Sign In  |  Register  |  About Pleasanton  |  Contact Us

Pleasanton, CA
September 01, 2020 1:32pm
7-Day Forecast | Traffic
  • Search Hotels in Pleasanton

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Pathward Financial, Inc. Announces Results for 2023 Fiscal First Quarter

- Net Income of $27.8 million, or $0.98 Per Diluted Share -

- Raises Fiscal 2023 GAAP EPS Guidance Range to $5.55-$5.95 -

Pathward Financial, Inc.™ (“Pathward Financial” or the “Company”) (Nasdaq: CASH) reported net income of $27.8 million, or $0.98 per share, for the three months ended December 31, 2022, compared to net income of $61.3 million, or $2.00 per share, for the three months ended December 31, 2021.

During the quarter, when adjusting for the gain on sale of names and trademarks, expenses related to rebranding efforts and separation expense, the Company recognized adjusted net income of $23.2 million, or $0.81 per share. For the same period of the prior year, the Company recognized adjusted net income of $24.0 million, or $0.78 per share when excluding the impact of the gain on sale of trademarks and rebranding and separation expenses. See non-GAAP reconciliation table below.

CEO Brett Pharr said, “Pathward Financial performed well during the first fiscal quarter of 2023. Commercial Finance loans grew 7 percent compared to the prior year period, and credit quality across the portfolio remains strong. As we head into a potential recessionary environment, we are confident in our active collateral management and the quality of our loan portfolio. At the same time, our broad range of partners enables us to excel in the Banking as a Service industry, even during economic downtimes. Primarily as a result of the rising interest rate environment, we are pleased to raise our fiscal year 2023 GAAP EPS range, and our unique business model positions us well for the remainder of the year.”

Business Highlights

  • During the first quarter of fiscal year 2023, the Company recognized the remaining $10.0 million as part of the agreement with Beige Key, LLC to cease all use of the Meta name and trademarks. The $10.0 million was recognized as noninterest income as a gain on sale of names and trademarks. As part of the corporate rebrand, the Company recognized $3.7 million of pre-tax expenses related to rebranding efforts during the first quarter of fiscal 2023. Since the first quarter of fiscal year 2022 through the first quarter of fiscal year 2023, the Company has recognized $16.9 million in expenses related to rebranding efforts. The Company does not anticipate any further material expenses related to rebranding efforts.

Financial Highlights for the 2023 Fiscal First Quarter

  • Total revenue for the first quarter was $149.8 million, a decrease of $8.4 million, or 5%, compared to the same quarter in fiscal 2022, primarily driven by the $50.0 million gain on sale of names and trademarks recognized during the prior year period, partially offset by an increase in interest income and the $10.0 million gain on sale of names and trademarks recognized during the first quarter of fiscal year 2023.
  • Net interest margin ("NIM") increased 103 basis points to 5.62% for the first quarter from 4.59% during the same period of last year. The prior year period was impacted by excess cash associated with the Company's participation in the U.S. Treasury Department's Economic Impact Program.
  • Total gross loans and leases at December 31, 2022 decreased $174.5 million, or 5%, to $3.51 billion, compared to December 31, 2021 and decreased $26.6 million, or 1%, when compared to September 30, 2022. The decrease compared to the prior year quarter was primarily due to a reduction in warehouse finance loans and the sale of the $81.5 million student loan portfolio during the fiscal 2022 fourth quarter, partially offset by growth in the commercial finance portfolio. The primary driver for the decrease on a linked quarter basis was the reduction in warehouse finance loans.
  • During the fiscal 2023 first quarter, the Company repurchased 653,994 shares of common stock at an average share price of $38.10. An additional 478,200 shares of common stock at an average price of $45.45 were repurchased in January 2023 through January 20, 2023. As of January 20, 2023, there are 3,162,783 shares available for repurchase under the common stock share repurchase program announced during the fourth quarter of fiscal year 2021.
  • The Company expects fiscal year 2023 GAAP earnings per share to be in the range of $5.55 to $5.95. See Outlook section and non-GAAP reconciliation table below.

Net Interest Income

Net interest income for the first quarter of fiscal 2023 was $84.1 million, an increase of 17% from the same quarter in fiscal 2022. The increase was mainly attributable to increased yields and an improved earning asset mix.

The first quarter average outstanding balance of loans and leases decreased $182.1 million compared to the same quarter of the prior fiscal year, primarily due to a reduction in warehouse finance loans and the sales of the remaining community bank and student loan portfolios, partially offset by an increase in the commercial finance loans. The Company’s average interest-earning assets for the first fiscal quarter decreased by $249.2 million to $5.93 billion compared with the same quarter in fiscal 2022, primarily due to a reduction in cash balances as a result of high cash levels during the prior year period related to the Company's participation in government stimulus programs. The decrease in interest-earnings assets was partially offset by growth in total investments and commercial finance loans and leases.

Fiscal 2023 first quarter NIM increased to 5.62% from 4.59% in the first fiscal quarter of last year. The overall reported tax-equivalent yield (“TEY”) on average earning asset yields increased 101 basis points to 5.70% compared to the prior year quarter, primarily driven by an increase in loan and lease and investment securities yields, along with a decrease in lower-yielding cash balances. The yield on the loan and lease portfolio was 7.70% compared to 6.96% for the comparable period last year and the TEY on the securities portfolio was 2.76% compared to 1.58% over that same period.

The Company's cost of funds for all deposits and borrowings averaged 0.07% during the fiscal 2023 first quarter, as compared to 0.08% during the prior year quarter. The Company's overall cost of deposits was 0.01% in the fiscal first quarter of 2023, the same as the prior year quarter.

