CASH - Earnings call transcript Q1 2022 | Pathward Financial, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

00:02 Ladies and gentlemen, thank you for standing by, and welcome to the Meta Financial Group Investor Conference Call for the First Fiscal Quarter of 2022.

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. 00:25 I would now like to turn the conference call over to Justin Schempp, Vice President of Investor Relations and Financial Reporting. ahead. go Please

Justin Schempp

I Meta you. to everyone welcome XX:XX Group would conference the Financial call to Thank like and webcast.

Pharr; the first Our Herrick your questions. which Brett President, and take Sharett; CEO, CFO we will will discuss quarter results fiscal our of XXXX, after Anthony Glen

that Additional the These risks comments our may and forward-looking statements. earnings cause investor found to may be could reminder, you information, our for As website financial uncertainties that a are we the are including most statements conference of and trends. subject on at release and to to The the undertakes presentation update Exchange metafinancialgroup.com. actual earnings in company XX:XX on any to statements. in and including to to are Securities and appendix release, only the additional call Commission, actual results the factors provided to turn language non-GAAP Now included materially anticipated within the refer non-GAAP today, Meta’s call, in our understanding differ. results the no filings investor for presentation XX:XX to forward-looking obligation statement. cautionary Additionally, with measures include the information, certain I’d Pharr. such cause Reconciliations measures over covering results presentation. differ measures discussing could from XX:XX performance investor Brett forward-looking non-GAAP this references be and Meta’s recent may assist filings Please

Brett Pharr

Group's for Financial earnings joining first everyone you, Meta quarter Thank fiscal XX:XX call. XXXX

substantial year's I well down during assets. events. December, results in that loans a quarter, legacy plan agreement to we with and shift bank Earnings community community we prior for as fulfil the brand This $X.XX, which mentioned fiscal share for to we quarter multi-year received year-end. million. first the return for that sold last during We the significant evolution I'm achieved in last fiscal the to are in a represent balances all. per quarter. our of well the enabled wind up XXXX significant First, We benefits December Second, Meta company's strategy pleased and the to corporate XX:XX our we began income pleased brand was the $X phase names the quarter, was financial review have plan again two reflecting of this of $XX Net name of solid sell non-operating say few we million quarter. to develop to year. vision in towards of remainder inclusion aligned has earning $XX bank announced trademarks to years, the better fully zero by our wrapping the higher $XX.X million agreement the XX:XX an us during which new that the above

business and name new the operating We in during activity expect rebranding of drive coming the the financial to in we all progress wrapped Returning initiatives months the company our a by that the end strategic year. to XX:XX and with calendar continued three quarter, we announce made results, results. up the

efficiencies funding funds First, of also were growing year. the to core cost increased compared basis million overall our to we XX% X% from the operating able efficiency our completion net by bank continue operations. And progress platforms our core with or earnings stable loans. drive the assets emphasizing community $XXX the Next, lastly, a margin focused interest points. existing over well of cost simplification we towards optimize our expand our successful business we last We quarter a our was further made remain asset of X by points. basis as and and We of on improving This XXX lower higher cost driving loans XX:XX help our demonstrated our or updates finance deposits optimization mix interest improving base to as our of earning sale XX:XX growth to to operating discuss operating and in that on in and commercial to to year-over-year of leverage. technology return Anthony improve as first Now efficiencies Meta’s let the average to of we our efforts our President, provide reduced investing business. again deposits Sharett contributed drive to lower lines call me over turn

