Earnings call transcript Q3 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Pathward Financial Third Quarter Fiscal Year 2023 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 Darby Schoenfeld, Senior Vice President, Head of Investor Relations. ahead. go Please

Darby Schoenfeld

fiscal and CEO, operator will me are questions. the today our we after Thank take will Pharr welcome. and Financial’s your third for results Brett and who of CFO, Pathward XXXX, operating which you, financial With quarter Glen discuss Herrick

Additional may that on be our information, our release, remarks prepared website presentation the investor earnings pathwardfinancial.com. found and including at the accompanies supplemental file

future comments our could to may include Those including to statements, subject respect for anticipated cause results that reminder, forward-looking anticipated to company with risks results update to differ. statement. a obligation any periods. and uncertainties are statements The As and no forward-looking undertakes actual

with the the Commission, presentation, Please Exchange to release, actual filings refer including forward-looking our in language from most results anticipated cautionary cause additional differ that to could Securities materially factors the the information recent and covering and company's earnings filings for investor and the statements.

be financial company's measures results only in trends. today, you of included the provided understanding discussing are presentation. appendix Additionally, for investor such in Reconciliations certain the to measures the this will measures conference and References non-GAAP non-GAAP are we assist to call. non-GAAP on performance

our turn over me the Now, let to CEO. Brett call Pharr,

Brett Pharr

Thanks, for Darby, and joining thanks, everyone, us.

especially to we about times. talked these As a we model news how some quarter, in Last start our today, industry anyone, us, as banking differentiated through the times. not whole has turbulent business come

This into share quarter, our strengths. those really I want to how translate differentials

suffered Just deposits. a unstable from has industry The few examples.

whatever collateral lending. both do have But come. But in There industry. margin a demand purpose may not. interest CRE interest not Compression throughout rising card a even classes general the margin, net the managed have And one. for net built not counting and interest a increase lower growing credit. from We on are with we importantly, do diverse expenses, loan-related we rates typically asset portfolio have we concerns,

about us puts in Pathward the of few in be far this still model us to business our consistent once XXXX. so while fiscal our times, details quarter. defensive results minutes. allowing year the produced More solid performance again position in the these third During some envious of returns. with first, increasing But next having

for Our did million Both in compared were diluted income growth the year. interest quarter net $X.XX this last to per by We $XX.X income increases or same was significant quarter both share. noninterest the income. and net when

third points margin points increase last interest basis Our grew six basis expansion, quarter. XXX an from of quarter net the it's to year. from last a significant X.XX%, And

quarter NIM of While last six impact margin. includes expect. points basis which business the our can temporarily boost that might tax as large the and as interest net sequential seasonal quarter growth seem Remember doesn't you

Our .XX%. adjusted card X rate-related was fees, considering processing NIM,

steady this net turn pleased the to believe very to We margin with upward are performance attention of my side will XXXX. business. interest trend continue the in loan and want I the

We meet have to businesses goals. proven small them medium-sized delivering and helping solutions history specific and a of financial

on well from refer what these story managed. customer's the page as recently often safely, the tells secure face the businesses us our a think we in have to a that? released to do to How now methods We challenges also we of clients understand may serve controls they funding We collateral that and video We the efforts I perspective. these allow LinkedIn and need. that right do set

it some take time please So to out. check

had premium lending SBA/USDA this significant asset our specific balances expansion loans. quarter. compared our and term had in in We highlights when finance growth Some to quarter. We insurance, last

are this optimistic a to we area had good we've but interest projects industrywide energy in that do pipeline become times, less capital the renewable working economic comment loans. the want rising due slowdown are on rates. we make originations. also in attractive and originations, about an That's I to in increase particular experiencing We Recent saw especially a number climate. demand an of as increased

funds will lower which optimizing others those to may expect to since kind This on that therefore In originations already it for we and have earning next mean We likely premium to initiatives our asset mature, being helps of diversity into strategic and goals optionality rate said, us us guidance securities variety asset factored classes year. are working economic is insurance our a various of other rates lead today. this higher may our tax continue our is reinvest XXXX, we deliver in other increased a into portfolio, environments. our the we finance, even maybe will the capital, finance. That strategic securities provide built cycles. introducing that may sometimes grow if be This of It in times equipment of meet some significantly. order

