CASH - Earnings call transcript Q4 2018 | Pathward Financial, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Meta Financial Group Fourth Quarter and Fiscal Year 2018 Investor Conference Call.

During the presentation, all participants will be in a listen-only mode.

Following the prepared remarks, we will conduct a question-and-answer session.

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

Brittany Elsasser

Thank you, fourth to earlier our year and welcome September this financial to and ended results discuss afternoon. webcast for XXXX, the XX, quarter fiscal Meta's and released conference call

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

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

for statements behalf new a other whether any expressly reason. its or update they as of are or Forward-looking to the any information, future on as Meta on date company forward-looking obligation or only which events circumstances, of statements speak any intent changed result disclaims of the subsidiaries, made.

over the and company forward earnings a conference in that share At this time, reflect stock during recently adjusted like to three-for-one share to Chairman, all release and data been As our the Tyler split I note, would to has Haahr. call this per reported affected. call turn

Tyler Haahr

Brittany, and joining everyone for call. you, Thank to thank you today's

over would the into our fourth I afternoon. touch to Before record like briefly I XXXX, quarter Brad results announcement the to for and we fiscal made on turn it for leadership this get to

take story our XX platform, years. for financial lead As take immediately. MetaBank our the January the inclusion press and saw the for work care President you value in this release, Board our Chief its more to privilege place has the be XXXX. shareholders. I'm in board part strengthen that shareholders of I annual growth been advance Brad our of Chairman done Systems, and vision employees XX remain additional and of everyone Payment Financial will Meta to our great of company meeting Officer diversify extremely It’s appointed for customers, and through expect proud for role to effective have and of Group, deliver to Meta Executive Hanson, years of we current of our our a than good of

to the I under I'm continuing strategic will will I, Brad of With proven to Brad services transition the forward Brad. smooth to year has Chairman over call I work initiatives. come. a I'm leadership. new the of that as to continue completion leader executing to the Brad’s as conclusion acquisition, for fiscal that to the is my with financial has and transformative to in to succeed confident He's the in look time Crestmark ensure Following now and transition board delighted right our determined CEO. drive industry me Meta leadership in and decades elected along instrumental been the a board, to the with that, turn role

Brad Hanson

Meta have entire the the given honor of for to behalf to On Thanks an this a contributions your company. many would team, to It’s our Tyler. like been Meta service again. I role. you, gratitude opportunity and express Thank lead new in to

will our President, on recent continuing I As growth CEO momentum. and on build to accomplishments focus and

platform and talented I strong we poised ahead. XXXX deliver fourth years is our the shareholders for Meta to our and value our results evident and in Given team, the today. announced believe quarter years strength of The in fiscal is significant platform

million, pleased up fiscal We even non-recurring fiscal such XXXX expenses the generated prior of earnings results very report strong are year XX% with the acquisition to very significant which record expenses. over as Crestmark $XX.X

earnings touch to on in XX% million fourth and XXXX items meaningful diluted report fiscal quarter, also the or that share we're his remarks. per $X.X For impacted results of will pleased Glen our

fourth the enhanced acquisition the profitability growth. to company, fiscal revenue we of the for are and deliver and priorities efforts other Crestmark growth. the throughout Due reflect of Bancorp and quarter to executing work results Our and profitable drive year our diligent strategies to on our strategic employees successfully

core continues record strategies risk solid and of XXXX performance resulted client Our for around and and around discipline in year. reflect remains earnings which and underwriting strong revenues to acquisition success core our the management fiscal

growing factoring, the well a to XX, base. benefiting great are integration two-fold fully commercial as further of funding lending growth USDA utilize $X.X sheet recent and company in addition and of the at of Crestmark in Crestmark low growth SBA through XXXX, now asset balance the our over initiatives as lending. acquisition on fiscal more financing and dramatic during our the the leases. quarter organic leasing and look a which successful equipment are base scale We reach and and loans gross and cost optimize These activities, to opportunity of for than grew expanding on billion impact more fiscal $X.X loans lending, leases the has Reflecting September we XXXX from of national as providing billion

the to fiscal and year, over grew increase the non-interest $XXX.X year. deposits grew over million average. over average million income Our prior or up of fiscal year an to division fiscal million, up interest income $X.XX over X% X% $XX.X prior grew prior payments $XXX.X billion, or XX% fiscal the Net

securities fiscal sale $XX for current year-over-year. the million income quarters, of the losses Excluding nearly or XX% prior and non-interest grew on

