Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q3 2021 Earnings Presentation
27 slides from Pathward Financial's earnings presentation, Jul 28, 2021
Slide 1: Quarterly Investor Update Third Quarter Fiscal Year 2021
QUARTERLY INVESTOR UPDATE THIRD QUARTER FISCAL YEAR 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 2 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,” “h
Slide 3: We strive to increase financial availability, choice, and opportunity
3 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 servic
Slide 4: Differentiated business lines with significant growth opportunities
DIFFERENTIATED BUSINESS LINES WITH SIGNIFICANT GROWTH OPPORTUNITIES 49% $272.8 $103.1 $85.1 $39.9 $34.1 Net Interest Income Payments Fees Tax Product Income Rental Income Other Income Noninterest Income as a percent of Total Revenue in LTM ending June 30, 2021 Consumer Finance Our Consumer Finance d
Slide 5: Third Quarter Business Highlights & Key Strategic Initiatives
Increase Percentage of Funding From Core Deposits Optimize Interest- earning Asset Mix Improve Operating Efficiencies Efficiency ratio of 61.75% improved from 63.60% as of June 30, 2020. • Continuing to drive optimization and utilization of existing business platforms. • Leveraging technology to hel
Slide 6: Summary Financial Results Third Quarter Ended June 30, 2021
SUMMARY FINANCIAL RESULTS THIRD QUARTER ENDED JUNE 30, 2021 6 1 Amounts presented are used in the two-class earnings per common share calculation. INCOME STATEMENT ($ in thousands, except per share data) 3Q21 2Q21 3Q20 Net interest income 68,475 73,850 62,137 Provision for credit losses 4,612 30,290
Slide 7: Balance Sheet Highlights Third Quarter Ended June 30, 2021
BALANCE SHEET HIGHLIGHTS THIRD QUARTER ENDED JUNE 30, 2021 7 BALANCE SHEET PERIOD ENDING ($ in thousands) 3Q21 2Q21 3Q20 Cash and cash equivalents 720,243 3,724,242 3,108,141 Investments 1,981,852 1,552,892 1,268,416 Loans held for sale 87,905 67,635 79,905 Loans and leases (HFI)1 3,496,670 3,657,53
Slide 8: Quarterly Average Earning Asset Mix
Quarterly Average Earning Asset Mix % in charts represent % of total interest earning assets At the Quarter Ended JUNE 30, 2021 JUNE 30, 2020 ($ in thousands) 3 Q 2 1 3 Q 2 0 Y/Y Δ COMMERCIAL FINANCE 2,586,527 2,158,905 20% Term lending 920,279 738,454 25% Asset-based lending 263,237 181,130 45% Fac
Slide 9: Consumer Business Lines
CONSUMER BUSINESS LINES 9Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 10: MetaBank is a well-recognized leader in BaaS
METABANK IS A WELL-RECOGNIZED LEADER IN BAAS 10 • Full range of payment and debit services • Leading issuer of prepaid debit cards • Agent for all three rounds of U.S. Treasury Economic Impact Payments • Provide partners with regulatory and compliance oversight • Provide tax return transfer and loan
Slide 11: MetaBank serves as the hub of the payments ecosystem
METABANK SERVES AS THE HUB OF THE PAYMENTS ECOSYSTEM 11 Regulatory/Compliance Oversight OCC Primary Regulator Issuing/Acquiring Bank End User Card Holder/ Consumer End User Merchants Processor Issuing 20+ Fintech / Program Manager Partners 50+ Community Banks 1200+ Debit/Credit Networks 20+ Fed / Se
Slide 12: BaaS capabilities generate increasing low-cost deposits and revenue
0.0 20,000.0 40,000.0 60,000.0 80,000.0 100,000.0 120,000.0 3Q20 2Q21 3Q21 Payments Tax Services Consumer Finance BAAS CAPABILITIES GENERATE INCREASING LOW-COST DEPOSITS AND REVENUE 12 Growth in BaaS revenue Average Payments Deposits* ($ in billions) 26% 53% 33% % of Total Revenue $6.32 $9.29 $6.79
Slide 13: Tax Services Economics
Refund advances (“RAs”) and refund-transfers (“RTs”) leverage BaaS infrastructure and are core to MetaBank’s mission, as they allow consumers quicker access to their money. Strong revenue generation in the quarter compared to the prior year related to delayed timing of RT product income due to the e
Slide 14: Lending Business Lines
