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    Pathward Financial, Inc. Announces Results for 2024 Fiscal Fourth Quarter and Fiscal Year 2024

    10/23/24 4:10:00 PM ET
    $CASH
    Major Banks
    Finance
    Get the next $CASH alert in real time by email

    Pathward Financial, Inc. ("Pathward Financial" or the "Company") (NASDAQ:CASH) reported net income of $33.6 million, or $1.35 per share, for the three months ended September 30, 2024, compared to net income of $35.9 million, or $1.36 per share, for the three months ended September 30, 2023.

    The Company reported net income of $168.4 million, or $6.62 per share, for the fiscal year ended September 30, 2024, compared to net income of $163.6 million, or $5.99 per share, for the fiscal year ended September 30, 2023. For the fiscal year ended September 30, 2024, the Company recognized return on average assets of 2.20% compared to 2.33% for the prior year period.

    CEO Brett Pharr said, "2024 was a great year for Pathward. We recertified as a Great Place to Work, remained committed to our remote first approach, announced new partnerships and extended others, celebrated employees who won multiple awards, and, most recently, announced that our newly rebranded Partner Solutions team won Finovate's Best Banking as a Service provider. These successes translated to solid financial results as well. We reported earnings per diluted share of $6.62 for the fiscal year, which was just above the high end of our updated guidance range and represents year-over-year growth of 11%."

    Company Highlights and Business Developments

    • On August 28, 2024, Pathward announced the sale of its commercial insurance premium finance business. The Company expects this transaction will close by October 31, 2024.
    • On September 25, 2024, Pathward, N.A., ("Bank" or "Pathward"), a subsidiary of Pathward Financial, celebrated its 20th year serving the payments industry with the announcement it renamed its "Banking as a Service" business line to "Partner Solutions."
    • On September 30, 2024, Pathward Financial and Pathward announced the Bank's Partner Solutions line of business won the 2024 Finovate Award for Best Banking as a Service Provider. According to Finovate, its awards recognize the companies driving fintech innovation forward and the individuals bringing new ideas to life.

    Financial Highlights for the 2024 Fiscal Fourth Quarter

    • Total revenue for the fourth quarter was $167.9 million, an increase of $6.9 million, or 4%, compared to the same quarter in fiscal 2023, driven by an increase in net interest income, partially offset by a reduction in noninterest income.
    • Net interest margin ("NIM") increased 47 basis points to 6.66% for the fourth quarter from 6.19% during the same period last year, primarily driven by increased yields on earning assets and an improved earning asset mix from the continued optimization of the portfolio. When including contractual, rate-related processing expense, which includes the expenses associated with custodial deposits, NIM would have been 5.15% in the fiscal 2024 fourth quarter compared to 4.87% during the fiscal 2023 fourth quarter. Servicing fee income on off-balance sheet custodial deposits is not included in this calculation. See non-GAAP reconciliation table below.
    • Total gross loans and leases at September 30, 2024 decreased $290.9 million to $4.08 billion compared to September 30, 2023 and decreased $537.4 million when compared to June 30, 2024. When excluding insurance premium finance loans of $800.1 million and $617.1 million, respectively, total gross loans and leases at September 30, 2024 increased $509.2 million, or 14%, when compared to September 30, 2023 and increased $79.7 million, or 2%, compared to June 30, 2024.
    • During the 2024 fiscal fourth quarter, the Company repurchased 236,308 shares of common stock at an average share price of $63.44. As of September 30, 2024, there were 7,000,000 shares available for repurchase under the current common stock share repurchase program.

    Net Interest Income

    Net interest income for the fourth quarter of fiscal 2024 was $115.9 million, an increase of 10% from the same quarter in fiscal 2023. The increase was mainly attributable to increased yields, higher average interest-earning asset balances and an improved earning asset mix.

    The Company's average interest-earning assets for the fourth quarter of fiscal 2024 increased by $201.1 million to $6.93 billion compared to the same quarter in fiscal 2023, due to growth in average outstanding balances of loans and leases, partially offset by a decrease in total investment security balances and a decrease in cash balances. The fourth quarter average outstanding balance of loans and leases increased $406.4 million compared to the same quarter of the prior fiscal year, primarily due to an increase in commercial finance and warehouse finance loans, partially offset by a decrease in consumer finance loans.

    Fiscal 2024 fourth quarter NIM increased to 6.66% from 6.19% in the fourth fiscal quarter of last year. When including contractual, rate-related processing expense, NIM would have been 5.15% in the fiscal 2024 fourth quarter compared to 4.87% during the fiscal 2023 fourth quarter. See non-GAAP reconciliation table below. The overall reported tax-equivalent yield ("TEY") on average earning asset yields increased 41 basis points to 6.89% compared to the prior year quarter, driven by an improved earning asset mix. The yield on the loan and lease portfolio was 8.67% compared to 8.33% for the comparable period last year and the TEY on the securities portfolio was 3.12% compared to 3.13% over that same period.

    The Company's cost of funds for all deposits and borrowings averaged 0.24% during the fiscal 2024 fourth quarter, as compared to 0.29% during the prior year quarter. The Company's overall cost of deposits was 0.07% in the fiscal fourth quarter of 2024, as compared to 0.12% during the prior year quarter. When including contractual, rate-related processing expense, the Company's overall cost of deposits was 1.76% in the fiscal 2024 fourth quarter, as compared to 1.56% during the prior year quarter. See non-GAAP reconciliation table below.

    Noninterest Income

    Fiscal 2024 fourth quarter noninterest income decreased 7% to $52.0 million, compared to $56.1 million for the same period of the prior year. The decrease was primarily driven by a decrease in card and deposit fees, rental income, and other income. The period-over-period decrease was partially offset by an increase in gain on sale of other and tax services product fees.

    The period-over-period decrease in card and deposit fee income was primarily related to lower servicing fee income due to a reduction in custodial deposits. Servicing fee income totaled $3.2 million during the 2024 fiscal fourth quarter, compared to $7.8 million for the same period of the prior year. For the fiscal quarter ended June 30, 2024, servicing fee income on custodial deposits totaled $8.6 million.

    Noninterest Expense

    Noninterest expense increased 10% to $129.9 million for the fiscal 2024 fourth quarter, from $118.2 million for the same quarter last year. The increase was primarily attributable to increases in compensation and benefits, card processing expense, other expense, and legal and consulting expense. The period-over-period increase was partially offset by a decrease in operating lease depreciation and amortization expenses.

    The card processing expense increase was due to rate-related agreements with Partner Solutions relationships. The amount of expense paid under those agreements is based on an agreed upon rate index that varies depending on the deposit levels, floor rates, market conditions, and other performance conditions. Generally, this rate index is based on a percentage of the Effective Federal Funds Rate ("EFFR") and reprices immediately upon a change in the EFFR. Approximately 57% of the deposit portfolio was subject to these rate-related processing expenses during the fiscal 2024 fourth quarter. For the fiscal quarter ended September 30, 2024, contractual, rate-related processing expenses were $26.3 million, as compared to $27.6 million for the fiscal quarter ended June 30, 2024, and $22.5 million for the fiscal quarter ended September 30, 2023.

