CASH - Earnings call transcript Q2 2018 | Pathward Financial, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Meta Financial Group Second Quarter Fiscal 2018 Investor Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference call over to Brittany Elsasser, Director of Investor Relations. Please go ahead.

Brittany Elsasser

earlier to financial Conference second results March XXXX, welcome to and quarter and XX, our discuss for released you, Meta Call Financial's Webcast ended Thank afternoon. this the fiscal

describing on President, reliance and the Act could cause Glen including the caution undue Herrick and Chairman investor be metafinancialgroup.com. on We these release goals. Additional materially and actual results our of Tyler Executive information, differ forward-looking forward-looking These at Haahr; earnings website CEO, uncertainties safe before CFO, that Hanson; forward-looking are or presentation, and are may we to plans, company's Today's found risks will related Brad that or open objectives and President Company outcomes the those statements, Private or remarks to anticipated be place sharing the discuss its questions. you Securities XXXX. contain not some harbor call may to from we which identified to today. and otherwise future subject call Meta today may Reform which generally statements made prepared of to for the provisions subsidiaries, as pursuant up statements operating currently be Litigation Vice

and and the XX-K further Commission. XX-Q most please see and recent affect other For the Exchange about factors forms Meta's its information with company's filed reports annual could that future Securities the on results, and filings quarterly

company future like Tyler other At result the over or subsidiaries, to of made. statements this to new time, forward-looking CEO, speak or or expressly events for statements update Forward-looking or as intent any would the date behalf they of only obligation a its of reason. on to Meta whether which turn call the disclaims I Haahr. any information, on changed are as any circumstances

Tyler Haahr

results, numerous everyone quarter season Thank clear acquisition proposed performance well strong a fiscal positive differentiated credit Crestmark Meta's prepaid successful services consumer and the earnings strong with and financial on including and Meta second to and our respect fiscal high-fee that and half with during platform We're XXXX. for second our largely businesses generation the you, with you and today's a quarter. us our thank our it's second pleased strong annuity-like Brittany, Meta's model, very services payments, and and joining growth tax to and complete, is continue to call. of with lending relationships financial national deliver banking community developments combined profitability in organic highly operations, positioned tax

to actively are our out and business in systems for and believe to plan initiatives to be our enhancements beyond. and next drivers investments we credit make for for existing earnings, to investments build business people XX meaningful significant Crestmark We the growth what making we And months in lines. groundwork to in our lay new additional the for prepare particularly will with line and platforms consumer XXXX

existing the and hope lines and beyond. next gain expect operating year do business our we in efficiencies However, over some to

defined by interest-free origination during measures season, business partners preview, with of tax you we across that contributions As the the tax $X results. season of October's the season. billion overall many more advance multiple quarter XXXX Meta's is we're second our than and fiscal In by our of loans anticipated know, pleased to refund tax

originated billion. a of we fact, total In $X.XX

same to business we when prior expected, be period experience transfer income than The comparing quarter higher with refund was quarter advance than slightly and year. the volumes XXXX income higher while pretax lower periods. than first of to for than year, timing the and year period the prior in Tax third XXXX to same the expect pretax the XXXX second came the was we Services year, fiscal refund of prior differences prior the fiscal fiscal better respect Although did quarter

team contribution to in further fiscal the remarks. Brad we our payments the of quarter, long-term newly third on Expanding million These pretax information to comments. performance larger credit and this to scale allow relationship on Network, March, AAA. and approximately in space, prepared earnings million $X than expected significantly his we team the leverage sheet $X payments us into strategic are provide we much programs. in to extended Corporation renewal performance consistency capitalize fiscal consumer today with Holdings with and XXXX. agreements through In expect our below entered agreement the CURO expected in We're in to which with Money will SCS XXXX we on to positive generate in and lending Although Health able overall plan elaborate leadership and margins proud his announced platform, and CURO, with consumer will balance to our is an further Services Group announced programs with be to our Corp. our announced longevity the have a relationship in kind Brad on January now higher to we achieve SCS historically. or Liberty a Lending, Credit were

few the this to programs to of take earnings potential the efficiencies to within take believe see divisions our acquisition scale update January. also We positive consumer and and to see to Bancorp profitable effect in expect Crestmark announced further a opportunity I income in from we XXXX, wanted growth We XXXX hold. even you one be in this years. expect has lending as greater most the on