LENDING BUSINESS LINES 14Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 15: Highly granular and diversified loan portfolio
HIGHLY GRANULAR AND DIVERSIFIED LOAN PORTFOLIO 15 • Collateral-based lending focused on risk management and administrative controls of borrowers’ assets. • Underwritten to ensure recovery of full loan exposure in the event of a default or liquidation. • Closely monitored and managed. • Strong credit
Slide 16: Overview of loan portfolio
OVERVIEW OF LOAN PORTFOLIO 16 Business Line Balance Sheet Category 3Q20 2Q21 3Q21 % of Portfolio 3Q21 Commercial Finance Commercial Finance Guaranteed portion of US govt SBA/USDA Loans SBA/USDA 8.5 68.5 71.9 2% Unguaranteed portion of US govt SBA/USDA Loans SBA/USDA 84.6 54.8 48.6 1% Paycheck Protec
Slide 17: Select Commercial Finance Areas
• Permanent debt financing | $111.7 million outstanding (Investment Advisor) and $98.3 million outstanding (Insurance Agency) – Financed through both SBA 7(a) ($77.9 million) and Conventional ($132.1 million) product offerings. – Repeatable and predictable cash flows of insurance premiums and asset
Slide 18: Commercial Real Estate Industry Composition
Commercial Real Estate Industry Composition ($ in millions) OUTSTANDING BALANCE % OF TOTAL¹ Commercial Real Estate $287.1 7.7% Commercial Operating 7.7 0.2% Agricultural 7.8 0.2% 1-4 Family Real Estate 1.4 0.1% Total $304.0 8.2% • All hospitality loans have resumed principal and interest payments ac
Slide 19: Asset Quality, Interest Rate Risk, & Capital
ASSET QUALITY, INTEREST RATE RISK, & CAPITAL 19Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 20: Asset Quality
$4.9 $5.5 $3.8 $3.8 $2.8 0.55% 0.63% 0.44% 0.44% 0.32% 3Q20 4Q20 1Q21 2Q21 3Q21 Period Ended NCOs NCOs / Average Loans Adjusted Net Charge-Offs (“NCOs”)¹ Excludes Tax Services NCOs and Related Seasonal Average Loans ($ in millions) KEY CREDIT METRICS • Annualized adjusted net charge-offs1: – 0.32% o
Slide 21: Interest Rate Risk Management
-10% 5% 20% 35% -100 +100 +200 +300 Parallel Shock Ramp 1 Fixed rate securities, loans and leases are shown for contractual periods. -2,000 0 2,000 4,000 6,000 Month 1-12 Month 13-36 Month 37-60 Month 61-180 V o lu m e ( $ M M ) Period Variance Total Assets Total Liabilities INTEREST RATE RISK MANAG
Slide 22: Capital and Sources of Liquidity
5.91% 6.58% 7.39% 4.75% 6.85%6.89% 7.56% 8.60% 5.47% 7.83% 3Q20 4Q20 1Q21 2Q21 3Q21 CAPITAL AND SOURCES OF LIQUIDITY REGULATORY CAPITAL AS OF JUNE 30, 2021 Minimum Requirement to be Well-Capitalized under Prompt Corrective Action Provisions Meta Financial Group, Inc. MetaBank, N.A. Capital Ratio Tre
Slide 23: Appendix
APPENDIX 23Meta Financial Group, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 24: Active COVID-19 Loan and Lease Modifications and Deferrals
June 30, 2021 March 31, 2021 COUNT $ BALANCE COUNT $ BALANCE COMMUNITY BANK 9 $ 36.6 15 $58.7 Hospitality 9 36.6 11 40.8 Movie Theater 0 - 4 17.9 COMMERCIAL FINANCE 24 $3.2 55 $5.8 Small ticket equipment finance 23 1.6 55 5.8 Other commercial finance 1 1.6 0 - CONSUMER 50 $1.6 76 $1.9 TOTAL 83 $41.5
Slide 25: Net Interest Margin EIP-Adjusted Reconciliation
THREE MONTHS ENDED ($ in millions) JUNE 30, 2021 MARCH 31, 2021 DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Average interest-earning assets 7,316,820 9,768,242 5,636,445 6,806,366 7,608,616 Net interest income 68,475 73,850 65,999 64,513 62,137 Net interest margin 3.75% 3.07% 4.65% 3.77% 3.28
Slide 26: Regulatory Capital Reconciliation
($ in millions) JUNE 30, 2020 MARCH 31, 2020 DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Total stockholder's equity $ 980,163 $ 934,010 $ 912,143 $ 933,430 $ 923,520 LESS: Goodwill, net of associated deferred tax liabilities 301,179 301,602 301,999 302,396 302,815 LESS: Certain other intangib
Slide 27: Financial Measure Reconciliations
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. FINANCIAL MEASURE RECONCILIATIONS 27 For the last twelve months ended ($ in thousands) Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep