GDOT 10-K & 10-Q changes, risk factors and insider trading
Green Dot Corp. · NYSE · Finance Services · CIK 1386278 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “RISKS RELATED TO THE GREEN DOT MERGER AND THE PAYMENTS SALE”
New heading “Failure to complete the transactions contemplated by each of the Merger Agreement and the Separation Agreement could negatively affect our stock price and our future business and financial results.”
New heading “We will be subject to business uncertainties and contractual restrictions in the Merger Agreement and the Separation Agreement while the transactions contemplated thereby are pending.”
New heading “Stockholder litigation related to the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement could prevent or delay the completion of such transactions, result in the payment of damages or otherwise negatively impact our business and operations.”
New heading “We have incurred and are expected to incur substantial costs related to the Green Dot Merger, the Payments Sale and the other transactions contemplated by the Merger Agreement and the Separation Agreement, and these costs may be greater than anticipated due to unexpected costs.”
New heading “The merger consideration to be received by our stockholders is fixed (subject to limited exceptions) and will not be adjusted for changes affecting us or CommerceOne.”
New heading “Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the pro forma bank business following the Mergers and the other transactions contemplated by the Merger Agreement and the Separation Agreement.”
New heading “Either the Merger Agreement or the Separation Agreement may be terminated in accordance with its respective terms, such that the transactions contemplated thereby, including the Green Dot Merger and the Payments Sale, may not be completed.”
New heading “We and New CommerceOne may be unable to retain CommerceOne and Green Dot Bank personnel successfully.”
Removed heading “Acquisitions or investments, or the failure to consummate such transactions, could disrupt our business and negatively impact our financial condition.”
Removed heading “Our business could be negatively impacted by actions of stockholders.”
Largest changes
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 judicialsee in full comparisonproceedingsproceedings, investigations orinvestigations.subpoenas. The outcome of litigation and regulatory or judicial proceedings or investigations is difficult to predict. Plaintiffs or regulatory agencies or authorities in these matters have sought and may seek recovery of very large or indeterminate amounts, seek to have aspects of our business suspended or modified or seek to impose sanctions, including significant monetary fines. For example, in July 2024 we and our subsidiary bank entered into the Consent Order, including a civil money penalty of $44 million, with the Federal Reserve Board as further discussed in the "As a bank holding company, we are subject to extensive and potentially changingregulationregulations andareregulatoryrequiredexpectations, which may limit our ability toservepursueasbusinessaopportunitiessourceandofincreasestrengthcompliancefor Green Dot Bankchallenges" risk factor above. Additionally, the monetary and other impacts of these actions, litigations, proceedings or investigations may remain unknown for substantial periods of time. The cost to defend, settle or otherwise resolve these matters have been and may be significant. Further, an unfavorable resolution of litigation, proceedings or investigations against us could have a negative impact on our business, operating results, or financial condition. In this regard, such costs could make it more difficult to maintain the capital, leverage and other financial commitments at levels we have agreed to with the Federal Reserve Board and the UtahDepartmentDFI.of Financial Institutions. IfAny regulatory or judicial proceedings or investigationswere to beinitiated against us by private or governmentalentities,entities may result in adverse publicitythat may beassociated with these proceedings or investigations and could negatively impact our relationships with retail distributors, tax preparation partners, network acceptance members, financial institutions and other lending partners, other business partners and card processors and decrease acceptance and use of, and loyalty to, our products and related services, and could impact the price of our Class A common stock. In addition, such proceedings or investigations could increase the risk that we will be involved in litigation. For the foregoing reasons, any regulatory or judicial proceedings or investigations that are initiated against us by private or governmental entities, could negatively impact our business, results of operations and financial condition or could cause our stock price to decline. 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.
“Stockholder litigation related to the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement could prevent or delay the completion of such transactions, result in the payment of damages or otherwise negatively impact our business and operations.”see in full comparison
“It is possible that stockholders may file lawsuits challenging the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement, which may name us, our officers or members of our Board of Directors as defendants. Green Dot has received demand letters from purported stockholders of Green Dot, alleging deficiencies and/or omissions of certain allegedly material information in the registration statement on Form S-4 filed by New CommerceOne with the SEC of which the proxy statement/prospectus forms a part. …”see in full comparison
“If we are unable to successfully integrate an acquired business or technology or otherwise address these special risks and challenges or other problems encountered in connection with an acquisition, we might not realize the anticipated benefits of that acquisition, we might incur unanticipated liabilities, or we might otherwise experience negative impacts to our business generally. Furthermore, acquisitions and investments are often speculative in nature and the actual benefits we derive from them could be lower or take longer to materialize than we expect. …”see in full comparison
“Before the Mergers and the Payments Sale may be completed, various approvals, consents and non-objections that have not yet been obtained must be obtained, including from the Federal Reserve, the Utah DFI and the ASBD and antitrust and other authorities in the United States. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party to the proposed transaction. …”see in full comparison
“Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the pro forma bank business following the Mergers and the other transactions contemplated by the Merger Agreement and the Separation Agreement.”see in full comparison
Full comparison: every changed paragraph (68)
RISKS RELATED TO THE GREEN DOT MERGER AND THE PAYMENTS SALE
Failure to complete the transactions contemplated by each of the Merger Agreement and the Separation Agreement could negatively affect our stock price and our future business and financial results.
The Merger Agreement and the Separation Agreement each provide for a number of conditions that must be satisfied (or waived) in order to complete the transactions contemplated thereby, including the Green Dot Merger and the Payments Sale, respectively. These conditions to the closing of such transactions may not be fulfilled in a timely manner or at all, and accordingly, such transactions may not be completed.
If such transactions are not completed for any reason, including the failure to receive the required approvals of our or CommerceOne’s stockholders, there may be various adverse consequences, and we may experience negative reactions from the financial markets and from our customers and employees. For example, our business may be adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Green Dot Merger, the Payments Sale and other transactions contemplated by the Merger Agreement and the Separation Agreement, without realizing any of the anticipated benefits of completing the Green Dot Merger, the Payments Sale and such other transactions. Additionally, if either the Merger Agreement or the Separation Agreement is terminated, the market price of our common stock could decline, including to the extent that current market prices reflect a market presumption that the transactions contemplated by the Merger Agreement or the Separation Agreement will be completed. We could also be subject to litigation or proceedings related to any failure to complete such transactions, including litigation or proceedings commenced against us to perform our respective obligations under the Merger Agreement or the Separation Agreement. If the Merger Agreement is terminated under certain circumstances, we may be required to pay a termination fee of $27 million to CommerceOne.
Additionally, we have incurred and will incur substantial expenses in connection with the completion of the Green Dot Merger, the Payments Sale and other transactions contemplated by the Merger Agreement and the Separation Agreement, as well as the costs and expenses of preparing, filing, printing and mailing the proxy statement/prospectus, and other fees and expenses in connection with the Green Dot Merger, the Payments Sale and such other transactions. If such transactions are not completed, we would have to pay these expenses without realizing the expected benefits of the Green Dot Merger, the Payments Sale and such other transactions.
We will be subject to business uncertainties and contractual restrictions in the Merger Agreement and the Separation Agreement while the transactions contemplated thereby are pending.
Uncertainty about the effect of the Green Dot Merger, the Payments Sale and the other transactions contemplated by the Merger Agreement and the Separation Agreement on our employees and customers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel until such transactions are completed, and could cause customers and others that deal with us to seek to change existing business relationships with us. Subject to certain exceptions, we have agreed to operate our business in the ordinary course in all material respects and to refrain from taking certain actions, including actions that may adversely affect our ability to consummate the transactions contemplated by either the Merger Agreement or the Separation Agreement on a timely basis, without the consent of CommerceOne and Payments Buyer, as applicable, until the transactions contemplated by the Merger Agreement and the Separation Agreement, including the Green Dot Merger and the Payments Sale, are completed. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of such transactions.
Stockholder litigation related to the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement could prevent or delay the completion of such transactions, result in the payment of damages or otherwise negatively impact our business and operations.
It is possible that stockholders may file lawsuits challenging the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement, which may name us, our officers or members of our Board of Directors as defendants. Green Dot has received demand letters from purported stockholders of Green Dot, alleging deficiencies and/or omissions of certain allegedly material information in the registration statement on Form S-4 filed by New CommerceOne with the SEC of which the proxy statement/prospectus forms a part. New CommerceOne, CommerceOne and Green Dot believe that the allegations in these letters are without merit. If additional similar demands are made, absent new or different allegations that are material, neither New CommerceOne, CommerceOne nor Green Dot will necessarily announce them. We cannot assure you as to the outcome of any lawsuits, if filed, including the amount of costs associated with defending such claims or any other liabilities that may be incurred in connection with the litigation of such claims. If any plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement on the agreed-upon terms, such an injunction may delay the completion of such transactions in the expected time-frame, or may prevent such transactions from being completed altogether. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significant costs, and divert management’s attention and resources, which could adversely affect the operation of our business.
We have incurred and are expected to incur substantial costs related to the Green Dot Merger, the Payments Sale and the other transactions contemplated by the Merger Agreement and the Separation Agreement, and these costs may be greater than anticipated due to unexpected costs.
We have incurred and expect to incur a number of significant non-recurring costs associated with the Green Dot Merger, the Payments Sale and the other transactions contemplated by the Merger Agreement and the Separation Agreement, including legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, financial printing and other printing costs and other related costs. If such transactions are not completed, we would have to pay such expenses without realizing the expected benefits of such transactions.
The merger consideration to be received by our stockholders is fixed (subject to limited exceptions) and will not be adjusted for changes affecting us or CommerceOne.
At the First Effective Time, each issued and outstanding share of our common stock, subject to limited exceptions, will be converted into the right to receive (i) 0.2215 shares of the common stock of New CommerceOne and (ii) an amount in cash equal to $8.11, less any withholding and without interest. Subject to limited exceptions, the exchange ratio is fixed and will not be adjusted for changes affecting us or CommerceOne, including for changes in the market price or value of our common stock or CommerceOne common stock. There will be a time lapse between each of the date of the proxy statement/prospectus for the stockholders’ meeting to adopt the Merger Agreement and approve the transactions contemplated by the Separation Agreement, the date on which our stockholders vote to adopt the Merger Agreement and approve the transactions contemplated by the Separation Agreement, and the date on which our stockholders entitled to receive shares of New CommerceOne common stock actually receive such shares. The value of CommerceOne common stock and New CommerceOne common stock may fluctuate during these periods as a result of a variety of factors, including general market and economic conditions, changes in our and CommerceOne’s businesses, operations and prospects, and regulatory considerations. Many of these factors are outside of our and CommerceOne’s control. The actual value of the shares of New CommerceOne common stock received by our stockholders will depend on the value of shares of New CommerceOne common stock at the time the Mergers are completed. This market value may be less or more than the value used to determine the exchange ratio stated in the Merger Agreement and the proxy statement/prospectus.
Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the pro forma bank business following the Mergers and the other transactions contemplated by the Merger Agreement and the Separation Agreement.
Before the Mergers and the Payments Sale may be completed, various approvals, consents and non-objections that have not yet been obtained must be obtained, including from the Federal Reserve, the Utah DFI and the ASBD and antitrust and other authorities in the United States. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party to the proposed transaction. These approvals could be delayed or not obtained at all, including due to an adverse development in any party’s regulatory standing or in any other factors considered by regulators when granting such approvals; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. Some recent transactions comparable to the Mergers and the Payments Sale have encountered lengthy delays, and the Mergers and the Payments Sale may be subject to similar delays in obtaining its required approvals.
The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the Merger Agreement and the Separation Agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by either the Merger Agreement or the Separation Agreement, imposing additional material costs on or materially limiting the revenues of the pro forma bank business following the Mergers and the other transactions contemplated by the Merger Agreement and the Separation Agreement or otherwise reducing the anticipated benefits of such transactions if they were consummated successfully within the expected time frame. In addition, there can be no assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of such transactions. The completion of the Mergers and the other transactions contemplated by the Merger Agreement and the Separation Agreement is conditioned on the absence of certain orders, injunctions or decrees by any court or governmental entity of competent jurisdiction that would prohibit or make illegal the completion of any of such transactions.
In addition, despite the parties’ commitments to using their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the Merger Agreement and as described further therein, neither we nor CommerceOne will be required to take actions or agree to conditions that would reasonably be expected to have a material burdensome condition on the pro forma bank business.
Either the Merger Agreement or the Separation Agreement may be terminated in accordance with its respective terms, such that the transactions contemplated thereby, including the Green Dot Merger and the Payments Sale, may not be completed.
Each of the Merger Agreement and Separation Agreement provide for a number of conditions that must be satisfied (or waived) in order to complete the Green Dot Merger, the Payments Sale and the other transactions contemplated by the Merger Agreement or the Separation Agreement, as applicable.
The completion of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Merger Agreement by the requisite vote of our stockholders and CommerceOne’s stockholders, (ii) the authorization for listing on the NYSE of the shares of New CommerceOne Common Stock to be issued pursuant to the Merger Agreement, (iii) the receipt of the requisite regulatory approvals, including from the Federal Reserve, the Utah DFI and the ASBD, and no such regulatory approval having resulted in a material burdensome condition, (iv) the effectiveness of the registration statement on Form S-4 filed with the SEC by New CommerceOne in connection with the transactions contemplated by the Merger Agreement, (v) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the Merger Agreement or any law making the completion thereof illegal and (vi) the satisfaction or waiver of the closing conditions set forth in the Separation Agreement with certain exceptions described in the Merger Agreement. Each party’s obligation to complete the transactions contemplated by the Merger Agreement is also subject to certain additional customary conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Merger Agreement and (c) in the case of CommerceOne, the funding by Payments Buyer of the purchase price in the Payments Sale in accordance with the terms of the Separation Agreement.
In addition, the completion of the transactions contemplated by the Separation Agreement are subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Separation Agreement by our stockholders, (ii) the waiting period applicable to the consummation of the closing under the Hart-Scott-Rodino Act (the “HSR Act”) having expired or been terminated, (iii) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the Separation Agreement or any law making the completion thereof illegal and (iv) the satisfaction or waiver of the closing conditions set forth in the Merger Agreement with certain exceptions described in the Merger Agreement. Each party’s obligation to complete the transactions contemplated by the Separation Agreement is also subject to certain additional customary conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Separation Agreement and (c) in the case of Payments Buyer, the absence of the occurrence of a material adverse effect on the Payments Business. On December 31, 2025, the parties filed their respective Premerger Notification and Report Forms under the HSR Act in connection with the transactions contemplated by the Separation Agreement. The parties requested early termination of the waiting period under the HSR Act, and such request was granted, effective January 21, 2026.
These conditions to the closing of the transactions contemplated by each of the Merger Agreement and the Separation Agreement may not be fulfilled in a timely manner or at all, and, accordingly, such transactions may not be completed. In addition, CommerceOne and we can mutually decide to terminate the Merger Agreement, and Payments Buyer and we can mutually decide to terminate the Separation Agreement, at any time, before or after receipt of the requisite stockholder approvals.
We and New CommerceOne may be unable to retain CommerceOne and Green Dot Bank personnel successfully.
The success of the Mergers and the Payments Sale will depend in part on retaining the talent and dedication of key employees currently employed by Green Dot Bank and CommerceOne and the employees who will be transferred to Payments Buyer in connection with the Payments Sale. It is possible that these employees may decide not to remain with us or CommerceOne, as applicable, while the Mergers are pending or with New Commerce or Payments Buyer after the completion of the Mergers. If we and CommerceOne are unable to retain key employees, including management, who are critical to the future operations of the companies, we and CommerceOne could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, following the completion of the Mergers, if key employees terminate their employment, New CommerceOne’s or Payments Buyer’s business activities may be adversely affected, which may cause New CommerceOne’s or Payments Buyer’s business to suffer, and there is no assurance that New CommerceOne or Payments Buyer will be able to locate or retain suitable replacements for any such key employees who leave.
