Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Q4 2020 Earnings Presentation
26 slides from Pathward Financial's earnings presentation, Oct 28, 2020
Slide 1: Quarterly Investor Update: Fourth Quarter & Fiscal Year End 2020
Q U A R T E R LY I N V E S T O R U P D AT E FOURTH QUARTER & FISCAL YEAR END 2020
Slide 2: Forward-Looking Statements
F O R W A R D - L O O K I N G S TAT E M E N T S 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 word
Slide 3: Update on Key Strategic Initiatives
U P D AT E O N K E Y S T R AT E G I C I N I T I AT I V E S INCREASE PERCENTAGE OF OPTIMIZE INTEREST-EARNING IMPROVE OPERATING FUNDING FROM CORE DEPOSITS ASSET MIX EFFICIENCIES Partnered with Department of the Treasury’s Bureau of the Fiscal Service and Fiserv to facilitate portions of Economic Impac
Slide 4: Selected Financial Highlights
SELECTED FINANCIAL HIGHLIGHTS Fourth Quarter Ended September 30, 2020 INCOME STATE ME N T ($ in thousands, except per share data) 4Q20 3Q20 4Q19 FY 2020 FY 2019 Net interest income 64,513 62,137 65,617 259,038 264,207 Provision for loan and lease losses 8,980 15,093 4,121 64,776 55,650 Payments card
Slide 5: Differentiated Business Reduces Risk and Provides Growth Opportunities
D I F F E R E N T I AT E D B U S I N E S S R E D U C E S R I S K A N D P ROV I D E S G ROW T H O P P O R T U N I T I E S I N VA R I O U S ECONOMIC ENVIRONMENTS REVENUE MAKEUP FISCAL YEAR 2020 48% COMMERCIAL ($ in millions) Provide customized business capital solutions for small-and medium-sized Othe
Slide 6: 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 September 30, 2020 September 30, 2019 ($ in thousands) 4Q20 4Q19 Y/Y Δ COMMERCIAL FINANCE 2,307,984 1,916,230 20 % 33% 29% Term lending 805,323 641,74
Slide 7: Asset Quality
ASSET QUALIT Y 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. Allowance for loan and lease losses (“ALLL”)
Slide 8: Asset Quality: COVID-19 Loan and Lease Modifications and Deferrals
ASSET QUALIT Y Excluding PPP loans, active deferments and modifications decreased from $327, or 10% of total gross loans and leases at June 30, 2020 to $193 million or 6% of total gross loans at September 30, 2020. COVID-19 LOAN AND LEASE MODIFICATIONS AND DEFERRALS September 30, 2020 Allowance buil
Slide 9: Commercial Finance & Community Bank Portfolios
COMMERCIAL FINANCE & COMMUNIT Y BANK PORTFOLIOS 9 Fourth Quarter & Fiscal Year End 2020 | Nasdaq: CASH
Slide 10: Limited Total Exposure to COVID-High Impact Industries
L I M I T E D T O TA L E X P O S U R E T O C O V I D - 1 9 H I G H I M P A C T INDUSTRIES HIGH IMPACT INDUSTRY EXPOSURES COMMUNITY COMMERCIAL ($ in millions) BANK FINANCE PPP LOANS TOTAL % OF TOTAL¹ HOSPITALITY $179.3 $46.9 $0.8 $227.0 6.4% RETAIL (excl. consumer staples²) $48.2 $40.5 $1.4 $90.1 2.6
Slide 11: 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, of 53 months. Exposure is concentrated in solar/alternative energy, most of which are construction net projects that will convert to longer t
Slide 12: Distribution of Commercial Finance Portfolio by Industry
DISTRIBUTION OF COMMERCIAL FINANCE PORTFOLIO BY INDUSTRY¹ $ in millions $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Manufacturing Transportation and Warehousing Utilities Finance and Insurance Health Care and Social Assistance Construction Wholesale Trade Admin and Support and Waste Mgmt and Reme
Slide 13: Commercial Finance Mix
COMMERCIAL FINANCE MIX¹ MANUFACTURING UTILITIES Total Exposure $413.8 million % of Total² 11.8% Total Exposure $311.9 million % of Total² 8.9% • Limited exposure to single borrowers • 97% of Utilities exposure is to Solar Electric Power Generation, majority of • Diversified across multiple subsector
Slide 14: Legacy Community Bank Portfolio Breakdown
LEGACY COMMUNIT Y BANK PORTFOLIO BREAKDOWN As of September 30, 2020 | Serviced by Central Bank During the quarter, sold $135 million loans and classified Outstanding another $130 million as held for sale. ($ in millions) Balance % of Total¹ • Sales did not result in any material gain. Commercial Rea
Slide 15: Legacy Community Bank Hotel Portfolio
LEGACY COMMUNIT Y BANK | HOTEL PORTFOLIO As of September 30, 2020 | Serviced by Central Bank $179.3 million outstanding, total exposure of $201.3 million including unfunded commitments $170.6 million in commercial real estate and $8.7 million in C&I • Portfolio comprised of 30 relationships represen
Slide 16: Payments
PAY M E N T S 16 Fourth Quarter & Fiscal Year End 2020 | Nasdaq: CASH
Slide 17: Payments Business Solutions
P AY M E N T S B U S I N E S S S O L U T I O N S PAY M E N T S B U S I N E S S P ROV I D E S P R I M A RY D E P O S I T S O U RC E GE NE RAT E S S TA BLE , LOW C OS T C ORE D E POS IT S A ND FE E INC OM E PREPAID BANKING AS A SERVICE DE POSITS + F E E I NCOME DE POSITS + F E E I NCOME Leading prepai
Slide 18: Payments Business Update
P AY M E N T S B U S I N E S S U P D AT E Payments Card and Deposit Fee Income Breakout Fourth Quarter Fiscal 2020 • Increased monitoring of our partners due to COVID-19; providing payment 9% modifications and deferrals where necessary, immaterial impact to date. • Selected as the prepaid debit card
Slide 19: Interest Rate Risk and Capital
I N T E R E S T R AT E R I S K A N D C A P I TA L 19 Fourth Quarter & Fiscal Year End 2020 | Nasdaq: CASH
Slide 20: Interest Rate Risk Management
I N T E R E S T R AT E R I S K M A N A G E M E N T September 30, 2020 12-Month Interest Rate Sensitivity from Base Net Interest Income • Lower for longer rate environment -- focus is on reducing wholesale funding and redeploying deposits 25% and assets into positive carry opportunities. 20% 15% • In
Slide 21: Strong Capital and Sources of Liquidity
S T R O N G C A P I TA L A N D S O U R C E S O F L I Q U I D I T Y Regulatory Capital as of September 30, 2020 At September 30, 2020 Meta Financial Group, Inc. MetaBank Tier 1 Leverage 6.58% 7.56% Capital Ratio Trends Tier 1 Leverage – Adjusted¹ N/A 9.66% Common Equity Tier 1 11.78% 13.96% Tier 1 Ca
Slide 22: Appendix
APPENDIX 22 Fourth Quarter & Fiscal Year End 2020 | Nasdaq: CASH
Slide 23: Warehouse Finance
WAREHOUSE FINANCE Total Exposure $293.4 million % of Total¹ 8.3% 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 24: Consumer Credit Programs
CONSUMER CREDIT PROGRAMS Consumer Payments Principal, Interest, Fees Total Exposure $89.8 million % of Total¹ 2.6% Consumer credit programs offer Meta a risk adjusted return, protected by certain layers of credit support and balance sheet flexibility. Programs are offered to strategic partners with
Slide 25: Financial Measure Reconciliations
F I N A N C I A L M E A S U R E R E C O N C I L I AT I O N S Efficiency Ratio For the last twelve months ended ($ in thousands) Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Noninterest Expense - GAAP 319,051 314,911 316,138 334,663 333,160 Net Interest Income 259,038 260,142 264,
Slide 26: Non-GAAP Reconciliations
N O N - G A A P R E C O N C I L I AT I O N S Three Months Ended MetaBank Period-end Tier 1 Leverage September 30, 2020 Adjusted Net Interest Margin September 30, 2020 Total stockholder's equity $ 933,430 Average interest-earning assets 6,806,366 ADJUSTMENTS: Net interest income 64,513 LESS: Goodwill