We shareholder and and deal statement April to XX, filed proxy related close we customary to continue joint our prospectus to the and proposals. the On final transaction June related by XX, expect subject to approvals. regulatory

strategic staff access take Commercial lending legal Meta's low-cost can scheduled capital division. complementary on high we will there Tuesday, the May with believe to providing grow finance in will Meta and to to opportunities transformational National and business This while is for Our existing XX. we meeting place commercial existing Crestmark's platform, special potential new add opportunities Lending strategic for through higher cross-selling platform, insurance the Likewise, Crestmark's upside financial is Meta's By time. with loan external opportunities over merger Crestmark's provide with business lines premium lines, value. deposits, significant and to consider combining limits deal's both addition

the to been also Crestmark, funded We by manage believe which enhance of our historically continue wholesale has acquisition that considerable will fully for flexibility already balance Meta's sheet. deposits,

business to across We accommodate able expect lines. to revenue growth volumes and origination continued in our

the no need have the in foreseeable at to balance or selling our assets assets we some many growth should the While time very future, sheet we of saleable of for are Crestmark's of intention loans future. manage

activities the Business Crestmark with as to front credit Meta meet a together nicely. remains continue on opportunities and expected, work I'm continue merger, strong. at this both expansion. well the to closing teams pleased we Crestmark work quality Our integration efforts successful are progressing they to for and perform remain very Crestmark prepare shows for a enthused and and while activity, seamless as of about solid integration. pipeline expectations

over will stock Before would we to the Board careful attractive to model. confidence proposed Payments marketable I investors, believes split Board's and lending authorized indication amendment turn number stock additional more over of would provide of raising common proposal another businesses. the XXXX I'll turn amendment the to a Meta's and who common awareness stock outlook disclosed a to tax detail update the call equity for on to The to board consumer have After trading national consideration, our call is of of increase with Hanson, the of recent Meta's XXXX, stock. split our and broader Meta's on to stock stock the related on business now through Meta make accommodate shares group President, split. and Form Brad the charter of season, our employees' charter and our a our X-for-X common recently Brad, touch I S-X potential platform liquidity stock awards. proposal -- like an the our common made the our filing the SEC we increasing shares proposed in our

Bradley Hanson

tax we above the execution this company with the have the season. tax quality we If million to ongoing if loan refund Meta one business U.S. Tyler. preparation Thank originated honored We're a the country, XXXX dedication To relationship pleased relationship with partners our in the Starting without October include season. total one approximately with in do XXXX volume from the participation originations largest past you, match been year's the last to of expectations and team in would Block, fiscal the billion the -- the our tax we this originations. XXXX, is $XXX to of year. from we programs, line partners our of our these with able team from loans $X.XX exclude exceptional and increased have a during we testament this XXXX of support H&R and advance of be our shared the last

Originations which tax tax XX% saw $X.XX loans to in were previously loan by what bolstered advance addition billion a in higher-average season. we doubling we more over originating also season. prior XXXX our size advance average loans executed balance than we to the retained on these increase all announced in retain In sizes, our of nearly refund plan loan on this refund sheet, year,

refund Turning transfers. to

compression partners more performing provider fiscal the original a under expect we of to transfer margin by during in XXXX. million season. the even was associated shift $X.X quarter, loan with the expect than we of last year. and fiscal second $X.X would timing expect refund total slightly and mainly the quarter, We to and from and pretax million average to in advance income in to slower of advance compares year-over-year expected to be volume a and continue of volumes been advances repayment compressed through refund quarter issues, expected. due higher to the third tax net coming than the we mix tax Accordingly, transfer XXXX with margin mix refund a slightly a the service This which to IRS. This experienced statistics. refund transfers finish XXXX, and compression same our refund increase caused end comparing see as approximately on issue is This Compared pricing; the to margin size slight revenue others last expectations; process third specifically, better in some of period in have contributions, better year's timing

