Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q2 FY2016 Earnings Presentation
26 slides from Pathward Financial's earnings presentation, Apr 28, 2016
Slide 1: April 2016 Investor Update, Second Quarter Fiscal Year 2016
April 2016 Investor UpdateSecond Quarter Fiscal Year 2016
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Meta Financial Group, Inc.® (“the Company”) and its wholly-owned subsidiary, MetaBank® (the “Bank” or “MetaBank”), may from time to time make written or oral “forward-looking statements,” including statements contained in this investor update, the Company’s filings with
Slide 3: Meta Senior Management
Meta Senior Management 3 Chairman and Chief Executive Officer, Meta Financial GroupTyler Haahr has been with Meta Financial Group since 1997. Previously, he was a partner with the law firm of Lewis and Roca LLP, Phoenix, Arizona. Tyler received his B.S. degree in Accounting with honors at the Univer
Slide 4: Meta Financial Group Highlights
Meta Financial Group Highlights 4 Net Income (2QFY16 vs 2QFY15)Record quarterly earnings for 2QFY16Year-over-year growth of 176%Earnings ProfileSizable and growing non-interest income Opportunity for NIM expansion in current and higher rate environmentRevenue from business development and new agreem
Slide 5: Non-Performing Assets
Non-Performing Assets 5 Non-Performing Assets ($MM) % of Total Assets Very strong asset quality 0.15%NPAs of total assets at 3/31/16.
Slide 6: Who We Are
Who We Are BankingGrowing community bank in regions with strong economiesRetail Operations based in Iowa and South Dakota Strong and high quality commercial and agricultural loan growthAFS/IBEX asset acquisition completed in December 2014Platform for nationwide expansionHigh quality; strong and acce
Slide 7: Footprint Map
Footprint Map Meta@ a CI MAP KEY © seafront Payment Ste meraanksranches @ arsieexosies @ refund advantage ofice
Slide 8: Banking – Retail Bank
Banking – Retail Bank Retail Bank Regional Community BankGrowing, profitable operationsAttractive combination of commercial, agricultural, retail and national insurance premium lendingLow-cost deposit base gives Bank competitive advantage on terms to attract high quality creditsExpect continued robu
Slide 9: Banking – AFS/IBEX
Banking – AFS/IBEX AFS/IBEX Loans to commercial businesses to fund their property, casualty, and liability insurance premiumsShort duration assetsHigher yields than alternative investments, particularly for the termLoans generally priced as a spread to Prime, reset higher if Prime moves higherSignif
Slide 10: Payments - Meta Payment Systems (MPS) Overview
Payments - Meta Payment Systems (MPS) Overview Prepaid card industry leader with payments diversificationContinuing to grow “annuity”-like stream of fee incomeAdjacent and complementary new product introductionRefund Advantage® – Tax channelAdditional MPS distributionFasterMoneyNew Credit productsCo
Slide 11: Payments - Refund Advantage
Payments - Refund Advantage® Asset acquisition completed in September 2015Offers tax refund-transfer (RTs) solutions through ACH direct deposit, check, and prepaid cardGrowth enhanced by new credit-advance product Processed a record number of RTs in 2QFY16On track to process a record number of RTs o
Slide 12: Industry Recognition
Industry Recognition 12 Top 50 of ACH originators in 2015Top 30 of ACH receivers in 2015 #44 “More double-digit goodness” (June 2015) based on average ROE over the past three years #48 “Top 200 Community Banks and Thrifts” (June 2015) Top 1% based on three year ROE Added to Russell 2000 Index (RTY)
Slide 13: Growth Drivers and Goals
