Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q3 2015 Earnings Presentation
28 slides from Pathward Financial's earnings presentation, Jul 30, 2015
Slide 1: Third Quarter 2015 Investor Update
Third QUARTER 2015 Investor Update
Slide 2: META Management
META Management Chairman and Chief Executive Officer, Meta Financial GroupTyler Haahr has been with Meta Financial Group since March 1997. Previously, he was a partner with the law firm of Lewis and Roca LLP, Phoenix, Arizona. Tyler received his B.S. degree with honors at the University of South Dak
Slide 3: Who We Are
MetaBank Retail Bank Meta Payment Systems Meta Financial Group LOANS* $652M MPS Deposits* $1,295M STRONG ECONOMY IN LOCAL MARKETS BUSINESS PARTNERS > NetSpend> Money Network> Blackhawk> Unirush> Many Others * As of 06/30/2015 WHO WE ARE 3 Accelerating Growth Product/asset Expansion Compliant Assets*
Slide 4: Who We Are
WHO WE ARE Growing community bank in regions with strong economiesBased in Iowa and South Dakota Strong and high quality commercial & ag loan growthAFS / IBEX asset acquisition completed in December 2014Platform for nationwide expansionHigh quality and accelerating loan growth RETAIL BANK A top prep
Slide 5: MFG Evolution
5 MFG evolution Community Bank MPS Start-Up Pre-Recession Regulatory Diversification ($ mil) 2000 2004 2007 2011 2015 Assets $506 $781 $686 $1,275 $2,310 Mkt Cap $23 $55 $103 $59 $298 TBV – not rounded $16.48 $18.98 $18.11 $25.19 $27.01 Net Income $2.3 $4.0 $1.2 $4.6 $13.4 (9 Mos.) Events Expanded t
Slide 6: Meta Payment Systems
> Prepaid card industry leader with payments diversification> Deposit Growth ~ 26% (qtr avg) over prior year> Fee Income up 17% vs 3Q14> Adjacent and Complementary new product introductions*Ft. Knox – complementary product in the tax channelFaster MoneyNew credit products> Strong systems and complia
Slide 7: Meta Payment Systems
> Growing Existing relationshipsNetspendMoney NetworkBlackhawkGlobal Cash> New relationships driving accelerating growth, Strong PipelineInComm UnirushStore FinancialHyperwallet Systems Berkley Payment SolutionsUnivision> 9 of the top 10 program managers under contract through 2019 Meta Payment Syst
Slide 8: Retail Bank
> Successful regional enterprise60 years in business 10 locations in Iowa and South Dakota Growing, profitable operationsLoyal customer base> Diverse customer base Attractive combination of commercial, agricultural & retail> Net Loan growth of 19% ($87M) over the last 12 Months> Expect continued rob
Slide 9: Retail Bank Locations
Retail bank locations > South dakotaBrookingsSioux Falls> Iowa Des MoinesStorm Lake 9
Slide 10: Retail Bank - AFS/IBEX Acquisition
Retail bank - AFS/IBEX acquisition 10 7th largest U.S. insurance premium finance company in 2014Loans to commercial businesses fund their property, casualty, and liability insurance premiums. Assisted by > 1,300 independent insurance agencies / brokersHigher yields than alternative investments, part
Slide 11: Recognition
RECOGNITION #44 in American Banker Magazine “More double-digit goodness” (June 2015) based on avg. roe over the past 3 years#68 in American Banker Magazine “Top 200 Community Banks and Thrifts” (June 2014) Top 1% based on 3 year ROETop 100 in ABA Banking Journal’s annual Performance Ranking for $1B-
Slide 12: Strategic Goals
Strategic Goals Grow organically and by acquisition to achieve scaleDiversify business linesStrengthen balance sheet and grow revenueCreate a more strategic asset mixHire and develop the right people in the right rolesscalable operating infrastructureVertically integrate to gain more of the economic
Slide 13: Strategy: Optimize synergies, leverage MPS, specialty lending
> Optimize synergies: retail bank and MPSStrong loan growth in local markets and AFS/IBEXLow cost deposits feed increasingly diverse asset mixRising rates expected to increase yields while funding costs remain lowMBS portfolio ($666M) yields & income expected to increase as rates riseAs of June 30,
