Slide 1: Quarterly Investor Update
Quarterly Investor Update T H I R D Q UA R T E R FISCAL YEAR 2023 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This investor update contains “forward-looking statements” which are made in good faith by Pathward Financial, Inc.TM (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statemen
Slide 3: Q3 FY 2023 Highlights
Q3 FY 2023 $45.1 M IL L IO N IN N E T IN C O M E Highlights $1.68 IN D ILU T E D E AR N IN GS PE R S HAR E G ROW TH IN B OT H N E T IN T E RE ST IN C O M E AN D N O N - IN T E R EST IN C O M E AS C O M PARED TO Q 3 F Y 2022 N E T IN T E R EST M ARG IN ( “ N IM ” ) O F 6.18% ; AD J U ST ED N IM 1 O F
Slide 4: Commercial Finance Portfolio Diversification Delivers Growth
Commercial Finance Portfolio Diversification Delivers Growth • History of delivering proven solutions to businesses • Significant growth in insurance premium financing • Expansion in term lending and SBA/USDA lending 4 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 5: Delivering on Deposit Stability Through BaaS Partnerships
Delivering on Deposit Stability Through BaaS Partnerships • Teamed up with existing partners to expand offerings • Noninterest-bearing deposits have a weighted average life of over 6 years based on decay study • Announced new partnership with Finix to support launch as a payments processor 5 Pathwar
Slide 6: Results Driven by NIM Expansion and Growth in Noninterest Income
Results Driven by NIM Expansion and Growth in Noninterest Income ($ in millions, except per share data) Net Interest Income Noninterest Income Noninterest Expenses +35% +25% +19% $97.5 $67.7 $114.6 $54.0 $96.7 $72.2 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Net Income Attributable to Parent Ea
Slide 7: Total Deposits Remain Strong
Total Deposits Total Managed Deposits Remain Strong Period ending ($ in millions) 2% $6,929.5 $7,087.9 Ave r ag e o f f b al an ce s h e et $780.9 d e p o s i ts o f $1.18 b i l l i o n , $781 $1,218.7 m i l l i o n at q u ar te r e n d L i n ke d q u ar te r tot al d e p o s i ts i m p acte d b
Slide 8: Total Loans and Leases Increased from Q3 2022
Total Loans and Leases Increased Total Loans and Leases Period ending ($ in millions) from Q3 2022 10% G row t h p r i m ar i ly d r i ve n by $4,068.5 In s u r an ce Pre miu m Fi n an ce, Te r m Le n d i n g an d S B A/ USDA $3,683.5 C re d i t q u al i t y re m ai n s s t ro n g N o n p e rf
Slide 9: Strong Balance Sheet Allows for Return to Shareholders
Strong Balance Sheet Allows for Return to Shareholders ($ in millions) Liquidity Sources Share Repurchases 2,316,814 $625 $515 $234 $124 $744 490,120 $781 Q3 2023 YTD 2023 Off Balance Sheet Deposits1 FHLB Borrowing Capacity Cash and Cash Equivalents Fed Discount Window Funds Number of Shares Repurch
Slide 10: Increasing Fiscal Year 2023 Earnings Guidance and Introducing Fiscal Year 2024 Guidance
Increasing Fiscal Year 2023 Earnings Guidance and Introducing Fiscal Year 2024 Guidance1 FY 2023 Guidance FY 2024 Guidance Diluted earnings per share - GAAP $5.60 - $6.00 Diluted earnings per share - GAAP $6.10 - $6.60 Less: Net FY2023 Q1 extraordinary items, net of tax2 $0.15 Diluted earnings per s
Slide 11: Q&A
Q&A 11 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 12: Investment Highlights
Investment 1 Record of strong earnings growth and profitability above banking industry averages Highlights Excess capital generating business enables 2 ongoing return of value to shareholders Experienced leader in fast-growing Banking 3 as a Service (BaaS) sector, with diversified portfolio of high-
