Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q3 2020 Earnings Presentation
26 slides from Pathward Financial's earnings presentation, Jul 22, 2020
Slide 1: Quarterly Investor Update Third Quarter Fiscal Year 2020
Quarterly Investor Update Third Quarter Fiscal Year 2020
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: Business Developments Third Quarter Ended June 30, 2020
Business Developments Third Quarter Ended June 30, 2020 • Signed letter of intent with Emerald Financial Services, LLC, a wholly owned indirect subsidiary of H&R Block, to enter into a multi-year program management agreement to offer certain financial products to H&R Block clients. • Renewed and ext
Slide 4: Selected Financial Highlights
Selected Financial Highlights Third Quarter Ended June 30, 2020 INCOME STATEMENT ($ in thousands, except per share data) 3Q20 2Q20 3Q19 Net interest income 62,137 67,737 66,968 Provision for loan and lease losses 15,093 37,296 9,112 Payments card & deposit fees 21,302 23,156 21,377 Total noninterest
Slide 5: 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 June 30, 2020 June 30, 2019 ($ in thousands) 3Q20 3Q19 Y/Y Δ 28% COMMERCIAL FINANCE 2,158,905 1,835,850 18 % 35% Term lending 738,454 562,557 31 % JUN
Slide 6: Asset Quality
Asset Quality 1 Excludes Tax Services NCOs and Related Seasonal Average Loans Tax Services NCOs and related seasonal average loans are excluded to adjust for the cyclicality of activity related to the overall economics of the tax services business line. Allowance for loan and lease losses (“ALLL”) $
Slide 7: Asset Quality: Continue to Build Allowance
Asset Quality Continue to Build Allowance COVID-19 LOAN AND LEASE MODIFICATIONS AND DEFERRALS June 30, 2020 TOTAL MODIFICATIONS & DEFERRALS ACTIVE MODIFICATIONS & DEFERRALS COUNT $ BALANCE COUNT $ BALANCE COMMUNITY BANK 59 $151.4 59 $151.4 Hospitality relationships 30 $86.5 30 $86.5 COMMERCIAL FINAN
Slide 8: Commercial Finance & Community Bank Portfolios
Commercial Finance & Community Bank Portfolios 8 Third Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 9: Limited Total Exposure to COVID-19 High Impact Industries
Limited Total Exposure to COVID-19 High Impact Industries HIGH IMPACT INDUSTRY EXPOSURES COMMUNITY COMMERCIAL ($ in millions) BANK FINANCE TOTAL % OF TOTAL¹ HOSPITALITY $169.0 $43.6 $212.6 5.7% RETAIL (excl. consumer staples²) $56.0 $38.2 $94.2 2.5% FITNESS AND RECREATIONAL CENTERS $0.7 $21.7 $22.4
Slide 10: Commercial Finance Loan and Lease Portfolio
Commercial Finance Loan and Lease Portfolio Rental TERM LENDING. Collateralized conventional term loans and notes receivable, weighted average life Equipment, of 53 months. Exposure is concentrated in solar/alternative energy, most of which are construction net projects that will convert to longer t
Slide 11: Distribution of Commercial Finance Portfolio by Industry
Distribution of Commercial Finance Portfolio by Industry¹ $ in millions $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Manufacturing Transportation and Warehousing Utilities Finance and Insurance Construction Wholesale Trade Health Care and Social Assistance Admin and Support and Waste Mgmt and Reme
Slide 12: Commercial Finance Mix
Commercial Finance Mix¹ MANUFACTURING UTILITIES Total Exposure $411.4 million % of Total² 11.1% Total Exposure $267.6 million % of Total² 7.2% • Limited exposure to single borrowers • 97% of Utilities exposure is to Solar Electric Power Generation, majority of • Diversified across multiple subsector
Slide 13: Legacy Community Bank Portfolio Breakdown
Legacy Community Bank Portfolio Breakdown As of June 30, 2020 | Serviced by Central Bank 1-4 FAMILY REAL ESTATE Outstanding • Majority first mortgages for owner-occupied homes ($ in millions) Balance % of Total¹ • Vast majority of loans are originated with loan-to-values below 80% Commercial Real Es
