EX-99.1 2 cash3312025earningsrelease.htm EX-99.1 Document

Exhibit 99.1
pathward_logoxrgb.jpg
PATHWARD FINANCIAL, INC. ANNOUNCES RESULTS FOR 2025 FISCAL SECOND QUARTER

Sioux Falls, S.D., April 22, 2025 - Pathward Financial, Inc. (“Pathward Financial” or the “Company”) (Nasdaq: CASH) reported net income of $74.3 million, or $3.11 per share, for the three months ended March 31, 2025, compared to net income of $65.3 million, or $2.56 per share, for the three months ended March 31, 2024.
CEO Brett Pharr said, “At the halfway point for the fiscal year, our businesses are healthy, and we are optimistic about the future. We have made significant progress toward our goals thanks in large part to the successful execution on our balance sheet strategy, which is allowing us to generate revenue above our asset size and means that we do not need to grow our balance sheet to grow revenues. This is evident in our financial performance during the quarter. We are also having a great tax season, which led the way to noninterest income growth for the quarter.”
Company Highlights and Business Developments
•On March 20, 2025, the Company's subsidiary Pathward®, N.A. announced it became Certified™ by Great Place to Work® for the third year in a row. Great Place to Work describes itself as the global authority on workplace culture, employee experience, and the leadership behaviors proven to deliver market-leading revenue, employee retention and increased innovation.
Financial Highlights for the 2025 Fiscal Second Quarter
•Total tax services product income, net of losses and direct product expenses, increased 29% to $47.6 million from $36.9 million, when comparing the first six months of fiscal 2025 to the same period of the prior fiscal year.
•Total revenue for the second quarter was $262.9 million, an increase of $15.6 million, or 6%, compared to the same quarter in fiscal 2024, driven by an increase in both net interest income and noninterest income.
•Net interest margin ("NIM") increased 27 basis points to 6.50% for the second quarter from 6.23% during the same period last year, primarily driven by increased yields and balances in the loan and lease portfolio and 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 5.09% in the fiscal 2025 second quarter compared to 4.76% during the fiscal 2024 second quarter. See non-GAAP reconciliation table below.
•Total gross loans and leases at March 31, 2025 increased $55.5 million to $4.46 billion compared to March 31, 2024 and decreased $97.8 million when compared to December 31, 2024. When excluding the insurance premium finance loans, which sold during the first quarter of fiscal 2025, of $522.9 million at March 31, 2024, total gross loans and leases at March 31, 2025 increased $578.4 million, or 15%, when compared to March 31, 2024.
•During the 2025 fiscal second quarter, the Company repurchased 575,804 shares of common stock at an average share price of $78.11. As of March 31, 2025, there were 5,722,336 shares available for repurchase under the current common stock share repurchase program.


