Open the filing on EDGARPATHWARD FINANCIAL, INC. ANNOUNCES RESULTS FOR 2026 FISCAL THIRD QUARTER
Sioux Falls, S.D., July 22, 2026 - Pathward Financial, Inc. (“Pathward Financial” or the “Company”) (Nasdaq: CASH), a U.S.-based financial holding company driven by its purpose to power financial inclusion for all, today reported its unaudited results for the 2026 fiscal third quarter. The Company reported net income of $29.0 million, or earnings per diluted share of $1.37 for the three months ended June 30, 2026, compared to net income of $42.1 million, or earnings per diluted share of $1.81 for the three months ended June 30, 2025.
CEO Brett Pharr said, "We saw changes in our credit performance this quarter primarily as a result of a few larger loans, one of which we began discussing last year. While this is certainly a disappointing outcome, credit events can and do occur in the world of lending. It’s unfortunate that these events occurred within an otherwise solid performing quarter and year thus far. During the quarter, we delivered higher interest income from commercial finance loans, higher noninterest income, and disciplined expense management that prioritized the execution of our strategy with an emphasis on people, processes and technology. We remain focused on supporting our partners and advancing our long-term strategy of being the trusted platform that enables our partners to thrive."
Company Highlights
- In April 2026, the Company released its 2025 Impact Report. The report highlights Pathward's deep partner expertise in enabling inclusive banking, payments, lending and tax solutions nationwide, while making progress on the Company's sustainability efforts.
Financial Highlights for the 2026 Fiscal Third Quarter
All highlights are compared to the same fiscal quarter in the prior year period.
- Interest income from commercial finance loans increased by $6.1 million.
- Total noninterest income increased 4%, or $3.3 million, as a result of strong secondary market revenue generation.
- Noninterest expense decreased 7% as a result of disciplined expense management while the Company continued to make strategic investments across people, processes, and technology in order to execute on its long-term strategy.
- New loan originations increased from $1.10 billion to $1.86 billion, primarily driven by an increase in consumer loan originations resulting from a new contract announced during fiscal 2025 and growth with current partners.
- The Company repurchased 303,632 shares of common stock at an average share price of $92.18. As of June 30, 2026, there were 3,127,179 shares available for repurchase under the current common stock share repurchase program.
Tax Season
All reported numbers are for the nine months ended June 30, 2026 and are compared to the same fiscal period in the prior year.
The Company is very pleased with the performance in Tax Services during fiscal 2026, which was the result of significant work to grow this business, increase market share and evolve the underwriting model. Total tax services product revenue was $107.7 million, an increase of 13% compared to the prior year. This was driven by increases in refund advance and refund transfer product fees. Total tax services product fee income increased by $12.4 million and net interest income on tax services loans increased $0.2 million. Total tax services product expense increased $0.9 million.
Provision for credit losses for the tax services portfolio decreased $5.7 million as a result of the continued work on enhancing underwriting models and data analytics capabilities.
Total tax services product income, net of losses and direct product expenses, increased 29% to $77.1 million from $59.8 million.
Net Interest Income
Net interest income for the third quarter of fiscal 2026 was $112.9 million, a decrease of 8% compared to the same quarter in fiscal 2025. The decrease was primarily driven by an $11.6 million reduction in interest income on the consumer finance portfolio. Interest income on the consumer finance portfolio was impacted by the sale of a portfolio in October 2025 that was previously accounted for using a gross accounting methodology, and therefore, recorded at higher yields with offsetting entries not included in net interest income. Partially offsetting that decrease, interest income from commercial finance loans and leases increased $6.1 million year-over-year as the Company continues to have strong originations.
The Company’s average interest-earning assets for the third quarter of fiscal 2026 increased by $273.8 million to $6.88 billion compared to the same quarter in fiscal 2025 due to increases in the average outstanding balances in total loans and leases and cash and fed funds sold. The increase was partially offset by a decrease in the average outstanding balance of total investments. The third quarter average outstanding balance of loans and leases increased $406.2 million compared to the same quarter of the prior fiscal year due to an increase in the commercial finance portfolio, partially offset by decreases in the consumer finance portfolio and warehouse finance portfolio.
