of Operations Pursuant to instruction 1 of the instructions to paragraph 303(b) of Regulation S-K, discussion of the results of operations for the fiscal year ended December 31, 2022 to fiscal year ended December 31, 2021 has been omitted.
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.
Cash Processing Revenues — Cash processing 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.
The applicable margin for borrowings depends on our total leverage ratio and varies from 1.25% to 2.00% for LIBOR Rate loans and 0.25% to 1.00% for Base Rate loans. The interest rate on our outstanding balance as of December 31, 2022 was 5.52%.
The applicable margin for borrowings depends on our total leverage ratio and varies from 1.25% to 2.00% for SOFR Rate loans and 0.25% to 1.00% for Base Rate loans. The interest rate on our outstanding balance as of December 31, 2023 was 7.23%.
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. See Note 7—Equity Method Investment of the Notes to our Consolidated Financial Statements for additional information.
We hold a 20% ownership interest in the entity, in exchange for annual capital contributions of $35.0 million per year from January 2020 through January 2024. Our final payment under this commitment was paid in January 2024. See Note 7—Equity Method Investment to the Consolidated Financial Statements included herein for additional information.
See "Part II, Item 1A, Risk Factors," for an additional discussion of risks related to the COVID-19 pandemic. 34 Table of Contents Consolidated Key Metrics We review a number of metrics to help us monitor the performance of, and identify trends affecting, our business.
See "Part I, Item 1A, Risk Factors," for an additional discussion of risks related to macro-economic factors. 35 Table of Contents Consolidated Key Metrics We review a number of metrics to help us monitor the performance of, and identify trends affecting, our business.
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.
We intend to continue to invest in new products and programs, including GO2bank, new features for our existing products and IT infrastructure in order to scale and operate effectively to meet our strategic objectives.
We believe the following measures are the primary indicators of our revenues: Year Ended December 31, Year Ended December 31, 2022 2021 Change % 2021 2020 Change % (In millions, except percentages) Gross dollar volume $ 73,484 $ 70,822 $ 2,662 3.8 % $ 70,822 $ 58,203 $ 12,619 21.7 % Number of active accounts* 4.15 5.07 (0.92) (18.1) % 5.07 5.45 (0.38) (7.0) % Purchase volume $ 26,687 $ 33,736 $ (7,049) (20.9) % $ 33,736 $ 31,220 $ 2,516 8.1 % Number of cash transfers 36.06 40.51 (4.45) (11.0) % 40.51 48.71 (8.2) (16.8) % Number of tax refunds processed 14.57 12.14 2.43 20.0 % 12.14 12.46 (0.32) (2.6) % * Represents number of active accounts as of December 31, 2022 , 2021, and 2020 respectively.
We believe the following measures are the primary indicators of our revenues: Year Ended December 31, Year Ended December 31, 2023 2022 Change % 2022 2021 Change % (In millions, except percentages) Gross dollar volume $ 99,204 $ 73,484 $ 25,720 35.0 % $ 73,484 $ 70,822 $ 2,662 3.8 % Number of active accounts* 3.57 4.15 (0.58) (14.0) % 4.15 5.07 (0.92) (18.1) % Purchase volume $ 22,514 $ 26,687 $ (4,173) (15.6) % $ 26,687 $ 33,736 $ (7,049) (20.9) % Number of cash transfers 33.86 36.06 (2.2) (6.1) % 36.06 40.51 (4.45) (11.0) % Number of tax refunds processed 14.14 14.57 (0.43) (3.0) % 14.57 12.14 2.43 20.0 % * Represents number of active accounts as of December 31, 2023 , 2022, and 2021 respectively.
Our effective tax rate for the years ended December 31, 2022 and 2021 was 23.5% and 25.5%, respectively.
Our effective tax rate for the years ended December 31, 2023 and 2022 was 54.1% and 23.5%, respectively.
Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including the continuing impacts of the coronavirus ("COVID-19") pandemic, increasing inflation and interest rates and other macroeconomic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified above, under “Part I, Item 1A.
Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified above, under “Part I, Item 1A.
Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, increased for the year ended December 31, 2022 by 124% over the prior year comparable period.
Net interest income earned by Green Dot Bank, a component of our Corporate and Other segment, decreased for the year ended December 31, 2023 by 11% from the prior year comparable period.
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.
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.