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Tax Season
For the six months ended March 31, 2025, total tax services product revenue was $85.0 million, an increase of 17% compared to the same period of the prior year. Total tax services product fee income increased by $9.5 million and net interest income on tax services loans increased $2.6 million, while total tax services product expense increased marginally when compared to the prior year.
Provision for credit losses for the tax services portfolio increased $0.9 million for the six months ended March 31, 2025 when compared to the same period of the prior year, primarily due to an increase in loan originations.
Total tax services product income, net of losses and direct product expenses, increased 29% to $47.6 million from $36.9 million, when comparing the first six months of fiscal 2025 to the same period of the prior fiscal year. This increase was primarily due to a 13% increase in independent tax office enrollments this tax season as compared to the prior year period.
For the 2025 tax season through March 31, 2025, Pathward originated $1.66 billion in refund advance loans compared to $1.56 billion during the 2024 tax season.
Net Interest Income
Net interest income for the second quarter of fiscal 2025 was $124.3 million, an increase of 5% from the same quarter in fiscal 2024. The increase was mainly attributable to increased yields and balances in the loan and lease portfolio and an improved earning asset mix, along with a reduction in funding costs.
The Company’s average interest-earning assets for the second quarter of fiscal 2025 increased by $125.3 million to $7.76 billion compared to the same quarter in fiscal 2024, due to increases in average outstanding balances of interest earning cash and total loan and lease balances, partially offset by a decrease in total investment securities. The second quarter average outstanding balance of loans and leases increased $185.2 million compared to the same quarter of the prior fiscal year, primarily due to increases in the warehouse finance and tax services portfolios, partially offset by decreases in the consumer finance and commercial finance loan 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 second quarter NIM increased to 6.50% from 6.23% in the second fiscal quarter of 2024. When including contractual, rate-related processing expenses associated with deposits on the Company's balance sheet, NIM would have been 5.09% in the second quarter compared to 4.76% during the fiscal 2024 second quarter. See non-GAAP reconciliation table below. The overall reported tax-equivalent yield (“TEY”) on average interest-earning assets increased 12 basis points to 6.81% compared to the prior year quarter, driven by an improved earning asset mix. The yield on the loan and lease portfolio was 8.59% compared to 8.43% for the comparable period last year and the TEY on the securities portfolio was 3.11% compared to 3.20% over that same period.
The Company's cost of funds for all deposits and borrowings averaged 0.32% during the fiscal 2025 second quarter, as compared to 0.47% during the prior year quarter. The Company's overall cost of deposits was 0.23% in the fiscal second quarter of 2025, as compared to 0.38% 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 1.75% in the fiscal 2025 second quarter, as compared to 1.95% during the prior year quarter. See non-GAAP reconciliation table below.
Noninterest Income
Fiscal 2025 second quarter noninterest income increased 7% to $138.5 million, compared to $128.9 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, refund advance and other tax product income, and refund transfer product fees, partially offset by a loss on sale of investment securities, a reduction in card and deposit fees, and a loss on sale of divestiture related to closing business activities from the insurance premium finance business sale that occurred during the first quarter of the fiscal year.
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The period-over-period decrease in card and deposit fee income was primarily related to lower quarterly average deposit balances held at partner banks along with lower servicing fee income due to a reduction in rates following reductions in the Effective Federal Funds Rate ("EFFR"). Servicing fee income on custodial deposits totaled $6.5 million during the 2025 fiscal second quarter, compared to $10.4 million for the same period of the prior year. For the fiscal quarter ended December 31, 2024, servicing fee income on custodial deposits totaled $4.5 million.
Noninterest Expense
Noninterest expense increased 1% to $142.5 million for the fiscal 2025 second quarter, from $140.4 million for the same quarter last year. The increase was primarily attributable to increases in operating lease equipment depreciation expense, other expense, refund transfer product expense, card processing expense, and occupancy and equipment expense. This increase was partially offset primarily by reductions in compensation and benefits expense, refund advance product expense, and impairment 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 second quarter. For the fiscal quarter ended March 31, 2025, contractual, rate-related processing expenses were $28.4 million, as compared to $25.6 million for the fiscal quarter ended December 31, 2024, and $30.1 million for the fiscal quarter ended March 31, 2024.
Income Tax Expense
The Company recorded an income tax expense of $15.9 million, representing an effective tax rate of 17.6%, for the fiscal 2025 second quarter, compared to an income tax expense of $15.2 million, representing an effective tax rate of 18.9%, for the second quarter last fiscal year. The current quarter increase in income tax expense compared to the prior year quarter was primarily due to an increase in income.
The Company originated $1.9 million in renewable energy leases during the fiscal 2025 second quarter, resulting in $0.5 million in total net investment tax credits. During the second quarter of fiscal 2024, the Company originated $25.9 million in renewable energy leases resulting in $7.0 million in total net investment tax credits. For the six months ended March 31, 2025, the Company originated $11.2 million in renewable energy leases, compared to $38.1 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.