We have identified certain additional risk factors in connection with the transactions contemplated by each of the Merger Agreement, including the Mergers, and the Separation Agreement, including the Payments Sale. These risks and the other risks associated with such transactions are more fully discussed in the proxy statement/prospectus that is included in the registration statement on Form S-4 filed by New CommerceOne with the SEC and is available through the SEC's website at www.sec.gov. The proxy statement/prospectus contains important information regarding such transactions, and we urge all of our stockholders to read the proxy statement/prospectus carefully and in its entirety.
A significant portion of our operating revenues are derived from our BaaS partners and the products and services sold at our largest retail distributors. Approximately 55%63% of our total operating revenues for the year ended December 31, 20242025 was generated from a single BaaS partner. Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 10%7% for the year ended December 31, 2024.2025. We expect that both Walmart and our largest BaaS partner and Walmart will continue to have a significant impact on our operating revenues in future periods. It would be difficult to replace these operating revenues. Accordingly, any significant reduction in transaction volume or customers’ spending levels through Walmart or our largest BaaS partner,partner or Walmart, for any reason, including macroeconomic conditions or non-renewal of existing contracts, would negatively impact our business and results of operations. In addition, any publicity associated with the loss of any of our large retail distributors, significant BaaS partnerpartners 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.
MostA significant portion of our operating revenues are derived from program management service fees that we earn from our BaaS partners and products and services sold at the stores of our retail distributors. In addition, the revenues we generate from our tax refund processing services are largely derived from products and services sold through retail tax preparation businesses and income tax software providers. Revenues from our BaaS partners, retail distributors and tax preparation partners depend on a number of factors outside our control and may vary from period to period. Our program management service fees depend upon the success of our BaaS partners’ efforts to promote their own products and services which incorporate our products and services. Additionally, because we compete with many other providers of products and services for placement and promotion of products in the stores of our retail distributors or in conjunction with the delivery of tax preparation services by our tax preparation providers, our success depends on the willingness of our retail distributors and tax preparation partners to promote our products and services successfully. In general, our contracts with these third parties allow them to exercise significant discretion over the placement and promotion of our or their products and services, and for a variety of reasons they could give higher priority to other products or services they are offering or the products and services of other companies. Accordingly, losing the commitment of our BaaS partners, retail distributors and tax preparation partners might limit or reduce program management service fees and the sales of our products and services. Our operating revenues and operating expenses may also be negatively affected by the operational decisions of our BaaS partners, retail distributors and tax preparation partners. For example, if a retail distributor reduces shelf space for our products or implements changes in its systems that disrupt the integration between its systems and ours, our product sales could be reduced or decline, and we may incur additional merchandising costs to ensure our products are appropriately stocked. Similarly, for a variety of reasons, many of our tax preparation partners that provide commercial income tax preparation software offer their customers several alternatives for tax refund processing services, including those of our competitors. Even if our BaaS partners, retail distributors and tax preparation partners actively and effectively promote our or their products and services, there can be no assurance that their efforts will maintain or result in growth of our operating revenues.
We are also experiencing competition as a result of competitorscompetitors, such as Chime Financial, Inc., offering free or low-cost alternatives to our products and services. Digital-centric financial services platforms have continued to gain market share through the marketing of their largely free bank account offerings. To the extent these competitors continue to take market share at our expense, we expect that the purchase and use of our products and services would decline. In order to compete across the markets served by our Consumer Services and Money Movement Services segments, we may have to increase the incentives that we offer to our retail distributors and our tax preparation partners, or directly to consumers, and decrease the prices of our products and services, any of which would likely negatively impact our results of operations.
The electronic payments industry is subject to rapid and significant technological changes.changes, and our ability to meet our customers' and partners' needs and expectations is key to our business success and financial results over the long term. We cannot predict the effect of technological changes on our business. We rely in part on third parties for the development of, and access to, new technologies. We expect that new services and technologies applicable to our industry will continue to emerge, and these new services and technologies may be superior to, or render obsolete, the technologies we currently utilize in our products and services. Additionally,Some of our competitors are substantially larger than we are, which may makeallow futurethose investmentscompetitors in,to orinvest entermore money into strategictheir alliancestechnology infrastructure, use of artificial intelligence, and digital innovation than we do. In addition, other competitors may experience lower cost structures and different regulatory requirements and scrutiny than we do, which may allow them to develop,innovate newmore technologiesrapidly andthan serviceswe or to implement infrastructure change to further our strategic objectives, strengthen our existing businesses and remain competitive. However, our ability to develop or transition to new services and technologies may be inhibited by a lack of industry-wide standards, by difficulties encountered in our development of new services and technologies, by resistance from our retail distributors, BaaS partners, third-party processors or consumers to these changes, by the intellectual property rights of third parties or our reliance on certain third-party service providers. Investments in new services and technologies or enhancements are inherently risky, and may not be successful or may have a negative impact on our business, financial condition and results of operations.can.
Additionally, we may make future investments in, or enter into strategic alliances to develop, new technologies and services or to implement infrastructure change to further our strategic objectives, strengthen our existing businesses and remain competitive. However, our ability to develop or transition to new services and technologies may be inhibited by a lack of industry-wide standards, by difficulties encountered in our development of new services and technologies, by resistance from our retail distributors, BaaS partners, third-party processors or consumers to these changes, by the intellectual property rights of third parties or our reliance on certain third-party service providers. Moreover, our previously-announced plan to cease operations in China, where a significant portion of our software development was conducted, could potentially delay our ability to launch new products or services or impact our ability to deliver current products and services if we are unsuccessful in timely and cost-effectively transitioning those operations. A failure to maintain or to enhance our competitive position with respect to digital products and services, whether because we fail to anticipate customer or partner expectations or because our technological developments fail to perform as desired or are not implemented in a timely or successful manner, could negatively affect our business and financial results.
A large portion of our business is conducted through retail distributors that sell our products and services to consumers at their store locations or other banking partners that collect funds and fees from our customers on our behalf. Our retail distributors and banking partners collect funds from the consumers who purchase our products and services and then must remit these funds directly to our subsidiary bank. While the remittance of these funds by the retail distributor or banking partner takes on average two business days, we have in the past and may in the future experience lengthy delays. Such delays or refusal to pay exposes us to increased settlement risk. If a retail distributor or other banking partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuingsubsidiary bank from the sales of our products and services, we are liable for any amounts owed to our customers. As of December 31, 2024,2025, we had assets subject to settlement risk of $616.2$947.5 million. Given the possibility of recurring volatility in global financial markets, the approaches we use to assess and monitor the creditworthiness of our retail distributors or other banking partners may be inadequate, and we may be unable to detect and take steps to mitigate an increased credit risk in a timely manner. Economic recessions could result in settlement losses, whether or not directly related to our business. We are not insured against these risks. Significant settlement losses could have a negative impact on our business, results of operations and financial condition.
Global and macro-economic factors have resulted andand, from time to time, may continue to result in high inflation rates, interest rates, or unemployment rates, leading to economic challenges for consumers and our retail distributors and other partners as well as reduced transaction and spending volumes on accounts. Additionally, these effects increase the settlement risk from our retail distributors and banking partners and could cause us to experience contraction in the number of locations within our network of retail distributors due to store closures or other developments, such as Rite Aid's recent bankruptcy proceedings, with attendant negative impacts to our operating revenues and results of operations. If current market conditions persist or deteriorate, we may decide to adjust pricing to account for an increasing cost of funds and increased credit risk, and thereby erode our margins and negatively impact our future financial performance and the price of our Class A common stock. Additionally, significant inflationary pressure increases borrowing rates, and we may not be able to fully offset such higher costs through rate increases. Our inability or failure to do so could negatively impact our business, financial condition and results of operations. Additionally, increaseda rising interest ratesrate environment may negatively impact our customers’ spending levels or our customers’ ability to pay outstanding amounts owed to us.
The electronic payments industry, including the prepaid and debit card financial services segment within that industry, depends heavily upon the overall level of consumer spending. Economic recessionsconditions, including inflationary pressures, have resulted and may continue to result in decreased consumer spending and may also result in us experiencing a reduction in the number of our accounts that are purchased or reloaded, the number of transactions involving our cards and the use of our reload network and related services. A sustained reduction in the use of our products and related services, either as a result of a general reduction in consumer spending or as a result of a disproportionate reduction in the use of card-based payment systems, would negatively impact our business, results of operations and financial condition.
As the financial services industry evolves, consumers may find prepaid financial services or demand deposit accounts to be less attractive and demand for such services and accounts could decline. Consumers might not use prepaid financial services or demand deposit accounts for any number of reasons, including the general perception of our industry, new technologies, a decrease in our distribution partners’ willingness to sell these products as a result of a more challenging regulatory environment or other factors outside of our control. If consumers do not continue to use or increase their usage of prepaid cards or demand deposit accounts, including making changes in the way such products are funded, our operating revenues may decline. Any projected growth for the industry may not occur or may occur more slowly than estimated. If there is a shift in the mix of payment forms, such as cash, credit cards, traditional debit cards and prepaid cards, away from our products and services, it could have a negative impact on our financial position and results of operations.
Our systems and the systems of third-party processors are susceptible to outages and interruptions including due to fire, natural disaster, cyber-attacks, power loss, telecommunications failures, software or hardware defects, terrorist attacks, pandemics and similar events. We use both internally developed and third-party systems, including cloud computing and storage systems, for our services and certain aspects of transaction processing. Interruptions in our service may result for a number of reasons. Additionally, the data center hosting facilities that we use could be closed without adequate notice or experience unanticipated problems resulting in lengthy interruptions in our service. Moreover, as we continue to add cloud-based solutions or additional capacity to our existing data centers,solutions, we could experience problems transferring customer accounts and data,data or interruptions in service from our cloud providers, impairing the delivery of our service.
We and our retail distributors, tax preparation partners, network acceptance members, third-party processors and the merchants that accept our cards receive, transmit and store confidential customer and other information, including personal information, in connection with the sale and use of our products and services. Despite the encryption software and the other technologies and systems we use to provide security for storage, processing and transmission of confidential customer and other information these technologies or systems have been, and continue to be, vulnerable to cyber-attacks, incidents and data security breaches by third parties and we have experienced, and may in the future experience, attacks, incidents and breaches that circumvent our security measures. The risk of unauthorized circumvention of our security measures has been heightened by advances in artificial intelligence, computer capabilities and the increasing sophistication of hackers, including state sponsored hackers. Our retail distributors, tax preparation partners, network acceptance members, other business partners, third-party processors and the merchants that accept our cards also may experience similar cyber-attacks, incidents or security breaches or discover securities vulnerabilities involving the receipt, transmission and storage of our confidential customer and other information. Improper access to our or these third parties’ systems or databases could result in the theft, publication, deletion or modification of confidential customer and other information.
A data security breach of the systems on which sensitive accountholder or other customer or end-customer data and account information are stored have led, and could in the future lead, to fraudulent activity involving our products and services, reputational damage and claims, and could lead to regulatory actions, including penalties, against us. Further, a cyber-attack or other incident could go undetected and persist in our systems for extended periods. Regardless of whether or not we are sued or face regulatory actions, a breach will require us to carefully assess the materiality of a cyber-attack or other incident. Depending on the nature and magnitude of the accessed data, this effort may require substantial resources. If we are sued in connection with any data security breach, we could be involved in protracted and costly litigation and might be forced to pay damages and/or change our business practices, any of which could have a negative impact on our operating revenues and profitability. We would also likely have to pay (or indemnify the banks that issue our products and services which includes cards) fines, penalties and/or other assessments imposed by the networks such as Visa or Mastercard as a result of any data security breach. Further, a significant data security breach could lead to additional regulation, which could impose new and costly compliance obligations. In addition, a data security breach or perceived security vulnerability at any of the third-party banks that issue our cards or at any of our retail distributors, tax preparation partners, network acceptance members, other business partners, third-party processors or the merchants that accept our cards could result in significant reputational harm to us and cause the use and acceptance of our cards or other products and services to decline, either of which could have a significant adverse impact on our operating revenues and future growth prospects. Moreover, it may require substantial financial resources to address and remediate any such breach, including additional costs for hiring an external party to conduct a forensic investigation, replacement cards, manufacturing, distribution, re-stocking fees, fraud monitoring, and other added security measures, among others, which could have a significant adverse impact on our operating results.
Additionally, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on reasonable terms, or that any insurer will not deny coverage as to any future claim. The assertion of large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or large deductible or co-insurance requirements, could have a negative impact 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 negative impact on our business, including our financial condition, operating results, and reputation.
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 and data protection laws and regulations are quickly evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subject to new or different interpretations. Complying with these laws and regulations can be costly and can impede the development and offering of new products and services. In addition, our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal information, or to protect personal information from unauthorized access, use, or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, damage to our reputation, and loss of goodwill, any of which could have a negative impact on our operations, financial performance, and business.
Some of our operations, including a significant portion of our software development operations,operations are located outside of the United States, which subjects us to additional risks.
A significant portion of our software development operations arewere based in Shanghai, China.China and have been or are being relocated to locations in and outside of the United States. A prolonged disruption at our Chinafacilities facilityor the facilities of our outsourcing service providers for any reason including due to natural or man-made disasters, outbreaks of disease, climate changechange, geopolitical matters 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 negatively impact our business. Additionally, as a result of our international operations, we face numerous other challenges and risks, including, but not limited to:
•increased complexity and costs of managing international operationsoperations, including regulatory compliance;
As a bank holding company, we are subject to extensive and potentially changing regulationregulations and areregulatory requiredexpectations, which may limit our ability to servepursue asbusiness aopportunities sourceand ofincrease strengthcompliance for Green Dot Bank.challenges.
As a bank holding company,BHC, 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 InstitutionsDFI and must comply with applicable laws and regulations and other commitments we have agreed to, including financial commitments with respect to minimum capital and leverage requirements. IfAs has been the case in the past, when the regulators believe that we or Green Dot Bank have not complied with any of these requirements, we have in the past and may in the future become subject to, in addition to our then-current obligations (which includes the formal enforcement action noted below), additional 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, negatively impact our results of operations and restrict our ability to grow. For example, in July 2024 we and our subsidiary bank entered into a consent order, including a $44 million civil money penalty, with the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations (the "Consent Order"). In response to enhanced regulatory scrutiny, we have increased our investment in our regulatory and compliance infrastructure and will continue with further increases. We expect heightened oversight of our compliance and other risk management capabilities will continue for the foreseeable future. If we fail to comply with the applicable capital and leverage requirements, or if Green Dot Bank fails to comply with its applicable capital and leverage requirements, the Federal Reserve Board may limit our or Green Dot Bank's ability to pay dividends or fund stock repurchases, or require us to raise additional capital. In addition, if at any time we or Green Dot Bank fail to be “well-capitalized” or “well managed,” we may not commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval.
The restriction on our ability to commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval would also generally apply if Green Dot Bank received a CRA rating of less than “Satisfactory.” Currently, under the Bank Holding Company Act (the "BHC Act"),Act, we may not be able to engage in new activities or acquire shares or control of other businesses. Such restrictions might limit our ability to pursue future business opportunities which we might otherwise consider, but which might fall outside the scope of permissible activities. U.S. bank regulatory agencies from time to time take supervisory actions under certain circumstances that restrict or limit a financial institution's activities, including in connection with examinations, which take place on a continual basis. We are subject to significant legal restrictions on our ability to publicly disclose the existence of these actions or any of the related details. In addition, as part of the regular examination process, our and Green Dot Bank's regulators may direct us or our subsidiaries to operate under various restrictions as a prudential matter. Such restrictions may include not being able to engage in certain categories of new activities or acquire shares or control of other companies.