Our closed and on we payments increasing base. opportunities cost benefited and net deposits tax quarter, see growth XXX the our year. and are to increased X.XX%, the coordination to earning and an basis strategies fourth equivalent with points low a continued engagement asset and low fourth Crestmark the fourth focused results a fiscal over deposit pleased the improved fourth quarter and only quarter, mix. on Since of continuing we two on quarter interest the Crestmark August In ahead, months And are increase from as division looking reflect the advantageous quarter. a XXXX benefit to increased prior support of that basis will points other remains we our linked for partner company's acquisition evaluate large basis. of our Xst, over lending cost long-term Crestmark the fiscal of basis in client margin our growth In the year the XXX result, acquisition prior acquisition the

in into fiscal interest increases of further expect margin first we current XXXX. our So net quarter

Lending in consumer initiatives, we the see quarter. in new national and fourth Liberty were lending SCS from million the our loan $XX programs to origination activity Regarding pleased

mitigating business. fiscal value quarter. for CURO with loan our platform The drive have as a and year fiscal product and partners XXXX, year, our feel consumer return be of preparing the first generating its and we needs platform, moving to needed with tax service of effects of create been risks, XXXX we're in to consumer our we that prepare science ROE overall our in a building scale partners unwavering was programs and our Overall, confident fiscal to Meta's prudently the activity the actively experience We needs solid risks anticipate expected prepared while credit maintaining XX.XX%. credit partners are and along have clients balance expect are and while X.XX%, in fiscal process customer operational and managing come. we tax we time, the pilot and underwriting, XXXX consumers. a and provided better We're that continue commitment to also XXXX the to the to of for Adjusting efforts address what launch decision on ROA earnings consolidation diligently our for equity our compliance, our X.XX% average assets months the We is and to appropriate the expenses other our same portfolio, to address on capacity average earnings program national season. for sophisticated lending believe and capabilities, return to At acquisition help of in and working for we was in XX.XX%. and improvements merger partners was tax

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

Glen Herrick

everyone. the per share. GAAP fourth quarter, $X.X or a you, million we income $X.XX Thank of net basis, good afternoon Brad On diluted for fiscal and reported XXXX

opportunity Investor will GAAP in details of on we In included and we are You earnings. quarter securities that took rate advantage our a of securities and Crestmark the current the loan to growth sale loss portfolio take to on our Presentation, note notice quarter, fourth environment. items of Slide acquisition the earnings our on from for the primarily the have X selected $X release million reposition of fourth fund in

benefit an feel considering methods are Crestmark fourth included to shareholder advantage our optimize market suited favorable prospects over sheet million quarter long-term, also for amended to tax the continue prior-year we best return. of the tax nimble in will from while by utilize We Earnings Meta where opportunities. returns $X.X take to staying the of balance

to operational the in addition, totaled acquisition-related $X.X support In charges aforementioned fourth totaled synergies quarter. expenses fiscal expense million areas million, and related division direct tax in and the while $X.X merger the

which are and timing meet and from expected GAAP addition, $X company's that to quarter. to period, earnings the net income those and tax fourth but period the impact return. intend for are of and maximize experienced benefit evaluating, opportunities shareholder for processes Meta opportunities income to the alternative to The return credits the to underwriting, the source tax undertake credit tax tax managing acquisition, net acquired an million Through vary which sophisticated manage be utilize underwriting only investment in Meta approximately alternative contributed and of and includes to we an energy expense energy team income to In of criteria. Crestmark credits to intends ongoing expected company

the fiscal to tax For XXXX year. our X% the XX.X% was for year, effective fiscal compared XXXX rate

$XXX year, rates earnings we Looking our fiscal impact expectation is to grew the teens years receivable favorable the in XX% during in loans high-single-digits loans recent net million reflected during fiscal total and million and leases, This of lower XXXX. fiscal XX% lease company's including for loans XXXX excluding or or credits. and effective Crestmark tax XXXX. investment ahead tax $XXX XXXX anticipate Community outlook the the fiscal XXXX. range When to increased to banking

by $XX credit products by loan Within warehouse consumer the lending finance loans million finance line driven consumer and the portfolio. The largely launch of national credit growth. increased million loan-based portfolios, premium loan insurance commercial finance driven portfolio commercial increased $XXX of consumer primarily student the and

