Pathward Financial : Investor Presentation June 2024
CASH
INVESTOR PRESENTATION
UPDATED JUNE 10, 2024
FORWARD LOOKING STATEMENTS
This investor update contains "forward-looking statements" which are made in good faith by Pathward Financial, Inc. (the "Company") pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue," "could," "future," "target," or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other "forward-looking" information.
These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company's beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company's control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results including our earnings per share guidance, future effective tax rate, and related performance expectations; progress on key strategic initiatives; expected results of our partnerships; our goals regarding the addition of recurring revenue and related expected performance impacts; expected nonperforming loan resolutions and net charge-off rates; the performance of our securities portfolio; the impact of card balances related to government stimulus programs; customer retention; loan and other product demand; new products and services; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; and technology. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; the potential adverse effects of unusual and infrequently occurring events, including the impact on financial markets from geopolitical conflicts such as the military conflicts in Ukraine and the Middle East, weather-related disasters, or public health events, such as pandemics and any governmental or societal responses thereto; our ability to achieve brand recognition for the Bank equal to or greater than we enjoyed for MetaBank; our ability to successfully implement measures designed to reduce expenses and increase efficiencies; changes in trade, monetary, and fiscal policies and laws, including actual changes in interest rates and the Fed Funds rate, and their related impacts on macroeconomic conditions, customer behavior, funding costs and loan and securities portfolios; changes in tax laws; the strength of the United States' economy, and the local economies in which the Company operates; adverse developments in the financial services industry generally such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer behavior; inflation, market, and monetary fluctuations; our liquidity and capital positions, including the sufficiency of our liquidity; the timely and efficient development of, new products and services offered by the Company or its strategic partners, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value and acceptance of these products and services by users; the ability of the Company's subsidiary Pathward®, N.A. ("Pathward") to maintain its Durbin Amendment exemption; the risks of dealing with or utilizing third parties, including, in connection with the Company's prepaid card and tax refund advance businesses, the risk of reduced volume of refund advance loans as a result of reduced customer demand for or usage of the Company's strategic partners' refund advance products; our relationship with, and any actions which may be initiated by, our regulators; changes in financial services laws and regulations, including laws and regulations relating to the tax refund industry and the insurance premium finance industry; technological changes, including, but not limited to, the protection of our electronic systems and information; the impact of acquisitions and divestitures; litigation risk; the growth of the Company's business, as well as expenses related thereto; continued maintenance by Pathward of its status as a well-capitalized institution, changes in consumer borrowing, spending and saving habits; losses from fraudulent or illegal activity, technological risks and developments and cyber threats, attacks or events; the success of the Company at maintaining its high quality asset level and managing and collecting assets of borrowers in default should problem assets increase; and the other factors described under the caption "Risk Factors" and in other sections of the Company's Annual Report on Form 10-K for the Company's fiscal year ended September 30, 2023 and in other filings made by the Company with the Securities and Exchange Commission ("SEC").
The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included herein speak only as of the date of this investor update. The Company expressly disclaims any intent or obligation to update, revise or clarify any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changed circumstances or future events or for any other reason.
2 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
AT PATHWARD®, LEADING THE WAY TO FINANCIAL ACCESS IS THE HEART OF OUR BUSINESS.
Since our founding, we have worked to advance financial inclusion. We seek out diverse partners, including fintechs, affinity groups, government agencies, and other banks and work with them to identify markets where people and businesses are underserved.
Our national bank charter, coordination with regulators, and deep understanding of risk mitigation and compliance allow us to guide our partners and deliver financial products, services and funding to the people and businesses who need them the most.
We are powering financial inclusion.
3 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
BUILDING A DIVERSIFIED COMPANY DEDICATED TO FINANCIAL EMPOWERMENT FOR INDIVIDUALS AND BUSINESSES
1993
2015 / 2016
Listed on
Entered Tax Services
Nasdaq: CASH
business by acquiring Refund
Advantage, SCS, and EPS
Dramatic growth in deposits from Payments business
heavily invested in securities, treasuries, and bond portfolio.