overall Although third the below approximately performance to we quarter, million $X in to expected positive XXXX in fiscal XXXX. performance pretax earnings our is in $X expect be million contribution the

anticipate tax more reasonable. tax continued to XX% we update, refund potential of ahead efficiencies we to March additional season synergies tax as EPS incorporating to noted relationships up growth to off on we is our our the advantage, X XXXX, believe have next year's based are continue Looking to growth existing and believe fiscal for And in Initiatives and in we related between been kicked gain. our there already season. divisions

We today are with is for momentum multiyear our infrastructure believe place collaborative tax to growth us and privileged great enable to to partners, continue relationships objectives XXXX. achieve enjoy and organic season our we the in

outstanding to secure partners continue our multiyear We division. Payments in agreements with

our of XX-year We're Money and strong announced we're announce had for where also expanded to worked this lending innovative expand we incorporating be as a Money AAA, distribution a we mentioned, X-year renewal payments Tyler relationship Consumer happy As to proud MetaBank strong of and order have well products years, quarter. the additional and features. product Network products. be relationship extend able relationship together in provide as with XX Network. enhancements the partnering payment with to an today to to will

agreements During Liberty the Lending and vision for diversified which financial in two inclusion new announced healthcare such our everyone, to services. markets, financial support we as continue quarter, of

we entered In addition, we're pleased with CURO. that agreement an today have into to announce

have while medical Our cost and the gain with a with borrowing, opportunity the pilot innovative flexible helps product. country CURO with ability those launch of will with expected they is Lending healthcare to and expenses. with year. medical later need debt will while provide settlement, providing to the consumers services This access they responsibly through need, this line agreement procedures product to our manage credit of patients help consumers easily their throughout Likewise, agreement access to Liberty them credit healthcare an control with the to

$XXX,XXX start-up years, of agreements the periods. costs, returns, expect investment X% in to estimates higher each compensation As loan which X% to net management of With of has to always three and require ramp-up of first cost new to for require programs. start-up are in been net credit losses. initial durations we X pretax new yield between million legal and provisioning $X the expense the case, generate programs loss primarily fiscal announced future Accordingly, expect approximately of during XXXX the upfront and Meta's X

a over significant our credit profitable volume originations consumer grow of manner. plan we and to products expect in also time, and We controlled

will visibility However, good up. how we ramp currently don't have volumes these into fast

leveraging of more consumer the Given earnings pipeline, programs to anticipate cycles benefits as these disciplined be Services the origination as to business. loan and our structuring. and beyond. to management group, of the platform, more economic XXXX we there credit are risk lending in these to exhibited loan material grow leadership lending continue are able products, we opportunities as we in talent Specialty By channels consumer of practice its Consumer Though of national growth and decision our prudent consumer well science we develop originations with and

of brief to like consolidated turn call Now Herrick, over the review like a CFO, I'd to financials. Glen our provide to our to

Glen Herrick

income prior the $XX.X Earnings was everyone. to period touch Net to afternoon, second per quarter good decrease highlights we'd other ask for million. XXXX. review you fiscal few as $XX.X note $X.XX We million of quarter reflects another year a and and results. compared good a I'll you, Thank from on and delivered the our financial you briefly quarter, of the $X.XX items of Brad, share

growth the included increase to one payout on holding disclosed our billion and synergy quarter's high from tax XX, sale growth while The credit year. by income. in $XX.X million purchases to growth results in $X.X in net portfolio loan income XX% and loss expenses the acquisition-related severance March organic related that portfolio quarter growth, XXXX, investments. offset XX% previously with million student was of $XXX,XXX of the a net at wholesale million loans contributed net supported reflected some our $X.X loan loans last year our costs our second interest tax investment interest Importantly, period of the quality XXXX, more prior. $X.X Net of this Total division; funded of income in interest of deposits over quarter; same efforts of