From time to time, federal and state legislators and regulatory authorities, including state attorney generals,generals and federal executive departments, increase their focus on the banking, consumer financial services and tax preparation industries and have commenced and may in the future commence formal and informal inquiries. The adoption of new or proposed legislation or guidance has in the past and may in the future propose and adopt new legislation or guidance that could result in significant adverse changes in the regulatory landscape for financial institutions and financial services companies. Accordingly, changes in laws and regulations or the interpretation or enforcement thereof may occur that could increase our compliance and other costs of doing business, require significant systems redevelopment, or render our products or services less profitable or obsolete, any of which could have a negative impact on our results of operations. For example, we could face more stringent AML rules and regulations, as well as more stringent licensing rules and regulations, compliance with which could be expensive and time consuming. In addition, adverse rulings relating to the industries in which we participate could cause our products and services to be subject to additional laws and regulations, which could make our products and services less profitable.
If additional legal or regulatory requirements were imposed on our bank or the sale of our products and services, the requirements could lead to a loss of retail distributors, network participants, tax preparation partners or other business partners, which could negatively impact our operations. Moreover, if our products are negatively impacted by the interpretation or enforcement of these regulations or if we or any of our retail distributors or tax preparation partners were unwilling or unable to make such operational changes to comply with the interpretation or enforcement thereof, we would no longer be able to sell our products and services through that noncompliant retail distributor or tax preparation partner, which could negatively impact our business, financial position and operating results.
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 proceedingsproceedings, investigations or investigations.subpoenas. The outcome of litigation and regulatory or judicial proceedings or investigations is difficult to predict. Plaintiffs or regulatory agencies or authorities in these matters have sought and may seek recovery of very large or indeterminate amounts, seek to have aspects of our business suspended or modified or seek to impose sanctions, including significant monetary fines. For example, in July 2024 we and our subsidiary bank entered into the Consent Order, including a civil money penalty of $44 million, with the Federal Reserve Board as further discussed in the "As a bank holding company, we are subject to extensive and potentially changing regulationregulations and areregulatory requiredexpectations, which may limit our ability to servepursue asbusiness aopportunities sourceand ofincrease strengthcompliance for Green Dot Bankchallenges" risk factor above. Additionally, the monetary and other impacts of these actions, litigations, proceedings or investigations may remain unknown for substantial periods of time. The cost to defend, settle or otherwise resolve these matters have been and may be significant. Further, an unfavorable resolution of litigation, proceedings or investigations against us could have a negative impact on our business, operating results, or financial condition. In this regard, such costs could make it more difficult to maintain the capital, leverage and other financial commitments at levels we have agreed to with the Federal Reserve Board and the Utah DepartmentDFI. of Financial Institutions. IfAny regulatory or judicial proceedings or investigations were to be initiated against us by private or governmental entities,entities may result in adverse publicity that may be associated with these proceedings or investigations and could negatively impact our relationships with retail distributors, tax preparation partners, network acceptance members, financial institutions and other lending partners, other business partners and card processors and decrease acceptance and use of, and loyalty to, our products and related services, and could impact the price of our Class A common stock. In addition, such proceedings or investigations could increase the risk that we will be involved in litigation. For the foregoing reasons, any regulatory or judicial proceedings or investigations that are initiated against us by private or governmental entities, could negatively impact our business, results of operations and financial condition or could cause our stock price to decline. 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.
Our brands and marks are important to our business, and we utilize trademark registrations and other means to protect them. Our business would be negatively impacted if we were unable to protect our brand against infringement. We also rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to protect the intellectual property rights related to our products and services. We currently have 1718 issued patents and 1 patent application pending.patents. Although we generally seek patent protection for inventions and improvements that we anticipate will be incorporated into our products and services, there is always a chance that our patents or patent applications could be challenged, invalidated or circumvented, or that an issued patent will not adequately cover the scope of our inventions or improvements incorporated into our products or services. Additionally, our patents could be circumvented by third parties.
In September2024 and October 2024,2025, we issued and sold senior unsecured notes in an aggregate principal amount of $50.0 million, and in February 2025, an additional aggregate principal amount of $15$65.0 million, all of which mature in September 2029. As a result of these transactions, we have incurred additional debt service obligations in addition to normal operating expenses and planned capital expenditures. Our increased level of indebtedness may have several important effects on our future operations, including, without limitation, a portion of our cash flow must be dedicated to the payment of interest and principal on the senior unsecured notes, reducing funds available for distribution to stockholders and limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes. Our ability to meet our debt service obligations and to reduce our total indebtedness will be dependent upon our future performance, as well as Green Dot Bank and its ability to pay dividends to us, which will be subject to regulatory restrictions, general economic, industry and competitive conditions and to financial, business and other factors affecting us and Green Dot Bank, many of which are beyond our control. In addition, the senior unsecured notes contain certain affirmative and negative non-financial covenants applicable to us and Green Dot Bank that could limit our ability to take advantage of financing, merger, acquisition or other opportunities, to fund our business operations or to fully implement our current and future operating strategies.
Acquisitions or investments, or the failure to consummate such transactions, could disrupt our business and negatively impact our financial condition.
We have in the past acquired, and we may acquire in the future, other businesses and technologies. Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to identify suitable candidates or successfully complete identified acquisitions. Failure to complete an acquisition could negatively impact 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 be negatively impacted as the failure to consummate such an acquisition may result in negative perception in the investment community.
Further, the process of integrating an acquired business, product, service or technology can involve a number of special risks and challenges, including:
•increased regulatory and compliance requirements;
•implementation or remediation of controls, procedures and policies at the acquired company;
•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;
Management's Discussion & Analysis (MD&A)
New heading “Proposed Transactions with CommerceOne Financial Corporation and Smith Ventures, LLC”
New heading “Other expense, net”
New heading “Deferred Tax Asset Valuation Allowance”
Largest changes
“On July 19, 2024, we and our subsidiary bank entered into a consent order (the "Consent Order") with the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations. Included in the Consent Order was a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. …”see in full comparison
“Our income tax expense for the year ended December 31, 2025 decreased $2.6 million, or 62%, from the prior year comparable period. The decrease in our income tax expense was primarily due to an increase in our pre-tax loss for the year ended December 31, 2025. Our effective tax rate for the years ended December 31, 2025 and 2024 was (1.6)% and (18.5)%, respectively. …”see in full comparison
“The increases in total operating expenses were partially offset by lower other general and administrative expenses, which decreased due to several factors, including the timing of accruals in the prior year related to the civil money penalty under our Consent Order from the Federal Reserve Board that did not recur in the current period, the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system in the prior year comparable period that also did not recur, and a decrease in overall transaction losses attributable to …”see in full comparison
The netsee in full comparisondecreaseincrease in the effective tax rate for the year ended December 31,20242025 from the prior year comparable period was primarily due toaandecreaseincrease of$2.9$3.3 million in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of$0.8$1.5 million in research and development tax credits, an increase of $3.4 million in the valuation allowance on the deferred tax assets of our China subsidiary, an increase of $0.9 million in nondeductible transaction related costs, an increase of $3.0 million from our examination settlement with the IRS, and an increase of $15.5 million in state income tax expense, net of federal benefits,andprimarily resulting from an increase of $17.7 million in theimpactvaluationofallowancegeneralon state deferred tax assets related to state businesscredits.credits and certain state net operating loss carryforwards. Thesedecreasesincreases were partially offset byanaincreasedecrease of$2.9$5.5 million in the expense related to tax shortfalls from stock-based compensation, a decrease of $5.1 million in tax expense from nondeductible penalties primarily associated with the civil money penalty incurred in 2024 for our Consent Order from the Federal Reserve Board, an increase of$0.8$0.7 million in theexpensecashrelatedsurrenderto nondeductible penalties, an increasevalue of$0.4our banked owned life insurances policies, a decrease of $2.2 million in thevaluation allowancereserve on our unrecognized tax benefits, and aportiondecrease of $2.3 million related to ourunrealizedbanklossownedonlifeequityinsurancesecurities,surrenderandpenalties we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policieswhich resultedcompleted ina tax charge of $1.5 million and surrender penalties of $0.7 million. The increases in nondeductible penalties for the years ended December 31, 2024 and 2023 are primarily related to the tax effect associated with the civil money penalty under the Consent Order.2024.
“The increase in our processing expenses for the year ended December 31, 2024 was driven primarily by the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment discussed above, partially offset by reductions in processor costs realized from the migration to our in-licensed card management system. …”see in full comparison
“Our income tax expense for the year ended December 31, 2024 decreased $3.7 million, or 47%, from the prior year comparable period. The decrease in our income tax expense was due primarily to a decrease in our pre-taxable income. Our effective tax rate for the years ended December 31, 2024 and 2023 was (18.5)% and 54.1%, respectively. …”see in full comparison
Full comparison: every changed paragraph (96)
This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, (the "Securities Act") and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).Act. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified above, under “Part I, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.
Green Dot Corporation is a financial technology platform and registered bank holding company ("BHC") that builds banking and payment solutions to create value, retain and reward customers, and accelerate growth for businesses of all sizes. For more than two decades, we have delivered financial tools and services that address the most pressing financial needs of consumers and businesses, and that transform the way people and businesses manage and move money. Through Green Dot Bank, our wholly-ownedwholly owned subsidiary, we deliver a broad spectrum of financial products to consumers and businesses through our portfolio of brands, including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, such as tax refunds, cash deposits and disbursements.
Our Chief Operating Decision Maker (our “CODM” who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, transaction losses and fraud management, and customer support and related expenses. Our operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business ("B2B") Services, 2) Consumer Services, and 3) Money Movement Services. Net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses. Refer to "Part I, Item 1. Business" for more detailed information about our operations and Note 2425—Segment Information to the Consolidated Financial Statements.Statements included herein.
Proposed Transactions with CommerceOne Financial Corporation and Smith Ventures, LLC
In connection with a strategic review process we commenced in March 2025 (our “strategic review process”), on November 23, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), with CommerceOne Financial Corporation, an Alabama corporation (“CommerceOne”), Compass Sub North, Inc., a newly formed Delaware corporation and a direct, wholly owned subsidiary of CommerceOne (“New CommerceOne”), Compass Sub East, Inc., a newly formed Delaware corporation and a direct, wholly owned subsidiary of New CommerceOne (“Merger Sub One”), and Compass Sub West, Inc., a newly formed Delaware corporation and an indirect, wholly owned subsidiary of New CommerceOne (“Merger Sub Two”), pursuant to which, upon the terms and subject to the conditions therein, (i) Merger Sub One will merge with and into CommerceOne, with CommerceOne surviving (the “CommerceOne Merger”), and Merger Sub Two will merge with and into Green Dot Corporation, with Green Dot Corporation surviving (the “Green Dot Merger,” and together with the CommerceOne Merger, the “First Mergers”); and (ii) following the First Mergers, CommerceOne will merge with and into New CommerceOne, with New CommerceOne surviving under the name “CommerceOne Financial Corporation” (together with the First Mergers, the “Mergers”).
Subject to the terms and conditions of the Merger Agreement, at the effective time of the First Mergers (the “First Effective Time”), each share of common stock of Green Dot Corporation, issued and outstanding immediately prior to the First Effective Time, other than certain excluded shares held by us, CommerceOne, New CommerceOne or our dissenting stockholders, will be converted into the right to receive (i) 0.2215 shares of the common stock of New CommerceOne and (ii) an amount in cash equal to $8.11 (the “Per Share Cash Consideration”), less any withholding and without interest.
Also on November 23, 2025, we entered into a separation agreement (the “Separation Agreement”), with New CommerceOne and Green Dot OpCo, LLC, a newly formed Delaware limited liability company and affiliate of Smith Ventures LLC, an Alabama limited liability company (“Payments Buyer”), pursuant to which, upon the terms and subject to the conditions therein, following the First Mergers, (i) Green Dot Corporation will convert into a limited liability company, (ii) Green Dot Corporation will distribute the stock of Green Dot Bank to Compass Sub Northwest, Inc., a Delaware corporation and direct, wholly owned subsidiary of New CommerceOne, and (iii) Payments Buyer will acquire Green Dot Corporation and its non-bank financial technology and related assets and operations (the “Payments Business”) for $690 million (the “Payments Sale”), the proceeds of which will be paid to New CommerceOne and are expected to be used to fund the Per Share Cash Consideration and to retire certain indebtedness of Green Dot Corporation.
The Merger Agreement and the Separation Agreement were unanimously approved by our Board of Directors. The closing of the transactions contemplated by the Merger Agreement and the Separation Agreement remains subject to the receipt of required regulatory approvals, approval by the stockholders of Green Dot Corporation and CommerceOne and the satisfaction of other customary closing conditions.
For additional information regarding potential risks and uncertainties associated with such transactions, please see Part I, Item 1A, Risk Factors above.
Our consolidated total operating revenues increased year-over-year due to the continuedContinued growth of certain BaaS partner programs, whichprograms generated an increase of 18% in our total gross dollar volume of 33% for the year ended December 31, 2024.2025 over the prior year comparable period, which increased our total operating revenues year-over-year. However, as discussed below, our total operating revenues for the year ended December 31, 2025 were negatively impacted by unfavorable trends and factors in ourcertain deposit account programsprograms, thatdriving, reducedamong other things, a small reduction in the average number of consolidated active accounts, and a decrease in purchase volume and number of cash transfers forof the year ended December 31, 2024 by 5%, 10%4%, and 5%,8%, respectively, from the prior year comparable period.
In our Consumer Services segment, revenues decreased during the year ended December 31, 2024 by 19% from the prior year comparable period. Gross dollar volume and purchase volume declined for the year ended December 31, 2024 by 16% and 19%, respectively, and the average number of active accounts and direct deposit accounts for the fiscal year declined by 18% and 19%, respectively. We believe these decreases in our Consumer Services segment are attributable to several factors, including our decision to wind-down many of our legacy accountholder programs in support of GO2bank, macro-economic factors affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations, and the non-renewal of one of our retail partner programs in a prior period. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, new card fees, ATM fees and interchange fees. Revenues within this segment were also adversely impacted by a decrease in breakage revenue on our gift card portfolios for the comparable period.
In our B2B Services segment, revenues increased by 40% during the year ended December 31, 20242025 by 33% over the prior year comparable period. The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the year ended December 31, 20242025 by 45%,22%, and to a lesser extent, growth in purchase volume, which also increased year-over-year by 9%.1%. The average number of active accounts for the year ended December 31, 20242025 increased by 15%11% over the prior year comparable period. The growth in gross dollar volume was driven primarily by certain BaaS programs that do not generate interchange fees and resulted in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners, partially offset by the non-renewals of certain other BaaS partners in prior periods.partners.
In our Consumer Services segment, revenues decreased during the year ended December 31, 2025 by 9% from the prior year comparable period. Gross dollar volume and purchase volume each declined for the year ended December 31, 2025 by 7%, and the average number of active accounts and direct deposit accounts for the fiscal year declined by 10%. We believe these decreases in our Consumer Services segment remain attributable to several persistent factors, including macro-economic factors affecting consumer behavior and other competitive trends that have impacted acquisition at retail locations. These factors had a corresponding impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, ATM fees and interchange fees. Revenues within this segment were also adversely impacted by a decrease in breakage revenue on our gift card portfolio for the comparable period, as the program has been discontinued.
