Slide 1: Quarterly Investor Update
Quarterly Investor Update F O U R T H Q UA R T E R & FISCAL YEAR END 2023 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This investor update contains “forward-looking statements” which are made in good faith by Pathward Financial, Inc.TM (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statemen
Slide 3: FY 2023 Highlights
FY 2023 $163.6 M IL L IO N IN N E T IN C O M E; AN IN C R E ASE Highlights O F 5% C O M PARED TO F Y 2022 $5.99 IN D ILU T E D E AR N IN GS PE R S HAR E; AN IN C R E ASE O F 14% C O M PARE D TO F Y 2022 G ROW TH IN B OT H N E T IN T E RE ST IN C O M E AN D N O N - IN T E R EST IN C O M E AS C O M PA
Slide 4: Fiscal Year 2023 Accomplishments
Fiscal Year 2023 Accomplishments • Certified Great Place to Work and Newsweek ranked Pathward among America’s Greatest Workplaces • Commercial Finance grew total loans and leases by 23% • BaaS extended multiple agreements and launched new programs with both new and existing partners • Commercial Fin
Slide 5: Delivering on Strategic Initiatives in FY 2024
Delivering on Strategic Initiatives in FY 2024 • Commercial Finance is focused on driving smart balance sheet growth • BaaS is building an organization that will be a one stop shop for partners • Increasing full year guidance 5 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentatio
Slide 6: Results Driven by NIM Expansion and Growth in Noninterest Income
Results Driven by NIM Expansion and Growth in Noninterest Income ($ in millions, except per share data) Net Interest Income Noninterest Income Noninterest Expenses +32% +29% +15% $104.9 $56.1 $118.2 $103.0 $79.8 $43.5 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Net Income Attributable to Parent
Slide 7: Total Deposits Remain Strong
Total Deposits Total Managed Deposits Remain Strong Period ending ($ in millions) -4% $7,178.6 $6,856.8 ▪ Ave r ag e Q 4 of f b al an ce s h e et $267.6 d e p os i ts of $588 m i l l i on , $268 $1,312.6 m i l l i on at q u ar te r e n d ▪ S e q u en ti al q u ar te r tot al d e p os i t s i m p act
Slide 8: Total Loans and Leases Increased from Q4 2022
Total Loans and Leases Increased Total Loans and Leases Period ending ($ in millions) from Q4 2022 +24% ▪ G row t h p r i m ar i ly d r i ve n by $4,359.7 In s u r an ce Pre miu m Fi n an ce, Te r m Le n d i n g an d S B A/ USDA $3,529.3 ▪ C re d i t q u al i t y re m ai n s s t ron g ▪ N on p e rfo
Slide 9: Strong Balance Sheet Allows for Return to Shareholders
Strong Balance Sheet Allows for Return to Shareholders ($ in millions) Liquidity Sources Share Repurchases 2,628,541 $375 $785 $268 $252 $83 311,727 $875 1 Q4 2023 FY 2023 Off Balance Sheet Deposits FHLB Borrowing Capacity Cash and Cash Equivalents Fed Discount Window Funds Number of Shares Repurcha
Slide 10: Increasing FY 2024 Guidance to $6.20 to $6.70 Per Diluted Share
Increasing FY 2024 Guidance1 to $6.20 to LOW ER F E E R E VE N UE F RO M E IP D E P OSIT B AL AN CE D E C L INE $6.70 Per Diluted Share GUIDANCE INCLUDES B AS E D O N C U RRE NT R ATE E N VIRONM ENT THRO UGH F IS C AL Y E AR 2024 THE FOLLOWING ASSUMPTIONS: E F F E CTI VE IN C O M E TAX R AT E IN T H
Slide 11: Q&A
Q&A 11 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 12: Investment Highlights
Investment 1 Record of strong earnings growth and profitability above banking industry averages Highlights Excess capital generating business enables 2 ongoing return of value to shareholders Experienced leader in fast-growing Banking 3 as a Service (BaaS) sector, with diversified portfolio of high-
Slide 13: Record of Strong Earnings Growth and Profitability
Record of Strong Earnings Growth and Profitability1 Return on Average Assets Return on Average Tangible Equity 2.33% ROAA inclusive of one-time items 2.20% ROATE inclusive of one-time items 48.32% 1.88% 1.74% 1.55% 35.42% 1.45% 28.66% 30.25% 1.12% 22.34% 21.87% 16.78% 2018 2019 2020 2021 2022 2023 2
Slide 14: Return of Capital to Shareholders
Return of Capital Track Record of Strong Earnings Growth and to Shareholders Right-Sized Balance Sheet Enables Ongoing Return of Capital Capital Returned to Shareholders HI G HL IG HT S Pathward’s track record of profitability, combined with its commitment to maintaining the size of its balance shee
Slide 15: Continued Progress on Key Strategic Initiatives
Continued Progress on Key Strategic Initiatives O P T IM IZE IN T E R E ST-E ARNIN G O P T IM IZE D E P OSIT M IX , TO TARG ET O F 2X O PE R ATING P O R TFOL IO, TO E M PHASIZE M AIN TAIN A STAB LE L E VE R AG E HIG HE R -R ET URN AS SE TS D E P OSIT B AS E • Improved yield on earning assets to 6.48
Slide 16: Summary Financial Results
Summary Financial Results Four th Quar ter and Fiscal Year End September 30, 2023 INCOME STATEMENT For the quarter ended For the year ended ($ in thousands, except per share data) 4Q22 3Q23 4Q23 2022 2023 Net interest income 79,760 97,465 104,934 307,324 387,861 Provision for credit losses (2,648) 1
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights Four th Quar ter and Fiscal Year End September 30, 2023 BALANCE SHEET PERIOD ENDING ($ in thousands) 4Q22 3Q23 4Q23 Cash and cash equivalents 388,038 515,271 375,580 Investments 1,924,551 1,951,996 1,840,819 Loans held for sale 21,071 87,351 77,779 Loans and leases (HFI) 3,5
