MetaBank Community Reinvestment Act

Strategic Plan

January 1, 2021 – December 31, 2023

Table of Contents

SECTION I. INTRODUCTION ................................................................................................................... 3

SECTION II. CRA STRATEGIC PLAN PROPOSAL ....................................................................................... 4

SECTION III. ASSESSMENT AREA............................................................................................................ 6

SECTION IV. NEEDS AND OPPORTUNITIES IN THE ASSESSMENT AREA .................................................. 9

SECTION V. PUBLIC PARTICIPATION ................................................................................................... 13

SECTION VI. METABANK CRA STRATEGIC PLAN AND MEASURABLE GOALS ........................................ 14

SECTION VII. REQUEST FOR APPROVAL AND CONTACT INFORMATION .............................................. 22

Exhibits .............................................................................................................................................. 23

Exhibit 1: Map of Sioux Falls MSA ...................................................................................................... 24

Exhibit 2: Assessment Area Needs Assessment Participants ............................................................... 24

Exhibit 3: Assessment Area map with demographic information ........................................................ 25

Exhibit 4: Sioux Falls MSA Deposit Market Share Report ..................................................................... 26

Exhibit 5: Public Notice and Proof of Publication ................................................................................ 27

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SECTION I. INTRODUCTION

MetaBank, National Association (“MetaBank” or “Bank”) is a national bank headquartered in Sioux Falls, South Dakota. MetaBank is a wholly owned subsidiary of Meta Financial Group, Inc. (MFG), a financial holding company also headquartered in Sioux Falls, South Dakota. MFG is publicly traded on the NASDAQ global select market under the symbol “CASH.” As of March 31, 2020, MFG / MetaBank had total assets of $5.8 billion. MetaBank is regulated at the federal level by the Office of the Comptroller of the Currency (“OCC”).

As a federally insured depository institution, MetaBank is subject to the Community Reinvestment Act (“CRA”), which requires banks to help meet the credit needs of their entire community, including low- and moderate-income (LMI) individuals and those located in LMI geographies. Due to MetaBank’s branchless business model, the Bank has elected to be evaluated under the “Strategic Plan” option as provided in 12 C.F.R. § 25.27 for the plan period January 1, 2021 through December 31, 2023. The OCC issued a final rule that made significant changes to CRA related regulations on May 20, 2020. MetaBank incorporated into its CRA Strategic Plan parts of the final rule that go into effect on October 1, 2020. For parts of the final rule that go into effect on January 1, 2023, the bank will follow the requirements outlined in the guidance or (if necessary) the Bank will request exemptions to the final rule outside of the CRA Strategic Plan.

A. MetaBank Product Offerings

MetaBank is a leader in providing innovative financial solutions to consumers and businesses in under-served niche markets and believes in financial inclusion for all. MetaBank includes the following divisions to serve our customer’s needs: Payments Division The Payments division serves consumers often overlooked by traditional banks and strives to ensure everyone has access to the kind of financial products that most people take for granted. Meta is one of the largest issuers of prepaid cards in the U.S., having issued more than a billion cards in partnership with banks, program managers, payment providers and other businesses. The Payments division also offers electronic payment services on a nationwide basis by issuing demand deposit accounts (DDA), sponsoring ATMs, and providing automated clearinghouse origination services. National Commercial Lending Division The National Commercial Lending division includes the Crestmark and AFS-IBEX business lines. Crestmark provides products such as Asset-Based Lending, Factoring, Lease Financing, Gov’t Guaranteed lending, and other commercial financing. Crestmark prides itself on lending in industries that require the bank to understand the risks of the industry, such as, manufacturing, alternative energy, oilfield services, and transportation. AFS-IBEX provides short-term, collateralized financing to facilitate the purchase of insurance for commercial property, casualty, and liability risk through a nationwide network of over 1,300 independent insurance agencies. Tax Services Division The Tax Services division offers free and fee-based refund advance loans, tax refund-transfer solutions, and commercial loans to tax preparers (software purchases, start-up costs, and loyalty cards). Consumer Lending Division The Consumer Lending division provides a total solution for marketplace lending, including underwriting and loan management in the direct-to-consumer credit business. A purchased student loan portfolio is also managed by the Consumer Lending division. Community Bank Division The sale of MetaBank’s Community Bank division to Central Bank closed on February 29, 2020. The sale included all of the community bank branch locations as well as the deposits, fixed assets, and a portion of the community

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bank’s loan portfolio. In addition, all the community bank employees migrated to Central Bank with the sale. The remaining community bank loans not sold to Central Bank were retained by MetaBank under a servicing agreement with Central Bank. The retained loan portfolio includes a mix of commercial and consumer lending products.

B. MetaBank Financial Information

MetaBank is profitable, growing, and well-capitalized. MetaBank’s Consolidated Reports of Condition and Income (Call Report)1 as of March 31, 2020 reflected the following:

• $5.8 billion in total assets • $3.9 billion in total deposits • $3.6 billion in loans and leases held for investment • $532 million Tier 1 Capital • 992 full-time employees

SECTION II. CRA STRATEGIC PLAN PROPOSAL

A. MetaBank’s Commitment to CRA

We believe the core businesses at MetaBank are structured to serve LMI consumers and small businesses. These core businesses, the bank’s past CRA performance, and the MetaBank CRA program demonstrate the significant effort devoted to complying with both the letter and the spirit of the CRA. Core Businesses Payments Division MetaBank’s Payments division specializes in providing deposit banking services for the unbanked and underbanked. According to a survey completed by the FDIC2, 8.4 million U.S. households are unbanked, and an additional 24.2 million are underbanked. Also, according to the survey, prepaid card use was most prevalent among unbanked households and was higher among lower-income households. As of March 31, 2020, the bank’s deposit portfolio was $3.9 billion, and a substantial majority of those deposits are from prepaid cards. One of the most impactful products offered by MetaBank and its partners is the general purpose reloadable (GPR) prepaid card which serves as a primary transaction account for many unbanked and underbanked individuals. GPR cards provide access to the financial system and offer the same kind of features, functionality, and safety as traditional banking products. Prepaid card customers often utilize GPR cards as a budgeting tool to control spending and stay out of debt. Direct deposit features allow cardholders to avoid expensive check cashing fees. Many LMI individuals utilize GPR cards to direct deposit their payroll, withdraw funds from an ATM, make point-of-sale purchases, and manage their finances. GPR cards issued by MetaBank offer the same kind of consumer protections as traditional bank accounts including initial disclosures, FDIC insurance, error and dispute resolution under Regulation E, and comprehensive transaction and account information with 24/7 customer support. These accounts are available to everyone, regardless of their financial standing.

To distribute funds appropriated by the CARES Act, MetaBank was selected as the prepaid debit card issuer for

1 MetaBank’s Consolidated Reports of Condition and Income as of March 30, 2020: https://cdr.ffiec.gov/public/ManageFacsimiles.aspx (After

accessing the link, in the Search function select “Call Report”, Report Date: Single Date “3/30/2020”, Institution Name “MetaBank”. 2 2017 FDIC National Survey of Unbanked and Underbanked Households: https://www.fdic.gov/householdsurvey/2017/2017report.pdf (page 1)

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Economic Impact Payments (EIP). The Bank issued 3.6 MM cards representing $6.42 billion in funding. The prepaid cards included all of the consumer protections and functionality as traditional banking products. MetaBank is playing a pivotal role to ensure Consumers have access to EIP funds during the COVID-19 pandemic (“pandemic”).