In our Money Movement Services segment, revenues increased for the year ended December 31, 20242025 by 4%3% from the prior year comparable period. The increase in revenues was driven primarily by an increase in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased by 2%13% during the year ended December 31, 2024,2025, our tax processing revenues increased due to the expansion of our taxpayer advance programs and a favorable mix-shift in the distribution channel in which the tax refund was processedgenerated. andThe fromdecrease in the expansionnumber of tax refunds processed was principally attributable to the performance of our taxpayeronline advancetax programs.preparation partners. These increases werein tax processing revenues was partially offset by aan 5%8% decline in the number of cash transfers processed during the year ended December 31, 20242025 from the prior year comparable period. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment as discussed above.above and to a lesser extent, a lower number of cash transfers processed for third-party programs. The Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs. We continued to experience an increase inAlthough the number of cash transfers processedfrom forthird-party programs decreased slightly year over year, we continue to experience a strong concentration from our third-party programs, which has grown steadily on a year-over-year basis, and representedas the majority of our total cash transfers were attributable to these programs as of December 31, 2024.2025.
Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 67%44% for the year ended December 31, 20242025 from the prior year comparable period. The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partnerspartners, higher yielding investments from our bond repositioning strategy, and yieldsa earned at the Federal Reserve, partially offset by an increasedecrease in interest shared with certain BaaS partners (a reduction of revenue).
Our total operating expenses for the year ended December 31, 20242025 increased $246.9$341.3 million, or 17%,20%, over the prior year comparable period. The increase in our total operating expenses was driven primarily by an increase in processing expenses from the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment, andwhich tois discussed above. To a lesser extent, our total operating expenses increased due to a net increase in our compensation and benefits expensesexpenses, anddriven otherprimarily generalby andhigher administrativeaccrued expenses,bonus compensation expense due to our current financial performance relative to annual performance targets, as well as an increase in third-party call center support costs associated with the growth of our BaaS account programs discussed above, partially offset by a decrease in salesemployee stock-based compensation expense due to forfeitures of awards and marketinga expenses,decrease eachin assalary and wage expenses due to the closure of our China operations announced in September 2025. As discussed further below, we also recorded restructuring and other charges associated with our decision to exit our operations in more detail below.China.
The increases in total operating expenses were partially offset by lower other general and administrative expenses, which decreased due to several factors, including the timing of accruals in the prior year related to the civil money penalty under our Consent Order from the Federal Reserve Board that did not recur in the current period, the settlement payment and impairment charges related to the termination of our partnership agreement to develop a new core banking system in the prior year comparable period that also did not recur, and a decrease in overall transaction losses attributable to lower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates. These decreases in other general and administrative expenses were partially offset by higher professional services fees associated with our strategic review process, the proposed transactions with CommerceOne and Smith Ventures, and our anti-money laundering ("AML") regulatory compliance initiatives, an increase in software licenses and hosting costs due to investments in our platform and operations, and an increase in federal deposit insurance due to higher deposit balances and the rates we pay thereon. Additionally, sales and marketing expenses decreased, principally due to a decrease in supply chain materials expenses, which are comprised of debit card plastics and related materials costs, from fewer active accounts, and a decrease in revenue-sharing arrangements in our Money Movement business primarily due to a decrease in cash transfer revenues.
During the third quarter of 2025, we announced a plan to exit our operational activities in China by the end of 2025 as a means of reducing complexity and promoting long-term structural improvements for our business. As a result of this transition, we recorded restructuring and other charges of approximately $22.1 million during the year ended December 31, 2025. These charges were primarily related to severance and employee benefits and other direct costs associated with the restructuring, including lease termination costs. Substantially all of our restructuring activities were completed during the fourth quarter of 2025, and all significant expenses we expected to incur from this plan were paid prior to December 31, 2025.
Other expense, net
Other expense, net for the year ended December 31, 2025 increased $89.4 million from the prior year comparable period. The increase in other expense, net was driven primarily by an increase in equity method losses associated with TailFin Labs, LLC ("TailFin") due to a $70 million incentive payment made by TailFin in connection with our extension of the Walmart MoneyCard program and related agreements in the second quarter of 2025. In addition, we sold certain available-for-sales securities during the first half of the year in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the year ended December 31, 2025. These increases were partially offset by higher income earned from bank-owned life insurance policies.
The increase in our processing expenses for the year ended December 31, 2024 was driven primarily by the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment discussed above, partially offset by reductions in processor costs realized from the migration to our in-licensed card management system. Our total operating expenses also increased due to an increase in compensation and benefits expenses, driven primarily by an increase in third-party call center support costs associated with the growth of the BaaS account programs, as discussed above, and higher accrued bonus compensation expense, partially offset by lower salary and wages driven by the reduction in employee workforce we initiated in February 2024 (the "Headcount Reduction") and lower employee stock-based compensation expense, primarily due to fluctuations in the expected achievement of certain performance-based equity awards. Other general and administrative expenses increased during the year ended December 31, 2024 due to a civil money penalty paid, as discussed further below, higher professional services fees related to our anti-money laundering program ("AML") programs, including improvements to our compliance controls, policies and procedures, and the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in the amount of customer dispute volume across our portfolios and favorable reductions in our dispute loss rates, as well as lower losses from purchase overdraft transactions.
These increases in total operating expenses were partially offset by lower sales and marketing expenses, principally due to decreases in sales commissions due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, and to a lesser extent, reduced marketing spend within our Consumer Services segment.
On July 19, 2024, we and our subsidiary bank entered into a consent order (the "Consent Order") with the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with anti-money laundering regulations. Included in the Consent Order was a civil money penalty related to these issues in the amount of $44 million which was subsequently paid in July 2024. We previously accrued an estimated liability of $20 million related to the Consent Order during the three months ended December 31, 2023, and the remaining portion was accrued during the three months ended June 30, 2024. For further discussion, see the headings "As a bank holding company, we are subject to extensive and potentially changing regulation and are required to serve as a source of strength for Green Dot Bank" and “Litigation or investigations could result in significant settlements, sanctions, fines or penalties” included as part of our risk factor disclosures in Part I, Item 1A, "Risk Factors."
Our income tax expense for the year ended December 31, 2025 decreased $2.6 million, or 62%, from the prior year comparable period. The decrease in our income tax expense was primarily due to an increase in our pre-tax loss for the year ended December 31, 2025. Our effective tax rate for the years ended December 31, 2025 and 2024 was (1.6)% and (18.5)%, respectively. The increase in our effective tax rate was primarily attributable to an increase in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease in research and development tax credits, an increase in the valuation allowance on the deferred tax assets of our China subsidiary, an increase in nondeductible transaction related costs, an increase in tax expense from our examination settlement with the Internal Revenue Service ("IRS"), and an increase in state income tax expense, net of federal benefits, primarily resulting from an increase in the valuation allowance on state deferred tax assets related to state business credits and certain state net operating loss carryforwards. These increases were partially offset by a decrease in the expense related to tax shortfalls from stock-based compensation, a decrease in tax expense from nondeductible penalties associated with the civil money penalty incurred in 2024 for our Consent Order from the Federal Reserve Board, an increase in the cash surrender value of our banked owned life insurances policies, a decrease in the reserve on our unrecognized tax benefits, and a decrease in our bank owned life insurance surrender penalties we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies completed in 2024.
On July 4, 2025, H.R. 1, commonly referred to as the “One Big Beautiful Bill Act" (“OBBBA”) was signed into law, enacting significant changes to the U.S. federal tax code with various effective dates from 2025 to 2027. The OBBBA introduced several significant provisions impacting us, including an elective deduction for domestic research expenditures and reinstatement of elective 100% first year bonus depreciation. These provisions of the OBBBA primarily affected the timing and the mix of current versus deferred income tax expense, and were not material to total income tax expense for the year ended December 31, 2025.
Our income tax expense for the year ended December 31, 2024 decreased $3.7 million, or 47%, from the prior year comparable period. The decrease in our income tax expense was due primarily to a decrease in our pre-taxable income. Our effective tax rate for the years ended December 31, 2024 and 2023 was (18.5)% and 54.1%, respectively. The decrease in our effective tax rate was primarily attributable to a decrease in state income taxes expense, net of federal benefits, the impact of general business credits, and a reduction in the amount of compensation expense that was subject to the Internal Revenue Code (the "IRC") Section 162(m) limitation on the deductibility of certain executive compensation. These decreases were partially offset by incremental taxes and penalties ("surrender penalties") we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies, an increase in the valuation allowance on a portion of our unrealized loss on equity securities, an increase in tax expense associated with shortfalls from stock-based compensation, and an increase in tax expense due to nondeductible expenses and penalties. The increase in nondeductible expenses and penalties for the year ended December 31, 2024 is primarily related to the tax effect associated with the civil money penalty for the Consent Order.
In December 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules introducing a 15% global minimum tax rate for large multinational corporations ("Pillar Two"). CertainOur countriesforeign subsidiary operated in China, which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. The results of this legislation did not have a material impact on the Consolidated Financial Statements included herein. We are monitoring further legislative developments and continuing to evaluate the potential future impact of Pillar Two on our consolidated financial statements, but we do not expect that it will have aany material impact on our results of operations in future periods.
While we are still experiencing a difficult macro-economic environment, competitive headwinds and other factors that have contributed to declining trends in our consolidated operating results in recent periods, excluding impacts from the proposed transactions with CommerceOne and Smith Ventures and other non-operating items, such as our equity method losses in TailFin, we continue to expect our core results of operations will stabilize on a year-over-yearfull year basis year-over-year in 20252026 based on our anticipated initiatives and cost reductioncost-reduction measures we have implemented.
We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results. Our growth-oriented investments are focused on, among other things, accelerating our ability to onboard new partners in our B2B Services and Money Movement segments, adding new features and functionality to our Arc platform, cost-effectively re-engaging inimplementing strategic marketing initiatives in support of our GO2bank productproduct, and other initiatives across our account programs with the objective of returning to active account growth.
We haveare seen reductions in our processing expensesbenefiting from synergies achieved through our processor conversion in 2024 and expect the implementation of our card management platform will allow us to continue to realize reductions in our processing expenses as we seek to expand account programs. In 2025, we also initiated a re-alignment of teams and resources across the enterprise in a continual effort to better support our strategic priorities and growth channels, and improve our operating efficiency. We expect these re-alignments, including the exit from our operational activities in China, to further improve our cost structure year-over-year.
Despite the meaningful reductions toin our cost structure that we have achieved across our organization through our various completed and ongoing initiatives, we are incurring increased expenses in other areas,areas as we haveendeavor incurredto complete the proposed transactions with CommerceOne and Smith Ventures, incur or accrue for additional retention and officer compensation expenses and incur expenses in connection with our continuedongoing investments in our AML program, including improvements to our compliance controls, policies and procedures. We believe theseinvestments investmentsin our AML program will ultimately help us to continue to remediate matters identified in the Consent Order and mitigate andidentified, reduce our fraud losses over the long term.term and cost-efficiently scale our compliance and regulatory programs as we look to grow our business.
In SeptemberDecember 2024,2025, the Federal Reserve decreased interest rates by 50 basis points, the first rate cut in over four years, and further reduced interest rates by an additional 5025 basis points duringto thea fourthcurrent quarterrange of 2024.3.50% to 3.75%. The Federal Reserve's decision-making policies for short-term interest rates will continue to impact the amount of net interest income we earn in the future. In general, while increases inhigher short-term interest rates benefit the yield we earn on our cash, certain of our BaaS partner arrangements allow for the BaaS partner to share in a significant portion of the interest earned from accountholder deposits (which are recorded as a reduction of revenue in our consolidated financial statements), and yields on our investment portfolio tend to lag interest rate increases as securities mature and proceeds are reinvested. Accordingly, the net effect has had and we expect will continue to have a negative impact on our consolidated financial statements and will be dependent upon future interest rate changes enacted by the Federal Reserve. In an effort to reduce these impacts, we have begun to reposition a portion of our investment securities portfolio and our cash into variable rate debt securities to improve net yields and balance the effect of our interest sharing arrangements with BaaS partners.
We classify our operating expenses into the following four categories:
Other General and Administrative Expenses — Other general and administrative expenses consist primarily of professional services fees, telephone and communication costs, depreciation and amortization of our property and equipment, amortization of our intangible assets, impairment charges of long-lived assets, transaction losses (losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud), rent and utilities, and insurance. We incur telephone and communication costs primarily from customers contacting us through our toll-free telephone numbers. These costs vary with the total number of active accounts in our portfolio, as do losses from customer disputed transactions, unrecovered customer purchase transaction overdrafts and fraud. Costs associated with professional services, depreciation and amortization of our property and equipment, amortization of our acquired intangible assets, impairment charges of long-lived assets, rent and utilities that vary based upon our investment in infrastructure, business development, risk management andmanagement, internal controls and activities relating to acquisitions, divestitures and other strategic transactions, such as our strategic review process and the proposed transactions with CommerceOne and Smith Ventures, are generally not correlated with our operating revenues or other transaction metrics.
Restructuring and Other Charges — Restructuring and other charges consist principally of charges related to employee severance and benefits, as well as expenses associated with the termination of our facility lease and other miscellaneous exit costs. We generally recognize employee severance costs when payments are probable and amounts are estimable or when notification occurs. Costs related to contracts without future benefit or subject to termination are recognized at the earlier of the contract termination or cease-use date. Other exit-related costs are recognized as incurred.
Income Tax Expense and Benefit
Our income tax expense and benefit consists of the federal and state corporate income taxes accrued on income resulting from the sale of our products and services. Our effective income tax rate may differ from the 21% U.S. federal statutory rate due to a number of factors, including state income taxes, generalresearch businessand development tax credits, non-deductible expenses and penalties, increases or decreases in valuation allowances and liabilities for uncertain tax positions, excess tax benefits or shortfalls on stock compensation awards, audit developments, and legislative changes. See Note 14—Income Taxes to the Consolidated Financial Statements included herein for a discussion of the significant tax differences that impacted our effective tax rate.
The amount of cash-back rewards on our programs varies based on multiple factors, including the terms and conditions for accountholder eligibility, the redemption amount based on accountholder activity, and the accountholder redemption rates. Our estimated cash-back rewards are recorded as a reduction to card revenues and other fees on our consolidated statements of operations and as a component of other accrued liabilities on our consolidated balance sheets. Cash rewards have decreased by approximately 15% for the year ended December 31, 2024 compared to the prior year period, as ourOur 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. Increases or decreases in our estimate of cash-back rewards is dependent upon accountholder behavioral changes and we periodically evaluate our estimation process and assumptions based on developments in redemption patterns, dollars redeemed and other accountholder behavioral trends. A relatively small change in any of our assumptions could result in a sizable increase or decrease in the amount of cash-back rewards we accrue. For example, on our Green Dot Unlimited product, a combination of a 1% increase in accountholder 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 accountholder's annual rewards cycle is completed.
Deferred Tax Asset Valuation Allowance
Under ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to net operating loss carryforwards, tax credit carryforwards, and capital losses, as well as temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, which will result in taxable or deductible amounts in the future.
Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the net amount that is more likely than not to be realized. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, both positive and negative, including our historical operating results, the existence of cumulative losses in recent years, projections of future taxable income, and the feasibility of tax planning strategies. Estimating future taxable income is inherently uncertain and our actual operating results in future years could differ from our current assumptions, judgments and estimates. In the event that we change our determination of the amount of deferred tax assets that can be realized, we adjust our valuation allowance with a corresponding impact to the provision for (or benefit from) income taxes in the period in which such determination is made.