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Investments, Loans and Leases
(Dollars in thousands)March 31, 2025December 31, 2024September 30, 2024June 30, 2024March 31, 2024
Total investments$1,442,855 $1,512,091 $1,774,313 $1,759,486 $1,814,140 
Loans held for sale
Term lending— 7,860 4,567 — 1,977 
Lease financing— 424 — — — 
Insurance premium finance— — 594,359 — — 
SBA/USDA15,188 21,786 65,734 7,030 7,372 
Consumer finance30,579 42,578 24,210 22,350 16,597 
Total loans held for sale45,767 72,648 688,870 29,380 25,946 
Term lending1,766,432 1,735,539 1,554,641 1,533,722 1,489,054 
Asset-based lending542,483 608,261 471,897 473,289 429,556 
Factoring224,520 364,477 362,295 350,740 336,442 
Lease financing134,856 138,305 152,174 155,044 168,616 
Insurance premium finance— — — 617,054 522,904 
SBA/USDA701,736 595,965 568,628 563,689 560,433 
Other commercial finance154,728 174,097 185,964 166,653 149,056 
Commercial finance3,524,755 3,616,644 3,295,599 3,860,191 3,656,061 
Consumer finance246,202 280,001 248,800 253,358 267,031 
Tax services55,973 45,051 8,825 43,184 84,502 
Warehouse finance643,124 624,251 517,847 449,962 394,814 
Total loans and leases4,470,054 4,565,947 4,071,071 4,606,695 4,402,408 
Net deferred loan origination costs (fees)(5,184)(3,266)4,124 5,857 6,977 
Total gross loans and leases4,464,870 4,562,681 4,075,195 4,612,552 4,409,385 
Allowance for credit losses(78,449)(48,977)(45,336)(79,836)(80,777)
Total loans and leases, net$4,386,421 $4,513,704 $4,029,859 $4,532,716 $4,328,608 
The Company's investment security balances at March 31, 2025 totaled $1.44 billion, as compared to $1.51 billion at December 31, 2024 and $1.81 billion at March 31, 2024. The sequential decrease was primarily related to the sale of $57.7 million of investment securities AFS during the second quarter of fiscal 2025. The year-over-year decrease was primarily related to the sale of investment securities AFS during both the second and first quarters of fiscal 2025.
Total gross loans and leases totaled $4.46 billion at March 31, 2025, as compared to $4.56 billion at December 31, 2024 and $4.41 billion at March 31, 2024. The drivers for the sequential decrease were reductions in the commercial finance and consumer finance loan portfolios, partially offset by increases in the warehouse 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, tax services, and consumer finance loan portfolios. When excluding the insurance premium finance loans, which sold during the first quarter of fiscal 2025, of $522.9 million at March 31, 2024, total gross loans and leases at March 31, 2025 increased $578.4 million, or 15%, when compared to March 31, 2024.
Commercial finance loans, which comprised 79% of the Company's loan and lease portfolio, totaled $3.52 billion at March 31, 2025, reflecting a decrease of $91.9 million, or 3%, from December 31, 2024 and a decrease of $131.3 million, or 4%, from March 31, 2024. The sequential decrease was primarily driven by decreases of $140.0 million in factoring loans and $65.8 million in asset-based lending, partially offset by increases of $105.8 million in SBA/USDA and $30.9 million in term lending. 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 $111.9 million in factoring loans, partially offset by increases of $277.4 million in term lending, $141.3 million in SBA/USDA, and
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$112.9 million in asset-based lending. When excluding the insurance premium finance loans of $522.9 million at March 31, 2024, commercial finance loans at March 31, 2025 increased by $391.6 million when compared to March 31, 2024.
Asset Quality
The Company’s allowance for credit losses ("ACL") totaled $78.4 million at March 31, 2025, an increase compared to $49.0 million at December 31, 2024 and a decrease compared to $80.8 million at March 31, 2024. The increase in the ACL at March 31, 2025, when compared to December 31, 2024, was primarily due to a $33.0 million increase in the allowance related to the seasonal tax services portfolio, partially offset by a $3.7 million decrease in the allowance related to the commercial finance portfolio.
The $2.4 million year-over-year decrease in the ACL was primarily driven by a $5.4 million decrease in the allowance related to the commercial finance portfolio, partially offset by a $2.3 million increase in the allowance related to the 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)March 31, 2025December 31, 2024September 30, 2024June 30, 2024March 31, 2024
Commercial finance1.10 %1.18 %1.29 %1.17 %1.21 %
Consumer finance2.11 %1.79 %0.90 %2.23 %1.71 %
Tax services60.35 %1.75 %0.02 %66.35 %37.31 %
Warehouse finance0.10 %0.10 %0.10 %0.10 %0.10 %
Total loans and leases1.75 %1.07 %1.11 %1.73 %1.83 %
Total loans and leases excluding tax services1.01 %1.07 %1.12 %1.12 %1.14 %

The Company's ACL as a percentage of total loans and leases increased to 1.75% at March 31, 2025 from 1.07% at December 31, 2024. The increase in the total loans and leases coverage ratio was primarily driven by seasonality in both the tax services portfolio and consumer finance portfolio.