The ATM Sponsorship group sponsors nearly 70% (280,000) of all freestanding ATMs across the U.S. Freestanding ATMs are located in non-bank locations such as; malls, retail chains, convenience stores, and other small businesses which provide convenient access to funds when consumers need it. Access to cash is often a need among the unbanked/underbanked and MetaBank is a sponsor of these services.

National Commercial Lending Division Crestmark has a variety of lending products that help businesses of all sizes. It specializes in helping businesses in niche industries that are often unable to access traditional financial solutions. The Asset-Based lending and Factoring products are two of the Crestmark products that help MetaBank support small businesses in B2B industries facing business growth or economic downturn. The Asset-Based lending product offers more flexibility than other methods of financing and is a fast and cost-efficient way to obtain working capital. Unlike certain types of structured financial products, with an asset-based lending relationship, the business owner does not need to give up equity in the company. Factoring is the sale of accounts receivable that allows the business to access cash based on strength of its customer’s credit. Due to the risk in these industries/products, most traditional banks are not willing to lend to these businesses. In Q2 2020, the Crestmark business unit provided 673 Paycheck Protection Program (PPP) loans, which funded $215MM to support businesses during the pandemic. This initiative provided payroll funding for more than 20,000 individuals across 38 states.

AFS originates loans to small businesses to finance insurance premiums. This financing allows these businesses to deploy capital to operate / grow their business instead of paying their insurance premium upfront. In 20193, MetaBank originated 34,378 loans for insurance premium financing through its AFS business unit. The average loan size was $24,238 and 96% of loans were under $100,000. Each year the AFS business unit originates 70-80% of all commercial loans (by number) originated by MetaBank, which illustrates the significance of smaller loan amounts in MetaBank’s Commercial Lending Division.

Tax Services Division MetaBank, through its Meta Tax business line and its partnerships is able to provide small dollar loans (Refund Advances) to consumers nationwide. In 20194, MetaBank originated 984,884 Refund Advance loans for a total of $1.33 billion dollars. This equates to an average loan amount of $1,354 per customer. Refund Advance loan amounts varied between $200 - $6,400. There was a total of 519,218 loans (53%) originated that were free to the consumer (No interest or loan fees). Refund Advance loans provide borrowers with funds to meet their financial obligations prior to the disbursement of their Tax Refund, which is a common necessity for LMI individuals. Past CRA Performance MetaBank’s most recent CRA performance evaluation was as a Large Bank exam that was completed on February 3, 2020. The Scope of the exam included lending activities in 2016-2018 and Community Development (CD) activities in 2017-2018. The bank received an overall rating of Outstanding, including Outstanding ratings on all three Performance Tests (Lending, Investments, and Services). In 2019, only 24% of OCC regulated institutions earned an Outstanding rating5. Earning an Outstanding CRA rating, speaks to MetaBank’s focus on meeting the needs of LMI individuals / families and small businesses in the communities it serves.

3 Based on MetaBank’s analysis of AFS CML loans originated in 2019. 4 Based on MetaBank’s analysis of Consumer Tax loans originated in 2019. 5 According to data obtained from the OCC: https://apps.occ.gov/crasearch/Default.aspx

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CRA Program MetaBank’s CRA Team (as part of the Compliance department) is led by the bank’s CRA Officer and is responsible for the development, implementation, and oversight of the bank’s CRA Strategic Plan. To develop goals for the CRA Strategic Plan, the CRA Team worked with various teams at Meta including management within the National Commercial Lending Division, Treasury department, Compliance department, Corporate Donations team, Volunteer Services team (Outreach), and Executive Management. CRA performance is monitored and progress reports are provided to various stakeholders on a regular basis. The CRA Team performs extensive due diligence regarding all proposed CRA loans and investments. The bank’s CRA Team has developed deep ties in the community, and is engaged with community members, with an emphasis on finding and developing new or expanded ways to help meet community needs.

B. Overview of Strategic Plan, Effective Date and Term

MetaBank’s strong commitment to CRA is demonstrated by the extent and breadth of its measurable goals included in the Strategic Plan. There are three goals (Tier I): 1) CD Investments / Loans; 2) CD Donations; 3) CD Service Hours specific to activities in the assessment area (AA), and one goal (Tier II) specific to CD Investments / Loans in the Broader Statewide Regional Area (BSRA). These goals will allow the bank to respond to critical community needs and implement responsive, flexible, and innovative loans and investments. In developing the Plan and goals, the bank received input from a wide array of community partners. The goals are described in greater detail in Section VI below.

The effective date of this Strategic Plan is January 1, 2021, and the term is three years: 2021-2023. If during the term of this Strategic Plan there is a material change in circumstance, MetaBank may request an amendment to this Strategic Plan as provided for in 12 C.F.R. § 25.27(h).

SECTION III. ASSESSMENT AREA

The Community Reinvestment Act (CRA) requires a bank to delineate one or more assessment areas (AAs) within which the bank’s record of helping to meet the credit needs of its community will be examined. The AAs must include the geographies in which the bank has its main office, its branches and its deposit-taking ATMs (12 C.F.R. § 25.41(c)(2)).6 MetaBank operates no physical branches or deposit-taking ATMs; therefore, the Bank delineates its AA based on its main office in Sioux Falls, South Dakota. The Bank’s AA is the Sioux Falls MSA (MSA-43620), which includes all of Minnehaha, Lincoln, McCook, and Turner counties in South Dakota (see map in Exhibit 1). In compliance with 12 C.F.R. § 25.41(c) – (e), the AA includes only whole geographies or political subdivisions (counties), does not reflect illegal discrimination, and does not arbitrarily exclude LMI geographies. After the sale of the Community Bank division in February 2020, MetaBank expanded its AA to include the entire Sioux Falls MSA, which added portions of Minnehaha and Lincoln counties as well as all of McCook and Turner counties. Expanding the AA to include the Sioux Falls MSA allows the bank to serve the rural areas that surround Sioux Falls, where a portion of the residents’ commute to Sioux Falls to work.

A. Population Data and Median Family Income

As of 2015, the city of Sioux Falls had a population of 164,3417, which is 67% of the total population of 242,731 in the Sioux Falls MSA. The population and income breakdown of the Sioux Falls MSAs 57 census tracts is included in Table 1. The MSA does not have any low-income tracts and 29% of its tracts are moderate income tracts. Table 2 Median

6 Section 25.09 (Assessment Area) of the new CRA rule does not go into effect until 1-1-2023.

7 2015 American Community Survey (ACS) - Sioux Falls https://data.census.gov/cedsci/table?d=ACS%205-

Year%20Estimates%20Data%20Profiles&table=DP05&tid=ACSDP5Y2015.DP05&g=0400000US46_1600000US4659020

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Family Income Ranges indicates there has been an increase of 11% of Median Family Income (MFI) in the MSA over the last three years. In 2017, the state of South Dakota ranked #5 in the nation in inbound migration as a percentage of total moves.8 All of these data points indicate the population and the MFI in Sioux Falls are on an upward trajectory.

Table 1: Population and Income Breakdown

Table 2: Median Family Income Ranges

B. Housing Data

Following the economic downturn in 2008, single family home sales prices have been climbing steadily since 2012. The median home value in Sioux Falls has increased gradually, as of September 2016 the median sales price was $185,0009. As home prices have increased, housing affordability has decreased; Sioux Falls saw a 14.4% decrease in housing affordability from September 2014 to September 2016 9.