See Note 14—Income Taxes to the Consolidated Financial Statements included herein for more information.
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, 20232024 to fiscal year ended December 31, 20222023 has been omitted. 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, 2023,2024, filed with the SEC on FebruaryMarch 29,4, 2024.2025.
Card Revenues and Other Fees — Card revenues and other fees totaled $1.2$1.6 billion for the year ended December 31, 2024,2025, an increase of $223.9$334.4 million, or 22%,27%, from the comparable prior year period. Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners. These increases were partially offset by decreases in accountholder fees, such as monthly maintenance fees,fees and ATM fees, andas newa cardresult fees,of a decline in the number of active accounts in our Consumer Services segment during the current year and lower breakage revenue on our gift card portfolios.portfolio, as the program has been discontinued.
Cash Processing Revenues — Cash processing revenues totaled $231.8$240.2 million for the year ended December 31, 2024,2025, an increase of $6.4$8.4 million, or 3%,4%, from the comparable prior year period. AlthoughIn theour numberMoney ofMovement taxServices refunds processed decreased by 2% during the year ended December 31, 2024,segment, our tax processing revenues increased duefrom tothe expansion of our taxpayer advance program and a favorable mix-shift in the distribution channel in which tax refunds were generated, despite a 13% decline in the number of tax refundrefunds wasprocessed. The decrease in the number of tax refunds processed andis fromprincipally attributable to the expansionperformance of our taxpayeronline advancetax programs.preparation Thesepartners. increasesThe wereincrease in tax processing revenues was partially offset by aan 5%8% decline in the number of cash transfers processed during the year ended December 31, 20242025 from the prior year comparable period. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment.segment and to a lesser extent, a lower number of cash transfers processed for third-party programs.
Interchange Revenues — Interchange revenues totaled $198.3$184.6 million for the year ended December 31, 2024,2025, a decrease of $32.7$13.7 million, or 14%,7%, from the comparable prior year period. The decrease was primarily due to a 10%4% decrease in purchase volume during the year ended December 31, 2024,2025, as well as a lower effective interchange rate for the comparable periods. Our interchange ratewhich declined due to a mix-shift toward categories of consumer purchases with lower effective rates. In addition, our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors.
Interest Income, net — Net interest income totaled $62.4$89.8 million for the year ended December 31, 2024,2025, an increase of $25.1$27.4 million, or 67%,43%, from the comparable prior year period. The increase in net interest income was primarily the result of yields earned from an increase in cash from deposit programs with our partners and yieldshigher earnedyielding atinvestments thefrom Federalour Reserve,bond partiallyrepositioning offsetstrategy, byand ana increasedecrease in interest shared with certain BaaS partners (a reduction of revenue).
The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses and restructuring and other charges:
Sales and Marketing Expenses — Sales and marketing expenses totaled $217.2$207.9 million for the year ended December 31, 2024,2025, a decrease of $28.1$9.3 million, or 11%,4%, compared to the year ended December 31, 2023.2024. This decrease was driven primarily driven by a decrease in salessupply commissionschain materials expenses, which are comprised of card packages and personalized debit cards, from fewer active accounts, and a decrease in revenue-sharing arrangements in our Money Movement Services segment primarily due to lower revenues generated from certain products that are subject to tiered revenue-sharing agreements, and to a lesserdecrease extent,in reducedcash marketingtransfer spend within our Consumer Services segment.revenues.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $251.0$254.4 million for the year ended December 31, 2024,2025, an increase of $12.5$3.4 million, or 5%,1%, compared to the year ended December 31, 2023.2024. The increase was driven primarily by an increase in accrued bonus compensation expense due to our current financial performance relative to annual performance targets and an increase in third-party call center support costs associated with the growth of certainthe BaaS account programs within our B2B Services segment and higher accrued bonus compensation expense,segment, partially offset by lowera salarydecrease and wages driven by the Headcount Reduction and lowerin employee stock-based compensation expense, primarilyexpense due to fluctuationsforfeitures of awards and a decrease in salary and wage expenses due to the expected achievementclosure of certainour performance-basedChina equityoperations awards.announced in September 2025.
Processing Expenses — Processing expenses totaled $887.2$1,230.4 million for the year ended December 31, 2024,2025, an increase of $248.0$343.2 million, or 39%, compared to the year ended December 31, 2023.2024. This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment, partially offset by reductions in processor costs realized from the migration to our in-licensed card management system.segment.
Other General and Administrative Expenses — Other general and administrative expenses totaled $370.0$352.0 million for the year ended December 31, 2024,2025, ana increasedecrease of $14.4$18.0 million, or 4%,5%, from the comparable prior year period. The increasedecrease in other general and administrative expenses during the year ended December 31, 2024 was due to aseveral factors, including the timing of accruals in 2024 related to the civil money penalty paidunder underour Consent Order from the ConsentFederal Order,Reserve higherBoard professionalthat servicesdid feesnot relatedrecur toin our AML program, including improvements to our compliance controls, policies and procedures and2025, the settlement payment and impairment charges related to internal-use software and other related assets associated with the termination of our partnership agreement to develop a new core banking system. These increasessystem in other2024 generalthat also did not recur in 2025, and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in the amount oflower customer dispute volume across our portfolios and favorable reductions in our dispute loss rates,rates. asThese welldecreases aswere lowerpartially lossesoffset fromby purchasehigher overdraftprofessional transactions.services fees associated with our strategic review process, the proposed transactions with CommerceOne and Smith Ventures, and AML regulatory compliance initiatives, an increase in software licenses and hosting costs due to investments in our platform and operations, and an increase in federal deposit insurance due to higher deposit balances and the rates we pay thereon.
Restructuring and Other Charges — Restructuring and other charges totaled $22.1 million for the year ended December 31, 2025, and were due to our previously announced restructuring plan relating to our China operations, which is discussed further above under "Overview." Additionally, refer to Note 23 — Restructuring and Other Charges in the Consolidated Financial Statements included herein for a more detailed discussion of our restructuring and other charges.
Other expense, net totaled $104.8 million for the year ended December 31, 2025, an increase of $89.4 million, or 582%, from the prior year comparable period. This increase was driven by our equity method losses associated with TailFin and resulted principally from a $70 million incentive payment that TailFin made in connection with our extension of the Walmart MoneyCard program and related agreements in the second quarter of 2025. We recorded the incentive payment as a component of equity in losses attributable to TailFin during the second quarter of 2025 under our HLBV method of accounting. In addition, during the first half of 2025, we sold certain available-for-sale securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the year ended December 31, 2025. These increases were partially offset by higher income earned from bank-owned life insurance policies.
Other expense, net totaled $15.4 million for the year ended December 31, 2024, an increase of $10.4 million, or 207%, from the prior year comparable period. The net increase in other expenses was driven primarily from an increase in equity method losses in TailFin Labs, LLC ("TailFin") of $8.1 million, which was comprised of a $10.1 million increase in compensation and related professional services to support project initiatives undertaken during the current year period, partially offset by interest income earned.
The following table presents a breakdown of our effective tax rate among federal, state and other after the adoption of Accounting Standards Update 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures."
Our income tax expense totaled $4.2$1.6 million for the year ended December 31, 2024,2025, representing a decrease of $3.7$2.6 million from the comparable prior year period. The decrease in our income tax expense was primarily driven by the decreaseincrease in our taxablepre-tax income and a lower effective tax rate.loss.
The net decreaseincrease in the effective tax rate for the year ended December 31, 20242025 from the prior year comparable period was primarily due to aan decreaseincrease of $2.9$3.3 million in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease of $0.8$1.5 million in research and development tax credits, an increase of $3.4 million in the valuation allowance on the deferred tax assets of our China subsidiary, an increase of $0.9 million in nondeductible transaction related costs, an increase of $3.0 million from our examination settlement with the IRS, and an increase of $15.5 million in state income tax expense, net of federal benefits, andprimarily resulting from an increase of $17.7 million in the impactvaluation ofallowance generalon state deferred tax assets related to state business credits.credits and certain state net operating loss carryforwards. These decreasesincreases were partially offset by ana increasedecrease of $2.9$5.5 million in the expense related to tax shortfalls from stock-based compensation, a decrease of $5.1 million in tax expense from nondeductible penalties primarily associated with the civil money penalty incurred in 2024 for our Consent Order from the Federal Reserve Board, an increase of $0.8$0.7 million in the expensecash relatedsurrender to nondeductible penalties, an increasevalue of $0.4our banked owned life insurances policies, a decrease of $2.2 million in the valuation allowancereserve on our unrecognized tax benefits, and a portiondecrease of $2.3 million related to our unrealizedbank lossowned onlife equityinsurance securities,surrender andpenalties we incurred in connection with the surrender and restructuring of our existing bank owned life insurance policies which resultedcompleted in a tax charge of $1.5 million and surrender penalties of $0.7 million. The increases in nondeductible penalties for the years ended December 31, 2024 and 2023 are primarily related to the tax effect associated with the civil money penalty under the Consent Order.2024.
Our effective tax rate for the year ended December 31, 2025 is lower than our statutory federal income tax rate primarily due to a reduction in the expense related to tax shortfalls from stock-based compensation, cash value growth in our banked owned life insurances policies, and a decrease in the reserve on our unrecognized tax benefits, partially offset by an increase in the amount of compensation expense subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, a decrease in research and development tax credits, an increase in the valuation allowance on the deferred tax assets of our China subsidiary, an increase in nondeductible transaction related costs, an increase from our examination settlement with the IRS, and an increase in state income tax expense, net of federal benefits, primarily resulting from an increase in the valuation allowance on state deferred tax assets related to certain state tax attributes. Our negative effective tax rate for the year ended December 31, 2025 was the result of our loss before income taxes of $97.3 million and the tax effect of our examination settlement with IRS, the increase in the valuation allowance on the deferred tax assets of our China subsidiary, and the increase in the valuation allowance on state deferred tax assets related to state business credits and certain state net operating loss carryforwards.
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.
What changed in the latest 10-Q
Risk Factors
Largest changes
see in full comparisonItStockholdersishavepossible that stockholdersand may continue to file lawsuits challenging the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement, which may name us, our officers or members of our Board of Directors as defendants. Green Dot has received demand letters from purported stockholders of Green Dot, and complaints have been filed in the Supreme Court of the State of New York by purported stockholders against Green Dot, alleging deficiencies and/or omissions of certain allegedly material information in the registration statement on Form S-4 filed by New CommerceOne with theSECSEC, as amended, of which the proxy statement/ prospectus forms a part. In response to such stockholder demand letters and complaints, we filed a Current Report on Form 8-K on June 16, 2026, containing supplemental disclosures regarding, among other things, certain financial projections and the background of the transactions. New CommerceOne, CommerceOne and Green Dot believe that the allegations in these letters and complaints are without merit. If additional similardemandsdemand letters aremade,received or complaints are filed, absent new or different allegations that are material, neither New CommerceOne, CommerceOne nor Green Dot will necessarily announce them. We cannot assure you as to the outcome of any pending or future lawsuits,if filed,including the amount of costs associated with defending such claims or any other liabilities that may be incurred in connection with the litigation of such claims. If any plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement on the agreed-upon terms, such an injunction may delay the completion of such transactions in the expectedtime-frame,time-frame or may prevent such transactions from being completed altogether. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significantcosts,costs and divert management’s attention and resources, which could adversely affect the operation of our business.
The completion of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Merger Agreement by the requisite vote of our stockholders and CommerceOne’s stockholders, (ii) the authorization for listing on the NYSE of the shares of New CommerceOnesee in full comparisonCommoncommonStockstock to be issued pursuant to the Merger Agreement, (iii) the receipt of the requisite regulatory approvals, including from the Federal Reserve, the Utah DFI and the ASBD, and no such regulatory approval having resulted in a material burdensome condition, (iv) the effectiveness of the registration statement on Form S-4 filed with the SEC by New CommerceOne in connection with the transactions contemplated by the Merger Agreement, (v) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the Merger Agreement or any law making the completion thereof illegal and (vi) the satisfaction or waiver of the closing conditions set forth in the Separation Agreement with certain exceptions described in the Merger Agreement. Each party’s obligation to complete the transactions contemplated by the Merger Agreement is also subject to certain additional customary conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Merger Agreement and (c) in the case of CommerceOne, the funding by Payments Buyer of the purchase price in the Payments Sale in accordance with the terms of the Separation Agreement. The registration statement on Form S-4 filed with the SEC by New CommerceOne in connection with the transactions contemplated by the Merger Agreement, as amended, was declared effective by the SEC on May 8, 2026, and the Merger Agreement was approved by both our stockholders and CommerceOne stockholders on June 23, 2026.
A significant portion of our operating revenues are derived from our BaaS partners and the products and services sold at our largest retail distributors. Approximatelysee in full comparison60%70% and 64% of our total operating revenues for the three and six months endedMarchJune31,30,20262026, respectively, was generated from a single BaaS partner. Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately5%6% for each of the three and six months endedMarchJune31,30, 2026. We expect that both our largest BaaS partner and Walmart will continue to have a significant impact on our operating revenues in future periods. It would be difficult to replace these operating revenues. Accordingly, any significant reduction in transaction volume or customers’ spending levels through our largest BaaS partner or Walmart, for any reason, including macroeconomic conditions or non-renewal of existing contracts, would negatively impact our business and results of operations. 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 our negotiating power with our remaining and prospective retail distributors, BaaS partners and third-party processors.
At the First Effective Time, each issued and outstanding share of our common stock, subject to limited exceptions, will be converted into the right to receive (i) 0.2215 shares of the common stock of New CommerceOne and (ii) an amount in cash equal to $8.11, less any withholding and without interest. Subject to limited exceptions, the exchange ratio is fixed and will not be adjusted for changes affecting us or CommerceOne, including for changes in the market price or value of our common stock or CommerceOne common stock. There has been, and willsee in full comparisonbebe, a time lapse between each of the date of the proxy statement/prospectus for the stockholders’ meeting to adopt the Merger Agreement and approve the transactions contemplated by the Separation Agreement, the date on which our stockholdersvotevoted to adopt the Merger Agreement and approve the transactions contemplated by the Separation Agreement, and the date on which our stockholders entitled to receive shares of New CommerceOne common stock actually receive such shares. The value of CommerceOne common stockandand, following the First Effective Time, the value of New CommerceOne common stock may fluctuateduring these periodsas a result of a variety of factors, including general market and economic conditions, changes in our and CommerceOne’s businesses, operations and prospects, and regulatory considerations. Many of these factors are outside of our and CommerceOne’s control. The actual value of the shares of New CommerceOne common stock received by our stockholders will depend on the value of shares of New CommerceOne common stock at the time the Mergers are completed. This market value may be less or more than the value used to determine the exchange ratio stated in the Merger Agreement and the proxy statement/prospectus.
