Green Dot (GDOT) $160mm IPO at price range mid-point of $33.5

Scheduled for Thursday, July 22

BUSINESS

General Purpose Reloadable (GPR) prepaid debit cards

SUMMARY

. Priced at 38x adjusted earnings, annualizing the March quarter, see financials below . Priced at 26x unadjusted earnings, annualizing the March quarter . Notice that GDOT’s P/E at price range mid-point is considerable higher than Visa and Higher One, based on adjusted earnings, see financials at end of report

COMPARE & CONTRAST
VALUATION RATIOS	IPO Mrkt	Price /	Price /	Price /	Price /
annualizing adj March qtr	Cap (mm)	Sales	Earnings	BookValue	TangibleBV
Green Dot (adj, see below)	$1,353	3.6	38	15.7	15.7
Green Dot (not adj)	$1,353	3.6	26	15.7	15.7
VISA (V)	$63,220	8.1	22	2.6	21.2
Higher One (ONE)	$792	5.3	24	43.3	-44.7

Competitor NetSpend filed for an up to $200mm IPO Thursday, July 15, see sales/profits comparison with GDOT below. . NetSpend said it had about 2.1 million cards active as of March 31, while Green Dot said it had 3.4 million active cards in its portfolio. As of March 31, 2010 NetSpend had 450 retail distributors at over 38,000 locations and offered cardholders the ability to reload funds onto their cards at over 114,000 locations. . GDOT offer reload services nationwide at approximately 50,000 retail store locations, which in general have higher traffic than NetSpend’s locations.

. 100% of offering to selling shareholders, sometimes that’s a warning sign . Customer concentration -- Walmart is the gorilla customer accounting for 63% of revenue, with a co-branded program that continues until 2015 . Walmart’s newly negotiated sales commission jumped to 22% from 5-7.9% . Next contract negotiation risk -- at the next contract negotiation Walmart will consider taking over the business, perhaps by buying a competitor, or may negotiate a higher sales commission. . All expenses categories increasing as % of revenue. Sales & marketing is a special case, see below . Sales & marketing expenses should increase by an estimated 9% of revenue based on recent contract renegotiation with Walmart. . GDOT "expects that this change will negatively affect on sales and marketing expenses, net income and net income per share through at least 2011" . Expect competitors who are not vertically integrated like GDOT to fully integrate as the business segment matures over time, which could exert downward pressure on margins

OVERVIEW

. The leading provider of general purpose reloadable prepaid debit cards in the United States . Sells cards and offers reload services nationwide at 50,000 retail stores, which provide consumers convenient access to products and services. . Proprietary technology platform, Green PlaNET, enables real-time transactions in a secure environment. . According to a Scarborough Research survey, which was conducted between August 2008 and September 2009, at least 93% of U.S. adult respondents had shopped at one or more of the stores of GDOT’s current retail distributors within the prior twelve months.

INDUSTRY OVERVIEW

. According to Mercator Advisory Group’s "Prepaid Market Forecast 2009 to 2012" research report, $8.7 billion was loaded onto GPR cards in the United States in 2008 and $118.5 billion is expected to be loaded onto GPR cards in the United States in 2012, reflecting a 92% compound annual growth rate during that four-year period.

GDOT believes it has first mover advantage

. The prepaid financial services industry is fragmented and its products are relatively early in their life cycles. . Vendors generally do not have a broad set of product and service offerings or capabilities, and no single vendor currently provides all of the elements that are necessary to establish and operate a GPR card program. . GDOT believes this creates a significant opportunity for a vertically-integrated provider with a broad suite of innovative products and services.

CUSTOMER CONCENTRATION RISK

Has significant with retail chains, including Walmart, Walgreens, CVS, Rite Aid, 7-Eleven, Kroger, K-Mart, Meijer and Radio Shack. These retail chains provide consumers with convenient locations to purchase and reload GDOT’s cards

Operating revenues derived from sales at Walmart and the other three largest retail distributors represented 63%, 8%, 7% and 5% (83% total), respectively, of total operating revenues during the three months ended March 31, 2010

RECENT DEVELOPMENTS

In May 2010, extended the term of a commercial agreement (where GDOT was the exclusive provider of GPR cards sold in Walmart stores since Walmart initiated its Walmart MoneyCard program in 2007) with Walmart and GE Money Bank, the card issuing bank for this program -- to May 2015 and the parties agreed to various other changes to the terms of their commercial arrangement.