Now partnerships a words our few about deposits. and BaaS

we and integral fee formed different. manage we but are to You purpose, have stable to coveted provide our call, inclusion and quarter's how heard deposits source continue listened Partnerships continue financial to also last income. are to you

pivotal industry rising model of environment. called and This by are that significantly decide to impacted careful core and/or built is to As a the experiencing defense. stability. are in smart our costs our deposits less we we is diligent These success. We've to companies deposit very importantly, the relationships group long-term is who banking this with. work contribute deposit partnerships with outflows, And

in Fintechs, we example, those strong a sure during made cash requirements had are who burn of regulatory and expansion we could survive their that understanding recent the with phase. partnered For

strengthen from and even notably, internal Clair allows us line a recently industry, new Finix. limits. and specific current spending a This few conjunction have as But consumers we that to one savings of we partnerships, added few industry during new establishing with holdings. relationships, our to partners. very together enhance focus I'd a on partners, earned a announced and new we to wage product advances. with maximize concentrating new launched those for added and well relationship We and partners offer stayed away to credit And capabilities the existing expand offerings. launched limited any accounts with in programs deepen time. like also in propel mention new these partners, as or We paired work that with We

payment and is banking deliver their their as new may impact are launch supporting long-term is or to This processor. programs built meaningful partner contracts. We time balances a These a our and why a associations deposit take on model revenue.

partnerships, our are card nurtured, we partnership We most with are retail of access accounts of has formed our of excited fulfill more the than in average strengthen increasing millions of for an less and continue to of purpose network, Americans. Pathward and Because deposits held balance our $X,XXX. financial to

to few loans our have we those very accounts, commercial collateral cash We institutional typically group. are have within and do finance tied

As decay based on deposits a study. noninterest sheet on our of the have balance six years result, average our a -bearing weighted over life

as be needed. party's cost in have of not of has pricing. regulatory third I the which trends. these the recent The comment service banking will reflected, cycle the a There new bit industry there regulatory framework is be the realizing a that in events adjust are and BaaS on deposits of value invested entrants significant, included others as they more industry wake demands, believe in news eventually believe Just will the a space, of we to banks always these the banking. in but of the in are entering recent

continue net seeing can we moment, we closely more may but the have with to at card to on XXXX, both GAAP pricing, includes interest to However, our and interest in continued This competition adjusted we believe slightly work in our these we higher net which XXXX. fees are and margin costs partners. very lead margin, processing grow

This we today. introduced is also guidance the included in

announce We've our a had comment lot and Before some of want candidate progress, substantive pipeline. I have search. It's months. a hope turn to I made our CFO in something things over coming very Glen, the strong discussions to on to and

turn Now, to to Glen take it us financial over results. through our I'll

Glen Herrick

Brett. you, Thank

$XX.X margin the and For the share share as expansion driven and million the of the in increased for the XXX the increase X.XX% or was quarter XXXX, from securities portfolio by $XX the year quarter basis expansion June This are portfolio. in expansion interest expenses. Remember, an was loan XX NIM from recorded prior interest yield of to year our and yields income of on point in was basis income million costs quarter. or million totaled by ended driven $XX.X from year's per lease net quarter. X.XX%. points third the bulk $X.XX prior card net an XX% expansion per Net in deposit processing XXth, fiscal $XX.X

that mind fee deposits in last on in revenue third and income. shown those interest include expenses NIM our compared year. is X.XX% to you adjusted have not X.XX% the balance the If our would sheet margin of calculation, are we quarter but net NIM, keep in off X.XX% Also, last in quarter been in earning our the