Anthony Sharett

and become another of core manage all by banking banking a been focus we vision increase financial partners focus service innovation to businesses. this model. a to reliable of pleased of driving better customers. provide MetaBank's to as XX:XX attention service new business powered resources to to This we with and bank. quarter, our our features cross-sell how on to even banking enable enhanced that business a is adds the design to across Spruce, Spruce revenue Thank an customer-centric refines with note, we will with to ability new our agreement a this completed the During our capabilities you, Meta more consumers strength customers. product XX:XX with and has meet extension closely approach customers' using valuable their financial partners Block. introduce a innovative spending quarter feature spending on opportunities needs. as larger platform capabilities we're accelerate for that year of have as our pay financial card. a solutions and This promise leveraging three us simplification, debit products always and earlier successful develop offerings and and Brett. partners will help for product great a This and Of is account XX:XX an H&R our existing example mobile agreements and month, their internal H&R Banking-as-a-service have attached capabilities This our Block help partnerships With goals inclusion of that our existing aligns focus provider. use company,

totaled payments as opportunities and to generating within robust continue The to XX, on our the see an our year-over-year. XX% linked as finance revenue across well incremental division a $X.X drive increase service a as quarter. pipeline finance cross-selling We banking a a X% portfolio businesses. opportunities through December and division, loan fee income commercial performed XX:XX commercial quarter of increase solutions basis at during well billion Our

the for driven prior in helps provide X.XX% financials. million tax me our quarter, and loans our primarily overview continue as We XX:XX X.XX% XX the quarter of for Banking to leases dropped to was finance Now healthy loans lease million have and leases totaling for see by basis percentage in strong demand Turning by improvement services from a million, outstanding net tax our across for prior services a of in quarter XX:XX to loans loans points declined This of current from were over percentage and Total the Herrick, quarter, let leases quarter. an loans. an allowance The sale largely loan and portfolio. XX:XX our Overall, part with just the $X.X non-performing prior credit doubtful our Community the turn leases charge-offs improved sales portfolio. recoveries and due portfolios. quality. $XX to of commercial the and pipeline call from total the our our to total substandard bank the X.XX%. community as and loans to a to CFO, minimal X.X Glen Likewise, the

Glen Herrick

good Anthony you, afternoon, everyone. Thank and XX:XX

$XX noted, sale core quarter We on for net quarter $XX.X income anticipate funds a million first estimate the $X.XX corporate anticipate million transactions of million. activities, XX:XX had expect in completion of capital including tax As for the $XX this per $XX $XX the million remainder impact with the significant the between the from and increase $XX For of XXXX. of gain trademarks and income including $X names upon general Brett toward the and agreement rebranding the the million purposes, and as the proceeds allocation of of Meta million strategy. We by or those the or the XX, discussed million we share. share, recognizing previously from for December during remaining ended of of year. will gain using we the the rebranding recognized XX:XX totaled efforts quarter net end to $XX.X our adjusting fiscal utilizing million quarter, $XX consistent sale sell an of efficient be first which the totaled two completed When per proceeds trademarks, quarter

a XX:XX allowance earning $X.X loans million of loss for sale As Community $XX.X when mix, first part of we generated of of that wind transactions efforts a of $X.X down asset These sold to approximately million our on pre-tax combining release. the net loans impact legacy optimize portfolio. completing million remaining and quarter the the favorable the Bank

X% income generated prior Net of in Community Bank the forward. addition, the an liability towards $XX continued in of we Cost efficiencies increase loan million, earning and mix. basis We average growth year. income will expect the of strong interest the loan the prior year. by grew driven portfolio. for points first XX compared prior of or from to Banking $XXX X Quarterly Community the our wind by funds million offset basis compared improved to moving the from assets XX:XX improvement improved leases elimination and from XX:XX and In lease partially points loans growth year, the portfolio benefited contribute portfolios and the quarter net interest to X% down to

and rates, interest to of trademarks, Bank investment believe markets increased a Community funding As included mark-to-market adjustment sale on gain loss balance XX:XX for positioned we income well loans $X.X quarter Non-interest given the $X.X sheet MoneyLion. potential $XX in base. our the equity of stable million our rise for benefit sale of the prepare the negative our million is million in low cost financial $XX on a to million the and

process in quarter a publicly million XX:XX for a we've of MoneyLion from completed they the quarter range fiscal XXXX, totaled expense $XX became line first million the recognized net gain with Non-interest last noted $X decrease we approximately prior unrealized As investment of their our on and a de-SPAC of quarter, and the last after million quarter. reminder, $XX traded.