Housing data for the Sioux Falls MSA is available in Table 3. This data indicates 37 percent of families in the AA are LMI. The area’s median housing value in the Sioux Falls MSA is 2.15 times the Median Family Income in the MSA, 2.69 times the moderate-income demographic, and 5.3 times the low-income demographic. This indicates a limited proportion of owner-occupied housing units are affordable to many low-income residents. The median housing value is lower in the MSA ($157,000), than it is in the city of Sioux Falls ($185,000); which indicates the need for affordable housing in the city of Sioux Falls is greater than in more rural areas of the MSA.

New housing construction has shifted towards the building of multi-family units. The number of multifamily units permitted in 2016 set the record for the highest year of multifamily activity since 19779. In 2016, Single family permitting rebounded from the 2008 recession; however, it remains below peak levels seen in early 2000s. The increase of multifamily construction for rental units has been concentrated in the price range of $800 or more and the number of units priced below $600 has decreased. Tax credit properties (60% or less AMI) are

8 2017 Homeless Advisory Boards Annual Report (page 2) https://www.minnehahacounty.org/hab/2017AnnualHAB_Report.pdf 9 2016 Affordable housing Needs Assessment by Augustana University (pg.35-36)

http://www.augie.edu/sites/default/files/sitefiles/AffordableHousingNeedsAssessment2016.pdf

Demographic Characteristics # Low % of #

Moderate % of #

Middle % of #

Upper% of #

NA* % of #

Geographies (Census Tracts) 57 0.0 29.8 49.1 21.1 0.0

Population by Geography 242,731 0.0 27.8 50.7 21.5 0.0

Assessment Area: Sioux Falls MSA

Median Family Incomes

Low <50%

Moderate50% to <80%

Middle80% to <120%

Upper≥120%

2017 ($76,800) <$38,400 $38,400 to <$61,440

$61,440 to <$92,160

≥$92,160

2018 ($78,700) <$39,350 $39,350 to <$62,960

$62,960 to <$94,440

≥$94,440

2019 ($86,200) <$43,100 $43,100 to <$68,960

$68,960 to <$103,440

≥$103,440

Sioux Falls, SD MSA Median Family Income (43620)

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continuing to be built in Sioux Falls; however, the total inventory remained stable because there are a number of units leaving the program and converting to conventional rental housing. There is extremely high demand for subsidized housing in Sioux Falls. As of June 2016, project-based subsidized housing units had a reported vacancy rate of 1.99% and there were 3,150 households waiting for tenant-based rent assistance9.

Table 3 – Demographic Information of the Assessment Area Assessment Area: Sioux Falls MSA

Demographic Characteristics # Low % of #

Moderate % of #

Middle % of #

Upper % of #

NA* % of #

Geographies (Census Tracts) 57 0.0 29.8 49.1 21.1 0.0

Population by Geography 242,731 0.0 27.8 50.7 21.5 0.0

Housing Units by Geography 100,015 0.0 30.6 48.9 20.5 0.0

Owner-Occupied Units by Geography 63,268 0.0 20.0 55.3 24.8 0.0

Occupied Rental Units by Geography 30,682 0.0 51.0 36.5 12.5 0.0

Vacant Units by Geography 6,065 0.0 38.6 45.7 15.7 0.0

Businesses by Geography 23,421 0.0 35.0 39.8 25.2 0.0

Farms by Geography 1,405 0.0 7.1 72.1 20.8 0.0

Family Distribution by Income Level 61,621 19.0 18.1 24.4 38.5 0.0

Household Distribution by Income Level 93,950 22.0 18.1 18.9 41.0 0.0

Median Family Income MSA - 43620 Sioux Falls, SD MSA

$72,948 Median Housing Value $157,049

Median Gross Rent $720

Families Below Poverty Level 7.1%

Source: 2015 ACS Census and 2019 D&B Data Due to rounding, totals may not equal 100.0 (*) The NA category consists of geographies that have not been assigned an income classification.

In June 2020, the following year over year trends were identified for the Sioux Falls area housing market10:

• Mortgage rates close to all-time lows • Pending sales ↑ by 15% • Inventory levels ↓ by 29% • Median sales price ↑ 7% to $219,900

These trends indicate it is a sellers’ market in Sioux Falls. The increase in median sales prices continues to put a strain on the affordable housing inventory, which becomes a barrier to home ownership for LMI households.

C. Economic Outlook and Other Relevant Data Sioux Falls in the largest city in South Dakota and is the main population hub in the Sioux Falls MSA. The top 10 largest employers in the area include: Sanford Health, Avera Health, Smithfield Foods, Hy-Vee Food Stores, Wells Fargo, and Citi11. According to Table 4 below, the top four occupations in terms of number of employees in the MSA all include annual median wages below the annual median wage for all occupations. Employment growth is expected to come from the healthcare industry, which includes occupations that carry high salaries (e.g. healthcare practitioners and technical occupations); however, the industry also includes lower wage support occupations (e.g. personal care /

10 June 2020 Sioux Falls Housing Market Report https://www.sioux-falls-real-estate.com/blog/ 11 2017 Homeless Advisory Boards Annual Report (page 4) https://www.minnehahacounty.org/hab/2017AnnualHAB_Report.pdf

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service, healthcare support occupations). The mix of higher and lower income occupations in the healthcare industry will likely reinforce employment trends.12 Table 4 - Employment by occupation group for the Sioux Falls MSA as of May 2015

According to Forbes13, Sioux Falls ranked #1 in its 2019 list of “The Best Small Places for Business and Careers”. As of 12-31- 2018, Sioux Falls household income growth was 3.5% and the job growth was at 1.6%. The unemployment rate in Sioux Falls was at 2.4%, which compared favorably to the National unemployment rate of 3.9%. These factors are positive for certain segments of the population; however, it should be noted that low income households (less than 50% MFI) represent 12,362 households, or 22% of all households in Sioux Falls.14 Over two-thirds (68%) of employees in Sioux Falls work in an occupation where the median wage falls below 50% MFI for a family of four. 14 These statistics indicate that, although unemployment in Sioux Falls is low, a significant percentage of those employed work in lower wage jobs. The large number of employees at lower wage jobs impacts the communities need for affordable housing solutions.

SECTION IV. NEEDS AND OPPORTUNITIES IN THE ASSESSMENT AREA MetaBank has always taken the approach of evaluating the needs of the AA and then searching/competing for the opportunities to meet those needs. In the development of the CRA Strategic plan, the CRA Team took the lead in conducting the needs assessment. The CRA Team worked with various business lines / departments to evaluate the

12 2016 Affordable housing Needs Assessment by Augustana University (pg.38)

http://www.augie.edu/sites/default/files/sitefiles/AffordableHousingNeedsAssessment2016.pdf 13 Forbes “The Best Small Places for Business and Careers” https://www.forbes.com/places/sd/sioux-falls/#1c74ad606e85 14 2016 Affordable housing Needs Assessment by Augustana University (pg.193) http://www.augie.edu/sites/default/files/sitefiles/AffordableHousingNeedsAssessment2016.pdf

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available opportunities.

A. Needs in the Assessment Area

The needs in the AA were evaluated two ways: 1) Volunteer Service and Community Connections; 2) Community Needs Assessment.