    Income Tax Expense

    The Company recorded an income tax expense of $3.1 million, representing an effective tax rate of 8.2%, for the fiscal 2024 fourth quarter, compared to an income tax benefit of $2.7 million, representing an effective tax rate of (7.9%), for the fourth quarter last fiscal year. The current quarter increase in income tax expense compared to the prior year quarter was primarily due to a decrease in investment tax credits.

    The Company originated $26.1 million in renewable energy leases during the fiscal 2024 fourth quarter, resulting in $7.2 million in total net investment tax credits. During the fourth quarter of fiscal 2023, the Company originated $42.6 million in renewable energy leases resulting in $13.7 million in total net investment tax credits. For the fiscal year ended September 30, 2024, the Company originated $68.4 million in renewable energy leases, compared to $93.6 million for the comparable prior year period. Investment tax credits related to renewable energy leases are recognized ratably based on income throughout each fiscal year.

    Investments, Loans and Leases

    (Dollars in thousands)

    September 30, 2024

     

    June 30, 2024

     

    March 31, 2024

     

    December 31, 2023

     

    September 30, 2023

    Total investments

    $

    1,774,313

     

     

    $

    1,759,486

     

     

    $

    1,814,140

     

     

    $

    1,886,021

     

     

    $

    1,840,819

     

     

     

     

     

     

     

     

     

     

     

    Loans held for sale

     

     

     

     

     

     

     

     

     

    Term lending

     

    4,567

     

     

     

    —

     

     

     

    1,977

     

     

     

    2,500

     

     

     

    —

     

    Lease financing

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    778

     

     

     

    —

     

    Insurance premium finance

     

    594,359

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    SBA/USDA

     

    65,734

     

     

     

    7,030

     

     

     

    7,372

     

     

     

    —

     

     

     

    —

     

    Consumer finance

     

    24,210

     

     

     

    22,350

     

     

     

    16,597

     

     

     

    66,240

     

     

     

    77,779

     

    Total loans held for sale

     

    688,870

     

     

     

    29,380

     

     

     

    25,946

     

     

     

    69,518

     

     

     

    77,779

     

     

     

     

     

     

     

     

     

     

     

    Term lending

     

    1,554,641

     

     

     

    1,533,722

     

     

     

    1,489,054

     

     

     

    1,452,274

     

     

     

    1,308,133

     

    Asset-based lending

     

    471,897

     

     

     

    473,289

     

     

     

    429,556

     

     

     

    379,681

     

     

     

    382,371

     

    Factoring

     

    362,295

     

     

     

    350,740

     

     

     

    336,442

     

     

     

    335,953

     

     

     

    358,344

     

    Lease financing

     

    152,174

     

     

     

    155,044

     

     

     

    168,616

     

     

     

    188,889

     

     

     

    183,392

     

    Insurance premium finance

     

    —

     

     

     

    617,054

     

     

     

    522,904

     

     

     

    671,035

     

     

     

    800,077

     

    SBA/USDA

     

    568,628

     

     

     

    563,689

     

     

     

    560,433

     

     

     

    546,048

     

     

     

    524,750

     

    Other commercial finance

     

    185,964

     

     

     

    166,653

     

     

     

    149,056

     

     

     

    160,628

     

     

     

    166,091

     

    Commercial finance

     

    3,295,599

     

     

     

    3,860,191

     

     

     

    3,656,061

     

     

     

    3,734,508

     

     

     

    3,723,158

     

    Consumer finance

     

    248,800

     

     

     

    253,358

     

     

     

    267,031

     

     

     

    301,510

     

     

     

    254,416

     

    Tax services

     

    8,825

     

     

     

    43,184

     

     

     

    84,502

     

     

     

    33,435

     

     

     

    5,192

     

    Warehouse finance

     

    517,847

     

     

     

    449,962

     

     

     

    394,814

     

     

     

    349,911

     

     

     

    376,915

     

    Total loans and leases

     

    4,071,071

     

     

     

    4,606,695

     

     

     

    4,402,408

     

     

     

    4,419,364

     

     

     

    4,359,681

     

    Net deferred loan origination costs

     

    4,124

     

     

     

    5,857

     

     

     

    6,977

     

     

     

    6,917

     

     

     

    6,435

     

    Total gross loans and leases

     

    4,075,195

     

     

     

    4,612,552

     

     

     

    4,409,385

     

     

     

    4,426,281

     

     

     

    4,366,116

     

    Allowance for credit losses

     

    (45,336

    )

     

     

    (79,836

    )

     

     

    (80,777

    )

     

     

    (53,785

    )

     

     

    (49,705

    )

    Total loans and leases, net

    $

    4,029,859

     

     

    $

    4,532,716

     

     

    $

    4,328,608

     

     

    $

    4,372,496

     

     

    $

    4,316,411

     

    The Company's investment security balances at September 30, 2024 totaled $1.77 billion, as compared to $1.76 billion at June 30, 2024 and $1.84 billion at September 30, 2023.

    Total gross loans and leases totaled $4.08 billion at September 30, 2024, as compared to $4.61 billion at June 30, 2024 and $4.37 billion at September 30, 2023. The primary driver for the sequential and year-over-year decrease was related to the insurance premium finance portfolio moving to held for sale. The decrease was partially offset by growth in total commercial finance loans, excluding insurance premium finance loans, and warehouse finance loans. A decrease in seasonal tax services loans also led to the sequential decrease. When excluding insurance premium finance loans, total gross loans and leases at September 30, 2024 increased $79.7 million, or 2%, compared to June 30, 2024 and increased $509.2 million, or 14%, when compared to September 30, 2023.

    Commercial finance loans, which comprised 81% of the Company's loan and lease portfolio, totaled $3.30 billion at September 30, 2024, reflecting a decrease of $564.6 million from June 30, 2024 and a decrease of $427.6 million, or 11%, from September 30, 2023. The sequential decrease in commercial finance loans was primarily driven by the insurance premium finance portfolio moving to held for sale during the fourth quarter of fiscal 2024, which had a balance of $594.4 million at September 30, 2024. The decrease was partially offset by a $20.9 million increase in the term lending portfolio, a $19.3 million increase in the other commercial finance portfolio, and an $11.6 million increase in the factoring portfolio. The decrease in commercial finance loans when comparing the current period to the same period of the prior year was primarily driven by the aforementioned insurance premium finance loans along with a decrease in lease financing. This decrease was partially offset by increases in the term lending, asset-based lending, SBA/USDA, and other commercial finance portfolios. When excluding insurance premium finance loans, commercial finance loans at September 30, 2024 increased $52.5 million, or 2%, compared to June 30, 2024 and increased $372.5 million, or 13%, when compared to September 30, 2023.

    Asset Quality

    The Company's allowance for credit losses ("ACL") totaled $45.3 million at September 30, 2024, a decrease compared to $79.8 million at June 30, 2024 and a decrease compared to $49.7 million at September 30, 2023. The decrease in the ACL at September 30, 2024, when compared to June 30, 2024, was primarily due to a $28.6 million decrease in the allowance related to the seasonal tax services portfolio, a $3.4 million decrease in the allowance related to the consumer finance portfolio, and $2.5 million decrease in the allowance related to the commercial finance portfolio.