Slide 14: Legacy Community Bank Hotel Portfolio
Legacy Community Bank | Hotel Portfolio As of June 30, 2020 | Serviced by Central Bank $169.0 million outstanding, total exposure of $204.1 million including unfunded commitments $162.9 million in commercial real estate and $6.1 million in C&I • Portfolio comprised of 30 relationships representing 3
Slide 15: Payments
Payments 15 Third Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 16: Payments Business Update
Payments Business Update Payments Card and Deposit Fee Income Breakout Third Quarter Fiscal 2020 • Increased monitoring of our partners due to COVID-19; providing payment 8% modifications and deferrals where necessary, immaterial impact to date. 10% • Prepaid card distribution based on balance as of
Slide 17: Interest Rate Risk and Capital
Interest Rate Risk and Capital 17 Third Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 18: Interest Rate Risk Management
Interest Rate Risk Management as of June 30, 2020 12-Month Interest Rate Sensitivity from Base Net Interest Income (excluding EIP Card Impact) • Lower for longer rate environment -- focus is on 21% reducing wholesale deposits and redeploying deposits and assets into positive carry opportunities. 16%
Slide 19: Strong Capital and Sources of Liquidity
Strong Capital and Sources of Liquidity Regulatory Capital as of June 30, 2020 At June 30, 2020 Meta Financial Group, Inc. MetaBank Tier 1 Leverage 5.91% 6.89% Capital Ratio Trends Tier 1 Leverage – Adjusted¹ N/A 9.67% Common Equity Tier 1 11.51% 13.82% Tier 1 Capital 11.90% 13.86% Total Capital 14.
Slide 20: Appendix
Appendix 20 Third Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 21: Long-Term Strategy to Drive Shareholder Value
Long-Term Strategy to Drive Shareholder Value 1 2 3 KEY Increase Percentage of Optimize Interest-Earning Improve Operating Funding from Core Asset Mix Efficiencies INITIATIVES Deposits Expense discipline by improving collaboration Leverage payments division growth Replace lower-yielding loans and se
Slide 22: Differentiated Portfolio of Business Lines
Differentiated Portfolio of Business Lines Last Twelve Months Ended June 30, 2020 Commercial Consumer Community Corporate & Payments Tax Total ($ in thousands) Finance Finance Bank Eliminations Net interest income (expense) 151,827 65,416 (1,112) 36,503 38,646 (31,138) 260,142 Non-interest income 58
Slide 23: Warehouse Finance
Warehouse Finance Total Exposure $277.6 million % of Total¹ 7.5% All Loan/Collateral Cash Flows Asset-backed warehouse lines of credit used to support strategic initiatives. • Lines are primarily secured by consumer receivables, whereby Meta is in a senior, secured position as the first out particip
Slide 24: Consumer Credit Programs
Consumer Credit Programs Consumer Payments Total Exposure $102.8 million % of Total¹ 2.8% Principal, Interest, Fees Consumer credit programs offer Meta a risk adjusted return, protected by certain layers of credit support and balance sheet flexibility. Programs are offered to strategic partners with
Slide 25: Financial Measure Reconciliations
Financial Measure Reconciliations Efficiency Ratio For the last twelve months ended ($ in thousands) Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Noninterest Expense - GAAP 314,911 316,138 334,663 333,160 323,657 Net Interest Income 260,142 264,973 268,586 264,207 247,127 Noninte
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations MetaBank Period-end Tier 1 Leverage Adjusted Net Interest Margin Three Months Ended June 30, 2020 June 30, 2020 Total stockholder's equity $ 919,733 Average interest-earning assets 7,608,618 ADJUSTMENTS: Net interest income 62,137 LESS: Goodwill, net of associated deferred t