Excluding portfolio, advance which XX% in driven $XX XX% commercial agricultural year-over-year. of which our even we purchased community loan with by insurance And portfolio, loans, premium was the reduction student finance part our growth refund real year-over-year, growth grew loan by large and loans. estate, million portfolios bank net delivered driven in expanded in commercial up year-over-year, of XX%

a transferred the continue $X.X pace even metrics maintained grow in double-digit quality our and assets strong. to executed fiscal assets second risk our our have nonperforming points ag repossessed relationship of the disclosed January Importantly, management real XXXX, XX primarily foreclosure the quarter the and of in has we represented underwriting Nonperforming billion remain asset estate discipline was as we at a at previously basis lieu loans Outstanding which end high in deed for loan and NPAs are just Meta's of total on collateral foreclosed of collateral XXXX. been to related assets. to and

from totaled XX, primarily quarter. total is XXXX, loans relationship. and loan $XX.X receive million this Provision the The was all our volume in of balance $XX.X note At to this related service just an driven reserve $XX.X tax assets. million, agricultural loans, second representing provision totaled related sheet of by all-tax expenses X.X% expense expense interest tax expect We million retaining principal, to season. which outcome an on March

funding. to Turning

XXXX Meta's average in of second cost as financial basis overnight the At wholesale same remains well of was our average quarter. to funding for XX funds sized largely the higher rates, comparably of season. increased institutions. points increased well balances to time, Our borrowing below the due tax as overall use increase funds average and to This cost support deposits

deposit the a space, growing a core banking low-cost base in rate in particularly as our differentiator We continue rising to environment. view

X.XX% improved recent deposits yields of margin adoption the the cost income important quarter. XX and our points point the Our Meta's It's was of our points We programs, excluding for and tax with was year-ago wholesale margin quarter, by cyclical second which to quarter. and adjusted growth, deposits, refund was of of basis noninterest during quarter two investor X impact is contributor quarter also remember, equivalent to On interest a when highest income product impact points the Tax $XX.X X quarterly having instead, revenue from Tax basis and quarter seasonal for basis that tax fiscal for given the tax at of fiscal year-over-year presentation, XXXX these second levels to million. their partners, net grew we net due for value-add services who and the Cuts noninterest second previous quarter X.X% income tax NIM the from loan down refund business been loans the basis negative our fees as while tax and the which each the loans of interest normalized certain interest a particularly items, to services by not the the metafinancialgroup.com, a just reported interest result Jobs the X% them We the the in have offer rate Act. as to fiscal that of to estimate XX quarter, transfer fiscal advance would primary net which collect in advance These on reflects margin. benefit assets show available and noninterest year. to loans. drive second funding X.XX%, for corresponding a the our refund contributions do Slide between a when income, clients. advance we fee generate wholesale refund loan programs income, from adjusting associated

lending further revenue decrease to However, in company ended with less compared This XX, is significantly years X% up million is and this to to months period three $XXX.X Crestmark and year. the March prior the same total consumer the prior the our year, expected seasonality agreements. in grew than

attract commitment financial results partially providing who and performance-driven incentives. based on these is a our focus. proud diverse talent Beyond compensated Meta, team exceptional an to customer-centric We're producers. solutions with of individuals top to our share is team And to products

prior initiatives flat our our FTEs the XXX as to true expense and the factors, XX, expense our for reflecting previously accruals. result, increase is existing separation or of an in the as bonus increase business the expenses consumer the a agreement a discussed by marked the our in compared to XX% higher total count, the increase rollout the in total overall of As with growth cost, at of a to the Despite insight combined total period employees, Crestmark March business well. and relatively our an overall in from compared XX% XXXX, and primarily same lines. net is compensation in seasonality the discipline employees These investment expense year, in benefits our saw support increase management we holds our of quarter increase linked as the cost to provide of last of recent To increase merger, and related second this, quarter FTE And XXX year-over-year. lending noninterest to deeper merger second for the resulted quarter The remain XX compensation quarter to well national overall. year. headcount