Fiscal 2026 third quarter net interest margin ("NIM") decreased to 6.59% from 7.43% in the third fiscal quarter of 2025 primarily due to the aforementioned sale of the consumer finance portfolio in October 2025. When including contractual, rate-related processing expense associated with deposits on the Company's balance sheet and excluding the gross interest income on consumer finance loans, NIM would have been 5.27% in the fiscal 2026 third quarter compared to 5.33% during the fiscal 2025 third quarter. See non-GAAP reconciliation table at the end of the press release. The overall reported tax-equivalent yield (“TEY”) on average interest-earning assets decreased 86 basis points to 6.66% compared to the prior year quarter. The yield on the loan and lease portfolio was 7.99% compared to 9.33% for the comparable period last year and the TEY on the securities portfolio was 3.00% compared to 3.10% over that same period. The decreases in the TEY on average interest-earning assets and the yield on the loan and lease portfolio were also primarily driven by the aforementioned sale of the consumer finance portfolio.
The Company's cost of funds for all deposits and borrowings averaged 0.07% during the fiscal 2026 third quarter, as compared to 0.08% during the prior year quarter. The Company's overall cost of deposits was 0.01% in the fiscal third quarter of 2026, as compared to 0.02% during the prior year quarter. When including contractual, rate-related processing expense associated with deposits on the Company's balance sheet, the Company's overall cost of deposits was 1.43% in the fiscal 2026 third quarter, a decrease from 1.61% during the prior year quarter primarily reflecting a lower rate environment. See non-GAAP reconciliation table at the end of the press release.
Noninterest Income
Fiscal 2026 third quarter noninterest income increased 4% to $76.7 million, compared to $73.4 million for the same period of the prior year. The increase was driven by increases in secondary market revenue as the Company was able to catch up on sales as government agencies cleared earlier-year backlogs, higher refund transfer product fees, and other income. This was partially offset by decreases in rental income and card and deposit fees.
Servicing fee income on custodial deposits totaled $7.5 million during the 2026 fiscal third quarter, as compared to $7.8 million for the fiscal quarter ended March 31, 2026, and $7.9 million for the same period of the prior year.
Noninterest Expense
Noninterest expense decreased 7% to $129.1 million in the third quarter of fiscal 2026, compared to $139.3 million for the same quarter last year. The decrease was primarily attributable to reductions in card processing expense and lower legal and consulting expense. These decreases were partially offset by increases in compensation and benefits and building and software expenses that directly correlate to the execution of the Company's long-term strategy, particularly investments in people, processes and technology.
Card processing expense is primarily driven by rate-related agreements with Partner Solutions relationships and subject to deposit levels, floor rates, market conditions, and other performance conditions. Generally, this rate index is based on a percentage of the effective federal funds rate ("EFFR") and reprices immediately upon a change in the EFFR. Approximately 68% of the deposit portfolio was subject to these rate-related processing expenses during the fiscal 2026 third quarter. For the fiscal quarter ended June 30, 2026, contractual, rate-related processing expense was $23.3 million, as compared to $25.4 million for the fiscal quarter ended March 31, 2026, and $25.1 million for the fiscal quarter ended June 30, 2025.
Income Tax Expense
The Company recorded an income tax expense of $3.1 million, representing an effective tax rate of 9.5% for the fiscal 2026 third quarter, compared to an income tax expense of $4.8 million, representing an effective tax rate of 10.2%, for the third quarter last fiscal year. The current quarter decrease in income tax expense compared to the prior year quarter was primarily driven by a decrease in income.