Key Financial and Credit Ratios The following tables show certain of Green Dot Bank’s key financial and credit ratios for the years ended December 31, 2022, 2021, and 2020: December 31, 2022 December 31, 2021 December 31, 2020 Net return on assets 3.3 % 2.0 % 2.0 % Net return on equity 79.2 24.6 19.7 Equity to assets ratio 4.2 8.1 10.0 Allowance for credit losses to total loans outstanding 29.8 22.4 3.5 Nonaccrual loans to total loans outstanding 7.3 3.4 6.3 Allowance for credit losses to nonaccrual loans 405.4 648.9 55.5 December 31, 2022 December 31, 2021 December 31, 2020 Net charge-offs during the period to average loans outstanding: (In thousands) Consumer Net charge-off during the period $ 34,699 $ 18,798 $ — Average amount outstanding 16,337 7,578 — Secured credit card Net charge-off during the period 517 1,382 1,269 Average amount outstanding 10,924 14,062 14,703
Key Financial and Credit Ratios The following tables show certain of Green Dot Bank’s key financial and credit ratios for the years ended December 31, 2023, 2022, and 2021: December 31, 2023 December 31, 2022 December 31, 2021 Net return on assets 2.3 % 3.3 % 2.0 % Net return on equity 104.2 79.2 24.6 Equity to assets ratio 2.2 4.2 8.1 Allowance for credit losses to total loans outstanding 27.2 29.8 22.4 Nonaccrual loans to total loans outstanding 6.1 7.3 3.4 Allowance for credit losses to nonaccrual loans 442.1 405.4 648.9 December 31, 2023 December 31, 2022 December 31, 2021 Net charge-offs during the period to average loans outstanding: (In thousands) Consumer Net charge-off during the period $ 20,111 $ 25,521 $ 18,798 Average amount outstanding 10,036 16,337 7,578 Secured credit card Net charge-off during the period 3,895 3,308 1,382 Average amount outstanding 12,398 10,924 14,062 53 Table of Contents
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 The actual amounts and ratios, and required "well capitalized" minimum capital amounts and ratios at December 31, 2022 and 2021, were as follows: December 31, 2022 Amount Ratio Regulatory Minimum "Well-capitalized" Minimum (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 661,404 16.6 % 4.0 % n/a Common equity Tier 1 capital $ 661,404 40.1 % 4.5 % n/a Tier 1 capital $ 661,404 40.1 % 6.0 % 6.0 % Total risk-based capital $ 675,043 40.9 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 389,541 9.6 % 4.0 % 5.0 % Common equity Tier 1 capital $ 389,541 31.2 % 4.5 % 6.5 % Tier 1 capital $ 389,541 31.2 % 6.0 % 8.0 % Total risk-based capital $ 397,870 31.8 % 8.0 % 10.0 % December 31, 2021 Amount Ratio Regulatory Minimum "Well-capitalized" Minimum (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 637,338 15.9 % 4.0 % n/a Common equity Tier 1 capital $ 637,338 54.0 % 4.5 % n/a Tier 1 capital $ 637,338 54.0 % 6.0 % 6.0 % Total risk-based capital $ 648,038 54.9 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 329,162 9.1 % 4.0 % 5.0 % Common equity Tier 1 capital $ 329,162 40.7 % 4.5 % 6.5 % Tier 1 capital $ 329,162 40.7 % 6.0 % 8.0 % Total risk-based capital $ 336,461 41.6 % 8.0 % 10.0 % 46 Table of Contents Liquidity and Capital Resources The following table summarizes our major sources and uses of cash for the periods presented: Year Ended December 31, 2022 2021 (In thousands) Total cash provided by (used in) Operating activities $ 277,686 $ 167,033 Investing activities (820,188) (1,368,487) Financing activities 36,707 1,030,393 Decrease in unrestricted cash, cash equivalents and restricted cash $ (505,795) $ (171,061) During the years ended December 31, 2022 and 2021, we financed our operations primarily through our cash flows provided by operating activities and customer funds held on deposit.
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 47 Table of Contents The actual amounts and ratios, and required "well capitalized" minimum capital amounts and ratios at December 31, 2023 and 2022, were as follows: December 31, 2023 Amount Ratio Regulatory Minimum "Well-capitalized" Minimum (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 730,459 17.9 % 4.0 % n/a Common equity Tier 1 capital $ 730,459 38.0 % 4.5 % n/a Tier 1 capital $ 730,459 38.0 % 6.0 % 6.0 % Total risk-based capital $ 749,623 39.0 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 404,559 9.8 % 4.0 % 5.0 % Common equity Tier 1 capital $ 404,559 27.8 % 4.5 % 6.5 % Tier 1 capital $ 404,559 27.8 % 6.0 % 8.0 % Total risk-based capital $ 412,966 28.4 % 8.0 % 10.0 % December 31, 2022 Amount Ratio Regulatory Minimum "Well-capitalized" Minimum (In thousands, except ratios) Green Dot Corporation: Tier 1 leverage $ 661,404 16.6 % 4.0 % n/a Common equity Tier 1 capital $ 661,404 40.1 % 4.5 % n/a Tier 1 capital $ 661,404 40.1 % 6.0 % 6.0 % Total risk-based capital $ 675,043 40.9 % 8.0 % 10.0 % Green Dot Bank: Tier 1 leverage $ 389,541 9.6 % 4.0 % 5.0 % Common equity Tier 1 capital $ 389,541 31.2 % 4.5 % 6.5 % Tier 1 capital $ 389,541 31.2 % 6.0 % 8.0 % Total risk-based capital $ 397,870 31.8 % 8.0 % 10.0 % Liquidity and Capital Resources The following table summarizes our major sources and uses of cash for the periods presented: Year Ended December 31, 2023 2022 (In thousands) Total cash provided by (used in) Operating activities $ 97,519 $ 277,686 Investing activities 33,157 (820,188) Financing activities (264,019) 36,707 Decrease in unrestricted cash, cash equivalents and restricted cash $ (133,343) $ (505,795) During the years ended December 31, 2023 and 2022, we financed our operations primarily through our cash flows provided by operating activities and customer funds held on deposit.
