Q1 2021 Meta Financial Group Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the meta financial group first quarter fiscal year 2021 Investor Conference call.
During the presentation, all participants will be in a listen only mode.
Following the prepared remarks, we will conduct a question and answer session.
As a reminder, this conference call is being recorded.
I would now like to turn the conference over to Brittany Kelley Elsasser director of Investor Relations. Please go ahead.
Thank you and welcome to the meta financial Group Conference call and webcast for President and CEO, Brad Hanson and executive Vice President and CFO Glen Herrick will discuss the results of our first fiscal quarter ended December 31, 2020, all for participating in the call is Brett Farr.
Co President and C O olive medibank additional information, including the earnings release and Investor presentation may be found on our website at meta financial group Dot Com as a reminder, our comments may include forward looking statement. Those statements are subject to risks and uncertainties that could cause actual and anticipated.
As a result to differ the company undertakes no obligation to update any forward looking statements.
Please refer to the cautionary language and the earnings release Investor presentation, and and met its filings with the Securities and Exchange Commission, including our most recent filings for additional information covering factors that could cause actual results to differ materially from for looking statements.
Additionally, today, we will be discussing certain non-GAAP financial measures on this conference call references to non-GAAP measures are only provided to assist you in understanding meta as a result and performance trends reconciliations for such non-GAAP measures are included within the appendix on the Investor presentation.
Now I will turn the call over to Brad Hansen.
Thanks Brittany.
You all for joining meta financial's first fiscal quarter year, 'twenty 'twenty one earnings call.
It's my pleasure to discuss our strong results achieved in the first fiscal quarter.
I want to start by acknowledging our excellent team and thank our employees for generating these results while dealing with the challenges of the pandemic and serving our customers remotely.
Yeah.
Compared to the same quarter last year revenue was up 9% to $111 million net income was up 33% to 28 million and earnings per share was up 50% to 84 per share.
Our focus on improving our efficiency ratio resulted in an improvement of six percentage points to 62, 2% over last year.
Which was achieved without any COVID-19 related layoffs or salary reductions.
Our loan portfolios continue to perform well.
Nonperforming loans and leases as a percentage of loans and leases for commercial finance were 86 basis points.
Lowest level and over a year and a half.
As Bret will discuss we remain focused on the hospitality and movie theater loans, and our legacy community bank portfolio as well as our small ticket leasing and finance relationships and our commercial finance division and we stay and regular contact with those borrowers.
Due to our conservative approach to ramping up provision during the early days of the pandemic. We believe that current reserves are adequate to withstand projected losses and the existing portfolio.
The effects of government stimulus programs have had a significant impact on our balance sheet.
These programs include the Paycheck protection program loans.
Economic impact payments or AIP.
And enhanced unemployment benefits that flow through to existing card programs.
Total average payments divisions deposits, including stimulus funds associated with the IP programs were up 83% year over year.
While it's not possible to determine the exact amount of the deposit growth associated with government stimulus programs, our analysis of our deposit base, including several large programs that we moved over from other banks during the year lead us to believe a more realistic run rate would be somewhere and the.
Mid teens, excluding any stimulus related impact.
Card and deposit fee income for our payments division is up 5% over the first fiscal quarter of last year to $22 $6 million.
This was quite an accomplishment given the lower card volumes of ARX.
And especially in our loyalty awards and promotions or rebate card area and our gift card promotions for programs.
Do that were caused by Covid related shutdowns during the latter half of the fiscal year.
Some of this volume, especially and gift cards rebounded nicely and the fiscal first quarter of 2021.
In addition fee income was negatively impacted from the previous year by the closure of two program managers, who were forced to cease operations due to the pandemic.
Fortunately increased activity on other card programs and our new transaction related payments initiatives like faster payments and acquiring more than made up for these reductions.
Overall.
Income plays an important role on our financial performance accounting for 49% of total revenue for the last 12 months.
We expect our fee income related programs to be an even bigger part of our story going forward.
As previously mentioned Medibank is a financial agent of the U S Department of the Treasury's Bureau of the physical service and was tasked with issuing prepaid debit cards for disbursement of economic impact payments to consumers under the cares Act during fiscal year 2020.
We recently reported that we were again past to distribute prepaid debit cards to individuals and as part of the second round of VIP program.
To accommodate.
This program, we have partnered with Pfizer and visa to distribute approximately $11 6 million cars totaling $13 $5 billion and stimulus funds for the two programs combined.
