8-K
PATHWARD FINANCIAL, INC. (CASH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2025
PATHWARD FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-22140 | 42-1406262 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
5501 South Broadband Lane, Sioux Falls, South Dakota 57108
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (877) 497-7497
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
|---|---|
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value | CASH | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 28, 2025, the Registrant issued a press release announcing its preliminary results of operations and financial condition as of and for the three and nine months ended June 30, 2025. A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated into this Item 2.02 by reference.
The information in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities thereof, nor shall it be deemed to be incorporated by reference in any filing under the Exchange Act or under the Securities Act of 1933, as amended (the "Securities Act"), except to the extent specifically provided in any such filing.
Item 7.01 Regulation FD Disclosure.
Information is being furnished herein in Exhibit 99.2 with respect to the Quarterly Investor Update slide presentation prepared for use in connection with the Company's conference call and earnings webcast for the third quarter of fiscal 2025. The Quarterly Investor Update slide presentation is dated July 28, 2025 and the Company does not undertake to update the materials after that date. This presentation is also available under the Presentations link in the Investor Relations - Events & Presentations section of the Company's website at https://pathwardfinancial.com.
The information in this Item 7.01, including Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities thereof, nor shall it be deemed to be incorporated by reference in any filing under the Exchange Act or under the Securities Act, except to the extent specifically provided in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release of Pathward Financial, Inc., dated July 28, 2025 regarding the results of operations and financial condition. |
| 99.2 | Quarterly Investor Update slide presentation for the Third Quarter of Fiscal Year 2025, dated July 28, 2025, prepared for use with the Press Release. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PATHWARD FINANCIAL, INC. | ||
|---|---|---|
| Date: July 28, 2025 | By: | /s/ Gregory A. Sigrist |
| Gregory A. Sigrist | ||
| Executive Vice President and Chief Financial Officer |
Document
Exhibit 99.1
PATHWARD FINANCIAL, INC. ANNOUNCES PRELIMINARY RESULTS FOR 2025 FISCAL THIRD QUARTER
Sioux Falls, S.D., July 28, 2025 - Pathward Financial, Inc. (“Pathward Financial” or the “Company”) (Nasdaq: CASH) reported net income of $42.1 million, or $1.81 per share, for the three months ended June 30, 2025, compared to net income of $44.9 million, or $1.78 per share, for the three months ended June 30, 2024.
CEO Brett Pharr said, “We are encouraged by the results achieved in the third quarter, as they represent another quarter where we have successfully executed on our strategy and generated shareholder value. We have made progress on many fronts, and I am incredibly proud of what our team has been able to accomplish over the past nine months. Being the trusted platform that enables our partners to thrive remains our main focus, and we are working to deliver solutions for our clients."
As previously disclosed, the Company plans to amend its Annual Report on Form 10-K for the year ended September 30, 2024 to restate certain financial statements included therein and its Quarterly Report on Form 10-Q for the quarter ended December 31, 2024 to reflect restatement adjustments, after which the Company expects to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. The restatements are due to errors related to the Company’s gross vs. net basis presentation and derivative accounting, and financial reporting, of certain third-party lending and servicing relationships within the Credit Solutions business, within held-for-investment loan balances. While the Company works diligently to complete the restatement process, the Company is providing the preliminary results for the 2025 fiscal third quarter contained in this release. These results, for all periods presented, reflect the updated gross basis accounting methodology for the affected third-party lending and servicing arrangements. The Company’s actual results may differ materially from these preliminary financial results.
Financial Highlights for the 2025 Fiscal Third Quarter
•Total revenue for the third quarter was $195.8 million, an increase of $7.1 million, or 4%, compared to the same quarter in fiscal 2024, driven by an increase in noninterest income.
•Net interest margin ("NIM") increased 17 basis points to 7.43% for the third quarter from 7.26% during the same period last year, primarily driven by an improved earning asset mix from the continued balance sheet optimization. When including contractual, rate-related processing expenses associated with deposits on the Company's balance sheet, NIM would have been 5.98% in the fiscal 2025 third quarter compared to 5.76% during the fiscal 2024 third quarter. See non-GAAP reconciliation table below.
•Total gross loans and leases at June 30, 2025 increased $127.7 million to $4.74 billion compared to June 30, 2024 and increased $278.5 million when compared to March 31, 2025. When excluding the insurance premium finance loans, which were sold during the first quarter of fiscal 2025, of $620.1 million at June 30, 2024, total gross loans and leases at June 30, 2025 increased $747.8 million, or 19%, when compared to June 30, 2024.
•During the 2025 fiscal third quarter, the Company repurchased 603,780 shares of common stock at an average share price of $74.49. As of June 30, 2025, there were 5,118,556 shares available for repurchase under the current common stock share repurchase program.
Tax Season
For the nine months ended June 30, 2025, total tax services product revenue was $95.2 million, an increase of 16% compared to the same period of the prior year. The increase in revenue was driven by increases in tax product fee income, refund advance fee income, and tax services net interest income.
Provision for credit losses for the tax services portfolio decreased $0.5 million for the nine months ended June 30, 2025 when compared to the same period of the prior year, due to improvements in data analytics, underwriting and monitoring.
Total tax services product income, net of losses and direct product expenses, increased 27% to $59.8 million from $47.1 million, when comparing the first nine months of fiscal 2025 to the same period of the prior fiscal year.
Net Interest Income
Net interest income for the third quarter of fiscal 2025 was $122.3 million, as compared to $122.8 million for the same quarter in fiscal 2024.
The Company’s average interest-earning assets for the third quarter of fiscal 2025 decreased by $199.6 million to $6.60 billion compared to the same quarter in fiscal 2024, due to decreases in average outstanding balances in total investment securities balances, partially offset by increases in total loan and lease balances and interest earning cash balances. The third quarter average outstanding balance of loans and leases increased $169.6 million compared to the same quarter of the prior fiscal year, due to an increase in the warehouse finance portfolio, partially offset by decreases in the commercial finance, consumer finance, and tax services portfolios. The decrease in the average outstanding balance of commercial finance loans and leases was primarily driven by the sale of the insurance premium finance loans during the first quarter of fiscal year 2025.
Fiscal 2025 third quarter NIM increased to 7.43% from 7.26% in the third fiscal quarter of 2024. When including contractual, rate-related processing expenses associated with deposits on the Company's balance sheet, NIM would have been 5.98% in the third quarter compared to 5.76% during the fiscal 2024 third quarter. See non-GAAP reconciliation table below. The overall reported tax-equivalent yield (“TEY”) on average interest-earning assets increased 7 basis points to 7.52% compared to the prior year quarter, driven by an improved earning asset mix. The yield on the loan and lease portfolio was 9.33% compared to 9.62% for the comparable period last year and the TEY on the securities portfolio was 3.10% compared to 3.16% over that same period.
