Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Investor Presentation (November 2023)
23 slides from Pathward Financial's investor presentation, Nov 7, 2023
Slide 1: Investor Presentation
Investor Presentation U P DAT E D N OV E M B E R 7 , 2 0 2 3
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. (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements
Slide 3: Leading the Way to Financial Access Is the Heart of Our Business
AT PATHWARD®, LEADING THE WAY TO FINANCIAL ACCESS IS THE HEART OF OUR BUSINESS. Since our founding, we have worked to advance financial inclusion. We seek out diverse partners, including fintechs, affinity groups, government agencies, and other banks and work with them to identify markets where peop
Slide 4: Building a Diversified Franchise Dedicated to Financial Empowerment
Building a Diversified Franchise Dedicated to Financial Empowerment for Individuals and Businesses 1993 2015 / 2016 2021 2022 Listed on Entered Tax Services Sold Meta Completed Nasdaq: CASH business by acquiring Refund trademarks and rebranding as Advantage, SCS, and EPS began rebranding Pathward in
Slide 5: Resilient Business Model in Economic Cycles
Resilient Business Model in Economic Cycles Funding Income Stable funding Earns consistent Operates a via BaaS partner fees from the BaaS collateralized relationships business lending platform that outperforms in down-cycles 5 Pathward Financial, Inc. (Nasdaq: CASH) | 2023 Investor Presentation
Slide 6: Collaborate With Partners to Provide Innovative BaaS Solutions
Collaborate With Partners to Provide Innovative Banking as a Service (BaaS) Solutions Accepting and processing payments through highspeed banking rails Payment Solutions Partner with a network of tax preparers offering a variety of products Tax Issuing Solutions Solutions A leading debit and prepaid
Slide 7: Commercial Finance Helps Businesses Access Needed Funds
Commercial Finance Helps Businesses Access Needed Funds Through Various Solutions Working Capital Equipment Structured Insurance Finance Finance Finance Premium Finance Ready cash for Providing access to Assisting small and Short-term financing liquidity needs to equipment financing, mid-sized for p
Slide 8: Strong and Diverse Leadership Team and Board of Directors
Strong and Diverse Leadership Team and Board of Directors Executive Leadership Team Brett Pharr Anthony Sharett Glen Herrick Chief Executive Officer and Director President EVP, Chief Financial Officer Charles Ingram Nadia Dombrowski Greg Sigrist EVP, Chief Technology & Product EVP, Chief Legal and A
Slide 9: 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 10: Record of Strong Earnings Growth
1 2 3 4 5 Record of Strong Earnings Growth Earnings Per Common Share Net Income $ in millions 25.96% Core Net Income 29.10% CAGR $$163.6 Core EPS $5.99 $156.4 CAGR $141.7 $5.26 $131.4 $4.38 $4.49 $104.7 $97.0 $2.94 $2.49 $51.6 $1.67 FY '18 FY '19 FY '20 FY '21 FY '22 FY '23 FY '18 FY '19 FY '20 FY '
Slide 11: Profitability Above Banking Industry Averages
1 2 3 4 5 Profitability Above Banking Industry Averages Return on Average Assets Net Interest Margin 2.33% 2.20% 6.04% 1.74% 4.84% 1.45% 4.09% 3.83% 1.32% 1.25% 3.43% 1.17% 3.17% 3.33% 3.13% 0.97% FY '20 FY '21 FY '22 FY '23 FY '20 FY '21 FY '22 FY '23 Pathward Peers Pathward Peers • Peer data inclu
Slide 12: Strong Earnings Growth and Right-Sized Balance Sheet Enable Return of Capital
1 2 3 4 5 Track Record of Strong Earnings Growth and Right-Sized Balance Sheet Enables Ongoing Return of Capital $539.9 $30.7M TOTAL SHARE REPURCHASES TOTAL DIVIDENDS PAID 2Q19 TO 4Q23 2Q19 TO 4Q23 Targeting regulatory capital leverage Paid dividend every quarter ratio above 8% and total risk-weight