Noninterest Income

Fiscal 2023 first quarter noninterest income decreased to $65.8 million, compared to $86.6 million for the same period of the prior year. The decrease was primarily attributable to the gain on sale of names and trademarks as the Company recognized a $10.0 million gain during the current quarter as compared to a $50.0 million gain during the same period of the prior year. The period over period decrease was partially offset by increases in card and deposit fee income, gain on sale of other, other income and rental income.

The increase in card and deposit fee income was primarily from servicing fee income on off-balance sheet deposits, which totaled $12.9 million during the 2023 fiscal first quarter, as compared to $5.9 million for the fiscal quarter ended September 30, 2022 and an insignificant amount for the fiscal quarter ended December 31, 2021.

Noninterest Expense

Noninterest expense increased 27% to $105.1 million for the fiscal 2023 first quarter, from $82.4 million for the same quarter last year. The increase was primarily attributable to increases in card processing expense, compensation expense, legal and consulting expense, and operating lease equipment depreciation.

The card processing expense increase was due to structured agreements with banking as a service ("BaaS") partners. 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 averages between 50% to 85% of the Effective Federal Funds Rate ("EFFR") and reprices immediately upon a change in the EFFR. Approximately 43% of the deposit portfolio was subject to these higher card processing expenses. For the fiscal quarter ended December 31, 2022, card processing expenses related to these structured agreements were $14.0 million, as compared to $7.4 million for the fiscal quarter ended September 30, 2022 and $0.1 million for the fiscal quarter ended December 31, 2021.

Income Tax Expense

The Company recorded an income tax expense of $6.6 million, representing an effective tax rate of 18.8%, for the fiscal 2023 first quarter, compared to income tax expense of $14.3 million, representing an effective tax rate of 18.9%, for the first quarter last fiscal year. The current quarter decrease in income tax expense was primarily due to decreased earnings.

The Company originated $11.4 million in solar leases during the fiscal 2023 first quarter, resulting in $3.1 million in total net investment tax credits. During the first quarter of fiscal 2022, the Company originated $21.2 million in solar leases resulting in $5.7 million in total net investment tax credits. Investment tax credits related to solar leases are recognized ratably based on income throughout each fiscal year. The timing and impact of future solar tax credits are expected to vary from period to period, and the Company intends to undertake only those tax credit opportunities that meet the Company's underwriting and return criteria.

Outlook

The following forward-looking statements reflect the Company’s expectations as of the date of this release and are subject to substantial uncertainty. The Company's results may be materially affected by many factors, such as changes in economic conditions and customer demand, changes in interest rates, inflation, uncertainty regarding the COVID-19 pandemic, and other factors detailed below under “Forward-looking Statements.” Because the Company’s reported GAAP results include certain income and expense items that are not expected to continue indefinitely and may include additional elements that the Company cannot currently predict, the Company is also providing guidance on a non-GAAP or “adjusted” basis.

The Company expects fiscal year 2023 GAAP earnings per share to be in the range of $5.55 to $5.95. When adjusting for gain on sale of trademarks, rebrand related expenses, and separation related expenses, the Company expects fiscal year 2023 adjusted earnings per share to be in the range of $5.40 to $5.80. See non-GAAP reconciliation table below.

Investments, Loans and Leases

(Dollars in thousands)

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Total investments

$

1,888,343

 

 

$

1,924,551

 

 

$

2,000,400

 

 

$

2,090,765

 

 

$

1,833,733

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

 

 

 

 

 

 

 

Consumer credit products

 

17,148

 

 

 

21,071

 

 

 

23,710

 

 

 

23,670

 

 

 

20,728

 

SBA/USDA

 

 

 

 

 

 

 

43,861

 

 

 

7,740

 

 

 

15,454

 

Total loans held for sale

 

17,148

 

 

 

21,072

 

 

 

67,571

 

 

 

31,410

 

 

 

36,182

 

 

 

 

 

 

 

 

 

 

 

Term lending

 

1,160,100

 

 

 

1,090,289

 

 

 

1,047,764

 

 

 

1,111,076

 

 

 

1,038,378

 

Asset based lending

 

359,516

 

 

 

351,696

 

 

 

402,506

 

 

 

382,355

 

 

 

337,236

 

Factoring

 

338,594

 

 

 

372,595

 

 

 

408,777

 

 

 

394,865

 

 

 

402,972

 

Lease financing

 

189,868

 

 

 

210,692

 

 

 

218,789

 

 

 

235,397

 

 

 

245,315

 

Insurance premium finance

 

436,977

 

 

 

479,754

 

 

 

481,219

 

 

 

403,681

 

 

 

385,473

 

SBA/USDA

 

357,084

 

 

 

359,238

 

 

 

215,510

 

 

 

214,195

 

 

 

209,521

 

Other commercial finance

 

164,734

 

 

 

159,409

 

 

 

173,338

 

 

 

173,260

 

 

 

178,853

 

Commercial finance

 

3,006,873

 

 

 

3,023,673

 

 

 

2,947,903

 

 

 

2,914,829

 

 

 

2,797,748

 

Consumer credit products

 

130,750

 

 

 

144,353

 

 

 

152,106

 

 

 

171,847

 

 

 

173,343

 

Other consumer finance

 

56,180

 

 

 

25,306

 

 

 

107,135

 

 

 

111,922

 

 

 

144,412

 

Consumer finance

 

186,930

 

 

 

169,659

 

 

 

259,241

 

 

 

283,769

 

 

 

317,755

 

Tax services

 

30,364

 

 

 

9,098

 

 

 

41,627

 

 

 

85,999

 

 

 

100,272

 

Warehouse finance

 

279,899

 

 

 

326,850

 

 

 

434,748

 

 

 

441,496

 

 

 

466,831

 

Total loans and leases

 

3,504,066

 

 

 

3,529,280

 