The Company's cost of funds for all deposits and borrowings averaged 0.08% during the fiscal 2025 third quarter, as compared to 0.20% during the prior year quarter. The Company's overall cost of deposits was 0.02% in the fiscal third quarter of 2025, as compared to 0.11% during the prior year quarter. When including contractual, rate-related processing expenses associated with deposits on the Company's balance sheet, the Company's overall cost of deposits was 1.61% in the fiscal 2025 third quarter, as compared to 1.74% during the prior year quarter. See non-GAAP reconciliation table below.
Noninterest Income
Fiscal 2025 third quarter noninterest income increased 11% to $73.4 million, compared to $65.9 million for the same period of the prior year. The increase in noninterest income when comparing the current period to the same period of the prior year was primarily driven by secondary market revenue, card and deposit fees, and total tax services product fee income, partially offset by reductions in gain on sale of other and rental income.
Included in card and deposit fees is servicing fee income on custodial deposits, which totaled $7.9 million during the 2025 fiscal third quarter, compared to $8.6 million for the same period of the prior year. For the fiscal quarter ended March 31, 2025, servicing fee income on custodial deposits totaled $6.5 million. The period-over-period decrease in servicing fee income on deposit balances held at partner banks was primarily due to a reduction in rates following reductions in the Effective Federal Funds Rate ("EFFR"). The sequential quarter increase in servicing fee income was due to an increase in custodial deposits.
Noninterest Expense
Noninterest expense increased 11% to $139.3 million for the fiscal 2025 third quarter, from $125.5 million for the same quarter last year. The increase was primarily attributable to increases in legal and consulting expense, other expense, card processing expense, occupancy and equipment expense, and operating lease equipment depreciation expense.
Card processing expense is primarily driven by 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 EFFR and reprices immediately upon a change in the EFFR. Approximately 62% of the deposit portfolio was subject to these rate-related processing expenses during the fiscal 2025 third quarter. For the fiscal quarter ended June 30, 2025, contractual, rate-related processing expenses were $25.1 million, as compared to $28.4 million for the fiscal quarter ended March 31, 2025, and $27.6 million for the fiscal quarter ended June 30, 2024.
Income Tax Expense
The Company recorded an income tax expense of $4.8 million, representing an effective tax rate of 10.2%, for the fiscal 2025 third quarter, compared to an income tax expense of $6.1 million, representing an effective tax rate of 11.9%, for the third quarter last fiscal year. The current quarter decrease in income tax expense compared to the prior year quarter was primarily due to a decrease in income.
The Company originated $2.1 million in renewable energy leases during the fiscal 2025 third quarter, resulting in $0.2 million in total net investment tax credits. During the third quarter of fiscal 2024, the Company originated $4.3 million in renewable energy leases resulting in $1.2 million in total net investment tax credits. For the nine months ended June 30, 2025, the Company originated $13.3 million in renewable energy leases, compared to $42.1 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 (Unaudited)
| (Dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total investments | $ | 1,397,612 | $ | 1,442,855 | $ | 1,512,091 | $ | 1,774,313 | $ | 1,759,486 |
| Loans held for sale | ||||||||||
| Term lending | 5,736 | — | 7,860 | 4,567 | — | |||||
| Lease financing | 93 | — | 424 | — | — | |||||
| Insurance premium finance | — | — | — | 597,177 | — | |||||
| SBA/USDA | 9,564 | 15,188 | 21,786 | 65,734 | 7,030 | |||||
| Consumer finance | 34,374 | 30,579 | 42,578 | 24,210 | 22,350 | |||||
| Total loans held for sale | 49,767 | 45,767 | 72,648 | 691,688 | 29,380 | |||||
| Term lending | 2,003,699 | 1,766,432 | 1,735,539 | 1,554,641 | 1,533,722 | |||||
| Asset-based lending | 610,852 | 542,483 | 608,261 | 471,897 | 473,289 | |||||
| Factoring | 241,024 | 224,520 | 364,477 | 362,295 | 350,740 | |||||
| Lease financing | 134,214 | 134,856 | 138,305 | 152,174 | 155,044 | |||||
| Insurance premium finance | — | — | — | — | 620,107 | |||||
| SBA/USDA | 674,902 | 701,736 | 595,965 | 568,628 | 563,689 | |||||
| Other commercial finance | 153,321 | 154,728 | 174,097 | 185,964 | 166,653 | |||||
| Commercial finance | 3,818,012 | 3,524,755 | 3,616,644 | 3,295,599 | 3,863,244 | |||||
| Consumer finance | 226,380 | 246,202 | 280,001 | 248,800 | 253,358 | |||||
| Tax services | 37,419 | 55,973 | 45,051 | 8,825 | 43,184 | |||||
| Warehouse finance | 664,110 | 643,124 | 624,251 | 517,847 | 449,962 | |||||
| Total loans and leases | 4,745,921 | 4,470,054 | 4,565,947 | 4,071,071 | 4,609,748 | |||||
| Net deferred loan origination costs (fees) | (2,597) | (5,184) | (3,266) | 4,124 | 5,857 | |||||
| Total gross loans and leases | 4,743,324 | 4,464,870 | 4,562,681 | 4,075,195 | 4,615,605 | |||||
| Allowance for credit losses | (105,995) | (102,890) | (74,338) | (71,765) | (106,764) | |||||
| Total loans and leases, net | $ | 4,637,329 | $ | 4,361,980 | $ | 4,488,343 | $ | 4,003,430 | $ | 4,508,841 |
The Company's investment security balances at June 30, 2025 totaled $1.40 billion, as compared to $1.44 billion at March 31, 2025 and $1.76 billion at June 30, 2024. The year-over-year decrease was primarily related to the sale of investment securities available for sale during both the first and second quarters of fiscal 2025.
Total gross loans and leases totaled $4.74 billion at June 30, 2025, as compared to $4.46 billion at March 31, 2025 and $4.62 billion at June 30, 2024. The drivers for the sequential increase were increases in the commercial finance and warehouse finance portfolios, partially offset by decreases in the consumer finance and the seasonal tax services portfolios. The year-over-year increase was due to an increase in the warehouse finance portfolio, partially offset by decreases in the commercial finance, consumer finance, and seasonal tax services portfolios. When excluding the insurance premium finance loans, which were sold during the first quarter of fiscal 2025, of $620.1 million at June 30, 2024, total gross loans and leases at June 30, 2025 increased $747.8 million, or 19%, when compared to June 30, 2024.
