CASH - Earnings call transcript Q1 2020 | Pathward Financial, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Meta Financial Group Fiscal Year 2020 First Quarter 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.

I would now like to turn the conference call over to Brittany Elsasser, Director of Investor Relations. ahead. go Please

Brittany Elsasser

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

earnings information website our release Additional metafinancialgroup.com. the and presentation found at may investor on be including

Herrick, before CEO, and we the for questions. Glen open and sharing some President and Executive up President be Vice prepared Hanson; CFO, Brad will remarks today call

place may and that undue outcomes contain or on may statements forward-looking otherwise we or statements, those be to its that the uncertainties subject operating describing forward-looking statements, which you goals. which from reliance not objectives discuss Meta risks call Today's today. to related and company's to results subsidiaries, including generally these cause differ or caution actual anticipated could plans, materially as identified to are currently future We

forward-looking These Securities the harbor Private provisions made the of Act to statements are XXXX. Reform safe Litigation pursuant of

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

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

At turn President this call time, Hanson. would Brad and I like to CEO, to the over

Brad Hanson

XXXX welcome to fiscal quarter I'd first earnings to Brittany. call. like everyone you, Thank our

representing earnings year's per of fiscal over XXXX report $X.XX quarter EPS. growth $XX.X share, first quarter of or million prior XX% pleased including results the diluted are to We first

improving deposits, initiatives, the and reflective are key the These operating core earning balance of results efficiencies. our sheet balance interest asset funding sheet, from our of increasing the mix optimizing strategic percentage of

driving company shareholder initiatives sale for announced we the value. power an the that having of of positive into In MetaBank Bank and division. on a community earnings Executing Central on impact entered November, our is these the with agreement bank

up operations and to is overlooked traditional strategic XXXX. key Central streamlining on focus and platforms, and transaction fiscal with This banks. to enable The second both often in our of serving close is will quarter national our lending by Bank markets expected transaction us value payments attention the companies to

As priority top which always, for remarks. decisions, company, remains disciplined credit a further his we discuss in our will and our remain in prepared underwriting quality Glen

the disclosed quarter, were During the to previously the that real owned. agricultural estate formerly related held relationship and we assets other disposed off

Resolution of share this authorized matter common improvement resulted to In X.X November, program the also for new of ratios our of asset quarters. previous repurchase stock. up Board in million shares market non-performing Meta's over a

completing June XXX,XXX program. the back shares quarter, XXXX, utilizing another the shares XXX,XXX we of program bought in announced During and roughly first the new

we sale purposes. approximately stated, to corporate previously the as well pre-tax million community the use $XX.X expected on for repurchases, intend other division of of as As share the bank gain pending

management approach capital We to values. growth and shareholder balanced activity prospects designed of maximize to will repurchase the the consider context support within continue a company's

Now, detail our on let over to me turn Glen XXXX first CFO quarter Herrick, financial the to provide fiscal our call more results.

Glen Herrick

and Brad good afternoon, you, Thank everyone.

XXXX, $X.XX same of we net share, compared per prior $XX.X the quarter for quarter diluted $XX.X per or first the million or diluted of $X.XX fiscal year. For the of reported to GAAP share income million

efforts a result the XX% interest of income quarter, growth to Earnings higher prior reflected balance per share primarily sheet. of our optimize as year's first net over

improving tax tax During leases, income. after investment credits, the fiscal we quarter solar first million of $XX.X XXXX, related in further originated with

expected tax investment period. to future of to impact and vary period timing the credits So are from

which were leases at low the expect fiscal a basis, to decrease XXXX a loans year of to transfer the rate teens. held tax division Banking to of Community the to Bank in continue quarter for of and sale loans quarter a settle December $XXX sale with Community Central million on function in of of connection X% billion Bank. linked for $X.XX pending Total XX, the was the mostly during We the gross

to X%. total gross XX loans Compared December and XXXX. increased leases

guaranteed Our commercial term basis year-over-year, on totaled finance loan XX in the by and XX% $X.XX linked billion of lending, increase December based at increase lending a driven quarter a growth portfolio X% loan government portfolios. an asset and