B2B Services expenses increased for the year ended December 31, 2022 principally due to higher processing expenses with the growth of certain BaaS account programs and higher overall transaction losses as a result of the 43 Table of Contents increase in gross dollar volume.
B2B Services expenses increased for the year ended December 31, 2023 principally due to higher processing expenses and third-party call center support costs, each associated with the growth of certain BaaS account programs, and higher overall transaction losses as a result of the increase in gross dollar volume.
Corporate and Other Year Ended December 31, 2022 2021 Change % (In thousands, except percentages) Financial Results Unallocated revenue and inter-segment eliminations $ 20,151 $ (5,169) $ 25,320 (489.8) % Unallocated corporate expenses and inter-segment eliminations 207,747 190,592 17,155 9.0 % $ (187,596) $ (195,761) $ 8,165 (4.2) % Revenues within Corporate and Other are comprised of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue) and eliminations of inter-segment revenues.
Corporate and Other Year Ended December 31, 2023 2022 Change % (In thousands, except percentages) Financial Results Unallocated revenue and inter-segment eliminations $ 2,513 $ 20,151 $ (17,638) (87.5) % Unallocated corporate expenses and inter-segment eliminations 199,308 207,747 (8,439) (4.1) % $ (196,795) $ (187,596) $ (9,199) 4.9 % Revenues within Corporate and Other are comprised of net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue) and eliminations of inter-segment revenues.
Material Cash Requirements While the effect of COVID-19, increasing inflation and interest rates and other macro-economic events have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and invest in property and equipment as necessary in the normal course of our business.
Material Cash Requirements While the overall macro-economic environment, the effect of high inflation and interest rates, and other factors described in "Outlook and Other Trends Affecting Our Business" above have created economic uncertainty and impacted how we manage our liquidity and capital resources, we anticipate that we will continue to develop and invest in property, equipment and internal-use software as necessary in the normal course of our business.
Comparison of Consolidated Results for the Years Ended December 31, 2022 and 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: Year Ended December 31, 2022 2021 Amount % of Total Operating Revenues Amount % of Total Operating Revenues (In thousands, except percentages) Operating revenues: Card revenues and other fees $ 876,318 60.5 % $ 788,834 55.0 % Cash processing revenues 235,445 16.2 245,539 17.1 Interchange revenues 295,646 20.4 380,037 26.6 Interest income, net 42,157 2.9 18,787 1.3 Total operating revenues $ 1,449,566 100.0 % $ 1,433,197 100.0 % Card Revenues and Other Fees — Card revenues and other fees totaled $876.3 million for the year ended December 31, 2022, an increase of $87.5 million, or 11%, from the comparable prior year period.
Comparison of Consolidated Results for the Years Ended December 31, 2023 and 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: Year Ended December 31, 2023 2022 Amount % of Total Operating Revenues Amount % of Total Operating Revenues (In thousands, except percentages) Operating revenues: Card revenues and other fees $ 1,007,565 67.1 % $ 876,318 60.5 % Cash processing revenues 225,416 15.0 235,445 16.2 Interchange revenues 231,003 15.4 295,646 20.4 Interest income, net 37,344 2.5 42,157 2.9 Total operating revenues $ 1,501,328 100.0 % $ 1,449,566 100.0 % Card Revenues and Other Fees — Card revenues and other fees totaled $1,007.6 million for the year ended December 31, 2023, an increase of $131.3 million, or 15%, from the comparable prior year period.
Our $167.0 million of net cash provided by operating activities during the year ended December 31, 2021 principally resulted from $47.5 million of net income, adjusted for certain non-cash operating expenses of $184.9 million, and a decrease in net working capital assets and liabilities of $65.3 million.
Cash Flows from Operating Activities Our $97.5 million of net cash provided by operating activities during the year ended December 31, 2023 principally resulted from $6.7 million of net income, adjusted for certain non-cash operating expenses of $158.9 million, and a decrease in net working capital assets and liabilities of $68.1 million.
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.
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.
Our tax processing revenues increased year-over-year for the year ended December 31, 2022 as a result of a 20% increase in the number of tax refunds processed. The increase in number of tax refunds processed for the year ended December 31, 2022 was principally attributable to higher volumes from our online consumer tax channels.
Our tax processing revenues decreased for the year ended December 31, 2023 from the prior year comparable period, as a result of a 3% year-over-year decrease in the number of tax refunds processed. The decrease in number of tax refunds processed was principally attributable to lower volumes from our online consumer tax channels.
Income taxes Our income tax expense for the year ended December 31, 2022 increased $3.5 million, or 22% over the prior year comparable period. The increase in our income tax expense was due primarily to a 32% increase in income before taxes, partially offset by a decrease in our effective tax rate.
Income taxes Our income tax expense for the year ended December 31, 2023 decreased $11.8 million, or 60% over the prior year comparable period. The decrease in our income tax expense was due primarily to an 83% decrease in our income before taxes, partially offset by an increase in our effective tax rate.
The decrease is primarily due to a decline in the number of cash transfers processed year-over-year as a result of fewer active accounts within our Consumer Services and B2B Services segments, partially offset by higher overall tax processing revenues due to a 20% increase in the number of tax refunds processed.