    The $4.4 million year-over-year decrease in the ACL was primarily driven by a $4.4 million decrease in the allowance related to the commercial finance portfolio and a $0.1 million decrease in the allowance related to the consumer finance portfolio, partially offset by a $0.1 million increase in the allowance related to the warehouse finance portfolio.

    The following table presents the Company's ACL as a percentage of its total loans and leases.

     

    As of the Period Ended

    (Unaudited)

    September 30, 2024

    June 30, 2024

    March 31, 2024

    December 31, 2023

    September 30, 2023

    Commercial finance

    1.29

    %

    1.17

    %

    1.21

    %

    1.30

    %

    1.26

    %

    Consumer finance

    0.90

    %

    2.23

    %

    1.71

    %

    1.45

    %

    0.92

    %

    Tax services

    0.03

    %

    66.35

    %

    37.31

    %

    1.52

    %

    0.04

    %

    Warehouse finance

    0.10

    %

    0.10

    %

    0.10

    %

    0.10

    %

    0.10

    %

    Total loans and leases

    1.11

    %

    1.73

    %

    1.83

    %

    1.22

    %

    1.14

    %

    Total loans and leases excluding tax services

    1.12

    %

    1.12

    %

    1.14

    %

    1.21

    %

    1.14

    %

    The Company's ACL as a percentage of total loans and leases decreased to 1.11% at September 30, 2024 from 1.73% at June 30, 2024. The decrease in the total loans and leases coverage ratio was primarily driven by the consumer finance portfolio and the seasonal tax services portfolio, partially offset by an increase in the commercial finance portfolio. The decrease in the consumer finance loan coverage ratio was due to seasonal activity. The increase in the commercial finance loan and lease coverage ratio was primarily related to the $594.4 million of insurance premium finance loans that were held for sale as of September 30, 2024 and, as such, had no related ACL balance. That portfolio carried a lower reserve rate compared to the rest of the commercial finance portfolio.

    Activity in the allowance for credit losses for the periods presented was as follows.

    (Unaudited)

    Three Months Ended

     

    Fiscal Year Ended

    (Dollars in thousands)

    September 30, 2024

    June 30, 2024

    September 30, 2023

     

    September 30, 2024

    September 30, 2023

    Beginning balance

    $

    79,836

     

    $

    80,777

     

    $

    81,916

     

     

    $

    49,705

     

    $

    45,947

     

    Provision (reversal of) - tax services loans

     

    (297

    )

     

    (3,285

    )

     

    2,945

     

     

     

    22,995

     

     

    35,775

     

    Provision (reversal of) - all other loans and leases

     

    1,423

     

     

    8,926

     

     

    6,124

     

     

     

    19,243

     

     

    21,673

     

    Charge-offs - tax services loans

     

    (28,815

    )

     

    (820

    )

     

    (36,606

    )

     

     

    (30,780

    )

     

    (38,741

    )

    Charge-offs - all other loans and leases

     

    (7,912

    )

     

    (7,772

    )

     

    (6,227

    )

     

     

    (26,902

    )

     

    (21,158

    )

    Recoveries - tax services loans

     

    461

     

     

    1,230

     

     

    531

     

     

     

    7,785

     

     

    2,963

     

    Recoveries - all other loans and leases

     

    640

     

     

    780

     

     

    1,022

     

     

     

    3,290

     

     

    3,246

     

    Ending balance

    $

    45,336

     

    $

    79,836

     

    $

    49,705

     

     

    $

    45,336

     

    $

    49,705

     

    The Company recognized a provision for credit losses of $0.8 million for the quarter ended September 30, 2024, compared to $9.0 million for the comparable period in the prior fiscal year. The period-over-period decrease in provision for credit losses was primarily due to decreases in provision for credit losses in the commercial finance portfolio of $4.7 million and the tax services portfolio of $3.2 million, partially offset by an increase of $0.1 million in provision for credit losses in the warehouse finance portfolio. The decrease in provision for credit losses in the commercial finance portfolio was primarily due to the insurance premium finance portfolio moving to held for sale during the quarter and reversing out the provision for credit losses on that portfolio. The Company recognized net charge-offs of $35.6 million for the quarter ended September 30, 2024, compared to net charge-offs of $41.3 million for the quarter ended September 30, 2023. Net charge-offs attributable to the seasonal tax services, consumer finance, and commercial finance portfolios for the current quarter were $28.4 million, $3.9 million, and $3.3 million, respectively. Net charge-offs attributable to the tax services, commercial finance and consumer finance portfolios for the same quarter of the prior year were $36.1 million, $5.1 million, and $0.1 million, respectively.

    The Company's past due loans and leases were as follows for the periods presented.

    As of September 30, 2024

    Accruing and Nonaccruing Loans and Leases

     

    Nonperforming Loans and Leases

    (Dollars in thousands)

    30-59 Days Past Due

     

    60-89 Days Past Due

     

    > 89 Days Past Due

     

    Total Past Due

     

    Current

     

    Total Loans and Leases Receivable

     

    > 89 Days Past Due and Accruing

     

    Nonaccrual Balance

     

    Total

    Loans held for sale

    $

    2,266

     

    $

    1,361

     

    $

    1,050

     

    $

    4,677

     

    $

    684,193

     

    $

    688,870

     

    $

    1,050

     

    $

    —

     

    $

    1,050

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial finance

     

    23,381

     

     

    7,671

     

     

    19,975

     

     

    51,027

     

     

    3,244,572

     

     

    3,295,599

     

     

    2,314

     

     

    26,412

     

     

    28,726

    Consumer finance

     

    3,962

     

     

    3,186

     

     

    3,053

     

     

    10,201

     

     

    238,599

     

     

    248,800

     

     

    3,053

     

     

    —

     

     

    3,053

    Tax services

     

    —

     

     

    —

     

     

    8,733

     

     

    8,733

     

     

    92

     

     

    8,825

     

     

    8,733

     

     

    —

     

     

    8,733

    Warehouse finance

     

    —

     

     

    —

     

     

    —

     

     

    —

     

     

    517,847

     

     

    517,847

     

     

    —

     

     

    —

     

     

    —

    Total loans and leases held for investment

     

    27,343

     

     

    10,857

     

     

    31,761

     

     

    69,961

     

     

    4,001,110

     

     

    4,071,071

     

     

    14,100

     

     

    26,412

     

     

    40,512

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total loans and leases

    $

    29,609

     

    $

    12,218

     

    $

    32,811

     

    $

    74,638

     

    $

    4,685,303

     

    $

    4,759,941

     

    $

    15,150

     

    $

    26,412

     

    $

    41,562

    As of June 30, 2024

    Accruing and Nonaccruing Loans and Leases

     

    Nonperforming Loans and Leases

    (Dollars in thousands)

    30-59 Days Past Due

     

    60-89 Days Past Due

     

    > 89 Days Past Due

     

    Total Past Due

     

    Current

     

    Total Loans and Leases Receivable

     

    > 89 Days Past Due and Accruing

     