In addition, the completion of the transactions contemplated by the Separation Agreement is subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Separation Agreement by our stockholders, (ii) the waiting period applicable to the consummation of the closing under the Hart-Scott-Rodino Act (the “HSR Act”) having expired or been terminated, (iii) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the Separation Agreement or any law making the completion thereof illegal and (iv) the satisfaction or waiver of the closing conditions set forth in the Merger Agreement with certain exceptions described in the Merger Agreement. Each party’s obligation to complete the transactions contemplated by the Separation Agreement is also subject to certain additional customary conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Separation Agreement and (c) in the case of Payments Buyer, the absence of the occurrence of a material adverse effect on the Payments Business. On December 31, 2025, the parties filed their respective Premerger Notification and Report Forms under the HSR Act in connection with the transactions contemplated by the Separation Agreement. The parties requested early termination of the waiting period under the HSR Act, and such request was granted, effective January 21, 2026. Our stockholders also approved the transactions contemplated by the Separation Agreement on June 23, 2026.see in full comparison
If such transactions are not completed for any reason,see in full comparisonincluding the failure to receive the required approvals of our or CommerceOne’s stockholders,there may be various adverse consequences, and we may experience negative reactions from the financial markets and from our customers and employees. For example, our business may be adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Green Dot Merger, the Payments Sale and other transactions contemplated by the Merger Agreement and the Separation Agreement, without realizing any of the anticipated benefits of completing the Green Dot Merger, the Payments Sale and such other transactions. Additionally, if either the Merger Agreement or the Separation Agreement is terminated, the market price of our common stock could decline, including to the extent that current market prices reflect a market presumption that the transactions contemplated by the Merger Agreement or the Separation Agreement will be completed. We could also be subject to litigation or proceedings related to any failure to complete such transactions, including litigation or proceedings commenced against us to perform our respective obligations under the Merger Agreement or the Separation Agreement. If the Merger Agreement is terminated under certain circumstances, we may be required to pay a termination fee of $27 million to CommerceOne.
Full comparison: every changed paragraph (19)
If such transactions are not completed for any reason, including the failure to receive the required approvals of our or CommerceOne’s stockholders, there may be various adverse consequences, and we may experience negative reactions from the financial markets and from our customers and employees. For example, our business may be adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Green Dot Merger, the Payments Sale and other transactions contemplated by the Merger Agreement and the Separation Agreement, without realizing any of the anticipated benefits of completing the Green Dot Merger, the Payments Sale and such other transactions. Additionally, if either the Merger Agreement or the Separation Agreement is terminated, the market price of our common stock could decline, including to the extent that current market prices reflect a market presumption that the transactions contemplated by the Merger Agreement or the Separation Agreement will be completed. We could also be subject to litigation or proceedings related to any failure to complete such transactions, including litigation or proceedings commenced against us to perform our respective obligations under the Merger Agreement or the Separation Agreement. If the Merger Agreement is terminated under certain circumstances, we may be required to pay a termination fee of $27 million to CommerceOne.
ItStockholders ishave possible that stockholdersand may continue to file lawsuits challenging the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement, which may name us, our officers or members of our Board of Directors as defendants. Green Dot has received demand letters from purported stockholders of Green Dot, and complaints have been filed in the Supreme Court of the State of New York by purported stockholders against Green Dot, alleging deficiencies and/or omissions of certain allegedly material information in the registration statement on Form S-4 filed by New CommerceOne with the SECSEC, as amended, of which the proxy statement/ prospectus forms a part. In response to such stockholder demand letters and complaints, we filed a Current Report on Form 8-K on June 16, 2026, containing supplemental disclosures regarding, among other things, certain financial projections and the background of the transactions. New CommerceOne, CommerceOne and Green Dot believe that the allegations in these letters and complaints are without merit. If additional similar demandsdemand letters are made,received or complaints are filed, absent new or different allegations that are material, neither New CommerceOne, CommerceOne nor Green Dot will necessarily announce them. We cannot assure you as to the outcome of any pending or future lawsuits, if filed, including the amount of costs associated with defending such claims or any other liabilities that may be incurred in connection with the litigation of such claims. If any plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Green Dot Merger, the Payments Sale or the other transactions contemplated by the Merger Agreement and the Separation Agreement on the agreed-upon terms, such an injunction may delay the completion of such transactions in the expected time-frame,time-frame or may prevent such transactions from being completed altogether. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significant costs,costs and divert management’s attention and resources, which could adversely affect the operation of our business.
At the First Effective Time, each issued and outstanding share of our common stock, subject to limited exceptions, will be converted into the right to receive (i) 0.2215 shares of the common stock of New CommerceOne and (ii) an amount in cash equal to $8.11, less any withholding and without interest. Subject to limited exceptions, the exchange ratio is fixed and will not be adjusted for changes affecting us or CommerceOne, including for changes in the market price or value of our common stock or CommerceOne common stock. There has been, and will bebe, a time lapse between each of the date of the proxy statement/prospectus for the stockholders’ meeting to adopt the Merger Agreement and approve the transactions contemplated by the Separation Agreement, the date on which our stockholders votevoted to adopt the Merger Agreement and approve the transactions contemplated by the Separation Agreement, and the date on which our stockholders entitled to receive shares of New CommerceOne common stock actually receive such shares. The value of CommerceOne common stock andand, following the First Effective Time, the value of New CommerceOne common stock may fluctuate during these periods as a result of a variety of factors, including general market and economic conditions, changes in our and CommerceOne’s businesses, operations and prospects, and regulatory considerations. Many of these factors are outside of our and CommerceOne’s control. The actual value of the shares of New CommerceOne common stock received by our stockholders will depend on the value of shares of New CommerceOne common stock at the time the Mergers are completed. This market value may be less or more than the value used to determine the exchange ratio stated in the Merger Agreement and the proxy statement/prospectus.
Before the Mergers and the Payments Sale may be completed, various approvals, consents and non-objections that have not yet been obtained must be obtained, including from the Federal Reserve, the Utah DFI and the Alabama State Banking Department (the "ASBD") and antitrust and other authorities in the United States. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party to the proposed transaction. These approvals could be delayed or not obtained at all, including due to an adverse development in any party’s regulatory standing or in any other factors considered by regulators when granting such approvals; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. Some recent transactions comparable to the Mergers and the Payments Sale have encountered lengthy delays, and the Mergers and the Payments Sale may be subject to similar delays in obtaining its required approvals.
The completion of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Merger Agreement by the requisite vote of our stockholders and CommerceOne’s stockholders, (ii) the authorization for listing on the NYSE of the shares of New CommerceOne Commoncommon Stockstock to be issued pursuant to the Merger Agreement, (iii) the receipt of the requisite regulatory approvals, including from the Federal Reserve, the Utah DFI and the ASBD, and no such regulatory approval having resulted in a material burdensome condition, (iv) the effectiveness of the registration statement on Form S-4 filed with the SEC by New CommerceOne in connection with the transactions contemplated by the Merger Agreement, (v) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the Merger Agreement or any law making the completion thereof illegal and (vi) the satisfaction or waiver of the closing conditions set forth in the Separation Agreement with certain exceptions described in the Merger Agreement. Each party’s obligation to complete the transactions contemplated by the Merger Agreement is also subject to certain additional customary conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Merger Agreement and (c) in the case of CommerceOne, the funding by Payments Buyer of the purchase price in the Payments Sale in accordance with the terms of the Separation Agreement. The registration statement on Form S-4 filed with the SEC by New CommerceOne in connection with the transactions contemplated by the Merger Agreement, as amended, was declared effective by the SEC on May 8, 2026, and the Merger Agreement was approved by both our stockholders and CommerceOne stockholders on June 23, 2026.
In addition, the completion of the transactions contemplated by the Separation Agreement is subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Separation Agreement by our stockholders, (ii) the waiting period applicable to the consummation of the closing under the Hart-Scott-Rodino Act (the “HSR Act”) having expired or been terminated, (iii) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the Separation Agreement or any law making the completion thereof illegal and (iv) the satisfaction or waiver of the closing conditions set forth in the Merger Agreement with certain exceptions described in the Merger Agreement. Each party’s obligation to complete the transactions contemplated by the Separation Agreement is also subject to certain additional customary conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Separation Agreement and (c) in the case of Payments Buyer, the absence of the occurrence of a material adverse effect on the Payments Business. On December 31, 2025, the parties filed their respective Premerger Notification and Report Forms under the HSR Act in connection with the transactions contemplated by the Separation Agreement. The parties requested early termination of the waiting period under the HSR Act, and such request was granted, effective January 21, 2026. Our stockholders also approved the transactions contemplated by the Separation Agreement on June 23, 2026.
TheseThe remaining conditions to the closing of the transactions contemplated by each of the Merger Agreement and the Separation Agreement may not be fulfilled in a timely manner or at all, and, accordingly, such transactions may not be completed. In addition, CommerceOne and we can mutually decide to terminate the Merger Agreement, and Payments Buyer and we can mutually decide to terminate the Separation Agreement, at any time, before or after receipt of the requisite stockholder approvals.
The success of the Mergers and the Payments Sale will depend in part on retaining the talent and dedication of key employees currently employed by Green Dot Bank and CommerceOne and the employees who will be transferred to Payments Buyer in connection with the Payments Sale. It is possible that these employees may decide not to remain with us or CommerceOne, as applicable, while the Mergers are pending or with New CommerceCommerceOne or Payments Buyer after the completion of the Mergers. If we and CommerceOne are unable to retain key employees, including management, who are critical to the future operations of the companies, we and CommerceOne could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, following the completion of the Mergers, if key employees terminate their employment, New CommerceOne’s or Payments Buyer’s business activities may be adversely affected, which may cause New CommerceOne’s or Payments Buyer’s business to suffer, and there is no assurance that New CommerceOne or Payments Buyer will be able to locate or retain suitable replacements for any such key employees who leave.
We have identified certain additional risk factors in connection with the transactions contemplated by each of the Merger Agreement, including the Mergers, and the Separation Agreement, including the Payments Sale. These risks and the other risks associated with such transactions are more fully discussed in the proxy statement/prospectus that is included in the registration statement on Form S-4 filed by New CommerceOne with the SECSEC, as amended, and is available through the SEC's website at www.sec.gov. The proxy statement/prospectus contains important information regarding such transactions, and we urge all of our stockholders to read the proxy statement/prospectus carefully and in its entirety.
A significant portion of our operating revenues are derived from our BaaS partners and the products and services sold at our largest retail distributors. Approximately 60%70% and 64% of our total operating revenues for the three and six months ended MarchJune 31,30, 20262026, respectively, was generated from a single BaaS partner. Additionally, as a percentage of total operating revenues, operating revenues derived from products and services sold at the store locations of Walmart was approximately 5%6% for each of the three and six months ended MarchJune 31,30, 2026. We expect that both our largest BaaS partner and Walmart will continue to have a significant impact on our operating revenues in future periods. It would be difficult to replace these operating revenues. Accordingly, any significant reduction in transaction volume or customers’ spending levels through our largest BaaS partner or Walmart, for any reason, including macroeconomic conditions or non-renewal of existing contracts, would negatively impact our business and results of operations. 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 our negotiating power with our remaining and prospective retail distributors, BaaS partners and third-party processors.
A large portion of our business is conducted through retail distributors that sell our products and services to consumers at their store locations or other banking partners that collect funds and fees from our customers on our behalf. Our retail distributors and banking partners collect funds from the consumers who purchase our products and services and then must remit these funds directly to our subsidiary bank. While the remittance of these funds by the retail distributor or banking partner takes on average two business days, we have in the past and may in the future experience lengthy delays. Such delays or refusal to pay exposes us to increased settlement risk. If a retail distributor or other banking partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our subsidiary bank from the sales of our products and services, we are liable for any amounts owed to our customers. As of MarchJune 31,30, 2026, we had assets subject to settlement risk of $879.5$970.4 million. Given the possibility of recurring volatility in global financial markets, the approaches we use to assess and monitor the creditworthiness of our retail distributors or other banking partners may be inadequate, and we may be unable to detect and take steps to mitigate an increased credit risk in a timely manner. Economic recessions could result in settlement losses, whether or not directly related to our business. We are not insured against these risks. Significant settlement losses could have a negative impact on our business, results of operations and financial condition.
As a BHC,bank holding company (a "BHC"), we, along with Green Dot Bank, are subject to comprehensive supervision and examination by the Federal Reserve Board and the State of Utah DFI and must comply with applicable laws and regulations and other commitments we have agreed to, including financial commitments with respect to minimum capital and leverage requirements. As has been the case in the past, when the regulators believe that we or Green Dot Bank have not complied with any of these requirements, we may in the future become subject to, in addition to our then-current obligations (which includes the formal enforcement action noted below), additional 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, negatively impact our results of operations and restrict our ability to grow. For example, in July 2024, we and our subsidiary bank entered into a consent order, including a $44 million civil money penalty, with the Federal Reserve Board relating principally to various aspects of compliance risk management, including consumer compliance and compliance with AML regulations (the "Consent Order"). In response to enhanced regulatory scrutiny, we have increased our investment in our regulatory and compliance infrastructure and will continue with further increases. We expect heightened oversight of our compliance and other risk management capabilities will continue for the foreseeable future. If we fail to comply with the applicable capital and leverage requirements, or if Green Dot Bank fails to comply with its applicable capital and leverage requirements, the Federal Reserve Board may limit our or Green Dot Bank's ability to pay dividends or fund stock repurchases, or require us to raise additional capital. In addition, if at any time we or Green Dot Bank fail to be “well-capitalized” or “well managed,” we may not commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval.
The restriction on our ability to commence, or acquire any shares of a company engaged in, any activities only permissible for an FHC, without prior Federal Reserve approval would also generally apply if Green Dot Bank received a CRA rating of less than “Satisfactory.” Currently, under the Bank Holding Company Act of 1956, as amended (the "BHC Act,Act"), we may not be able to engage in new activities or acquire shares or control of other businesses. Such restrictions might limit our ability to pursue future business opportunities which we might otherwise consider, but which might fall outside the scope of permissible activities. U.S. bank regulatory agencies from time to time take supervisory actions under certain circumstances that restrict or limit a financial institution's activities, including in connection with examinations, which take place on a continual basis. We are subject to significant legal restrictions on our ability to publicly disclose the existence of these actions or any of the related details. In addition, as part of the regular examination process, our and Green Dot Bank's regulators may direct us or our subsidiaries to operate under various restrictions as a prudential matter. Such restrictions may include not being able to engage in certain categories of new activities or acquire shares or control of other companies.
The FDICFederal Deposit Insurance Corporation issued a final rule establishing a framework for analyzing certain provisions of the “deposit broker” definition, including “placing deposits,” “facilitating the placement of deposits” and “primary purpose,” for purposes of the classification of deposits as brokered deposits and exemptions from such a classification. As a result of the final rule, Green Dot Bank reclassified most of its deposits as non-brokered. If our reclassification is deemed non-compliant, we could be subject to regulatory fines and penalties, increased regulatory oversight, restrictions on our activities, and increased litigation risk.
Furthermore, a material portion of our operating revenues is derived from interchange fees. For each of the three and six months ended MarchJune 31,30, 2026, interchange revenues represented 7% of our total operating revenues, and we expect interchange revenues to continue to represent a significant percentage of our total operating revenues. The amount of interchange revenues that we earn is highly dependent on the interchange rates that the payment networks set and adjust from time to time.
The enactment of the Dodd-Frank Act required the Federal Reserve Board to implement regulations that have substantially limited interchange fees for many issuers. While the interchange rates that may be earned by us and Green Dot Bank are exempt from the limitations imposed by the Dodd-Frank Act, federal legislators and regulatory authorities have become increasingly focused on interchange fees, and continue to propose new legislation that could result in significant adverse changes to the rates we are able to charge and there can be no assurance that future regulation or changes by the payment networks will not substantially impact our interchange revenues. If interchange rates decline, whether due to actions by the payment networks or future regulation, we would likely need to change our fee structure to offset the loss of interchange revenues. However, our ability to make these changes is limited by the terms of our contracts and other commercial factors, such as price competition. To the extent we increase the pricing of our products and services, we might find it more difficult to acquire consumers and to maintain or grow card usage and customer retention, and we could suffer reputational damage and become subject to greater regulatory scrutiny. We also might have to discontinue certain products or services. As a result, our total operating revenues, operating results, prospects for future growth and overall business could be negatively impacted.
