Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q3 2019 Earnings Presentation
25 slides from Pathward Financial's earnings presentation, Aug 20, 2019
Slide 1: Investor Presentation Fiscal Third Quarter 2019
Investor Presentation Fiscal Third Quarter 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements The Company and MetaBank may from time to time make written or oral “forward-looking statements,” including statements contained in this presentation, the Company’s filings with the Securities and Exchange Commission (“SEC”), the Company’s reports to stockholders, and in o
Slide 3: Long-Term Value Drivers
Long-Term Value Drivers Differentiated Model • Target niche commercial and consumer industries to provide opportunities for growth Low-Cost Funding Advantage • National payments business drives low-cost deposits • Re-focus on increasing percentage of funding from core deposits Scalable Lending Platf
Slide 4: Differentiated Approach to Driving Shareholder Value
Differentiated Approach to Driving Shareholder Value 1 2 3 KEY Increase Percentage of Optimize Interest-Earning Improve Operating Funding from Core Asset Mix Efficiencies INITIATIVES Deposits Leverage payments division growth Replace lower-yielding loans and securities Improve efficiency ratio from
Slide 5: Ongoing Balance Sheet Remix Provides Powerful Commercial Finance Growth Opportunities
1 2 Ongoing Balance Sheet Remix Provides Powerful Commercial Finance Growth Opportunities 1 Earning Asset Mix Yields Aspirational Selected Quarterly Average June 2018 September 2018 June 2019 June 2019 Earning Asset Mix Commercial Finance 8% 23% 34% 10.01% >55% Consumer & Warehouse Finance 5% 6% 11%
Slide 6: Rising Loan Yields and More Compelling Asset Mix Driving Differentiated NIM Expansion
2 Rising Loan Yields and More Compelling Asset Mix Driving Differentiated NIM Expansion Closed Crestmark Acquisition August 1, 2018. Yield on Loans Net Interest Margin SNL U.S. Banks $2B-$10B1 Net Interest Margin 1 SNL U.S. Bank $2-10B; includes all Banks in SNL's coverage universe with $2B to $10B
Slide 7: Diversified Loan Growth
2 Diversified Loan Growth At the Quarter Ended June 30, 2018 March 31, 2019 June 30, 2019 3Q19 % Change From ($ in thousands) 3Q18 2Q19 3Q19 2Q19 3Q18 Commercial Finance 315,021 1,665,891 1,835,850 10.2% 482.8% Asset based lending — 572,210 615,309 7.5% NM Factoring — 287,955 320,344 11.2% NM Lease
Slide 8: Operating Efficiencies
3 Operating Efficiencies What levers does Meta have to improve operating efficiencies? - Expense discipline by improving collaboration and productivity between business lines. - Concentrated focus on optimization and utilization of existing business platforms. - Pause on material mergers and acquisi
Slide 9: Company Targeted Focus Areas
Company Targeted Focus Areas Strategic, tailored solutions to facilitate money movement, enabling payments providers to Payments grow their businesses and build more profitable customer relationships by creating, delivering and sponsoring payment solutions Incorporated in 1993, is the holding compan
Slide 10: Payments
Payments 10 Fiscal Third Quarter 2019 | Nasdaq: CASH
Slide 11: Payments Solutions
Payments Solutions Prepaid Demand Deposits ACH Meta is a leader in applying innovative How DDA delivers value for consumers Turnkey and flexible ACH payments prepaid solutions to address key consumer implementation and business payments needs. Promotes strong direct deposit relationship, acceptance
Slide 12: Commercial Finance
Commercial Finance 12 Fiscal Third Quarter 2019 | Nasdaq: CASH
Slide 13: Commercial Finance Growth Engine
Commercial Finance Growth Engine Asset Based Lending. Provide asset-based loans secured by assets such as inventory, accounts receivable, machinery & equipment, work-in-process and other assets. Other $99.7M SBA/USDA $99.8M Lease Financing. Provide flexible leasing solutions for technology, capital
Slide 14: Experienced Management Team Offers Consultative Approach to Targeted Commercial Finance Clients
Experienced Management Team Offers Consultative Approach to Targeted Commercial Finance Clients on Nationwide Basis • Seasoned management team Commercial Finance Industry Concentrations1 – Average tenure at Crestmark of 13 years – Average of over 25 years of banking or specialty finance experience •
Slide 15: Risk Management in Commercial Finance
Risk Management in Commercial Finance Underlying credit philosophy is fundamentally collateral-based lending with underwriting and monitoring focused on the risk management and administrative controls of the collateral borrowing base. Loans are underwritten to ensure that the Bank can recover the fu
Slide 16: Quarterly Financial Highlights
Quarterly Financial Highlights Third Quarter Fiscal Year 2019 16 Fiscal Third Quarter 2019 | Nasdaq: CASH
Slide 17: Financial Highlights Third Quarter Ended June 30, 2019
Financial Highlights Third Quarter Ended June 30, 2019 • Net income of $29.3 million, or $0.75 per diluted share, for the quarter. • Net interest margin ("NIM") increased to 5.07% for the fiscal 2019 third quarter, up 213 basis points from the fiscal 2018 third quarter. – Net purchase accounting acc
Slide 18: MetaBank Interest Rate Risk Management
MetaBank Interest Rate Risk Management as of June 30, 2019 12-Month Interest Rate Sensitivity from Base Net Interest Income 12% Net Interest Income modeled under an instantaneous, parallel rate shock. 8% 4% Management also employs rigorous modeling techniques 0% under a variety of yield curve shapes
Slide 19: Disciplined Credit Culture Drives Strong Asset Quality
Disciplined Credit Culture Drives Strong Asset Quality 1 Excludes Tax Services NCOs and Related Seasonal Average Loans Tax Services NCOs and average loans are excluded to adjust for the cyclicality of activity related to the overall economics of the tax services business line. • Allowance for loan a
Slide 20: Regulatory Capital as of June 30, 2019
Regulatory Capital as of June 30, 2019 Strong capital remains above "well-capitalized" Capital Deployment Priorities 1. Growth initiatives 2. Share repurchases1 3. Dividend payout Meta Financial Group, Inc. MetaBank Minimum Requirement to be Well-Capitalized under Prompt Corrective Action (PCA) Prov
Slide 21: Investment Highlights
Investment Highlights Differentiated Model Low-Cost Funding Advantage Scalable Lending Platforms Cross-Selling Opportunities Positioning in a shifting rate environment 21 Fiscal Third Quarter 2019 | Nasdaq: CASH
Slide 22: Appendix
Appendix 22 Fiscal Third Quarter 2019 | Nasdaq: CASH
Slide 23: Quarterly Income Statement
Quarterly Income Statement 3Q19 Change From ($ in millions, except per share data) 3Q18 2Q19 3Q19 2Q19 3Q18 $ % $ % Net Interest Income 28.4 71.4 67.0 (4.4) (6)% 38.6 136% Card & Deposit Fee Income 23.9 25.1 21.9 (3.3) (13)% (2.1) (9)% Refund Transfer Product Fee Income 7.4 31.6 6.7 (24.9) (79)% (0.
Slide 24: Average Balance Sheet
Average Balance Sheet Fiscal Quarter Average - for the quarter ended Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 3Q19 Change From ($ in millions) 3Q18 4Q18 1Q19 2Q19 3Q19 2Q19 3Q18 $ % $ % Cash and fed funds sold 57 61 45 281 80 (201) (71)% 23 40% Total Investments 2,253 2,201 2
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Efficiency Ratio and Adjusted Operating Leverage For the last twelve months ended ($ in thousands) Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Noninterest Expense - GAAP 215,338 228,232 258,485 300,242 323,657 Less: Rental Equipment Depreciation