Commissions to Walmart shoot up to 22% from 5-7.9%

. In particular, the sales commission percentages that GDOT pays to Walmart for the Walmart MoneyCard program increased significantly to an estimated 22%, or a level approximately equal to what they had been during the three months ended December 31, 2008… . from the level in place during the fifteen months ended April 30, 2010, which ranged from 5.0% to 7.9% in the calendar quarters that ended within that period. . Expects that this change will negatively affect on sales and marketing expenses, net income and net income per share through at least 2011. In future periods, GDOT believes that, if the volume of the products sold in Walmart stores grows as GDOT’s expects it will under the new arrangement, the increased sales volumes will more than offset the margin impact of the sales commission percentage

Stock issued to Walmart creates income statement uncertainty

In connection with the above commercial transaction, GDOT issued to Walmart 2,208,552 shares of Class A common stock, or approximately 36.5% of outstanding Class A common stock and 5.5% of our total outstanding Class A and Class B common stock, in each case after giving effect to this offering. These shares will represent less than 1% of the combined voting power of our outstanding Class A and Class B common stock after this offering. They also are subject to our right to repurchase them at $0.01 per share upon termination of our commercial agreement with Walmart and GE Money Bank other than a termination arising out of our knowing, intentional and material breach of the agreement. . GDOTs right to repurchase the shares lapses with respect to 36,810 shares per month over the 60-month term of the commercial agreement. This aspect of the equity issuance to Walmart may result in significant fluctuations in our monthly operating revenues, net income and net income per share, as we will recognize each month over the 60-month term the fair value of the 36,810 shares for which our right to repurchase has lapsed using the then-current fair market value of our Class A common stock and will record the fair value recognized as stock-based retailer incentive compensation, a contra-revenue component of our total operating revenues.

GROWTH PLAN INCLUDES ACQUIRING A BANK

. In February 2010, GDOT entered into a definitive agreement to acquire Utah-based Bonneville Bancorp, a bank holding company, and its subsidiary commercial bank, Bonneville Bank, for an aggregate cash purchase price of approximately $15.7 million, and filed applications with the appropriate federal and state regulators seeking approvals for this transaction. . GDOT currently expects to complete this acquisition in the third quarter of calendar 2010.

SEQUENTIAL MILESTONES

2001 to 2005

. In 2001, sold first General Purpose Reloadable (GPR) debit card at a Rite Aid store in Virginia. . Between 2001 and 2004, concentrated on increasing our distribution capacity and established distribution agreements with CVS, The Pantry Stores (Kangaroo Express) and Radio Shack, among others. . In 2004, launched the Green Dot Network, which allowed cardholders to reload funds onto their cards at any of GDOT’s retail distributors’ locations regardless of where their cards were initially purchased. For example, this allowed cards purchased at Rite Aid stores to be reloaded at CVS stores. . Also began to market the Green Dot Network to providers of third-party prepaid card programs, which enabled their cardholders to reload funds onto their cards through GDOT’s Green Dot Network. . In 2005, continued to expand distribution capacity by establishing a distribution relationship with Walgreens.

Website: in May 2007, began marketing and distributing Green Dot-branded cards through GDOT’s website.

2006 to July 2010

Walmart

. In October 2006, entered into agreements with Walmart and GE Money Bank to manage a co-branded GPR card program for Walmart and to provide reload network services at Walmart stores through the Green Dot Network. . After an extensive product design and pilot period, launched the Walmart MoneyCard program in approximately 2,500, or 70%, of Walmart’s U.S. stores in July 2007. . In October 2007, launched a Visa-branded non-reloadable gift card program at most of these stores. . By March 31, 2010, offered the Walmart MoneyCard in more than 3,600, or 97%, of Walmart’s U.S. stores. Since its inception, the Walmart MoneyCard program has been highly successful, contributing significantly to the increase in total operating revenues.