Activity in the allowance for credit losses for the periods presented was as follows.
(Unaudited)Three Months EndedSix Months Ended
(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024March 31, 2025March 31, 2024
Beginning balance$48,977 $45,336 $53,785 $45,336 $49,705 
Provision (reversal of) - tax services loans26,178 1,301 25,221 27,479 26,577 
Provision (reversal of) - all other loans and leases3,389 10,913 684 14,302 8,894 
Charge-offs - tax services loans— (741)— (741)(1,145)
Charge-offs - all other loans and leases(8,114)(8,935)(5,492)(17,050)(11,218)
Recoveries - tax services loans6,813 228 5,800 7,041 6,094 
Recoveries - all other loans and leases1,206 875 779 2,082 1,870 
Ending balance$78,449 $48,977 $80,777 $78,449 $80,777 
The Company recognized a provision for credit losses of $29.9 million for the quarter ended March 31, 2025, compared to $26.1 million for the comparable period in the prior fiscal year. The period-over-period increase in provision for credit losses was primarily due to increases in provision for credit losses in the commercial finance portfolio of $2.8 million and the seasonal tax services portfolio of $1.0 million. The Company recognized net charge-offs of $0.1 million for the quarter ended March 31, 2025, compared to net recoveries of $1.1 million for the quarter ended March 31, 2024. Net charge-offs attributable to the commercial finance portfolio for the current quarter were $6.9 million while recoveries of $6.8 million were recognized in the tax services portfolio. Net charge-offs attributable to the commercial finance portfolio for the same quarter of the prior year were $4.7 million, while recoveries of $5.8 million were recognized in the tax services portfolio.
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The Company's past due loans and leases were as follows for the periods presented.
As of March 31, 2025Accruing and Nonaccruing Loans and LeasesNonperforming Loans and Leases
(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due> 89 Days Past DueTotal Past DueCurrentTotal Loans and Leases Receivable> 89 Days Past Due and AccruingNonaccrual BalanceTotal
Loans held for sale$— $— $— $— $45,767 $45,767 $— $— $— 
Commercial finance41,161 14,933 18,273 74,367 3,450,388 3,524,755 1,359 36,049 37,408 
Consumer finance3,922 2,769 2,397 9,088 237,114 246,202 2,398 — 2,398 
Tax services1,036 — — 1,036 54,937 55,973 — — — 
Warehouse finance— — — — 643,124 643,124 — — — 
Total loans and leases held for investment46,119 17,702 20,670 84,491 4,385,563 4,470,054 3,757 36,049 39,806 
Total loans and leases$46,119 $17,702 $20,670 $84,491 $4,431,330 $4,515,821 $3,757 $36,049 $39,806 

As of December 31, 2024Accruing and Nonaccruing Loans and LeasesNonperforming Loans and Leases
(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due> 89 Days Past DueTotal Past DueCurrentTotal Loans and Leases Receivable> 89 Days Past Due and AccruingNonaccrual BalanceTotal
Loans held for sale$— $— $— $— $72,648 $72,648 $— $— $— 
Commercial finance25,080 8,966 23,545 57,591 3,559,053 3,616,644 5,555 27,231 32,786 
Consumer finance4,502 2,936 2,423 9,861 270,140 280,001 2,423 — 2,423 
Tax services— — — — 45,051 45,051 — — — 
Warehouse finance— — — — 624,251 624,251 — — — 
Total loans and leases held for investment29,582 11,902 25,968 67,452 4,498,495 4,565,947 7,978 27,231 35,209 
Total loans and leases$29,582 $11,902 $25,968 $67,452 $4,571,143 $4,638,595 $7,978 $27,231 $35,209 
The Company's nonperforming assets at March 31, 2025 were $41.6 million, representing 0.59% of total assets, compared to $37.5 million, or 0.49% of total assets at December 31, 2024 and $37.2 million, or 0.50% of total assets at March 31, 2024.
The increase in the nonperforming assets as a percentage of total assets at March 31, 2025 compared to December 31, 2024, was driven by an increase in nonperforming loans in the commercial finance portfolio, partially offset by a slight decrease in nonperforming loans in the consumer finance portfolio. 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 portfolio.
The Company's nonperforming loans and leases at March 31, 2025, were $39.8 million, representing 0.88% of total gross loans and leases, compared to $35.2 million, or 0.76% of total gross loans and leases at December 31, 2024 and $34.4 million, or 0.78% of total gross loans and leases at March 31, 2024.