 

 

3,683,519

 

 

 

3,726,093

 

 

 

3,682,606

 

Net deferred loan origination costs

 

5,664

 

 

 

7,025

 

 

 

5,047

 

 

 

4,097

 

 

 

1,655

 

Total gross loans and leases

 

3,509,730

 

 

 

3,536,305

 

 

 

3,688,566

 

 

 

3,730,190

 

 

 

3,684,261

 

Allowance for credit losses

 

(52,592

)

 

 

(45,947

)

 

 

(75,206

)

 

 

(88,552

)

 

 

(67,623

)

Total loans and leases, net

$

3,457,138

 

 

$

3,490,358

 

 

$

3,613,360

 

 

$

3,641,638

 

 

$

3,616,638

 

The Company's investment security balances at December 31, 2022 totaled $1.89 billion, as compared to $1.92 billion at September 30, 2022 and $1.83 billion at December 31, 2021.

Total gross loans and leases totaled $3.51 billion at December 31, 2022, as compared to $3.54 billion at September 30, 2022 and $3.68 billion at December 31, 2021. The primary driver for the decrease on a linked quarter basis was a reduction in warehouse finance loans and commercial finance loans, partially offset by an increase in the consumer finance portfolio and the seasonal increase in tax services loans. The year-over-year decrease was primarily due a reduction in warehouse finance loans, the sale of the student loan portfolio during the fiscal 2022 fourth quarter and a reduction in seasonal tax services loans, partially offset by growth in our commercial finance portfolio.

Commercial finance loans, which comprised 86% of the Company's gross loan and lease portfolio, totaled $3.01 billion at December 31, 2022, reflecting a reduction of $16.8 million, or 1%, from September 30, 2022 and an increase of $209.1 million, or 7%, from December 31, 2021.

Asset Quality

The Company’s allowance for credit losses ("ACL") totaled $52.6 million at December 31, 2022, an increase compared to $45.9 million at September 30, 2022 and a decrease from $67.6 million at December 31, 2021. The increase in the ACL at December 31, 2022, when compared to September 30, 2022, was primarily due to a $4.7 million increase in the commercial finance portfolio, a $1.4 million increase in the consumer finance portfolio and a $0.6 million increase in the seasonal tax services loan portfolio.

The $15.0 million year-over-year decrease in the ACL was primarily driven by a $8.1 million decrease in the commercial finance portfolio, a $5.7 million decrease in the consumer finance portfolio and a $1.0 million decrease in the tax services portfolio. The year-over-year decrease in the commercial finance portfolio was primarily due to a reduction in specific reserves on two individually evaluated loans during the second quarter of fiscal 2022 while the decrease in the consumer finance portfolio was primarily attributable to the sale of the student loan portfolio during the fourth quarter of fiscal 2022.

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

 

As of the Period Ended

(Unaudited)

December 31,

2022

September 30,

2022

June 30,

2022

March 31,

2022

December 31,

2021

Commercial finance

1.62%

1.46%

1.56%

1.66%

2.04%

Consumer finance

1.54%

0.86%

2.44%

3.18%

2.70%

Tax services

2.01%

0.05%

54.29%

35.76%

1.60%

Warehouse finance

0.10%

0.10%

0.10%

0.10%

0.10%

Total loans and leases

1.50%

1.30%

2.04%

2.38%

1.84%

Total loans and leases excluding tax services

1.50%

1.30%

1.44%

1.59%

1.84%

The Company's ACL as a percentage of total loans and leases increased to 1.50% at December 31, 2022 from 1.30% at September 30, 2022. The increase in the total loans and leases coverage ratio was primarily driven by the commercial and consumer finance portfolios. The increase in the commercial finance coverage ratio was primarily due to a specific reserve on an individually evaluated loan relationship while the increase in consumer finance was related to seasonal activity. The Company expects to continue to diligently monitor the ACL and adjust as necessary in future periods to maintain an appropriate and supportable level.

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

(Unaudited)

Three Months Ended

 

(Dollars in thousands)

December 31,

2022

September 30,

2022

December 31,

2021

 

Beginning balance

$

45,947

 

$

75,206

 

$

68,281

 

 

Provision (reversal of) - tax services loans

 

1,637

 

 

 

 

(714

)

 

Provision (reversal of) - all other loans and leases

 

8,226

 

 

(2,617

)

 

1,184

 

 

Charge-offs - tax services loans

 

(1,731

)

 

(22,599

)

 

(254

)

 

Charge-offs - all other loans and leases

 

(2,708

)

 

(6,844

)

 

(4,605

)

 

Recoveries - tax services loans

 

698

 

 

5

 

 

2,567

 

 

Recoveries - all other loans and leases

 

523

 

 

2,796

 

 

1,164

 

 

Ending balance

$

52,592

 

$

45,947

 

$

67,623

 

 

The Company recognized a provision for credit losses of $9.8 million for the quarter ended December 31, 2022, compared to $0.2 million of provision for credit losses expense for the comparable period in the prior fiscal year. The increase in provision for credit losses during the current quarter compared to the prior year period was primarily driven by the release of provision for credit losses related to the community bank portfolio during the prior year period. Net charge-offs were $3.2 million for the quarter ended December 31, 2022, compared to $1.1 million for the quarter ended December 31, 2021. Net charge-offs attributable to the commercial finance, tax services, and consumer finance portfolios for the current quarter were $2.0 million, $1.0 million, and $0.2 million, respectively.