Walmart commission changes

. To enhance the value proposition to cardholders, in February 2009, significant pricing changes were made to the Walmart MoneyCard program. The new card fee, monthly maintenance fee and point-of-sale, or POS, swipe reload fee for Walmart MoneyCards at Walmart stores were each lowered to $3.00 from $8.94, $4.94 and $4.64, respectively. . In addition, the sales commission percentage that to Walmart was significantly reduced in order to offset lost revenue resulting from these substantial fee reductions. Revenues from Walmart have increased significantly in response to these pricing changes, as substantial increases in volumes more than offset the revenue impact of the lower fees.

Re-launch

. In July 2009, re-launched the Green Dot-branded GPR card with new packaging, features and pricing. . The innovative new package contains a temporary prepaid card, for the first time visible to the consumer through the packaging, that can be used immediately upon activation. New card features include free online bill payment services and a fee-free ATM network with approximately 17,000 participating ATMs. . Reduced the new card fee from $9.95 to $4.95. We raised the monthly maintenance fee from $4.95 to $5.95, and at the same time instituted maintenance fee waivers for months in which cardholders either load $1,000 or more onto their cards or make at least 30 purchase transactions in order to encourage increased card usage and cardholder retention. . The re-launch of the Green Dot-branded GPR card generated significant increases in volume that more than offset the revenue impact of the lower new card fee.

Further distribution capacity expansion

September 2009 – July 2010

. In September 2009, further expanded distribution capacity by entering into a distribution agreement with 7-Eleven. . Also, in September 2009, PayPal became a new acceptance member in the Green Dot Network, allowing PayPal customers to add funds to a new or existing PayPal account using our MoneyPak product. These funds can be used immediately by account holders unlike funds loaded to PayPal accounts from a bank account, which may not be available for several days. GDOT believes PayPal’s customers have begun recognizing the value of GDOT’s offerings, but to date GDOT has not generated significant operating revenues from the relationship with PayPal. . In October 2009, further expanded distribution capacity by entering into a joint marketing and referral agreement with Intuit Inc. In January 2010, Intuit integrated into its TurboTax software an option that allows its customers to receive their tax refunds via direct deposit to a Green Dot co-branded GPR card, called a TurboTax Refund Card, that we manage.

. In July 2010, further expanded distribution capacity by entering into a distribution agreement with Circle K.

COMPETITION

Prepaid Card Issuance and Program Management

Primary competitors in the prepaid card issuance and program management market are traditional credit, debit and prepaid card account issuers and prepaid card program managers like First Data, Netspend, AccountNow, PreCash, Rush Card, Western Union and MoneyGram. . Green-Dot branded cards also compete withco-branded GPR cards, such as the Walmart MoneyCard.

Reload Networks

. Primary competitors in the reload services market are: Visa, MasterCard, Western Union, MoneyGram, Blackhawk and Netspend. . Visa and MasterCard each have broad brand recognition and a large base of merchant acquiring and card issuing banks. Western Union, MoneyGram, Blackhawk and Netspend each have a national network of retail and/or agent locations. . In addition, GDOT competes for consumers and billers with financial institutions that provide their retail customers with billing, payment and funds transfer services.

Prepaid Card Distribution

. Primary competitors in the prepaid card distribution market are: InComm, Blackhawk, First Data, Netspend and AccountNow. . In addition, faces potential competition from Western Union, MoneyGram and a number of retail banks if they enter this market

INTELLECTUAL PROPERTY

. Relies on a combination of trademark and copyright laws and trade secret protection in the United States, as well as confidentiality procedures and contractual provisions, to protect the intellectual property rights related to our products and services.

. Owns several trademarks, including Green Dot, MoneyPak and the Green Dot logo. . Has one patent application under consideration in the United States related to the retail packaging of our cards.