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Deposits, Borrowings and Other Liabilities
The average balance of total deposits and interest-bearing liabilities was $7.30 billion for the three-month period ended March 31, 2025, compared to $7.28 billion for the same period in the prior fiscal year. Total average deposits for the fiscal 2025 second quarter increased by $12.6 million to $7.18 billion compared to the same period in fiscal 2024. The increase in average deposits was primarily due to increases in noninterest bearing deposits and interest bearing checking, partially offset by a decrease in wholesale deposits.
Total end-of-period deposits decreased 9% to $5.82 billion at March 31, 2025, compared to $6.37 billion at March 31, 2024. The decrease in end-of-period deposits was primarily driven by decreases in noninterest-bearing deposits of $458.0 million, wholesale deposits of $100.9 million, and money market deposits of $10.0 million, partially offset by an increase in interest bearing checking deposits of $25.1 million.
As of March 31, 2025, the Company managed $1.12 billion 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 increase in these customer deposits held at other banks reflects normal seasonal patterns during the second 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 March 31, 2025, 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. The decrease in Tier 1 leverage capital ratio for the period as compared to the sequential quarter is the result of higher quarterly average assets related to the Company's seasonal tax business. The Bank's Tier 1 leverage capital ratio using end of period assets of 10.49% better reflects the expected capital position of the Company post tax season. See non-GAAP reconciliation 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
March 31, 2025(1)
December 31, 2024September 30,
2024		June 30,
2024		March 31,
2024
Company
Tier 1 leverage capital ratio8.53 %9.15 %9.26 %9.13 %7.75 %
Common equity Tier 1 capital ratio13.98 %12.53 %12.61 %12.44 %12.30 %
Tier 1 capital ratio14.25 %12.79 %12.86 %12.70 %12.56 %
Total capital ratio15.90 %14.11 %14.08 %14.33 %14.21 %
Bank
Tier 1 leverage ratio8.73 %9.42 %9.44 %9.36 %7.92 %
Common equity Tier 1 capital ratio14.59 %13.16 %13.12 %13.02 %12.83 %
Tier 1 capital ratio14.59 %13.16 %13.12 %13.02 %12.83 %
Total capital ratio15.84 %14.10 %13.97 %14.27 %14.09 %
(1) March 31, 2025 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.

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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)
March 31,
2025		December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024
Total stockholders' equity$832,232 $776,430 $839,605 $765,248 $739,462 
Adjustments:
LESS: Goodwill, net of associated deferred tax liabilities285,865 286,171 296,105 296,496 296,889 
LESS: Certain other intangible assets16,363 16,951 18,018 18,315 19,146 
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards3,410 12,298 13,253 11,880 15,862 
LESS: Net unrealized (losses) on available for sale securities(163,206)(187,834)(152,328)(206,584)(205,460)
LESS: Noncontrolling interest(658)(756)(277)(506)(420)
ADD: Adoption of Accounting Standards Update 2016-13672 672 1,345 1,345 1,345 
Common Equity Tier 1(1)
691,130 650,272 666,179 646,992 614,790 
Long-term borrowings and other instruments qualifying as Tier 113,661 13,661 13,661 13,661 13,661 
Tier 1 minority interest not included in common equity Tier 1 capital(381)(462)(150)(374)(311)
Total Tier 1 capital704,410 663,471 679,690 660,279 628,140 
Allowance for credit losses61,994 48,818 44,687 65,182 62,715 
Subordinated debentures, net of issuance costs19,744 19,719 19,693 19,668 19,642 
Total capital$786,148 $732,008 $744,070 $745,129 $710,497 
(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.

