Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Investor Presentation (February 2024)
23 slides from Pathward Financial's investor presentation, Feb 13, 2024
Slide 1: Investor Presentation Updated February 13, 2024
INVESTOR PRESENTATION UPDATED FEBRUARY 13, 2024
Slide 2: Forward Looking Statements
Pathward Financial, Inc. (Nasdaq: CASH) | February 2024 Investor Presentation2 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 Securi
Slide 3: 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 people and businesses are underserved. Our national bank charter, coordination with
Slide 4: Building a diversified franchise dedicated to financial empowerment
BUILDING A DIVERSIFIED FRANCHISE DEDICATED TO FINANCIAL EMPOWERMENT FOR INDIVIDUALS AND BUSINESSES 4 1993 Listed on Nasdaq: CASH 2015 / 2016 Entered Tax Services business by acquiring Refund Advantage, SCS, and EPS 2020 Completed sale of Retail Bank division to focus on national banking operations a
Slide 5: Resilient business model in economic cycles
Stable funding via BaaS partner relationships Funding Earns consistent fees from the BaaS business Operates a collateralized lending platform that outperforms in down-cycles Income 5 RESILIENT BUSINESS MODEL IN ECONOMIC CYCLES Pathward Financial, Inc. (Nasdaq: CASH) | February 2024 Investor Presenta
Slide 6: Collaborate with partners to provide innovative BaaS solutions
6 COLLABORATE WITH PARTNERS TO PROVIDE INNOVATIVE BANKING AS A SERVICE (BAAS) SOLUTIONS Payment Solutions Issuing Solutions Credit Solutions Tax Solutions Accepting and processing payments through highspeed banking rails A leading debit and prepaid card issuer holding funds for partner programs Enab
Slide 7: Commercial Finance helps businesses access needed funds
7 Commercial Finance Helps Businesses Access Needed Funds Through Various Solutions Working Capital Finance Equipment Finance Structured Finance Insurance Premium Finance Ready cash for liquidity needs to new or growing companies in cyclical or seasonal industries Providing access to equipment finan
Slide 8: Strong and diverse leadership team and board of directors
STRONG AND DIVERSE LEADERSHIP TEAM AND BOARD OF DIRECTORS 8 Executive Leadership Team Board of Directors Frederick Moore Director1 Brett Pharr Chief Executive Officer and Director Anthony Sharett President Greg Sigrist EVP, Chief Financial Officer Nadia Dombrowski EVP, Chief Legal and Administrative
Slide 9: Investment Highlights
RECORD OF STRONG EARNINGS GROWTH AND PROFITABILITY ABOVE BANKING INDUSTRY AVERAGES EXCESS CAPITAL GENERATING BUSINESS ENABLES ONGOING RETURN OF VALUE TO SHAREHOLDERS INVESTMENT HIGHLIGHTS 2 3 4 1 5 EXPERIENCED LEADER IN FAST-GROWING BANKING AS A SERVICE (BAAS) SECTOR, WITH DIVERSIFIED PORTFOLIO OF H
Slide 10: Record of strong earnings growth
RECORD OF STRONG EARNINGS GROWTH 10 1 2 3 4 5 Earnings Per Common Share Earnings inclusive of extraordinary items In fiscal year 2022, the company sold its Meta names and trademarks and completed a Company rebrand. Adjustments to earnings in fiscal year 2022 include the revenue from the sale, expens
Slide 11: Profitability above banking industry averages
PROFITABILITY ABOVE BANKING INDUSTRY AVERAGES 11 1 2 3 4 5 • Peer data includes commercial insured banks with assets between $3-10 billion. Return on average assets and net interest margin information gathered from the Federal Financial Institutions Examination Council database. • Fiscal Year 2022 r
Slide 12: Right-sized balance sheet enables ongoing return of capital
TRACK RECORD OF STRONG EARNINGS GROWTH AND RIGHT-SIZED BALANCE SHEET ENABLES ONGOING RETURN OF CAPITAL 12 1 2 3 4 5 $550.9M TOTAL SHARE REPURCHASES 2Q19 TO 1Q24 $32.0M TOTAL DIVIDENDS PAID 2Q19 TO 1Q24 Note: Repurchased common shares include shares withheld to cover income taxes owed by participants
