Two things to understand about what is going on at Green Dot:

1. In the latter part of February, Green Dot announced that they would initiate an initial public offering (IPO) to raise $150 million of equity.
2. Green Dot announced that is acquiring Bonneville Bank, a small Utah state-chartered bank with $34 million in assets.  Bonneville has about $6 million in equity.

Now, why would you take out $150 million to buy a $6 million bank?

The answer is that Green Dot expects to need a lot of liquidity after the acquisition.  My belief (ALERT – this is (more…)

MetaBank has stepped in to fill the void that might be created if Pacific Capital (Santa Barbara Bank & Trust) is no longer able to fund refund anticipation loans (RALs).

This is a development with two main impacts.  First, it guarantees that financial problems at Pacific Capital will not prevent Jackson Hewitt from offering refund anticipation loans this year.  Second, it provides a line of credit to refund anticipation loans with high interest rates.  The rates, by MetaBank’s own calculation, are 150 percent APR.

In a brief reference on their latest 10-K, MetaBank makes reference to a pilot program that began this spring to fund RALs for “a major tax preparation firm.”

During fiscal 2009 the Bank participated in tax refund anticipation loans with a major tax preparation firm after participating in a test program with that firm in fiscal 2008.

The major tax preparer is Jackson Hewitt (JTX).  Jackson Hewitt, it turns out, was not going to be left holding (more…)