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Competing prepaid issuers may target and attract MetaBank's partners as the company deals with new regulatory restrictions imposed by the Office of Thrift Supervision.
October 14
Meta Financial Group Inc. said meetings with the Office of Thrift Supervision last week failed to sway the regulator to allow its MetaBank subsidiary to enter any agreements regarding its credit products without prior written approval.
The company's shares were down 6.3% at $17.75 in recent premarket trading following the disclosure in filing Monday with the Securities and Exchange Commission.
MetaBank last week was forced to discontinue originations in its iAdvance line-of-credit program under a directive issued by the OTS. The agency found that MetaBank had engaged in deceptive acts or practices in connection with the iAdvance program, which is an add-on service that offers a line of credit to debit-card holders.
The bank last week sought had sought approvals for programs conducted through the its Meta Payment Systems division. The OTS decision, which the company said it received Thursday, means MetaBank can't amend existing agreements or enter into new agreements with distributors, pending an OTS review of the bank's operations, which might not occur for up to several months.
Meta Financial said it is cooperating with OTS to correct any deficiencies in its operations, but it remains uncertain when or to what extent OTS will allow the bank to resume adding new banks or selling cards.
The OTS move led NetSpend Holdings Inc., a prepaid-debit-card company, to postpone its initial public offering last week, as MetaBank is its preferred issuing bank and the regulatory problems cast a shadow over their partnership.