USE OF PROCEEDS

100% to selling shareholders

 

Green Dot (GDOT)	GCOT, C+, 7					Post-IPO shares: 40.7mm
Reloadable debit cards	July 31 fiscal -- after Dec 31, 2009 fiscal changed to calendar, see qtrs below
Monrovia CA		2007	2008	2009		IPO Mkt
Operating Revenue ($mm)		$84	$168	$235		Cap (mm)
Processing expense % of rev		12%	13%	14%		$1,363
Sales & Marketing % of rev		46%	41%	32%		@$33.5
Compensation & benefits %		12%	13%	14%
Other G & A expense %		16%	1%	10%
After tax income ($mm)		$5	$17	$37
After tax income % of rev		5%	10%	16%
Quarterly performance	Dec 08	March 09	June 09	Sept 09	Dec 09	March 10
Operating Revenue ($mm)	$55	$61	$63	$65	$70	$93
Processing expense % of rev	13%	13%	15%	15%	16%	16%
Sales & Marketing % of rev	37%	33%	24%	26%	28%	28%
Compensation & benefits %	13%	13%	15%	15%	16%	16%
Other G A expense %	11%	9%	10%	12%	13%	13%
Pretax income						$24
Income tax rate						47%
After tax income ($mm)	$7.0	$11.0	$12.5	$10.5	$6.9	$12.8
After tax income % of rev	13%	18%	20%	16%	10%	14%
Adjusted after-tax income						$8.8
Adjusted after-tax income %						9.5%
Adjustments: in the Dec 2008 quarter GDTO was paying Walmat 22% commission, which dropped to 5-7.9% for
later quarters, and was racheted back up to 22% in May, 2010
Comparing sales & marketing expenses for the Dec 2008 quarter with the March 2010 quarter, notice 9% difference
Apply the 9% difference to March qtr earnings and notice that aftertax income drops to $$8.8
After tas profit margin is then 9.5%, which is annualized and used in the valuation below
Competitor NetSpend filed for an IPO Thursday, July 15
EBIDTDA comparisons			July 31 fiscal for GDOT		3 mos
EBITDA comparisons		2007	2008	2009	March 10
GDOT Revenue		$84	$168	$235	$93
GDOT EBITDA		$5	$35	$71	$27
GDOT EBITDA % of rev		6%	21%	30%	29%
Price / annualized EBITDA multiple					12
		Calendar year for Netspend			3 mos
		2007	2008	2009	March 10
NetSpend rev		$129	$184	$225	$70
NetSpend EBIDTA		$31	$37	$40	$17
NetSPend EBIDTA % of rev		24%	20%	18%	24%
NetSpend -- quarterly	Dec 08	March 09	June 09	Sept 09	Dec 09	March 10
Revenue	$49	$55	$55	$56	$59	$70
After tax profits ($mm)	-$24.0	$3.6	$7.5	$3.6	$3.5	$4.6
After tax profit margin	-49%	7%	14%	6%	6%	7%
COMPARE & CONTRAST
VALUATION RATIOS	IPO Mrkt	Price /	Price /	Price /	Price /
annualizing adj March qtr	Cap (mm)	Sales	Earnings	BookValue	TangibleBV
Green Dot (adj, see above)	$1,363	3.7	39	15.8	15.8
Green Dot (not adj)	$1,363	3.7	27	15.8	15.8
VISA (V)	$63,220	8.1	22	2.6	21.2
Higher One (ONE)	$792	5.3	24	43.3	-44.7
VALUATION RATIOS
	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
annualizing adj March qtr	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
Green Dot	$1,363	3.7	39	15.8	15.8	10%
Green Dot (not adj)	$1,363	3.7	27	15.8	15.8
Price/Ebidta (not adj)
(annualized March qtr	----------------------------------------------------------------->					12
Potential NetSpend valuations
NetSpend-annualizing Mrch qtr*
*using GDOT's adj P/E	$699	1.9	38	8.1	8.1
**with GDOT's unadj P/E	$478	1.3	26	5.5	5.5
Price/Ebitda, GDOT's multiple	$mm---------------------------------------------------------->					$816
SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	2	2	1	7