We interest million quarter. interest expand expect appropriate the targeting optimizing portfolio initiative Provision to of earning our our the to strategic net our rate in assets environment we was repricing as the deliver and yields. continue margin current in expense $X.X on third

finance to year During in quarter, commercial of portfolio. credit the $X.X million the provision primarily to prior business releases due the recorded a

last third compared of in coverage was of quarter. finance As year time ACL company quarter at in had the and X.XX% commercial the June to our compared X.XX% coverage rate ACL X.XX% last XXth, an last X.XX% year. X.XX% same the group to

the decrease deposit. driven off-balance rate. a income of XX% with by premium to a Noninterest by was was and increased primarily income year prior associated SBA have lower million quarter finance driven in sequential The which This allowance servicing the insurance towards loans increase shift $XX.X mixed sheet deposit $XX.X million fee quarter. third from

The expenses contractual due deposits. or sheet, the driven in prior million million primarily environment. to off-balance and increase on the processing million deposits from to increased from $XXX Total of decreased Turning prior linked expenses Total the card $X.X primarily related related XX% year quarter seasonal decrease quarter. to deposits, $XX total including expenses, to noninterest year tax billion. from the quarter was or higher by return a $XX.X rate grew X%

an billion quarter, fee average $XXX $X.X of At income Fed rates. roughly period sheet, end, third the of of funds to off-balance equal off-balance June deposits During million earning deposits sheet. effective we there the maintained were XXth,

XXth, XXXX. At serviced being quarter, deposits These July fourth programs continue last to throughout government unclaimed be while fiscal June will $XXX these XXth, balances fiscal million the and spent that we are year mentioned Between over of remained. related the slowly deposits decline returned roughly to and the to As Treasury. June end down return off-balance of U.S. quarter Total amount stimulus the deposits This XXXX service for and of XX% X% banks. as at to ended reduction funds and close growing expect and sheet partner in to from of lower hold $XXX total will our $X.X the deposit prior leases billion we million of XXXX, levels unclaimed quarter year from the last deposits. year. we loans

SBA net collateral finance, We basis points rates The from was and by insurance of charge-off of Credit and our portfolio. portfolio in points remain year-over-year the XX the and up increase XX the across the premium our term continues quarter, primarily a loans. a quality USDA and stable. remains quality basis perspective, in management confident strong. liquidity be driven Nonperforming previous loans slightly in lending, good From position. our remain Pathward to loan were

sheet balance in million strong holds deposits company $XXX is sheet. the off-balance Our and

the cash equivalents through have Fed capacity million, $XXX of funds million. FHLB investment window In $XXX unpledged of and million, $XXX and borrowing securities cash discount we of million, available $XXX addition, of

When in factoring available $X wholesale us liquidity. and options, over in funding gives billion unsecured this funding other

sheet Our to continue to return to return strong us and allow shareholders. levels balance value

shares the XXX,XXX approximately fiscal third we an quarter, at repurchased price XXXX $XX.XX. of average During

price July stock average shares an XXX,XXX July in through common of were XXXX. In of addition, at purchased $XX.XX XX,

for are share. fiscal $X.XX in increasing diluted GAAP $X to our range XXXX earnings a We guidance and per of year

to We of be in XX%. rate range also expect XX% to the the effective tax

We XXXX guidance introducing year diluted are per share. also $X.XX fiscal $X.XX to of

from This EIP guidance declining includes the deposit impacts balances.

fundings, renewable Additionally, in we credits, will as impact XXXX. Brett lower mentioned, and to energy tax demand be for them expect slowing is which seeing the market

effective annual concludes That prepared range. XXXX tax in the to As for in XX% will fiscal a year the line questions. XX% result, Operator, please rate our we expect be open remarks. our

Operator

Instructions] [Operator

Piper with Our first Frank question comes from Schiraldi the line of Sandler.