1. Volunteer Service and Community Connections: Historically, MetaBank has performed a significant number of CD Service hours within the Sioux Falls AA (2020 – High level; 2017 – Good level). This performance has demonstrated the bank and its employee’s commitment to volunteer service that helps to meet the needs of LMI individuals and families in the community. Meta employees continue to serve on boards and committees of community service organizations, which gives the bank visibility into the needs and opportunities in the AA. Employees are encouraged to communicate the needs of community service organizations to the Sioux Falls Corporate Donations team, which evaluates those needs and approves financial commitments. The Outreach team (focused on employee volunteerism) coordinates volunteer service projects in the Sioux Falls community and through their community contacts identified the need for volunteer services focused on affordable housing and financial literacy.

2. Community Needs Assessment: Given the development of the CRA Strategic Plan, the bank conducted a needs assessment of the AA. This needs assessment consisted of in-depth meetings between MetaBank’s CRA Officer and five organizations that are integral in identifying and meeting the needs of the community. The meetings consisted of organizations focused on affordable housing, community services, financial literacy, and economic development (Exhibit 2). The needs assessment focused on the following discussion points:

• Organizational mission • Greatest needs within their primary service area • What can banks do to help the organization meet the needs of the community?

Needs Assessment Findings and Conclusions: a. Affordable Housing – Both organizations that focus on affordable housing, noted that affordable housing is

becoming less prevalent in the Sioux Falls area due to the cost increase to build new homes ($275k to $325k) and the increase in rents. It was noted that on average a wage earner must be earning at least $15.15 an hour to afford a two-bedroom apartment in Sioux Falls. These conditions make it difficult for families to graduate from renting to homeownership. Sioux Falls does not currently have a rent to own housing program that could help with the affordable housing needs of the community. The ongoing pandemic has led to the need for payment deferments and utility assistance for families impacted.

When asked what banks can do to help, both organizations noted that continued financial investment in affordable housing (e.g. purchasing affordable housing MBS, buyer education programs) are key to ensuring the needs of the community are supported. It was also noted that, to ensure programming can be sustained, non-profits supporting affordable housing initiatives needed continued financial support to offset additional costs that were incurred due to the pandemic.

b. Community Services – The organization interviewed noted various community needs that have been exacerbated by the pandemic. This included access to childcare, many childcare providers are struggling to adhere to new safety guidelines and there is a shortage of employees to maintain operations. It was noted that protections from evictions / foreclosures and utilities being shut off was winding down and there was a concern of the impact on LMI families. When asked what banks can do to help, the organization noted that long term financial commitments help non-

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profits better plan their budgets and allow them to prepare for unexpected needs in the community. The organization noted that it was also up to non-profits to adapt to the new normal and develop ways to administer their programs while adhering to all safety standards.

c. Financial Literacy – The organization noted that there is still a significant need for financial literacy education in the Sioux Falls area, especially in the lower income area schools. It was noted that in certain households, the children take the financial literacy lessons (e.g. budgeting) and pass those lessons on to their parents. Given the challenges presented by the pandemic, there is uncertainty related to how K-12 education will be delivered in the future. The Sioux Falls School District is asking non-profits to prepare as if they will not have physical access to schools and financial literacy education will need to be re-designed to be delivered virtually.

When asked what banks can do to help, the organization stated that encouraging employees to be flexible to new methods of volunteering would be crucial. The organization also noted that past fundraising efforts would also need to be adapted due to challenges presented by the pandemic and that continued long term financial commitment would allow non-profits to adapt to the changing circumstances more readily.

d. Economic Development – The organization noted that the pandemic has presented challenges to the business community in Sioux Falls, especially the hospitality industry (e.g. hotels, restaurants, events). Many of the small businesses have had to rely on the support of PPP loans and state / local government to stay open. There is thought amongst the business community that if small businesses can survive during the disruption there are opportunities to capitalize as the Sioux Falls economy re-opens and neighboring communities stay closed. The organization was encouraged by the business community to press forward with pre-pandemic initiatives like workforce development and the attraction of growing companies to Sioux Falls. These initiatives will help to attract new residents and train employees to meet growing sectors of the economy (e.g. Tech, Healthcare).

When asked what banks can do to help, the organization stated it was important for banks to work with businesses and individuals using tools like deferrals and PPP loans during the pandemic. The organization also noted that banks should continue to support economic development projects financially and through volunteer service.

B. Opportunities in the Assessment Area

There are three driving factors that impact MetaBank’s opportunities in the AA (Sioux Falls MSA). Those factors include: 1) MetaBank’s Business model; 2) Small Population of the AA; 3) Number and Strength of Banks in the AA. These factors create an extraordinarily competitive environment for CRA qualified activities.

1) MetaBank’s Business Model: After the sale of the Community Bank division in February 2020, MetaBank no longer has branches within the community. Meta focuses lending on its niche Commercial lending products that are largely distributed by third parties nationwide. This business model limits the bank’s ability to generate small business loans and Community Development (CD) loans in the AA. Due to the small population base in the Sioux Falls area, the target market for third-party niche product offerings does not overlap with our main office AA. Given this business model, MetaBank aggressively pursues CD investments in the AA.

2) Small Population: The population of MetaBank’s AA (Sioux Falls MSA) is 242k and the state population is 858k, making it one of the least populous states in the country15. A small population means fewer: federal / state affordable housing subsidies and CD investment opportunities. Existing federal / state programs provide for affordable rental housing for moderate income households making 60-80% of the area’s median family income

15 2015 American Community Survey (ACS) https://data.census.gov/cedsci/table?d=ACS%205-

Year%20Estimates%20Data%20Profiles&table=DP05&tid=ACSDP5Y2015.DP05&g=0400000US46_1600000US4659020

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(MFI); however, there is a gap in programs for those making less than 50% MFI16. The lack of subsidies may be due to the level of revenue generated by the State (e.g. no state income tax) and the minimal allocation of Federal funds due to the state’s population. CD Investment opportunities are often highly correlated to the number of LMI tracts and the percentage of LMI households. Much of the population growth in the Sioux Falls MSA is in the communities surrounding Sioux Falls (e.g. Harrisburg, Tea, Brandon). For example, as of February 2020, the city of Harrisburg’s annual growth rate was at 7% compared to 1.9% for the city of Sioux Falls17. All of the LMI census tracts are located in the middle of the Sioux Falls city limits (Exhibit 3 – AA Map). The additional growth in population within the Sioux Falls MSA is happening in areas on the outskirts or outside of the Sioux Falls city limits, which constrains the CD investment opportunities. 3) Number and Strength of Banks in the AA: Since the 1980’s Sioux Falls has been an attractive location for banks to establish headquarters due to the favorable banking laws and regulations. The FDIC Summary of Deposits report from June 30, 2019 (Exhibit 4 – Sioux Falls MSA Market Share report) demonstrates how competitive the Sioux Falls market is with its mix of National Bank main offices (Citi and Wells Fargo), National Credit Card issuers (First Premier Bank and Department Stores National Bank), and Regional Banks with a heavy concentration of branches in the MSA (Great Western Bank and The First National Bank of Sioux Falls). There are 37 institutions in the market with 141 branches / main offices that contain $673 billion in deposits. A large number of those deposits are from Wells Fargo and Citibank, which identify most of their deposits as non-retail branch deposits. The non-retail branch deposits do not reflect traditional retail customer relationships, rather they are wholesale funds. These deposits do not reflect where customers are located, where they work, or where they conduct business. This is similar to MetaBank’s deposit base, although Wells Fargo and Citibank are much larger institutions than Meta. Wells Fargo and Citibank have a significant impact on the availability of CD Investments in the AA. For example, Wells Fargo was the issuing bank and Citi was one of the underwriters for the July 2020 $99MM South Dakota Housing Development Authority (SDHDA) affordable housing bond. Being an issuer and underwriter for the bond allowed these banks to purchase part of the bond prior to it being made available to other institutions. MetaBank sought a multi-million-dollar allocation of this bond; however, by the time it was made available there was only $250k available to be purchased. This type of competition is also apparent when Meta pursues custom mortgage backed securities (MBS) that include loans to LMI borrowers in the AA. Below (Table 5) is a comparison of MSAs in the Midwest that have similar populations, percentage of LMI tracts, and Median Family Incomes (MFI) to the Sioux Falls MSA. These data points support that there should be similar CD Investment / Lending opportunities in these markets.

