Slide 1: Quarterly Investor Update Fourth Quarter & Fiscal Year End 2022
Quarterly Investor Update FOUR TH QUAR TER & F ISCA L YEAR END 2022 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 2: Forward Looking Statements
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation2 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 199
Slide 3: Leading the way to financial access
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 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 people and
Slide 4: Pathward's Unique Business Model
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation4 Pathward’s Unique Business Model Pathward’s resilient model secures low-cost funding1 via BaaS payments relationships, earns an outsized proportion of consistent payment fees, and operates a collateralized lending platform th
Slide 5: Why Invest?
2 3 4 1 Record of strong earnings growth and profitability above banking industry averages Resilient Commercial Finance loan portfolio produces attractive returns throughout economic cycles Leader in fast-growing Banking as a Service (BaaS) sector, with diversified portfolio of high-quality financia
Slide 6: Record of Strong Earnings Growth and Profitability
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation6 Record of Strong Earnings Growth and Profitability 2.20% 1.13% 1.12% 1.55% 1.45% 1.74% 1.88% 2017 2018 2019 2020 2021 2022 Return on Average Assets ROAA inclusive of one-time items Net Interest Margin Return on Average Tangib
Slide 7: Return of Capital to Shareholders
Pathward’s track record of profitability and strong earnings growth, combined with its commitment to maintaining the size of its balance sheet, enables the return of the majority of earnings through repurchases and dividends. Targeting to maintain regulatory capital leverage ratio above 8% and total
Slide 8: Continued Progress on Key Strategic Initiatives
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation8 Continued Progress on Key Strategic Initiatives OPTIMIZE INTEREST-EARNING PORTFOLIO, TO EMPHASIZE HIGHER -RETURN ASSETS • Improved yield on earning assets to 5.26% for 4Q22 as compared to 4.45% for 4Q21. • Grew commercial fin
Slide 9: Earnings Guidance
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation9 Earnings Guidance 1 Includes gain on sale of trademarks, rebranding-related expenses, and separation agreement expenses. 2 The percentage change is calculated by using the midpoint of the respective ranges. (Earnings per shar
Slide 10: Summary Financial Results
Pathward Financial, Inc, (Nasdaq: CASH) | Quarterly Investor Presentation10 Summary Financial Results Fourth Quarter Ended September 30, 2022 INCOME STATEMENT ($ in thousands, except per share data) 4Q21 3Q22 4Q22 Net interest income 70,667 72,151 79,760 Provision for credit losses 8,775 (1,302) (2,
Slide 11: Balance Sheet Highlights
Pathward Financial Inc. (Nasdaq: CASH) | Quarterly Investor Presentation11 Balance Sheet Highlights Fourth Quarter Ended September 30, 2022 BALANCE SHEET PERIOD ENDING ($ in thousands) 4Q21 3Q22 4Q22 Cash and cash equivalents 314,019 157,260 388,038 Investments 1,921,568 2,000,400 1,924,551 Loans he
Slide 12: Deposit Growth
Deposits held on Balance Sheet Pathward’s BaaS business generates fee income and low-cost deposits leading to high levels of noninterest- bearing deposits (96% of total deposits). The BaaS business’ ability to attract and maintain these low-cost deposits provides a powerful competitive advantage. No
Slide 13: Low-cost Deposits
Pathward is benefitting from the deposit optimization strategy that included transitioning away from higher cost interest-bearing wholesale deposits in favor of growing BaaS deposits. As of September 30, 2022, approximately 37% of the deposit balances were subject to variable card processing expense
Slide 14: Diversified Noninterest Income Streams
Noninterest income continues to represent greater than 40% of total revenue. Majority of non-interest income fees are generated by the Company’s BaaS business line. Other major items include fee income from loan and lease rental and sale income. Pathward’s large fee income base provides stability th
Slide 15: Overview of Loan Portfolio
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation 15 Overview of Loan Portfolio ($ in millions) Business Line Balance Sheet Category 4Q21 3Q22 4Q22 MRQ Yield % of Total Commercial Finance Structured Finance Guaranteed portion of US govt SBA/USDA loans SBA/USDA 61.9 59.4 194.9
Slide 16: Commercial Finance Attributes by Asset Class
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation16 Commercial Finance Attributes by Asset Class WORKING CAPITAL FINANCE • Provides working capital for new or growing companies to meet short-term operational requirements • Primarily variable rate loans with majority of floors
Slide 17: Loan Portfolio Interest Rate Sensitivity
As of September 30, 2022, $1.2B, or 33% of loans and leases contained floating or variable interest rates. Of these, $1.0B are tied to Fed Funds or Prime, with the remaining tied to either LIBOR or the CMT. Of the $1.2B variable interest rate loans, approximately 75% utilized floor rates in some cap
Slide 18: Interest Rate Risk Management
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation18 Interest Rate Risk Management September 30, 2022 -2,000 0 2,000 4,000 Month 1-12 Month 13-36 Month 37-60 Month 61-180 V ol um e ($ M M ) Period Variance Total Assets Total Liabilities Asset/Liability Gap Analysis 1 Fixed rat
Slide 19: Asset Quality
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation19 Asset Quality $7.0 $3.4 $11.4 $4.2 $4.1 0.77% 0.37% 1.25% 0.46% 0.45% 0.50% 0.48% 0.68% 0.71% 0.63% 4Q21 1Q22 2Q22 3Q22 4Q22 Period Ended Adj. NCOs Adj. NCOs / Adj. Average Loans Adj. NCOs / Adj. Average Loans - LTM Adjusted
Slide 20: Capital and Sources of Liquidity
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation20 Capital and Sources of Liquidity Regulatory Capital as of September 30, 2022 At September 30, 2022¹ Pathward Financial, Inc. Pathward, N.A. Tier 1 Leverage 8.10% 8.19% Common Equity Tier 1 12.07% 12.55% Tier 1 Capital 12.39%
Slide 21: Appendix
APPENDIX 21 Pathward Financial, Inc, (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 22: Non-GAAP Reconciliation: Adjusted Net Income and EPS
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation22 Non-GAAP Reconciliation Adjusted Net Income and Adjusted Earnings Per Share For the quarter ended For the year ended ($ in thousands, except per share data) 4Q21 3Q 22 4Q 22 2021 2022 Net income - GAAP 15,903 22,391 23.420 1
Slide 23: Non-GAAP Reconciliation: Adjusted Net Charge-offs
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation23 Non-GAAP Reconciliation 1 Tax Services NCOs and average loans are excluded to adjust for the cyclicality of activity related to the overall economics of the Company's tax services business line. For the quarter ended ($ in t
Slide 24: Non-GAAP Reconciliation: Efficiency Ratio
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation24 Non-GAAP Reconciliation For the last twelve months ended ($ in thousands) Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Noninterest Expense - GAAP 343,683 353,544 360,733 375,860 385,275 Net Interest Incom
Slide 25: Commercial Finance Industry Concentrations
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation25 Commercial Finance Industry Concentrations1 Manufacturing Transportation and Warehousing Utilities Wholesale Trade Health Care and Social Assistance Finance and Insurance Construction Administrative and Support and Waste Man