Frank Schiraldi

follow share buyback? everyone. can guide the backdrop you talk assumes I that in rate continued if sort of initial outlook? including you here, macro terms terms any outlook interest for wondered you through just capital us XXXX If the and in the about, could of return include Hi, it also curve here, of the the guide, potential with does of forward sort

Glen Herrick

forward for the guidance. being Fed Glen. and does include we're investment is Yes. I action part This could our of Frank. lending That cautious It energy the factored on a year. We into that. next were talked We curve. little by obviously generally today's Hi, credits about start. renewable anticipating tax as

that the his we as section. other component guide and on in events So macro business well then wanted to call our touched conditions off that in as Brett

Brett Pharr

It's about capital and buybacks.

Glen Herrick

could And a we Yes. to plan to to you assume maintain, our plan, try maintain sheet. consistent balance or continue

the buybacks levels. do like continue levels return we these would to so with And price we that at have,

Frank Schiraldi

that's And be Okay. guidance, plans so are your fact, on the factored whatever that there would into buyback.

Glen Herrick

correct. that's Yes,

Frank Schiraldi

any that of to then I thoughts, interest those energy the guess what driving offset rates backlog wasn't color and that overcome you thought projects tax the things, expectations demand, I And year? does or on I that. renewable Okay. your just decrease just for done in of that was for there sort or maybe decreased fewer expectations couple given higher energy a touching a just for this there on getting but credits that might understand your Is guys give next these while projects more that anything and what's XXXX.

Brett Pharr

we have transactions in Brett. just this a whole have because with. equity it, with to marketplace, least higher they'd coming operate in these tax we're And investor size are what's it. capital lot mean, the the a of into And mix more equity rates were is seeing at Yes, and equity debt, is not is lot happening that what of I generally a funded tax it. and of is the deals of there components Frank

And So down. that's a things, have as project. these why before imagine they long pipeline pipeline is you actually they slowed the into can fairly turn a

our at about and of looking just to year. much next of that's realistic pipeline expectations sort we're so happen having And going how

Frank Schiraldi

talk rate here from what wondering fair book loan outlook of just All a sort if And potential about floors you're rate margin down any your if thoughts can do with you curve lining even where expansion year? NIM we movement now protect the get now, are margin, the the in get the in that that directionally, and curve, Or, some Just enough. what color can where that the doing comes next if on get to downward it variable to with interest some is the things, Okay. are forward at up margin? you is additional rates on right, we then rates environment. do and you the forward of point the if sort are on where

Brett Pharr

our so Brett, about elements of we have classes the duration different it’s Frank, so one it. got Yes, things that different models, we've and asset of business classes asset different like those

repriced it. about our And a assets in those of numbers, start a into little I assets of that we'll to to mind, would equipment round we've figure year duration to do on or note expect the year, think longer less. been as what like I do the You'll a how only more leasing, because we they keep go and life XX% trying happen longer out have to in lean given

And opportunity got bit a longer to a so duration of asset to you've on bring that term have longer quite help. a

pretty were slow clear margin we getting we up the So and down way margin. should on way the be were and slow losing on on we the the

Glen add. And and so anything that's you'd

Glen Herrick

down, rates expenses immediately. the our off are then other and related, if that those rate fall thing card as come and Frank, when is, do recall No, processing

So there's no lag to those.

real give time, well. a certainly tailwind reset those So us as little which

Frank Schiraldi

on get then a long Okay, if growth could, was to just I And last I trying here. great. just handle

quarter piece of the isn't of assume was linked manufacturing that sort which all business. slowdown we the sustainable in on the finance, side. growth insurance hear about that side growth rate the macro the think in And mostly I I finance commercial premium

business So expectations how is for commercial are forward. Your that growth impacting the that here business? finance in particularly going

Brett Pharr

Yes, few I think is that back. a opportunity. And there's things, are pulling think as an banks we being of one

bit little that. of seeing are a we So

class pick at time, this time, I mentioned, might that to little be able why but So more. leasing the been it in as hopefully, example, working I've up some the showing a saying capital days goes them, into we're take on. XXX that's should slowdown equipment numbers the get for for because we seeing up yet, of in not those to origination. you as actual XX it can assets. to starting And we're And in pure for the diligence see opportunities to start right involved

at very they've impressed so That well opportunity, this with class. to, sustainable. what getting finance I there's stay insurance to free correct, So, yield, very we'd particularly asset group for mean, a low did what we're I done. risk is such with of kind not But grows, that like you're the think time, level the

it's the yield can and race think opportunity get we'll goes, it of asset get business, picking and a about classes more starts the certainly duration I So we be as thinking a where down. going the that steady that before