The Company originated $5.3 million in renewable energy leases during the fiscal 2026 third quarter, resulting in $1.4 million in total net investment tax credits. During the third quarter of fiscal 2025, the Company originated $2.1 million in renewable energy leases resulting in $0.2 million in total net investment tax credits. For the nine months ended June 30, 2026, the Company originated $32.9 million in renewable energy leases, compared to $13.3 million for the comparable prior year period. Investment tax credits related to renewable energy leases are recognized ratably based on income throughout each fiscal year.
Investments, Loans and Leases
| (Dollars in thousands) | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
| Total investments | $1,246,718 | $1,299,421 | $1,338,709 | $1,357,151 | $1,397,613 |
| Loans held for sale | | | | | |
| Term lending | 3,438 | - | 5,000 | - | 5,736 |
| Lease financing | 511 | 566 | 619 | 690 | 93 |
| SBA/USDA | 59,342 | 20,811 | 31,338 | 15,654 | 9,564 |
| Consumer finance | 33,997 | 31,695 | 51,012 | 163,077 | 34,374 |
| Total loans held for sale | 97,288 | 53,072 | 87,969 | 179,421 | 49,767 |
| Term lending | 2,666,977 | 2,501,855 | 2,506,777 | 2,302,540 | 2,003,699 |
| Asset-based lending | 697,687 | 660,220 | 629,317 | 593,265 | 610,852 |
| Factoring | 220,026 | 213,269 | 213,888 | 217,501 | 241,024 |
| Lease financing | 120,583 | 126,902 | 136,505 | 149,236 | 134,214 |
| SBA/USDA | 567,986 | 536,637 | 520,461 | 511,488 | 674,902 |
| Other commercial finance | 49,510 | 73,694 | 140,229 | 149,939 | 153,321 |
| Commercial finance | 4,322,769 | 4,112,577 | 4,147,177 | 3,923,969 | 3,818,012 |
| Consumer finance | 99,430 | 90,912 | 132,045 | 93,319 | 226,380 |
| Tax services | 34,770 | 60,191 | 62,049 | 2,532 | 37,419 |
| Warehouse finance | 647,611 | 604,642 | 641,669 | 645,186 | 664,110 |
| Total loans and leases | 5,104,580 | 4,868,322 | 4,982,940 | 4,665,006 | 4,745,921 |
| Net deferred loan origination costs (fees) | 3,261 | (1,157) | (85) | (98) | (2,597) |
| Total gross loans and leases | 5,107,841 | 4,867,165 | 4,982,855 | 4,664,908 | 4,743,324 |
| Allowance for credit losses | (109,780) | (98,279) | (58,840) | (53,319) | (105,995) |
| Total loans and leases, net | $4,998,061 | $4,768,886 | $4,924,015 | $4,611,589 | $4,637,329 |
The Company's investment security balances at June 30, 2026 totaled $1.25 billion, as compared to $1.30 billion at March 31, 2026 and $1.40 billion at June 30, 2025. The year-over-year decrease was primarily related to normal paydown activity of investment security balances and the sale of investment securities available-for-sale during the fourth quarter of fiscal 2025.
Total gross loans and leases totaled $5.11 billion at June 30, 2026, as compared to $4.87 billion at March 31, 2026 and $4.74 billion at June 30, 2025. The drivers for the sequential quarter increase were increases in the commercial finance, warehouse finance, and consumer finance portfolios, partially offset by the seasonal decrease in the tax services portfolio. The year-over-year increase was due to growth in the commercial finance portfolio, partially offset by a decrease in the consumer finance portfolio due to the aforementioned loan sale within that portfolio in October 2025, as well as a decrease in the warehouse finance and tax services portfolio.
Commercial finance loans, which comprised 85% of the Company's loan and lease portfolio, totaled $4.32 billion at June 30, 2026, reflecting an increase of $210.2 million, or 5%, from March 31, 2026 and an increase of $504.8 million, or 13%, from June 30, 2025. The sequential quarter increase in the commercial finance portfolio was driven by a $165.1 million increase in term lending, a $37.5 million increase in asset-based lending, and a $31.3 million increase in SBA/USDA, partially offset by a $24.2 million decrease in other commercial finance and a $6.3 million decrease in lease financing. The year-over-year increase was primarily driven by an increase of $663.3 million in term lending and an increase of $86.8 million in asset-based lending, partially offset by a decrease of $106.9 million in SBA/USDA and a decrease of $103.8 million in other commercial finance. These changes are primarily the result of the Company's efforts to maintain an optimized balance sheet.