    Nonaccrual Balance

     

    Total

    Loans held for sale

    $

    —

     

    $

    —

     

    $

    —

     

    $

    —

     

    $

    29,380

     

    $

    29,380

     

    $

    —

     

    $

    —

     

    $

    —

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial finance

     

    28,224

     

     

    7,348

     

     

    17,071

     

     

    52,643

     

     

    3,807,548

     

     

    3,860,191

     

     

    8,427

     

     

    27,613

     

     

    36,040

    Consumer finance

     

    4,496

     

     

    3,534

     

     

    8,588

     

     

    16,618

     

     

    236,740

     

     

    253,358

     

     

    8,588

     

     

    —

     

     

    8,588

    Tax services

     

    —

     

     

    43,184

     

     

    —

     

     

    43,184

     

     

    —

     

     

    43,184

     

     

    —

     

     

    —

     

     

    —

    Warehouse finance

     

    —

     

     

    —

     

     

    —

     

     

    —

     

     

    449,962

     

     

    449,962

     

     

    —

     

     

    —

     

     

    —

    Total loans and leases held for investment

     

    32,720

     

     

    54,066

     

     

    25,659

     

     

    112,445

     

     

    4,494,250

     

     

    4,606,695

     

     

    17,015

     

     

    27,613

     

     

    44,628

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total loans and leases

    $

    32,720

     

    $

    54,066

     

    $

    25,659

     

    $

    112,445

     

    $

    4,523,629

     

    $

    4,636,074

     

    $

    17,015

     

    $

    27,613

     

    $

    44,628

    The Company's nonperforming assets at September 30, 2024 were $43.0 million, representing 0.57% of total assets, compared to $46.3 million, or 0.61% of total assets at June 30, 2024 and $58.0 million, or 0.77% of total assets at September 30, 2023.

    The decrease in the nonperforming assets as a percentage of total assets at September 30, 2024 compared to June 30, 2024, was primarily driven by a decrease in nonperforming loans in the commercial finance and consumer finance portfolios, partially offset by an increase in nonperforming loans in the tax services portfolio due to seasonal activity. When comparing the current period to the same period of the prior year, the decrease in nonperforming assets was primarily due to decreases in nonperforming loans in the commercial finance portfolio, partially offset by increases in the seasonal tax services portfolio and consumer finance portfolio.

    The Company's nonperforming loans and leases at September 30, 2024, were $41.6 million, representing 0.87% of total gross loans and leases, compared to $44.6 million, or 0.96% of total gross loans and leases at June 30, 2024 and $56.2 million, or 1.26% of total gross loans and leases at September 30, 2023.

    The Company has various portfolios of consumer lending and tax services loans that present unique risks that are statistically managed. Due to the unique risks associated with these portfolios, the Company monitors other credit quality indicators in their evaluation of the appropriateness of the allowance for credit losses on these portfolios, and as such, these loans are not included in the asset classification table below. The Company's loans and leases held for investment by asset classification were as follows for the periods presented.

     

    Asset Classification

    (Dollars in thousands)

    Pass

    Watch

    Special Mention

    Substandard

    Doubtful

    Total

    As of September 30, 2024

     

     

     

     

     

     

    Commercial finance

    $

    2,524,429

    $

    486,670

    $

    93,257

    $

    180,942

    $

    10,301

    $

    3,295,599

    Warehouse finance

     

    517,847

     

    —

     

    —

     

    —

     

    —

     

    517,847

    Total loans and leases

    $

    3,042,276

    $

    486,670

    $

    93,257

    $

    180,942

    $

    10,301

    $

    3,813,446

     

    Asset Classification

    (Dollars in thousands)

    Pass

    Watch

    Special Mention

    Substandard

    Doubtful

    Total

    As of June 30, 2024

     

    Commercial finance

    $

    3,058,737

    $

    537,278

    $

    63,523

    $

    192,473

    $

    8,180

    $

    3,860,191

    Warehouse finance

     

    449,962

     

    —

     

    —

     

    —

     

    —

     

    449,962

    Total loans and leases

    $

    3,508,699

    $

    537,278

    $

    63,523

    $

    192,473

    $

    8,180

    $

    4,310,153

    Deposits, Borrowings and Other Liabilities

    The average balance of total deposits and interest-bearing liabilities was $6.38 billion for the three-month period ended September 30, 2024, compared to $6.39 billion for the same period in the prior fiscal year. Total average deposits for the fiscal 2024 fourth quarter decreased by $5.7 million to $6.20 billion compared to the same period in fiscal 2023. The decrease in average deposits was due to decreases in wholesale deposits and savings deposits, partially offset by increases noninterest bearing deposits and money market deposits.

    Total end-of-period deposits decreased 11% to $5.88 billion at September 30, 2024, compared to $6.59 billion at September 30, 2023. The decrease in end-of-period deposits was primarily driven by decreases in noninterest-bearing deposits of $715.8 million, money market deposits of $10.6 million, and savings deposits of $10.3 million, partially offset by an increase in wholesale deposits of $20.1 million.

    As of September 30, 2024, the Company had $433.3 million in deposits related to government stimulus programs. Of the total amount of government stimulus program deposits, $198.2 million are on activated cards while $235.1 million are on inactivated cards.

    As of September 30, 2024, the Company managed $201.9 million of customer deposits at other banks in its capacity as custodian. These deposits provide the Company with the ability to earn servicing fee income, typically reflective of the EFFR. The sequential quarter decrease in these customer deposits held at other banks reflects normal seasonal patterns in deposits on balance sheet as well as the Company retaining more deposits on its balance sheet to fund loan growth by the Company during the current quarter.

    Regulatory Capital

    The Company and its subsidiary Pathward®, N.A. (the "Bank") remained above the federal regulatory minimum capital requirements at September 30, 2024, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies. Regulatory capital ratios of the Company and the Bank are stated in the table below. Regulatory capital is not affected by the unrealized loss on accumulated other comprehensive income ("AOCI"). The securities portfolio is primarily comprised of amortizing securities that should provide consistent cash flow.

    The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analysis.

    As of the Periods Indicated

    September 30,

    2024(1)

     

    June 30, 2024

     

    March 31,

    2024

     

    December 31,

    2023

     

    September 30,

    2023

    Company

     

     

     

     

     

     

     

     

     

    Tier 1 leverage capital ratio

    9.26

    %

     

    9.13

    %

     

    7.75

    %

     

    7.96

    %

     

    8.11

    %

    Common equity Tier 1 capital ratio

    12.60

    %

     

    12.44

    %

     

    12.30

    %

     

    11.43

    %

     

    11.25

    %

    Tier 1 capital ratio

    12.86

    %

     

    12.70

    %

     

    12.56

    %

     

    11.69

    %

     

    11.50

    %

    Total capital ratio

    14.08

    %

     

    14.33

    %

     

    14.21

    %

     

    13.12

    %

     

    12.84

    %

    Bank

     

     

     

     

     

     

     

     

     

    Tier 1 leverage ratio

    9.44

    %

     

    9.36

    %

     

    7.92

    %

     

    8.15

    %

     

    8.32

    %

    Common equity Tier 1 capital ratio

    13.12

    %

     

    13.02

    %

     

    12.83

    %

     

    11.97

    %

     

    11.81

    %

    Tier 1 capital ratio

    13.12

    %

     

    13.02

    %

     

    12.83

    %

     

    11.97

    %

     

    11.81

    %

    Total capital ratio

    13.97

    %

     

    14.27

    %

     

    14.09

    %

     

    13.01

    %

     

    12.76

    %

    (1)

    September 30, 2024 percentages are preliminary pending completion and filing of the Company's regulatory reports. Regulatory capital ratios for periods presented reflect the Company's election of the five-year CECL transition for regulatory capital purposes.