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

As of December 31, 2022

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

$

 

$

 

$

 

$

 

$

17,148

 

$

17,148

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial finance

 

19,974

 

 

11,729

 

 

17,280

 

 

48,983

 

 

2,957,890

 

 

3,006,873

 

 

13,281

 

 

25,077

 

 

38,358

Consumer finance

 

2,757

 

 

2,533

 

 

2,493

 

 

7,783

 

 

179,147

 

 

186,930

 

 

2,493

 

 

 

 

2,493

Tax services

 

 

 

 

 

 

 

 

 

30,364

 

 

30,364

 

 

 

 

 

 

Warehouse finance

 

 

 

 

 

 

 

 

 

279,899

 

 

279,899

 

 

 

 

 

 

Total loans and leases held for investment

 

22,731

 

 

14,262

 

 

19,773

 

 

56,766

 

 

3,447,300

 

 

3,504,066

 

 

15,774

 

 

25,077

 

 

40,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases

$

22,731

 

$

14,262

 

$

19,773

 

$

56,766

 

$

3,464,448

 

$

3,521,214

 

$

15,774

 

$

25,077

 

$

40,851

As of September 30, 2022

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

$

 

$

 

$

 

$

 

$

21,071

 

$

21,071

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial finance

 

24,881

 

 

6,208

 

 

7,868

 

 

38,957

 

 

2,984,716

 

 

3,023,673

 

 

4,142

 

 

13,375

 

 

17,517

Consumer finance

 

3,322

 

 

2,609

 

 

2,793

 

 

8,724

 

 

160,935

 

 

169,659

 

 

2,793

 

 

 

 

2,793

Tax services

 

 

 

 

 

8,873

 

 

8,873

 

 

225

 

 

9,098

 

 

8,873

 

 

 

 

8,873

Warehouse finance

 

 

 

 

 

 

 

 

 

326,850

 

 

326,850

 

 

 

 

 

 

Total loans and leases held for investment

 

28,203

 

 

8,817

 

 

19,534

 

 

56,554

 

 

3,472,726

 

 

3,529,280

 

 

15,808

 

 

13,375

 

 

29,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases

$

28,203

 

$

8,817

 

$

19,534

 

$

56,554

 

$

3,493,797

 

$

3,550,351

 

$

15,808

 

$

13,375

 

$

29,183

The Company's nonperforming assets at December 31, 2022 were $45.0 million, representing 0.68% of total assets, compared to $30.9 million, or 0.46% of total assets at September 30, 2022 and $44.3 million, or 0.58% of total assets at December 31, 2021.

The Company's nonperforming loans and leases at December 31, 2022, were $40.9 million, representing 1.16% of total gross loans and leases, compared to $29.2 million, or 0.82% of total gross loans and leases at September 30, 2022 and $43.2 million, or 1.16% of total gross loans and leases at December 31, 2021.

The increase in the nonperforming assets as a percentage of total assets at December 31, 2022 compared to September 30, 2022, was driven by an increase in nonperforming loans in the commercial finance portfolio, primarily due to one lending relationship that moved to nonperforming during the period. The increase was partially offset by a decrease in nonperforming tax services loans due to seasonal timing. When comparing the current period to the same period of the prior year, the slight increase in nonperforming assets was due to an increase in nonperforming loans in the consumer finance portfolio.

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

 

Asset Classification

(Dollars in thousands)

Pass

Watch

Special

Mention

Substandard

Doubtful

Total

As of December 31, 2022

 

 

 

 

 

 

Commercial finance

$

2,277,687

$

441,453

$

84,445

$

199,401

$

3,887

$

3,006,873

Warehouse finance

 

279,899

 

 

 

 

 

279,899

Total loans and leases

$

2,557,586

$

441,453

$

84,445

$

199,401

$

3,887

$

3,286,772

 

Asset Classification

(Dollars in thousands)

Pass

Watch

Special

Mention

Substandard

Doubtful

Total

As of September 30, 2022

 

Commercial finance

$

2,254,579

$

469,638

$

91,754

$

203,680

$

4,022

$

3,023,673

Warehouse finance

 

294,350

 

 

32,500

 

 

 

326,850

Total loans and leases

$

2,548,929

$

469,638

$

124,254

$

203,680

$

4,022

$

3,350,523

Deposits, Borrowings and Other Liabilities

Total average deposits for the fiscal 2023 first quarter decreased by $284.7 million to $5.64 billion compared to the same period in fiscal 2022. The decrease in average deposits was primarily due to decreases in noninterest bearing deposits, wholesale deposits and savings deposits, partially offset by an increase in money market deposits. Prior period deposit balances were elevated due to the Company's participation in government stimulus programs.

The average balance of total deposits and interest-bearing liabilities was $5.70 billion for the three-month period ended December 31, 2022, compared to $6.01 billion for the same period in the prior fiscal year, representing a decrease of 5%.

Total end-of-period deposits decreased 11% to $5.79 billion at December 31, 2022, compared to $6.53 billion at December 31, 2021. The decrease in end-of-period deposits was primarily driven by a decrease in noninterest-bearing deposits of $690.5 million and wholesale deposits of $60.8 million.

As of December 31, 2022, the Company managed $2.23 billion of customer deposits at other banks in its capacity as custodian. The balance of these deposits increased as of December 31, 2022 as compared to September 30, 2022 primarily due to seasonal activity. These deposits provide the Company with excess deposits that can earn record keeping service fee income, typically reflective of the EFFR.

Approximately 43% of the deposit balances at December 31, 2022 are subject to variable card processing expenses that are derived from the terms of contractual agreements with certain BaaS partners. These agreements are tied to a portion of a rate index, typically the EFFR.

Regulatory Capital

The Company and its subsidiary Pathward™, N.A. (the "Bank") remained above the federal regulatory minimum capital requirements at December 31, 2022, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies. Regulatory capital ratios of the Company and the Bank are stated in the table below. Regulatory Capital is not affected by the unrealized loss on accumulated other comprehensive income (“AOCI”). The securities portfolio is made up of nearly all amortizing securities that should provide consistent cash flow and is not expected to require sales to realize the losses to fund future loan growth.