Asset Quality
The Company’s allowance for credit losses ("ACL") totaled $109.8 million at June 30, 2026, an increase compared to $98.3 million at March 31, 2026 and an increase compared to $106.0 million at June 30, 2025. The sequential increase in the ACL was primarily due to an increase of $18.0 million in the allowance related to the commercial finance portfolio, partially offset by a $5.2 million decrease in the allowance related to the seasonal tax portfolio, and a $1.4 million decrease in the allowance related to the consumer finance portfolio. The increase in the ACL in the commercial finance portfolio was primarily driven by specific reserves on two loans and an increase in the current expected credit loss ("CECL") reserve.
The $3.8 million year-over-year increase in the ACL was primarily driven by a $25.4 million increase in the allowance related to the commercial finance portfolio, partially offset by a decrease in the allowance related to the consumer finance portfolio of $21.3 million.
The following table presents the Company's ACL as a percentage of its total loans and leases.
| As of the Period Ended |
|---|
| (Unaudited) | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
| Commercial finance | 1.71% | 1.36% | 1.16% | 1.18% | 1.27% |
| Consumer finance | 5.23% | 7.25% | 6.85% | 6.88% | 11.69% |
| Tax services | 86.66% | 58.63% | 1.71% | - % | 81.32% |
| Warehouse finance | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% |
| Total loans and leases | 2.15% | 2.02% | 1.18% | 1.14% | 2.23% |
| Total loans and leases excluding tax services | 1.57% | 1.31% | 1.17% | 1.14% | 1.60% |
The Company's ACL as a percentage of total loans and leases increased to 2.15% at June 30, 2026 from 2.02% at March 31, 2026 and decreased from 2.23% at June 30, 2025. The sequential increase in the total loans and leases coverage ratio was primarily driven by an increase in the ACL related to the commercial finance portfolio. The year-over-year decrease in the total loans and leases coverage ratio was primarily driven by the decrease in the ACL related to the decrease in the consumer finance portfolio due to the aforementioned sale of the consumer finance portfolio in October 2025. The year-over-year decrease in the total loans and leases coverage ratio was partially offset by an increase in the ACL related to the commercial finance portfolio.
Activity in the ACL for the periods presented was as follows.
| (Unaudited) | Three Months Ended | Nine Months Ended |
| (Dollars in thousands) | June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 |
| Beginning balance | $98,279 | $58,840 | $102,890 | $53,319 | $71,765 |
| Provision (reversal of) - tax services loans | (6,035) | 24,476 | (4,728) | 17,043 | 22,751 |
| Provision (reversal of) - all other loans and leases | 33,565 | 20,800 | 13,959 | 59,071 | 40,251 |
| Charge-offs - tax services loans | (1,000) | - | (554) | (1,000) | (1,295) |
| Charge-offs - all other loans and leases | (17,712) | (16,767) | (9,482) | (37,886) | (41,469) |
| Recoveries - tax services loans | 1,879 | 9,752 | 1,930 | 14,090 | 8,971 |
| Recoveries - all other loans and leases | 804 | 1,178 | 1,980 | 5,143 | 5,021 |
| Ending balance | $109,780 | $98,279 | $105,995 | $109,780 | $105,995 |
The Company recognized a provision for credit losses of $28.3 million for the quarter ended June 30, 2026, compared to $9.3 million for the comparable period in the prior fiscal year. The year-over-year increase was primarily due to increases in the commercial finance portfolio of $22.6 million, partially offset by decreases in the consumer finance portfolio of $3.0 million and in the tax services portfolio of $1.3 million. The increase in the provision in the commercial finance portfolio was primarily driven by specific reserves on two loans and an increase in the CECL reserve.