Table 5 - MSA Comparison Population, MFI, LMI Tracts

MSA 2019 Estimate1

2019 Median Family Income # LMI Tracts # Total Tracts % LMI Tracts

Sioux Falls 268,232 $86,200 17 59 29% Cedar Rapids IA 273,032 $83,600 16 59 27%

16 2016 Affordable housing Needs Assessment by Augustana University (pg.3)

http://www.augie.edu/sites/default/files/sitefiles/AffordableHousingNeedsAssessment2016.pdf 17 Argus Leader February 2020 https://www.argusleader.com/story/news/business-journal/2020/02/07/harrisburg-growth-south-sioux-falls-schools-homes-development-south-dakota/4678586002/

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Duluth, MN 288,732 $72,700 22 79 28% Fargo ND-MN 246,145 $89,400 9 33 27% 1 Annual Estimates of Resident Population: April 1, 2010 to July 2019: https://www.census.gov/data/tables/time-series/demo/popest/2010s-total-metro-and-micro-statistical-areas.html#par_textimage_1139876276

Below (Table 6) includes the deposit market share data for each MSA. The Sioux Falls MSA has a significantly greater number of branches and deposits in the market than the other MSAs. Even after some of the large national bank deposits are excluded, the Sioux Falls MSA has considerably more deposits than the other MSAs. Given that state / regional banks also have a significant amount of deposits in the MSA, those institutions are also competing for CD opportunities in the MSA.

Table 6 - Banking Environment Deposits Market Share2

MSA

Number of Institutions in Market

Branches in Market

Deposits in Market (000's)

Remove Large National Banks Deposits (000's) Banks Removed

Sioux Falls 37 141 $673,331,450 $11,536,724 Wells Fargo and Citi Cedar Rapids IA 39 102 $6,345,671 $5,664,351 Wells Fargo Duluth, MN 29 92 $4,544,963 $3,397,109 Wells Fargo Fargo ND-MN 29 94 $8,777,825 $8,061,234 Wells Fargo 2 FDIC Deposit Market share: https://www7.fdic.gov/sod/sodMarketBank.asp?barItem=2 Search by MSA, Deposits as of June 30 2019, Market Share (highest to lowest), Choose MSA.

MetaBank’s highest CRA priority has always been – and will continue to be – to demonstrate responsiveness to the needs and opportunities in the AA. The combination of the Sioux Falls MSAs small population and large number of banks completing for the same CD loans / investments has led to the Sioux Falls MSA becoming known as a CRA “hot spot”. This has led to significantly higher pricing on the limited number of CRA qualified activities. In short, the AA and the state of South Dakota do not have enough capacity to absorb the amount of CD loans and investments banks seek to deploy.

SECTION V. PUBLIC PARTICIPATION

A. Informal Public Suggestions

MetaBank has sought informal suggestions and input from members of the public in the Sioux Falls MSA, as required by 12 C.F.R. § 25.27(d)(1). The Bank works with numerous community partners in the development and refinement of its overall strategy to provide responsive investments / donations, loans, and services. Many of those community partners participated in the Bank’s needs assessment discussed above. A common theme among those surveyed was that the local / state government, corporations, and individuals contribute a significant amount of time and money to address the needs of LMI individuals. The gaps tend to be with the low-income individuals in the community. Affordable homeownership and subsidized rental units are extremely difficult to come by for low-income individuals. Given the pandemic, it was noted that the low-income segment of the community seems to have been disproportionately affected due to the types of jobs and community services that have been impacted.

Community organizations urged the bank to adapt to the ever-changing needs of the community by being flexible with loan terms and finding ways to continue supporting the needs of the community. Many non-

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profits fear that volunteerism will decrease given the risks associated with the pandemic. The bank has been encouraged to continue its support of community organizations virtually and help these organizations adapt to the changes presented by the pandemic. Many non-profits noted that the needs of the community may be impacted long term and that it is important that businesses in the community make long term financial commitments to allow for organizations to adapt to the changing needs of the community.

B. Formal Public Comment Solicitation MetaBank will solicit formal public comment on this Strategic Plan for 30 days by publishing notice in at least one newspaper of general circulation in the AA, as required by 12 C.F.R. § 25.27(d)(2). A copy of the Notice and proof of publication is included in Exhibit 5 – Public Notice. MetaBank’s CRA Strategic Plan is available to the public on its website at: www.metabank.com/cra-plan. The public has been provided the bank’s physical address, CRA Officer contact information, and the e-mail address of its CRA department (CRA@Metabank.com) to request a copy of the CRA Strategic Plan. Commenters are directed to provide written comments regarding the Plan to MetaBank’s main office (Attn: Kevin Topolinski) 5501 S. Broadband Ln Sioux Falls, SD 57108 or the e-mail address listed above.

The Bank’s request for comment was published on August 28, 2020, and the 30-day public comment period closes on September 27, 2020. SECTION VI. METABANK CRA STRATEGIC PLAN AND MEASURABLE GOALS MetaBank’s CRA Strategic Plan reflects the Regulatory guidance described in §25.27 Strategic plan18 that is currently in place as of the date of the Plan submission. MetaBank analyzed the new CRA rule Strategic Plan section (§25.18) and incorporated its guidance into the bank’s CRA Strategic Plan. MetaBank’s measurable goals reflect the regulatory flexibility, both in how the goals are expressed and the three performance categories (loans, investments, and services), described in the OCC’s Community Reinvestment Act: Guidelines for Requesting Approval of a Strategic Plan (“OCC Bulletin 2019-39”)19, which provides as follows:

Generally, a bank's strategic plan must address all three performance categories (i.e., lending, investments, and services), with an emphasis on lending and lending-related activities; the strategic plan nevertheless need not specify measurable goals in all three categories if the bank chooses a different emphasis. A focus on one or more performance categories may be appropriate if responsive to the characteristics and credit needs of the bank's assessment area(s), considering public comment and the bank's capacity and constraints, product offerings, and business strategy.

MetaBank has developed three measurable Community Development (CD) goals (Tier I) specific to the AA: Tier I: Community Development Goals: 1) CD Investments / Loans; 2) CD Donations; 3) CD Service Hours The CD Investments / Loans goal demonstrates the bank’s dedication to significant financial commitments to support LMI individuals/ families and small businesses in the AA. The CD Donations goal specific to the AA exhibits the bank’s determination to make high impact donations to non-profits in the community. The CD Service Hours goal for the AA was developed because about half of MetaBank’s employees are located in the AA; therefore, bank staff can significantly contribute to fulfilling the volunteer service needs in the AA.