expenses the FTE and growth environment. seeing an increase We employment compensation are current in to due

towards expect see repurchase Turning In some to an to quarters in XX:XX our trademark addition, as efforts. share we proceeds coming gain we utilize in rebranding uptick our expenses the sale our program. on of do of

price purchased we of During January, and at January the at average $XX.XX, additional in an shares have X.X XX. of fiscal an XXX,XXX $XX.XX of price an XXXX, average first shares through quarter million repurchased

program. reflected January confidence are shares to repurchase remaining continued growth we XX:XX X.X in our momentum the a X.X% had quarter. make against we and the of company The purchases compared capitalized Operator, million X.X% for key open under XX, remarks. the the and initiatives, of business as in regulatory progress of prior As company's questions. outlook the well to prepared Overall, great our with XX:XX bank please The which trajectory. the recent results. remains ratio approximately reflect our concludes leverage financial up line for That strategic continue the to

Operator

XX:XX question Certainly. line Sandler. of first Schiraldi [Operator is from Piper Instructions] with the The Frank

may You proceed.

Frank Schiraldi

XX:XX Good afternoon.

Brett Pharr

Frank. Hey, XX:XX

Frank Schiraldi

that grew if smaller if sheet remind grow wanted book, and wondered consumer to in that to quarter? could linked on thoughts finance the with a I'm on your the I you basis product And incremental is consumer of us balance start went not sort on what you want Just percentage XX:XX just where off base too significantly the the a mistaken, quarter. pretty

Anthony Sharett

We the consumer Correct? Yeah. And Anthony. question your was about is -- book. this XX:XX

Frank Schiraldi

Correct. XX:XX

Anthony Sharett

remarks, talked our about prepared Yeah. and focused XX:XX -- we've so. we'll in it we to We do as offerings are continue on our again, -- banking-as-a-service we are certainly

as it approach to as I've within start. we utilizing book that to our loans that'll Our season banking-as-a-service Consumer to to through teams also we're is in see Tax us will again, tax and the good we're wait and coming well. also our and includes our our division, relates of for believe here, of consumer now loans consist so a our off our Solutions Group, division tax but continue consumer to model still that, talking the the consumer But up, consolidation grow.

Frank Schiraldi

Okay. XX:XX

So...

Brett Pharr

the you'll be base, pretty of see the still going a XX:XX to basis. off foreseeable small small on amount it's balance relative are Yeah. consumer as for Frank, sheet future on coming loans a

lot finance this a a We use you're on going to consumer allowance risk, see those Anthony taking for and will strategically as quarter. without either said big build of

Frank Schiraldi

set the partnerships these the on the of with Does represent Right. with different on side most XX:XX that do balance for depository of the business sheet, parts? partners you or other side partners balances

Anthony Sharett

is XX:XX Anthony. So, this

Brett Pharr

Go Anthony. XX:XX ahead,

Anthony Sharett

XX:XX So we Speakers] again today [Multiple

Brett Pharr

and now XX:XX crossed want least are with the not lenders That doing pipeline are has people payments place there the currently do over market business, is that is in both, that that and is one but to both. at filled

Frank Schiraldi

And I is a there just end then balance period, the which seasonality. Great. was on of growth significant sheet, the Okay. into XX:XX believe

XXXX, on us Just the remind basis thoughts of you wondered your you an balance if could over during average the on out as look remainder year? sheet size

Brett Pharr

So, is this Brett. XX:XX

sheet I balance we mean, the going balance So not come as sheet to growth. and we're Obviously, rapid to we're will. manage interested to us, in deposits continue

been balance some Our has the because sheet swollen stimulus. deposit -- of our of government bit a still

things So think I down, will right much wouldn't growth but of some where now. we to expect those continue from I run are