The Company recognized net charge-offs of $16.0 million for the quarter ended June 30, 2026, of which $15.9 million was attributable to the commercial finance portfolio. Net charge-offs were $6.1 million for the quarter ended June 30, 2025, comprised of $5.8 million within the consumer finance portfolio and $1.7 million within the commercial finance portfolio, while net recoveries of $1.4 million were recognized in the seasonal tax services portfolio.
The Company's past due loans and leases were as follows for the periods presented.
| As of June 30, 2026 | Accruing and Nonaccruing Loans and Leases | Nonperforming Loans and Leases |
| (Dollars in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | > 89 Days Past Due | Total Past Due | Current | Total Loans and Leases Receivable | > 89 Days Past Due and Accruing | Nonaccrual Balance | Total |
| Loans held for sale | $ - | $12,420 | $ - | $12,420 | $84,868 | $97,288 | $ - | $ - | $ - |
| Commercial finance | 56,731 | 87,246 | 171,712 | 315,689 | 4,007,080 | 4,322,769 | 15,711 | 255,365 | 271,076 |
| Consumer finance | 1,425 | 448 | 3,998 | 5,871 | 93,559 | 99,430 | 3,998 | - | 3,998 |
| Tax services | - | 34,770 | - | 34,770 | - | 34,770 | - | - | - |
| Warehouse finance | - | - | - | - | 647,611 | 647,611 | - | - | - |
| Total loans and leases held for investment | 58,156 | 122,464 | 175,710 | 356,330 | 4,748,250 | 5,104,580 | 19,709 | 255,365 | 275,074 |
| Total loans and leases | $58,156 | $134,884 | $175,710 | $368,750 | $4,833,118 | $5,201,868 | $19,709 | $255,365 | $275,074 |
| As of March 31, 2026 | Accruing and Nonaccruing Loans and Leases | Nonperforming Loans and Leases |
| (Dollars in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | > 89 Days Past Due | Total Past Due | Current | Total Loans and Leases Receivable | > 89 Days Past Due and Accruing | Nonaccrual Balance | Total |
| Loans held for sale | $ - | $ - | $ - | $ - | $53,072 | $53,072 | $ - | $ - | $ - |
| Commercial finance | 91,137 | 9,838 | 88,791 | 189,766 | 3,922,811 | 4,112,577 | 25,850 | 91,446 | 117,296 |
| Consumer finance | 985 | 492 | 417 | 1,894 | 89,018 | 90,912 | 417 | - | 417 |
| Tax services | 1,454 | - | - | 1,454 | 58,737 | 60,191 | - | - | - |
| Warehouse finance | - | - | - | - | 604,642 | 604,642 | - | - | - |
| Total loans and leases held for investment | 93,576 | 10,330 | 89,208 | 193,114 | 4,675,208 | 4,868,322 | 26,267 | 91,446 | 117,713 |
| Total loans and leases | $93,576 | $10,330 | $89,208 | $193,114 | $4,728,280 | $4,921,394 | $26,267 | $91,446 | $117,713 |
The Company's nonperforming assets at June 30, 2026 were $277.5 million, representing 3.79% of total assets, compared to $119.8 million, or 1.68% of total assets at March 31, 2026 and $74.7 million, or 1.03% of total assets at June 30, 2025.
The increase in the nonperforming assets as a percentage of total assets at June 30, 2026, compared to March 31, 2026, was driven by an increase in nonperforming loans in the commercial finance and consumer finance portfolios. When comparing the current period to the same period of the prior year, the increase was driven by an increase in nonperforming loans in the commercial finance portfolio, partially offset by a decrease in nonperforming loans in the consumer finance portfolio.
