Green Dot 2012 Annual Report Download - page 50

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The increase in compensation and benefits expenses was also due to a $2.5 million increase in third-party call center
contractor expenses as the number of active cards in our portfolio and associated call volumes increased during the
year ended December 31, 2011. However, our call center costs, as a percentage of our total operating revenues, were
lower than the comparable period in 2010 as a result of volume incentives received from our third-party providers.
Processing Expenses — Processing expenses totaled $71.0 million for the year ended December 31, 2011, an
increase of $14.0 million, or 25%, from the comparable period in 2010. The increase was primarily the result of period-
over-period growth of 24% in the number of active cards in our portfolio and 55% in gross dollar volume and a $7.7 million
increase in ATM processing fees as the volume of ATM transactions increased during the year ended December 31,
2011. Processing expenses were partially offset by volume incentives from the payment networks.
Other General and Administrative Expenses — Other general and administrative expenses totaled $56.6 million
for the years ended December 31, 2011, an increase of $12.0 million, or 27%, from the comparable period in 2010.
The increase in other general and administrative expenses was primarily the result of a $4.7 million increase in
depreciation and amortization of property and equipment, a $3.0 million increase in our provision for uncollectible
overdrawn accounts related to purchase transactions, and a $2.9 million increase in transaction losses, primarily
associated with customer disputed transactions, which fluctuate based on changes in gross dollar volume. These
increases were partially offset by a decrease of $4.0 million in professional service expenses. During the year ended
December 31, 2010, we incurred significant professional services expenses in connection with our initial public offering,
which was completed in July 2010.
Income Tax Expense
The following table presents a breakdown of our effective tax rate among federal, state and other:
Years Ended December 31,
2011 2010
U.S. federal statutory tax rate 35.0% 35.0%
State income taxes, net of federal benefit 1.6 3.8
Change in state apportionment method —(4.6)
Non-deductible offering costs —2.4
Other 1.4 2.7
Effective tax rate 38.0% 39.3%
Our income tax expense increased by $4.3 million to $31.7 million in the year ended December 31, 2011 from the
comparable period in 2010, and our effective tax rate decreased 1.3 percentage points from 39.3% to 38.0%. Certain
enacted California tax law changes, which became effective January 1, 2011 and allowed us to continue to apply the
alternative apportionment method we used to allocate income to California in 2009 and 2010, lowered the income we
apportion to California from the comparable period in 2010, resulting in a lower effective state tax rate in 2011. The
year ended December 31, 2010 was impacted by several discrete items. The California Franchise Tax Board 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 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.