Green Dot 2010 Annual Report Download - page 54

Processing Expenses — Processing expenses totaled $57.0 million for the year ended December 31,
2010, an increase of $19.0 million, or 50%, from the comparable period in 2009. The increase was primarily
the result of period-over-period growth of 26% in the number of active cards in our portfolio and 80% in
gross dollar volume.
Other General and Administrative Expenses — Other general and administrative expenses totaled
$44.6 million for the year ended December 31, 2010, an increase of $17.1 million, or 62%, from the comparable
period in 2009. The increase was partly the result of an increase of $6.4 million relating to professional services
expenses, $5.1 million of which resulted from expenses related to our initial public offering, and $1.3 million of
which represented an increase in professional services fees primarily incurred in connection with our proposed
bank acquisition and other corporate development initiatives. The increase in other general and administrative
expenses was also the result of a $3.2 million increase in telephone and communications expenses resulting
from increased use of our call center and our IVR, as the number of active cards in our portfolio increased.
Additionally, depreciation and amortization of property and equipment increased by $2.6 million due to
expansion of our infrastructure to support our growth and we experienced a $2.4 million increase in transaction
losses, primarily associated with customer disputed transactions.
Income Tax Expense
2010 2009
Twelve
Months
Ended
December 31,
U.S. federal income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0% 35.0%
State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 6.0
Non-deductible offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 —
Change in state tax apportionment method . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.6) —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 0.9
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.3% 41.9%
Our income tax expense decreased by $1.8 million to $27.4 million in the year ended December 31,
2010 from the comparable period in 2009, and our effective tax rate decreased 2.6% from 41.9% to 39.3%
primarily as a result of a lower effective state tax rate in the year ended December 31, 2010. The lower
effective state tax rate was the result of a change in the apportionment method we use to allocate income
to California. Under the alternative apportionment method, approved by the California Franchise Tax
Board, or FTB, in May 2010, we apportion less income to California, resulting in a lower effective state tax
rate. Additionally, the effective tax rate for the year ended December 31, 2010 was impacted by several
discrete items. The FTB approved a retroactive application of the alternative apportionment method to our
income tax returns filed for the five months ended December 31, 2009 and the year ended July 31, 2009.
We recognized this for tax benefit in the year ended December 31, 2010. This tax benefit was partially
offset by non-deductible expenses related to our initial public offering recognized in the year ended
December 31, 2010. Excluding the impact of these discrete items, our effective tax rate would have been
39.7%.
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