The Company's nonperforming loans and leases at June 30, 2026, were $275.1 million, representing 5.28% of total gross loans and leases, compared to $117.7 million, or 2.39% of total gross loans and leases at March 31, 2026 and $71.3 million, or 1.49% of total gross loans and leases at June 30, 2025. The primary reason for the increase in nonperforming commercial finance loans was related to certain renewable energy construction projects with a common developer. The Company continues to work with other parties in these projects to bring them to completion.
Deposits, Borrowings and Other Liabilities
The average balance of total deposits and interest-bearing liabilities was $6.25 billion for the quarter ended June 30, 2026, compared to $6.07 billion for the same period in the prior fiscal year. Total average deposits for the fiscal 2026 third quarter increased by $170.9 million to $6.17 billion compared to the same period in fiscal 2025. The increase in average deposits was primarily due to increases in noninterest-bearing deposits and money market deposits.
Total end-of-period deposits decreased 1% to $5.95 billion at June 30, 2026, from $6.01 billion at June 30, 2025. The decrease in end-of-period deposits was primarily driven by a decrease in noninterest-bearing deposits of $65.4 million, partially offset by an increase in interest-bearing checking deposits of $18.8 million.
As of June 30, 2026, the Company managed $575.0 million of customer deposits at other banks in its capacity as custodian, compared to $1.07 billion as of March 31, 2026 and $430.7 million as of June 30, 2025. These deposits provide the Company with the ability to earn servicing fee income, typically reflective of the EFFR.
Regulatory Capital
The Company and its subsidiary Pathward®, N.A. (the "Bank") remained above the federal regulatory minimum capital requirements at June 30, 2026, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies. Regulatory capital ratios of the Company and the Bank are stated in the table below. Regulatory capital is not affected by the unrealized loss on accumulated other comprehensive income (“AOCI”). The securities portfolio is primarily comprised of amortizing securities that should provide consistent cash flow.
The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analysis.
| As of the Periods Indicated | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
| Company | | | | | |
| Tier 1 leverage capital ratio | 9.66% | 8.62% | 9.51% | 9.79% | 9.78% |
| Common equity Tier 1 capital ratio | 11.51% | 12.65% | 12.02% | 12.70% | 12.87% |
| Tier 1 capital ratio | 11.74% | 12.89% | 12.26% | 12.95% | 13.12% |
| Total capital ratio | 13.33% | 14.52% | 13.67% | 14.27% | 14.76% |
| Bank | | | | | |
| Tier 1 leverage ratio | 9.91% | 8.85% | 9.84% | 10.00% | 10.00% |
| Common equity Tier 1 capital ratio | 12.05% | 13.24% | 12.67% | 13.23% | 13.43% |
| Tier 1 capital ratio | 12.05% | 13.24% | 12.67% | 13.23% | 13.43% |
| Total capital ratio | 13.31% | 14.49% | 13.73% | 14.19% | 14.68% |
June 30, 2026 percentages are preliminary pending completion and filing of the Company's regulatory reports. Regulatory capital ratios for periods presented reflect the Company's election of the five-year CECL transition for regulatory capital purposes.
The following table provides the non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP:
| Standardized Approach |
|---|
| As of the Periods Indicated (Dollars in thousands) | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
| Total stockholders' equity | $851,146 | $850,677 | $853,712 | $857,454 | $818,148 |
| Adjustments: | | | | | |
| LESS: Goodwill, net of associated deferred tax liabilities | 284,105 | 284,471 | 284,815 | 285,158 | 285,482 |
| LESS: Certain other intangible assets | 18,699 | 17,306 | 17,746 | 18,077 | 17,091 |
| LESS: Net deferred tax assets from operating loss and tax credit carry-forwards | 785 | 1,207 | 5,877 | 5,733 | 2,671 |
| LESS: Net unrealized (losses) on available for sale securities | (138,411) | (138,462) | (133,516) | (143,190) | (158,673) |
| LESS: Noncontrolling interest | 245 | (785) | (823) | (591) | (856) |
| ADD: Adoption of Accounting Standards Update 2016-13 | - | - | - | 1,788 | 1,788 |
| Common Equity Tier 1 | 685,723 | 686,940 | 679,613 | 694,055 | 674,221 |
| Long-term borrowings and other instruments qualifying as Tier 1 | 13,661 | 13,661 | 13,661 | 13,661 | 13,661 |
| Tier 1 minority interest not included in common equity Tier 1 capital | 115 | (382) | (437) | (307) | (513) |
| Total Tier 1 capital | 699,499 | 700,219 | 692,837 | 707,409 | 687,369 |
| Allowance for credit losses | 74,916 | 68,278 | 59,687 | 52,455 | 65,960 |
| Subordinated debentures, net of issuance costs | 19,872 | 19,846 | 19,821 | 19,796 | 19,770 |
| Total capital | $794,287 | $788,343 | $772,345 | $779,660 | $773,099 |
Capital amounts and ratios are calculated in accordance with Basel III capital rules as implemented by U.S. banking regulators and reflect fully phased-in regulatory requirements applicable to the Company as of the reporting date.