Slide 13: Leader in Fast-Growing BaaS Sector
1 2 3 4 5 Leader in Fast-Growing BaaS Sector Top 25 ~$2.5 Billion NACHA – Top 25 ACH Originator and Moved daily in ACH Receiver (#17 and #23, April 2022) and wire services >1 Billion >$10 Billion Cards Issued Moved since start of MasterCard Send and Visa Direct programs in 2020 >340,000 >260,000 Poi
Slide 14: Pathward Serves as a Hub of the BaaS Ecosystem
1 2 3 4 5 Pathward Serves as a Hub of the BaaS Ecosystem Debit/Credit Fed / Networks Settlement 20+ Community Banks ATM Sponsorship 1,200+ 85+ ISOs Issuing/Acquiring/ Originating Bank End User End User Card Holder / Merchants Consumer FinTech / Processor Program Manager Acquiring Partners Processor
Slide 15: Resilient Commercial Loan Portfolio
1 2 3 4 5 Resilient Commercial Loan Portfolio… WORKI NG CAPI TAL E QUI PME N T STRUCTURE D I NS UR ANCE PRE MI UM FI NANCE FI NANCE FI NANCE FI NANCE • Provides working capital for new • Loan and lease financing to • Funding to small and midsized • Short-term financing to facilitate or growing compa
Slide 16: Produces Stable Annual Net Charge-Off Rates
1 2 3 4 5 …Produces Stable Annual Net Charge-Off Rates December 31st Commercial Finance Loan Balances1 ($ in millions) 4,000 1.0 $3,723 Pathward Acquires 0.9 3,500 Crestmark $3,007 0.8 3,000 $2,798 0.7 2,500 $2,423 0.6 $1,995 2,000 0.5 $1,618 0.4 1,500 0.3 1,000 $934 $702 0.2 $521 $582 500 $428 $326
Slide 17: Well-Developed Risk Mitigation and Compliance Capabilities
1 2 3 4 5 Well-Developed Risk Mitigation and Compliance Capabilities Enterprise Risk Third-Party Risk Business Continuity Bank Secrecy Act / Anti- Management Management Management Money Laundering Our Enterprise Risk Management Just as Pathward’s ERM program Business Continuity Management To protect
Slide 18: Appendix
Appendix
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Net Income and Adjusted Earnings Per Share Fiscal Year ($ in thousands, except per share data) 2 022 2 023 Net income - GAAP 156,386 163,615 Less: Gain on sale of trademarks 50,000 10,000 Less: Loss on disposal of certain mobile generators - (1,993) Add: Accelerated
Slide 20: Pathward's Balance Sheet
Pathward’s Balance Sheet BaaS deposits fund Pathward’s earning asset portfolio while delivering ample fee income Pathward’s commitment to maintain the size of its balance sheet enables the return of capital to shareholders Assets Liabilities Earning Assets BaaS Deposits Prepaid Cards Loans & Leases
Slide 21: Credit Controls Limit the Risk in Consumer and Warehouse Programs
Credit Controls Limit the Risk in Consumer and Warehouse Programs Warehouse Finance Consumer Credit Program Asset-backed warehouse lines of credit used to support Consumer credit programs with marketplace lenders offer strategic initiatives. Pathward a risk adjusted return, protected by certain laye
Slide 22: Definitions
Definitions Industry Terms Payment Players Banking-as-a-Service (BaaS): Acquiring Bank: Issuing Processor: Providing financial services and solutions to third parties An acquiring bank provides merchant accounts that allow a Connects directly with the networks and issuing bank to to offer through th
Slide 23: Definitions, Continued
Definitions, Continued Commercial Lending Terms Asset-Based Lending: Government Guaranteed Lending: Asset-Based Lending (ABL) refers to business loans that are A government guaranteed loan is a loan guaranteed by a secured based on assets as collateral, generally accounts government agency and finan
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