    The following table provides the non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP:

     

    Standardized Approach(1)

    As of the Periods Indicated

     

    (Dollars in thousands)

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

     

    December 31,

    2023

     

    September 30,

    2023

    Total stockholders' equity

    $

    839,605

     

     

    $

    765,248

     

     

    $

    739,462

     

     

    $

    729,282

     

     

    $

    650,625

     

    Adjustments:

     

     

     

     

     

     

     

     

     

    LESS: Goodwill, net of associated deferred tax liabilities

     

    296,105

     

     

     

    296,496

     

     

     

    296,889

     

     

     

    297,283

     

     

     

    297,679

     

    LESS: Certain other intangible assets

     

    18,018

     

     

     

    18,315

     

     

     

    19,146

     

     

     

    20,093

     

     

     

    21,228

     

    LESS: Net deferred tax assets from operating loss and tax credit carry-forwards

     

    13,253

     

     

     

    11,880

     

     

     

    15,862

     

     

     

    20,253

     

     

     

    19,679

     

    LESS: Net unrealized (losses) on available for sale securities

     

    (152,328

    )

     

     

    (206,584

    )

     

     

    (205,460

    )

     

     

    (187,901

    )

     

     

    (254,294

    )

    LESS: Noncontrolling interest

     

    (277

    )

     

     

    (506

    )

     

     

    (420

    )

     

     

    (510

    )

     

     

    (1,005

    )

    ADD: Adoption of Accounting Standards Update 2016-13

     

    1,345

     

     

     

    1,345

     

     

     

    1,345

     

     

     

    1,345

     

     

     

    2,017

     

    Common Equity Tier 1(1)

     

    666,179

     

     

     

    646,992

     

     

     

    614,790

     

     

     

    581,409

     

     

     

    569,355

     

    Long-term borrowings and other instruments qualifying as Tier 1

     

    13,661

     

     

     

    13,661

     

     

     

    13,661

     

     

     

    13,661

     

     

     

    13,661

     

    Tier 1 minority interest not included in common equity Tier 1 capital

     

    (150

    )

     

     

    (374

    )

     

     

    (311

    )

     

     

    (410

    )

     

     

    (826

    )

    Total Tier 1 capital

     

    679,690

     

     

     

    660,279

     

     

     

    628,140

     

     

     

    594,660

     

     

     

    582,190

     

    Allowance for credit losses

     

    44,687

     

     

     

    65,182

     

     

     

    62,715

     

     

     

    53,037

     

     

     

    47,960

     

    Subordinated debentures, net of issuance costs

     

    19,693

     

     

     

    19,668

     

     

     

    19,642

     

     

     

    19,617

     

     

     

    19,591

     

    Total capital

    $

    774,070

     

     

    $

    745,129

     

     

    $

    710,497

     

     

    $

    667,314

     

     

    $

    649,741

     

    (1)

    Capital ratios were determined using the Basel III capital rules that became effective on January 1, 2015. Basel III revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio; those changes were fully phased in through the end of calendar year 2021.

    Conference Call

    The Company will host a conference call and earnings webcast with a corresponding presentation at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) on Wednesday, October 23, 2024. The live webcast of the call can be accessed from Pathward's Investor Relations website at www.pathwardfinancial.com. Telephone participants may access the conference call by dialing 1-833-470-1428 approximately 10 minutes prior to start time and reference access code 291724.

    The Quarterly Investor Update slide presentation prepared for use in connection with the Company's conference call and earnings webcast is available under the Presentations link in the Investor Relations - Events & Presentations section of the Company's website at www.pathwardfinancial.com. A webcast replay will also be archived at www.pathwardfinancial.com for one year.

    Upcoming Investor Events

    • Piper Sandler East Coast Financial Services Conference, Nov. 14, 2024 | Naples, FL

    About Pathward Financial, Inc.

    Pathward Financial, Inc. (NASDAQ:CASH) is a U.S.-based financial holding company driven by its purpose to power financial inclusion for all. Through our subsidiary, Pathward®, N.A., we strive to increase financial availability, choice, and opportunity across our Partner Solutions and Commercial Finance business lines. These strategic business lines provide end-to-end support to individuals and businesses. Learn more at www.pathwardfinancial.com.

    Forward-Looking Statements

    The Company and the Bank may from time to time make written or oral "forward-looking statements," including statements contained in this press release, the Company's filings with the Securities and Exchange Commission ("SEC"), the Company's reports to stockholders, and in other communications by the Company and the Bank, 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 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 diluted share guidance, annual effective tax rate and related performance expectations; progress on key strategic initiatives; expected results of our partnerships; impacts of our improved data analytics, underwriting and monitoring processes; 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 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 Bank's ability 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 Bank'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 the Bank 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; and 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.

    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 in this press release speak only as of the date hereof. Additional discussions of factors affecting the Company's business and prospects are reflected 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 with the SEC. 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.

    Condensed Consolidated Statements of Financial Condition (Unaudited)

     

    (Dollars in Thousands, Except Share Data)

    September 30, 2024

     

    June 30, 2024

     

    March 31, 2024

     

    December 31, 2023

     

    September 30, 2023

    ASSETS

     

     

     

     

     

     

     

     

     

    Cash and cash equivalents

    $

    158,337

     

     

    $

    298,926

     

     

    $

    347,888

     

     

    $

    671,630

     

     

    $

    375,580

     

    Securities available for sale, at fair value

     

    1,741,221

     

     

     

    1,725,460

     

     

     

    1,779,458

     

     

     

    1,850,581

     

     

     

    1,804,228

     

    Securities held to maturity, at amortized cost

     

    33,092

     

     

     

    34,026

     

     

     

    34,682

     

     

     

    35,440

     

     

     

    36,591

     

    Federal Reserve Bank and Federal Home Loan Bank Stock, at cost

     

    36,014

     

     

     

    24,449

     

     

     

    25,844

     

     

     

    23,694

     

     

     

    28,210

     

    Loans held for sale

     

    688,870

     

     

     

    29,380

     

     

     

    25,946

     

     

     

    69,518

     

     

     

    77,779

     

    Loans and leases

     

    4,075,195

     

     

     

    4,612,552

     

     

     

    4,409,385

     

     

     

    4,426,281

     

     

     

    4,366,116

     

    Allowance for credit losses

     

    (45,336

    )

     

     

    (79,836

    )

     

     

    (80,777

    )

     

     

    (53,785

    )

     

     

    (49,705

    )

    Accrued interest receivable

     