Frank Schiraldi

like so forward. fair? in year. you Okay, still it the commercial business finance that next expect Is sounds Probably growth going

Brett Pharr

just that's I classes don't that's Yes, right. know which be asset I in. think to right.

Operator

next of KBW. line comes the The Michael question with Perito from

Michael Perito

and trying this but guys indemnification expense and as or a the yet. them bit them a of on kind starting realizing more contracts have just within a lot Can like to think consumers these since on consider you agreements about just should of than might we generally then there's a the over up higher terms color maybe I yields my historically. these? realize wondering sense you indemnification afternoon. or get there losses how are you with Good few that I launching. I these noise some of a wanted guys. how on give you're guys ramp, on could how some Thanks the ahead I Hey, to partnerships this you be fees? like Should Number it. questions. if things we on to for built structure the just taking a they time be better credit in to credit of you're maybe appreciate Just these was of new in propel on hard of, you NII in? had you couple, that touch there ramp risk of But little line credit some income one, expect of structuring as for to guys. aren't time, Is of are us things some there'll and to a sense lot maybe, a get but trying statement of trying some with

Brett Pharr

Yes, Mike, very I consumer that not do want credit exposed to appreciate the consistent been We've risk. question. naked to we be

any might like we're And a to be Those variety. so appropriate and different that into agreements these credit enter going are enhancements. to going agreements that have of

Some sheet and away. term might just a on they're balance then get be, they short securitized

Some might be waterfall structures.

We might we credit this guarantees to do want have we enhancement actually products other credit it. offer products marketplace can these Some have disintermediated by have to we get are our on. our And partners don't don't in to way because because rely needed with that the they want consumer a and one.

And we're that's so reasons it. of the main one in

it. fully huge. won't an bulk make be will income also of optimistic when propel holdings the example, economics. you you It but we're to about, stream give understand, we for And on risk, as But do us give the the and going partnership what credit it Now some it's up do. the you for up be economics very of

Michael Perito

And then some mentioned like last stuff. there time interested non-banks, I months was share. been talked spending are a doing it. for of interesting But in know the bank also a Clair. seems over Do can think maybe take other market some you There just with And love growing guys space more of I've space. a level nine make give you earned we have daily bank a advanced us that DOT about guys, space? guys I an of guys? EWA that It's wage you to there's the not see, some of kind Got I you that share. It as thoughts maybe area there's is know that for magnitude Green couple so. money to or there's lot pay. high with sense and partnerships a some opportunity. would about that in you opportunity and type some share room think of, the sizable

Brett Pharr

be I to that How is there's to And be? industry. new well I This business. in there be lot certain going it learned a big the to think is going to are questions around it's a think How yet be going regulatory it. are received?

turns next like those of take some engage a things. do others. going a to I And to going are this have time. fintech grow. necessarily We lot and plant out programs, think with. startups them grow that's with these right a how We what we're industry We that employers watch seven and these five, not year we do. now the and perspective them for few into why just business. huge are might We ride understand produce. They're a huge right partner. with it. it things But as they Clair well they're the one learnings long years, let going on we're to Obviously, can And of now for thinking we We in seeds. it

Michael Perito

Yes.