Slide 13: Leader in fast-growing BaaS sector
LEADER IN FAST-GROWING BAAS SECTOR 13 1 2 3 4 5 ~$2.5 Billion Moved daily in ACH and wire services >$11 Billion Moved since start of MasterCard Send and Visa Direct programs in 2020 ~280,000 ATMs Sponsored nationwide Top 25 NACHA – Top 25 ACH Originator and Receiver (#17 and #23, April 2022) >11,000
Slide 14: Pathward serves as a hub of the BaaS ecosystem
PATHWARD SERVES AS A HUB OF THE BAAS ECOSYSTEM 14 1 2 3 4 5 Fed / Settlement ATM Sponsorship 80+ ISOs Processor Acquiring 25+ Processor Issuing ~20 FinTech / Program Manager Partners 65+ Financial Institution Clients 1,100+ Debit/Credit Networks 14 End User Card Holder / Consumer End User Merchants
Slide 15: Working Capital, Equipment and Structured Finance
Working Capital Finance • Provides working capital for new or growing companies to meet short-term operational requirements • Primarily variable rate loans with majority of floors at or above 6% • Bank typically has dominion of funds • Heavily collateral-managed • Historically excels during economic
Slide 16: Produces stable annual net charge-off rates
…PRODUCES STABLE ANNUAL NET CHARGE-OFF RATES 16 Fiscal Year End Commercial Finance Loan Balances ($ in millions) $126 $113 $92 $140 $158 $207 $324 $368 $414 $474 $591 $665 $858 $1,510 $1,916 $2,308 $2,725 $3,024 $3,723 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 500 1,000 1,500 2,000 2,500 3,000 3
Slide 17: Well-developed risk mitigation and compliance capabilities
WELL-DEVELOPED RISK MITIGATION AND COMPLIANCE CAPABILITIES 17 1 2 3 4 5 Enterprise Risk Management Our Enterprise Risk Management (ERM) program applies corporate governance to risk-taking activities. The ERM program sets strategy across the enterprise and works closely with the lines of business to
Slide 18: Appendix
APPENDIX Pathward Financial, Inc. (Nasdaq: CASH) | February 2024 Investor Presentation
Slide 19: Non-GAAP Reconciliation
19 Adjusted Net Income and Adjusted Earnings Per Share Fiscal Year ($ in thousands, except per share data) 2022 2023 Net income - GAAP 156,386 163,615 Less: Gain on sale of trademarks 50,000 10,000 Less: Loss on disposal of certain mobile generators - (1,993) Add: Accelerated depreciation on certain
Slide 20: Pathward's Balance Sheet
20 PATHWARD’S BALANCE SHEET BaaS deposits fund Pathward’s earning asset portfolio while delivering ample fee income Pathward’s commitment to maintain the size of its balance sheet enables the return of capital to shareholders Assets Liabilities Shareholders’ Equity Earning Assets Loans & Leases Secu
Slide 21: Credit controls limit the risk in consumer and warehouse programs
21 CREDIT CONTROLS LIMIT THE RISK IN CONSUMER AND WAREHOUSE PROGRAMS All Loan/Collateral Cash Flows Admin Fees (0-5%) Junior Tranche $40MM (40%) Equity Tranche $10MM (10%) First-Out Tranche (Pathward Position) $50MM (50%) $100M Facility EXAMPLE Warehouse Finance Asset-backed warehouse lines of credi
Slide 22: Industry Terms
Industry Terms 22 Types of Payment Cards Banking-as-a-Service (BaaS): Providing financial services and solutions to third parties to offer through their distribution channels. Push-to-debit: The ability to move money directly to an end user. At Pathward, our push-to-debit capabilities are called “Fa
Slide 23: Asset-Based Lending Glossary
23 Asset-Based Lending: Asset-Based Lending (ABL) refers to business loans that are secured based on assets as collateral, generally accounts receivable, inventory, equipment or other balance sheet assets. Accounts Receivable: Accounts Receivable (A/R) financing refers to financing based on the valu
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