As business longer-term, national to look loan portfolios majority garner the commercial and of our expect lines we we total and finance lease Meta's portfolio. of

other funding. time, The allow supported deposit sources. to certificates the balance Over CDs XXX average these growing acquisition historically certificates advantage and of which over time. to reflects expect cost to In cost fourth we Meta's of points to meantime, runoff take in profitable the Crestmark wholesale deposits basis low loan sheet fully very growth the its Turning recent with higher roll-off which obviously reflecting of of increased cost more funding Meta's of fiscal will funds base. funding quarter the

quarter the XX when just was and points was during wholesale deposits of cost points excluding XX basis basis Our deposit.

the XXXX. in two the growth net the the for expect in to of As Meta's quarter basis basis We of fiscal million the Crestmark tax accretion losses services $X and September of quarter which purchase XXXX XXXX a lease first was assets tax acquisition provision interest XXX basis XXXX activity loan saw was on tax in $X.X see quarter. net on was yields lease remain loan division. fourth total a than $XX.X million the the XX related Brad related higher the include the to from and less fourth points to of million total, accounting quarter at margin off Crestmark third further primarily fourth uptick assets of million to was loans and X.XX% improving due interest XXXX Meta's have just months books. Currently, equivalent by net Crestmark activity. fiscal of loan from our mentioned, months Net additional Meta's fiscal quarter. left we points represented advances margin leases will current basis loans. fourth In Charge-off in from strong. three contributed full next quarter XX, $X and to XX which charging metrics Non-performing points

a primarily equipment operating outstanding favorably Fourth Crestmark $X.X lease relationship addition, In line Meta. wind-down excluding costs the line the lower was fee declined full-year a has the foreclosed income year-over-year finance income quarter. in reflecting two the are calendar addition primarily hires fourth expense we to million two well just equipment costs the a of support how continued This million previously by in as million business. with non-interest which year. fiscal for the over Crestmark compensation related Meta's fee XXXX fees to and we we've discussed rate to rental The important of expect resolve. period and transition increase run fee before. national the that million in estate payments revenue make quarter $XX.X of partners I’ll somewhat fee end real other Crestmark last merger-related income item which in of Total operational the discussed of loan another two lending efficiency. initiatives of balance months rental depreciation to reflects the repossessed non-performing be which million that of driving $X.X was further as with non-strategic related relationship business includes XXXX $X.X in assets card finance for XXXX fourth agricultural $XX.X million benefits $XX.X to Crestmark's expense expansions. our of division card is employees, quarterly quarter and was note deposit our residual you in months in XXXX from fiscal line quarter totaled will million from compared example expectations. which the progress Non-interest income with year XXXX Meta totaled equipment for $XX year-over-year diversity of reduction fourth for this by company's and acquisition same offset enhances and income and

synergies to continued expense as of the and we quarter, our and fourth result, business incurred some the charges evaluate in company related consolidation the During operations a tax to systems in the costs expect one guidance those earn support approximately note, and gains year, to in and the areas. division tax other captured We efficiency of provided do those were back of within earnings recently.

effectively provide support to customers, platform serve the stable more and We expect opportunities. a to better growth business, our long-term tax manage

Even as increased initiatives balance we around discipline we to invest expense with in management. these future intend non-interest growth,

expect and in to fiscal degree fiscal operating accelerating XXXX. for in continue XXXX greater We a leverage opportunities to

XXXX. earnings turning discuss the for Before to back to I call disclosed outlook want previously XXXX our per fiscal and Brad, share

incur share. to cost, executive For executive continue transition up fiscal year $X.XX agreement cost expect ending range transition of per $X.XX XXXX, quarter earnings share which per of full-year to a XXXX. we expected company of per to in share per share. anticipate share range GAAP excluding to XX, This XXXX per the $X.XX currently the We reduce the we March to to $X.XX an is earnings effects the estimate share per to $X.XX related to

anticipate fiscal range For $X.XX. per to continue share an of to $X.XX XXXX, earnings we

split. stock for With for questions. outlook we any forward the that, reflects recent call your one EPS before over our take to back Brad turn three comments Our I'll closing

Brad Hanson

Thanks, Glen.

management. we model; of and suite be of concludes line growth differentiated continues open remain Glen Operator, rigorous their advantage diversified from for all full Meta our programs and risk and discipline questions. hope at underwriting That focused and talented sheet; services. our our implementing I take profitable as generating around questions. businesses, partners, on Meta's balance and and including I of any business fee for the any available products As professionals comments to this management expense maintaining will please for learned deliver you remarks. our expanding teams the afternoon, Crestmark innovative prepared

Operator

[Operator you. Thank Instructions].

