Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q3 2016 Earnings Presentation
26 slides from Pathward Financial's earnings presentation, April 2016
Slide 1: Investor Update Third Quarter, Fiscal Year 2016
Investor Update Third Quarter, Fiscal Year 2016 April 2016
Slide 2: 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, the Company’s filings with th
Slide 3: Meta Senior Management
Meta Senior Management J. TYLER HAAHR Chairman and Chief Executive Officer Tyler Haahr has been with Meta Financial Group since 1997. Previously, he was a partner with the law firm of Lewis and Roca LLP, Phoenix, Arizona. Tyler received his B.S. degree in Accounting with honors at the University of
Slide 4: Meta Financial Group Highlights
Meta Financial Group Highlights Net Income ($MM) Net Income (3QFY16 vs 3QFY15) Twelve Months Ending Nine Months Ending • Strong quarterly earnings for 3QFY16; Net Income $8.9MM • Year-over-year growth of 91% Earnings Profile • Sizable and rapidly growing non-interest income • Opportunity for NIM exp
Slide 5: Non-Performing Assets
Non-Performing Assets Very strong asset quality $18.0 0.07% NPAs as a percentage of total 1.40% assets at 6/30/16. $15.9 1.20% $15.0 Non-Performing Assets ($MM) 1.00% $12.0 % of Total Assets 0.80% $9.0 $7.8 $7.6 0.60% $6.0 0.40% $3.0 $2.6 $2.2 0.20% $0.8 $1.0 $0.0 0.00% FY11 FY12 FY13 FY14 FY15 3QFY
Slide 6: Who We Are
Who We Are Banking Payments Growing community bank in regions with strong A top prepaid card issuer in U.S. economies • Retail Operations based in Iowa and South Dakota • Robust non-interest bearing deposit growth Strong commercial and other loan growth • “Annuity”-like stream of fee income AFS/IBEX
Slide 7: Footprint Map
Footprint Map Meta®@ Financial Group 10) Newport Beach, CA MAP KEY 0) Meta Financial Group/Meta Payment Systems @ MetaBank Branches @ Ars iBEx offices [O) Refund Advantage Office Brookings, SD Sioux Falls, SD Storm Lake, A Des Moines, 1A 9 Dallas, TX Louisville, KY
Slide 8: Banking – Retail Bank
Banking – Retail Bank Retail Bank Regional Community Bank • Growing, profitable operations • Attractive combination of commercial, agricultural, retail and national insurance premium lending • Low-cost deposit base gives Bank competitive advantage on terms to attract high quality credits The origina
Slide 9: Banking – AFS/IBEX
Banking – AFS/IBEX AFS/IBEX Loans to commercial businesses to fund their property, casualty, and liability insurance premiums • • • • Short duration assets Higher yields than alternative investments, particularly for the term Loans generally priced as a spread to Prime, reset higher if Prime moves h
Slide 10: Payments - Meta Payment Systems (MPS)
Payments - Meta Payment Systems (MPS) Overview Highlights Prepaid card industry leader with payments Growing existing relationships diversification • Netspend Continuing to grow “annuity”-like stream of • Money Network fee income • Blackhawk • Global Cash Adjacent and complementary new product intro
Slide 11: Payments - Refund Advantage
Payments - Refund Advantage® Refund Advantage® • Asset acquisition completed 4QFY15 $23.1 Million; Tax Product • Offers tax refund-transfer (RTs) solutions Revenues FY YTD through ACH direct deposit, check, and prepaid card • Growth enhanced by new credit-advance >10 >1 product • Processed a record
Slide 12: Industry Recognition
Industry Recognition #1 Top Growth Bank (May 2016) Second largest prepaid card issuer in the U.S. ranked by Top 50 of ACH originators in 2015 purchase volume (2015) Top 30 of ACH receivers in 2015 #44 “More double-digit goodness” (June 2015) based on average ROE over the past three years #48 “Top 20
Slide 13: Growth Drivers and Goals
Growth Drivers and Goals Optimize synergies: Banking and Payments • Strong loan growth in local markets and AFS/IBEX; over 31% YoY growth • Continue to improve upon earning asset mix • Low cost deposits with long average life (approximately seven years) feed increasingly diverse asset mix • Unlock v
Slide 14: Earning Asset Mix & Net Interest Margin