2021 Sold Meta trademarks and began rebranding initiative
2022 Completed rebranding as Pathward Financial
1954
2004
2014
2018
Founded as a
Created Prepaid
Acquired AFS/IBEX, an
Acquired
savings
Card Sponsorship
insurance premium
Crestmark
and loan
business - now
finance company
Bancorp, a
bank
Banking as a
commercial lending
Service (BaaS)
company
2020
Completed sale of Retail Bank division to focus on national banking operations and BaaS
Developed a governance structure that aligns with key ESG efforts
Converted to National Bank Charter
4
Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
4
RESILIENT BUSINESS MODEL IN
ECONOMIC CYCLES
Funding
Income
Stable funding
Earns consistent
Operates a
via BaaS partner
fees from the BaaS
collateralized
relationships
business
lending platform
that outperforms
in down-cycles
5 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
COLLABORATE WITH PARTNERS TO PROVIDE INNOVATIVE BANKING AS A SERVICE (BAAS) SOLUTIONS
Payment
Accepting and processing payments through highspeed banking rails
Solutions
Issuing
A leading debit and prepaid card issuer holding funds for partner programs
Solutions
Credit
Enable partners' lending solutions to serve diverse credit customer needs
Solutions
Tax
Partner with a network of tax preparers offering a variety of products
Solutions
Solutions for
Financial Partner with financial institutions to offer additional financial services
Institutions
6 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
Commercial Finance Helps Businesses Access Needed Funds Through Various Solutions
Working Capital
Equipment
Structured
Insurance
Finance
Finance
Finance
Premium Finance
Ready cash for
Providing access to
Assisting small and
Short-term financing
liquidity needs to
equipment financing,
mid-sized
for purchase of
new or growing
through loans and
businesses and
property, casualty,
companies in
leases, without
rural borrowers with
and liability
cyclical or seasonal
sacrificing cash flows
primarily SBA and
insurance premiums
industries
USDA lending to
fund growth,
expansion and
refinancing
7 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
INVESTMENT HIGHLIGHTS
RECORD OF STRONG
1 EARNINGS GROWTH AND
PROFITABILITY ABOVE BANKING INDUSTRY AVERAGES
RESILIENT COMMERCIAL
4 FINANCE LOAN
PORTFOLIO PRODUCES ATTRACTIVE RETURNS THROUGHOUT ECONOMIC CYCLES
EXCESS CAPITAL
2 GENERATING BUSINESS
ENABLES ONGOING RETURN OF VALUE TO SHAREHOLDERS
HIGHLY ADVANTAGEOUS
5 NATIONAL BANK CHARTER,
WITH WELL-DEVELOPED
RISK MITIGATION AND COMPLIANCE CAPABILITIES
EXPERIENCED LEADER IN
3 FAST-GROWING BANKING
AS A SERVICE (BAAS) SECTOR, WITH DIVERSIFIED PORTFOLIO OF HIGH- QUALITY FINANCIAL PARTNERS
8 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
1
2
3
4
5
RECORD OF STRONG EARNINGS GROWTH
Earnings Per Common Share
Net Income
$ in millions
CAGR
CAGR
$5.99
+26%
$156.4
$163.6
+29%
$5.26
$141.7
$4.38
$97.0
$104.7
$2.94
$2.49
$131.4
$4.49
$51.6
$1.67
FY '18
FY '19
FY '20
FY '21
FY '22
FY '23
FY '18
FY '19
FY '20
FY '21
FY '22
FY '23
Earnings inclusive of extraordinary items
In fiscal year 2022, the company sold its Meta names and trademarks and completed a Company rebrand. Adjustments to earnings in fiscal year 2022 include the revenue from the sale, expenses associated with rebranding, and additional onetime compensation expenses stemming from organizational restructuring. Fiscal year 2023 displays GAAP earnings as the net adjustments for the period are insignificant. See appendix for non-GAAP reconciliation.
9 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
1 2 3 4 5
PROFITABILITY ABOVE BANKING INDUSTRY AVERAGES
Return on Average Assets
2.33%
Net Interest Margin
6.04%
2.20%
1.74%
1.45%
1.32% 1.25%
0.97%
1.17%
4.84%
4.09%
3.83%
3.43%
3.17%
3.13%
3.33%
FY '20
FY '21
FY '22
FY '23
Pathward
Peers
FY '20
FY '21
FY '22
FY '23
Pathward
Peers
10 Pathward Financial, Inc. (Nasdaq: CASH) | June 2024 Investor Presentation
Disclaimer
Pathward Financial Inc. published this content on 10 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 June 2024 20:28:50 UTC.