Commercial finance loans, which comprised 80% of the Company's loan and lease portfolio, totaled $3.82 billion at June 30, 2025, reflecting an increase of $293.3 million, or 8%, from March 31, 2025 and a decrease of $45.2 million, or 1%, from June 30, 2024. The sequential increase was primarily driven by increases of $237.3 million in term lending loans and $68.3 million in asset-based lending, partially offset by a decrease of $26.8 million in SBA/USDA. The year-over-year decrease was primarily related to the sale of insurance premium finance loans during the first quarter of fiscal 2025 and a decrease of $109.7 million in factoring loans, partially offset by increases of $470.0 million in term lending, $137.6 million in asset-based lending, and $111.2 million in SBA/USDA. When excluding the insurance premium finance loans of $620.1 million at June 30, 2024, commercial finance loans at June 30, 2025 increased by $574.9 million when compared to June 30, 2024.
Asset Quality
The Company’s allowance for credit losses ("ACL") totaled $106.0 million at June 30, 2025, an increase compared to $102.9 million at March 31, 2025 and a decrease compared to $106.8 million at June 30, 2024. The increase in the ACL at June 30, 2025, when compared to March 31, 2025, was primarily due to a $9.6 million increase in the allowance related to the commercial finance portfolio, partially offset by a $3.1 million decrease in the allowance related to the consumer finance portfolio and a $3.3 million decrease in the allowance related to the seasonal tax services portfolio.
The $0.8 million year-over-year decrease in the ACL was primarily driven by a $6.1 million decrease in the allowance related to the consumer finance portfolio, partially offset by a $3.3 million increase in the commercial finance portfolio and a $1.8 million increase in the allowance related to the seasonal tax services portfolio.
The following table presents the Company's ACL as a percentage of its total loans and leases.
| As of the Period Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | |||||
| Commercial finance | 1.27 | % | 1.10 | % | 1.18 | % | 1.29 | % | 1.17 | % |
| Consumer finance | 11.69 | % | 12.04 | % | 10.84 | % | 11.52 | % | 12.85 | % |
| Tax services | 81.32 | % | 60.35 | % | 1.75 | % | 0.02 | % | 66.35 | % |
| Warehouse finance | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % |
| Total loans and leases | 2.23 | % | 2.30 | % | 1.63 | % | 1.76 | % | 2.32 | % |
| Total loans and leases excluding tax services | 1.60 | % | 1.57 | % | 1.63 | % | 1.77 | % | 1.71 | % |
The Company's ACL as a percentage of total loans and leases decreased to 2.23% at June 30, 2025 from 2.30% at March 31, 2025 and decreased from 2.32% at June 30, 2024.
Activity in the allowance for credit losses for the periods presented was as follows.
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||
| Beginning balance | $ | 102,890 | $ | 74,338 | $ | 111,282 | $ | 71,764 | $ | 96,856 |
| Provision (reversal of) - tax services loans | (4,728) | 26,178 | (3,285) | 22,751 | 23,292 | |||||
| Provision (reversal of) - all other loans and leases | 13,959 | 8,750 | 14,971 | 40,252 | 25,425 | |||||
| Charge-offs - tax services loans | (554) | — | (820) | (1,295) | (1,965) | |||||
| Charge-offs - all other loans and leases | (9,481) | (15,001) | (17,744) | (41,469) | (47,786) | |||||
| Recoveries - tax services loans | 1,930 | 6,813 | 1,230 | 8,971 | 7,324 | |||||
| Recoveries - all other loans and leases | 1,979 | 1,812 | 1,130 | 5,021 | 3,618 | |||||
| Ending balance | $ | 105,995 | $ | 102,890 | $ | 106,764 | $ | 105,995 | $ | 106,764 |
The Company recognized a provision for credit losses of $9.3 million for the quarter ended June 30, 2025, compared to $11.9 million for the comparable period in the prior fiscal year. The period-over-period decrease in provision for credit losses was primarily due to a $4.5 million decrease in provision for credit losses in the consumer finance portfolio and a $1.4 million decrease in the provision for credit losses in the seasonal tax services portfolio, partially offset by an increase in provision for credit losses in the commercial finance portfolio of $3.6 million. The Company recognized net charge-offs of $6.1 million for the quarter ended June 30, 2025, compared to net charge-offs of $16.2 million for the quarter ended June 30, 2024. Net charge-offs attributable to the consumer finance and commercial finance portfolios for the quarter ended June 30, 2025 were $5.8 million and $1.7 million, respectively, while net recoveries of $1.4 million were recognized in the seasonal tax services portfolio. Net charge-offs attributable to the consumer finance and commercial finance portfolios for the same quarter of the prior year were $9.7 million and $6.9 million, respectively, while net recoveries of $0.4 million were recognized in the seasonal tax services portfolio.
The Company's past due loans and leases were as follows for the periods presented.
| As of June 30, 2025 (Unaudited) | 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 | $ | — | $ | — | $ | — | $ | — | $ | 49,767 | $ | 49,767 | $ | — | $ | — | $ | — |
| Commercial finance | 26,178 | 13,281 | 37,225 | 76,684 | 3,741,328 | 3,818,012 | 3,370 | 61,524 | 64,894 | |||||||||
| Consumer finance | 3,376 | 2,497 | 6,402 | 12,275 | 214,105 | 226,380 | 6,402 | — | 6,402 | |||||||||
| Tax services | — | 37,234 | — | 37,234 | 185 | 37,419 | — | — | — | |||||||||
| Warehouse finance | — | — | — | — | 664,110 | 664,110 | — | — | — | |||||||||
| Total loans and leases held for investment | 29,554 | 53,012 | 43,627 | 126,193 | 4,619,728 | 4,745,921 | 9,772 | 61,524 | 71,296 | |||||||||
| Total loans and leases | $ | 29,554 | $ | 53,012 | $ | 43,627 | $ | 126,193 | $ | 4,669,495 | $ | 4,795,688 | $ | 9,772 | $ | 61,524 | $ | 71,296 |
| As of March 31, 2025 (Unaudited) | 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 | $ | — | $ | — | $ | — | $ | — | $ | 45,767 | $ | 45,767 | $ | — | $ | — | $ | — |
| Commercial finance | 41,161 | 14,933 | 18,273 | 74,367 | 3,450,388 | 3,524,755 | 1,359 | 36,049 | 37,408 | |||||||||
| Consumer finance | 3,922 | 2,769 | 2,398 | 9,089 | 237,113 | 246,202 | 2,398 | — | 2,398 | |||||||||
| Tax services | 1,036 | — | — | 1,036 | 54,937 | 55,973 | — | — | — | |||||||||
| Warehouse finance | — | — | — | — | 643,124 | 643,124 | — | — | — | |||||||||
| Total loans and leases held for investment | 46,119 | 17,702 | 20,671 | 84,492 | 4,385,562 | 4,470,054 | 3,757 | 36,049 | 39,806 | |||||||||
| Total loans and leases | $ | 46,119 | $ | 17,702 | $ | 20,671 | $ | 84,492 | $ | 4,431,329 | $ | 4,515,821 | $ | 3,757 | $ | 36,049 | $ | 39,806 |
The Company's nonperforming assets at June 30, 2025 were $74.7 million, representing 1.03% of total assets, compared to $41.6 million, or 0.60% of total assets at March 31, 2025 and $46.3 million, or 0.62% of total assets at June 30, 2024.