18 Part 25 Community Reinvestment Act Regulations (https://www.ecfr.gov/cgi-

bin/retrieveECFR?gp=1&SID=415967a14c90b33f47d467b5f7df6e92&ty=HTML&h=L&mc=true&n=pt12.1.25&r=PART#se12.1.25_127) 19 OCC CRA: Guidelines for Requesting Approval of a Strategic Plan https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-39.html

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MetaBank also developed a fourth goal: Tier II: CD Investments / Loans in the Broader Statewide or Regional Area (BSRA) The BSRA for MetaBank was determined by including states in the same Region as South Dakota (West North Central region20). The BSRA includes the following states: South Dakota, Iowa, Minnesota, Nebraska, North Dakota, Kansas, and Missouri. Given the competition for limited opportunities in the AA (as described in Section IV. Needs / Opportunities), having a CD Investments / Loans goal in the BSRA will provide the bank with more opportunities to meet the needs of LMI individuals and small businesses.

A. CRA Strategic Plan Goals

1. Tier I – CD Investments / Loans in the AA The goals reflect a thorough analysis of the needs and opportunities in MetaBank’s AA, the bank’s business model, strategy, past CRA performance, and the CRA performance of peer banks. Business Model: MetaBank’s focus will be on Investments within the “CD Investments / Loans” goal. This focus is due to the bank’s niche Commercial lending products (e.g. Insurance premium financing, Tax business loans, Factoring/ABL, etc.), which constrains the bank from pursuing CD loans in the natural course of business. Strategy: Through its relationships in the community and with national brokers, MetaBank will target a variety of investment types including:

• Affordable Housing – investing in bonds that include loans to LMI individuals and specifically investments that serve low-income individuals and those located in LMI geographies, as these areas have the greatest need in the AA.

• Essential Community Facilities – investments in facilities (e.g. school, library, park, healthcare, etc.) that serve LMI individuals and families or LMI geographies.

• Essential Infrastructure – investments in essential infrastructure (e.g. public roads, bridges, water supply, sewage treatment facilities, etc,.) that serve LMI individuals and families.

• Community Support Services - investments in activities, such as childcare, education, workforce development, health / housing services, and job training programs that serve LMI individuals.

• Economic Development – investments in small businesses (e.g. Community Development Financial Institutions (CDFI), Community Development Entity, etc.) for the primary purposes of job creation / job retention of LMI individuals

• Revitalization Projects – investments in Federal, State, Local, or Tribal government programs, projects, or initiatives that serve LMI individuals / families or revitalize LMI geographies, designated disaster areas, or Native / Tribal lands.

MetaBank Past CRA Performance: In the bank’s prior CRA Performance Evaluation (PE)21 (2017-2018), the bank had investments of $1.5MM ($775k per year) in the Sioux Falls AA. Considering the competition and availability of CD investments in the AA, this performance received an Adequate rating. CRA Performance of Peer Banks: As previously indicated, the competition for CD investments in the AA is strong (See Section IV. Needs and Opportunities). When developing the bank’s goals, we analyzed the banks that impact MetaBank’s ability to obtain CD Investments in the AA (Table 7).

20 Census Regions and Divisions of the US https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf 21 2020 MetaBank CRA Performance Evaluation (page 23) https://www.occ.gov/static/cra/craeval/Jun20/705902.pdf

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Table 7 – Peer Performance / Competition:

Bank Attributes PE Year

Actual Performance Rating

Department Stores

CitiBank Affiliate, Sioux Falls MSA AA, OCC, Strategic Plan

2017 $6MM per year in the AA Outstanding

CitiBank Sioux Falls MSA AA, OCC, Large Bank Standard

2018 $3.2MM per year in the AA Outstanding

Wells Fargo Sioux Falls MSA AA, OCC, Large Bank Standard

2019 $8MM per year in the AA Outstanding

The following should be considered when evaluating the competition for CD Investments in the AA:

• Department Stores goals were largely met by a capital infusion by CitiHousing and grants provided by Citi Foundation.

• Wells Fargo (#3) and CitiBank (#4) rank in the top 5 in the U.S. in terms of Bank Asset size. The size of these banks gives them considerable leverage in seeking CRA qualified investments in the AA. For example, Citi and Wells are involved with the issuance of Mortgage Backed Securities (MBS) and the development of other CRA related investments with the City of Sioux Falls (as noted in Section IV. Needs and Opportunities (B)(3).

MetaBank – Tier I: CD Investments / Lending Goals 2021-2023 Table 8 – Tier I CD Investments / Lending Goals

Plan Year Tier I - AA (Sioux Falls MSA) Satisfactory Outstanding

2021 $2MM $3MM

2022 $2MM $3MM

2023 $4MM $5MM Conclusion The “Satisfactory” goals are all considerably higher than MetaBank’s prior investment performance of $775k per year within the Sioux Falls AA21. Meta’s goals compare favorably to larger institutions in the AA when the size of the banks is considered. It is difficult to predict the availability of CRA qualified investments in the AA and the competition for those investments is extremely high; therefore, the Bank opted for static goals in ’21 and ’22. The 2023 goals were increased as prior period investments (purchased before start of scope period and still outstanding) will be combined with the 2023 results. The bank will continue to pursue CD Investment opportunities at the local level by building relationships in the community, which will assist the bank in gaining access to these highly sought-after investments.

2. Tier I – CD Donations in the AA The goals reflect a thorough analysis of the needs and opportunities in MetaBank’s AA, the bank’s business model, strategy, and past CRA performance. Peer performance was difficult to quantify due to donations / grant activity being combined with investment performance in Large bank examination standards. MetaBank’s

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prior performance was the main driver of the CD Donations goal. Business Model: Given the limited availability and competition for CD investments in the AA, the bank felt it was important to have a separate CD donations goals specific to the AA. MetaBank operates its main office and about half of its total employees reside in the Sioux Falls MSA; therefore, the bank wants to ensure it makes an impact providing financial support for CD activities in the community where its employees live. Strategy: As previously detailed, MetaBank sold its Community bank division in February 2020. This caused a reduction of $300MM in assets as well as the loss of bank employees with strong connections to non-profits in the community. Since the sale of the Community Bank, MetaBank formed a Sioux Falls Corporate Donations team to enhance relationships with non-profits, evaluate, and approve donations. The CRA Officer will be a permeant member of this team. The team will evaluate donations based on a number of factors including if the donation fits with the bank’s financial inclusion platform and if the donation is CRA qualified. The types of donations targeted will be the same as detailed in the Tier 1- CD investments / Loans goal. These donation initiatives will range from small non-profits to local chapters of national non-profits. Meta will look to pair donations with employee volunteer service projects to further connections between bank staff and the community. The financial support for these donations will vary; however, the bank will strive to make a large number of financial commitments to ensure there is broad support for many of the community-based initiatives in the AA. MetaBank Past CRA Performance: In the bank’s prior CRA PE22 covering 2017-2018, the bank made 54 donations totaling $110 thousand (Avg. of $55k per year) to 23 qualified CD organizations. The banks investment / donations performance in the AA received an Adequate rating. MetaBank - CD Donations Goals 2021-2023 Table 9 – Tier I CD Donations Goals

Plan Year

Tier I - AA (Sioux Falls MSA)

Satisfactory Outstanding

2021 $50,000 $60,000

2022 $60,000 $70,000

2023 $70,000 $80,000 Conclusion Even though MetaBank no longer has a community banking presence in Sioux Falls, its donation goals exceed its prior performance in the 2nd and 3rd year of the Plan. The bank’s strategy of forming a Sioux Falls Corporate Donations team will enhance its ability to seek high impact CRA qualified donations and monitor the bank’s performance throughout the CRA Strategic Plan. MetaBank employees will continue their involvement with non-profits to better understand the needs of the community and how the bank can make financial commitments to help the community thrive.

