REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

On October 1, 2018, the Company adopted Topic 606 on a modified retrospective basis. Prior period amounts have not been adjusted to reflect the adoption of Topic 606 and continue to be reported in accordance with the Company’s historical accounting policies. The impact of the Company’s adoption of Topic 606 was limited to the MPS division within the Payments reporting segment. Upon adoption, Meta recorded a cumulative-effect adjustment that increased retained earnings by $1.5 million, net of tax.

Topic 606 applies to all contracts with customers unless such revenue is specifically addressed under existing guidance. The table below presents the Company’s revenue by operating segment. For additional descriptions of the Company’s operating segments, including additional financial information and the underlying management accounting process, see Note 15. Segment Reporting to the Consolidated Financial Statements.



(Dollars in thousands)	Payments					Banking				Corporate Services/Other						Consolidated Company
Three Months Ended June 30,	2019		2018			2019		2018		2019			2018			2019		2018
Net interest income⁽¹⁾	$	15,232	$	6,298		$	60,043	$	18,077	$	(8,307	)	$	4,036		$	66,968	$	28,411
Noninterest income:
Refund transfer product fees	6,697		7,358			—		—		—			—			6,697		7,358
Tax advance product fees⁽¹⁾	34		(46		)	—		—		—			—			34		(46		)
Card fees	19,445		22,717			92		90		—			—			19,537		22,807
Rental income⁽¹⁾	4		—			9,382		—		—			—			9,386		—
Loan and lease fees⁽¹⁾	—		—			1,012		1,111		—			—			1,012		1,111
Bank-owned life insurance⁽¹⁾	—		—			—		—		628			633			628		633
Deposit fees	1,932		1,027			403		107		—			—			2,335		1,134
Gain (loss) on sale of securities available-for-sale, net⁽¹⁾	—		—			—		—		440			(22		)	440		(22		)
Gain on sale of loans and leases⁽¹⁾	—		—			1,913		—		—			—			1,913		—
Other income⁽¹⁾	290		251			781		10		737			(11		)	1,808		250
Total noninterest income	28,402		31,307			13,583		1,318		1,805			600			43,790		33,225
Revenue	$	43,634	$	37,605		$	73,626	$	19,395	$	(6,502	)	$	4,636		$	110,758	$	61,636

⁽¹⁾These revenues are not within the scope of Topic 606. Additional details are included in other footnotes to the accompanying financial statements. The scope of Topic 606 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities, including loans, leases, and securities.



(Dollars in thousands)	Payments				Banking						Corporate Services/Other						Consolidated Company
Nine Months Ended June 30,	2019		2018		2019			2018			2019			2018			2019			2018
Net interest income⁽¹⁾	$	38,238	$	15,900	$	168,107		$	49,794		$	(7,755	)	$	16,318		$	198,590		$	82,012
Noninterest income:
Refund transfer product fees	38,559		41,353		—			—			—			—			38,559			41,353
Tax advance product fees⁽¹⁾	34,757		35,739		—			—			—			—			34,757			35,739
Card fees	61,678		74,662		261			248			—			—			61,939			74,910
Rental income⁽¹⁾	5		—		30,162			—			—			—			30,167			—
Loan and lease fees⁽¹⁾	—		—		3,185			3,445			—			—			3,185			3,445
Bank-owned life insurance⁽¹⁾	—		—		—			—			1,901			1,952			1,901			1,952
Deposit fees	5,177		2,634		1,188			330			—			—			6,365			2,964
Gain (loss) on sale of securities available-for-sale, net⁽¹⁾	—		—		—			—			649			(1,198		)	649			(1,198		)
Gain on sale of loans and leases⁽¹⁾	—		—		3,865			—			—			—			3,865			—
Loss on foreclosed real estate⁽¹⁾	—		—		(185		)	(19		)	—			—			(185		)	(19		)
Other income⁽¹⁾	804		694		3,323			40			1,236			32			5,363			766
Total noninterest income	140,980		155,082		41,799			4,044			3,786			786			186,565			159,912
Revenue	$	179,218	$	170,982	$	209,906		$	53,838		$	(3,969	)	$	17,104		$	385,155		$	241,924