The increase in the nonperforming assets as a percentage of total assets at June 30, 2025 compared to March 31, 2025, was driven by an increase in nonperforming loans in the commercial and consumer finance portfolios. When comparing the current period to the same period of the prior year, the increase was driven by an increase in nonperforming loans in the commercial finance portfolio, partially offset by a decrease in nonperforming loans in the consumer finance and seasonal tax services portfolio.
The Company's nonperforming loans and leases at June 30, 2025, were $71.3 million, representing 1.49% of total gross loans and leases, compared to $39.8 million, or 0.88% of total gross loans and leases at March 31, 2025 and $44.6 million, or 0.96% of total gross loans and leases at June 30, 2024.
Deposits, Borrowings and Other Liabilities
The average balance of total deposits and interest-bearing liabilities was $6.07 billion for the three-month period ended June 30, 2025, compared to $6.35 billion for the same period in the prior fiscal year. Total average deposits for the fiscal 2025 third quarter decreased by $258.4 million to $6.00 billion compared to the same period in fiscal 2024. The decrease in average deposits was primarily due to decreases in noninterest bearing and wholesale deposits.
Total end-of-period deposits decreased 7% to $6.01 billion at June 30, 2025, compared to $6.43 billion at June 30, 2024. The decrease in end-of-period deposits was primarily driven by decreases in noninterest-bearing deposits of $386.9 million, and wholesale deposits of $42.3 million, partially offset by an increase in interest bearing checking deposits of $8.6 million.
As of June 30, 2025, the Company managed $430.7 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 during the third quarter of the fiscal year.
Regulatory Capital
The Company and its subsidiary Pathward®, N.A. (the "Bank") remained above the federal regulatory minimum capital requirements at June 30, 2025, and continued to be classified as well-capitalized, and in good standing with its regulatory agencies.
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 Monday, July 28, 2025. 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 348908.
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.
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 support to individuals and businesses. Learn more at www.pathwardfinancial.com.
| Investor Relations Contact |
|---|
| Darby Schoenfeld, CPA |
| SVP, Chief of Staff & Investor Relations |
| 877-497-7497 |
| investorrelations@pathward.com |
| Media Relations Contact |
| mediarelations@pathward.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 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; future effective tax rate; 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; technology; the Company's planned restatement of its consolidated financial statements; and the anticipated effects of related changes in the Company's accounting. 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 federal funds rate and changes in international trade policies, tariffs, and treaties affecting imports and exports, and their related impacts on macroeconomic conditions, customer behavior, funding costs and loan and securities portfolios; changes in tax laws; trade disputes, barriers to trade or the emergence of trade restrictions; 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, and any related increases in compliance and other costs; changes in financial services laws and regulations, including laws and regulations relating to the tax refund 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. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. 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, 2024, and in the Company's 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) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 258,343 | $ | 254,249 | $ | 597,396 | $ | 158,337 | $ | 298,926 |
| Securities available for sale, at fair value | 1,367,340 | 1,411,520 | 1,480,090 | 1,741,221 | 1,725,460 | |||||
| Securities held to maturity, at amortized cost | 30,273 | 31,335 | 32,001 | 33,092 | 34,026 | |||||
| Federal Reserve Bank and Federal Home Loan Bank Stock, at cost | 29,451 | 24,276 | 24,454 | 36,014 | 24,449 | |||||
| Loans held for sale | 49,767 | 45,767 | 72,648 | 691,688 | 29,380 | |||||
| Loans and leases | 4,743,324 | 4,464,870 | 4,562,681 | 4,075,195 | 4,615,605 | |||||
| Allowance for credit losses | (105,995) | (102,890) | (74,338) | (71,765) | (106,764) | |||||
| Accrued interest receivable | 39,996 | 37,081 | 35,279 | 31,385 | 31,755 | |||||
| Premises, furniture, and equipment, net | 39,799 | 39,542 | 38,263 | 39,055 | 36,953 | |||||
| Rental equipment, net | 181,370 | 202,194 | 206,754 | 205,339 | 209,544 | |||||
| Goodwill and intangible assets | 311,193 | 311,992 | 313,074 | 326,094 | 327,018 | |||||
| Other assets | 284,756 | 274,642 | 314,958 | 266,362 | 286,677 | |||||
| Total assets | $ | 7,229,617 | $ | 6,994,578 | $ | 7,603,260 | $ | 7,532,017 | $ | 7,513,029 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| LIABILITIES | ||||||||||