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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 Tuesday, April 22, 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 162083.
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

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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; 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; 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 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.
10

Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Share Data)March 31, 2025December 31, 2024September 30, 2024June 30, 2024March 31, 2024
ASSETS
Cash and cash equivalents$254,249 $597,396 $158,337 $298,926 $347,888 
Securities available for sale, at fair value1,411,520 1,480,090 1,741,221 1,725,460 1,779,458 
Securities held to maturity, at amortized cost31,335 32,001 33,092 34,026 34,682 
Federal Reserve Bank and Federal Home Loan Bank Stock, at cost24,276 24,454 36,014 24,449 25,844 
Loans held for sale45,767 72,648 688,870 29,380 25,946 
Loans and leases4,464,870 4,562,681 4,075,195 4,612,552 4,409,385 
Allowance for credit losses(78,449)(48,977)(45,336)(79,836)(80,777)
Accrued interest receivable37,081 35,279 31,385 31,755 30,294 
Premises, furniture, and equipment, net39,542 38,263 39,055 36,953 37,266 
Rental equipment, net202,194 206,754 205,339 209,544 215,885 
Goodwill and intangible assets311,992 313,074 326,094 327,018 328,001 
Other assets268,636 308,679 260,070 280,053 283,245 
Total assets$7,013,013 $7,622,342 $7,549,336 $7,530,280 $7,437,117 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits5,819,209 6,518,953 5,875,085 6,431,516 6,368,344 
Short-term borrowings— — 377,000 — 31,000 
Long-term borrowings33,405 33,380 33,354 33,329 33,373 
Accrued expenses and other liabilities328,167 293,579 424,292 300,187 264,938 
Total liabilities6,180,781 6,845,912 6,709,731 6,765,032 6,697,655 
STOCKHOLDERS’ EQUITY 
Preferred stock— — — — — 
Common stock, $.01 par value236 241 248 251 254 
Common stock, Nonvoting, $.01 par value— — — — — 
Additional paid-in capital643,887 640,422 638,803 636,284 634,415 
Retained earnings359,960 332,322 354,474 343,392 317,964 
Accumulated other comprehensive loss(166,311)(190,917)(153,394)(207,992)(206,570)
Treasury stock, at cost(4,882)(4,882)(249)(6,181)(6,181)
Total equity attributable to parent832,890 777,186 839,882 765,754 739,882 
Noncontrolling interest(658)(756)(277)(506)(420)
Total stockholders’ equity832,232 776,430 839,605 765,248 739,462 
Total liabilities and stockholders’ equity$7,013,013 $7,622,342 $7,549,336 $7,530,280 $7,437,117 


11

Condensed Consolidated Statements of Operations (Unaudited)
 Three Months EndedSix Months Ended
(Dollars in thousands, except per share data)March 31, 2025December 31, 2024March 31, 2024March 31, 2025March 31, 2024
Interest and dividend income:   
Loans and leases, including fees$107,818 $102,731 $102,750 $210,549 $197,713 
Mortgage-backed securities8,580 8,986 9,998 17,566 20,047 
Other investments13,669 7,522 14,013 21,191 24,899 
 130,067 119,239 126,761 249,306 242,659 
Interest expense:  
Deposits4,086 775 6,685 4,861 10,211 
FHLB advances and other borrowings1,640 2,331 1,775 3,971 4,111 
 5,726 3,106 8,460 8,832 14,322 
Net interest income124,341 116,133 118,301 240,474 228,337 
Provision for credit loss29,905 12,032 26,052 41,937 35,942 
Net interest income after provision for credit loss94,436 104,101 92,249 198,537 192,395 
Noninterest income:    
Refund transfer product fees32,663 410 28,942 33,073 29,364 
Refund advance and other tax fee income48,585 524 43,200 49,109 43,311 
Card and deposit fees30,793 29,066 35,344 59,859 66,094 
Rental income13,200 13,708 13,720 26,908 27,179 
(Loss) on sale of securities(7,228)(15,671)— (22,899)— 
Gain (loss) on divestitures(1,360)16,404 — 15,044 — 
Secondary market revenue15,378 4,378 1,401 19,756 1,370 
Gain on sale of other627 987 294 1,614 3,165 
Other income5,866 7,572 6,044 13,438 11,223 
Total noninterest income138,524 57,378 128,945 195,902 181,706 
Noninterest expense:    
Compensation and benefits51,905 49,292 54,073 101,197 100,725 
Refund transfer product expense8,475 108 7,366 8,583 7,558 
Refund advance expense1,265 34 1,846 1,299 1,876 
Card processing36,238 33,314 35,163 69,552 69,747 
Occupancy and equipment expense10,307 9,706 9,293 20,013 18,141 
Operating lease equipment depreciation 11,780 11,426 10,424 23,206 20,847 
Legal and consulting5,878 5,225 6,141 11,103 11,033 
Intangible amortization1,082 812 1,240 1,894 2,224 
Impairment expense1,514 — 2,013 1,514 2,013 
Other expense14,076 13,642 12,872 27,718 25,541 
Total noninterest expense142,520 123,559 140,431 266,079 259,705 
Income before income tax expense90,440 37,920 80,763 128,360 114,396 
Income tax expense15,937 6,294 15,246 22,231 20,965 
Net income before noncontrolling interest74,503 31,626 65,517 106,129 93,431 
Net income attributable to noncontrolling interest237 199 249 436 506 
Net income attributable to parent$74,266 $31,427 $65,268 $105,693 $92,925 
Less: Allocation of Earnings to participating securities(1)
261130524404744
Net income attributable to common shareholders(1)
74,00531,29764,744105,28992,181
Earnings per common share:  
Basic$3.13 $1.29 $2.56 $4.40 $3.61 
Diluted$3.11 $1.29 $2.56 $4.38 $3.61 
Shares used in computing earnings per common share:
Basic23,657,145 24,221,697 25,281,743 23,941,980 25,529,186 
Diluted23,776,023 24,280,371 25,311,144 24,039,020 25,555,656 
(1) Amounts presented are used in the two-class earnings per common share calculation.
12