Obviously, a program of this size has significant impact on our balance sheet and performance metrics for.
For example.
Our capital leverage ratio net interest margin and return on assets will be skewed much lower since the associated deposits are held in cash.
Risk based capital ratios remain largely unchanged and we should see a slightly positive impact on earnings overall.
Additionally, we are working closely with our regulators the OCC and the federal reserve.
The OCC has granted us an exemption for meeting capital.
Leverage ratios due to the significant but temporary increase in deposits associated with the IP program.
We remain in good standing with regulatory agencies will not be deemed under capitalized and on that.
B understanding regulatory restrictions due to our participation and this program.
Now I'd like to spend a few minutes to talk about our mission and some of the important enhancements, we made to our environmental social and governance programs during the quarter.
Our long term mission is providing financial inclusion for all meta is a financial enablement company, who works with Fintech and censored innovators to increase financial availability choice and opportunity for all.
Banking as a service has always been a core feature of our business model and I like to say that we offered banking as a service since before it was cool.
Our National Bank charter coordination with regulators and deep understanding of risk mitigation and compliance allows us to guide and support our partners to deliver financial products to those who need them, most and contribute to the social benefit of communities we serve.
Medibank is the fiduciary who issues. The accounts holds the farms and manages the money moving billions of dollars each day.
Our years of experience and proprietary techniques for actively monitoring collateral and mitigating risk allow.
Allows us to enter markets and serve customers that traditional financial institutions, often shy away from.
We go where others won't because word willing to do the hard work that others don't.
Our mission and ESG efforts are strongly aligned with them and embedded and our strategy. So that our priorities stay fixed on helping our communities to move towards prosperity and success.
E S G along with diversity equity and inclusion are critical to the long term success of our company and our commitment to them is reflected in our hiring of our vice president of ESG and community impact who is responsible for advancing and sustaining a measurable ESG strategy.
And community outreach effort.
This initiative will be overseen by our newly formed ESG Committee of our board of directors.
Medibank is committed to expanding who and how the financial industry helps and we strongly believe that financial enablement and alpha.
Economic mobility are fundamental to our cause.
These key ESG enhancements are meant to ensure that we stay true to our mission and helping those at the heart of the real economy by providing pathways towards prosperity and success and.
We endeavor to bring financial inclusion to all.
Now, let me turn the call over to Brett to provide some updates on our lines of business.
Thank you Brad.
Today I'll share some updates on a few of our business lines not yet covered starting with commercial finance.
At December 31, commercial finance loans made up 70% of the company's gross loan and lease portfolio and totaled two point for $2 billion.
A 5% increase from the linked quarter.
We saw solid growth and term lending primarily related to our solar lending business and strong asset base lending originations.
During the quarter, our solar credits balance increased 29% from last quarter to $323 9 million.
While we have a strong pipeline, we expect that we could see a slowdown and asset based lending and factoring as a result, and the second round of PPP loans, reducing temporary demand for funding.
From a credit perspective, we continued to closely monitor each of our lending portfolios paying significant attention to our legacy community Bank hospitality and movie theater loans as well as our small ticket equipment finance relationships and the credit Mark Division.
Our credit management team has remained in regular contact with these borrowers and we feel comfortable with the level of reserves and collateral and place on these credits.
Our legacy community Bank portfolio balances continue to decline as the portfolio winds down.
The portfolio is performing well and we have not experienced any further deterioration and as such we believe our credit metrics demonstrate the company's ability to weather the worst of the pandemic.
Movie Theater, and hospitality loans, and our legacy community Bank portfolio continued to account for most of our total deferral balances are.
Our current level of reserves reflects the elevated level of risk and these portfolios, but we are pleased that we are starting to see some positive developments and these relationships for.
And for example, most of the hospitality loans that were on deferral are now back to making P&I payments.
And our consumer lending portfolios credit remained strong and we have seen no measurable change and performance due to COVID-19.
This reinforces the strength of our program structuring and guardrails in place.
Nonperforming assets increased slightly during the quarter, primarily related to an increase and legacy community banking nonperforming loans, the increase and non accrual balances was driven by one community bank relationship operating and the movie theater industry that moved to non accrual status and the fiscal 2021 first quarter as a reminder.
Tinder this relationship is roughly 50% reserve for it.
We believe this to be isolated and not a representation of our overall loan and lease portfolio.
Finally, I would like to highlight our moneyline relationship as it is a great example of banking as a service and how we are leveraging our balance sheet to create relationships that advance our capabilities and create future revenue generating opportunities.