Following is a discussion of key revenues within the scope of Topic 606. The Company provides services to customers that have related performance obligations that must be completed to recognize revenue. Revenues are generally recognized immediately upon the completion of the service or over time as services are performed. Any services performed over time generally require that the Company renders services each period, therefore the Company measures progress in completing these services based upon the passage of time. Revenue from contracts with customers did not generate significant contract assets and liabilities.

Refund Transfer Product Fees

Refund transfer fees are specific to the tax products offered by Refund Advantage and EPS. These fees are for products, services such as payment processing, and product referral commissions. Software partner fees paid and/or incurred are recorded on a net basis. The Company’s obligation for product fees and commissions is satisfied at the time of the product delivery and obligation for payment processing is satisfied at the time of processing. The transaction price for such activity is based upon stand-alone fees within the terms and conditions. As of June 30, 2019, there were no receivables related to refund transfer fees, which reflect earned revenue with unconditional rights to payment for product fee income, while as of September 30, 2018, there were $827,039 of such receivables. All refund transfer fees are recorded within the Payments reporting segment.

Card Fees

Card fees relate to MPS, retail bank, Refund Advantage and EPS products. These fees are for products and services such as card activation, product support, processing, and servicing. The Company earns these fees based upon the underlying terms and conditions with each cardholder over the contract term. Agreements with the Company’s cardholders are considered daily service contracts as they are not fixed in duration. The Company’s obligation for card activation and product support fees is satisfied at the time of product delivery, while the obligation for processing and servicing is satisfied over the course of each month. The transaction price for such activity is based upon the stand-alone fees within the terms and conditions of the cardholder agreements. Card fee revenue also includes income from sponsorships, associations and networks, and interchange income. Sponsorship income relates to fees charged to the Company’s ATM sponsorship partners, where the obligation is satisfied over the course of each month. Association and network income reflect incentives, performance bonuses and rebates with MasterCard and Visa. The obligation for such income is satisfied at the time when certain thresholds of transaction volume have been met. Interchange income is generated by cardholder activity, and therefore the Company’s obligations are satisfied as activity occurs. The transaction price for such activity is based on underlying rates and activity thresholds within the terms and conditions of the applicable agreements. Card fee revenue also includes breakage revenue. Breakage represents the estimated amount that will not be redeemed by the holder of unregistered, unused prepaid cards for goods or services. Breakage revenue is recognized ratably over the expected customer usage period and is an estimate based on cardholder behavior and breakage rates. Breakage is also impacted by escheatment laws. Card fees are recorded within the Payments and Banking reporting segments.

Deposit Fees

Fees are earned on depository accounts for commercial and consumer customers and include fees for account services, overdraft services, safety deposit box rentals, and event-driven services (i.e. returned checks, ATM surcharge, card replacement, wire transfers, and stop pays). The Company’s obligation for event-driven services is satisfied at the time of the event when the service is delivered, while its obligation for account services is satisfied over the course of each month. The Company’s obligation for overdraft services is satisfied at the time of overdraft. The transaction price for such activity is based upon stand-alone fees within the terms and conditions of the deposit agreements. Deposit fees are recorded within the Payments and Banking reporting segment.

Principal vs Agent

The Payments reporting segment includes principal/agent relationships. Within this segment, MPS relationships are recorded on a gross basis within the income statement, as Meta is the principal in the contract, with the exception of association/network contracts and partner/processer contracts for prepaid cards, which are recorded on a net basis within the income statement as Meta is the agent in these contracts. Also within this segment, Tax service relationships are recorded on a gross basis within the income statement, as Meta is the principal in the contract, with the exception of contracts with software providers and merchants, which are recorded on a net basis within the income statement as Meta is the agent in these contracts.