Slide 1: The Pathward Story
THE PATHWARD STORY U P D AT E D O C TO B E R 2 3 , 2 0 2 4
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 company dedicated to financial empowerment
BUILDING A DIVERSIFIED COMPANY 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 Dram
Slide 5: Resilient business model in economic cycles
RESILIENT BUSINESS MODEL IN ECONOMIC CYCLES Funding Revenue Stable funding Earns consistent Operates a from deposits via fees from the Commercial Partner Solutions Partner Solutions Finance relationships business collateralized lending platform 5 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly I
Slide 6: Collaborate with partners to provide innovative Partner Solutions
COLLABORATE WITH PARTNERS TO PROVIDE INNOVATIVE PARTNER SOLUTIONS Issuing Acquiring Financial Digital Institution Payments Solutions Credit Professional Solutions Tax Solutions 6 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 7: Commercial Finance helps businesses access needed funds
COMMERCIAL FINANCE HELPS BUSINESSES ACCESS NEEDED FUNDS THROUGH VARIOUS SOLUTIONS Working Equipment Structured Capital Finance Finance Finance Ready cash for liquidity Providing access to Assisting small and mid- needs to new or growing equipment financing, sized businesses and rural companies in cy
Slide 8: Investment Highlights
INVESTMENT HIGHLIGHTS RECORD OF STRONG EXCESS CAPITAL EXPERIENCED LEADER IN 1 EARNINGS GROWTH AND 2 GENERATING BUSINESS 3 FAST-GROWING PAYMENTS PROFITABILITY ABOVE ENABLES ONGOING RETURN SECTOR, WITH DIVERSIFIED BANKING INDUSTRY OF VALUE TO PORTFOLIO OF HIGH- AVERAGES SHAREHOLDERS QUALITY FINANCIAL
Slide 9: Record of strong earnings growth and profitability
1 2 3 4 5 RECORD OF STRONG EARNINGS GROWTH & PROFITABILITY1 Return on Average Assets Return on Average Tangible Equity 2.33% 2.20% 2.20% 48.32% 1.88% 1.74% 41.74% 1.55% 35.42% 1.45% ROAA inclusive of one-time items 28.66% 30.25% ROATE inclusive of Peer average3 22.34% 21.87% one-time items 2019 2020
Slide 10: Ongoing return of capital: repurchases and dividends
1 2 3 4 5 TRACK RECORD OF STRONG EARNINGS GROWTH AND RIGHT-SIZED BALANCE SHEET ENABLES ONGOING RETURN OF CAPITAL $620.0M $35.8M TOTAL SHARE REPURCHASES TOTAL DIVIDENDS PAID 2Q19 TO 4Q24 2Q19 TO 4Q24 Note: Repurchased common shares include shares withheld to cover income taxes owed by participants re
Slide 11: Pathward serves as a hub of the payments ecosystem
1 2 3 4 5 PATHWARD SERVES AS A HUB OF THE PAYMENTS ECOSYSTEM Debit/Credit Fed / Networks Settlement Financial Institution ATM Sponsorship Clients Issuing/Acquiring/ Originating Bank End User End User Card Holder / Merchants Consumer FinTech / Processor Program Manager Acquiring Partners Processor Is
Slide 12: Commercial Finance portfolio stable annual net charge-off rates
1 2 3 4 5 COMMERCIAL FINANCE PORTFOLIO PRODUCES STABLE ANNUAL NET CHARGE-OFF RATES Fiscal Year End Commercial Finance Loan Balances Insurance premium finance ($ in millions) portfolio moved to held for sale during 4QFY24 4,000 1 $3,723 Pathward Acquires 0 3,500 Crestmark $3,296 $3,024 0 3,000 $2,725
Slide 13: Mature risk mitigation and compliance capabilities
1 2 3 4 5 MATURE 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 our cus
Slide 14: Quarterly Investor Update
QUARTERLY INVESTOR UPDATE F O U R T H Q UA R T E R F I S C A L Y E A R 2 0 2 4
Slide 15: FY 2024 Highlights
FY 2024 HIGHLIGHTS Net Income Diluted Earnings Per Share $168.4 million in net income; an increase of 3% $6.62 in diluted earnings per share; an increase of 11% compared compared to FY 2023 to FY 2023 Net Interest Margin Return Metrics2 Net interest margin (“NIM”) of 6.41% compared to 6.04% FY 2024
Slide 16: Strong results from asset optimization
STRONG RESULTS FROM ASSET OPTIMIZATION • Loan and lease portfolio yield increased to 8.67% for the fourth quarter • Announced sale of the Insurance Premium Finance business • 39th largest SBA 7(a) program lender for the year ending September 30, 20241 • Solid pipelines in SBA, USDA, working capital,
Slide 17: Celebrating 20 years in the payments industry