Through our venture capital arm meta ventures, we were a strategic investor and Moneyline before we helped power their checking account product called more money.
Net adventures is focused on investing and early stage companies that are on the cutting edge of payments and likely to be future users of our platform.
By investing and and partnering with Fintech like Moneyline, and we continue to stay on the forefront of payments industry innovation.
Now I'd like to turn it over to Glen Herrick.
Thank you Brett and good afternoon, everyone.
Total revenue for the fiscal 2021 first quarter was $111 million and increase of 9% compared to the same quarter last year the.
The increase in revenue benefited from the previously disclosed 5 million dollar loss from the sale of foreclosed property. During the last years first fiscal quarter related to a legacy community bank agricultural relationship.
Revenue also benefited from the receipt of $3 $5 million from a portion of the company's liquidation insurance claims of unearned premiums on the rely on Max as state related to our student loan portfolio.
In June 2018, we announced that we received written notification of the rely on Max and solvency and that we expected to recover a portion of the unearned premiums.
We generated net interest income of $66 million and increase of 2% for the first fiscal quarter of 2021 compared to the same quarter of fiscal 2020 net interest income benefited from a reduction and total interest expense.
Related to lower deposit and funding costs cost of funds for the first quarter of 2021 average just 15 basis points.
Fee income represented 49% of total revenue for the 12 months ended December 31, and an improvement from 45% for the prior year 12 month period, we continue to see a robust pipeline of fee income opportunities within our payments division and our.
Randy and banking as a service capabilities.
We expect fee income to continue to be a greater percentage of revenue over time.
Noninterest expense was $72 $6 million for the first fiscal quarter of 2021.
A decrease of 4% compared to the prior year, we remain disciplined on expense management as is evidenced by our efficiency ratio of 62, 2% for the last 12 months ended December 31, and an improvement of over 600 basis points compared to the prior year.
We continue to focus on achieving our key long term efficiency goals by driving optimization and utilization of existing business platforms, and leveraging technology to help drive future efficiencies.
Overall net income for the quarter was $28 million or <unk> 84 per share and increase of 33% and 50% respectively compared to last year's first quarter.
Total assets at December 31 were seven $2 $6 billion and increase of 18% year over year, and 19% compared to the linked quarter. The increase was due to the higher level of cash on the balance sheet related to a seasonal increase in deposits as well as <unk>.
<unk> funds from the first and second round of economic impact payments.
Deposits and the first quarter also benefited from the $150 million and deposits from.
From the Emerald prepaid Mastercard program, which removed to matter bank as a component of the broader H&R block relationship that began in the first quarter.
As Brad mentioned, we were selected again to disperse a portion of the AIP payments to eligible recipients via bank issued prepaid debit cards as part of the second round of stimulus.
With initial payments having began in early January.
While the EAP program is anticipated to have a slightly positive impact on earnings and the balance sheet impact will be significant due to the large amount of cash on deposit balances during our fiscal second quarter, resulting in a significant but temporary reduction of net interest income.
Return on average assets and the company's leverage capital ratios and tell funds are spent by consumers. We do not expect these conditions will be sustained long term and do not expect any material impact on our risk based capital ratios and.
As a result of participating in this program, we expect to remain in good standing with regulatory agencies, and we will not be deemed as under capitalized and will not be under any regulatory restrictions.
As you May recall, we reinstituted, our share repurchase program last quarter.
During the quarter, we repurchase just over $1 8 million shares on an average price of $29 46.
Since quarter end through January 20th we purchased an additional 300000 shares on.
And there are authorized share repurchase program, which is scheduled to expire on December 31, 2022, we have approximately 2 million shares remaining we will continue to consider further share repurchase activity within the context of our overall capital deployment strategies, including funding growth initiatives.
<unk> and returning excess capital to shareholders.
And finally, we adopted <unk> effective October one 2020, and its day one entry to increase the allowance for credit losses was $12 $8 million in line with expectations allowance for credit losses was $72 $4 million at December 31, the increase.
And the allowance when compared to linked quarter was largely due to the adoption of the seasonal accounting standard.
That concludes our prepared remarks, operator, please open the line for questions.
Ladies and gentlemen, if you'd like to ask a question at this time. Please press the star and the number one key on your Touchtone telephone to withdraw your question press the pound key.
Our first question comes from Steve Moss with B Riley Securities.
Good afternoon.
Okay.
Thanks, David and maybe on the group.
Brad I just want to stop for you on the loan yields here.