Slide 14: Compliance systems and barriers to entry
> Early adopter of sophisticated compliance systems> OCC consent order removed in august 2014> Federal reserve bank consent order removed in may 2015> Investments in MPS program design, training and technologyImplemented enhanced bsa/aml technologyEnhanced infrastructure supports growthShifted focus
Slide 15: Positively leveraged for higher rate environment
> Positively leveraged for higher rate environment> OCI volatile relative to peers GAAP does not capture balance sheet true value, particularly low and no-cost depositsMeta mark includes ~65% of assets (securities) vs. typical “peer” at ~20%> Expectation for Continued, increasing Net Interest Margin
Slide 16: Capital Management
> Capital enhancementsRecent $26 million private placement supporting pending Fort Knox acquisition2014-15 ATM net proceeds of $25.4 million to support growth$61.0 million in 2012-13 via private placements and an ATM offering> Maintain strong capital ratio goalsCommon equity tier 1 capital at least
Slide 17: Financial Highlights
> Net Income$13.4m in fiscal 2015 (9 months thru 06/30/15)Adjusted $14.9M*, +19% vs. fy14 same period> earnings profileAnnualized ROAA of 0.78% and annualized ROAE of 9.07%Adjusted* annualized ROAA and ROAE of 0.87% and 10.04%Business development & implementation costs from new agreements & products
Slide 18: Earnings power while growing equity
Earnings power while growing equity 18
Slide 19: Income statement ($000s)
Income statement ($000s) * Includes $11.4M gain on sale of GNMA Securities** Includes $2.4M gain on sale of securities*** Includes $(1.5)M loss on sale of securities, $(.8)M acquisition costs, $(0.8)M Amortization Expense and $0.9M ins. claim reimbursements. Meta Financial Group FY10 FY11 FY12* FY13
Slide 20: Total revenue
Total revenue * Includes $11.4M gain on sale of GNMA Securities** Includes $2.4M gain on sale of securities*** Includes $(1.5)M loss on sale of securities, $(1.6)M acquisition costs, $(0.7)M Amortization Expense and $0.9M ins. claim reimbursements $ millions 20
Slide 21: Balance sheet ($000s)
Balance sheet ($000s) 4Q10 4Q11 4Q12 4Q13 4Q14 3Q14 3Q15 Cash And Cash Equivalents 94,248 132,149 106,067 73,733 100,159 75,120 79,460 Investments and MBS 511,011 615,320 998,826 1,176,811 1,320,364 1,319,198 1,516,948 Loans Receivable Net 369,563 314,484 329,689 364,100 484,690 450,628 634,513 Othe
Slide 22: Deposits and cost of funds
Deposits and cost of funds deposits - $ mill* Cost of Funds 22 *Quarter Average
Slide 23: Total assets
Total assets* 19.0% CAGR $ millions 23 *Fiscal Quarter average
Slide 24: Total net loans
Total net loans* *Fiscal Quarter average Net of ALLL $ millions 24
Slide 25: Non-performing assets
Non-performing assets $ millions of non-performing assets % of total assets 25 > A Leading issuer of prepaid debit cardsSpringboard into other products and servicesSignificant growth - current partners' expanding & new partners added> Strong capital positionEarnings and access to capital markets to
Slide 26: Meta Value Proposition
META VALUE PROPOSITION Meta® Financial Group > A LEADING ISSUER OF PREPAID DEBIT CARDS * SPRINGBOARD INTO OTHER PRODUCTS AND SERVICES * SIGNIFICANT GROWTH - CURRENT PARTNERS' EXPANDING & NEW PARTNERS ADDED > STRONG CAPITAL POSITION * EARNINGS AND ACCESS TO CAPITAL MARKETS TO FUND OUR GROWTH OBJECTIV
Slide 27: Forward Looking Statements
Forward Looking Statements Meta Financial Group, Inc.®, (“the Company”) and its wholly-owned subsidiary, MetaBank® (the “Bank” or “MetaBank”), may from time to time make written or oral “forward-looking statements,” including statements contained in this investor update, in its filings with the Secu
Slide 28: Meta Financial Group
Meta® Financial Group’ NASDAQ: CASH