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

December

31, 2022(1)

 

September

30, 2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Company

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital ratio

8.37

%

 

8.10

%

 

8.23

%

 

6.80

%

 

7.39

%

Common equity Tier 1 capital ratio

12.31

%

 

12.07

%

 

11.87

%

 

11.26

%

 

10.88

%

Tier 1 capital ratio

12.63

%

 

12.39

%

 

12.19

%

 

11.58

%

 

11.20

%

Total capital ratio

14.29

%

 

13.88

%

 

13.44

%

 

14.16

%

 

13.80

%

Bank

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

8.68

%

 

8.19

%

 

8.22

%

 

7.79

%

 

8.52

%

Common equity Tier 1 capital ratio

13.09

%

 

12.55

%

 

12.17

%

 

13.26

%

 

12.90

%

Tier 1 capital ratio

13.09

%

 

12.55

%

 

12.18

%

 

13.26

%

 

12.91

%

Total capital ratio

14.29

%

 

13.57

%

 

13.43

%

 

14.52

%

 

14.16

%

(1) December 31, 2022 percentages are preliminary pending completion and filing of the Company's regulatory reports. Regulatory capital ratios for periods presented reflect the Company's election of the five-year CECL transition for regulatory capital purposes.

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

 

Standardized Approach(1)

(Dollars in thousands)

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Total stockholders' equity

$

659,133

 

 

$

645,140

 

 

$

724,774

 

 

$

763,406

 

 

$

826,157

Adjustments:

 

 

 

 

 

 

 

 

 

LESS: Goodwill, net of associated deferred tax liabilities

 

298,788

 

 

 

299,186

 

 

 

299,616

 

 

 

299,983

 

 

 

300,382

LESS: Certain other intangible assets

 

25,053

 

 

 

26,406

 

 

 

27,809

 

 

 

30,007

 

 

 

32,294

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

 

16,641

 

 

 

17,968

 

 

 

11,978

 

 

 

13,404

 

 

 

19,855

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

 

(200,597

)

 

 

(211,600

)

 

 

(131,352

)

 

 

(69,838

)

 

 

403

LESS: Noncontrolling interest

 

(207

)

 

 

(30

)

 

 

665

 

 

 

322

 

 

 

642

ADD: Adoption of Accounting Standards Update 2016-13

 

2,017

 

 

 

2,689

 

 

 

10,011

 

 

 

13,387

 

 

 

6,527

Common Equity Tier 1(1)

 

521,472

 

 

 

515,899

 

 

 

526,069

 

 

 

502,915

 

 

 

479,108

Long-term borrowings and other instruments qualifying as Tier 1

 

13,661

 

 

 

13,661

 

 

 

13,661

 

 

 

13,661

 

 

 

13,661

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

 

(138

)

 

 

(20

)

 

 

377

 

 

 

208

 

 

 

444

Total Tier 1 capital

 

534,995

 

 

 

529,540

 

 

 

540,107

 

 

 

516,784

 

 

 

493,213

Allowance for credit losses

 

50,853

 

 

 

43,623

 

 

 

55,506

 

 

 

56,051

 

 

 

55,125

Subordinated debentures, net of issuance costs

 

19,521

 

 

 

20,000

 

 

 

 

 

 

59,256

 

 

 

59,220

Total capital

$

650,369

 

 

$

593,163

 

 

$

595,613

 

 

$

632,091

 

 

$

607,558

(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.

The following table provides a reconciliation of tangible common equity and tangible common equity excluding AOCI, each of which is used in calculating tangible book value data, to Total Stockholders' Equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.

 

December

31,
2022

 

September

30,
2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Total stockholders' equity

$

659,133

 

 

$

645,140

 

 

$

724,774

 

 

$

763,406

 

 

$

826,157

Less: Goodwill

 

309,505

 

 

 

309,505

 

 

 

309,505

 

 

 

309,505

 

 

 

309,505

Less: Intangible assets

 

24,433

 

 

 

25,691

 

 

 

27,088

 

 

 

29,290

 

 

 

31,661

Tangible common equity

 

325,195

 

 

 

309,944

 

 

 

388,181

 

 

 

424,611

 

 

 

484,991

Less: AOCI

 

(201,690

)

 

 

(213,080

)

 

 

(131,407

)

 

 

(69,374

)

 

 

724

Tangible common equity excluding AOCI

$

526,885

 

 

$

523,024

 

 

$

519,588

 

 

$

493,985

 

 

$

484,267

Conference Call

The Company will host a conference call and earnings webcast at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) on Wednesday, January 25, 2023. 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 1-844-200-6205 (International: +1-929-526-1599) approximately 10 minutes prior to start time and reference access code 611903. A webcast replay will also be archived at www.pathwardfinancial.com for one year.