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, investigations or subpoenas. The outcome of litigation and regulatory or judicial proceedings or investigations is difficult to predict. Plaintiffs or regulatory agencies or authorities in these matters have sought and may seek recovery of very large or indeterminate amounts, seek to have aspects of our business suspended or modified or seek to impose sanctions, including significant monetary fines. For example, in July 2024, we and our subsidiary bank entered into the Consent Order, including a civil money penalty of $44 million, with the Federal Reserve Board as further discussed in the "As a bank holding company, we are subject to extensive and potentially changing regulations and regulatory expectations, which may limit our ability to pursue business opportunities and increase compliance challenges" risk factor above. Additionally, the monetary and other impacts of these actions, litigations, proceedings or investigations may remain unknown for substantial periods of time. The cost to defend, settle or otherwise resolve these matters have been and may be significant. Further, an unfavorable resolution of litigation, proceedings or investigations against us could have a negative impact on our business, operating results, or financial condition. In this regard, such costs could make it more difficult to maintain the capital, leverage and other financial commitments at levels we have agreed to with the Federal Reserve Board and the Utah DFI. Any regulatory or judicial proceedings or investigations initiated against us by private or governmental entities may result in adverse publicity associated with these proceedings or investigations and could negatively impact our relationships with retail distributors, tax preparation partners, network acceptance members, financial institutions and other lending partners, other business partners and card processors and decrease acceptance and use of, and loyalty to, our products and related services, and could impact the price of our Class A common stock. In addition, such proceedings or investigations could increase the risk that we will be involved in litigation. For the foregoing reasons, any regulatory or judicial proceedings or investigations that are initiated against us by private or governmental entities, could negatively impact our business, results of operations and financial condition or could cause our stock price to decline. Refer to Note 17—Commitments and Contingencies to the Consolidated Financial Statements included herein for further information regarding certain of our legal and other proceedings.
Our net goodwill and intangible assets represent a significant portion of our consolidated assets. Our net goodwill and intangible assets were $369.0$363.3 million as of MarchJune 31,30, 2026. Under generally accepted accounting principles in the United States, or ("U.S. GAAP"), we are required to test the carrying value of goodwill at least annually or sooner if events occur that indicate impairment could exist, such as a significant change in the business climate, including a significant sustained decline in a reporting unit’s fair value, legal and regulatory factors, operating performance indicators, competition and other factors. The amount of any impairment charge could be significant and could have a negative impact on our financial condition and results of operations for the period in which the charge is taken.
Provisions in our certificate of incorporation and bylaws, as well as provisions under Delaware law, could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our Class A common stock, and result in the trading price of our Class A common stock being lower than it otherwise would be. In addition to the foregoing, under the BHC Act and the Change in Bank Control Act, and their respective implementing regulations, Federal Reserve Board approval is necessary prior to any person or company acquiring control of a bank or BHC, subject to certain exceptions. Control, among other considerations, exists if an individual or company acquires 25% or more of any class of voting securities, and may be presumed to exist if a person acquires 10% or more of any class of voting securities. These restrictions could affect the willingness or ability of a third party to acquire control of us for so long as we are a BHC.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of Consolidated Results for the Six Months Ended June 30, 2026 and 2025”
New heading “Operating Expenses”
New heading “Other Income and Expense, net”
New heading “Income Tax Expense and Benefit”
Largest changes
“Our total operating expenses for the six months ended June 30, 2026 increased over the prior year comparable period, driven by similar factors as discussed above for the three months ended June 30, 2026. Our processing expenses and other general and administrative expenses increased during the six months ended June 30, 2026, due to the same reasons discussed above. …”see in full comparison
“Comparison of Consolidated Results for the Six Months Ended June 30, 2026 and 2025”see in full comparison
“Our $696.2 million of net cash provided by financing activities during the three months ended March 31, 2026 was principally the result of net short term borrowings from the FHLB of $500.0 million in support of our tax refund processing business, a net increase in customer deposits of $112.4 million and a net increase in obligations to customers of $87.9 million. Refer to additional discussion below for our borrowings and repayments from our liquidity sources, including the FHLB.”see in full comparison
Full comparison: every changed paragraph (90)
This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may” and “assumes,” variations of such words and similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including inflation and interest rate trends and impacts and other macro-economic impacts on our business, results of operations and financial condition and governmental and our responses to such events, including those identified below, under “Part II, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.
Our Chief Operating Decision Maker (our “CODMCODM,” who is our Chief Executive Officer) organizes and manages our businesses primarily on the basis of the channels in which our product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment's net revenue less direct costs, such as sales and marketing expenses, processing expenses, transaction losses and fraud management, and customer support and related expenses. Our operations are aggregated amongst three reportable segments: 1) Business to Business ("B2B") Services, 2) Consumer Services, and 3) Money Movement Services. Net interest income, certain other investment income earned by our bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses that are not considered when our CODM evaluates the performance of our three reportable segments are recorded in Corporate and Other expenses. Refer to our 2025 Annual Report on Form 10-K "Part I, Item 1. Business" for more detailed information about our operations and Note 20—Segment Information in the notes to the accompanying unaudited consolidated financial statements.
Our consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:
Our total operating revenues for the three and six months ended MarchJune 31,30, 2026 increased $97.4$91.7 million, or 17%,18%, and $189.1 million, or 18%, respectively, over the prior year comparable period,periods, driven primarily by higher revenues in our B2B Services segment and to a lesser extent in our Money Movement Services segment, partially offset by lower revenues earned in our Consumer Services segment.
Continued growth of certain BaaS partner programs generated an increase of 16%19% and 18% in our total gross dollar volume for the three and six months ended MarchJune 31,30, 20262026, respectively, over the prior year comparable period,periods, which increased our total operating revenues year-over-year. However, as discussed below, our total operating revenues for the three and six months ended MarchJune 31,30, 2026 were negatively impacted by unfavorable trends and factors in our deposit account programs, driving, among other things, a decrease in the number of active accounts,accounts during the three months ended June 30, 2026 by 1%, as compared to the prior year period, and a decrease in purchase volume,volume and the number of cash transfers ofby 6% and 2%, respectively, for the three months ended June 30, 2026 and 7% and 4%, 8%,respectively, andfor 7%,the respectively,six months ended June 30, 2026 from the prior year comparable period.periods.
In our B2B Services segment, revenues increased during the three and six months ended MarchJune 31,30, 2026 by 22%29% and 25%, respectively, over the prior year comparable period.periods. The increase was driven by strong year-over-year growth in our gross dollar volume, which increased during the three and six months ended MarchJune 31,30, 2026 by 19%,22% and 21%, respectively, and to a lesser extent, growth in the number of active accounts, which increased by 7%9% over the prior year comparable period. TheseWe increasesrecorded a net increase in revenues were partially offset by a decrease in interchangesegment revenue primarily due to a decrease in purchase volume of 3% from the prior year comparable period. The growth in gross dollar volume wasattributable driven primarily byto certain BaaS programs that do not generate interchange feesfees, and resultedresulting in a net increase in segment revenue due to higher program management service fees earned from these BaaS partners.
In our Consumer Services segment, revenues decreased during each of the three and six months ended MarchJune 31,30, 2026 by 9% from the prior year comparable period.periods. Our gross dollar volume and purchase volume declined by 8%7% and 11%,10%, respectively, for the three months ended MarchJune 31,30, 2026, and the number of active accounts and direct deposit accounts declined by 16%12% and 7%, respectively. Similarly, gross dollar volume and purchase volume each declined for the six months ended June 30, 2026 by 8% and 11%, respectively. While we saw some moderation in these declining trends in 2025,recent periods, we believe these decreases in our Consumer Services segment remain attributable to several persistent factors, including macro-economic factors affecting consumer behavior and other competitive trends that have impacted account acquisition. These factors had a corresponding negative impact on the amount of accountholder fee revenue we earn from accounts, including monthly maintenance fees, ATM fees and interchange fees. These decreases in segment revenues were partially offset by fees generated from our overdraft protection programs due to expanded usage by our accountholders.
In our Money Movement Services segment, revenues increaseddecreased during the three months ended MarchJune 31,30, 2026 by 19%8% and increased by 10% during the six months ended June 30, 2026, from the prior year comparable period.periods. The increasedecrease in our Money Movement Services segmentrevenue during the three months ended MarchJune 31,30, 2026 was driven primarily by ana increasedecrease in our tax processing revenues, partially offset by a decrease in cash transfer revenues. Although the number of tax refunds processed decreased by 3% for the three months ended March 31, 2026, as compared to the prior year period, our tax processing revenues increased due to thea expansion of our taxpayer advance programs. The23% decrease in the number of tax refunds processed wasprocessed, principally attributable to our online tax preparation partners.partners Theand the timing of when tax refunds were processed between interim periods during the first half of the year. This decrease in our Money Movement Services revenue was partially offset by an increase in taxcash processingtransfer revenues forduring the three months ended MarchJune 31,30, 2026 wasprimarily partiallydue offsetto byhigher disbursements revenue per transaction from a 7%platform partner despite a 2% decrease in the number of cash transfers processed from the prior year comparable period.processed. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment discussed above, andpartially tooffset by a lesser extent, a lowerhigher number of cash transfers processed for third-party programs.programs, Thewhich Green Dot Network is a service provider to accountholders in both our Consumer Services and B2B Services segments, as well as third-party programs. Although the number of cash transfers from third-party programs decreased slightly year over year, they continuecontinued to represent the majority of our total cash transfers as of MarchJune 31,30, 2026.
The increase in revenue in our Money Movement Services segment during the six months ended June 30, 2026 was driven primarily by an increase in our tax processing revenues and, to a lesser extent, an increase in cash transfer revenues. Although the number of tax refunds processed decreased by 9% for the six months ended June 30, 2026, as compared to the prior year period, our tax processing revenues increased due to the expansion of our taxpayer advance programs. The decrease in the number of tax refunds processed was principally attributable to our online tax preparation partners. Our cash transfer revenues increased during the six months ended June 30, 2026 despite a 4% decrease in the number of cash transfers processed due to the same reasons discussed above.
Revenues within our Corporate and Other segment increased during the three and six months ended June 30, 2026 by 31% and 67%, respectively, from the prior year comparable periods, driven primarily by a decrease in interest profit sharing arrangements with certain BaaS partners (a reduction of revenue). In addition, the increase during the six months ended June 30, 2026 was driven by an increase in net interest income earned by Green Dot Bank, primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy.
Revenues within our Corporate and Other segment were driven primarily by net interest income earned by Green Dot Bank, which increased by 26% for the three months ended March 31, 2026, over the prior year comparable period. The increase in net interest income was primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy, as well as a decrease in interest shared with certain BaaS partners (a reduction of revenue).
Our total operating expenses for the three and six months ended MarchJune 31,30, 2026 increased $89.1$105.9 million, or 18%,22%, and $194.9 million, or 20%, respectively, over the prior year comparable period.periods.
TheFor the three months ended June 30, 2026, the increase in total operating expenses was driven primarily by an increase in our processing expenses from the growth in gross dollar volume associated with certain BaaS account programs within our B2B Services segment, which is discussed above. To a lesser extent, our total operating expenses increased due to an increase in other general and administrative expenses, driven primarily by higher professional services fees associated with our proposed transactions with CommerceOne and Smith Ventures, as well as our anti-money laundering ("AML") regulatory compliance initiatives, and an increase in depreciation and amortization expense and software licenses and hosting costs due to investments in our platform and operations. In addition, the increase in other general and administrative expenses reflects a reserve established for unclaimed property obligations. No comparable expense was recorded in the prior year period. These increases in other general and administrative expenses were partially offset by a decrease in overall transaction losses attributable to a decrease in customer dispute volume across our portfolios and a favorable reduction in our dispute loss rates. Total operating expenses were partially offset by a decrease in compensation and benefits expenses, driven primarily by a reduction in third-party call center support costs associated with certain of our BaaS account programs discussed above, and a decrease in salary and wage expenses and rent expense due to the closure of our China operations announced in September 2025, partially offset by higher employee stock-based compensation expense due to forfeituresa reduction in new grants of certainequity awards during the pendency of our proposed transactions with CommerceOne and Smith Ventures, and lower accrued bonus compensation expense due to our financial performance in the prior year comparableperiod period.exceeding our bonus targets.
Our total operating expenses for the six months ended June 30, 2026 increased over the prior year comparable period, driven by similar factors as discussed above for the three months ended June 30, 2026. Our processing expenses and other general and administrative expenses increased during the six months ended June 30, 2026, due to the same reasons discussed above. Compensation and benefits expenses also decreased due to the same reasons discussed above, and were further partially offset from severance benefits that did not recur at the same magnitude in the current period as a result of our reduction in employee workforce in the comparable prior year period and a decrease in salary and wage expenses due to the closure of our China operations announced in September 2025. Sales and marketing expenses decreased principally due to a decrease in supply chain materials expenses, which are comprised of debit card plastics and related materials costs, from fewer active accounts, partially offset by an increase in revenue-sharing arrangements in our tax processing business.
Other income and expense, net for the three and six months ended MarchJune 31,30, 2026 decreased $25.9$74.7 million and $100.6 million, respectively, from the prior year comparable period.periods. DuringThese decreases resulted principally from charges that did not recur in the current period, including a $70 million incentive payment made by TailFin Labs, LLC ("TailFin") in connection with the extension of the Walmart MoneyCard agreement and related agreements in May 2025. In addition, during the first quarter of 2025, we determined we would sell certain available-for-saleavailable-for-sales securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.5$24.8 million for the threesix months ended MarchJune 31,30, 2025. Additionally, our equity method losses associated with TailFin Labs, LLC ("TailFin") decreased during the three months ended March 31, 2026 from the comparable prior year period due to lower operating expenses incurred.
Our income tax benefit for the three months ended MarchJune 31,30, 2026 increaseddecreased by $6.0$15.6 million overfrom the prior year comparable period primarily due to an increase in income before taxes. Our effective tax rate for the threesix months ended MarchJune 31,30, 2026 was 20.5%,20.9%, a decrease from 23.4%27.4% for the prior year comparable period. The decrease in our effective tax rate was due to several factors, including a higher tax rate benefit from increased general business credits, a decrease in state income taxes expense, net of federal benefits, a higher tax rate benefit from the increase in cash surrender value in bank-owned life insurance policies, and a decrease in tax expense associated with shortfalls from stock-based compensation. These decreases in our effective tax rate were partially offset by an increase in state income taxes expense, net of federal benefits, an increase in the amount of compensation expense that was subject to the IRC Section 162(m) limitation on the deductibility of certain executive compensationcompensation, an increase in nondeductible transaction related costs, and an increase in the valuation allowance on our deferred tax assets.
We intend to continue to make growth-oriented investments and incur other expenditures that we believe will benefit our long-term financial results. Our growth-oriented investments are focused on, among other things, accelerating our ability to onboard new partners in our B2B Services and Money Movement Services segments, adding new features and functionality to our Arc platform, cost-effectively implementing strategic marketing initiatives in support of our GO2bank product, and other initiatives across our account programs with the objective of returning to active account growth. In 2025, we initiated a re-alignment of teams and resources across the enterprise in a continual effort to better support our strategic priorities and growth channels, and improve our operating efficiency. We expect these re-alignments, including the exit from our operational activities in China, to further improve our cost structure year-over-year.
* Represents the number of active accounts as of MarchJune 31,30, 2026 and 2025, respectively.