3. Tier I – CD Service Hours in the AA

The goals reflect a thorough analysis of the needs and opportunities in MetaBank’s AA, the bank’s business

22 2020 MetaBank CRA PE (page 23) https://www.occ.gov/static/cra/craeval/Jun20/705902.pdf

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model, strategy, and past CRA performance. Peer performance was difficult to quantify due to CRA PEs not always providing the number of employees in the AA (to determine the # of volunteer hours per employee) and the variance in CD service opportunities between geographic locations. MetaBank’s prior performance was the main driver of the CD Service Hours goal. Business Model: After the sale of the Community Bank division in February 2020, MetaBank no longer has community banking staff. Given the business needs to be engaged in the community, community bank staff were integral to MetaBank’s volunteer efforts. As of May 31, 2020, MetaBank had a total of 496 full time employees (FTEs) or 49% of its total FTEs residing in the AA. Given the number of employees in the AA, the bank has a critical responsibility to encourage employees to volunteer and help facilitate volunteerism within the community. Strategy: The bank has embraced the expanded opportunities for CD service hours that are outlined in the qualifying activities section of the new CRA rule (§25.04). MetaBank will encourage employees to volunteer with service organizations focused on the following:

• Affordable Housing – services to provide affordable rental and owner-occupied housing to LMI individuals and families.

• Essential Community Facilities – services in facilities (e.g. school, library, park, healthcare, etc.) that serve LMI individuals and families or LMI geographies.

• Community Support Services – services to provide activities, such as childcare, education, workforce development, health / housing services, and job training programs that serve LMI individuals and families.

• Financial Literacy - services in financial education or homebuyer counseling programs, which includes LMI individuals and families.

• Essential Infrastructure – services that facilitate the addition / improvement of essential infrastructure (e.g. public roads, bridges, water supply, sewage treatment facilities, etc,.), which benefit LMI individuals and families or LMI geographies.

• Economic Development – services that provide technical assistance and supportive services for businesses that meet the Small Business Investment Company (SBIC) program standards.

• Revitalization Projects – services in Federal, State, Local, or Tribal government programs, projects, or initiatives, which benefit LMI individuals / families or revitalize LMI geographies, designated disaster areas, or Native / Tribal lands.

Through MetaBank’s Community-Involvement Standards, the Management team feels strongly that through volunteerism MetaBank can help create a positive work environment, improve the communities it serves, and continue to develop positive customer relationships. MetaBank encourages volunteerism by honoring all reasonable requests to complete volunteer activities during business hours. Also, MetaBank has a Volunteer Services team (Outreach) that plans employee volunteer events and communicates volunteer opportunities in the Sioux Falls MSA.

MetaBank Past CRA Performance: In the bank’s previous CRA Performance Evaluation (PE)23, the bank had thirty-three employees complete 1,490 CD service hours to fourteen CD organizations. Below (Table 10) is information on the number of hours, number of employees, number of hours per FTE, and corresponding CRA Exam rating. Table 10 – MetaBank Past CD Service Hour Performance

23 2020 MetaBank CRA PE (page 25-26) https://www.occ.gov/static/cra/craeval/Jun20/705902.pdf

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Calendar Year # of Hours1

# of Employees

# of Hours per Employee per year

CRA Exam Rating

2017 1490 688 1.08 High

2018

2019 566 568 1.00 Not yet examined

1 The last CRA exam included the 2017-18 Scope period.

MetaBank - CD Service Hour Goals 2021-2023 Table 11 – Tier I CD Service Hours Goals

Calendar Year # of Hours1 # of Employees

2 CRA Exam Rating

Goals - # of Hours per FTE per year

3 2021-23

496 496 Satisfactory 1 620 496 Outstanding 1.25

Notes: 1 2021-23 hours are for illustrative purposes only. The goal will be the # of hours per FTE per year.

2 The number of employees is for illustrative purposes only. The goal will be based on the FTEs in the Sioux Falls MSA at the end of the prior calendar year (ex. 2021

goal based on FTEs as of 12-31-20). 3 The goals consider the new rules for CRA qualifying activities that are effective as of 10-1-20.

Conclusion The “Satisfactory” goals are aligned with MetaBank’s past CD Service Hour performance. The “Outstanding” goals exceed the prior period performance by about twenty percent. It should be noted that due to the pandemic which started in February 2020 the availability of volunteer opportunities has decreased and currently the bank is not sponsoring team-based volunteer activities. All of these factors impacted the goals that were developed. The bank will continue to promote volunteerism and strive to be a leader in volunteer services within the AA.

4. Tier II – CD Investments / Loans in the Broader State Regional Area (BSRA)

As previously indicated, due to competition and limited opportunities in the AA the bank has included a secondary CD Investments / Loans goal (Tier II). This goal is based on CD activities in MetaBank’s BSRA (West North Central region24), which includes South Dakota, Iowa, Minnesota, Nebraska, North Dakota, Kansas, and Missouri. The goals below reflect a thorough analysis of the bank’s business model, strategy, past CRA performance, and the CRA performance of peer banks. Business Model: MetaBank’s focus will be on Investments within the “CD Investments / Loans” goal. This focus is due to the bank’s niche Commercial lending products (e.g. Insurance premium financing, Tax business loans,

24 Census Regions and Divisions of the US https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf

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Factoring/ABL, etc.), which hinders the banks pursuit of CD loans in the natural course of business. The bank will pursue CD lending opportunities in the BSRA through its Crestmark business unit. Strategy: Through its relationships with state housing financial agencies, national brokers, and national community service organizations, MetaBank will target a variety of investment types in the BSRA including:

• Affordable Housing – investing in bonds that include loans to LMI individuals and specifically investments that serve low-income individuals, those located in LMI geographies, and LMI individuals located in distressed/underserved census tracts.

• Essential Community Facilities – investments in facilities (e.g. school, library, park, healthcare, etc.) that serve LMI individuals and families.

• Essential Infrastructure – investments in essential infrastructure (e.g. public roads, bridges, water supply, sewage treatment facilities, etc,.) that serve LMI individuals and families.

• Community Support Services - investments in activities, such as childcare, education, workforce development, health / housing services, and job training programs that serve LMI individuals.

• Economic Development – investments in small businesses (e.g. Community Development Financial Institutions (CDFI), Community Development Entity, etc.) for the primary purposes of job creation / job retention of LMI individuals

• Revitalization Projects – investments in Federal, State, Local, or Tribal government programs, projects, or initiatives that serve LMI individuals / families or revitalize LMI geographies, designated disaster areas, or Native / Tribal lands.

