Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q2 FY2021 Earnings Presentation
33 slides from Pathward Financial's earnings presentation, Apr 27, 2021
Slide 1: Quarterly Investor Update Second Quarter Fiscal Year 2021
Q U A R T E R LY I N V E STO R U P D AT E S E C O N D Q U A R T E R F I S C A L Y E A R 2 0 2 1
Slide 2: Forward-Looking Statements
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH F O R WA R D - LO O K I N G STAT E M E N TS 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 Litigatio
Slide 3: We Are a Financial Enablement Company
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH3 W E A R E A F I N A N C I A L E N A B L E M E N T C O M P A N Y We work with innovators to increase financial availability, choice, and opportunity for all. We strive to remove barriers that traditional institutions put in t
Slide 4: Banking as a Service: Differentiated Business Lines with Growth Opportunities
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH B A N K I N G A S A S E R V I C E ( “ B a a S ” ) 4 D I F F E R E N T I AT E D B U S I N E S S L I N E S W I T H S I G N I F I C A N T G RO W T H O P P O R T U N I T I E S C O M M E R C I A L F I N A N C E Enables fintechs, f
Slide 5: Second quarter strategic priorities and highlights
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH5 INCREASE PERCENTAGE OF FUNDING FROM CORE DEPOSITS OPTIMIZE INTEREST- EARNING ASSET MIX IMPROVE OPERATING EFFICIENCIES Efficiency ratio 63.1% • Continuing to drive optimization and utilization of existing business platforms.
Slide 6: Fee Income Drives Profitability
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH6 F E E I N C O M E D R I V E S P RO F I TA B I L I T Y S E C O N D Q U A R T E R E N D E D M A R C H 3 1 , 2 0 2 1 INCOME STATEMENT ($ in thousands, except per share data) 2Q21 1Q21 2Q20 Net interest income 73,850 65,999 67,7
Slide 7: Selected Balance Sheet Highlights
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH7 S E L E C T E D B A L A N C E S H E E T H I G H L I G H TS S E C O N D Q U A R T E R E N D E D M A R C H 3 1 , 2 0 2 1 BALANCE SHEET PERIOD ENDING AVERAGE ($ in thousands) 2Q21 1Q21 2Q20 2Q21 2Q20 Cash and cash equivalents 3
Slide 8: Diversified Earning Asset Portfolio
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH 74% 23% 3% 35% 19% 10% 42% 15% 43% D I V E R S I F I E D E A R N I N G AS S E T P O R T FO L I O 8 QUARTERLY AVERAGE EARNING ASSET MIX MAR 2020 $5.70 billion INTEREST EARNING ASSETS 25% 4% 6% MAR 2021 $9.77 billion INTEREST E
Slide 9: Environmental, Social, and Governance (ESG)
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH9 E N V I RO N M E N TA L , S O C I A L , A N D G OV E R N A N G E ( “ E S G ” ) Our mission, financial inclusion for all®, is about equal access to financial opportunity and is inherently ESG oriented. Every day, our team mem
Slide 10: Financial Inclusion: Enabling Businesses Through the Paycheck Protection Program
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH F I N A N C I A L I N C LU S I O N E N A B L I N G B U S I N E S S E S T H R O U G H T H E P AY C H E C K P R O T E C T I O N P R O G R A M 10 more than $300M IN RELIEF more than 18,000 EMPLOYEE JOBS 1,012 LOANS FUNDED $574K
Slide 11: Banking as a Service
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH BANKING AS A SERVICE 11
Slide 12: Payments Business Solutions
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH12 P AY M E N TS B U S I N E S S S O LU T I O N S E N A B L I N G F I N T E C H S A N D F I N S E R V S T H R O U G H B a a S DEPOSIT GENERATORS • Facilitate Transactional Payments including: Faster Payments, ACH, merchant acq
Slide 13: Payments Business Update
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH $2.45 $2.71 $3.57 $3.31 $6.43 $0.98 $2.86 2018 2019 2020 2Q20 2Q21 Average Payments Deposits ($ in billions) 13 P AY M E N TS B U S I N E S S U P DAT E • Selected as the prepaid debit card issuer for Economic Impact Payments
Slide 14: Tax Season Update
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH14 TA X S E AS O N U P DAT E 2 0 2 1 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. • RA origination
Slide 15: Meta Ventures
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH15 M E TA V E N T U R E S | E STA B L I S H E D 2 0 1 7 Formed for the purpose of making strategic minority equity investments¹ in companies or funds in the fintech and financial services industries that are aligned with our m
Slide 16: Commercial Finance & Legacy Community Bank Portfolio
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH COMMERCIAL F INANCE & LEGACY COMMUNIT Y BANK PORTFOLIO 16
Slide 17: Commercial finance portfolio: lending lines
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH TERM LENDING. Collateralized conventional term loans and notes receivable, weighted average life of 53 months. Exposure is concentrated in solar/alternative energy, most of which are construction projects that will convert to