Upcoming Investor Events

  • KBW Winter Financial Services Conference, Feb 16, 2023 | Boca Raton, FL

About Pathward Financial, Inc.™

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

Forward-Looking Statements

The Company and the Bank may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the 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,” or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company’s control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results including our earnings per share guidance and related performance expectations; the impact of measures expected to increase efficiencies or reduce expenses; customer retention; loan and other product demand; expectations concerning acquisitions and divestitures; new products and services; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; technology; and the Company's employees. 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 the ongoing COVID-19 pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events, including the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine; our ability to achieve brand recognition for the Bank equal to or greater than we have enjoyed for MetaBank; our ability to successfully implement measures designed to reduce expenses and increase efficiencies; changes in trade, monetary, and fiscal policies and laws, including actual changes in interest rates and the Fed Funds rate; changes in tax laws; the strength of the United States' economy, and the local economies in which the Company operates; inflation, market, and monetary fluctuations; 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 of these products and services by users; the Bank's ability to maintain its Durbin Amendment exemption; the risks of dealing with or utilizing third parties, including, in connection with the Company’s prepaid card and tax refund advance businesses, the risk of reduced volume of refund advance loans as a result of reduced customer demand for or usage of the Bank's strategic partners’ refund advance products; our relationship with, and any actions which may be initiated by, our regulators; changes in financial services laws and regulations, including laws and regulations relating to the tax refund industry and the insurance premium finance industry; technological changes, including, but not limited to, the protection of our electronic systems and information; the impact of acquisitions and divestitures; litigation risk; the growth of the Company’s business, as well as expenses related thereto; continued maintenance by the Bank of its status as a well-capitalized institution; changes in consumer spending and saving habits; losses from fraudulent or illegal activity; technological risks and developments and cyber threats, attacks, or events; and the success of the Company at maintaining its high quality asset level and managing and collecting assets of borrowers in default should problem assets increase.

The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2022, and in other filings made with the SEC. The Company expressly disclaims any intent or obligation to update 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)

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

369,169

 

 

$

388,038

 

 

$

157,260

 

 

$

237,680

 

 

$

1,230,100

 

Securities available for sale, at fair value

 

1,847,778

 

 

 

1,882,869

 

 

 

1,956,523

 

 

 

2,043,478

 

 

 

1,782,739

 

Securities held to maturity, at amortized cost

 

40,565

 

 

 

41,682

 

 

 

43,877

 

 

 

47,287

 

 

 

50,994

 

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

 

28,812

 

 

 

28,812

 

 

 

28,812

 

 

 

28,812

 

 

 

28,400

 

Loans held for sale

 

17,148

 

 

 

21,071

 

 

 

67,571

 

 

 

31,410

 

 

 

36,182

 

Loans and leases

 

3,509,730

 

 

 

3,536,305

 

 

 

3,688,566

 

 

 

3,730,190

 

 

 

3,684,261

 

Allowance for credit losses

 

(52,592

)

 

 

(45,947

)

 

 

(75,206

)

 

 

(88,552

)

 

 

(67,623

)

Accrued interest receivable

 

20,170

 

 

 

17,979

 

 

 

16,818

 

 

 

19,115

 

 

 

17,240

 

Premises, furniture, and equipment, net

 

41,029

 

 

 

41,710

 

 

 

42,076

 

 

 

43,167

 

 

 

44,130

 

Rental equipment, net

 

231,129

 

 

 

204,371

 

 

 

222,023

 

 

 

213,033

 

 

 

234,693

 

Goodwill and intangible assets

 

333,938

 

 

 

335,196

 

 

 

336,593

 

 

 

338,795

 

 

 

341,166

 

Other assets

 

272,349

 

 

 

295,324

 

 

 

243,265

 

 

 

242,824

 

 

 

227,376

 

Total assets

$

6,659,225

 

 

$

6,747,410

 

 

$

6,728,178

 

 

$

6,887,239

 

 

$

7,609,658

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits

 

5,789,132

 

 

 

5,866,037

 

 

 

5,710,799

 

 

 

5,829,886

 

 

 

6,525,569

 

Long-term borrowings

 

34,977

 

 

 

36,028

 

 

 

16,616

 

 

 

91,386

 

 

 

92,274

 

Accrued expenses and other liabilities

 

175,983

 

 

 

200,205

 

 

 

275,989

 

 

 

202,561

 

 

 

165,658

 

Total liabilities

 

6,000,092

 

 

 

6,102,270

 

 

 

6,003,404

 

 

 

6,123,833

 

 

 

6,783,501

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $.01 par value

 

282

 

 

 

288

 

 

 

294

 

 

 

294

 

 

 

301

 

Common stock, Nonvoting, $.01 par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

620,681

 

 

 

617,403

 

 

 

615,159

 

 

 

612,917

 

 

 

610,816

 

Retained earnings

 

246,891

 

 

 

245,394

 

 

 

244,686

 

 

 

223,760

 

 

 

217,992

 

Accumulated other comprehensive income (loss)

 

(201,690

)

 

 

(213,080

)

 

 

(131,407

)

 

 

(69,374

)

 

 

724

 

Treasury stock, at cost

 

(6,824

)

 

 

(4,835

)

 

 

(4,623

)

 

 

(4,513

)

 

 

(4,318

)

Total equity attributable to parent

 

659,340

 

 

 

645,170

 

 

 

724,109

 

 

 

763,084

 

 

 

825,515

 

Noncontrolling interest

 

(207

)

 

 

(30

)

 

 

665

 

 

 

322

 

 

 

642

 

Total stockholders’ equity

 

659,133

 

 

 

645,140

 

 

 

724,774

 

 

 

763,406

 

 

 

826,157

 

Total liabilities and stockholders’ equity

$

6,659,225

 

 

$

6,747,410

 

 

$

6,728,178

 

 

$

6,887,239

 

 

$

7,609,658

 

Condensed Consolidated Statements of Operations (Unaudited)

 

Three Months Ended

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

December 31,

2022

 

September 30,

2022

 

December 31,

2021

Interest and dividend income:

 

 

 

 

 

Loans and leases, including fees

$

68,396

 

$

64,963

 

 

$

65,035

 

Mortgage-backed securities

 

10,412

 

 

10,155

 

 

 

3,864

 

Other investments

 

6,252

 

 

5,104

 

 

 

3,992

 

 

 

85,060

 

 

80,222

 

 

 

72,891

 

Interest expense:

 

 

 

 

 

Deposits

 

142

 

 

99

 

 

 

141

 

FHLB advances and other borrowings

 

861

 

 