But in doing the for products larger more worthwhile. point way be keeping it's forward a how customers the in those market some with between the the you you have. at to you're how stuff things share and you're like critical that current perform felt about this on certainly was sounds you a willing pulse push EWA, of of it with the if future the would So your evolves. eying some protecting And opportunity

Brett Pharr

is think partner has that to really And Yes, bet what it's But yet the that think be I happens. good if significantly. grow to placing potential right. we're seen also, on a a we that's we're

Michael Perito

these Brett. questions so maybe longer we question Cool. the, since then color. for you with just a That's Glen, here. And on Thanks, for Yes. good only much get a test to

side. OpEx on Just the

you some guys My it reasonably guide. are order ‘XX the improve to fairly one efficiency the stable, is Obviously, next year? of maybe here. you're But on got of guess giving a to in more things the bit. for You've list what's hold magnitude ratio in just invest little quarter Like, looking are been just growth? As lot mean, allocating key But are how a thinking as of as you insulated generally, industry, pointed of dollars? pretty an where are out, you what there's tight a lid mean, I really obviously, pressures. expense on these the And are you I kind areas the fiscal you about of it. guys from Brett,

definitely to guys So what room year I think investing just am there's invest. be might maybe to what like. could curious as that growth in and of you next look we rate

Glen Herrick

least So we really we, operating think about Xx over Mike, least time, here at of our revenues expenses. leverage at as you growing and recall,

Now, far spaces those. of today. we But where could And this expenses our will today, we to environment, slowly are Many maintain plan, grow, but get ahead I yes, at certain nature. the to as some grow investments have too you in we're revenues that us of at in variable as think periods in expect expenses they it's and that. fairly make not least tight just to our of

go and technology And ahead. management, sorry, the, will the of and rest of we compliance. where with our And consistently then And can you investments, so make has revenue. those go think expenses risk primarily

Glen Herrick

we protection, sure service the in focused on as and and consumer more Oh, to just you technology attention and to business of are protection both up-to-date and small is made more of competitive compliance on compliance and the important. is staying a those a going space lot add going making top believe as incredibly providers investments have advantage to continue a of systems, be on, banking

Michael Perito

just certainly headlines. look when I Yes, the seems mean, you that way at

And makes lastly you Frank's plus that give assume alter similar if able kind or line ‘XX Go to type to kind just in to assumption indication that could assume, that one provisioning a is then macro sense. of me, reasonable of you on Is numbers ‘XX the or questioning, a I missed that? curve minus like follow-up something are assuming? year you're it's and round broad but financial too us the of that this, just I getting of for just kind So based and reasonable apologize guide? forward to and it Is without specific the of ahead. there everything of year-on-

Glen Herrick

And if feel missing, we really feel thanks, comfortable. today. see credit we we are there's feel looking yes, really good hard about, Now, something to we're about but no, We good our positioning Mike.

I did a explaining and in consumer space. think Brett confident job finance credit we collateral taking good feel not We the space. way our we're the commercial the in manage risk

provisioning So, some loan depend with front. as of yes, up It'll of will of levels a similar on lot roughly that that growth CECL. the take

similar originations lands that is where bit will yes, But, provisioning little new assumption. So, a depend on a how are year-over-year. good

Operator

The next with question comes from the line of David Feaster Raymond James.

David Feaster

the I'm and just versus obviously, end what the the I'm I the looking up expenses, range. your the I'm driver between now. differences end the just key you as the appreciate of on the of that between the and line this range? credit Is curious, so it provisioning biggest low is top of of guidance, XXXX right the really of of clear do curious just curious thoughts the low questioning. end at on think growth? see of perspective, Hey, commentary cycle? look, assuming is drivers your but end the crystal good top you ball of mean, Is some what And it achievability and the that afternoon, everybody. mine Maybe as as Obviously, following last kind curve about forward just is from

Brett Pharr

margin. wide range. been risen. there's cycle, But many we I on I first kind surprised how and to David, would had had so factors, of price thing is to compared which yield loans rates of a is we reason a way say, that this have we've particular the the the think thin Throughout

up. say while in I took our we're which to would it If banks the want living of is down on fact working so kind a show to for And capital. really slowing and are do, do to I yield lending able

credit have that. higher I the end ever any manage the that secured get will putting for is collateral on be it’s and service one if concerns our And I that debt, collateral, no thing. are pressure we particular am margin of We about did big everything. worried one strength time partner, credit, about I there the we that’s banking don’t as and and us. will a mention at not we

of We margins make them them some have contracts impact function to get we new do as in here have And concessions business. but that to well. new long-term business it’s might a for bringing

add? So those are you anything my Glen, big ones.