Pretty stay loan yields for commercial finance business kind of curious how the pricing environment is there.
And just the activity Youre seeing.
Okay.
Yes. This is Brett I'll jump in here.
And obviously rates are moving down and our assets have a fairly.
Short duration and so we're still feeling some price pressure, but because remember the kind of assets.
We go after and tend to have a higher yield so yes.
Yes for some price pressure, there's a lot of liquidity and the market.
We're not chasing it down market.
And we're still holding our own pretty well.
Okay.
And.
And then.
With regard to expenses here for the upcoming quarter, obviously big quarter for tax just kind of curious as to how we think about total expenses and the upcoming quarter.
Hey, Steve This is Glenn.
As always our fiscal second quarter the March quarter is our highest expenses.
No.
Part a lot of those expenses, though above our run rate are variable in nature. So it depends on on the volume of tax season as well, but.
So they could go to 90 $500 million.
But where it settles in at will also.
Correlate with revenues.
Okay.
That's helpful and just.
One last question for me here on fee income.
You guys talked about it becoming a greater percentage of revenue as the year goes on just wondering if you could expand on on that and how youre thinking about that percentage grow on throughout the year.
Well, we have announced several times about our faster payments initiatives and our acquiring business that we entered into during the last year, which is starting to ramp up as well so.
We have a number of those kinds of transaction related businesses that we've gotten into that will be ramping up over the next couple of years and that will be increasing our for our fee income now it's interesting and interest rates go up again and interest income goes up along with it.
You know those ratios could be more or less.
And depending on those factors, but if interest rates stay the same and our portfolio.
Kind of hangs in where it is then I think youll see.
Ever increasing percentage of fee income over time.
Yes.
Alright, well, thank you very much that good quarter.
You bet Steve.
Thank you.
Our next question comes from Michael Perito with J B W.
Hey, good afternoon, guys. Thanks for taking my questions.
Hey, you bet.
I have just kind of a conceptual question Brad you mentioned some of the.
The ESG and financial inclusion themes that are kind of driving the meta.
And the strategy.
And frankly have been for years right, but formalizing some of those those those those processes and.
Whatnot, but I guess as we think about the prepaid card business.
It's hard to not look at some of the other do you put on the slide deck, the neo banks for digital challenger banks for things of that nature, you know kind of going after the same part of the pie here and I'm curious if you have any kind of longer term views about the growth rate and viability of the prepaid business that theres more digital disruption from banking alternatives elsewhere and and.
As we think about specifically to meta I mean is it fair to think that.
With your representation on both sides that debt you don't really expect much of a.
And overall impact to kind of how your business grows or or do you think theres room for for growth rates to kind of shift is.
Time and Walt.
Well the neo banks generally don't have a banking charter and they partner with other banks in order to implement those programs and that's really what we do is support those guys and breadth.
Brett highlighted moneyline.
And the Roar money product, which is a checking account product.
So that's an example of us.
You know facilitating those kinds of opportunities. In addition to prepaid. So I don't think we're just pigeonholed and prepaid first of all secondly, I think prepaid is a broad category there are a lot of niche.
Applications of prepaid and if you think about the rebate cards, the loyalty and promotion cards the gift cards.
And how it's used for certain other categories like FSA products and.
Benefits and things like that there are a lot and niche categories that will continue to grow and prepaid and then finally.
And even it within some of the prepaid reloadable categories. They are still very operating very strongly and we're seeing.
Growth and a number of those programs but.
Also the payroll card programs, which are beneficial to employers so.
There are lots of opportunities within prepaid theres lots of opportunity for us with the neo banks and the Fintech. So that are out there for us to support their programs and partner with them and I think the.
The industry and the category is very broad so have no concerns about competitive pressures at this time.
Yes.
And that's very helpful and I think last I checked it and maybe a couple of dozen of banks debt one way or another are kind of in this embedded financial banking as a service arena I mean have you noticed any.
Change and in the competitive landscape as far as kind of the day.
The amount of other banks looking at deals Youre looking at are or has it been relatively steady for you guys and I know you've been doing it for for a long time, but just curious if that debt that competition has has really noticeably changed at all over the last 12 months to 24 months.
And not seen any competition noticeably change and the last 12 months to 24 months and fact I've seen opportunities increasing in all categories.
Great.
I also wanted to talk about the day.
Capital I saw and in the release debt that you guys youre getting some temporary relief because of the IP and the impact on capital and just curious if you could comment if at all if any and impact on kind of your appetite near term for share repurchases and is it fair to think that either way coming into tax season here when the balance sheets typically.