believe further our program leverage of acquisition currently which creating on regulatory And is we before potential Overall, completed. different forward. to points which is operating and We businesses expect are noninterest even of to cycles. positioned any Crestmark acquisition, pleased incur a and back to well conversation operating shareholder and for product in together, remain closing up With all we positive or between evaluation update of different intangible focused will accelerating also However, amortization it maturity positive we illustrates at open we our inherently $XX at I'll expense questions. the initiatives. and operating million excluding significant for the strong for going subject in fiscal in that estimated new Each that, We to total each quarterly flat, and more model, the efficiencies. our is analysis these their with XXXX, businesses, leverage life opportunities provide after million proposed an see are do approval. to attributable future $X comments, are so financial results for performance continue particularly very XXXX Tyler, turn Putting leverage, delivering in expense, them has XXXX. also we

Tyler Haahr

Brad for and comments Glen thank their participation to like and today. I'd

financial you'll investments growing second the and our results getting future and quarter, see in for initiatives. significant business growth contributions lines we're same the strong from at making As all time for

our on Operator, address cylinders and deal, most ahead and spent all firing We're we continue on businesses have well. are questions Crestmark other line opportunities strong payments operations. please of any our this on to futures That happy may our have tax our afternoon you open While pending time to questions. prepared the and completes for up remarks. as those

Operator

Instructions]. our from question the comes of first [Operator Perito with line Michael And KBW.

Michael Perito

couple pretax questions. what a guys you of seems reading the believe initial correctly, curious main But -- will expectations flat just what put $X your to now kind in Had, One, $X I guys back pretax to tax changed curious, the out. at guess, roughly it I'm you season? said expected year-on-year. of change I'm million year-on-year. -- it that relative release million press looking that of tax income the it the was overall And and are like I lower drivers earlier what be if income, I to

Tyler Haahr

could a what that between to season out talked will expected be than we little as We be the after-tax we Brad soon and it mix bit the the little Yes. higher start. lower as well. to has at loan guidance led as expectation get about different volumes a try to

Michael Perito

overall follow-up Okay. base. just the And my on expense

refund expenses, $XX not $XX of million. advance transfer about or if out which recur million back but quarterly tax annually, So tax-related you the

But growth like a color I was And expense that Where the we're guess, lot line you back perspective. the I'm ex I how that have if kind of through little you that you to in at the higher there what thinking the helpful done? it number least from million significant gets numbers, think, And just mean, run over much And It I lot qualitative I tax it's sounds coming curious, a does personally. future looking to year? $XX than is expect is guys dollars of $XX fiscal still was the investments. investments million trend a like quarters? expense flow of a half rate. for of

Glen Herrick

this is are to with of Mike, for the Glen. call We to $XXX,XXX million, some start-up those tried the programs. $X and loan hard that costs

we announced the X development. And up staff up these ramping There of quarter. those that underwriting, in to so have is we product as loans, been in additional and origination expenses of ramp outside service staff,

and amount And so part for that you higher you're it on up. be There at get a we business, be should once fixed have that cost up if support ramp running some looking the a programs be will investments and loans fast get will loan depend variable, of primarily, more while. cost, once loan how -- expect, will the lot What and fixed these staffing will cost a to the up expenses in legacy them, certainly is, running. then of but programs

Tyler Haahr

we program the about per amount Yes. That's why talked too.

us okay, can revenue again, announced. if expect. this consumer forward. going is is in The probably know to, And you the to you cost announce then So credit you see going it's what that associated be quarter relate again, to that we say, additional now relationships,