The decrease is primarily due to a decline in the number of cash transfers processed year-over-year as a result of lower active accounts within our Consumer Services and B2B Services segments, partially offset by an increase in the number of cash transfers processed for third-party programs as discussed above in "Overview." To a lesser extent, cash processing revenues also decreased due to lower overall tax processing revenues, as a result of a 3% decrease in the number of tax refunds processed.
Distribution of Assets, Liabilities and Stockholders' Equity The following table presents average balance data and interest income and expense data for our banking operations, as well as the related interest yields and rates for the years ended December 31, 2022, 2021 and 2020: Year ended December 31, 2022 2021 2020 Average balance Interest income/ interest expense Yield/ rate Average balance Interest income/ interest expense Yield/ rate Average balance Interest income/ interest expense Yield/ rate (In thousands, except percentages) Assets Interest-bearing assets Loans (1) $ 19,608 $ 2,273 11.6 % $ 25,101 $ 2,316 9.2 % $ 22,533 $ 2,454 10.9 % Taxable investment securities 2,581,235 40,349 1.6 1,271,329 13,831 1.1 506,152 7,031 1.4 Non-taxable investment securities 27,852 727 2.6 28,956 712 2.5 11,481 278 2.4 Federal reserve stock 7,693 324 4.2 7,069 322 4.6 5,473 272 5.0 Fee advances 9,672 2,061 21.3 6,756 1,491 22.1 7,775 1,455 18.7 Cash 965,070 13,085 1.4 2,012,597 2,539 0.1 1,769,837 5,709 0.3 Total interest-bearing assets 3,611,130 58,819 1.6 % 3,351,808 21,211 0.6 % 2,323,251 17,199 0.7 % Non-interest bearing assets 258,260 286,441 131,612 Total assets $ 3,869,390 $ 3,638,249 $ 2,454,863 Liabilities Interest-bearing liabilities Checking accounts $ 2,204 $ 38 1.7 % $ 5,345 $ 5 0.1 % $ 9,271 $ 54 0.6 % Savings deposits 16,004 289 1.8 26,745 25 0.1 20,702 41 0.2 Time deposits, denominations greater than or equal to $250 1,833 40 2.2 1,827 26 1.4 1,146 16 1.4 Time deposits, denominations less than $250 3,313 31 0.9 3,142 37 1.2 3,682 37 1.0 Total interest-bearing liabilities 23,354 398 1.7 % 37,059 93 0.3 % 34,801 148 0.4 % Non-interest bearing liabilities 3,683,481 3,304,652 2,173,578 Total liabilities 3,706,835 3,341,711 2,208,379 Total stockholders' equity 162,555 296,538 246,484 Total liabilities and stockholders' equity $ 3,869,390 $ 3,638,249 $ 2,454,863 Net interest income/yield on earning assets $ 58,421 (0.1) % $ 21,118 0.3 % $ 17,051 0.3 % ___________ (1) Non-performing loans are included in the respective average loan balances.
Distribution of Assets, Liabilities and Stockholders' Equity The following table presents average balance data and interest income and expense data for our banking operations, as well as the related interest yields and rates for the years ended December 31, 2023, 2022 and 2021: Year ended December 31, 2023 2022 2021 Average balance Interest income/ interest expense Yield/ rate Average balance Interest income/ interest expense Yield/ rate Average balance Interest income/ interest expense Yield/ rate (In thousands, except percentages) Assets Interest-bearing assets Loans (1) $ 23,801 $ 2,315 9.7 % $ 19,608 $ 2,273 11.6 % $ 25,101 $ 2,316 9.2 % Taxable investment securities 2,671,049 49,920 1.9 2,581,235 40,349 1.6 1,271,329 13,831 1.1 Non-taxable investment securities 29,491 814 2.8 27,852 727 2.6 28,956 712 2.5 Federal reserve stock 7,794 345 4.4 7,693 324 4.2 7,069 322 4.6 Fee advances 13,068 3,276 25.1 9,672 2,061 21.3 6,756 1,491 22.1 Cash 548,044 29,981 5.5 965,070 13,085 1.4 2,012,597 2,539 0.1 Total interest-bearing assets 3,293,247 86,651 2.6 % 3,611,130 58,819 1.6 % 3,351,808 21,211 0.6 % Non-interest bearing assets 311,643 258,260 286,441 Total assets $ 3,604,890 $ 3,869,390 $ 3,638,249 Liabilities Interest-bearing liabilities Checking accounts $ 1,461 $ 7 0.5 % $ 2,204 $ 38 1.7 % $ 5,345 $ 5 0.1 % Savings deposits 23,945 15 0.1 16,004 128 0.8 26,745 25 0.1 Time deposits, denominations greater than or equal to $250 1,320 26 2.0 1,833 40 2.2 1,827 26 1.4 Time deposits, denominations less than $250 3,599 56 1.6 3,313 31 0.9 3,142 37 1.2 Total interest-bearing liabilities 30,325 104 0.3 % 23,354 237 1.0 % 37,059 93 0.3 % Non-interest bearing liabilities 3,495,342 3,683,481 3,304,652 Total liabilities 3,525,667 3,706,835 3,341,711 Total stockholders' equity 79,223 162,555 296,538 Total liabilities and stockholders' equity $ 3,604,890 $ 3,869,390 $ 3,638,249 Net interest income/yield on earning assets $ 86,547 2.3 % $ 58,582 0.6 % $ 21,118 0.4 % ___________ (1) Non-performing loans are included in the respective average loan balances.