| Deposits | 6,005,246 | 5,819,209 | 6,518,953 | 5,875,085 | 6,431,516 | |||||
| Short-term borrowings | 115,000 | — | — | 377,000 | — | |||||
| Long-term borrowings | 33,431 | 33,405 | 33,380 | 33,354 | 33,329 | |||||
| Accrued expenses and other liabilities | 258,079 | 328,186 | 293,598 | 424,389 | 300,287 | |||||
| Total liabilities | 6,411,756 | 6,180,800 | 6,845,931 | 6,709,828 | 6,765,132 | |||||
| STOCKHOLDERS’ EQUITY | ||||||||||
| Preferred stock | — | — | — | — | — | |||||
| Common stock, $.01 par value | 230 | 236 | 241 | 248 | 251 | |||||
| Common stock, Nonvoting, $.01 par value | — | — | — | — | — | |||||
| Additional paid-in capital | 646,044 | 643,887 | 640,422 | 638,803 | 636,284 | |||||
| Retained earnings | 337,034 | 341,506 | 313,221 | 337,058 | 326,041 | |||||
| Accumulated other comprehensive loss | (159,709) | (166,311) | (190,917) | (153,394) | (207,992) | |||||
| Treasury stock, at cost | (4,882) | (4,882) | (4,882) | (249) | (6,181) | |||||
| Total equity attributable to parent | 818,717 | 814,436 | 758,085 | 822,466 | 748,403 | |||||
| Noncontrolling interest | (856) | (658) | (756) | (277) | (506) | |||||
| Total stockholders’ equity | 817,861 | 813,778 | 757,329 | 822,189 | 747,897 | |||||
| Total liabilities and stockholders’ equity | $ | 7,229,617 | $ | 6,994,578 | $ | 7,603,260 | $ | 7,532,017 | $ | 7,513,029 |
Condensed Consolidated Statements of Operations (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||
| Interest and dividend income: | ||||||||||
| Loans and leases, including fees | $ | 108,766 | $ | 119,755 | $ | 107,762 | $ | 341,603 | $ | 324,699 |
| Mortgage-backed securities | 8,337 | 8,580 | 9,748 | 25,903 | 29,795 | |||||
| Other investments | 6,488 | 13,669 | 8,323 | 27,679 | 33,222 | |||||
| 123,591 | 142,004 | 125,833 | 395,185 | 387,716 | ||||||
| Interest expense: | ||||||||||
| Deposits | 286 | 4,086 | 1,689 | 5,147 | 11,900 | |||||
| FHLB advances and other borrowings | 992 | 1,640 | 1,394 | 4,963 | 5,505 | |||||
| 1,278 | 5,726 | 3,083 | 10,110 | 17,405 | ||||||
| Net interest income | 122,313 | 136,278 | 122,750 | 385,075 | 370,311 | |||||
| Provision for credit loss | 9,278 | 35,266 | 11,926 | 63,205 | 49,428 | |||||
| Net interest income after provision for credit loss | 113,035 | 101,012 | 110,824 | 321,870 | 320,883 | |||||
| Noninterest income: | ||||||||||
| Refund transfer product fees | 9,846 | 32,663 | 9,111 | 42,919 | 38,475 | |||||
| Refund advance and other tax fee income | 307 | 48,585 | (67) | 49,416 | 43,244 | |||||
| Card and deposit fees | 37,342 | 30,793 | 33,408 | 97,201 | 99,502 | |||||
| Rental income | 12,913 | 13,200 | 13,779 | 39,821 | 40,958 | |||||
| (Loss) on sale of securities | — | (7,228) | — | (22,899) | — | |||||
| Gain (loss) on divestitures | — | (1,360) | — | 15,044 | — | |||||
| Secondary market revenue | 7,144 | 15,378 | 1,721 | 26,900 | 3,091 | |||||
| Gain on sale of other | 394 | 627 | 2,954 | 2,008 | 6,119 | |||||
| Other income | 5,496 | 5,866 | 4,968 | 18,934 | 16,191 | |||||
| Total noninterest income | 73,442 | 138,524 | 65,874 | 269,344 | 247,580 | |||||
| Noninterest expense: | ||||||||||
| Compensation and benefits | 48,558 | 51,905 | 48,449 | 149,755 | 149,174 | |||||
| Refund transfer product expense | 2,818 | 8,475 | 2,136 | 11,401 | 9,694 | |||||
| Refund advance expense | (74) | 1,265 | 47 | 1,225 | 1,923 | |||||
| Card processing | 36,198 | 36,238 | 34,314 | 105,750 | 104,061 | |||||
| Occupancy and equipment expense | 10,633 | 10,307 | 9,070 | 30,646 | 27,211 | |||||
| Operating lease equipment depreciation | 11,569 | 11,780 | 10,465 | 34,775 | 31,312 | |||||
| Legal and consulting | 11,094 | 5,878 | 5,410 | 22,197 | 16,443 | |||||
| Intangible amortization | 799 | 1,082 | 983 | 2,693 | 3,207 | |||||
| Impairment expense | 1,076 | 1,514 | 999 | 2,590 | 3,012 | |||||
| Other expense | 16,651 | 19,733 | 13,641 | 54,263 | 41,295 | |||||
| Total noninterest expense | 139,322 | 148,177 | 125,514 | 415,295 | 387,332 | |||||
| Income before income tax expense | 47,155 | 91,359 | 51,184 | 175,919 | 181,131 | |||||
| Income tax expense | 4,813 | 16,209 | 6,103 | 27,253 | 30,726 | |||||
| Net income before noncontrolling interest | 42,342 | 75,150 | 45,081 | 148,666 | 150,405 | |||||
| Net income attributable to noncontrolling interest | 214 | 237 | 212 | 650 | 718 | |||||
| Net income attributable to parent | $ | 42,128 | $ | 74,913 | $ | 44,869 | $ | 148,016 | $ | 149,687 |
| Less: Allocation of Earnings to participating securities(1) | 151 | 263 | 463 | 554 | 1,310 | |||||
| Net income attributable to common shareholders(1) | 41,977 | 74,650 | 44,406 | 147,462 | 148,377 | |||||
| Earnings per common share: | ||||||||||
| Basic | $ | 1.82 | $ | 3.16 | $ | 1.78 | $ | 6.24 | $ | 5.86 |
| Diluted | $ | 1.81 | $ | 3.14 | $ | 1.78 | $ | 6.21 | $ | 5.85 |
| Shares used in computing earnings per common share: | ||||||||||
| Basic | 23,006,454 | 23,657,145 | 24,946,085 | 23,629,565 | 25,335,621 | |||||
| Diluted | 23,140,124 | 23,776,023 | 24,979,818 | 23,745,086 | 25,364,642 |
(1) Amounts presented are used in the two-class earnings per common share calculation.