Michael Perito

of the then where, were right this and but ratios in now north is I that [indiscernible] guidance don't on are don't -- I efficiency that investments know or? give but metric, point are in obviously, in reasonable about quarter, probably Okay. is think with mean, where a range. Is the of we of low say, the a much if fiscal you the it -- XX% fourth second, which and like the it you commenting, guys know third first, XX% guys lower fair kind nets really you're I at the to to mean, you I are you comfortable way terms into

Glen Herrick

some of of But the right ramp need the programs way how timing or of thinking the these about to a you're those for up, ramp That's make programs. up Yes. way. it need fast and reasonable caveat we to investments with

Operator

of comes question the O'Neill. Frank line Sandler from next with our And Schiraldi

Frank Schiraldi

expenses, of much follow on million you've rate additive versus run quarter $X sort March and to Just in to on the of March guess, how I X, kind agreement. And comments the up want per right? June much Brad's the So quarter? to would $XXX how done of quarter? is in be million

Glen Herrick

tenet Frank, -- this since in those this assume of have been anything looking this good to at we're where the and others, yet. where you amounts spent haven't in announced We're we quarter. to Those makes going sense have is -- not it extent that was three to that so we're and announced, Glen. do X, recent find trying these can the phase most partners. And we quarter,

existing number hired of really I that employees last quarter we no we'll would compensation growing. expense add that XXX There businesses adds period. year-ago have our the the have both been think either staff months over acquisitions or were But close another good last we to in XX have that been look way a when obviously, that when increased XXX-some to look to where and the the is some support staffing, net run prior is year at since Crestmark. rate

a happening You properly. as in to consumer as our national premium saw what's do Bank loan and those business Community to up and lending then it do and to staff finance rates growth our business, well

Tyler Haahr

mean, traded. I example, been billion, $X Crestmark, not publicly under Right. for has

there. the perfectly for as preparing we have publicly large much traded, the they -- that talk the of think cetera, generate and of closed, haven't be et because for been to So growth time, -- larger future think we we while hasn't we But were, bank, well. were can we there they'll Crestmark controls, also and come the their of a with respect we all we same been that efficiencies out gain any that's able procedures, organization can deal to at that as obviously, the appropriate about, spending money out did

some too. that hope I So helps

Bradley Hanson

largely been experiencing any previously in that please? might deals I ones CURO and that incurred May developed later we'll be quarter. related year, X announce one And so and clarification, still launched one. was be new make expense we announced announced this just to The have consumer loan will this later. some

Frank Schiraldi

Right.

Okay. the But of quarterly And that start-up $X guys kind about expense? in costs, increase when stays with you what, you? in immediate to million that's just $XXX,XXX talk

Glen Herrick

Yes. No.

call Lot outside validations, trying Okay. the more program, need investment platforms we're cost. health. for That legal platforms those or that out direct to and additional we consulting development, onetime of particular

cost ongoing such The headcount cost. headcount-related will as those equipment occupancy and really costs, part onetime by direct hard So to building be and large support an in staff. driven

Frank Schiraldi

trying get a about comp down trying $X sense I'm where get the obviously, season. the sense comp I'm year a to of, had if of of before at you to Okay. of in June March comp I just closes. quarter, look line think last XXXX June quarter, the from decrease million in after big kind in just of to migrate costs a tax or XX% Crestmark even should you to,

Glen Herrick

in this over last of that. disclosed will year the expenses be permanent haven't compensation Certainly comp year We elevated some adds.

Tyler Haahr

incentive quarter, of in our things One that as percentage incentive compensation as compensation of quarter moving would higher would to too a comp a comp percentage and in incentive-based of more we're income recognized -- well. expense coming recognized second other the our be second the in more with the higher be of

Frank Schiraldi

Right.

Okay.

quarter? the of the amount So in -- that second in seasonal there's comp probably still comp quarter an second elevated

Glen Herrick

would expect, down that comp come would of depending quarter. this quarter Crestmark, when next the excluding expect to We from on we closes, timing Yes.

Frank Schiraldi

Okay.

wise? you would a year Okay. But saw stepdown you whether that see we last of in can't terms percentage similar say

Tyler Haahr

No.