And you know a bit more levered debt.
Debt buybacks are likely.
Not going to be quite as robust near term, but longer term, we should still view them as as a as a piece of your capital deployment strategy.
Glenn you want to take that.
Yeah.
Again, we've talked about keeping it.
And our balance sheet outside of the temporary AIP impacts keeping our balance sheet.
And that $6 billion $6 $5 billion range for for <unk>.
Quite some period of time.
And the returns we expect to generate we're going to generate a lot of excess capital and.
And we'll we'll look at all those options, but certainly share repurchases will be a part of that.
Okay.
Excellent. Thank you guys I appreciate it.
Yes. Thank you thanks.
Thanks, Mike.
As a reminder, ladies and gentlemen that is star then one to ask a question.
Our next question comes from the line of Frank Schiraldi with Piper Sandler.
Hey, guys good afternoon.
I'm wondering if you could give.
And <unk>.
Any color.
On or thoughts on the tax season, so far, especially given just how unique the environment is and things like greater flexibility and Ian.
Earned income tax credit.
In terms of filers using.
Either 19, or 20 income and I would imagine overall debt will increase payout and more and more potential for refunded losses, but any thoughts there you could offer.
Brett do you want to start with that.
Yes so.
We enter every tax season with a set of <unk>.
Very experienced people were probably more prepared for this season than we ever have.
And just as you go through it seems like every season has its unique attribute so I don't know that.
And we can predict and if in any way, but we're well prepared for it whatever it's going to entail.
Yeah.
Okay. So no change to thinking on previous guidance on.
Expectations on that front at this point.
Okay.
I think L b.
For the overall actually.
Thanks for that there'll be some delay on August the IRS deferred the start of the tax season and the processing so.
I think we'll see some delay, but I think the industry overall things so it'll be pretty consistent yet that's to be seen we won't know until we get into the season and start to see how people are reacting to all these changes.
Okay. Thanks, and then.
I'm wondering if you could just talk about the continued reduction and the community banking book.
And I would imagine the stuff that's moved off the book has been maybe and lower risk categories, but also the opportunity to maybe sell some stuff out from the higher risk categories given.
Difficult reserves taken against debt.
Yes.
And Frank it's Glenn and I wouldn't necessarily classify it is.
Lower risk stuff.
And all the loans have been sold the central bank thus far.
Or refined away and.
And so central banks working through the relationships that they want to prioritize long term as they have capacity on their balance sheet now clearly.
They're being very cautious about the hospitality and the theater at loans we have.
But but.
But it's not a.
We're not necessarily beyond that left with and adverse.
On the selection and the portfolio.
Polio and eventually get to zero.
Well, one way or the other but right now we feel good about the loans that we do have on our balance sheet and.
And those that we're watching closely we feel good about the reserve levels and we have against them.
Yes on reserves I know you talked about.
The specific reserve against this day.
Moving theater relationship that went into non accrual and.
And I know you give the reserves for total community banking book.
Give the reserves.
<unk>.
The movie Theater and hotel book and.
In total I don't know if I missed them.
Well.
Theaters are reserved at approximately 50%.
And I don't know, we haven't provided the hospitality loans.
Got you, Okay, and if I could just sneak in one final one in terms of the strength.
The solar business.
Any expectation or change the expectation on.
On the tax rate for.
For the year.
Okay.
Yes.
Solar pipeline is strong.
Our.
We also believe our taxable earnings pipeline is strong and.
So low low.
Low double digit tax rate.
As.
What we're thinking today.
As Brad mentioned.
A lot of our.
Annual results, including the amount of taxable income will depend on how well tax season goes.
Okay. Okay. Thank you.
Thanks Frank.
Thank you. Our next question comes from William Wallace with Raymond James.
Good evening, Thanks for taking my call.
Oh boy.
I was wondering if you could just kind of help us think about how you might think your reserve to loan ratio might move on your C. So as the year progresses.
Under the expectation that we start to get greater visibility into it.
And economic.
Recovery and not and we don't start to start and the other way.
Sure sure.
Yes, so we assuming the economy.
Improves or doesn't get worse from here.
Plateaus and <unk> and starts improving later in the year, then we would expect our allowance to come down.
Okay.
Okay.
No no.
As a percentage as a qualitative allowance as we reshaped our balance sheet, our earning assets and do more loans and fewer securities.