Money Movement Services Year Ended December 31, 2022 2021 Change % (In thousands, except percentages) Financial Results Segment revenues $ 222,192 $ 239,735 $ (17,543) (7.3) % Segment expenses 104,362 123,770 (19,408) (15.7) % Segment profit $ 117,830 $ 115,965 $ 1,865 1.6 % Key Metrics (In millions, except percentages) Number of cash transfers 36.06 40.51 (4.45) (11.0) % Number of tax refunds processed 14.57 12.14 2.43 20.0 % As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows: 2022 2021 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Number of cash transfers 9.03 9.16 9.00 8.87 9.95 10.05 10.19 10.32 Number of tax refunds processed 0.20 0.28 4.48 9.61 0.12 0.43 4.15 7.44 Segment revenues within our Money Movement services for the year ended December 31, 2022 decreased $17.5 million, or 7%, from the comparable prior year period, and segment expenses for the year ended December 31, 2022 decreased $19.4 million, or 16%.
Money Movement Services Year Ended December 31, 2023 2022 Change % (In thousands, except percentages) Financial Results Segment revenues $ 209,674 $ 222,192 $ (12,518) (5.6) % Segment expenses 96,498 104,362 (7,864) (7.5) % Segment profit $ 113,176 $ 117,830 $ (4,654) (3.9) % Key Metrics (In millions, except percentages) Number of cash transfers 33.86 36.06 (2.2) (6.1) % Number of tax refunds processed 14.14 14.57 (0.43) (3.0) % As additional supplemental information, our key metrics within our Money Movement Services segment is presented on a quarterly basis as follows: 2023 2022 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (In millions) Key Metrics Number of cash transfers 8.19 8.31 8.66 8.70 9.03 9.16 9.00 8.87 Number of tax refunds processed 0.16 0.20 3.87 9.91 0.20 0.28 4.48 9.61 Segment revenues within our Money Movement services for the year ended December 31, 2023 decreased $12.5 million, or 6%, from the comparable prior year period, and segment expenses for the year ended December 31, 2023 decreased $7.9 million, or 8%. 45 Table of Contents The decrease in segment revenues for the year ended December 31, 2023 was driven primarily by a lower number of cash transfers processed, which decreased by 6% from the prior year comparable period.
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.
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.
All of our loans due after one year are based upon fixed interest rates under the stated terms of the loan agreements: Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total (In thousands) Residential $ 182 $ 325 $ 3,757 $ — $ 4,264 Commercial 2,512 30 — — 2,542 Installment — 1,327 80 — 1,407 Consumer 14,446 — — — 14,446 Secured credit card 7,840 — — — 7,840 Total fixed-income securities $ 24,980 $ 1,682 $ 3,837 $ — $ 30,499 Allocation of Reserve of Credit Losses The following table shows the reserve for credit losses allocated to each loan category: December 31, 2022 December 31, 2021 Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans (In thousands, except percentages) Residential $ 83 0.9 % $ 87 1.6 % Commercial 29 0.3 32 0.6 Installment 38 0.4 42 0.8 Consumer 7,880 86.8 4,384 78.9 Secured credit card 1,048 11.6 1,010 18.1 Total $ 9,078 100.0 % $ 5,555 100.0 % 50 Table of Contents Deposits The following table shows Green Dot Bank’s average deposits and the annualized average rate paid on those deposits for the years ended December 31, 2022, 2021, and 2020: December 31, 2022 December 31, 2021 December 31, 2020 Average Balance Weighted-Average Rate Average Balance Weighted-Average Rate Average Balance Weighted-Average Rate (In thousands, except percentages) Interest-bearing deposit accounts Checking accounts $ 2,204 1.7 % $ 5,345 0.1 % $ 9,271 0.6 % Savings deposits 16,004 1.8 26,745 0.1 20,702 0.2 Time deposits, denominations greater than or equal to $250 1,833 2.2 1,827 1.4 1,146 1.4 Time deposits, denominations less than $250 3,313 0.9 3,142 1.2 3,682 1.0 Total interest-bearing deposit accounts 23,354 1.7 % 37,059 0.3 % 34,801 0.4 % Non-interest bearing deposit accounts 3,286,137 2,926,280 1,898,216 Total deposits $ 3,309,491 $ 2,963,339 $ 1,933,017 Our aggregate deposits in denominations that met or exceeded FDIC limits were $215 million, $180 million and $115 million as of December 31, 2022, 2021 and 2020, respectively.