Frank Schiraldi

in on think are coming businesses, I on obviously, And we where some at if bank that there? growth. on, the your then strong bit is of down significant Insurance just are was and those just are follow-up going slow any Crestmark was, that be you normalized look obviously, there's of But growth. And growth drivers quarter-over-quarter, quite wondering here? to grow Okay. it thoughts like the the thinner. loan and sort a loan a Premium just Finance things where been Or Year-over-year community got basis the if should

Tyler Haahr

Well, one reminder too.

loan in was a that was $XX-ish ag that As of XX, as million loan. December still

the So the out came that bank. growth or in of that's $XX benefactor retail loan of million essence

XX% So and then in at figures retail bank basically you're round at the XX%.

that last, loan number what has about the REO. the last at been the moving one frankly, well. least, excluding Again, to quarter it in is as ag So

Glen Herrick

a in lot opportunities Community lending see those in Finance. Bank and both the Premium We of

will same very pleased rate, that we're both Now with businesses. it we of the the stay at we the becomes see know. in pipeline But don't denominator larger. those Obviously,

Tyler Haahr

tripled now three bank premium it's between been years it's in finance been XX% little the years -- more And than And the had probably that we've and three Yes. again, XX%. five the over it. AFS, business that for community we've

lower, seasonality. And one's a so, and little a higher, loan again, we've consistently bit little talked little of and growth the little about of for there's There's but lot been one's a they've fact, a robust -- years. a strong

Glen Herrick

XX% added come to lending initiatives the we as the And to expect support would down growth Frank, the we've answer to one Delta drop just the Crestmark. the at follow-up being you saw looking clarify -- to all way question, year. not for our but probably consumer comp well as more Again, quarter, them QX, the your expenses, staffing for on third prepare last to that that from that specifically the at

Operator

Steve And our line with Instructions]. from question next [Operator the B. comes of Moss Riley.

Stephen Moss

loan growth here. on up following Just

forth? should with fiscal in Crestmark around kind acquisition Crestmark and of all where of at factoring the year XXXX so look for we the initiatives, be thoughts where loan your are XXXX and As growth

Tyler Haahr

Yes.

every with at that on looked XX% grown like based the the faster about being X.X They've that's the with number you that integration again, the, exactly XX% again, the in respect five dilution of we as was for community But, consistent with And round going the there's the we be quarter what's growth seen community XX in to don't talked bank. provided where on solid a or And figures. the out and there's -- and the think think we've whether and bank, Again, they're again, the there and and like putting know payback at we things than XX% were we seen what comfortable numbers had growth the upside we'll are. just years and not. that been AFS, Well, we and loan the out we past. AFS positive growth year opportunities If it's that, Crestmark. between XX stays I for else again, there see past. opportunities to they the do we've everything opportunity that XX%, to earnback see been continue

Stephen Moss

to today's color environment. purchases then yields as here new are a money in just investment securities where rate today. And on Okay. little Give

Tyler Haahr

rates Obviously, in opportunities. up, are going there above tax yields We're X% we're equivalent buying. things higher seeing Yes. with

the we go things talked the a you for growth year, that. and about margin and If like roughly back opportunity

basis portfolio XX you If up the from last points XX mortgage-backed securities yields points. it portfolio, look the quarter. the was securities basis was on up at The

tax one lower the even securities. type talked again, as buying, baskets upside about was is of does mortgaged-backed there's up a of a the But, move things and we've see -- go. or the we with again, securities ceiling have even -- [indiscernible] about quarter and overall because we're can though variable fixed-rate with of it a prepayment yields two rates, low over portfolio the obviously, the including to for with how because growth, seeing So continue higher yields of different last rates it potential subject that of number even to the speeds year started rate on because different higher more ago, opportunity are both

chart you -- was you again, you see look at XX you that yields. before, see So on referenced higher the look if if on loan Page

in LIBOR. that quasi-variable were again, Some that that student loans relates loans the as, what tied AFS seeing we the we're to portfolio the to bought of also XX-day --

going also benefit but good the quasi-variable much well on again, see to quickly rate of portfolio. again, as starting Securities you're quarter all more So those the loans, rates up, increases on last

Operator

comes with And the James. next line Raymond of from Daniel Cardenas our question

Daniel Cardenas

the Or expectations? Could it a color much perform did provide of loss the business? with terms a pretty in did Was for little line ago? that in of rates refund you tax bit it year better than

Glen Herrick

Yes.