CELEBRATING 20 YEARS IN THE PAYMENTS INDUSTRY • Renamed to Partner Solutions • Experience provides us with scale and capability to help partners expand • Awarded 2024 Finovate Best Banking as a Service Provider • Pipeline continues to be strong 17 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly
Slide 18: Trusted platform that enables our partners to thrive
TRUSTED PLATFORM THAT ENABLES OUR PARTNERS TO THRIVE Right-sized balance sheet with optimized asset mix Technology to facilitate evolution and scalability People and culture are important assets Mature risk and compliance framework 18 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Pres
Slide 19: Net interest income drives solid results
NET INTEREST INCOME DRIVES SOLID RESULTS ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net Interest Income Noninterest Income Noninterest Expense +10% +10% -7% $115.9 $56.1 $129.9 $104.9 $52.0 $118.2 Q4 2023 Q4 2024 Q4 2023 Q4 2024 Q4 2023 Q4 2024 Net Income Attributable to Parent Earnings per Diluted Shar
Slide 20: Deposit base supports asset growth
1 DEPOSITS Period ending ($ in millions) -11% $6,589.2 $5,875.1 DEPOSIT BASE SUPPORTS ASSET GROWTH Average Q4 2024 off-balance sheet custodial deposits held in custody at program banks of $240 million compared to $588 million during the prior year period. $202 million of off-balance sheet custod
Slide 21: Total loans and leases decreased from Q4 2023
TOTAL LOANS AND LEASES Period ending ($ in millions) -7% $4,366.1 $4,075.2 TOTAL LOANS AND LEASES DECREASED FROM Q4 2023 Decrease driven by $594 million insurance premium finance portfolio being moved to held for sale during Q4 2024. Decrease is partially offset by growth in SBA/USDA, renewable
Slide 22: Strong balance sheet allows for return of capital to shareholders
STRONG BALANCE SHEET ALLOWS FOR RETURN OF CAPITAL TO SHAREHOLDERS Liquidity Sources Share Repurchases ($ in millions) 1,520,001 $202 $158 $215 $221 $2,078 $727 236,308 $555 Q4 2024 2024 YTD Off Balance Sheet Custodial Deposits1 FHLB Borrowing Capacity Cash and Cash Equivalents Fed Discount Window Fu
Slide 23: Fiscal Year 2025 Guidance
FISCAL YEAR 2025 GUIDANCE1 $7.10- $7.60 EPS 25 bps rate cut in Nov and Dec 2024 Effective tax rate 18-22% Does not include impact of sale of Insurance Premium Finance Business Includes expected share repurchases 1 Information on this slide is presented as of October 23, 2024, reflects the Company’s
Slide 24: Q&A
Q&A 24 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 25: Diversified noninterest income streams
YTD 2024 REVENUE BREAKDOWN DIVERSIFIED NONINTEREST INCOME STREAMS Net interest income Noninterest 60% income Noninterest income represents 40% of year-to- 40% date total revenue. Majority of noninterest income fees are generated by the Company’s Partner Solutions business line. Other major items
Slide 26: Cost of deposits
COST OF DEPOSITS 5.26% COST OF DEPOSITS During the 2024 fiscal fourth quarter, approximately 57% of the deposit balances were subject to variable card processing expenses, derived from contractual agreements with certain Partner Solutions relationships tied to a rate index, typically the Effective
Slide 27: Loan portfolio interest rate sensitivity
TOTAL LOAN AND LEASE PORTFOLIO PRICING ATTRIBUTES1 15% LOAN PORTFOLIO INTEREST 33% RATE SENSITIVITY As of September 30, 2024, $2.4B, or 52% of loans 52% and leases contained floating or variable interest rates. Of these, $1.4B are tied to Fed Funds or Prime, with the remaining tied to either SOFR
Slide 28: Equipment Finance
EQUIPMENT FINANCE COMMERCIAL FINANCE 7.03% 19% Q4 2024 Quarterly Yield1 Of Loan Portfolio Loan and lease financing to provide access to needed equipment ($ in millions) Business Line Balance Sheet Category 4Q23 3Q24 4Q24 Focus on equipment critical to business operations Lease financing $171.7 $
Slide 29: Working Capital Finance
WORKING CAPITAL FINANCE COMMERCIAL FINANCE 12.98% 20% Q4 2024 Quarterly Yield Of Loan Portfolio • Provides working capital for companies to meet short- term operational requirements ($ in millions) Business Line Balance Sheet Category 4Q23 3Q24 4Q24 • Primarily variable rate loans with majority of f
Slide 30: Insurance Premium Finance