Slide 13: Record of Strong Earnings Growth and Profitability
Record of Strong Earnings Growth and Profitability1 Return on Average Assets2 Return on Average Tangible Equity2 ROAA inclusive of one-time items ROATE inclusive of one-time items 50.82% 2.46% 2.20% 1.88% 35.42% 1.74% 1.55% 28.66% 30.25% 1.45% 1.12% 22.34% 21.87% 16.78% 2018 2019 2020 2021 2022 YTD2
Slide 14: Return of Capital to Shareholders
Return of Capital Track Record of Strong Earnings Growth and to Shareholders Right-Sized Balance Sheet Enables Ongoing Return of Capital Capital Returned to Shareholders HI G HL I G HT S Pathward’s track record of profitability, combined with its commitment to maintaining the size of its balance she
Slide 15: Continued Progress on Key Strategic Initiatives
Continued Progress on Key Strategic Initiatives O P T IM IZE IN T E R E ST-E ARNIN G O P T IM IZE D E P OSIT M IX , TO TARG ET O F 2X O PE R ATING P O R TFOL IO, TO E M PHASIZE M AIN TAIN A STAB LE L E V E R AG E HIG HE R -R ET URN AS SE TS D E P OSIT B AS E • Improved yield on earning assets to 6.3
Slide 16: Summary Financial Results
Summary Financial Results Third Quar ter Ended June 30, 2023 INCOME STATEMENT For the quarter ended For the nine months ended ($ in thousands, except per share data) 3Q22 2Q23 3Q23 2022 2023 Net interest income 72,151 101,406 97,465 227,564 282,927 Provision for credit losses (1,302) 36,763 1,773 31
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights Third Quar ter Ended June 30, 2023 BALANCE SHEET PERIOD ENDING ($ in thousands) 3Q22 2Q23 3Q23 Cash and cash equivalents 157,260 432,598 515,271 Investments 2,000,400 1,864,276 1,951,996 Loans held for sale 67,571 24,780 87,351 Loans and leases (HFI) 3,688,566 3,725,616 4,07
Slide 18: 2023 Tax Season Update
2023 Tax Season Update Refund advances (“RAs”) and refund transfers (“RTs”) leverage Banking as a Service (“BaaS”) infrastructure and are core to Pathward’s purpose, allowing consumers quicker access to their money. • Total pre-tax net income for the nine months ended June 30, 2023, was down compare
Slide 19: Deposits
Deposits Deposit Breakdown Noninterest Bearing 96.4% Deposits Interest Bearing Non- HI G HL I G HT S Time Deposits Pathward’s BaaS business generates fee income and Time Deposits stable deposits leading to high levels of noninterest- 3.5% bearing deposits (96% of total deposits). 0.1% The BaaS busin
Slide 20: Cost of Deposits
Cost of Cost of Deposits Deposits 4.99% HI G HL I G HT S Pathward is benefiting from the deposit optimization strategy that included transitioning away from higher cost interest- bearing wholesale deposits in favor of growing BaaS deposits. 2.40% As of June 30, 2023, approximately 48% of the deposit
Slide 21: Diversified Noninterest Income Streams
Diversified FYTD 2023 Revenue Breakdown1 Noninterest Income Streams Net interest Noninterest income income 53% HI G HL I G HT S 47% Noninterest income represents 47% of fiscal year-to- date total revenue. Majority of noninterest income fees are generated by the Company’s BaaS business line. Other ma
Slide 22: Loan Portfolio
Average Loans and Yields ($B) Loan 7.70% 8.47% 8.31% Portfolio 6.69% $3.7 7.12% $3.6 $3.5 $4.0 $3.9 HI G HL I G HT S Remain focused on growing the Commercial Finance loan portfolio. Commercial Finance balances grew 17% from the third quarter of the prior year. 3Q22 4Q22 1Q23 2Q23 3Q23 Sequential qua
Slide 23: Commercial Finance Attributes by Asset Class