So with in line it expectations. been far, has

not said, disclosed have numbers. We million That provisioned quarter. rate this $XX.X we loss specific

mixing market this their But years, what to in throughout Our to we together, as want that from of that very customer of they Really, well benefit continue of all perform see as programs rates be. continue pertains well. rates, to this SCS models base, tax those to a their has for very partners depending our in it sizes season. the what demographics the as really had have loss on want loan the are history that where different number they to and goals be approval different

Bradley Hanson

rates, loans, be with it's and of Glen loss to partners think I businesses. to little the rates with pricing the the approval bit more to accommodate just by associated important desired aggressive what want those pricing and in some the various stress mentioned so rates we build fees commensurate to that the with approval the are that be different that a will

Daniel Cardenas

the Okay. as I'm Crestmark, return for kind Good. margin in of XXX-ish that does kind mean, level? Good. XQ, of then margin about your to And thinking your excluding core I that's

Tyler Haahr

XXX the would quarter been you well expectation. reasonable as at again, and advances refund associated we XXX have this I -- borrowing, advances to think that as Yes. That's exclude Again, a if the the saw Crestmark, our to as upside up as credit the we'll like some take that And is we're just consumer that closes, opportunities as this making that well quarter. margin once there well. we loans higher

Daniel Cardenas

half I the that last rate. How be for about one tax just then here regarding year? should And question Okay. the of thinking second

Glen Herrick

for out, XX% as It came remaining the we quarters. disclosed should be Dan, the Act the when Tax

Operator

the next our Sandler Frank O'Neill. Schiraldi with question of line comes And from

Frank Schiraldi

I a on just had follow-up business. tax

And next but the talked back get I of get wondered if some refunds Is guys from yet? would reversal about a provisioning pretax you refunds get come could more didn't some You -- people, just where that being income higher quarter in? that you year-over-year. as

Glen Herrick

that expect would primary refund transfer. we The quarter to third see in the carryover is

from processing, was products the of and the April. Frank, material, allowance at over higher primary flowed than it be given remainder in with today, same we're will be on in tax IRS the point. know the refund expectations, we ago. There but season, some know this payment for our be So don't quarter a But the those period delays we what that to of expecting true-ups third into not March throughout this the year will of based income transfers

Frank Schiraldi

And as you transfer if would I revenues just the of business at million last be look year, expect that well? $X.X I higher will in refund guess, the revenues

Glen Herrick

in refund transfer Correct, the income. fee

Frank Schiraldi

higher $X variance there that? doing to Or of is year. right? I'm math last mean, backing million Am I Okay. than just kind $X into million I my from

Glen Herrick

higher We year. be haven't bit on than given that. It a guidance little last will

Frank Schiraldi

guidance you okay. just but Okay. for you give guys I it to just into was trying mean, I about revenues, talk income. break

Operator

that And call now Haahr. I will to concludes session. turn question-and-answer back Tyler the CEO, the

Tyler Haahr

for I'd a great highly pleasure you. payments, participating of platform like model, tax our Financial's community you evening. national by our your investor you differentiated update hope Thank and to appreciate banking all have quarterly Meta's Meta services services annuity-like call. including close attention, on in thanking you high business to and It's financial with our We lending Thank and and and and interest combined operations. fee-generation you.

Operator

for participating conclude today's does gentlemen, day. have and conference. a the may program, thank wonderful you all in and Ladies you This Everyone, disconnect.

Pathward Financial (CASH) 30 Apr 182018 Q2 Earnings call transcript