363

 

 

 

1,137

 

 

 

1,003

 

 

462

 

 

 

1,278

 

 

 

 

 

 

 

Net interest income

 

84,057

 

 

79,760

 

 

 

71,613

 

 

 

 

 

 

 

Provision for credit losses

 

9,776

 

 

(2,648

)

 

 

186

 

 

 

 

 

 

 

Net interest income after provision for credit losses

 

74,281

 

 

82,408

 

 

 

71,427

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

Refund transfer product fees

 

677

 

 

1,135

 

 

 

579

 

Refund advance fee income

 

617

 

 

44

 

 

 

1,233

 

Card and deposit fees

 

37,718

 

 

28,908

 

 

 

25,369

 

Rental income

 

12,708

 

 

12,024

 

 

 

11,077

 

Gain (loss) on sale of securities

 

 

 

(1,882

)

 

 

137

 

Gain on sale of trademarks

 

10,000

 

 

 

 

 

50,000

 

Gain (loss) on sale of other

 

502

 

 

(3,319

)

 

 

(3,465

)

Other income

 

3,555

 

 

6,546

 

 

 

1,661

 

Total noninterest income

 

65,777

 

 

43,456

 

 

 

86,591

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

Compensation and benefits

 

43,017

 

 

42,762

 

 

 

38,225

 

Refund transfer product expense

 

105

 

 

52

 

 

 

138

 

Refund advance expense

 

27

 

 

1

 

 

 

183

 

Card processing

 

22,683

 

 

15,718

 

 

 

7,172

 

Occupancy and equipment expense

 

8,312

 

 

9,064

 

 

 

8,349

 

Operating lease equipment depreciation

 

9,628

 

 

9,306

 

 

 

8,449

 

Legal and consulting

 

9,459

 

 

13,355

 

 

 

6,208

 

Intangible amortization

 

1,258

 

 

1,397

 

 

 

1,488

 

Impairment expense

 

24

 

 

 

 

 

 

Other expense

 

10,546

 

 

11,375

 

 

 

12,224

 

Total noninterest expense

 

105,059

 

 

103,030

 

 

 

82,436

 

 

 

 

 

 

 

Income before income tax expense

 

34,999

 

 

22,834

 

 

 

75,582

 

 

 

 

 

 

 

Income tax expense (benefit)

 

6,577

 

 

(1,272

)

 

 

14,276

 

 

 

 

 

 

 

Net income before noncontrolling interest

 

28,422

 

 

24,106

 

 

 

61,306

 

Net income attributable to noncontrolling interest

 

580

 

 

686

 

 

 

(18

)

Net income attributable to parent

$

27,842

 

$

23,420

 

 

$

61,324

 

 

 

 

 

 

 

Less: Allocation of Earnings to participating securities(1)

 

402

 

 

393

 

 

 

953

 

Net income attributable to common shareholders(1)

 

27,440

 

 

23,027

 

 

 

60,371

 

Earnings per common share:

 

 

 

 

 

Basic

$

0.98

 

$

0.81

 

 

$

2.00

 

Diluted

$

0.98

 

$

0.81

 

 

$

2.00

 

Shares used in computing earnings per common share:

 

 

 

 

 

Basic

 

28,024,541

 

 

28,581,236

 

 

 

30,238,621

 

Diluted

 

28,086,823

 

 

28,581,236

 

 

 

30,260,655

 

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

Average Balances, Interest Rates and Yields

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

Three Months Ended December 31,

2022

 

2021

(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

$

226,004

 

$

1,716

 

3.01

%

 

$

594,614

 

$

560

 

0.37

%

Mortgage-backed securities

 

1,571,022

 

 

10,412

 

2.63

%

 

 

1,007,030

 

 

3,864

 

1.52

%

Tax exempt investment securities

 

154,754

 

 

980

 

3.18

%

 

 

207,621

 

 

820

 

1.98

%

Asset-backed securities

 

155,988

 

 

1,149

 

2.92

%

 

 

387,567

 

 

1,152

 

1.18

%

Other investment securities

 

301,739

 

 

2,407

 

3.17

%

 

 

279,839

 

 

1,460

 

2.07

%

Total investments

 

2,183,503

 

 

14,948

 

2.76

%

 

 

1,882,057

 

 

7,296

 

1.58

%

Commercial finance

 

3,010,868

 

 

58,100

 

7.66

%

 

 

2,775,394

 

 

49,021

 

7.01

%

Consumer finance

 

198,372

 

 

4,313

 

8.63

%

 

 

316,573

 

 

6,114

 

7.66

%

Tax services

 

25,230

 

 

57

 

0.90

%

 

 

33,604

 

 

1,474

 

17.40

%

Warehouse finance

 

290,454

 

 

5,926

 

8.09

%

 

 

443,506

 

 

6,901

 

6.17

%

Community banking

 

 

 

 

%

 

 

137,898

 

 

1,525

 

4.39

%

Total loans and leases

 

3,524,924

 

 

68,396

 

7.70

%

 

 

3,706,975

 

 

65,035

 

6.96

%

Total interest-earning assets

$

5,934,431

 

$

85,060

 

5.70

%

 

$

6,183,646

 

$

72,891

 

4.69

%

Noninterest-earning assets

 

589,580

 

 

 

 

 

 

839,854

 

 

 

 

Total assets

$

6,524,011

 

 

 

 

 

$

7,023,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

447

 

$

 

0.33

%

 

$

389

 

$

 

0.32

%

Savings

 

62,607

 

 

6

 

0.04

%

 

 

80,765

 

 

5

 

0.03

%

Money markets

 

138,872

 

 

78

 

0.22

%

 

 

75,664

 

 

52

 

0.27

%

Time deposits

 

7,199

 

 

2

 