Riley question from Steve comes with first Our FBR. Moss B.

Your line is open.

Steve Moss

funding you start-off balance want and of versus mentioned by about to XXXX wholesale sheet it, Good fund balance end think deposits how I your should sheet the the guys afternoon. fiscal growth the loan and terms of borrowings in we of on to just CDs? securities the

Glen Herrick

is Glen. Steve, Hi this

We now return that expect might uses se business, balance this effort haven't put again we But set more that have point. commercial per for at higher grow the and now sheet those to have us high that targets deposits. return to loans, Crestmark we with we want low to generate growing deposits risk into you ability finance

today to and growth forward. core balance and balance wholesale to low accelerate the going using hope cost sheet deposit we're So grow

Steve Moss

And terms two Okay. to could that us moving rate just to a color with more you for of the in quarter? or wondering here on what Crestmark expect fourth months run pieces lot if into as month little quarter here, one the given of in came a expenses give a basis

Glen Herrick

say said, reports line-by-line not run you was I to guidance months. a expenses if Crestmark We their months XXXX we providing two for rate be we'll said, so company, that amount $XX near roughly there of revert is to quarter would variable run so rate back had guidance three fair have in representative That our expect as the million in range. Their a for a that future. We're at on a That and expense. XXXX. would combined look call this of in Sure. item. full overall fourth and

the variable contracts, extent would certainly or there to So we expenses expenses. expect variable lower business is that business some accelerates,

Operator

you. comes Perito from question our next Michael KBW. And Thank with

open. is line Your

Unidentified Analyst

please is Thanks margin board? on for on Perito. the taking the thoughts that us [indiscernible] Hi, Crestmark on this is Could Mike my you color near-term now actually some for give on questions.

Glen Herrick

just that in yielding of and included expect higher as Crestmark, months quarter continue the through replaced included two the benefit and accounting We're by XXX which we loans. portfolio from then becomes purchase acquired it accretes also to Sure.

we So where move it’s from would up expect fourth margin the quarter. at in to this

Unidentified Analyst

your much thinking how you’re we that then which about forward? was going looking quarter, higher were And consumer growth than Okay. fourth for growth and that business

Glen Herrick

growth? lending Consumer

Unidentified Analyst

Yes.

Glen Herrick

continuing of and that and accordingly. the balance those Yes, sheet and programs we look profitability are growth growth managing the to at

Operator

Thank with question comes Schiraldi you. from Frank next Sandler The O'Neill.

line Your open. is

Frank Schiraldi

much guys strain any wondered just all? change of terms you now at like there's CEO, in there mean you if doesn't I is guidance it -- but change to strategy Hi, so seem reiterated Brad with much

Brad Hanson

Not in near-term. the

plan to our strategies. We have continued work on our on execute and existing

be at you will looking over time. that We time strategy as communicating with over and develops

Frank Schiraldi

in some Just all about that consumer we've at bit terms frothy. getting players and/or speed of scope some business, in the areas I business building of business? heard there credit like of any that the recently talk rethinking feel a Is

Brad Hanson

of those We the programs I a we've -- number out. for come focusing But are I signed, have programs how of now think announced more very in that we say the identify that would intact. we those may general, some and as right as we and programs diligently. rolled on a being may our look they have of little on we are paced managing quality are those still rollout come, bit plans

Glen Herrick

do noted part would this point, of that publicly our majority of have that of home to couple set provide add, our and is plan do this what finance sheet loan is over achieve not balance And guidance targets that we you'll the products, And it. sheet expect return thresholds. are next loan to there. while certain lending But majority our months forward Glen. to that mix to we see commercial the in goals how we we mix and moving and long-term we meet we at commercial risk be our the balance not of be not may Frank, portfolio balances additional want just I trying to note

Brad Hanson

very And not programs on as and we and these risk are I any of management, focused develop compromising risk would that. are we structure say we that mitigation on

Operator

Thank you. [Operator Instructions].

with Daniel Cardenas a Raymond We question James. from have

line Your is open.

