Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Q3 2022 Earnings Presentation
20 slides from Pathward Financial's earnings presentation, 2022
Slide 1: Quarterly Investor Update
QUARTERLY INVESTOR UPDATE THIRD QUARTER FISCAL YEAR 2022 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 1
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: Third Quarter Business Highlights & Key Strategic Initiatives
THIRD QUARTER BUSINESS HIGHLIGHTS & KEY STRATEGIC INITIATIVES Optimize Optimize Optimize Interest-Earning Assets Deposits Operating Efficiencies Continued focus on growing Total deposits fell by $178 million, or Efficiency ratio of 62.84% compared commercial finance business lines. 3%, from June 30,
Slide 5: Other Business Developments
OTHER BUSINESS DEVELOPMENTS THIRD QUARTER ENDED JUNE 30, 2022 • On July 13, 2022, the Company announced it is changing its name to Pathward Financial, Inc.TM, and its bank subsidiary, MetaBank, N.A., will be changing its name to PathwardTM, N.A. – Certain changes were made immediately, with a full t
Slide 6: Earnings Guidance
EARNINGS GUIDANCE (Earnings per share amounts) Fiscal Year 2022 Fiscal Year 2023 Diluted earnings per share - GAAP $5.04 – $5.24 $5.25 - $5.75 Less: Net nonrecurring items, net of tax1 $0.76 $0.15 Diluted earnings per share - Adjusted $4.28 - $4.48 $5.10 - $5.60 1 Includes gain on sale of trademarks
Slide 7: Summary Financial Results
SUMMARY FINANCIAL RESULTS THIRD QUARTER ENDED JUNE 30, 2022 INCOME STATEMENT ($ in thousands, except per share data) 3Q21 2Q22 3Q22 Net interest income 68,475 83,800 72,151 Provision for credit losses 4,612 32,302 (1,302) Total noninterest income 62,453 109,766 53,994 Total noninterest expense 81,52
Slide 8: 2022 Tax Season Recap
2022 TAX SEASON RECAP Refund advances (“RAs”) and refund-transfers (“RTs”) leverage banking-as-a-service (“BaaS”) infrastructure and are core to our Pathwardmission, as they allow consumers quicker access to their money. • RA originations of $1.83 billion compared to $1.79 billion in the 2021 tax se
Slide 9: BaaS Capabilities Generate Low-Cost Deposits and Revenue
BaaS CAPABILITIES GENERATE LOW-COST DEPOSITS AND REVENUE BaaS deposits BaaS revenue Average Payments Deposits* % of Total Revenue ($ in billions) ($ in millions) $120.0 58% $0.13 $100.0 $2.076 $0.02 $1.47 $0.02 $80.0 $1.39 $60.0 36% 32% $6.67 $40.0 $6.33 $5.56 $20.0 $- 3Q21 2Q22 3Q22 3Q21 2Q22 3Q22
Slide 10: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS THIRD QUARTER ENDED JUNE 30, 2022 BALANCE SHEET PERIOD ENDING ($ in thousands) 3Q21 2Q22 3Q22 Cash and cash equivalents 720,243 237,680 157,260 Investments 1,981,852 2,090,765 2,000,400 Loans held for sale 87,905 31,410 67,571 Loans and leases (HFI)1 3,496,670 3,730,190 3,68
Slide 11: Diversified Earning Asset Portfolio
DIVERSIFIED EARNING ASSET PORTFOLIO Quarterly Average Earning Asset Mix At the Quarter Ended % in charts represent % of total interest earning assets JUN 30, 2021 JUN 30, 2022 ($ in thousands) 3Q21 3Q22 Y/Y Δ COMMERCIAL FINANCE 2,586,527 2,947,903 14% Term lending 920,279 1,047,764 14% Asset-based l
Slide 12: Overview of Loan Portfolio
OVERVIEW OF LOAN PORTFOLIO MRQ ($ in millions) Business Line Balance Sheet Category 3Q21 2Q22 3Q22 Yield Commercial Finance Guaranteed portion of US govt SBA/USDA loans SBA/USDA 71.9 61.7 59.4 Unguaranteed portion of US govt SBA/USDA loans SBA/USDA 48.6 109.5 135.0 Paycheck Protection Program (PPP)
Slide 13: Commercial Finance Industry Concentrations
COMMERCIAL FINANCE INDUSTRY CONCENTRATIONS 1 $ in millions $- $100 $200 $300 $400 Transportation and Warehousing Manufacturing Utilities Wholesale Trade Health Care and Social Assistance Construction Finance and Insurance Admin. and Support and Waste Management and Remediation Services Mining, Quarr
Slide 14: Asset Quality
ASSET QUALITY Nonperforming Assets (“NPAs”) Adjusted Net Charge-Offs (“NCOs”)¹ ($ in millions) Excludes Tax Services NCOs and Related Seasonal Average Loans ($ in millions) 1.25% 0.92% 0.77% 0.64% 0.58% 0.56% 0.46% 0.40% 0.32% 0.37% $7.0 $11.4 $61.8 $45.1 $44.3 $38.3 $2.8 $4.2 $3.4 $26.8 3Q21 4Q21 1
Slide 15: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT JUNE 30, 2022 12-Month Interest Rate Sensitivity from Base Net Interest Income • Focus is on selectively adding duration to improve yield and protect margin against falling rates. 35% Parallel Shock Ramp • Interest rate risk shows asset sensitive balance sheet; net inte
Slide 16: Capital and Sources of Liquidity
CAPITAL AND SOURCES OF LIQUIDITY REGULATORY CAPITAL AS OF JUNE 30, 2022 Pathward Pathward, Capital Ratio Trends At June 30, 2022¹ Financial, Inc. N.A. Tier 1 Leverage Ratio Tier 1 Leverage 8.23% 8.22% 8.69% 8.52% Common Equity Tier 1 11.87% 12.17% 7.83% 7.67% 7.39% 7.79% 8.23% 8.22% 6.85% Tier 1 Cap
Slide 17: Appendix
APPENDIX Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 17
Slide 18: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Adjusted Net Income and Adjusted Earnings Per Share For the quarter ended For the nine months ended ($ in thousands, except per share data) 3Q21 2Q22 3Q22 3Q21 3Q22 Net income - GAAP 38,701 49,251 22,391 125,805 132,966 Less: Gain on sale of trademarks - - - - 50,000 Add: Reb
Slide 19: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Adjusted Annualized NCOs and Adjusted Loans and Leases For the quarter ended ($ in thousands) Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Net Charge-offs 12,333 31,753 1,129 11,226 12,198 Less: Tax services net charge-offs 9,488 24,798 (2,313) (183) 7,992
Slide 20: Financial Measure Reconciliations
FINANCIAL MEASURE RECONCILIATIONS Efficiency Ratio For the last twelve months ended ($ in thousands) Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Noninterest Expense - GAAP 330,352 343,683 353,544 360,733 375,860 Net Interest Income 272,837 278,991 284,605 294,555 298,231 Noninte