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 March 31,20252024
(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$926,841 $9,088 3.98 %$616,288 $7,422 4.84 %
Mortgage-backed securities1,240,243 8,580 2.81 %1,464,530 9,998 2.75 %
Tax-exempt investment securities116,976 797 3.50 %132,733 932 3.57 %
Asset-backed securities180,750 2,228 5.00 %237,421 3,368 5.71 %
Other investment securities207,973 1,556 3.03 %281,695 2,291 3.27 %
Total investments1,745,942 13,161 3.11 %2,116,379 16,589 3.20 %
Commercial finance3,597,280 73,053 8.24 %3,650,845 74,330 8.19 %
Consumer finance295,099 8,039 11.05 %351,459 9,144 10.46 %
Tax services557,229 11,913 8.67 %493,168 9,014 7.35 %
Warehouse finance638,747 14,813 9.41 %407,703 10,262 10.12 %
Total loans and leases5,088,355 107,818 8.59 %4,903,175 102,750 8.43 %
Total interest-earning assets$7,761,138 $130,067 6.81 %$7,635,842 $126,761 6.69 %
Noninterest-earning assets630,782 600,354 
Total assets$8,391,920 $8,236,196 
Interest-bearing liabilities:
Interest-bearing checking$2,462 $— 0.04 %$266 $— 0.31 %
Savings53,120 3 0.02 %59,914 5 0.04 %
Money markets179,591 270 0.61 %190,143 598 1.26 %
Time deposits4,213 3 0.25 %5,027 4 0.29 %
Wholesale deposits349,706 3,810 4.42 %439,785 6,078 5.56 %
Total interest-bearing deposits (a)589,092 4,086 2.81 %695,135 6,685 3.87 %
Overnight fed funds purchased88,522 1,004 4.60 %79,484 1,107 5.60 %
Subordinated debentures19,728 355 7.29 %19,625 355 7.27 %
Other borrowings13,661 281 8.34 %13,901 313 9.07 %
Total borrowings121,911 1,640 5.45 %113,010 1,775 6.32 %
Total interest-bearing liabilities711,003 5,726 3.27 %808,145 8,460 4.21 %
Noninterest-bearing deposits (b)6,592,216 — — %6,473,538 — — %
Total deposits and interest-bearing liabilities$7,303,219 $5,726 0.32 %$7,281,683 $8,460 0.47 %
Other noninterest-bearing liabilities294,121 223,560 
Total liabilities7,597,340 7,505,243 
Shareholders' equity794,580 730,953 
Total liabilities and shareholders' equity$8,391,920 $8,236,196 
Net interest income and net interest rate spread including noninterest-bearing deposits$124,341 6.49 %$118,301 6.22 %
Net interest margin6.50 %6.23 %
Tax-equivalent effect0.01 %0.01 %
Net interest margin, tax-equivalent(2)
6.51 %6.24 %
Total cost of deposits (a+b)7,181,308 4,086 0.23 %7,168,673 6,685 0.38 %
(1) Tax rate used to arrive at the TEY for the three months ended March 31, 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.

