Meta Financial Group Inc.’s fiscal second quarter profit was cut in half from a year earlier as the Storm Lake, Iowa-based provider of prepaid cards continued to deal with penalties from the Office of Thrift Supervision stemming from one of its credit products.
The company’s profit dropped 48.1%, to $2.7 million from $5.2 million for the same period ended March 31 last year. Revenue was down 39.4%, to $29.1 million from $48 million.
In October, the Office of Thrift Supervision shut down Meta’s iAdvance credit product after determining the bank misrepresented the product (
Meta Financial attributed the revenue decline to $20.2 million in lost fee income associated with the discontinuation of the iAdvance product, the company said in a press release.
“We continue to work with the OTS on the matters previously disclosed and believe we are making meaningful progress toward addressing their concerns,” Meta Financial President and CEO J. Tyler Haahr said in a press release. Representatives from the company could not be reached for comment.
Meta Financial is still awaiting a final decision from agency, and the delay may be attributable to the department’s merger with the Office of the Comptroller of the Currency, says Ben Jackson, a senior analyst in the prepaid advisory service at Mercator Advisory Group.
“I’m not sure Meta is necessarily at the top of the priority list,” Jackson tells PaymentsSource. “I’d imagine there are still negotiations going on as to what the final parameters will be” from the penalties.
Despite its troubles, Jackson believes Meta is still in a good position as it relates to the prepaid industry.
Meta Financial still has business with two of its largest clients in Account Now Inc. and Western Union Co. (
“I wouldn’t count them out just based on their commitment” to the prepaid space, Jackson says. “They are definitely trying to remain a viable issuer and prepaid player.”
Meta’s payment systems segment, which includes its prepaid debit card business, recorded net income of $2.2 million, down 66.2% from $6.5 million for the same period last year. The unit’s revenue totaled $21.3 million, down 48.8% from $41.6 million.
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