Glen Herrick

macro right. Yes, be is top and end for we that how are demand there loan beta The much certainly are cautious will demand loan when I as seeing that if more drive so in is to certainly that up as well been we picks you normalized think somewhat where then volume loan on that will just us this yields start and environment.

would of typical you David. kind so what drivers, your And

David Feaster

Then just upon yes. Okay. following maybe conversation,

Glen Herrick

that So pace there income pretty to I well. could projects pretty that’s opportunity want obviously, again, so just chunk pick cautious up tax the of good extent point credit as that renewable the earnings out, an a and energy to we year-over-year are there, be

David Feaster

sounds partners seen are And in little impact pipeline the how your partner getting more at look partners a Brett, broadly, bank That’s of like, this listen the characterization? just have the curious, bit extents side? a just just are pricing partnerships venture today? for that that more to gears does some may bit terms It to negotiations power. all point aggressive any and switching failures to going maybe conversation from on contracts again, a the of how you maybe more the helpful. fair And you, Is just at and I'm be just the capital of may impact

Brett Pharr

lot I in what had was is Yes, to into more they've alluding thin a comments, think there's done that I the a banking my as jumped business pricing. competitors service and some

in the gives Now, of And And two, of we some cases and fact did seeing the partners thin it they of deposits pricing of kind things. see some one a interest rates the small what that with but moved that's startups bigger we'll there, them have. a there. happens have out up the fintech lot are greater fairly

All a of they whole sudden, a lot. about care that

pressure those things that putting think kind I the are it. of are on So

I believe a going to cycle. regulatory of I is that part Now, mentioned this and this, be

reflected. going You have that can are and this the very some public that about newspaper on the even all in what's happened read things articles of

So but a XX I be XX term, short in here. back we pipeline. in some the certainly have to partners think reversion months, to pressure mean the there'll Yes, the in there's

We have the them time. all

have because other running issues We of institutions. us to at some regulatory

take advantage And we to so that. of try

sticker when to we us do before shock is have it as as compliance that the One for of don't they because bit get they a come it and because people framework. the they of cheaply problems them though risk don't did

that that. there's go on So negotiations in

gloom. all going doom margin the in pressure not and is be just on to people We want short some term. there it's So sure understood

David Feaster

makes curious, sense. That And then you've unique just got interesting a I'm and perspective.

you and of of you're fintech consumer some I anything interesting back at you're a curious, or more across interesting, that You I'm portfolio, maybe think just, there the in the seeing I'm seeing? you that anything economy maybe demand credit terms the SBA you're economy consumer for teal how partnerships, of health look country. is leaves behaviors the just do finance guess set and step trends health broadly? of the at your just of as play very and the just look commercial you seeing broad from is the the in within segments the and curious, as

Brett Pharr

the remember side, at On of what the is would business of is our economy. bulk that the I the consumer end lower say

people of they're one As consumer in me, a recession. told always once my credit

there's They're still drugstore, in buying cetera. gas, transactions. et groceries, the going difference to their the still real buying so no And

coming anything around commercial deposits So activity and EIP The finance that are don't that. we that of not borrowing there are are they're on they more as because the seeing down industries really going than particular much tax serve Conversely, where anything we're of the on. else. because not as runoff have side, much deposits

need a it's off not there's out there's and is Our less business bit transportation because there business just for borrow, to not and factoring less it. available that's

dramatic certain saw COVID hit. would of in first not we that anything But see is we mild. anything It's not you like seeing And fairly some some when see that that or areas, say certainly slowdown. I

Operator

Year Investor Thank you. Financial Thank concludes And that XXXX Conference Fiscal Quarter Pathward you. Third the Call.

Pathward Financial (CASH) 26 Jul 232023 Q3 Earnings call transcript