13

Selected Financial Information
As of and For the Three Months EndedMarch 31,
2025		December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024
Equity to total assets11.87 %10.19 %11.12 %10.16 %9.94 %
Book value per common share outstanding$35.33 $32.19 $33.79 $30.51 $29.14 
Tangible book value per common share outstanding$22.08 $19.21 $20.67 $17.47 $16.21 
Common shares outstanding23,558,939 24,119,416 24,847,353 25,085,230 25,377,986 
Nonperforming assets to total assets0.59 %0.49 %0.57 %0.61 %0.50 %
Nonperforming loans and leases to total loans and leases0.88 %0.76 %0.87 %0.96 %0.78 %
Net interest margin6.50 %6.84 %6.66 %6.56 %6.23 %
Net interest margin, tax-equivalent6.51 %6.85 %6.67 %6.57 %6.24 %
Return on average assets3.59 %1.69 %1.79 %2.28 %3.17 %
Return on average equity37.91 %15.51 %16.80 %22.62 %35.72 %
Return on average tangible equity62.50 %25.65 %28.40 %40.59 %64.92 %
Full-time equivalent employees1,155 1,170 1,241 1,232 1,204 

Non-GAAP Reconciliations
Net Interest Margin and Cost of DepositsAt and For the Three Months Ended
(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024
Average interest earning assets$7,761,138 $6,735,958 $7,635,842 
Net interest income$124,341 $116,133 $118,301 
Net interest margin6.50 %6.84 %6.23 %
Quarterly average total deposits$7,181,308 $6,081,235 $7,168,673 
Deposit interest expense$4,086 $775 $6,685 
Cost of deposits0.23 %0.05 %0.38 %
Adjusted Net Interest Margin with contractual, rate-related card expenses associated with deposits on the Company's balance sheet
Average interest earning assets$7,761,138 $6,735,958 $7,635,842 
Net interest income124,341 116,133 118,301 
Less: Contractual, rate-related processing expense26,852 24,241 28,024 
Adjusted net interest income$97,489 $91,892 $90,277 
Adjusted net interest margin5.09 %5.41 %4.76 %
Average total deposits$7,181,308 $6,081,235 $7,168,673 
Deposit interest expense4,086 775 6,685 
Add: Contractual, rate-related processing expense26,852 24,241 28,024 
Adjusted deposit expense$30,938 $25,016 $34,709 
Adjusted cost of deposits1.75 %1.63 %1.95 %


14

Pathward, N.A. Period-end Tier 1 Leverage
(Dollars in thousands)March 31, 2025
Total stockholders' equity$861,879 
Adjustments:
Less: Goodwill, net of associated deferred tax liabilities285,865 
Less: Certain other intangible assets16,363 
Less: Net deferred tax assets from operating loss and tax credit carry-forwards3,410 
Less: Net unrealized gains (losses) on available for sale securities(163,206)
Less: Noncontrolling interest(658)
Add: Adoption of Accounting Standards Update 2016-13672 
Common Equity Tier 1720,777 
Tier 1 minority interest not included in common equity Tier 1 capital— 
Total Tier 1 capital$720,777 
Total Assets (Quarter Average)$8,391,490 
Add: Available for sale securities amortized cost223,365 
Add: Deferred tax(55,372)
Add: Adoption of Accounting Standards Updated 2016-13672 
Less: Deductions from CET1305,638 
Adjusted total assets$8,254,517 
Pathward, N.A. Regulatory Tier 1 Leverage8.73 %
Total Assets (Period End)$7,011,075 
Add: Available for sale securities amortized cost217,000 
Add: Deferred tax(53,794)
Add: Adoption of Accounting Standards Updated 2016-13672 
Less: Deductions from CET1305,638 
Adjusted total assets$6,869,315 
Pathward, N.A. Period-end Tier 1 Leverage10.49 %
15