There have been no material changes during the threesix months ended MarchJune 31,30, 2026 to the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Comparison of Consolidated Results for the Three Months Ended MarchJune 31,30, 2026 and 2025
Card Revenues and Other Fees — Card revenues and other fees totaled $448.7$476.9 million for the three months ended MarchJune 31,30, 2026, an increase of $72.7$95.7 million, or 19%,25%, from the comparable prior year period. Card revenues and other fees increased primarily due to growth in gross dollar volume in our B2B Services segment programs, which resulted in higher program management service fees earned from our BaaS partners. These increases were partially offset by decreases in certain accountholder fees, such as monthly maintenance fees and ATM fees, as a result of a decline in the number of active accounts in our Consumer Services segment during the current period. Decreases in accountholder fees were partially offset by an increase in fees generated from our overdraft protection programs due to expanded usage by our accountholders.
Cash Processing Revenues — Cash processing revenues totaled $136.4$53.3 million for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $23.0$1.2 million, or 20%,2%, from the comparable prior year period. InCash ourprocessing Moneyrevenues Movementdecreased Servicesas segment,a ourresult of lower tax processing revenuesrevenues, increasedwhich decreased due to the expansion of our taxpayer advance programs, partially offset by a 7% decline in the number of cash transfers processed from the prior year comparable period. We generated an increase in our tax processing revenues during the three months ended March 31, 2026 despite a 3%23% decrease in the number of tax refunds processed.processed and lower ancillary tax program fees that are associated with tax refund transfers. The decrease in the number of tax refunds processed was principally attributable to the performance of our online tax preparation partners. This decrease was partially offset by an increase in cash transfer revenues primarily due to higher disbursements revenue earned per transaction from a platform partner despite a 2% decrease in cash transfers processed. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segmentsegment, andpartially tooffset by a lesser extent, a lowerhigher number of cash transfers processed for third-party programs.
Interchange Revenues — Interchange revenues totaled $44.0$44.2 million for the three months ended MarchJune 31,30, 2026, a decrease of $3.9$2.8 million, or 8%,6%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 8%6% as our effective interchange rate earned from the comparable prior year period remained consistent. Our interchange fees have both fixed and variable components, and as a result, the effective rate we earn may vary based on the size of transactions, among other factors.
Interest Income, net — Net interest income totaled $27.2$21.5 million for the three months ended MarchJune 31,30, 2026, anconsistent increase of $5.6 million, or 26%, fromwith the comparable prior year period. The increasechanges in net interest income was primarily the result of bothan increase in the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy, aswhich wellwas asoffset a decrease inby interest shared with certain BaaS partners (a reduction of revenue).
The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, and other general and administrative expenses and restructuring and other charges:
Sales and Marketing Expenses — Sales and marketing expenses totaled $59.3$49.4 million for the three months ended MarchJune 31,30, 2026, a decrease of $0.4$0.8 million, or 1%,2%, from the comparable prior year period. This decrease was driven primarily by a decrease in supply chain materials expenses, which are comprised of card packages and personalized debit cards, from fewer active accounts and a decrease in our marketingrevenue-sharing expensesarrangements in our Consumer Services business, partially offset by an increase in revenue-sharing arrangements in our tax processing business.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $59.8$59.0 million for the three months ended MarchJune 31,30, 2026, a decrease of $6.4$4.8 million, or 10%,8%, from the comparable prior year period. The decrease was driven primarily by a decrease in third-party call center support costs associated with certain BaaS account programs within our B2B Services segment, a decrease in salary and wage expenses due to the closure of our China operations announced in September 2025, partially offset by higher employee stock-based compensation expense due to forfeituresa reduction in new grants of certainequity awards during the pendency of our proposed transactions with CommerceOne and Smith Ventures, and lower accrued bonus compensation expense due to our financial performance in the prior year comparableperiod period.exceeding our bonus targets.
Processing Expenses — Processing expenses totaled $374.6$394.7 million for the three months ended MarchJune 31,30, 2026, an increase of $89.3$101.5 million, or 31%,35%, from the comparable prior year period. This increase was principally due to growth in gross dollar volume on certain BaaS account programs within our B2B Services segment.
Other General and Administrative Expenses — Other general and administrative expenses totaled $93.4$93.5 million for the three months ended MarchJune 31,30, 2026, an increase of $6.5$9.9 million, or 7%,12%, from the comparable prior year period. This increase was driven primarily by higher professional services fees associated with our proposed transactions with CommerceOne and Smith Ventures, and our AML regulatory compliance initiatives, and an increase in depreciation and amortization expense and software licenses and hosting costs due to investments in our platform and operations. In addition, the increase in other general and administrative expenses reflects a reserve established for unclaimed property obligations. No comparable expense was recorded in the prior year period. These increases were partially offset by a decrease in overall transaction losses attributable to a decrease in customer dispute volume across our portfolios and a favorable reduction in our dispute loss rates.
Restructuring and Other Charges — Restructuring and other charges totaled $0.1 million for the three months ended MarchJune 31,30, 2026, due to our previously announced restructuring plan discussed under "Overview."plan. Additionally, refer to Note 19 — Restructuring and Other Charges in the Consolidated Financial Statements included herein for a more detailed discussion of our restructuring and other charges.
Other income and expense, net totaled $0.01 million for the three months ended June 30, 2026, a decrease of $74.7 million, from the prior year comparable period. This decrease was driven by our equity method losses associated with TailFin and resulted principally from a $70 million incentive payment that TailFin made in connection with the extension of the Walmart MoneyCard agreement and related agreements in May 2025. The incentive payment, which did not recur in the current period, was recorded as a component of equity in losses attributable to TailFin during the second quarter of 2025 under our HLBV method of accounting.
Other income and expense, net totaled $0.2 million for the three months ended March 31, 2026, a decrease of $25.9 million, from the prior year comparable period. During the first quarter of 2025, we determined we would sell certain available-for-sale securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.5 million for the three months ended March 31, 2025. Additionally, our equity method losses associated with TailFin Labs, LLC ("TailFin") decreased during the three months ended March 31, 2026 from the comparable prior year period due to lower operating expenses incurred.
Our income tax expensebenefit totaled $13.9$0.3 million for the three months ended MarchJune 31,30, 2026, representing ana increasedecrease of $6.0$15.6 million from the prior year comparable period, primarily due to an increase in our income before taxes.
The net decrease in our effective tax rate for the three months ended MarchJune 31,30, 2026 from the prior year comparable period was due to several factors, including a decrease of $0.5 million in state income taxes expense, net of federal benefits, a decrease of $1.1$0.3 million in tax expense associated with shortfalls from stock-based compensation, an increase of $1.0 million in the tax benefit from the cash surrender value in bank-owned life insurance policies,compensation and a higher tax rate benefit due to an increasedecrease of $1.0 million in general business credits. These decreases were partially offset by an increase of $0.9$0.5 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensationcompensation. These decreases were partially offset by an increase of $3.1 million in state income taxes expense, net of federal benefits, a decrease of $0.1 million in the tax benefit from the cash surrender value in bank-owned life insurance policies, an increase of $0.4 million in nondeductible transaction related costs, and an increase in the valuation allowance recorded against our 2026 federal and state research credits. For the three months ended MarchJune 31,30, 2026, we recorded valuation allowances of $1.4$0.1 million against our 2026 federal research credits, which is reflected in change in valuation allowance, and $1.1$0.1 million against our 2026 state research credits, reflected in state income taxes, net of federal tax benefit in our effective tax rate reconciliation.
The "Other" category in our effective tax rate consists of a variety of permanent differences, none of which were individually significant.
Comparison of Consolidated Results for the Six Months Ended June 30, 2026 and 2025
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:
Card Revenues and Other Fees — Card revenues and other fees totaled $925.6 million for the six months ended June 30, 2026, an increase of $168.4 million, or 22%, from the comparable prior year period. This increase was driven principally by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2026 and 2025—Operating Revenues—Card Revenues and Other Fees."
Cash Processing Revenues — Cash processing revenues totaled $189.7 million for the six months ended June 30, 2026, an increase of $21.8 million, or 13%, from the comparable prior year period. Cash processing revenues increased primarily due to an increase in our tax processing revenues and to a lesser extent, an increase in cash transfer revenues. Although the number of tax refunds processed decreased by 9% for the six months ended June 30, 2026, as compared to the prior year period, our tax processing revenues increased due to the expansion of our taxpayer advance programs. The decrease in the number of tax refunds processed was principally attributable to our online tax preparation partners. Our cash transfer revenues increased during the six months ended June 30, 2026 primarily due to higher disbursements revenue earned per transaction from a platform partner despite a 4% decrease in the number of cash transfers. The decline in the number of cash transfers processed was primarily due to a lower number of active accounts within our Consumer Services segment and to a lesser extent, a lower number of cash transfers processed for third-party programs.
Interchange Revenues — Interchange revenues totaled $88.1 million for the six months ended June 30, 2026, a decrease of $6.8 million, or 7%, from the comparable prior year period. The decrease was primarily due to a decrease in purchase volume of 7% and for the same reasons as discussed under “Comparison of Three-Month Periods Ended June 30, 2026 and 2025—Operating Revenues—Interchange Revenues."
Interest Income, net — Net interest income totaled $48.7 million for the six months ended June 30, 2026, an increase of $5.6 million, or 12%, from the comparable prior year period. The increase in net interest income was primarily the result of both the size of our investments portfolio and higher yielding investments therein from our bond repositioning strategy.
Operating Expenses
The following table presents a breakdown of our operating expenses among sales and marketing, compensation and benefits, processing, other general and administrative expenses and restructuring and other charges:
Sales and Marketing Expenses — Sales and marketing expenses totaled $108.7 million for the six months ended June 30, 2026, a decrease of $1.1 million, or 1%, from the comparable prior year period. This decrease was driven primarily by a decrease in supply chain materials expenses, which are comprised of card packages and personalized debit cards, from fewer active accounts, partially offset by an increase in revenue-sharing arrangements in our tax processing business.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $118.8 million for the six months ended June 30, 2026, a decrease of $11.3 million, or 9%, from the comparable prior year period. The decrease was driven primarily by a decrease in third-party call center support costs associated with certain BaaS account programs within our B2B Services segment, a decrease in salary and wage expenses and related severance costs due to the closure of our China operations and lower employee stock-based compensation expense due to a reduction in new grants of equity awards during the pendency of our proposed transactions with CommerceOne and Smith Ventures.
Processing Expenses — Processing expenses totaled $769.3 million for the six months ended June 30, 2026, an increase of $190.8 million, or 33%, from the comparable prior year period. This increase was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2026 and 2025—Operating Expenses—Processing Expenses."
Other General and Administrative Expenses — Other general and administrative expenses totaled $186.9 million for the six months ended June 30, 2026, an increase of $16.4 million, or 10%, from the comparable prior year period. This increase was driven primarily by the same factors discussed above under “Comparison of Three- Month Periods Ended June 30, 2026 and 2025—Operating Expenses—Other General and Administrative Expenses."
Restructuring and Other Charges — Restructuring and other charges totaled $0.2 million for the six months ended June 30, 2026, due to our previously announced restructuring plan. Additionally, refer to Note 19 — Restructuring and Other Charges in the Consolidated Financial Statements included herein for a more detailed discussion of our restructuring and other charges.
Other Income and Expense, net
Other income and expense, net totaled $0.2 million for the six months ended June 30, 2026, a decrease of $100.6 million, from the prior year comparable period. This decrease was driven primarily by the same factors discussed above under “Comparison of Three-Month Periods Ended June 30, 2026 and 2025—Other Expense, net." In addition, during the first quarter of 2025, we determined we would sell certain available-for-sales securities in order to reposition the proceeds into higher yielding assets, which resulted in a realized loss of $24.8 million for the six months ended June 30, 2025.
Income Tax Expense and Benefit
The following table presents a breakdown of our effective tax rate among federal, state, and other:
Our income tax expense totaled $13.6 million for the six months ended June 30, 2026, representing an increase of $21.6 million from the prior year comparable period, primarily due to an increase in our income before taxes.
The net decrease in our effective tax rate for the six months ended June 30, 2026 from the prior year comparable period was due to several factors, including a decrease of $1.4 million in tax expense associated with shortfalls from stock-based compensation, an increase of $0.9 million in the tax benefit from the cash surrender value in bank-owned life insurance policies, and a higher tax rate benefit due to an increase of $1.0 million in general business credits. These decreases were partially offset by an increase of $2.7 million in state income taxes expense, net of federal benefits, an increase of $0.4 million in the amount of compensation expense that was subject to the IRC 162(m) limitation on the deductibility of certain executive compensation, an increase of $0.4 million in nondeductible transaction related costs, and an increase in the valuation allowance recorded against our 2026 federal and state research credits. For the six months ended June 30, 2026, we recorded valuation allowances of $1.1 million against our 2026 federal research credits, which is reflected in change in valuation allowance, and $1.1 million against our 2026 state research credits, reflected in state income taxes, net of federal tax benefit in our effective tax rate reconciliation.
The results of operations and key metrics of our B2B Services segment for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:
* Represents total number of active accounts as of MarchJune 31,30, 2026 and 2025, respectively.
Segment revenues within our B2B Services for the three and six months ended MarchJune 31,30, 2026 increased $75.6$99.8 million, or 22%,29%, overand $175.3 million, or 25%, respectively, from the prior year comparable period,periods, while our segment expenses for the three and six months ended MarchJune 31,30, 2026 increased $74.0$95.3 million, or 24%.30%, and $169.3 million, or 27%, respectively.
Our gross dollar volume and number of active accounts increased during the three months ended MarchJune 31,30, 2026 by 19%22% and 7%,9%, respectively, over the comparable prior year period, while purchase volume decreasedincreased by 3%1% year over year. We have continued to experience organic growth from both new and existing users concentrated in certain BaaS programs that tend to yield higher gross dollar volume per active user but do not generate comparable levels of interchange fees. The growth in gross dollar volume from these BaaS programs resulted in a net increase in segment revenue for the three and six months ended June 30, 2026 due to higher program management service fees earned from these BaaS partners.
Segment expenses increased for the three and six months ended MarchJune 31,30, 2026 over the comparable prior year period,periods, principally due to higher processing expenses associated with the growth of certain BaaS account programs, partially offset by lower third-party call center support costs as a result of decreases in call volume and lower transaction losses due to decreases in our dispute loss rates and incoming volume. As a result of these factors, our segment profit increased for the three and six months ended MarchJune 31,30, 2026 by approximately 6%16% overand 11%, respectively, from the prior year comparable period.periods. However, this segment also experienced margin compression because certain BaaS partnerships are largely structured based on a fixed profit and therefore, our segment profit for certain arrangements will not scale with revenue growth.
The results of operations and key metrics of our Consumer Services segment for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:
GDOT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-21 | Richey Ellen |
Grant/award | 17,496 | — | — |
| 2026-05-21 | Brewster J Chris |
Grant/award | 17,496 | — | — |
| 2026-05-21 | Shaheen George T |
Grant/award | 17,496 | — | — |
| 2026-05-21 | Millard Robert C. |
Grant/award | 17,496 | — | — |
| 2026-05-21 | Razon Michelleta |
Grant/award | 17,496 | — | — |
| 2026-05-21 | Fanlo Saturnino Sixto |
Grant/award | 17,496 | — | — |
Well-known investors holding GDOT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 715,659 | $9.7M | 0.01% | Added 30% |
| D. E. Shaw & Co. | 2026-06-30 | 373,063 | $5.0M | 0.0% | Reduced 11% |
| Renaissance Technologies | 2026-06-30 | 61,400 | $688.9K | — | Sold out |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 48,569 | $656.2K | 0.0% | Reduced 6% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 48,360 | $653.3K | 0.0% | Reduced 64% |