Frank Schiraldi

lastly XX:XX think higher on, you the me from expense Okay. I going Got mentioned forward. prepared just remarks Glenn, you. And then in some

normal you maybe base Just for wondered I color the stuff? expectations tax guess the outside your expense season any of, if could give on

Brett Pharr

ahead. go Glenn, XX:XX

Glen Herrick

Brett. sorry, I'm Yeah. XX:XX

line Our momentarily. dropped

question? the was what So

Frank Schiraldi

XX:XX Just on expenses.

some higher for something mentioned you forward. maybe expense on think remarks, going your prepared I

could at if all? quantify wondering you that Just

Glen Herrick

got had guided for during rate the where core quarter, the we taxes Yeah. variable. expenses to that with have kind XX:XX the and lot higher we We of run is March seasonality, last will back of obviously quarter a

go bulk bit generate over of for higher lower as growth operating I where that, of Outside would our being as of see $XX spent incurring tied a $XX expect expenses, but the grind and that because absolute the it season. little revenue year. that's million from so positive up we to in expenses, rest that than tax expense expenses here So to efforts, expenses probably will million and Outside we a at much rate our will you'll can core be of rebranding to higher revenues revenues, fiscal core leverage. be of will the

Frank Schiraldi

the left works? how is million a XX:XX call, time, that Okay. on And the you've but then game, $XX got when, that you the mentioned might year's have in it

Glen Herrick

be the prior use, $XX realize to last sitting said the transition to right in we the It's million. account of current for name, we'll our able XX:XX rest about the recognize We Meta or once period Yeah. fulfil year-end commitments then escrow an that now.

Frank Schiraldi

Thanks. All Got you. right. XX:XX

Glen Herrick

you. Thank XX:XX

Operator

Thank line Securities. The B. Riley you, Steve next XX:XX Schiraldi. is Mr. the Moss from with of question

You may proceed.

Steve Moss

finance you afternoon. commercial on part feeling portfolio here XX:XX the with Maybe business. other loan how and of pipeline are there? of Good just about guys Kind the the growth curious

Anthony Sharett

commercial finance. is This pipeline We our feel Yeah. XX:XX Anthony. good about in

commercial within And a criteria. to That continue growth up see full finance XX% strong got are loans growth. We year-over-year. pipeline. underwriting We've was our again, our

good our this feel pipeline about we So year.

Steve Moss

sale, then credit low obviously Okay. think terms quarter. the XX:XX And of pieces in the just moving here Community -- some about mean pretty charge-offs Bank costs here, for with but I

Just you normalizing kind around costs just about any sense to or how guys of that? credit thinking curious timeline are as or

Brett Pharr

manage is we This Yeah. business we're The collateral Brett. closely. very in, XX:XX that

So it. we have and limited at pretty losses good we're

continue very that the see with of You get so more had a to that's we've rate the but thing, fraud rate events have. would a you occasional will occasionally, related we good expect run we lumpy, something and run book

Steve Moss

the right. XX:XX I very much. all All Thank appreciate color. you Okay.

Brett Pharr

Steve. Thanks XX:XX

Operator

Mr. Our from line next comes Instructions] the Moss. Perito [Operator Michael of with XX:XX Thank KBW. question you,

proceed. You may

Michael Perito

XX:XX Good evening, Hey. guys.

Anthony Sharett

XX:XX Mike. Hey,

Michael Perito

what as to out have XXXX. of some deposit rates I real partners cost moving if wanted of has to your move needs with spend deposit I I'm you've I believe know of built higher that XX:XX with your there kind pull set new partnership and kind to but I partners here, move just sure differently, any much, grown rates kind that a the to to every don't I side to higher right. wanted higher. some And potentially on quick? side. the just through since second there rehash of is kind is you that competitors, rates wanted of be on had

Brett Pharr

and Yeah. a is XX:XX going we we and move the I it do have as in to was but funds certain I I renew you'll of forward have cost get but rates going bit think contracts, to bit these has that. There lowest the level, mean say, the of it, of little up little going we're industry. less it one there of have we we're still it, a of to less usually through a is going perspective in to see as