Average Balances, Interest Rates and Yields (Unaudited)
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 June 30, | 2025 | 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Average<br>Outstanding<br>Balance | Interest<br>Earned /<br>Paid | Yield /<br><br>Rate(1) | Average<br>Outstanding<br>Balance | Interest<br>Earned /<br>Paid | Yield /<br><br>Rate(1) | ||||||
| Interest-earning assets: | ||||||||||||
| Cash and fed funds sold | $ | 281,545 | $ | 2,325 | 3.31 | % | $ | 224,987 | $ | 2,053 | 3.67 | % |
| Mortgage-backed securities | 1,198,015 | 8,337 | 2.79 | % | 1,438,683 | 9,748 | 2.73 | % | ||||
| Tax-exempt investment securities | 113,886 | 782 | 3.49 | % | 128,117 | 911 | 3.62 | % | ||||
| Asset-backed securities | 152,635 | 1,968 | 5.17 | % | 220,461 | 3,148 | 5.74 | % | ||||
| Other investment securities | 179,942 | 1,413 | 3.15 | % | 282,966 | 2,211 | 3.14 | % | ||||
| Total investments | 1,644,478 | 12,500 | 3.10 | % | 2,070,227 | 16,018 | 3.16 | % | ||||
| Commercial finance | 3,717,018 | 76,736 | 8.28 | % | 3,756,152 | 78,353 | 8.39 | % | ||||
| Consumer finance | 268,132 | 16,791 | 25.12 | % | 286,476 | 18,756 | 26.33 | % | ||||
| Tax services | 43,035 | 48 | 0.45 | % | 56,836 | 55 | 0.39 | % | ||||
| Warehouse finance | 648,059 | 15,191 | 9.40 | % | 407,210 | 10,598 | 10.47 | % | ||||
| Total loans and leases | 4,676,244 | 108,766 | 9.33 | % | 4,506,674 | 107,762 | 9.62 | % | ||||
| Total interest-earning assets | $ | 6,602,267 | $ | 123,591 | 7.52 | % | $ | 6,801,888 | $ | 125,833 | 7.45 | % |
| Interest-bearing liabilities: | ||||||||||||
| Interest-bearing checking | $ | 1,196 | $ | — | 0.06 | % | $ | 684 | $ | — | 0.14 | % |
| Savings | 53,450 | 4 | 0.03 | % | 56,565 | 3 | 0.02 | % | ||||
| Money markets | 171,503 | 263 | 0.62 | % | 178,255 | 584 | 1.32 | % | ||||
| Time deposits | 2,855 | 7 | 1.03 | % | 4,265 | 3 | 0.32 | % | ||||
| Wholesale deposits | 1,035 | 12 | 4.56 | % | 74,167 | 1,099 | 5.96 | % | ||||
| Total interest-bearing deposits (a) | 230,039 | 286 | 0.50 | % | 313,936 | 1,689 | 2.16 | % | ||||
| Overnight fed funds purchased | 31,365 | 360 | 4.61 | % | 52,374 | 730 | 5.61 | % | ||||
| Subordinated debentures | 19,753 | 355 | 7.21 | % | 19,651 | 355 | 7.26 | % | ||||
| Other borrowings | 13,661 | 277 | 8.13 | % | 13,705 | 309 | 9.07 | % | ||||
| Total borrowings | 64,779 | 992 | 6.14 | % | 85,730 | 1,394 | 6.54 | % | ||||
| Total interest-bearing liabilities | 294,818 | 1,278 | 1.74 | % | 399,666 | 3,083 | 3.10 | % | ||||
| Noninterest-bearing deposits (b) | 5,772,507 | — | — | % | 5,947,054 | — | — | % | ||||
| Total deposits and interest-bearing liabilities | $ | 6,067,326 | $ | 1,278 | 0.08 | % | $ | 6,346,720 | $ | 3,083 | 0.20 | % |
| Net interest income and net interest rate spread including noninterest-bearing deposits | $ | 122,313 | 7.44 | % | $ | 122,750 | 7.26 | % | ||||
| Net interest margin | 7.43 | % | 7.26 | % | ||||||||
| Tax-equivalent effect | 0.02 | % | 0.01 | % | ||||||||
| Net interest margin, tax-equivalent(2) | 7.45 | % | 7.27 | % | ||||||||
| Total cost of deposits (a+b) | 6,002,546 | 286 | 0.02 | % | 6,260,990 | 1,689 | 0.11 | % |
(1) Tax rate used to arrive at the TEY for the three months ended June 30, 2025 and 2024 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 (Unaudited)
| As of and For the Three Months Ended | June 30,<br>2025 | March 31,<br>2025 | December 31,<br>2024 | September 30,<br>2024 | June 30,<br>2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity to total assets | 11.31 | % | 11.63 | % | 9.96 | % | 10.92 | % | 9.95 | % | |||||
| Book value per common share outstanding | $ | 35.63 | $ | 34.54 | $ | 31.40 | $ | 33.09 | $ | 29.81 | |||||
| Tangible book value per common share outstanding | $ | 22.07 | $ | 21.30 | $ | 18.42 | $ | 19.97 | $ | 16.78 | |||||
| Common shares outstanding | 22,953,608 | 23,558,939 | 24,119,416 | 24,847,353 | 25,085,230 | ||||||||||
| Nonperforming assets to total assets | 1.03 | % | 0.60 | % | 0.49 | % | 0.57 | % | 0.62 | % | |||||
| Nonperforming loans and leases to total loans and leases | 1.49 | % | 0.88 | % | 0.76 | % | 0.87 | % | 0.96 | % | |||||
| Net interest margin | 7.43 | % | 7.12 | % | 7.45 | % | 7.33 | % | 7.26 | % | |||||
| Net interest margin, tax-equivalent | 7.45 | % | 7.13 | % | 7.46 | % | 7.34 | % | 7.27 | % | |||||
| Full-time equivalent employees | 1,178 | 1,155 | 1,170 | 1,241 | 1,232 |
Non-GAAP Reconciliations (Unaudited)
| Net Interest Margin and Cost of Deposits | At and For the Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | ||||||
| Average interest earning assets | $ | 6,602,267 | $ | 7,761,138 | $ | 6,801,888 | |||
| Net interest income | $ | 122,313 | $ | 136,278 | $ | 122,750 | |||
| Net interest margin | 7.43 | % | 7.12 | % | 7.26 | % | |||
| Quarterly average total deposits | $ | 6,002,546 | $ | 7,181,308 | $ | 6,260,990 | |||
| Deposit interest expense | $ | 286 | $ | 4,086 | $ | 1,689 | |||
| Cost of deposits | 0.02 | % | 0.23 | % | 0.11 | % | |||
| Adjusted Net Interest Margin with contractual, rate-related card expenses associated with deposits on the Company's balance sheet | |||||||||
| Average interest earning assets | $ | 6,602,267 | $ | 7,761,138 | $ | 6,801,888 | |||
| Net interest income | 122,313 | 136,278 | 122,750 | ||||||
| Less: Contractual, rate-related processing expense | 23,831 | 26,852 | 25,320 | ||||||
| Adjusted net interest income | $ | 98,482 | $ | 109,426 | $ | 97,430 | |||
| Adjusted net interest margin | 5.98 | % | 5.72 | % | 5.76 | % | |||
| Average total deposits | $ | 6,002,546 | $ | 7,181,308 | $ | 6,260,990 | |||
| Deposit interest expense | 286 | 4,086 | 1,689 | ||||||
| Add: Contractual, rate-related processing expense | 23,831 | 26,852 | 25,320 | ||||||
| Adjusted deposit expense | $ | 24,117 | $ | 30,938 | $ | 27,009 | |||
| Adjusted cost of deposits | 1.61 | % | 1.75 | % | 1.74 | % |
13
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QUARTERLY INVESTOR UPDATE THIRD Q UARTER F ISCAL YEAR 2025
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation2 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 diluted share guidance, future effective tax rate, and related performance expectations; progress on key strategic initiatives; expected results of our partnerships; 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; technology; the Company’s planned restatement of its consolidated financial statements; and the anticipated effects of related changes in the Company’s accounting. 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 changes in international trade policies, tariffs and treaties affecting imports and exports, and their related impacts on macroeconomic conditions, customer behavior, funding costs and loan and securities portfolios; changes in tax laws; trade disputes, barriers to trade or the emergence of trade restrictions; 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, and any related increases in compliance and other costs; changes in financial services laws and regulations, including laws and regulations relating to the tax refund 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, 2024 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. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in or referred to in this section.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.