Slide 18: Distribution of Commercial Finance Portfolio by Industry
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH D I ST R I B U T I O N O F C O M M E R C I A L F I N A N C E P O R T F O L I O B Y I N D U ST RY ¹ 18 1 Distribution by NAICS codes; excludes certain joint ventures; percentages calculated based on aggregate principal amount
Slide 19: Commercial Finance Mix
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH Outstanding Balance % of Total² MANUFACTURING $446.0 11.6% Computer and Electronic Product Manufacturing 67.3 1.7% Fabricated Metal Product Manufacturing 52.1 1.3% Transportation Equipment Manufacturing 48.9 1.3% Machinery Ma
Slide 20: Solar / Alternative Energy
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH S O L A R / A LT E R N AT I V E E N E R GY 20 Project is Leased to a Solar Developer Project Financing (Construction) MetaBank Purchases the Project ITC Recognized TAX ADVANTAGES IN RENEWABLE ENERGY PORTFOLIO RENEWABLE ENERGY
Slide 21: Legacy Community Bank Portfolio Breakdown
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH L E G ACY C O M M U N I T Y B A N K P O R T F O L I O B R E A K D O W N A S O F M A R C H 3 1 , 2 0 2 1 | S E R V I C E D B Y C E N T R A L B A N K 21 COMMERCIAL REAL ESTATE INDUSTRY COMPOSITION ($ in millions) Outstanding Ba
Slide 22: Legacy Community Bank Hotel Portfolio
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH L E G ACY C O M M U N I T Y B A N K | H OT E L P O R T F O L I O A S O F M A R C H 3 1 , 2 0 2 1 | S E R V I C E D B Y C E N T R A L B A N K 22 $191.4 million outstanding, total exposure of $194.4 million including unfunded c
Slide 23: Asset Quality, Interest Rate Risk, & Capital
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH ASSET QUALIT Y, INTEREST R ATE R ISK, & CAPITAL 23
Slide 24: Asset Quality
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH AS S E T Q UA L I T Y 24 Credit quality remains strong. Allowance for credit losses (“ACL”) $98.9 million, or 2.70% of total loans and leases as of March 31, 2021. • ACL 228% of nonperforming loans • Legacy community bank hos
Slide 25: Asset Quality: Past Dues and COVID-19 Modifications
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH $75.4 $51.2 $63.7 $9.5 $85.3 $66.4 2Q20 1Q21 2Q21 $ i n m il li o n s Total Past Due COVID-19 Modifications & Deferrals Past Due Loans & Leases + COVID-19 Modifications & Deferrals AS S E T Q UA L I T Y 25 1 Small ticket equi
Slide 26: Interest Rate Risk Management
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH -10% 5% 20% 35% 50% 65% -100 +100 +200 +300 12-MONTH INTEREST RATE SENSITIVITY FROM BASE NET INTEREST INCOME Parallel Shock Ramp 42% 18% 8% 32% EARNING ASSET PRICING ATTRIBUTES 1 26 • Lower for longer rate environment -- focu
Slide 27: Capital and Sources of Liquidity
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH C A P I TA L A N D S O U RC E S O F L I Q U I D I T Y R E G U L AT O R Y C A P I TA L A S O F M A R C H 3 1 , 2 0 2 1 27 Minimum Requirement to be Well-Capitalized under Prompt Corrective Action Provisions Meta Financial Grou
Slide 28: Appendix
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH APPENDIX 28
Slide 29: Non-GAAP Reconciliations: EIP-Related Adjustments
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH N O N - G A A P R E C O N C I L I AT I O N S E I P - R E L AT E D A D J U S T M E N T S 29 ($ in millions) THREE MONTHS ENDED NET INTEREST MARGIN MARCH 31, 2021 DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Average inter
Slide 30: Non-GAAP Reconciliations: EIP-Related Capital Adjustments
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH N O N - G A A P R E C O N C I L I AT I O N S E I P - R E L AT E D C A P I TA L A D J U S T M E N T S 30 ($ in millions) METABANK TIER 1 LEVERAGE MARCH 31, 2020 DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Total stockhol
Slide 31: Financial Measure Reconciliations
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH F I N A N C I A L M E AS U R E R E C O N C I L I AT I O N S 31 Efficiency Ratio For the last twelve months ended ($ in thousands) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Noninterest Expense - GAAP 320
Slide 32: Warehouse Finance
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH WA R E H O U S E F I N A N C E 32 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
Slide 33: Indirect Consumer Credit Programs
QUARTERLY INVESTOR UPDATE | SECOND QUARTER FISCAL YEAR 2021 | NASDAQ: CASH I N D I R E C T C O N S U M E R C R E D I T P RO G R A M S 33 Consumer Payments Principal, Interest, Fees Principal Losses to Meta Collection Account Principal Repayment to Meta Servicing Meta’s Agreed upon interest return Re
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