Pathward Financial, Inc. · NASDAQ:CASH
Pathward Financial — Q1 FY2021 Earnings Presentation
30 slides from Pathward Financial's earnings presentation, January 2021
Slide 1: Quarterly Investor Update, First Quarter Fiscal Year 2021
Q U A R T E R LY I N V E S T O R U P D AT E FIRST QUARTER FISCAL YEAR 2021
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: We Are a Financial Enablement Company
W E A R E A F I N A N C I A L E N A B L E M E N T C O M PA N Y We work with innovators to increase financial availability, choice, and opportunity for all. We strive to remove barriers that traditional institutions put in the way of financial access, and promote economic mobility by providing respon
Slide 4: Strong Revenue Growth and Disciplined Expense Management Drive Profitability
STRONG REVENUE GROW TH AND DISCIPLINED E X P E N S E M A N A G E M E N T D R I V E P R O F I TA B I L I T Y F I R ST Q UA R T E R E N D E D D E C E M B E R 31 , 2 0 2 0 INCOME STATE ME N T ($ in thousands, except per share data) 1Q21 4Q20 1Q20 Net interest income 65,999 64,513 64,651 Provision for l
Slide 5: Healthy Balance Sheet with Robust Payments Deposit Growth
H E A LT H Y B A L A N C E S H E E T W I T H R O B U S T P AY M E N T DEPOSIT GROW TH F I R ST Q UA R T E R E N D E D D E C E M B E R 31 , 2 0 2 0 BALANCE SHE E T PERIOD ENDING AVERAGE ($ in thousands) 1Q21 4Q20 1Q20 1Q21 1Q20 Loans and leases 3,448,675 3,322,765 3,590,474 3,341,023 3,601,302 Allowa
Slide 6: Differentiated Business Lines with Significant Growth Opportunities
D I F F E R E N T I AT E D B U S I N E S S L I N E S W I T H S I G N I F I C A N T GROW TH OPPORTUNITIES REVENUE MAKEUP LAST TWELVE MONTHS ENDING DECEMBER 31, 2020 PAY M E N T S ($ in millions) TAX SERVICES Enables fintechs, finservs, and various Enables tax preparation firms to organizations by dis
Slide 7: First Quarter Business Highlights & Key Strategic Initiatives
FIRST QUARTER BUSINESS HIGHLIGHTS & 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 Executing large, national Focus on commercial finance Efficiency ratio improved to programs requiring M
Slide 8: 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 December 31, 2020 December 31, 2019 ($ in thousands) 1Q21 1Q20 Y/Y Δ 15% COMMERCIAL FINANCE 2,423,119 1,994,656 21% 43% Term lending 881,306 695,347 2
Slide 9: Payments & Tax Services
PAY M E N T S & TA X S E R V I C E S 9 QUARTERLY INVESTOR UPDATE | FIRST QUARTER FISCAL YEAR 2021 | NASDAQ: CASH
Slide 10: 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 DEPOSITS + FEE INCOME DEPOSITS + FEE INCOME Leading prepaid card i
Slide 11: Payments Business Update
P AY M E N T S B U S I N E S S U P D AT E • Selected as the prepaid debit card issuer for Economic Impact Payments as Payments Card and Deposit Fee Income Breakout First Quarter Fiscal 2021 Treasury’s financial agent. – Disbursed $6.42 billion in funding for EIP round 1 (“EIP1”) and $7.10 billion fo
Slide 12: Overview of Strategic Relationship with H&R Block
O V E R V I E W O F S T R AT E G I C R E L AT I O N S H I P W I T H H & R B L O C K P RO G R A M M A N AG E R H&R Block / Emerald Financial Services, LLC PAYMENTS TAX SERVICES CONSUMER FINANCE Emerald Prepaid Emerald Advance® Refund Advance Refund Transfers Mastercard® Line of Credit Emerald Savings
Slide 13: Commercial Finance & Community Bank Portfolios
COMMERCIAL FINANCE & COMMUNIT Y BANK PORTFOLIOS 13 QUARTERLY INVESTOR UPDATE | FIRST QUARTER FISCAL YEAR 2021 | NASDAQ: CASH
Slide 14: Commercial Finance Loan and Lease Portfolio
COMMERCIAL FINANCE LOAN AND LEASE PORTFOLIO $266.0M Small Ticket Equipment Financing TERM LENDING. Collateralized conventional term loans and notes receivable, weighted average life of 53 months. Exposure is concentrated in solar/alternative energy, most of Rental $235.3M which are construction proj
Slide 15: 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 Wholesale Trade Health Care and Social Assistance Construction Admin and Support and Waste Mgmt and Reme
Slide 16: Commercial Finance Mix
COMMERCIAL FINANCE MIX¹ MANUFACTURING UTILITIES Total Exposure $419.1 million % of Total² 11.5% Total Exposure $348.3 million % of Total² 9.6% • Limited exposure to single borrowers • 98% of Utilities exposure is to Solar Electric Power Generation, majority of • Diversified across multiple subsector
Slide 17: Legacy Community Bank Portfolio Breakdown
LEGACY COMMUNIT Y BANK PORTFOLIO BREAKDOWN A S O F D E C E M B E R 31, 2 0 2 0 | S E RV I C E D BY C E N T R A L B A N K During the quarter, sold $130 million loans and had $100 Outstanding million of community bank loans classified as held for sale as ($ in millions) Balance % of Total¹ of December
Slide 18: Legacy Community Bank Hotel Portfolio
LEGACY COMMUNIT Y BANK | HOTEL PORTFOLIO A S O F D E C E M B E R 31, 2 0 2 0 | S E RV I C E D BY C E N T R A L B A N K $186.7 million outstanding, total exposure of $197.9 million including unfunded commitments • $29.9 million related to construction. $180.4 million in commercial real estate and $6.