Growth Drivers and Goals Optimize synergies: Banking and PaymentsStrong loan growth in local markets and AFS/IBEXContinue to improve upon earning asset mixLow cost deposits with long average life (approximately seven years) feed increasingly diverse asset mixUnlock value of non-interest bearing depo
Slide 14: Earning Asset Mix & Net Interest Margin
14 Earning Asset Mix & Net Interest Margin *Fiscal Quarter Average 46bpsNIM Expansion 84bps10 Year Treasury Yield Declined (Qtr Average) Mortgage-Backed Securities Investment Securities Loans Earning Asset Mix* 97%Cumulative Investment Securities growth since 2Q14 85%Cumulative Loan growth since 2Q1
Slide 15: Assets – Earning Asset Mix
Assets – Earning Asset Mix 15 Total Assets* ($MM) Total Investments* ($MM) Mortgage-Backed Securities Municipal Securities Other Securities 25%Asset Compound Annual Growth Rate (CAGR) *Fiscal Quarter Average
Slide 16: Total Gross Loans
Total Gross Loans 16 *Fiscal Quarter Average Loan Composition*At March 31, 2016 Loan Portfolio* ($MM) Residential Real Estate Commercial Real Estate Agricultural Real Estate Consumer Agricultural/Commercial Operating Premium Finance
Slide 17: Deposits and Cost of Funds
Deposits and Cost of Funds 17 Deposits* ($MM) Cost of Funds 0.10%Cost of Funds in 2Q16 Low Cost of Funds *Fiscal Quarter Average
Slide 18: Earnings Power While Growing Equity
Earnings Power While Growing Equity 18
Slide 19: Infrastructure
Infrastructure 19 Early adopter of sophisticated compliance systemsInvestments in MPS program design, training and technologyImplemented enhanced BSA/AML technologyEnhanced infrastructure supports growthPrior investments allow more focus on growing current business and new development opportunities
Slide 20: Interest Rate Risk Management
Interest Rate Risk Management Positively leveraged for higher rate environmentOther Comprehensive Income volatile relative to peersWe believe GAAP understates balance sheet true value, particularly low-cost depositsMeta MTM of ~50% of assets available for sale (securities) vs. typical “peer” at ~15-
Slide 21: Interest Rate Sensitivity
Interest Rate Sensitivity 21 Static interest rate risk results do not accurately reflect Meta’s true interest rate sensitivity due to our unique and historically, predictable deposit baseDue to historically predictable weekly, monthly, and yearly deposit volatility, static IRR results can be signifi
Slide 22: Capital Management
Capital Management 22 Capital enhancement historyRecent $26 million and $12 million private placements supporting Refund Advantage acquisition and other growth2014-15 At-the-Market (ATM) net proceeds of $25.4 million to support growth$61.0 million in 2012-13 via private placements and ATM offeringIn
Slide 23: Meta's Value Proposition
Meta’s Value Proposition A leading issuer of prepaid debit cardsSpringboard into other products and servicesSignificant growth; current partners expanding, new partners added, and new products implemented with more to come in 2016Strong capital positionEarnings and historical access to capital marke
Slide 24: Appendix
Appendix 24
Slide 25: Income Statement
Income Statement 25 Meta Financial Group ($MM) Fiscal Year Ended September 30, Three Months Ended 2011 2012¹ 20132 2014 20153 2Q15⁴ 2Q165 % Change Net Interest Income 34.3 33.7 36.0 46.3 59.2 15.3 19.9 30.4% Non-Interest Income 57.5 69.6 55.5 51.7 58.2 15.0 40.9 173.2% Total Revenue $ 91.8 $ 103.3 $
Slide 26: Balance Sheet
Balance Sheet 26 Meta Financial Group($MM) Fiscal Quarter Average Fiscal Quarter Average 4Q11 4Q12 4Q13 4Q14 4Q15 2Q15 2Q16 % Change Cash And Cash Equivalents 132 106 74 100 81 231 88 -61.9% Investments and MBS 615 999 1,177 1,320 1,534 1,440 2,037 41.5% Loans Receivable Net 315 330 364 485 684 602
Meta Financial Group — Q2 FY2016 Earnings Presentation on 6ix