    31,385

     

     

     

    31,755

     

     

     

    30,294

     

     

     

    27,080

     

     

     

    23,282

     

    Premises, furniture, and equipment, net

     

    39,055

     

     

     

    36,953

     

     

     

    37,266

     

     

     

    38,270

     

     

     

    39,160

     

    Rental equipment, net

     

    205,339

     

     

     

    209,544

     

     

     

    215,885

     

     

     

    228,916

     

     

     

    211,750

     

    Goodwill and intangible assets

     

    326,094

     

     

     

    327,018

     

     

     

    328,001

     

     

     

    329,241

     

     

     

    330,225

     

    Other assets

     

    260,070

     

     

     

    280,053

     

     

     

    283,245

     

     

     

    280,571

     

     

     

    292,327

     

    Total assets

    $

    7,549,336

     

     

    $

    7,530,280

     

     

    $

    7,437,117

     

     

    $

    7,927,437

     

     

    $

    7,535,543

     

     

     

     

     

     

     

     

     

     

     

    LIABILITIES AND STOCKHOLDERS' EQUITY

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    LIABILITIES

     

     

     

     

     

     

     

     

     

    Deposits

     

    5,875,085

     

     

     

    6,431,516

     

     

     

    6,368,344

     

     

     

    6,936,055

     

     

     

    6,589,182

     

    Short-term borrowings

     

    377,000

     

     

     

    —

     

     

     

    31,000

     

     

     

    —

     

     

     

    13,000

     

    Long-term borrowings

     

    33,354

     

     

     

    33,329

     

     

     

    33,373

     

     

     

    33,614

     

     

     

    33,873

     

    Accrued expenses and other liabilities

     

    424,292

     

     

     

    300,187

     

     

     

    264,938

     

     

     

    228,486

     

     

     

    248,863

     

    Total liabilities

     

    6,709,731

     

     

     

    6,765,032

     

     

     

    6,697,655

     

     

     

    7,198,155

     

     

     

    6,884,918

     

     

     

     

     

     

     

     

     

     

     

    STOCKHOLDERS' EQUITY

     

     

     

     

     

     

     

     

     

    Preferred stock

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Common stock, $.01 par value

     

    248

     

     

     

    251

     

     

     

    254

     

     

     

    260

     

     

     

    262

     

    Common stock, Nonvoting, $.01 par value

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Additional paid-in capital

     

    638,803

     

     

     

    636,284

     

     

     

    634,415

     

     

     

    629,737

     

     

     

    628,500

     

    Retained earnings

     

    354,474

     

     

     

    343,392

     

     

     

    317,964

     

     

     

    293,463

     

     

     

    278,655

     

    Accumulated other comprehensive loss

     

    (153,394

    )

     

     

    (207,992

    )

     

     

    (206,570

    )

     

     

    (188,433

    )

     

     

    (255,443

    )

    Treasury stock, at cost

     

    (249

    )

     

     

    (6,181

    )

     

     

    (6,181

    )

     

     

    (5,235

    )

     

     

    (344

    )

    Total equity attributable to parent

     

    839,882

     

     

     

    765,754

     

     

     

    739,882

     

     

     

    729,792

     

     

     

    651,630

     

    Noncontrolling interest

     

    (277

    )

     

     

    (506

    )

     

     

    (420

    )

     

     

    (510

    )

     

     

    (1,005

    )

    Total stockholders' equity

     

    839,605

     

     

     

    765,248

     

     

     

    739,462

     

     

     

    729,282

     

     

     

    650,625

     

    Total liabilities and stockholders' equity

    $

    7,549,336

     

     

    $

    7,530,280

     

     

    $

    7,437,117

     

     

    $

    7,927,437

     

     

    $

    7,535,543

     

    Condensed Consolidated Statements of Operations (Unaudited)

     

     

    Three Months Ended

     

    Fiscal Year Ended

    (Dollars in Thousands, Except Share and Per Share Data)

    September 30, 2024

     

    June 30, 2024

     

    September 30, 2023

     

    September 30, 2024

     

    September 30, 2023

    Interest and dividend income:

     

     

     

     

     

     

     

     

     

    Loans and leases, including fees

    $

    102,292

     

    $

    95,871

     

     

    $

    90,085

     

     

    $

    395,876

     

    $

    323,602

    Mortgage-backed securities

     

    9,607

     

     

    9,748

     

     

     

    10,225

     

     

     

    39,402

     

     

    41,197

    Other investments

     

    7,851

     

     

    8,323

     

     

     

    9,332

     

     

     

    41,073

     

     

    33,936

     

     

    119,750

     

     

    113,942

     

     

     

    109,642

     

     

     

    476,351

     

     

    398,735

    Interest expense:

     

     

     

     

     

     

     

     

     

    Deposits

     

    1,119

     

     

    1,689

     

     

     

    1,954

     

     

     

    13,019

     

     

    4,356

    FHLB advances and other borrowings

     

    2,709

     

     

    1,394

     

     

     

    2,754

     

     

     

    8,214

     

     

    6,518

     

     

    3,828

     

     

    3,083

     

     

     

    4,708

     

     

     

    21,233

     

     

    10,874

     

     

     

     

     

     

     

     

     

     

    Net interest income

     

    115,922

     

     

    110,859

     

     

     

    104,934

     

     

     

    455,118

     

     

    387,861

     

     

     

     

     

     

     

     

     

     

    Provision for credit loss

     

    838

     

     

    5,881

     

     

     

    9,042

     

     

     

    42,661

     

     

    57,354

     

     

     

     

     

     

     

     

     

     

    Net interest income after provision for credit loss

     

    115,084

     

     

    104,978

     

     

     

    95,892

     

     

     

    412,457

     

     

    330,507

     

     

     

     

     

     

     

     

     

     

    Noninterest income:

     

     

     

     

     

     

     

     

     

    Refund transfer product fees

     

    1,703

     

     

    9,111

     

     

     

    308

     

     

     

    40,178

     

     

    39,452

    Refund advance fee income

     

    229

     

     

    (67

    )

     

     

    (252

    )

     

     

    43,473

     

     

    37,433

    Card and deposit fees

     

    26,441

     

     

    33,408

     

     

     

    31,233

     

     

     

    125,943

     

     

    150,746

    Rental income

     

    13,199

     

     

    13,779

     

     

     

    14,562

     

     

     

    54,157

     

     

    54,190

    Gain on sale of trademarks

     

    —

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

    10,000

    Gain on sale of other

     

    3,459

     

     

    4,675

     

     

     

    2,006

     

     

     

    12,669

     

     

    2,663

    Other income

     

    6,979

     

     

    4,965

     

     

     

    8,194

     

     

     

    23,167

     

     

    22,115

    Total noninterest income

     

    52,010

     

     

    65,871

     

     

     

    56,051

     

     

     

    299,587

     

     

    316,599

     

     

     

     

     

     

     

     

     

     

    Noninterest expense:

     

     

     

     

     

     

     

     

     

    Compensation and benefits

     

    52,298

     

     

    48,449

     

     

     

    46,352

     

     

     

    201,472

     

     

    184,318

    Refund transfer product expense

     