Michael Perito

XX:XX Got it.

it on kind lender the guys mean just in of non-deposit should lending opportunities, that Okay. where cards, interested heard fee banking-as-a-service primarily maybe there one? fee-oriented kind as I guess two, -- you you side of we some guys And fees balance were your certain for equation true of around you kind is of those dynamic? kinds type how bit a And be sheet them kind I of if then guys of alluded you point to think I be of could generate arrangements, number things arrangement products to that of of think number is nature, here, you more the on correctly in sell of not where arena. sponsored XX:XX type grow the one, other at oriented or selling Wondering the end credit a if a if you that do little specific about opportunity that, you'd that

Brett Pharr

Well, level But this a XX:XX is take then I'll focus other non-interest banks. driving about to on that's the is line a focus fee And service to banking-as-a-service this maybe about can are the doing differentiator just you borrowed us a income income, be big out. bit. that going income, high whatever talk and and us for little for that from is in and differentiator we Glenn our on and

to you only Now, of any of those specific those? ones do -- comment Glenn, want

Glen Herrick

the on don't more movement just long carry we infrastructure really Mike. them. our payments, use virtual side, high to payment of to that do our It's technology, deposits with real-time relationships that opportunities around with float near-term payments, Quite likely frankly, is balance fee our sheet, both Yeah. can income money the XX:XX drive sides where

that that will the most those So of it, applications credit little do skill serve over more banking-as-a-service credit, you're when brought space, partners towards deposit payment fee we accounts, we'll that deposit that, about, not Brett we're other it's large the but distribution with that, consumer against we but the but business, allowing continue we talked where right some and have of that about account sets hold just to that neo banking us serving. fintechs that's full these and Anthony compete And time of than and great up use in and where them more XX:XX have starting on can a more needs of to their we're well, drive then to you our risk bit retain are business on same think will deposit also a also banks customers other space. -- that that those

So the than a see those more banking as provider, solution why service in we future. we'll are you'll that's one that a win think a

Michael Perito

season make to demand rather, of lastly think things XX:XX think And structurally I I kind know Helpful. advance a the Thank it's maybe I'm you can could early, there guess like the on to impact similar volume environmentally read little softer. where of tax refund on the but perhaps tax or Anthony years kind you. initial that or or for I various last then up prior season. were or -- anything push alluded that of just year other that or me kind

bit that but side flow to cetera? that higher, guess et upcoming with of impact refund curious the Just guys a could of looking we recognition are probably and budgeting a that is that just minute revenues little my potentially you at the tax be that's on you guys if comment could of anything out, on should mindful the season, played credit guys you stimulus advance are spend the

Anthony Sharett

This XX:XX Yeah. Anthony. is

early you time on year us. got year tax too, As tax our a season the things late it's season this alluded and start, but last started for

had that optimistic a environmentally any may so, external But today last year. far, the early. see this yeah, happening good tax And But have about we year. season through factors are for season We are as again, other believe season. anything or impact so that positioned at we we going it's the don't feel that least to we tax

Michael Perito

Got XX:XX Thank it. it. guys. Appreciate good. you, Very

Operator

Mr. comes with from XX:XX Thank next Raymond you, question line Perito. The James. William the Wallace of

proceed. You may

William Wallace

to maybe the of that for the you you. you tax industry, will you to pressures. on Thank Could expenses. that stay going guys expect look there investments X%, anywhere that follow help the rebranding there's quantify the we up wage said Hi. Maybe pressures you front. we're core tech X%, on the you and trying said, and just of from outside believe expense spend pressure the at XX:XX I kind be outside that seeing across base Glenn, are of X%

by a expenses us to quantify be mean can we get just where help So pressures so what sense trying that the of you going? better might