for the side deposits. $X.XX and for in XX% balance the sheet, liability rising year deposits versus represented payments the of billion of the average average the to prior were quarter fiscal Turning same average XX% the quarter, nearly total

result a the in million quarter fiscal optimization to balance up quarter, income of net of the we our sheet fiscal interest first $XX.X of efforts, compared continued As first XXXX. X% XXXX generated

net to quarter. XXXX first margin for by Our expanded interest basis points XX year-over-year fiscal the X.XX%

basis first the X.XX% reflecting year, rate Loan the were X.XX% a quarter yields the versus accounting loan to for first XXXX X fiscal the the for the XXXX quarter. compared impact fiscal to points and prior the and added for quarter fiscal accretion X.XX% previous points environment. in lower prior Purchase in XX in points first of the quarter basis quarter yields XX quarter of basis

compared represented points XXXX XX September points at basis total basis XX assets at XX of of assets Non-performing to December assets XXXX. XX, total

Community disposed and basis as XX we assets related As XX, our points of agricultural off estate Bank XXXX. which to were real quarter other previously disclosed represented of September the that non-performing Brad during relationship owned, mentioned, held assets

the The pretax company net property related of $X.X recognized to of sale loss the the during foreclosed million a quarter.

offs non-performing the and lease of various its deterioration. loan charge continuously volatility, monitors degree of portfolios levels for trends some and the company While often of assets exhibit

loss December mentioned trends on previously estate. X% And fiscal XXXX in real decrease by same portfolios. $XX.X of first as loan less fiscal management the quarter, comfortable the income sale the the XX, than with characteristics our primarily for million remain of risk quarter of from was foreclosed of Non-interest due a the of

rental benefited fiscal quarter the income Excluding first the other of non-interest Non-interest loans from higher on XXXX. expense quarter X% to compared sale $XX.X gain leases, by fee and tax the product of to same increased loss for on million income. sale, and fiscal income, income

we remain ratio. the to improving allocating attractive and capital efficiency most profiles ahead, businesses our growth overall committed and while with Looking profitability to resources

our Finally, share let me earnings outlook. discuss per

We sale our discussed. $X.XX. loss the to are on reiterating excluding EPS per fiscal $X.XX of also $X.XX fiscal our to earnings We're foreclosed the XXXX of XXXX range property guidance gain $X.XX incurred of expected branch and GAAP reiterating previously guidance range share

With comments. that, conversation closing to for Brad I'll turn the back

Brad Hanson

are thus three far results we've ahead fiscal XXXX. in initiatives key and The made towards progress recap, our the XXXX. Thank we for strategic quarter of To our you, pleased with Glen. the year opportunities first

please Q&A. for questions. our That completes prepared ask so for any Glen open to line join the up I'll remarks, me Operator,

Operator

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

now is open. line Your

Steve Moss

afternoon. Good

Brad Hanson

afternoon, Good Steve.

Steve Moss

trends start the overall loan on off guess I just to here.

curious loan you're seeing as Just here to pipeline, what forward? expectations your and for finance for going commercial

Glen Herrick

seeing Hi, of it's confidence, frankly lot quite of Glen. today. Steve, and businesses amount small we customer a lot opportunity serve especially We're that market fair a a of the with

Steve Moss

think for number perhaps like loan we of mid-teens when loan growth thinking so for growth? XXXX, type still And about a

Glen Herrick

Yes.

Steve Moss

accretion think just of account for. loan then, in was looking purchase I And that lot terms yields obviously, I Okay. less a here,

given Just low a headed kind wondering, is rate one our environment? of where loan here yields

then bit back lower I'm also does assuming quarters? bit to little couple a accretion we next end But purchase go. a account come as little the

Glen Herrick

No nature given away goes the portfolio purchase that the this really of quarter. accounting after

it basis. quarter So, points on basis X drop the linked

point. down X basis NIM Our was

XXXX. that tax our the And loans would will it from here, NIM X% expect so, in excluding over we move north would cross

Steve Moss

where And guys for you days? commercial portfolio finance the loan Okay. then, these yields seeing

Glen Herrick

a a weighted different the X% minus rate today. portfolios. There's or lot plus But of kind average is of good that

Steve Moss

expect, terms single it deposit then more for double low growth here? in And not like of helpful. rate year-over-year. forward looks growth -- good consistent barring average increase or that's less high still deposit going digits Is on just digits, non-interest Okay, pretty the just to

Glen Herrick

Brad?