    168

     

     

    2,136

     

     

     

    28

     

     

     

    9,862

     

     

    9,723

    Refund advance expense

     

    20

     

     

    47

     

     

     

    (6

    )

     

     

    1,943

     

     

    1,863

    Card processing

     

    33,877

     

     

    34,314

     

     

     

    29,549

     

     

     

    137,938

     

     

    105,498

    Occupancy and equipment expense

     

    9,376

     

     

    9,070

     

     

     

    9,274

     

     

     

    36,587

     

     

    34,691

    Operating lease equipment depreciation

     

    10,445

     

     

    10,465

     

     

     

    10,846

     

     

     

    41,757

     

     

    45,710

    Legal and consulting

     

    8,414

     

     

    5,410

     

     

     

    7,633

     

     

     

    24,857

     

     

    27,102

    Intangible amortization

     

    924

     

     

    983

     

     

     

    1,110

     

     

     

    4,131

     

     

    4,971

    Impairment expense

     

    —

     

     

    999

     

     

     

    —

     

     

     

    3,012

     

     

    3,273

    Other expense

     

    14,348

     

     

    11,806

     

     

     

    13,416

     

     

     

    51,694

     

     

    47,826

    Total noninterest expense

     

    129,870

     

     

    123,679

     

     

     

    118,202

     

     

     

    513,253

     

     

    464,975

     

     

     

     

     

     

     

     

     

     

    Income before income tax expense

     

    37,224

     

     

    47,170

     

     

     

    33,741

     

     

     

    198,791

     

     

    182,131

     

     

     

     

     

     

     

     

     

     

    Income tax expense (benefit)

     

    3,052

     

     

    5,123

     

     

     

    (2,672

    )

     

     

    29,141

     

     

    16,324

     

     

     

     

     

     

     

     

     

     

    Net income before noncontrolling interest

     

    34,172

     

     

    42,047

     

     

     

    36,413

     

     

     

    169,650

     

     

    165,807

    Net income attributable to noncontrolling interest

     

    575

     

     

    212

     

     

     

    507

     

     

     

    1,293

     

     

    2,192

    Net income attributable to parent

    $

    33,597

     

    $

    41,835

     

     

    $

    35,906

     

     

    $

    168,357

     

    $

    163,615

     

     

     

     

     

     

     

     

     

     

    Less: Allocation of Earnings to participating securities(1)

     

    348

     

     

    432

     

     

     

    531

     

     

     

    1,540

     

     

    2,445

    Net income attributable to common shareholders(1)

     

    33,249

     

     

    41,403

     

     

     

    35,375

     

     

     

    166,817

     

     

    161,162

    Earnings per common share:

     

     

     

     

     

     

     

     

     

    Basic

    $

    1.35

     

    $

    1.66

     

     

    $

    1.37

     

     

    $

    6.63

     

    $

    6.01

    Diluted

    $

    1.35

     

    $

    1.66

     

     

    $

    1.36

     

     

    $

    6.62

     

    $

    5.99

    Shares used in computing earnings per common share:

     

     

     

     

     

     

     

     

     

    Basic

     

    24,676,329

     

     

    24,946,085

     

     

     

    25,883,807

     

     

     

    25,169,937

     

     

    26,833,079

    Diluted

     

    24,715,021

     

     

    24,979,818

     

     

     

    25,991,449

     

     

     

    25,201,750

     

     

    26,925,606

    (1) Amounts presented are used in the two-class earnings per common share calculation.

    Average Balances, Interest Rates and Yields

    The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and in rates. Only the yield/rate reflects tax-equivalent adjustments. Nonaccruing loans and leases have been included in the table as loans carrying a zero yield.

    Three Months Ended September 30,

    2024

     

    2023

    (Dollars in thousands)

    Average

    Outstanding

    Balance

     

    Interest

    Earned /

    Paid

     

    Yield /

    Rate(1)

     

    Average

    Outstanding

    Balance

     

    Interest

    Earned /

    Paid

     

    Yield /

    Rate(1)

    Interest-earning assets:

     

     

     

     

     

     

     

     

     

     

     

    Cash and fed funds sold

    $

    214,921

     

    $

    1,868

     

    3.46

    %

     

    $

    230,032

     

    $

    2,425

     

     

    4.18

    %

    Mortgage-backed securities

     

    1,412,359

     

     

    9,607

     

    2.71

    %

     

     

    1,514,318

     

     

    10,225

     

     

    2.68

    %

    Tax exempt investment securities

     

    124,944

     

     

    858

     

    3.46

    %

     

     

    141,328

     

     

    964

     

     

    3.43

    %

    Asset-backed securities

     

    200,382

     

     

    2,967

     

    5.89

    %

     

     

    260,460

     

     

    3,656

     

     

    5.57

    %

    Other investment securities

     

    278,197

     

     

    2,158

     

    3.09

    %

     

     

    289,980

     

     

    2,287

     

     

    3.13

    %

    Total investments

     

    2,015,882

     

     

    15,590

     

    3.12

    %

     

     

    2,206,086

     

     

    17,132

     

     

    3.13

    %

    Commercial finance

     

    3,909,498

     

     

    83,453

     

    8.49

    %

     

     

    3,543,353

     

     

    74,157

     

     

    8.30

    %

    Consumer finance

     

    274,675

     

     

    6,413

     

    9.29

    %

     

     

    312,292

     

     

    7,125

     

     

    9.05

    %

    Tax services

     

    39,437

     

     

    136

     

    1.38

    %

     

     

    44,192

     

     

    (147

    )

     

    (1.32

    )%

    Warehouse finance

     

    470,902

     

     

    12,290

     

    10.38

    %

     

     

    388,230

     

     

    8,950

     

     

    9.15

    %

    Total loans and leases

     

    4,694,512

     

     

    102,292

     

    8.67

    %

     

     

    4,288,067

     

     

    90,085

     

     

    8.33

    %

    Total interest-earning assets

    $

    6,925,315

     

    $

    119,750

     

    6.89

    %

     

    $

    6,724,185

     

    $

    109,642

     

     

    6.48

    %

    Noninterest-earning assets

     

    573,503

     

     

     

     

     

     

    566,890

     

     

     

     

    Total assets

    $

    7,498,818

     

     

     

     

     

    $

    7,291,075

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest-bearing liabilities:

     

     

     

     

     

     

     

     

     

     

     

    Interest-bearing checking

    $

    650

     

    $

    —

     

    0.19

    %

     

    $

    364

     

    $

    —

     

     

    0.33

    %

    Savings

     

    47,193

     

     

    3

     

    0.03

    %

     

     

    58,907

     

     

    6

     

     

    0.04

    %

    Money markets

     

    174,465

     

     

    561

     

    1.28

    %

     

     

    156,671

     

     

    237

     

     

    0.60

    %

    Time deposits

     

    4,205

     

     

    3

     

    0.25

    %

     

     

    5,589

     

     

    3

     

     

    0.19

    %

    Wholesale deposits

     

    41,299

     

     

    552

     

    5.32

    %

     

     

    128,155

     

     

    1,708

     

     

    5.29

    %

    Total interest-bearing deposits (a)