Glen Herrick

any immune not we helped of quarter for made jumping-off our to that, XXXX. We're and Yeah. point us on certainly year investments last fiscal XX:XX the here

really in that that -- for everyone there we've of We least in that where paying this seeing that years keep continue current we technology in manage XX else of out pressure technology been a we're we're haven't the compensation. where ago, always at one to is in to we needed more There's like always investments us, business, investing that. more payments, is company We'll make rate. our and for within changed demand run current our

in a strategies hiring focused our the efficiency on where gain reason competitive the and so And three be elsewhere environment. out part able it's to market we so of be one And simplification, productivity competitive that there. can and is of

William Wallace

Okay. XX:XX

you're platform and do been and then, of type roughly around tonight? credit Financial fits I press how loans closed that long kind us referencing on their some on just you release securitization of discussing give sense banking-as-a-service $XXX maybe of Cross side sit, into commentary sponsorship of relationship River. have sit, that the where a how Freedom the afternoon the and all that saw you those maybe they Moving million do specific that to opportunity sponsorship loans by I of believe that this of that a Is amounts originated

Brett Pharr

XX:XX Yeah.

established. the efficient. Freedom that's had that's a that's one very well already platform of securitization So models

it most so you -- sit plenty you're using And are very consumer finance and Rivers as sheet you essence them, our for facility loans for in bucket, building until and Freedom a size those not Cross execute as up in market balance imagine, loans know recent both and protections our and a can the gets warehouse is and of guardrails conditions there And around efficient size to to securitization. that. long

of may what table, different with So that's may terrific not components things lending, of exact a example the the of are consumer be the example. some that always the loan we do brings programs profile of within to consumer who that but

William Wallace

are be you with view, when might some forefront the on up and maybe ways loan like XX:XX provide to in shift that are of bit material It equation? seems we of in there a of lot fintechs to out fast with is benefits How partnership banks. keep along with running credit guys the that a trying figure see a the going to your on side

Anthony Sharett

Anthony. the at it and marketplace. is of ensure opportunities certainly take a within our are opportunities we the way strategy. in And strategy certainly that to are aware we in this, everything that of we're growing those we our else, aware are around approach fits like think this a that those in But were Well, and as three-pillared doing measured looking XX:XX evolution going market. that future We're the about

William Wallace

base a on customer back offering years? this their that is like or offered other in unique in product the season they'll the set to guys tackle products of Okay. Spruce they've selling during a end, with tax then on XX:XX that H&R this you like it's kind And is on or and to product similar prior accounted launched wholly Block be the

Anthony Sharett

for do proud H&R that their we it's Block. that within mobile Yeah. which enabling I that because offerings unique it H&R inclusion. banking to mission know but some partnership reach fits of of consumers goals, through financial help XX:XX our opportunity a We're want speak don't Block, savings offers

it it banking-as-a-service been strategy, providing more as and I As and to opportunities just we've talking consumers. relates evolution about think offerings their to for that the relates it's

William Wallace

sheet on Okay. XX:XX on any that? question EIP your can left program, and are so, Last the balance there quantify you if deposits

Brett Pharr

little XX:XX not still but so credit those there they say there piece, Yeah. indirect. the tax of This direct, is lows with some I'd partners, of is are sell very Brett. is are from EIP, our some

William Wallace

XX:XX Okay. it. Thanks for Appreciate the time.

Brett Pharr

and where XX:XX servicer we million there sheet sheet our then those. some we're $XX summer that disclosed actually off Wally, Yeah. obviously balance master those for number, only of on balance is

William Wallace

I the thanks missed Sorry, it XX:XX but pointing disclosure, for out.

Brett Pharr

XX:XX No. that the understand just I was out. release

So all expect that. to you we didn't see

William Wallace

guys. That's XX:XX I all appreciate I the had. time

Brett Pharr

XX:XX Thanks, Wally.

Operator

XX:XX concludes the call. investor Group Meta XXXX fiscal Thank And Mr. year you, Wallace. quarter first that Financial

Pathward Financial (CASH) 27 Jan 222022 Q1 Earnings call transcript