Brad Hanson

a think I assumption. that's fair

Steve Moss

then little Not perhaps expenses, ex think Any for I Bank. could third messy with more sure, thing color of quarter? me give guess a quarter around expecting here. Okay, the expenses if one exactly you maybe color expenses good. a the bit a on around but I to tax And

Glen Herrick

have expenses. divestiture -- related had few Yeah. We’ll a we

we’ll a to of business, amount fair in tax expenses next increase some have the related obviously quarter quarter and that's This variable.

-- But of pretty a if you expense is expenses I XX million look $XX be non-interest outside would for at quarter. this roughly for of our us tax expense. would absolute that good hope base

Steve Moss

And then… Okay.

Brad Hanson

Our tax season.

Steve Moss

off of sale like Bank, I the back the we like little June can mid-XXs, then or, low guess bit, a quarter? to from perhaps with the and Right, the

Glen Herrick

Yeah.

paying that servicing We'll So there'll still have a some will in shift $XXX we there. on. fees be mix million portfolio be

expect to especially finance. top -- some servicing we've well or see to grow so shifting geography about, other could to that. talked commercial our staffing expense you the cost continue processing, portfolios, in loan from line we go variable to with or as as fees And, So

Steve Moss

Okay. That's very Thank you much. helpful.

Glen Herrick

You bet.

Operator

Thank you.

comes question from of Perito from Michael the line next KBW. Our

is line open. Your now

Michael Perito

everybody. Hey, good afternoon,

Brad Hanson

Good afternoon Mike.

Michael Perito

operating of of look wondering you're earnings spend you kind just are core for through could us Glen if quarter at number I to, to I minute of was? maybe fiscal was or walk wanted a what kind kind thinking how the first about

would piece just just in with trying and was pieces -- the parts all divestiture. like about just you regard moving a I provision moving guys expenses few to there be easier and I was was to thought how the those are I together, given looked it Obviously to thinking it it fees And mentioned? see I

Glen Herrick

all look related around non-core really -- I at is the it to Bank Sure. the Community as divestiture. the

that of at offset provision quarter, held as we recapture we of well look when And in OREO The the as that first to the highlighted we portfolio hanging the so for expenses $XXX,XXX a move that been the there. sale. by disposal recapture that then had provision expenses positive out

Michael Perito

all fiscal So quarter $X.XX to that a EPS guys you for that for like as effective? $X.XX roughly does of figure you the type get those was tax adjust first -- or

Glen Herrick

I good Yes, a that's adjustment. think

Michael Perito

repurchases, Brad Thanks purposes. broadly And general you maybe repurchases? for gain and Okay. the just about the what the more curious comment you could the just But next put if is confirming then the corporate in mentioned quarter towards board's here to repurchases utilizing for appetite that. other on the here

quite you about intend bit I the should it. the is as mean, expect large out use what that a was you could reason is going of guys just the But that comment for that if you more maybe just to I is put appetite forward? I imagine clearly specifically a we authorization curious figure.

Brad Hanson

remember to that remaining pretty in it. just Well, the years term. several on long It has is authorization

that good it. But here. may in affect opportunities based we us we're going way a that over So of be other the We arise the to we prices various these we're much on authorization monitor opportunistic think that, course and bringing repurchase itself. how capital at along for investment with it's may the the factors

Michael Perito

Okay, to helpful. And then wanted just ask. one I one, last

Just deposit the quarter. on the growth in

over know season. these your next and between in I bit As then a seasonality we quite there's of the quarters, try tax deposit holidays couple portfolio

So non-interest seeing look the overall I question update But that taken out into that and growth in that was just kind core -- well? I also the of give previously. Steve's of year both factors for seasonal of that of us mean, curious some maybe some is I quarter, account the as expectations the seasonal outflows know of the mentioned of you you as bearing inflows you an but the can if kind current you're underneath

Glen Herrick

Yeah.