MetaBank Past CRA Performance: In the bank’s previous CRA PE (2017-2018)25, the bank had investments of $93.9 MM in the BSRA or 9.2% of Tier One Capital per year (See Table 12). The performance in the BSRA led to an overall Outstanding rating in the Investment test. There was a large concentration of investments targeted at providing funding for home loans to LMI individuals in the regional area. The bank also made a $2MM investment to provide funding for a newly formed CDFI in the state of South Dakota, which at the time the fund was established was the only CDFI venture fund operating in the state, making it a highly innovative and impactful investment.

Table 12 – Prior CRA Performance in BSRA

MetaBank 2017-2018 CRA Performance - Investments

State / Region1 Investments (000's) Rating 2020 MetaBank CRA PE

SD / BSRA $89,100 Strong Page 23 Central IA AA $1,500 Excellent Page 39 IA $3,300 Excellent Page 40

Total $93,900 Outstanding Page 22

Tier one capital (12-31-18) $508,400

Investments % of Tier one capital (per year) 9.2% 1 The past CRA performance in the Sioux Falls AA was excluded as it was considered in the Tier I - CD Investments / Loans goal.

CRA Performance of Peer Banks: When identifying peer banks, Meta chose to focus on bank’s with similar business models, those evaluated under a CRA Strategic Plan (if possible), and with similar asset sizes (Table

25 2020 MetaBank CRA Performance Evaluation (page 23) https://www.occ.gov/static/cra/craeval/Jun20/705902.pdf

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13). It should be noted, peer banks actual performance and the ratings of those performances varied. Table 13 – Peer Performance Tier II - CD Investments / Lending

Bank Attributes Performance Evaluation Year

Goals Actual Performance Rating

Axos Bank

Competitor, $10Bn in assets, nationwide footprint, OCC, Large Bank

2019 NA - not required under Large Bank

2.2% Tier One Capital per year

Low Satisfactory

BMW Bank

Similar Asset Size ($9Bn), nationwide footprint, FDIC, Strategic Plan

2017

Plan 1 (2015): $27.5MM (Sat.) to $42.5MM (Outstanding) Plan 2 (2016-2017): $31.5MM (Sat.) to $46.5MM (Outstanding).

Plan 1: $35.6MM Plan 2: $92.5MM 2.7% Tier One Capital per year

Satisfactory

Bancorp Bank

Competitor, $4Bn in assets, Combined loans and investments goal, FDIC, Strategic Plan

2019 9% (Satisfactory) to 12% (Outstanding) of Tier One Capital

10% of Tier One Capital per year Satisfactory

MetaBank - Tier II - CD Investments / Lending Goals 2021-2023 Table 14 – Tier II CD Investments / Lending Goals

Plan Year

Tier II – CD Investments / Lending (BSRA)

Date of Tier One Capital*

Bank Established Goals Satisfactory (% Tier One Capital)

Outstanding (% Tier One Capital)

2021 12/31/2020 8% 10% 2022 12/31/2021 8% 10% 2023 12/31/2022 11% 13%

*The actual performance will be compared to the % of Tier One Capital at the end of the prior year.

Conclusion If the bank exceeds its Tier I (AA) CD Investments / Lending goal for Outstanding performance in a particular year, the excess dollar amount will roll into the Tier II (BSRA) actual performance. This will encourage the bank to continue its pursuit of CD activities in the AA, even after it has achieved an Outstanding rating. For the Tier II goals, the 2021 & ‘22 goals for Outstanding performance are higher than the actual performance in the prior MetaBank CRA PE (9% - See Table 12), which received an Outstanding rating. The 2023 goals were increased as prior period investments (purchased before start of scope period and still outstanding) will be combined with the 2023 results. The goals are scalable and will adjust based on the Tier One Capital at the end of each calendar year. This will ensure that the bank’s goals are aligned with the size of the bank.

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B. Alternate Evaluation Method

MetaBank is committed, at the very minimum, to meeting this Strategic Plan’s measurable goals for a “Satisfactory” rating. However, as provided for in 12 C.F.R.§ 25.27(f)(4) if the Bank does not “meet substantially its plan goals for a satisfactory rating,” MetaBank may elect to be evaluated under the Lending, Investment and Service tests for Large Banks.

SECTION VII. REQUEST FOR APPROVAL AND CONTACT INFORMATION

A. Regulatory Criteria for Approval

MetaBank submits that it has fulfilled all of the regulatory requirements for CRA strategic plans, including those governing development of the plan, public participation in the plan, and the plan’s measurable goals. The bank’s measurable goals met the requirements of the CRA performance context (12 C.F.R. § 25.21(b)(1) – (7)). The extent and breadth of MetaBank’s Tier I and Tier II measurable goals met these requirements in a number of ways, including the goals being at or above MetaBank’s past performance and the performance of its peers. MetaBank will continue to seek out and create new CD investment, donation, and service opportunities that will benefit the AA and the BSRA.

B. Request for Approval of MetaBank CRA Strategic Plan 2021-2023

For the reasons described above, MetaBank respectfully requests OCC approval of the 2021-2023 CRA Strategic Plan, prior to January 1, 2021.

Questions regarding this Strategic Plan may be directed to the following:

Kevin Topolinski Community Reinvestment Act Officer

MetaBank 5501 S. Broadband Ln. Sioux Falls, SD 57108

Phone: (605) 362-2426 Email: Ktopolinski@metabank.com

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Exhibits

Exhibit 1: Map of Sioux Falls MSA

Exhibit 2: Assessment Area Needs Assessment Participants

Exhibit 3: Assessment Area map with demographic information

Exhibit 4: Sioux Falls MSA Market Share Report June 30, 2019

Exhibit 5: Public Notice and Proof of Publication

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Exhibit 1: Map of Sioux Falls MSA

Exhibit 2: Assessment Area Needs Assessment Participants

Organization CD Service Sioux Empire Housing Partnership Affordable Housing South Dakota Housing Development Authority Affordable Housing Sioux Empire United Way Community Services Junior Achievement of South Dakota Financial Literacy Forward Sioux Falls Economic Development

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Exhibit 3: Assessment Area map with demographic information

Sioux Falls MSA Census Tracts by County

Minnehaha County Census 0001.00 0002.01 0002.02 0003.00 0004.01 0004.05 0004.06 00004.07 0004.08 0005.00

0006.00 0007.00 0009.00 0010.01 0010.02 0011.01 0011.05 0011.06 0011.07 0011.08 0012.00 0015.00 0016.00 0017.00 0018.01 0018.03 0018.04 0019.01 0019.02 0101.01 0101.02 0102.00 0103.00 0104.01 0104.02 0104.03 0104.04 0104.05 0104.06 0105.01 0105.02 0106.00

Lincoln County Census Tracts

0101.01 0101.02 0101.03 0101.04 0101.05 0101.06 0101.07 0101.08 0102.00 0103.00

0104.00

McCook County Census 9646.00 9647.00 9999.99

McCook County Census 9651.00 9652.00 9999.99

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Exhibit 4: Sioux Falls MSA Deposit Market Share Report

27

Exhibit 5: Public Notice and Proof of Publication

MetaBank solicited formal public comment on this CRA Strategic Plan by publishing notice in at least one newspaper of general circulation in the Bank’s AA, as required by 12 C.F.R. § 25.27(d)(2). This notice was published on August 28, 2020, in the Argus Leader newspaper, which is in general circulation in the Bank’s assessment area. The public comment period expires on September 27, 2020. See the Public Notice and Proof of publication below. A. Public Notice

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B. Proof of Publication