TRUSTED PLATFORM THAT ENABLES OUR PARTNERS TO THRIVE 3 Optimized balance sheet with optimized asset mix Technology to facilitate evolution and scalability People and culture are important assets Mature risk and compliance framework Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation
STRATEGY DELIVERING SOLID RESULTS1 ($ IN MILLIONS, EXCEPT PER SHARE DATA) Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation4 Q3 2024 Q3 2025 $122.8 $122.3 0% Net Interest Income Q3 2024 Q3 2025 $125.5 $139.3 +11% Noninterest Expense Q3 2024 Q3 2025 $65.9 $73.4 +11% Noninterest Income Q3 2024 Q3 2025 $44.9 $42.1 -6% Net Income Attributable to Parent $1.78 $1.81 Q3 2024 Q3 2025 +2% Earnings per Diluted Share 1. As previously disclosed, the Company is in the process of amending certain historical financial statements. Accordingly, actual results may differ materially from the preliminary results contained in this presentation. These preliminary results reflect the updated gross basis accounting methodology.
Decrease in deposits at June 30, 2025 when compared to the prior year period was primarily due to a reduction in noninterest bearing and wholesale deposits. Average Q3 2025 off-balance sheet custodial deposits held in custody at program banks of $732 million compared to $645 million during the prior year period. $431 million of off-balance sheet custodial deposits as of June 30, 2025, compared to $353 million as of June 30, 2024. These off-balance sheet custodial deposits earn recordkeeping servicing fee income, typically reflective of the Effective Fed Funds Rate. DEPOSIT BASE SUPPORTS ASSET GROWTH Q3 2024 Q3 2025 $6,431.5 $6,005.2 -7% DEPOSITS 1 Period ending ($ in millions) Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation5 1 Does not include off-balance sheet custodial deposits
TOTAL LOANS AND LEASES INCREASED FROM Q3 2024 Increase primarily driven by term lending, warehouse finance and asset-based lending. Growth was partially offset by the sale of insurance premium finance loans during Q1 2025. Nonperforming loans and leases of 1.49% compared to 0.96% at June 30, 2024. Q3 2024 Q3 2025 $4,615.6 $4,743.3 +3% TOTAL LOANS AND LEASES Period ending ($ in millions) Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation6
STRONG BALANCE SHEET ALLOWS FOR RETURN OF CAPITAL TO SHAREHOLDERS Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation7 $775 $431 $953 $258 $200 $35 1These off balance sheet custodial deposits can be brought back on balance sheet, as needed, as they are immediately callable. ($ in millions) 603,780 1,881,444 Q3 2025 2025 YTD Share RepurchasesLiquidity Sources Off Balance Sheet Custodial Deposits1 Cash and Cash Equivalents Unpledged Investment Securities FHLB Borrowing Capacity Fed Discount Window Funds Unsecured Funding and Other Wholesale Funding Options $2,652
PRELIMINARY FISCAL YEAR GUIDANCE1 Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation8 Fiscal Year 2025 • $7.50- $7.80 EPS • Assumes one rate cut in fiscal Q4 2025 • Effective tax rate of 16% to 20% • Includes expected share repurchases 1 Information on this slide is presented as of July 28, 2025, reflects the Company’s updated financial outlook, certain of the Company’s financial targets, and key assumptions, and will not be updated or affirmed unless and until the Company publicly announces such an update or affirmation. The guidance for fiscal 2025 and 2026, the Company’s financial targets and key economic assumptions contain forward-looking statements and actual results or conditions may differ materially. See the information set forth below the heading "Forward Looking Statements" on slide 2 of this presentation. These ranges are preliminary and pending the outcome of the previously disclosed restatement. The Company’s actual results may differ materially from these preliminary financial guidance ranges. Fiscal Year 2026 • $8.25- $8.75 EPS • Assumes no rate cuts during the year • Effective tax rate of 18% to 22% • Includes expected share repurchases
Q&A Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation9
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation10 APPENDIX - BALANCE SHEET1 Assets For the quarter ended ($ in thousands) September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 Cash and cash equivalents $375,580 $671,630 $347,888 $298,926 $158,337 $597,396 $254,249 $258,343 Securities available for sale, at fair value 1,804,228 1,850,581 1,779,458 1,725,460 1,741,221 1,480,090 1,411,520 1,367,340 Securities held to maturity, at amortized cost 36,591 35,440 34,682 34,026 33,092 32,001 31,335 30,273 Federal Reserve Bank and Federal Home Loan Bank Stocks, at cost 28,210 23,694 25,844 24,449 36,014 24,454 24,276 29,451 Loans held for sale 77,779 69,518 25,946 29,380 691,688 72,648 45,767 49,767 Loans and leases 4,369,826 4,429,316 4,412,000 4,615,605 4,075,195 4,562,681 4,464,870 4,743,324 Allowance for credit losses (96,855) (91,041) (111,282) (106,764) (71,765) (74,338) (102,890) (105,995) Accrued interest receivable 23,282 27,080 30,294 31,755 31,385 35,279 37,081 39,996 Premises, furniture, and equipment, net 39,160 38,270 37,266 36,953 39,055 38,263 39,542 39,799 Rental equipment, net 211,750 228,916 215,885 209,544 205,339 206,754 202,194 181,370 Goodwill and intangible assets 330,225 329,241 328,001 327,018 326,094 313,074 311,992 311,193 Other assets 303,625 289,865 290,828 286,677 266,362 314,958 274,642 284,756 Total assets $7,503,401 $7,902,510 $7,416,810 $7,513,029 $7,532,017 $7,603,260 $6,994,578 $7,229,617 1. As previously disclosed, the Company is in the process of amending certain historical financial statements. Accordingly, actual results may differ materially from the preliminary results contained in this presentation. These preliminary results reflect the updated gross basis accounting methodology.
