Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q3 FY2021 Earnings Presentation
27 slides from Pathward Financial's earnings presentation, Jul 28, 2021
Slide 1: Quarterly Investor Update
QUARTERLY INVESTOR UPDATE THIRD QUARTER FISCAL YEAR 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This investor update contains “forward-looking statements” which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hop
Slide 3: We Strive to Increase Financial Availability, Choice, and Opportunity
WE STRIVE TO INCREASE FINANCIAL AVAILABILITY, CHOICE, AND OPPORTUNITY THROUGH FINANCIAL EMPOWERMENT. We work to disrupt traditional banking norms by developing partnerships with fintechs, affinity groups, government agencies, and other banks to make a range of quality financial products and services
Slide 4: Differentiated Business Lines with Significant Growth Opportunities
DIFFERENTIATED BUSINESS LINES WITH SIGNIFICANT GROWTH OPPORTUNITIES 49% Noninterest Income as a percent of Total Revenue in LTM ending June 30, 2021 Payments Tax Services Revenue Makeup Our Payments division works with fintechs, Our Tax Services division helps tax Last Twelve Months Ending third-par
Slide 5: Third Quarter Business Highlights & Key Strategic Initiatives
THIRD QUARTER BUSINESS HIGHLIGHTS & KEY STRATEGIC INITIATIVES Increase Percentage Optimize Interest- Improve Operating of Funding From earning Asset Mix Efficiencies Core Deposits Reduced wholesale funding and Focus on commercial finance Efficiency ratio of 61.75% improved borrowings by 82% from Jun
Slide 6: Summary Financial Results
SUMMARY FINANCIAL RESULTS THIRD QUARTER ENDED JUNE 30, 2021 INCOME STATEMENT ($ in thousands, except per share data) 3Q21 2Q21 3Q20 Net interest income 68,475 73,850 62,137 Provision for credit losses 4,612 30,290 15,093 Total noninterest income 62,453 113,453 41,048 Total noninterest expense 81,523
Slide 7: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS THIRD QUARTER ENDED JUNE 30, 2021 BALANCE SHEET PERIOD ENDING ($ in thousands) 3Q21 2Q21 3Q20 Cash and cash equivalents 720,243 3,724,242 3,108,141 Investments 1,981,852 1,552,892 1,268,416 Loans held for sale 87,905 67,635 79,905 Loans and leases (HFI)1 3,496,670 3,657,531
Slide 8: Diversified Earning Asset Portfolio
DIVERSIFIED EARNING ASSET PORTFOLIO At the Quarter Ended Quarterly Average Earning Asset Mix JUNE 30, 2021 JUNE 30, 2020 % in charts represent % of total interest earning assets ($ in thousands) 3Q21 3Q20 Y/Y Δ COMMERCIAL FINANCE 2,586,527 2,158,905 20% Term lending 920,279 738,454 25% Asset-based l
Slide 9: Consumer Business Lines
CONSUMER BUSINESS LINES Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 9
Slide 10: MetaBank Is a Well-Recognized Leader in BaaS
METABANK IS A WELL-RECOGNIZED LEADER IN BAAS Payments Capabilities, Tax Services Capabilities Consumer Finance Businesses Regulatory and Compliance Create Value for Partners Generate Higher NIM Expertise, Are Core Strengths • Full range of payment and • Provide tax return transfer • Marketplace lend
Slide 11: MetaBank Serves as the Hub of the Payments Ecosystem
METABANK SERVES AS THE HUB OF THE PAYMENTS ECOSYSTEM Debit/Credit Fed / Networks Settlement 20+ Community ATM Banks Sponsorship 1200+ 85+ ISOs Issuing/Acquiring Bank End User End User Card Holder/ Fintech / Merchants Consumer Program Processor Manager Acquiring Partners 10+ 50+ Processor Issuing 20+
Slide 12: BaaS Capabilities Generate Increasing Low-Cost Deposits and Revenue
BAAS CAPABILITIES GENERATE INCREASING LOW-COST DEPOSITS AND REVENUE Growth in BaaS payments- Growth in BaaS revenue generated deposits % of Total Revenue Average Payments Deposits* ($ in billions) 120,000.0 10.0 $9.29 53% 100,000.0 10% Banking Services** 9.0 8.0 8% Checking $6.79 80,000.0 7.0 $6.32
Slide 13: Tax Season Update 2021
TAX SEASON UPDATE 2021 Refund advances (“RAs”) and refund-transfers (“RTs”) leverage BaaS infrastructure and are core to MetaBank’s mission, as they allow consumers quicker access to their money. Strong revenue generation in the quarter compared to the prior year related to delayed timing of RT prod
Slide 14: Lending Business Lines