Absolute allowance will depend on the mix of loans versus securities, but on a qualitative basis, we would expect.
And if theres an improved economy.
And we're past the health crisis by.
By the end of the year, we would expect lower.
Allowance ratios.
Alright, thank you.
If I look at some of the.
Niche commercial lending business, there's a couple of them have seen some nice bounce back and grocery and the last quarter or two I wonder.
Wonder if you could talk a little bit about what youre seeing and the.
Our commercial lending business and what your expectations for growth might be at this point.
Yes, Brett so.
We've kind of talked about this before during a time of economic stress.
Some of the commercial borrowers are either run out of ore have too much trouble with their traditional lenders.
And they moved to more of a working capital line arrangements. So we've been the beneficiary of some growth and some nice transactions and asset based lending and factoring.
And that has come back also I mean, if you just kind of look at the pure numbers.
And when Covid hit and also with the PPP payments that occurred for our clients. Many of the same client borrowings dropped earlier. So some of that has come back quite a bit so that's really where youre seeing some good growth in those arenas.
And we would expect that and as we as we look forward and as I've mentioned and my comments.
Depending on how many of our clients get the second round of PPP loans, we may see some softness there for a short period of time, but as the economy comes back and we.
Have a pretty good pipeline, we should be able to build those asset classes more.
Okay, Alright, thanks, and that's actually a good segue to another question I had which was regarding the second on a PPP with the portal now open.
And just about a week, where are you and applications. So far and maybe what are your expectations for what the volume and end up just yet so just go round.
Yes. It came out to help me, if we'd actually disclose anything but what I would tell you is is that there are some tests to get into the second round and the most material of which is a 25% drop in revenue over the linked quarter and many of our clients are not able to meet that test. So thats sort of good news bad news, but.
I would say that.
At this point and the volume would be off from what it was the first round.
Okay No no no.
Not willing to maybe quantify that and it seems like from a lot of the banks that have been reporting.
Some have have suggested maybe as much as 50%, but others have thought debt could could come in closer to 20% 30%.
You have a sense.
And so we looked at a range of ethanol.
And then 50% is a directionally correct number to kind of work with.
Okay.
Okay. Thanks.
And then just on housekeeping question as it relates to PPP can you give us the net interest income impact or the net interest margin impacts from.
From the program and the first quarter.
Yes.
Just a couple of basis points from PPP.
It's it's really our impact on net interest margin is far outweighed by the impacts of these VIP deposits yes.
Yeah, and so that's actually debt.
I'm looking at my model and thinking debt trying to forecast that net interest margin might be a meaningless exercise and all of the noise.
It maybe it's growing yes NIM.
NIM is going to be noisy throughout the rest of 2021.
And and.
So a cleaner weighs just probably two to start with.
With the loan balances and and where those go and securities balances and and build from there we're going to hold a big chunk of the.
<unk> direct stimulus and cash so that's that's going to be sitting there just earning 10 basis points.
And I'm wondering you know now the <unk>.
Rate of decline in the first round of VIP has slowed pretty dramatically share and the last looks like three and six months and.
What's the decision matrix as to whether or not it makes sense to take some of that cash and and moving into the to the bond portfolio, maybe elaborate or keep it all short and pick up.
Extra dollars and net interest income if you have to keep it.
Yes.
Thank you and a number yeah.
Number of factors and there Wally.
A lot of that.
Lot of deposits that you see hanging around from.
From the first stimulus it last spring are still cards that have been unactivated.
And so we continue discussions with our partners on that program.
When the plan was rushed out and I don't think Congress ever anticipated that OXXO and actually take the money and.
And and use it so so those discussions continue and as well as some of our regulatory waivers on leverage ratios.
Yeah.
No call for us to keep that in cash, which is why our risk based ratios aren't moving and so.
That said, we do have excess liquidity, we're looking at options and and securities and other ways to use that powder.
That being said, we also don't want to.
On lock in too much interest rate risk, but we'll deploy some of it.
Okay.
Alex I would just state that.
And the Unactivated cards are still activating from from.
From last Mays.
Release of card. So we're still seeing some activations on a daily basis.
Albeit small and at some point if that.
Slowed down or stopped altogether, one of the considerations is that money.
And if it never does get accepted we don't get it we have to give it back to the government. So.
We don't want to tie that up.
Two long term.
Understood.
And that's all I have I appreciate your time thank you.
Thank you and that concludes the meta financial group first quarter fiscal year 2021 Investor Conference call.
And whatnot.
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Net.
And.
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