Earning Asset Mix & Net Interest Margin 2.86% 3.00% 3.27% 41bps NIM Expansion 2.61% 86bps 2.15% Net Interest Margin 1.75% Qtr Avg 10 Year Treasury 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 10 Year Treasury Yield Declined (Qtr Average) 82% Earning Asset Mix* Cumulative Loan growth since 3Q14 3Q14
Slide 15: Assets – Earning Asset Mix
Assets – Earning Asset Mix Total Assets* ($MM) Total Investments* ($MM) 23.5% Asset Compound Annual Growth $3,068 $2,004 Rate (CAGR) $2,447 $1,534 $2,002 $1,320 $1,713 $1,177 $1,496 $999 $1,127 $615 4Q11 4Q12 4Q13 4Q14 4Q15 3Q16 4Q11 4Q12 4Q13 4Q14 4Q15 3Q16 Mortgage-Backed Securities Municipal Secu
Slide 16: Total Gross Loans
Total Gross Loans Loan Composition* Loan Portfolio* ($MM) $827 At June 30, 2016 $691 16% 17% $490 9% $368 $319 $334 5% 8% 45% 4Q11 4Q12 4Q13 4Q14 4Q15 3Q16 Commercial Real Estate Consumer Residential Real Estate Agricultural/Commercial Operating Agricultural Real Estate Premium Finance *Fiscal Quart
Slide 17: Deposits and Cost of Funds
Deposits and Cost of Funds Low Cost of Funds $2,301 1.20% $2,400 $2,000 0.13% Cost of Funds in 3Q16 $1,827 1.00% Deposits* ($MM) $1,548 0.80% Cost of Funds $1,600 $1,414 $1,276 0.60% $1,200 $970 $800 0.40% $400 0.20% $0 0.00% 4Q11 4Q12 4Q13 4Q14 4Q15 3Q16 Bank MPS Cost of Funds *Fiscal Quarter Avera
Slide 18: Earnings Power While Growing Equity
Earnings Power While Growing Equity $4.00 $30.00 $3.50 $ Tangible Book Value Per Share $3.00 $25.00 $ Diluted Earnings Per Share $2.50 $20.00 $2.00 $15.00 $1.50 $1.00 $10.00 $0.50 $5.00 $0.00 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 -$0.50 $0.00 Diluted EPS Tangible Book Value/Share 18
Slide 19: Infrastructure
Infrastructure Early adopter of sophisticated compliance systems Investments in MPS program design, training and technology • Implemented enhanced BSA/AML technology • Enhanced infrastructure supports growth • These prior investments allow more focus on growing current business and new development o
Slide 20: Interest Rate Risk Management
Interest Rate Risk Management Positively leveraged for higher rate environment Other Comprehensive Income volatile relative to peers • We believe GAAP understates balance sheet true value, particularly low-cost deposits • Meta MTM of ~50% of assets available for sale (securities) vs. typical “peer”
Slide 21: Interest Rate Sensitivity – What We Believe
Interest Rate Sensitivity – What We Believe Static interest rate risk results do not accurately reflect Meta’s true interest rate sensitivity due to our unique and historically predictable deposit base • Due to historically predictable weekly, monthly, and yearly deposit volatility, static IRR resul
Slide 22: Capital Management
Capital Management Overview Regulatory Capital Ratios At June 30, 2016¹ Capital enhancement history Meta Financial • $26.1 million and $11.7 million private Group, Inc. placements supporting Refund Advantage MetaBank 18.88% 18.52% 18.44% 18.08% acquisition and other growth in 2015-16 17.84% 18.08% •
Slide 23: Meta's Value Proposition
Meta’s Value Proposition A leading issuer of prepaid debit cards • Springboard into other products and services • Significant growth; current partners expanding, new partners added, and new products implemented with more to come in 2016 and beyond Strong capital position • Earnings and historical ac
Slide 24: Appendix
Appendix 24
Slide 25: Income Statement
Income Statement Fiscal Year Ended September 30, Three Months Ended June 30, Meta Financial Group ($MM) 2011 2012¹ 20132 2014 20153 2015⁴ 20165 % Change Net Interest Income 34.3 33.7 36.0 46.3 59.2 14.7 19.9 35.9% Non-Interest Income 57.5 69.6 55.5 51.7 58.2 15.4 23.8 54.3% Total Revenue $ 91.8 $ 10
Slide 26: Balance Sheet
Balance Sheet Fiscal Quarter Average Fiscal Quarter Average Meta Financial Group ($MM) 4Q11 4Q12 4Q13 4Q14 4Q15 3Q15 3Q16 % Change Cash And Cash Equivalents 132 106 74 100 81 79 23 -70.9% Investments and MBS 615 999 1,177 1,320 1,534 1,517 2,027 33.6% Loans Receivable Net 315 330 364 485 684 635 819