LENDING BUSINESS LINES Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 14
Slide 15: Highly Granular and Diversified Loan Portfolio
HIGHLY GRANULAR AND DIVERSIFIED LOAN PORTFOLIO JUNE 30, 2021 • Collateral-based lending focused on risk management and administrative Commercial Finance controls of borrowers’ assets. 20% • Underwritten to ensure recovery of full loan exposure in the event of a 19% default or liquidation. Equipment
Slide 16: Overview of Loan Portfolio
OVERVIEW OF LOAN PORTFOLIO % of Portfolio Business Line Balance Sheet Category 3Q20 2Q21 3Q21 3Q21 Commercial Finance Guaranteed portion of US govt SBA/USDA Loans SBA/USDA 8.5 68.5 71.9 2% Unguaranteed portion of US govt SBA/USDA Loans SBA/USDA 84.6 54.8 48.6 1% Paycheck Protection Program (PPP) Loa
Slide 17: Select Commercial Finance Areas
SELECT COMMERCIAL FINANCE AREAS Renewable Energy Significant lender for both solar and fuel cell power generation projects. Debt financing for renewable energy via conventional term loans and United States Department of Agriculture (“USDA”) Guaranteed Loan Programs. Investment tax credit financing v
Slide 18: Legacy Community Bank Portfolio
LEGACY COMMUNITY BANK PORTFOLIO AS OF JUNE 30, 2021 | SERVICED BY CENTR AL BANK ($ in millions) OUTSTANDING BALANCE % OF TOTAL¹ Commercial Real Estate $287.1 7.7% Commercial Operating 7.7 0.2% Agricultural 7.8 0.2% 1-4 Family Real Estate 1.4 0.1% Total $304.0 8.2% During the quarter classified $18.1
Slide 19: Asset Quality, Interest Rate Risk, & Capital
ASSET QUALITY, INTEREST RATE RISK, & CAPITAL Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 19
Slide 20: Asset Quality
ASSET QUALITY Nonperforming Assets (“NPAs”) Adjusted Net Charge-Offs (“NCOs”)¹ ($ in millions) Excludes Tax Services NCOs and Related Seasonal Average Loans 0.79% ($ in millions) 0.73% 0.64% 0.64% 0.63% 0.48% 0.55% 0.44% 0.44% 0.32% $4.9 $5.5 $56.1 $53.2 $48.0 $46.7 $45.1 $3.8 $3.8 $2.8 3Q20 4Q20 1Q
Slide 21: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT JUNE 30, 2021 12-Month Interest Rate Sensitivity from Base Net Interest Income • Low-rate environment -- focus is on reducing wholesale funding and redeploying deposits and 35% assets into positive carry opportunities. Parallel Shock Ramp • Interest rate risk shows asse
Slide 22: Capital and Sources of Liquidity
CAPITAL AND SOURCES OF LIQUIDITY REGULATORY CAPITAL AS OF JUNE 30, 2021 Meta Financial MetaBank, Capital Ratio Trends At June 30, 2021¹ Group, Inc. N.A. Tier 1 Leverage Ratio Tier 1 Leverage 6.85% 7.83% Tier 1 Leverage – EIP-adjusted² N/A 8.60% 7.95% 7.39% 7.83% 7.56% Common Equity Tier 1 12.76% 6.8
Slide 23: Appendix
APPENDIX Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 23
Slide 24: Active COVID-19 Loan and Lease Modifications and Deferrals
ACTIVE COVID-19 LOAN AND LEASE MODIFICATIONS AND DEFERRALS June 30, 2021 March 31, 2021 COUNT $ BALANCE COUNT $ BALANCE COMMUNITY BANK 9 $ 36.6 15 $58.7 Hospitality 9 36.6 11 40.8 Movie Theater 0 - 4 17.9 COMMERCIAL FINANCE 24 $3.2 55 $5.8 Small ticket equipment finance 23 1.6 55 5.8 Other commercia
Slide 25: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS EIP-RELATED ADJUSTMENTS Net Interest Margin THREE MONTHS ENDED ($ in millions) JUNE 30, 2021 MARCH 31, 2021 DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Average interest-earning assets 7,316,820 9,768,242 5,636,445 6,806,366 7,608,616 Net interest income 68,475 73,850
Slide 26: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS EIP-RELATED CAPITAL ADJUSTMENTS MetaBank Tier 1 Leverage JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, ($ in millions) 2020 2020 2020 2020 2020 Total stockholder's equity $ 980,163 $ 934,010 $ 912,143 $ 933,430 $ 923,520 LESS: Goodwill, net of associated deferred ta
Slide 27: Financial Measure Reconciliations
FINANCIAL MEASURE RECONCILIATIONS Efficiency Ratio For the last twelve months ended ($ in thousands) Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Noninterest Expense - GAAP 330,352 320,070 315,828 319,051 314,911 Net Interest Income 272,837 266,499 260,386 259,038 260,142 Noninte
Meta Financial Group — Q3 FY2021 Earnings Presentation on 6ix