Daniel Cardenas

afternoon guys. Good

M&A I you programs. that and the now? thoughts Crestmark a completed the what kind for consumer expansion of you right lending are ramping given in those Are looking you're are up mean efforts. So your you've digestion additional or about transaction, phase additional

Glen Herrick

Glen. Yes, this hi Dan, is

near-term not can wouldn't aqua term But reasonable material do should what's acquisitions expect a us. is or fiscal higher from XXXX. you I think in not in some M&A the near we any from platform. to it's expect Again I technology the fill-ins say material that a in where

Brad Hanson

this to number point. period those going focused It's those really smooth been a our integrations of We've this and we're and short over point. of on stabilizing acquisitions really forward goal ensuring focus really time integration at made acquisitions and last the optimizing on at

Glen Herrick

combined at we're platforms what looking Dan you they brought all us brought Crestmark look were that Yes, us if really the for. we really

platforms. we that pieces and it's have now the portfolios. leveraging fully now in the major our the and about really combined of suite And power So product combined optimizing

Daniel Cardenas

Good. pick guys this for would kind EPS And you number quarter? where of a core

Glen Herrick

I it $X.XX. pick would at

Daniel Cardenas

step you. for right I’ll now. back great. Thank Okay,

Operator

Thank you.

Our Frank next O'Neill. question with comes from Sandler Schiraldi

Your line is open.

Frank Schiraldi

prepaid Glen, it's bit a deposit you opportunities a with idea like here ramp seems on. is follow-up up be so Yes, to ramp growth. just sorry mentioned able that certain you the and or that about Crestmark Can to degree. talked talk maturing to try about with up little up just would you expectations or you a

So give back ramp you opportunities can do on you of have color, that to any up? sort

Glen Herrick

gathering deposit a bit our opportunity expand asset and of there's been there. our programs consumer been particular. at we've in the are our maturing prepaid has still some of in in did see side growth can with for on but looking We've sheet balance doing past and to deposits prepaid and year opportunities little value how an and those. the what analyzed I various Yes, lending We refocus we towards associated we target think focus prepaid of different that shift

the So after that we've more we are go in targeted. categories to deposits going prepaid

Brad Hanson

it as could card have say, would be I Frank, your type traditional know, prepaid we additional besides And the today, deposits. that you payments deposits technologies

have. leverage to systems other exploring technology certainly we and opportunities that So

Frank Schiraldi

talk pretty all transition was in And was not no versus you the effective immediately issue I'm then comfortable Street how at this into went that can do maybe obviously here? the impending there's sudden obviously can if or just what other get change to sure you period thinking CEO about, the this a

Tyler Haahr

take half and Tyler. is road basically is the that CEOs have time an over reason our most one. From I I've last the go team meetings nights my I'll most XX This don’t on company a years. ahead perspective, and industry falls. told there been public when

so So we’ve added Glen we got consumer things the the I other senior Chair credit staying them they been particular I’m for me of an frankly role Frank, Crestmark in closed, when help now our really smooth and like with kicked-off got place, some through number the right in Annual here company to successfully a really for we’ve well, now. can in that leading long we a that the as great The again end while seen and the told got me the a of I'd and time, January has call transitioning they Brad things a and transition team be employee executives, the just is been there time, need Meeting anytime.

why I so well-positioned makes it that’s and success we’re future part it do to sense And for think now. of

Operator

Hanson to for showing And call you. like the closing Brad no I’m I'd further turn Thank Mr. back any remarks. questions. to

Brad Hanson

it. service. all participated enjoyed working We well investment for and quarterly really you All appreciate you Tyler right, with on everybody and call Meta's thank your thank who today you

our fiscal early We’re all and year and Investor making as look updating great progress you you evening. a begin forward in XXXX we the we’re have again excited again our January Thank to Call. by

Operator

does Ladies participating This today’s conference. and gentlemen, today’s in for you program. thank conclude

a disconnect. day. all great may have You Everyone

Pathward Financial (CASH) 31 Oct 182018 Q4 Earnings call transcript