Slide 18: Deposits
Deposits Deposit Breakdown Noninterest Bearing 96.1% Deposits Interest Bearing Non- HI G HL IG HT S Time Deposits Pathward’s BaaS business generates fee income and Time Deposits stable deposits. 3.8% 0.1% Ability to attract and maintain these deposits provides a powerful competitive advantage. Nonin
Slide 19: Cost of Deposits
Cost of Cost of Deposits Deposits 5.26% HI G HL IG HT S As of September 30, 2023, approximately 49% of the deposit balances were subject to variable card processing expenses, derived from contractual agreements with certain BaaS partners tied to a rate index, typically the Effective Fed 2.22% Funds
Slide 20: Diversified Noninterest Income Streams
Diversified FY 2023 Revenue Breakdown1 Noninterest Income Streams Net interest income 56% Noninterest HI G HL IG HT S income 44% Noninterest income represents 44% of fiscal year 2023 total revenue. Majority of noninterest income fees are generated by the Company’s BaaS business line. Other major ite
Slide 21: Loan Portfolio
Average Loans and Yields ($B) Loan 7.70% 8.47% 8.31% 8.33% Portfolio 7.12% $3.6 $3.5 $4.0 $3.9 $4.3 HI G HL IG HT S Remain focused on growing the Commercial Finance loan portfolio. Commercial Finance balances grew 23% from the fourth quarter of the prior year. 4Q22 1Q23 2Q23 3Q23 4Q23 Sequential qua
Slide 22: Commercial Finance Attributes by Asset Class
Commercial Finance Attributes by Asset Class WO R KING C APITAL E Q U IPM E NT ST RUCTURE D IN S U R ANCE PR E M IUM F IN AN C E F IN AN C E F IN AN C E F IN AN C E • Provides working capital for new • Loan and lease financing to • Funding to small and midsized • Short-term financing to facilitate o
Slide 23: Loan Portfolio Interest Rate Sensitivity
Total Loan and Lease Portfolio Loan Portfolio Pricing Attributes1 Interest Rate 43% Sensitivity 22% HI G HL IG HT S 35% As of September 30, 2023, $1.5B, or 30% of loans Fixed Rate > 1 Year and leases contained floating or variable interest rates. Fixed Rate < 1 Year Of these, $0.9B are tied to Fed F
Slide 24: Interest Rate Risk Management
Interest Rate Risk Management September 30, 2023 Earning Asset Pricing Attributes1 • Data presented on this page is reflective of the Company’s asset mix at a point in time and calculated for regulatory purposes. Future rate changes would impact a multitude of variables beyond the Company’s 55% Fixe
Slide 25: Asset Quality
Asset Quality Nonperforming Assets (“NPAs”) Adjusted Net Charge-Offs (“NCOs”)1 ($ in millions) Excludes Tax Services NCOs and Related Seasonal Average Loans ($ in millions) 0.77% 0.68% 0.63% 0.61% 0.68% 0.55% 0.46% 0.44% 0.46% 0.47% 0.46% 0.46% 0.45% 0.25% 0.49% $58.0 $45.0 $40.8 $30.9 $30.1 $6.0 $5
Slide 26: Capital and Sources of Liquidity
Capital and Sources of Liquidity Regulatory Capital as of September 30, 2023 Tier 1 Leverage Ratio Pathward Pathward, At September 30, 2023¹ Financial, Inc. N.A. Tier 1 Leverage 8.11% 8.32% 8.10% 8.19% 8.37% 8.68% 8.40% 8.67% 8.11% 8.32% Common Equity Tier 1 11.25% 11.81% 7.53% 7.79% Tier 1 Capital
Slide 27: Appendix
APPENDIX 27 — Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Net Income and Adjusted Earnings Per Share For the quarter ended For the year ended ($ in thousands, except per share data) 4Q22 3Q23 4Q23 2022 2023 Net income - GAAP 23,420 45,096 35,906 156,386 163,615 Less: Gain on sale of trademarks - - - 50,000 10,000 Less: Loss
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Annualized NCOs and Adjusted Loans and Leases For the quarter ended ($ in thousands) Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Net charge-offs 26,664 3,217 4,975 4,218 41,280 Less: Tax services net charge-offs (recoveries) 22,594 1,033 (1,064)
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation Efficiency Ratio For the last twelve months ended ($ in thousands) Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Noninterest expense – GAAP 385,275 407,899 431,875 449,803 464,975 Net interest income 307,324 319,768 337,373 362,687 387,861 Noninterest incom
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Interest Margin and Cost of Deposits For the Year For the Quarter Ended Ended ($ in thousands) Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Sep-23 Average Interest Earning Assets 6,806,366 5,636,444 9,768,242 7,316,820 6,438,5
Slide 32: Overview of Loan Portfolio
Overview of Loan Portfolio MRQ % of ($ in millions) Business Line Balance Sheet Category 4Q22 3Q23 4Q23 Yield Total Structured Finance Guaranteed portion of US govt SBA/USDA loans SBA/USDA 194.9 250.5 339.9 Unguaranteed portion of US govt SBA/USDA loans SBA/USDA 150.8 169.1 182.3 Paycheck Protection
Slide 33: Commercial Finance Concentrations by Industry
Commercial Finance Concentrations by Industry1 $ in millions Manufacturing $636 Utilities $621 Transportation and Warehousing $473 Other Services (except Public Administration) $423 Wholesale Trade $232 Finance and Insurance $198 Health Care and Social Assistance $181 Construction $134 Mining, Quarr