Commercial Finance Attributes by Asset Class WO R KING C APITAL E Q U IPM E NT ST RUCTURE D IN S U R ANCE PR E M IUM F IN AN C E F IN AN C E F IN AN C E F IN AN C E • Provides working capital for new • Loan and lease financing to • Funding to small and midsized • Short-term financing to facilitate o
Slide 24: Loan Portfolio Interest Rate Sensitivity
Total Loan and Lease Portfolio Loan Portfolio Pricing Attributes1 Interest Rate 48% Sensitivity 19% HI G HL I G HT S 33% As of June 30, 2023, $1.3B, or 33% of loans and Fixed Rate > 1 Year leases contained floating or variable interest rates. Of Fixed Rate < 1 Year these, $0.8B are tied to Fed Funds
Slide 25: Interest Rate Risk Management
Interest Rate Risk Management June 30, 2023 Earning Asset Pricing Attributes1 • Data presented on this page is reflective of the Company’s asset mix at a point in time and calculated for regulatory purposes. Future rate changes would impact a multitude of variables beyond the Company’s 58% Fixed Rat
Slide 26: Asset Quality
Asset Quality Nonperforming Assets (“NPAs”) Adjusted Net Charge-Offs (“NCOs”)1 ($ in millions) Excludes Tax Services NCOs and Related Seasonal Average Loans ($ in millions) 0.68% 0.71% 0.63% 0.61% 0.68% 0.55% 0.46% 0.44% 0.46% 0.40% 0.46% 0.46% 0.45% 0.25% 0.46% $6.0 $45.0 $40.8 $26.8 $30.9 $30.1 $4
Slide 27: Capital and Sources of Liquidity
Capital and Sources of Liquidity Regulatory Capital as of June 30, 2023 Tier 1 Leverage Ratio Pathward Pathward, At June 30, 2023¹ Financial, Inc. N.A. Tier 1 Leverage 8.41% 8.67% 8.23% 8.22% 8.10% 8.19% 8.37% 8.68% 8.41% 8.67% Common Equity Tier 1 11.52% 12.17% 7.53% 7.79% Tier 1 Capital 11.79% 12.
Slide 28: Appendix
APPENDIX 28 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 29: Non-GAAP Reconciliation: Adjusted Net Income and EPS
Non-GAAP Reconciliation Adjusted Net Income and Adjusted Earnings Per Share For the quarter ended For the nine months ended ($ in thousands, except per share data) 3Q22 2Q23 3Q23 2022 2023 Net income - GAAP 22,391 54,771 45,096 132,966 127,709 Less: Gain on sale of trademarks - - - 50,000 10,000 Les
Slide 30: Non-GAAP Reconciliation: Adjusted Annualized NCOs
Non-GAAP Reconciliation Adjusted Annualized NCOs and Adjusted Loans and Leases For the quarter ended ($ in thousands) Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Net charge-offs 12,198 26,664 3,217 4,975 4,218 Less: Tax services net charge-offs (recoveries) 7,992 22,594 1,033 (1
Slide 31: Non-GAAP Reconciliation: Efficiency Ratio
Non-GAAP Reconciliation Efficiency Ratio For the last twelve months ended ($ in thousands) Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Noninterest expense – GAAP 375,860 385,275 407,899 431,875 449,803 Net interest income 298,231 307,324 319,768 337,373 362,687 Noninterest incom
Slide 32: Overview of Loan Portfolio
Overview of Loan Portfolio MRQ % of ($ in millions) Business Line Balance Sheet Category 3Q22 2Q23 3Q23 Yield Total Structured Finance Guaranteed portion of US govt SBA/USDA loans SBA/USDA 59.4 243.6 250.5 Unguaranteed portion of US govt SBA/USDA loans SBA/USDA 135.0 157.3 169.1 Paycheck Protection
Slide 33: Commercial Finance Concentrations by Industry
Commercial Finance Concentrations by Industry1 $ in millions $- $100 $200 $300 $400 Manufacturing Utilities Other Services (except Public Administration) Transportation and Warehousing Finance and Insurance Wholesale Trade Health Care and Social Assistance Construction Mining, Quarrying, and Oil and