Green Dot reported strong earnings growth in the first quarter, thanks to improved returns from its flagship prepaid card business and growth in its tax refund processing unit.

The Pasadena, Calif.-based company generated net income of $40.8 million, up 24% from the same period a year earlier. Operating revenue rose to $253 million, an 11% increase.

Green Dot CEO Steve Streit
Survivor
Green Dot CEO Steve Streit, who dodged a shareholder challenge last year, says the company's turnaround efforts began to pay off in the first quarter.

Green Dot's quarterly results were helped by its acquisition of UniRush LLC, which offered competing prepaid cards. That deal closed in February.

Green Dot processed 8.6 million tax refunds during the first quarter, up from 8.18 million during the same period last year. The firm’s earnings tend to fluctuate seasonally because its tax refund processing unit does the large majority of its business during the first quarter.

The company said that it had 5.05 million active prepaid cards at the end of the quarter, up by 300,000 from a year earlier. It marked the first time since the second quarter of 2015 that the number of active cards rose.

Meanwhile, operating expenses rose by 10% to $191.6 million, in part because of higher spending on sales and marketing.

Green Dot has been working to overcome a setback it suffered in 2015, when its popular MoneyPak product was discontinued due to concerns that it was vulnerable to exploitation by fraudsters.

“Our hard work and vision to build Green Dot into one of the country’s premier financial technology platforms is coming together and paying off,” CEO Steve Streit said Tuesday in a press release.

Last year, Streit barely survived a challenge from the company’s largest shareholder, a hedge fund that was seeking to oust him from Green Dot’s board.

The two parties have since buried the hatchet. In March, a representative of the hedge fund that led the fight against Streit was named an adviser to Green Dot’s board.

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Kevin Wack

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.