All of our loans due after one year are based upon fixed interest rates under the stated terms of the loan agreements: Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total (In thousands) Residential $ 35 $ 537 $ 4,523 $ — $ 5,095 Commercial 2,517 41 158 — 2,716 Installment 1,063 668 2,626 — 4,357 Consumer 20,019 — — — 20,019 Secured credit card 9,730 — — — 9,730 Total fixed-income securities $ 33,364 $ 1,246 $ 7,307 $ — $ 41,917 52 Table of Contents Allocation of Reserve of Credit Losses The following table shows the reserve for credit losses allocated to each loan category: December 31, 2023 December 31, 2022 Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans (In thousands, except percentages) Residential $ 67 0.6 % $ 83 0.9 % Commercial 31 0.3 29 0.3 Installment 66 0.6 38 0.4 Consumer 10,032 88.1 7,880 86.8 Secured credit card 1,187 10.4 1,048 11.6 Total $ 11,383 100.0 % $ 9,078 100.0 % Deposits The following table shows Green Dot Bank’s average deposits and the annualized average rate paid on those deposits for the years ended December 31, 2023, 2022, and 2021: December 31, 2023 December 31, 2022 December 31, 2021 Average Balance Weighted-Average Rate Average Balance Weighted-Average Rate Average Balance Weighted-Average Rate (In thousands, except percentages) Interest-bearing deposit accounts Checking accounts $ 1,461 0.5 % $ 2,204 1.7 % $ 5,345 0.1 % Savings deposits 23,945 0.1 16,004 0.8 26,745 0.1 Time deposits, denominations greater than or equal to $250 1,320 2.0 1,833 2.2 1,827 1.4 Time deposits, denominations less than $250 3,599 1.6 3,313 0.9 3,142 1.2 Total interest-bearing deposit accounts 30,325 0.3 % 23,354 1.0 % 37,059 0.3 % Non-interest bearing deposit accounts 3,220,323 3,286,137 2,926,280 Total deposits $ 3,250,648 $ 3,309,491 $ 2,963,339 Our aggregate deposits in denominations that met or exceeded FDIC limits were $310 million, $215 million and $180 million as of December 31, 2023, 2022 and 2021, respectively.
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.
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.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $243.9 million for the year ended December 31, 2022, a decrease of $20.8 million, or 8%, compared to the year ended December 31, 2021.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $238.5 million for the year ended December 31, 2023, a decrease of $5.4 million, or 2%, compared to the year ended December 31, 2022.
Segment revenues within our B2B Services for the year ended December 31, 2022 increased $135.9 million, or 30%, compared to the prior year period, while our segment expenses for the year ended December 31, 2022 increased $122.7 million, or 32%.
Segment revenues within our B2B Services for the year ended December 31, 2023 increased $178.5 million, or 30%, compared to the prior year period, while our segment expenses for the year ended December 31, 2023 increased $187.6 million, or 37%.
Processing Expenses — Processing expenses totaled $481.5 million for the year ended December 31, 2022, an increase of $92.2 million, or 24%, compared to the year ended December 31, 2021.
Processing Expenses — Processing expenses totaled $639.2 million for the year ended December 31, 2023, an increase of $157.7 million, or 33%, compared to the year ended December 31, 2022.
Interchange Revenues — Interchange revenues totaled $295.6 million for the year ended December 31, 2022, a decrease of $84.4 million, or 22%, from the comparable prior year period. The decrease was primarily due to a 21% decrease in purchase volume during the year ended December 31, 2022.
Interchange Revenues — Interchange revenues totaled $231.0 million for the year ended December 31, 2023, a decrease of $64.6 million, or 22%, from the comparable prior year period. The decrease was primarily due to a 16% decrease in purchase volume during the year ended December 31, 2023, as well as a lower effective interchange rate for the comparable periods.
Other General and Administrative Expenses — Other general and administrative expenses totaled $331.9 million for the year ended December 31, 2022, an increase of $1.3 million, or 0.4%, from the comparable prior year period.
Other General and Administrative Expenses — Other general and administrative expenses totaled $355.6 million for the year ended December 31, 2023, an increase of $23.7 million, or 7%, from the comparable prior year period.
Segment revenues within Consumer Services for the year ended December 31, 2022 decreased $107.9 million, or 16%, compared to the prior year comparable period, while our segment expenses for the year ended December 31, 2022 decreased $106.5 million, or 23%.
Segment revenues within Consumer Services for the year ended December 31, 2023 decreased $88.2 million, or 15%, compared to the prior year comparable period, while our segment expenses for the year ended December 31, 2023 decreased $43.2 million, or 12%.
Consolidated Financial Results and Trends Our consolidated results of operations for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 Change % (In thousands, except percentages) Total operating revenues $ 1,449,566 $ 1,433,197 $ 16,369 1.1 % Total operating expenses 1,355,191 1,366,723 (11,532) (0.8) % Net income 64,212 47,480 16,732 35.2 % Refer to "Segment Results" below for a summary of financial results of each of our reportable segments. 31 Table of Contents Total operating revenues Our total operating revenues for the year ended December 31, 2022 increased $16.4 million , or 1% over the prior year comparable period, generating revenue growth from our B2B Services segment and higher net interest income in our Corporate and Other segment, partially offset by lower revenues earned from our Consumer Services and Money Movement Services segments.
Consolidated Financial Results and Trends Our consolidated results of operations for the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, 2023 2022 Change % (In thousands, except percentages) Total operating revenues $ 1,501,328 $ 1,449,566 $ 51,762 3.6 % Total operating expenses 1,478,658 1,355,191 123,467 9.1 % Net income 6,722 64,212 (57,490) (89.5) % Refer to "Segment Results" below for a summary of financial results of each of our reportable segments. 32 Table of Contents Total operating revenues Our total operating revenues for the year ended December 31, 2023 increased $51.8 million , or 4% over the prior year comparable period, driven primarily by higher revenues in our B2B Services segment, partially offset by lower revenues earned in our Consumer Services and Money Movement Services segments.