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation11 APPENDIX - BALANCE SHEET (CONTINUED)1 Liabilities and Stockholders’ Equity For the quarter ended ($ in thousands) September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 Deposits $6,589,182 $6,936,055 $6,368,344 $6,431,516 $5,875,085 $6,518,953 $5,819,209 $6,005,246 Short-term borrowings 13,000 - 31,000 - 377,000 - - 115,000 Long-term borrowings 33,873 33,614 33,373 33,329 33,354 33,380 33,405 33,431 Accrued expenses and other liabilities 248,999 228,594 265,016 300,287 424,389 293,598 328,186 258,079 Total liabilities 6,885,054 7,198,263 6,697,733 6,765,132 6,709,828 6,845,931 6,180,800 6,411,756 Preferred stock - - - - - - - - Common stock, $.01 par value 262 260 254 251 248 241 236 230 Common stock, Nonvoting, $.01 par value - - - - - - - - Additional paid-in capital 628,500 629,737 634,415 636,284 638,803 640,422 643,887 646,044 Retained earnings 246,377 268,428 297,579 326,041 337,058 313,221 341,506 337,034 Accumulated other comprehensive loss (255,443) (188,433) (206,570) (207,992) (153,394) (190,917) (166,311) (159,709) Treasury stock, at cost (344) (5,235) (6,181) (6,181) (249) (4,882) (4,882) (4,882) Total equity attributable to parent 619,352 704,757 719,497 748,403 822,466 758,085 814,436 818,717 Noncontrolling interest (1,005) (510) (420) (506) (277) (756) (658) (856) Total stockholders’ equity 618,347 704,247 719,077 747,897 822,189 757,329 813,778 817,861 Total liabilities and stockholders’ equity $7,503,401 $7,902,510 $7,416,810 $7,513,029 $7,532,017 $7,603,260 $6,994,578 $7,229,617 1. As previously disclosed, the Company is in the process of amending certain historical financial statements. Accordingly, actual results may differ materially from the preliminary results contained in this presentation. These preliminary results reflect the updated gross basis accounting methodology.
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation12 APPENDIX – INCOME STATEMENT1 For the quarter ended ($ in thousands) September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 Interest and dividend income: Loans and leases, including fees $99,309 $103,854 $113,083 $107,762 $113,885 $113,082 $119,755 $108,766 Mortgage-backed securities 10,225 10,049 9,998 9,748 9,607 8,986 8,580 8,337 Other investments 9,332 10,886 14,013 8,323 7,851 7,522 13,669 6,488 118,866 124,789 137,094 125,833 131,343 129,590 142,004 123,591 Interest expense: Deposits 1,954 3,526 6,685 1,689 1,119 775 4,086 286 FHLB advances and other borrowings 2,754 2,336 1,775 1,394 2,709 2,331 1,640 992 4,708 5,862 8,460 3,083 3,828 3,106 5,726 1,278 Net interest income 114,158 118,927 128,634 122,750 127,515 126,484 136,278 122,313 Provision for credit loss 28,008 7,757 29,744 11,926 8,673 18,661 35,266 9,278 Net interest income after provision for credit loss 86,150 111,170 98,890 110,824 118,842 107,823 101,012 113,035 Noninterest income: Refund transfer product fees 308 422 28,942 9,111 1,703 410 32,663 9,846 Refund advance and other tax fee income (252) 111 43,200 (67) 229 524 48,585 307 Card and deposit fees 31,233 30,750 35,344 33,408 26,441 29,066 30,793 37,342 Rental Income 14,562 13,459 13,720 13,779 13,199 13,708 13,200 12,913 (Loss) on sale of securities - - - - - (15,671) (7,228) - Gain (loss) on divestitures - - - - - 16,404 (1,360) - Secondary market revenue 205 (31) 1,401 1,721 2,829 4,378 15,378 7,144 Gain on sale of other 1,801 2,871 294 2,954 629 987 627 394 Other income 8,194 5,179 6,044 4,968 6,975 7,572 5,866 5,496 Total noninterest income $56,051 $52,761 $128,945 $65,874 $52,005 $57,378 $138,524 $73,442 1. As previously disclosed, the Company is in the process of amending certain historical financial statements. Accordingly, actual results may differ materially from the preliminary results contained in this presentation. These preliminary results reflect the updated gross basis accounting methodology.
Pathward Financial, Inc. (Nasdaq: CASH) | Quarterly Investor Presentation13 APPENDIX – INCOME STATEMENT (CONTINUED)1 For the quarter ended ($ in thousands) September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 Noninterest expense: Compensation and benefits $46,352 $46,652 $54,073 $48,449 $52,298 $49,292 $51,905 $48,558 Refund transfer product expense 28 192 7,366 2,136 168 108 8,475 2,818 Refund advance expense (6) 30 1,846 47 20 34 1,265 (74) Card processing 29,549 34,584 35,163 34,314 33,877 33,314 36,238 36,198 Occupancy and equipment expense 9,274 8,848 9,293 9,070 9,376 9,706 10,307 10,633 Operating lease equipment depreciation 10,846 10,423 10,424 10,465 10,445 11,426 11,780 11,569 Legal and consulting 7,633 4,892 6,141 5,410 8,414 5,225 5,878 11,094 Intangible amortization 1,110 984 1,240 983 924 812 1,082 799 Impairment expense - - 2,013 999 - - 1,514 1,076 Other expense 16,451 14,472 13,182 13,641 17,836 17,879 19,733 16,651 Total noninterest expense 121,237 121,077 140,741 125,514 133,358 127,796 148,177 139,322 Income before income tax expense 20,964 42,854 87,094 51,184 37,489 37,405 91,359 47,155 Income tax expense (benefit) (4,821) 7,697 16,926 6,103 3,382 6,231 16,209 4,813 Net income before noncontrolling interest 25,785 35,157 70,168 45,081 34,107 31,174 75,150 42,342 Net income attributable to noncontrolling interest 507 257 249 212 575 199 237 214 Net income attributable to parent $25,278 $34,900 $69,919 $44,869 $33,532 $30,975 $74,913 $42,128 1. As previously disclosed, the Company is in the process of amending certain historical financial statements. Accordingly, actual results may differ materially from the preliminary results contained in this presentation. These preliminary results reflect the updated gross basis accounting methodology.