account really core to we XX% quarter We at the that's seasonality. as year-over-year the growth. So why called for specifically look deposit a that out

it's had hope. to as up So ratchet we continuing

some as lumpy. little mentioned Brad, of As these a be can before

Some at core hope of would and year-over-year that the XX% deposit look payments relationships, that but trend we would continue. growth

Michael Perito

quickly, offs. sneak in then more I'll of million charge just And the right. just All one $X.X on

I drivers finance the think about taking us press you color Thanks guys. were mostly you mentioned was release, just a it little for in there? related. Can my bit questions the more give commercial what

Brad Hanson

happy standpoint. forward basis to Just because they're to a metrics looking in that dollar absolute just we're that range couple the from Certainly charge finance grow that relationships within But, growth offs that could off commercial believe that charge the portfolio. of that and expect it our with a model. an was stay we credit on and dollar the and expect going

Michael Perito

Thanks. guys. it, Appreciate Helpful.

Brad Hanson

Mike. Thanks,

Operator

[Operator you. our And the line question of next from Schiraldi Sandler. Thank from comes Piper Instructions] Frank

now open. line is Your

Frank Schiraldi

that to million. on programs in I is $XX.X the Hi had guys. the down fee ask fiscal pretty Is run the afternoon. want a line the card that Glen you've good number. item, I this past some quarter? know just rate for here boosted winding fourth Good

Glen Herrick

Yes. clean, This is very Frank.

Frank Schiraldi

-- than to and a I'm deposits, mentioned still growth maybe bit And rate the on to of reasonable related lower payments year-over-year about fees the growth in think Okay. what you're deposit? in then card assuming you little XX% getting assume take it's growth

here mid-single-digit income it is that it, in card is just So of reasonable fee a about maybe growth to rate from year-over-year? think line

Glen Herrick

Yes.

Frank Schiraldi

Okay.

Glen Herrick

we deposit it. growth little of fee said different a would program's to economics. the core collectively, than But every payments side at in expect as Yes, faster division rate -- different income grow expect we we in before, a the would the

Frank Schiraldi

Right.

year? then And rate, a that to December budgeted in were mean, is Or number the much my you your lot at than I the lot than with the Okay. was solar lower going be there tax had rest came guys always credit curious, well? this the least, just model, seasonal expected. I'm as was just lower of something on a the the quarter tax in I -- are lower rate you surprised, than

Brad Hanson

we what the our are related the this in There in to production say with tax we credits. some are, budget, downs quarter. I'd happy Well, step are investment

And certainly in so, priority get to to couple deals push folks, done the developers credit. here tax maximize

Frank Schiraldi

Okay. And tax the here think or the -- quarters next was the talked what for three that for when you that was rate last low-teens for? I about few from

Brad Hanson

fiscal Full year. full Yes. fiscal months year. XX year, Full

Frank Schiraldi

seemed Okay. in were in guess And first to a what like expecting Great. this quarter. the -- rate it fiscal then versus quarter pretty of lot a good people run I me

I bit even credit's guys mean than curious. anticipated. better just like So seems a you

of geography pretty versus obviously why behind statement run for a you Is thought terms kind you there your Just of schedule? someplace the I income for was else year strong of guys what are full curious in guys number reiterated first the the the quarter? where rate good

Brad Hanson

Yes.

comfortable of progress the happy with kind quarter. Frank. we're our stands guidance. We're that reiterating initiatives. the there, And strategic against that certainly on the We're think statement I with happy

Frank Schiraldi

to no is you're -- it and Is you strong doesn't that strong, that guidance. reiterating But behind are something the there a schedule a like there Okay. start just there's on, sound guys was fair? year

Brad Hanson

That's correct.

Frank Schiraldi

Okay. have. all I All great. right, That's you. Thank

Brad Hanson

Thank you.

Operator

showing questions, for CEO time, back At turn to I’m closing call I the Brad you. no this like Hanson Thank further to would over remarks.

Brad Hanson

to investor support today. in call. you like evening. your for quarterly everybody truly I'd thanking close you. time participating listen thank Have in Meta’s We for by and great to Thank taking appreciate a

Operator

for participating. this conference call. concludes today's gentlemen, Thank Ladies and you

You may now disconnect.

Pathward Financial (CASH) 29 Jan 202020 Q1 Earnings call transcript