We include our provision for uncollectible overdrawn accounts related to purchase transactions in other general and administrative expenses in our consolidated statements of operations. See Note 5—Accounts Receivable for more information. Allowance for Credit Losses We establish an allowance for estimated credit losses inherent in our loan portfolio over the life of the loans, including our secured credit cards.
We include our provision for uncollectible overdrawn accounts related to purchase transactions in other general and administrative expenses in our consolidated statements of operations. See Note 5—Accounts Receivable to the Consolidated Financial Statements included herein for more information.
The following table presents the amount of changes in interest income and interest expense due to changes in both average volume and average rate for the years ended: 49 Table of Contents December 31, 2022 December 31, 2021 Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) (In thousands) Interest-earning assets Loans $ (43) $ (294) $ 251 $ (138) $ (543) $ 405 Taxable investment securities 26,518 7,896 18,622 6,800 (1,139) 7,939 Non-taxable investment securities 15 40 (25) 434 4 430 Federal reserve stock 2 (13) 15 50 (20) 70 Fee advances 570 (50) 620 36 134 (98) Cash 10,546 11,141 (595) (3,170) (4,092) 922 Change in interest income $ 37,608 $ 18,720 $ 18,888 $ 4,012 $ (5,656) $ 9,668 Interest-bearing liabilities Checking accounts $ 33 $ 34 $ (1) $ (49) $ (29) $ (20) Savings deposits 264 270 (6) (16) (36) 20 Time deposits, denominations greater than or equal to $250 14 14 — 10 — 10 Time deposits, denominations less than $250 (6) (8) 2 — 1 (1) Change in interest expense 305 310 (5) (55) (64) 9 Change in net interest income and expense $ 37,303 $ 18,410 $ 18,893 $ 4,067 $ (5,592) $ 9,659 ___________ (1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
The following table presents the amount of changes in interest income and interest expense due to changes in both average volume and average rate for the years ended: 51 Table of Contents December 31, 2023 December 31, 2022 Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) Total Change in Interest Income/ Expense Change Due to Rate (1) Change Due to Volume (1) (In thousands) Interest-earning assets Loans $ 42 $ (128) $ 170 $ (43) $ (294) $ 251 Taxable investment securities 9,571 8,126 1,445 26,518 7,896 18,622 Non-taxable investment securities 87 43 44 15 40 (25) Federal reserve stock 21 17 4 2 (13) 15 Fee advances 1,215 406 809 570 (50) 620 Cash 16,896 19,701 (2,805) 10,546 11,141 (595) Change in interest income $ 27,832 $ 28,165 $ (333) $ 37,608 $ 18,720 $ 18,888 Interest-bearing liabilities Checking accounts $ (31) $ (16) $ (15) $ 33 $ 34 $ (1) Savings deposits (113) (245) 132 103 109 (6) Time deposits, denominations greater than or equal to $250 (14) (4) (10) 14 14 — Time deposits, denominations less than $250 25 22 3 (6) (8) 2 Change in interest expense (133) (243) 110 144 149 (5) Change in net interest income and expense $ 27,965 $ 28,408 $ (443) $ 37,464 $ 18,571 $ 18,893 ___________ (1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
Our $1.4 billion of net cash used in investing activities during the year ended December 31, 2021 primarily reflects purchases of available-for-sale investment securities, net of proceeds from sales and maturities of $1.2 billion, payments for the development and acquisition of property and equipment of $57.4 million, net changes in loans of $28.4 million, purchases of bank-owned life insurance policies of $55.0 million and capital contributions related to our investment in TailFin Labs, LLC of $35.0 million.
Cash Flows from Investing Activities Our $33.2 million of net cash provided by investing activities during the year ended December 31, 2023 primarily reflects net proceeds from sales and maturities of our available-for-sale investment securities of $176.9 million, payments for property, equipment and internal-use software of $75.9 million, net changes in loans of $29.0 million, and capital contributions related to our investment in TailFin Labs, LLC of $35.0 million.
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 segments, and trends occurring within our retail channel in our Consumer Services segment, we believe our consolidated operating profit will decline year-over-year in fiscal year 2023.
Outlook and Other Trends Affecting Our Business Based on the overall macro-economic environment, the effect of high inflation and interest rates, our commitment to making growth-oriented investments and the timing of the related expense savings from our ongoing technology transformation, the previously-disclosed non-renewals in our Consumer Services and B2B Services segments, our decision to wind-down many of our legacy cardholder programs in support of GO2bank, trends occurring within our retail channel in our Consumer Services segment, and our investments in our compliance programs, our consolidated operating profit has declined year-over-year in 2023.
Money Movement Services segment revenues for the year ended December 31, 2022 decreased by 7% compared with the prior year comparable period. The decrease in our Money Movement Services was primarily attributable to the number of cash transfers processed, which decreased by 11% compared with the prior year comparable period, partially offset by an increase in our tax processing revenues.
The decrease in our Money Movement Services segment was primarily attributable to the number of cash transfers processed, which decreased by 6% from the prior year comparable period, and to a lesser extent, a 3% decrease in our tax processing revenues.