Slide 19: Asset Quality, Interest Rate Risk, & Capital
A S S E T Q U A L I T Y, I N T E R E S T R AT E R I S K , & C A P I TA L 19 QUARTERLY INVESTOR UPDATE | FIRST QUARTER FISCAL YEAR 2021 | NASDAQ: CASH
Slide 20: Asset Quality
ASSET QUALIT Y Nonperforming Assets (“NPAs”) Adjusted Net Charge-Offs (“NCOs”)¹ Excludes Tax Services NCOs and Related Seasonal Average Loans 0.79% 0.73% 0.67% 0.64% $ in millions $ in millions 0.48% 0.63% 0.55% 0.44% 0.34% $56.1 $53.2 0.24% $48.0 $39.4 $29.8 $5.5 $4.9 $3.8 $3.1 $2.2 1Q20 2Q20 3Q20
Slide 21: Asset Quality: COVID-Related Modifications and Deferrals
ASSET QUALIT Y Portfolio showing strong improvement in COVID-related modifications and deferrals. Excluding PPP loans, active deferments and modifications decreased from $193.3, or 6% of total gross loans and leases at September 30, 2020 to $85.3 million or 3% of total gross loans at December 31, AC
Slide 22: 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 D E C E M B E R 31, 2 0 2 0 12-MONTH INTEREST RATE SENSITIVITY FROM BASE NET INTEREST INCOME • Lower for longer rate environment -- focus is on reducing wholesale funding and redeploying deposits and assets 45% into positive carry opportunities. 35%
Slide 23: 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 R E G U L ATO R Y C A P I TA L A S O F D E C E M B E R 31 , 2 0 2 0 At December 31, 2020¹ Meta Financial Group, Inc. MetaBank, N.A. Tier 1 Leverage 7.40% 8.62% CAPITAL RATIO TRENDS Tier 1 Leverage – EIP-adjusted² N/A 9.61% Tier 1 Lev
Slide 24: Appendix
APPENDIX 24 QUARTERLY INVESTOR UPDATE | FIRST QUARTER FISCAL YEAR 2021 | NASDAQ: CASH
Slide 25: Non-GAAP Reconciliations: EIP-Related Adjustments
N O N - G A A P R E C O N C I L I AT I O N S E I P - R E L AT E D A DJ U S T M E N T S THREE MONTHS ENDED NET INTEREST MARGIN DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Average interest-earning assets 5,636,445 6,806,366 7,608,616 Net interest income 65,999 64,513 62,137 Net interest margin
Slide 26: Non-GAAP Reconciliations: EIP-Related Capital Adjustments
N O N - G A A P R E C O N C I L I AT I O N S E I P - R E L AT E D C A P I TA L A DJ U S T M E N T S METABANK TIER 1 LEVERAGE DECEMBER 31, 2020 SEPTEMBER 30, 2020 JUNE 30, 2020 Total stockholder's equity $ 912,508 $ 933,430 $ 923,520 LESS: Goodwill, net of associated deferred tax liabilities 301,999
Slide 27: 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) Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Noninterest Expense - GAAP 315,828 319,051 314,911 316,138 334,663 Net Interest Income 260,386 259,038 260,
Slide 28: 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 D E C E M B E R 31 , 2 0 2 0 COMMUNITY COMMERCIAL ($ in millions) BANK FINANCE PPP LOANS TOTAL % OF TOTAL¹ HOSPITALITY $186.7 $56.2 $2.2 $245.1 6.7% RETAIL (excl. consumer staples
Slide 29: Warehouse Finance
WAREHOUSE FINANCE Total Exposure $318.9 million % of Total¹ 8.7% 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 30: Consumer Credit Programs
CONSUMER CREDIT PROGRAMS Consumer Payments Principal, Interest, Fees Total Exposure $88.6 million % of Total¹ 2.4% 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