Green Dot 2011 Annual Report Download - page 56

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46
Loan Portfolio Concentrations
Green Dot Bank operates at a single office in Provo, Utah located in the Utah County area. As of December 31,
2011, approximately 92% of our borrowers resided in the state of Utah and approximately 50% in the city of Provo.
Consequently, we are susceptible to any adverse market or environmental conditions that may impact this specific
geographic region.
As of December 31, 2011, the bank did not have any loans classified as non-accrual. Additionally, no allowance
for loan losses was recorded because we purchased the loans at fair value on December 8, 2011, and there have
been no material changes in credit quality associated with the loan portfolio since the acquisition date.
Deposits
The following table shows Green Dot Bank’s average deposits and the annualized average rate paid on those
deposits from December 8, 2011 through December 31, 2011:
Average
Balance
Weighted-
Average Rate
(In thousands)
Interest-bearing deposit accounts
Negotiable order of withdrawal (NOW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,634 0.25%
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,812 0.38%
Time deposits, denominations greater or equal than $100 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383 1.05%
Time deposits, denominations less than $100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,779 1.22%
Total interest-bearing deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,608 0.83%
Non-interest bearing deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,738
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,346
Key Financial Ratios
The following table shows certain of Green Dot Bank’s annualized key financial ratios for the period from December
8, 2011 through December 31, 2011:
Pretax return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Net return on equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5%
Equity to assets ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.4%
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the potential for economic losses from changes in market factors such as foreign currency exchange
rates, credit, interest rates and equity prices. We believe that we have limited exposure to risks associated with changes
in foreign currency exchange rates, interest rates and equity prices. We have no foreign operations, and we do not
transact business in foreign currencies. We do not hold or enter into derivatives or other financial instruments for trading
or speculative purposes. We do not consider our cash and cash equivalents or our investment securities to be subject
to significant interest rate risk due to their short duration.
We do have exposure to credit and liquidity risk associated with the financial institutions that hold our cash and
cash equivalents, restricted cash, available-for-sale investment securities, settlement assets due from our retail
distributors that collect funds and fees from our customers, and amounts due from our issuing banks for fees collected
on our behalf.
We manage the credit and liquidity risk associated with our cash and cash equivalents, available-for-sale investment
securities and amounts due from issuing banks by maintaining an investment policy that restricts our correspondent
banking relationships to approved, well capitalized institutions and restricts investments to highly liquid, low credit risk
related assets. Our policy has limits related to liquidity ratios, the concentration that we may have with a single institution
or issuer and effective maturity dates as well as restrictions on the type of assets that we may invest in. The management
Asset Liability Committee is responsible for monitoring compliance with our Capital Asset Liability Management policy
and related limits on an ongoing basis, and reports regularly to the audit committee of our board of directors.