     

    267,812

     

     

    1,119

     

    1.66

    %

     

     

    349,686

     

     

    1,954

     

     

    2.22

    %

    Overnight fed funds purchased

     

    147,425

     

     

    2,044

     

    5.52

    %

     

     

    148,837

     

     

    2,077

     

     

    5.54

    %

    Subordinated debentures

     

    19,676

     

     

    355

     

    7.17

    %

     

     

    19,574

     

     

    357

     

     

    7.23

    %

    Other borrowings

     

    13,661

     

     

    310

     

    9.02

    %

     

     

    14,484

     

     

    320

     

     

    8.76

    %

    Total borrowings

     

    180,762

     

     

    2,709

     

    5.96

    %

     

     

    182,895

     

     

    2,754

     

     

    5.97

    %

    Total interest-bearing liabilities

     

    448,574

     

     

    3,828

     

    3.39

    %

     

     

    532,581

     

     

    4,708

     

     

    3.51

    %

    Noninterest-bearing deposits (b)

     

    5,931,459

     

     

    —

     

    —

    %

     

     

    5,855,248

     

     

    —

     

     

    —

    %

    Total deposits and interest-bearing liabilities

    $

    6,380,033

     

    $

    3,828

     

    0.24

    %

     

    $

    6,387,829

     

    $

    4,708

     

     

    0.29

    %

    Other noninterest-bearing liabilities

     

    318,818

     

     

     

     

     

     

    223,242

     

     

     

     

    Total liabilities

     

    6,698,851

     

     

     

     

     

     

    6,611,071

     

     

     

     

    Shareholders' equity

     

    799,967

     

     

     

     

     

     

    680,004

     

     

     

     

    Total liabilities and shareholders' equity

    $

    7,498,818

     

     

     

     

     

    $

    7,291,075

     

     

     

     

    Net interest income and net interest rate spread including noninterest-bearing deposits

     

     

    $

    115,922

     

    6.65

    %

     

     

     

    $

    104,934

     

     

    6.19

    %

     

     

     

     

     

     

     

     

     

     

     

     

    Net interest margin

     

     

     

     

    6.66

    %

     

     

     

     

     

    6.19

    %

    Tax-equivalent effect

     

     

     

     

    0.01

    %

     

     

     

     

     

    0.02

    %

    Net interest margin, tax-equivalent(2)

     

     

     

     

    6.67

    %

     

     

     

     

     

    6.21

    %

     

     

     

     

     

     

     

     

     

     

     

     

    Total cost of deposits (a+b)

     

    6,199,271

     

     

    1,119

     

    0.07

    %

     

     

    6,204,934

     

     

    1,954

     

     

    0.12

    %

    (1) Tax rate used to arrive at the TEY for the three months ended September 30, 2024 and 2023 was 21%.

    (2) Net interest margin expressed on a fully-taxable-equivalent basis ("net interest margin, tax-equivalent") is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.

    Selected Financial Information

     

    As of and For the Three Months Ended

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

     

    December 31,

    2023

     

    September 30,

    2023

    Equity to total assets

     

    11.12

    %

     

     

    10.16

    %

     

     

    9.94

    %

     

     

    9.20

    %

     

     

    8.63

    %

    Book value per common share outstanding

    $

    33.79

     

     

    $

    30.51

     

     

    $

    29.14

     

     

    $

    28.06

     

     

    $

    24.85

     

    Tangible book value per common share outstanding

    $

    20.67

     

     

    $

    17.47

     

     

    $

    16.21

     

     

    $

    15.39

     

     

    $

    12.24

     

    Common shares outstanding

     

    24,847,353

     

     

     

    25,085,230

     

     

     

    25,377,986

     

     

     

    25,988,230

     

     

     

    26,183,583

     

    Nonperforming assets to total assets

     

    0.57

    %

     

     

    0.61

    %

     

     

    0.50

    %

     

     

    0.53

    %

     

     

    0.77

    %

    Nonperforming loans and leases to total loans and leases

     

    0.87

    %

     

     

    0.96

    %

     

     

    0.78

    %

     

     

    0.88

    %

     

     

    1.26

    %

    Net interest margin

     

    6.66

    %

     

     

    6.56

    %

     

     

    6.23

    %

     

     

    6.23

    %

     

     

    6.19

    %

    Net interest margin, tax-equivalent

     

    6.67

    %

     

     

    6.57

    %

     

     

    6.24

    %

     

     

    6.24

    %

     

     

    6.21

    %

    Return on average assets

     

    1.79

    %

     

     

    2.28

    %

     

     

    3.17

    %

     

     

    1.46

    %

     

     

    1.97

    %

    Return on average equity

     

    16.80

    %

     

     

    22.62

    %

     

     

    35.72

    %

     

     

    16.87

    %

     

     

    21.12

    %

    Return on average tangible equity

     

    28.40

    %

     

     

    40.59

    %

     

     

    64.92

    %

     

     

    33.95

    %

     

     

    41.15

    %

    Full-time equivalent employees

     

    1,241

     

     

     

    1,232

     

     

     

    1,204

     

     

     

    1,218

     

     

     

    1,193

     

    Non-GAAP Reconciliations

     

    Net Interest Margin and Cost of Deposits

    At and For the Three Months Ended

    (Dollars in thousands)

    September 30, 2024

    June 30, 2024

    September 30, 2023

    Average interest earning assets

    $

    6,925,315

     

    $

    6,801,888

     

    $

    6,724,185

     

    Net interest income

    $

    115,922

     

    $

    110,859

     

    $

    104,934

     

    Net interest margin

     

    6.66

    %

     

    6.56

    %

     

    6.19

    %

    Quarterly average total deposits

    $

    6,199,271

     

    $

    6,260,990

     

    $

    6,204,934

     

    Deposit interest expense

    $

    1,119

     

    $

    1,689

     

    $

    1,954

     

    Cost of deposits

     

    0.07

    %

     

    0.11

    %

     

    0.12

    %

     

     

     

     

    Adjusted Net Interest Margin and Adjusted Cost of Deposits

     

     

     

    Average interest earning assets

    $

    6,925,315

     

    $

    6,801,888

     

    $

    6,724,185

     

    Net interest income

     

    115,922

     

     

    110,859

     

     

    104,934

     

    Less: Contractual, rate-related processing expense

     

    26,274

     

     

    27,595

     

     

    22,473

     

    Adjusted net interest income

    $

    89,648

     

    $

    83,264

     

    $

    82,461

     

    Adjusted net interest margin

     

    5.15

    %

     

    4.92

    %

     

    4.87

    %

    Average total deposits

    $

    6,199,271

     

    $

    6,260,990

     

    $

    6,204,934

     

    Deposit interest expense

     

    1,119

     

     

    1,689

     

     

    1,954

     

    Add: Contractual, rate-related processing expense

     

    26,274

     

     

    27,595

     

     

    22,473

     

    Adjusted deposit expense

    $

    27,393

     

    $

    29,284

     

    $

    24,427

     

    Adjusted cost of deposits

     

    1.76

    %

     

    1.88

    %

     

    1.56

    %

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20241023397948/en/

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