0.11

%

 

 

8,619

 

 

15

 

0.67

%

Wholesale deposits

 

5,712

 

 

56

 

3.89

%

 

 

67,384

 

 

69

 

0.41

%

Total interest-bearing deposits

 

214,837

 

 

142

 

0.26

%

 

 

232,821

 

 

141

 

0.24

%

Overnight fed funds purchased

 

24,783

 

 

244

 

3.91

%

 

 

327

 

 

 

0.31

%

Subordinated debentures

 

19,593

 

 

357

 

7.22

%

 

 

73,995

 

 

986

 

5.28

%

Other borrowings

 

15,817

 

 

260

 

6.53

%

 

 

18,636

 

 

151

 

3.22

%

Total borrowings

 

60,193

 

 

861

 

5.67

%

 

 

92,958

 

 

1,137

 

4.85

%

Total interest-bearing liabilities

 

275,030

 

 

1,003

 

1.45

%

 

 

325,779

 

 

1,278

 

1.56

%

Noninterest-bearing deposits

 

5,421,821

 

 

 

%

 

 

5,688,563

 

 

 

%

Total deposits and interest-bearing liabilities

$

5,696,851

 

$

1,003

 

0.07

%

 

$

6,014,342

 

$

1,278

 

0.08

%

Other noninterest-bearing liabilities

 

178,789

 

 

 

 

 

 

182,916

 

 

 

 

Total liabilities

 

5,875,640

 

 

 

 

 

 

6,197,258

 

 

 

 

Shareholders' equity

 

648,371

 

 

 

 

 

 

826,242

 

 

 

 

Total liabilities and shareholders' equity

$

6,524,011

 

 

 

 

 

$

7,023,500

 

 

 

 

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

 

 

$

84,057

 

5.63

%

 

 

 

$

71,613

 

4.61

%

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 

 

5.62

%

 

 

 

 

 

4.59

%

Tax-equivalent effect

 

 

 

 

0.02

%

 

 

 

 

 

0.02

%

Net interest margin, tax-equivalent(2)

 

 

 

 

5.64

%

 

 

 

 

 

4.61

%

(1) Tax rate used to arrive at the TEY for the three months ended December 31, 2022 and 2021 was 21%.

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

Selected Financial Information

As of and For the Three Months Ended

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Equity to total assets

 

9.90

%

 

 

9.56

%

 

 

10.77

%

 

 

11.08

%

 

 

10.86

%

Book value per common share outstanding

$

23.36

 

 

$

22.41

 

 

$

24.69

 

 

$

26.00

 

 

$

27.46

 

Tangible book value per common share outstanding

$

11.53

 

 

$

10.77

 

 

$

13.22

 

 

$

14.46

 

 

$

16.12

 

Tangible book value per common share outstanding excluding AOCI

$

18.68

 

 

$

18.17

 

 

$

17.70

 

 

$

16.82

 

 

$

16.10

 

Common shares outstanding

 

28,211,239

 

 

 

28,788,124

 

 

 

29,356,707

 

 

 

29,362,844

 

 

 

30,080,717

 

Nonperforming assets to total assets

 

0.68

%

 

 

0.46

%

 

 

0.40

%

 

 

0.56

%

 

 

0.58

%

Nonperforming loans and leases to total loans and leases

 

1.16

%

 

 

0.82

%

 

 

0.71

%

 

 

0.95

%

 

 

1.16

%

Net interest margin

 

5.62

%

 

 

5.21

%

 

 

4.76

%

 

 

4.80

%

 

 

4.59

%

Net interest margin, tax-equivalent

 

5.64

%

 

 

5.23

%

 

 

4.77

%

 

 

4.81

%

 

 

4.61

%

Return on average assets

 

1.71

%

 

 

1.39

%

 

 

1.32

%

 

 

2.49

%

 

 

3.49

%

Return on average equity

 

17.18

%

 

 

12.82

%

 

 

11.93

%

 

 

24.16

%

 

 

29.69

%

Full-time equivalent employees

 

1,150

 

 

 

1,141

 

 

 

1,178

 

 

 

1,167

 

 

 

1,140

 

Non-GAAP Reconciliations

Adjusted Net Income and Adjusted Earnings Per Share

At and For the Three Months Ended

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

December 31,

2022

September 30,

2022

December 31,

2021

Net Income - GAAP

$

27,842

$

23,420

 

$

61,324

Less: Gain on sale of trademarks

 

10,000

 

 

 

50,000

Add: Rebranding expenses

 

3,737

 

6,899

 

 

3

Add: Separation related expenses

 

11

 

1,029

 

 

86

Add: Income tax effect resulting from gain on sale of trademarks and rebranding and separation expenses

 

1,575

 

(1,029

)

 

12,572

Adjusted net income

$

23,165

$

30,319

 

$

23,985

Less: Adjusted allocation of earnings to participating securities

 

335

 

508

 

 

373

Adjusted Net income attributable to common shareholders

 

22,830

 

29,811

 

 

23,612

Weighted average diluted common shares outstanding

 

28,086,823

 

28,581,236

 

 

30,260,655

Adjusted earnings per common share - diluted

$

0.81

$

1.04

 

$

0.78

Adjusted Diluted Earnings Per Share Guidance

Fiscal Year Ended

(Earnings per share amounts)

2023 (Guidance)

Diluted earnings per share - GAAP

$5.55 - $5.95

Less: Net extraordinary items, net of tax(1)

$0.15

Diluted earnings per share - Adjusted

$5.40 - $5.80

(1) Includes gain on sale of trademarks, rebrand related expenses and separation related expenses.

 

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Photography by Christophe Tomatis
Copyright © 2010-2020 Pleasanton.com & California Media Partners, LLC. All rights reserved.