Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Meta Financial Group — Q2 2017 Earnings Presentation
19 slides from Pathward Financial's earnings presentation, Apr 26, 2017
Slide 1: Investor Update Second Quarter Fiscal Year 2017
Investor Update Second Quarter Fiscal Year 2017 = 7 Meta
Slide 2: Forward Looking Statements
Forward Looking Statements MetaBank" (the “Bank”), * including SEC") in th 1995. ‘You can identity forwarc-ooking statements by words such as “may,” “hope,” “wil “continu B should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” could,” “future, 5 taint 7 gr
Slide 3: Company Overview
Company Overview Prepaid low-cost deposit base provides Prepaid division generates fee income with competitive advantage to obtain high quality low-cost, long duration deposit base (ES credits and attractive terms for the Retail Bank ‘and Specialty Finance divisions ¢ In addition to funding high-qua
Slide 4: The Meta Ecosystem
The Meta Ecosystem Banking Payments Retail Banking Prepaid/ATM/Other Regional community Be with 10 branch locations A prepaid cor industry leader with payments, in lowa and South Dakote diversification Growing, profitable operations Coailing ty soy eanunvner stem eres + Loan growth of 19-30% YoY eac
Slide 5: Financial Highlights
Financial Highlights Quarterly Earnings Quarterly net income of $32.4MM? Diluted EPS of $3.42 ROAA of 2.91% and ROAE of 32.86% Net Interest Income (NII) Quarterly Nil of $24.0MM, increase of 20% over Q2FY16 Non-interest Income Tax product fee income increased $42.5MM, or 202% over Q2FY16 Card fee in
Slide 6: Tax Season Review
Tax Season Review Tax product revenue was $63.6MM in Q2FY17, an increase of 202% compared to Q2FY16 Increase driven by growth in refund advance fee income and refund transfer fee income Tax product expenses grew at a much slower rate, increasing 62% compared to Q2FY16 Effectively and efficiently int
Slide 7: Net Interest Income
Net Interest Income (smu $19.94 246 Net Interest Income and NIM $19.92 3-16 $19.89 $19.83 Q1t7 $23.97 Q247 Second Quarter 2017 | NASDAQ: CASH Second Quarter Highlights Net interest income increased 20%, while net interest margin (NIM) decreased 31. bps compared to fiscal second quarter 2016 Issuance
Slide 8: Net Interest Margin Breakout
Net Interest Margin Breakout* Quarter Average Impact on NIM Net Interest Income/NIM as reported 2.91% Zero Interest Tax loans 13-14 bps Excess Cash Borrowings Adjustment Normalized NIM 3.29% - 3.32% Borrowings adjustment as removing borrowing expense if cash balances were available li in December 20
Slide 9: Net Interest Drivers
Net Interest Drivers (smu Fiscal Quarter Average Total Investments and Yield Total Loans and Yield 246 26 ets quay 2a7 Interest Bearing Liabilities and Total Cost of Funds $1,403, $615 q2a6 9346 eas qua? 27 Second Quarter 2017 | NASDAQ: CASH sm 26 36 aet6 quay q2a7 ‘Second Quarter i Excluding taxpay
Slide 10: Earning Asset Mix
Earning Asset Mix (sum) Interest Earning Assets Fiscal Quarter Average Lt a Loans TH Cash and other Seourties Continue to improve earning asset mix Earning Asset Growth + Asset diversification with higher yields + Continued robust loan growth in retail bank and premium finance portfolios 02-16 to 02
Slide 11: Loan Portfolio
Loan Portfolio (sum) Second Quarter Hi hts Total loans receivable, excluding student loan portfolio purchase and refund advances, increased 29%, YoY YoY loan growth driven by increases in Commercial, Premium Finance and Consumer + Retail Bank loan growth 24%, YoY + Premium finance loan growth 54%, Y
Slide 12: Balance Sheet Overview
Balance Sheet Overview (sum Total Liabilities Total Assets eye 3 asa $4aa4 5 rf S cass 6 % a7 $3,496 . ie ear $3,235 $3,078 $3,068 fe y ‘i a a 9246 9346 qe36 qua7 247 HE Wholesale deposits HE Borrowings Fiscal Quarter Average Subordinated debt HE othertiabitties Second Quarter Highlights Average ass
Slide 13: Regulatory Capital
Regulatory Capital Regulatory Capital Ratios* 9.46% 19.76% 18.95% 18.95% 14.14% 14.68% inimum Requirement. be WelkCaptaized under 820% Prompt Corrective Action al (PCA) Provisions Tier 4 Leverage Common Equity Tier 1 Tier 4 RiskBased Total Risk Based Regulatory ratios ae estimated Period Ending Meta
Slide 14: Competitive Landscape
Competitive Landscape Early adopter of sophisticated compliance systems Investments in program design, training and technology + Implemented enhanced BSA/AML technology + Enhanced infrastructure supports growth + These prior investments allow more focus on growing current business and new developmen
Slide 15: Interest Rate Risk Management
Interest Rate Risk Management Interest rate itivity (what believes) Static interest rate risk results do not accurately reflect Meta’s true interest rate sensitivity due to our unique and historically predictable deposit base + Utilizing quarterly average balances for deposits, cash, and borrowings
Slide 16: Industry Recognition
Industry Recognition BUSINESS JOURNAL PART OF THE USA TODAY NETWORK Bank Dire cto "4 Nosberk tered ret Te Wenn p Growth Bank (May 2011 tera Top Community Bank fe 2016) , = SNACHA REPORT Second largest prepaid card issuer in the U.S. ranked by purchase volume (2015) Top 40 of ACH originators in 2016
Slide 17: Appendix
Appendix Meta®
Slide 18: Income Statement
Income Statement Net interest income Card Fee income ax Product Fee income. Other income Total Revenue Provision for Loan Loss ‘Compensation and Benefits Card Processing Expense Tax Product Expense All Other Expense Total Expense Net Income Before Taxes Income Tax Expense Net Income Three Months End
Slide 19: Average Balance Sheet
Average Balance Sheet Fiscal Quarter Average Cash and Cash Equivalents 88,331 23,154 Investments and MBS 2,036,633 2,026,849 2,084,101 2,349,016 15% Net Loans 767,166 818,922 963,984 1,291,199 68% Other Assets, 186,326 198,870 247,933, 368,816 98% Assets $ 3,078,455 $ 3,067,795 $ 3,234,976 $ 3,491,0