Our remaining leases have terms of less than 1 year to approximately 10 years, subject to renewal options of varying terms, and as of December 31, 2022, we had a total lease liability of $8.4 million.
Our remaining leases have terms of less than 1 year to approximately 9 years, subject to renewal options of varying terms, and as of December 31, 2023, we had a total lease liability of $6.1 million. See Note 20—Leases to the Consolidated Financial Statements included herein for additional information regarding our lease liabilities as of December 31, 2023.
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.
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.
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 throughout 2023, we believe these investments will ultimately help mitigate and reduce our fraud losses over the long term.
We expect these cost reduction initiatives to be partially offset by increases in other areas, as we will continue to invest in and incur additional expenses in connection with our AML program, including improvements to our compliance controls, policies and procedures, which we believe will ultimately help us to continue to remediate regulatory matters discussed above and mitigate and reduce our fraud losses over the long term.
Interest Income, net — Net interest income totaled $42.2 million for the year ended December 31, 2022, an increase of $23.4 million, or 124%, from the comparable prior year period.
Interest Income, net — Net interest income totaled $37.3 million for the year ended December 31, 2023, a decrease of $4.9 million, or 11%, from the comparable prior year period.
Our effective tax rate for the year ended December 31, 2022 is higher than our statutory federal income tax rate primarily due to higher taxes from non-deductible executive compensation, tax shortfalls from stock-based compensation, and expenses related to state taxes, net of federal benefits.
Our effective tax rate for the year ended December 31, 2023 is higher than our statutory federal income tax rate primarily due to the expense associated with tax shortfalls from stock-based compensation, the expense related to nondeductible penalties, and higher expenses related to state taxes, net of federal benefits, partially offset by higher tax benefits from general business credits and cash value growth in bank owned life insurance policies.
The decrease in our effective tax rate was primarily attributable to a reduced IRC 162(m) limitation on the deductibility of certain executive compensation and higher tax benefits from general business credits, partially offset by tax shortfalls from stock-based compensation and higher expenses related to state taxes, net of federal benefits.
The increase in our effective tax rate was primarily attributable to the expense associated with tax shortfalls from stock-based compensation, expense related to nondeductible penalties, and higher expenses related to state taxes, net of federal benefits, partially offset by higher tax benefits from general business credits and cash value growth in bank owned life insurance policies.
In our Consumer Services segment, revenues decreased during the year ended December 31, 2022 by 16% over the prior year comparable period. As compared to the year ended December 31, 2021, gross dollar volume and purchase volume each declined 26% and 23%, respectively, while the average number of active accounts and direct deposit accounts declined by 26% and 24%, respectively.
As compared to the year ended December 31, 2022, gross dollar volume and purchase volume each declined 15% and 16%, respectively, and the average number of active accounts and direct deposit accounts for the fiscal year declined by 16% and 17%, respectively.
The decrease in segment revenues for the year ended December 31, 2022 was driven primarily by a lower number of cash transfers processed, which decreased by 11% from the prior year comparable period. 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 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, partially offset by an increase in the number of cash transfers processed for third-party programs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWhile it is expected that the FOMC may continue to maintain elevated interest rates 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.
Biggest changeWhile it is expected that the FOMC will decrease interest rates during 2024, we expect that an elevated interest rate environment may persist for the foreseeable future. The FOMC's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future.
We continue to monitor our exposure to credit risk with our retail distributors and other business partners in light of the current macro-economic uncertainties. 52 Table of Contents
We continue to monitor our exposure to credit risk with our retail distributors and other business partners in light of the current macro-economic uncertainties. 55 Table of Contents
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.
Our policy has limits related to liquidity ratios, the concentration that we may have with 54 Table of Contents a single institution or issuer and effective maturity dates as well as restrictions on the type of assets that we may invest in.
For example, assuming our credit agreement is drawn up to its maximum borrowing capacity of $100.0 million, based on the applicable LIBOR and margin in effect as of December 31, 2022, each quarter point of change in interest rates would result in a $0.3 million change in our annual interest expense.
For example, assuming our credit agreement is drawn up to its maximum borrowing capacity of $100.0 million, based on the applicable SOFR and margin in effect as of December 31, 2023, each quarter point of change in interest rates would result in a $0.3 million change in our annual interest expense.
Accordingly, we expect the net effect to have a negative impact on our consolidated financial statements in 2023 compared to 2022. As of December 31, 2022, we had $35.0 million outstanding under our $100.0 million line of credit agreement. Refer to Note 11—Debt to the Consolidated Financial Statements included herein for additional information.
Accordingly, the net effect has had and we expect may continue to have a negative impact on our consolidated financial statements. As of December 31, 2023, we had $61.0 million outstanding under our $100.0 million line of credit agreement. Refer to Note 11—Debt to the Consolidated Financial Statements included herein for additional information.
Our cash and cash equivalents are also subject to changes in short-term rates. The Federal Open Market Committee 51 Table of Contents ("FOMC") again increased the federal funds target rate in February 2023 to a range of 4.50%-4.75%, which will continue to impact the amount of net interest income we earn.
Our cash and cash equivalents are also subject to changes in short-term rates. The FOMC increased the federal funds target rate in July 2023 to a range of 5.25%-5.50%, which will continue to impact the amount of net interest income we earn.

Other GDOT 10-K year-over-year comparisons