Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q2 2020 Earnings Presentation
26 slides from Pathward Financial's earnings presentation, Apr 22, 2020
Slide 1: Quarterly Investor Update Second Quarter Fiscal Year 2020
Quarterly Investor Update Second 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 Second Quarter Ended March 31, 2020
Business Developments Second Quarter Ended March 31, 2020 • Through April 20, 2020, authorized 502 applications totaling $189.5 million for the Paycheck Protection Program (“PPP”). • Expanded faster payments platform to include Visa Direct. • Converted MetaBank to a national bank charter from a fede
Slide 4: COVID-19 Pandemic Focus
COVID-19 Pandemic Focus Second Quarter Ended March 31, 2020 Employee, Partner, and Customer Focus • COVID-19 Crisis Command Center monitors day-to-day operations and potential business interruptions • Remote work options and social distancing measures where available • Restrictions on non-essential
Slide 5: Selected Financial Highlights
Selected Financial Highlights Second Quarter Ended March 31, 2020 INCOME STATEMENT ($ in thousands, except per share data) 2Q20 1Q20 2Q19 Net interest income 67,737 64,651 71,350 • Net income of $52.3 million, or $1.45 per diluted Provision for loan and lease losses 37,296 3,407 33,318 share, for th
Slide 6: Differentiated Portfolio of Business Lines
Differentiated Portfolio of Business Lines Last Twelve Months Ended March 31, 2020 Commercial Consumer Community Corporate & Payments Tax Total ($ in thousands) Finance Finance Bank Eliminations Net interest income (expense) 154,864 57,474 (1,131) 38,919 41,167 (26,320) 264,973 Non-interest income 5
Slide 7: 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 March 31, 2020 March 31, 2019 3% ($ in thousands) 2Q20 2Q19 Y/Y Δ 35% COMMERCIAL FINANCE 2,026,347 1,665,891 22 % 23% Term lending 725,581 507,886 43
Slide 8: Commercial Finance & Community Bank Portfolios
Commercial Finance & Community Bank Portfolios 8 Second Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 9: 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, net of 53 months. Significant portion of the term lending exposure is concentrated in solar/alternative $200.8M energy. Most of these loans w
Slide 10: Distribution of Commercial Finance Portfolio by Industry
Distribution of Commercial Finance Portfolio by Industry¹ Public Administration Agriculture, Forestry, Fishing and Hunting Educational Services Management of Companies and Enterprises Arts, Entertainment, and Recreation Information Retail Trade Other Services (except Public Administration) Other Acc
Slide 11: Commercial Portfolio Concentrations
Commercial Portfolio Concentrations¹ MANUFACTURING UTILITIES Total Exposure $418.2 million % of Total² 11.0% Total Exposure $275.4 million % of Total² 7.2% • Limited exposure to single borrowers • 96% of Utilities exposure is to Solar Electric Power Generation, majority of • Diversified across multi
Slide 12: Limited Commercial Finance Exposure to Retail and Hospitality Sectors
Limited Commercial Finance Exposure¹ to Retail and Hospitality Sectors Retail & Other Services • $39.7 million total Retail Trade exposure; 1.0% of total² - Retail portfolio is widely distributed; largest categories include: $82.4M Exposure • Motor Vehicle and Parts Dealer $8.0 million outstanding t
Slide 13: Legacy Community Bank Portfolio Breakdown
Legacy Community Bank Portfolio Breakdown As of March 31, 2020 | Serviced by Central Bank 1-4 Family Real Estate Outstanding • Majority first mortgages for owner-occupied homes ($ in millions) Balance % of Total¹ • Vast majority of loans are originated with loan-to-values below 80% Commercial Real E
Slide 14: Consumer Lending, Tax Services, Payments
Consumer Lending, Tax Services, Payments 14 Second Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 15: Warehouse Finance
Warehouse Finance Total Exposure $333.8 million % of Total¹ 8.8% 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 16: Consumer Credit Programs
Consumer Credit Programs Consumer Payments Total Exposure $113.5 million % of Total¹ 3.0% 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 17: 2020 Tax Season Update
2020 Tax Season Update Tax Season at Meta begins ramping up during the first fiscal quarter and peaks during the second fiscal quarter. As a result, performance for the six months ended March 31 is a better reflection on the overall performance for tax season as it alleviates timing differences betw
Slide 18: Payments Business Update
Payments Business Update Payments Card and Deposit Fee Income Breakout Second Quarter Fiscal 2020 • Increased monitoring of our partners due to COVID-19; providing payment modifications and deferrals where necessary. 8% • Prepaid card distribution based on balance as of March 31, 2020: 11% - 30% Gif
Slide 19: Asset Quality, Interest Rate Risk, Capital
Asset Quality, Interest Rate Risk, Capital 19 Second Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 20: 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. Crestmark Division Community Bank Division Cha
Slide 21: Interest Rate Risk Management
Interest Rate Risk Management as of March 31, 2020 12-Month Interest Rate Sensitivity from Base Net Interest Income 11% • Net Interest Income modeled under an instantaneous, 9% parallel rate shock and a gradual parallel ramp. 7% 5% • Management also employs rigorous modeling 3% techniques under a va
Slide 22: Strong Capital and Sources of Liquidity
Strong Capital and Sources of Liquidity Regulatory Capital as of March 31, 2020 At March 31, 2020 Meta Financial Group, Inc. MetaBank Capital Ratio Trends Tier 1 Leverage 7.28% 8.52% Tier 1 Leverage – Period End¹ N/A 9.71% Common Equity Tier 1 10.24% 12.36% Tier 1 Capital 10.60% 12.41% Total Capital
Slide 23: Appendix
Appendix 23 Second Quarter Fiscal Year 2020 | Nasdaq: CASH
Slide 24: 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 25: Financial Measure Reconciliations
Financial Measure Reconciliations Efficiency Ratio For the last twelve months ended ($ in thousands) Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Noninterest Expense - GAAP 316,138 334,663 333,160 323,657 300,242 Net Interest Income 264,973 268,586 264,207 247,127 208,570 Noninte
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations MetaBank Period-end Tier 1 Leverage Adjusted Net Interest Margin Three Months Ended March 31, 2020 March 31, 2020 Total stockholder's equity $ 896,924 Interest-earning assets 5,701,859 Adjustments: Net interest income 67,737 LESS: Goodwill, net of associated deferred tax lia