INSURANCE PREMIUM FINANCE1 COMMERCIAL FINANCE 9.20% Q4 2024 Quarterly Yield • Typically, short-term financing to facilitate the purchase of property, casualty, and liability insurance ($ in millions) policies Business Line Balance Sheet Category 4Q23 3Q24 4Q241 Insurance Premium Finance Insurance pr
Slide 31: Structured Finance
STRUCTURED FINANCE COMMERCIAL FINANCE 6.56% 36% Q4 2024 Quarterly Yield1 Of Loan Portfolio • Funding small and midsized businesses, including rural borrowers ($ in millions) Business Line Balance Sheet Category 4Q23 3Q24 4Q24 • SBA, USDA, and conventional loans with fixed or Guaranteed portion of US
Slide 32: Consumer
9.29% 7% Q4 2024 Quarterly Yield Of Loan Portfolio CONSUMER ($ in millions) Business Line Balance Sheet Category 4Q23 3Q24 4Q24 Consumer Consumer finance $254.4 $253.3 $248.8 • Consumer credit programs with marketplace lenders TOTAL $254.4 $253.3 $248.8 offer Pathward a risk adjusted return • Protec
Slide 33: Warehouse
10.38% 13% Q4 2024 Quarterly Yield Of Loan Portfolio WAREHOUSE ($ in millions) Business Line Balance Sheet Category 4Q23 3Q24 4Q24 Warehouse Warehouse finance $376.9 $450.0 $517.8 • Asset-backed warehouse lines of credit used to TOTAL $376.9 $450.0 $517.8 support strategic initiatives • Lines are pr
Slide 34: Commercial Finance concentrations by industry
COMMERCIAL FINANCE CONCENTRATIONS BY INDUSTRY1 $ in millions Finance and Insurance $777 Utilities $741 Manufacturing $728 Transportation and Warehousing $436 Mining, Quarrying, and Oil and Gas Extraction $296 Null $263 Other Services (except Public Administration) $256 Wholesale Trade $230 Construct
Slide 35: Interest rate risk management
INTEREST RATE RISK MANAGEMENT SEPTEMBER 30, 2024 Earning Asset Pricing Attributes1 • Data presented on this page is reflective of the Company’s asset mix at a point in time and calculated for regulatory purposes. Future rate 49% Fixed Rate > 1 Year changes would impact a multitude of variables beyon
Slide 36: Asset quality
ASSET QUALITY Adjusted Net Charge-Offs (“NCOs”)1 Nonperforming Assets (“NPAs”) Excludes Tax Services NCOs and Related Seasonal Average Loans ($ in millions) ($ in millions) 0.77% 0.61% 0.57% 0.63% 0.62% 0.53% 0.50% 0.49% 0.50% 0.45% 0.47% 0.49% 0.52% 0.43% $58.0 0.41% $42.4 $46.3 $43.0 $7.0 $7.3 $37
Slide 37: Capital and sources of liquidity
CAPITAL AND SOURCES OF LIQUIDITY Regulatory Capital as of September 30, 2024 Tier 1 Leverage Ratio Pathward Pathward, At September 30, 2024¹ Financial, Inc. N.A. 9.13% 9.36% 9.26% 9.44% Tier 1 Leverage 9.26% 9.44% 8.11% 8.32% 7.96% 8.15% Common Equity Tier 1 12.60% 13.12% 7.75% 7.92% Tier 1 Capital
Slide 38: Appendix
APPENDIX 38 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 39: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Adjusted Net Income and Adjusted Earnings Per Share For the year ended ($ in thousands, except share and per share data) 2022 Net income – GAAP a 156,386 Less: Gain on sale of trademarks 50,000 Add: Rebranding expenses 13,148 Add: Separation related expenses 5,109 Add: Income
Slide 40: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Adjusted Annualized NCOs and Adjusted Average Loans and Leases For the quarter ended ($ in thousands) Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Net charge-offs 41,280 5,486 (1,087) 6,582 35,626 Less: Tax services net charge-offs (recoveries) 36,075 851
Slide 41: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Efficiency Ratio For the last twelve months ended ($ in thousands) Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Noninterest expense – GAAP 464,975 479,190 492,485 501,586 513,253 Net interest income 387,861 413,840 430,736 444,130 455,118 Noninterest incom
Slide 42: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Net Interest Margin and Cost of Deposits For the quarter ended For the year ended ($ in thousands) Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Sept-23 Sept-24 Average interest earning assets 6,438,572 6,183,646 7,082,417 6,082,32
Slide 43: Definitions
DEFINITIONS Industry Terms Payment Players Commercial Lending Terms Banking-as-a-Service (BaaS): Acquiring Bank: Asset-Based Lending: Providing financial services and solutions to third An acquiring bank provides merchant accounts that allow a business to accept card Asset-Based Lending (ABL) refers