Conference Call
The Company will host a conference call and earnings webcast with a corresponding presentation at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) on Wednesday, July 22, 2026. The live webcast of the call can be accessed from Pathward’s Investor Relations website at www.pathwardfinancial.com. Telephone participants may access the conference call by dialing 1-833-461-5787 approximately 10 minutes prior to start time and reference meeting ID 452951502.
The quarterly investor presentation prepared for use in connection with the Company's conference call and earnings webcast is available under the Presentations link in the Investor Relations - Events & Presentations section of the Company's website at www.pathwardfinancial.com. A webcast replay will also be archived at www.pathwardfinancial.com for one year.
About Pathward Financial, Inc.
Pathward Financial, Inc. (Nasdaq: CASH) is a U.S.-based financial holding company driven by its purpose to power financial inclusion for all. Through our subsidiary, Pathward®, N.A., we strive to increase financial availability, choice, and opportunity across our Partner Solutions and Commercial Finance business lines. These strategic business lines provide support to individuals and businesses. Learn more at www.pathwardfinancial.com.
Forward-Looking Statements
The Company and the Bank may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the Securities and Exchange Commission ("SEC"), the Company’s reports to stockholders, and in other communications by the Company and the Bank, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements notice
You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” "target," or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company’s control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results, including our performance expectations and fiscal 2026 and 2027 financial guidance; our fiscal 2026 goals and strategy; including our emphasis on people, processes and technology; progress on key strategic initiatives; future performance and business prospects, including our Partner Solutions pipeline; our value proposition, including opportunities for revenue growth; expected results of our partnerships; impacts of our improved data analytics, underwriting and monitoring processes; impacts of our evolved operating model; expectations with respect to credit performance, expected nonperforming loan resolutions and net charge-off rates; the performance of our securities portfolio; customer retention; loan and other product demand; new products and services; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; and technology, including impacts of technology investments. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; our ability to successfully implement measures designed to reduce expenses and increase efficiencies; changes in trade, monetary, and fiscal policies and laws, including actual changes in interest rates and the Fed Funds rate and changes in international trade policies, tariffs, and treaties affecting imports and exports, and their related impacts on macroeconomic conditions, customer behavior, funding costs and loan and securities portfolios; changes in tax laws; trade disputes, barriers to trade or the emergence of trade restrictions; the strength of the United States' economy and the local economies in which the Company operates; adverse developments in the financial services industry generally such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer behavior; inflation, market, and monetary fluctuations; our liquidity and capital positions, including the sufficiency of our liquidity; the timely and efficient development of new products and services offered by the Company or its strategic partners, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value and acceptance of these products and services by users; the Bank's ability to maintain its Durbin Amendment exemption; the risks of dealing with or utilizing third parties, including, in connection with the Company’s prepaid card and tax refund advance businesses; the risk of reduced volume of refund advance loans as a result of reduced customer demand for or usage of the Bank's strategic partners’ refund advance products; our relationship with, and any actions, which may be initiated by our regulators, and any related increases in compliance and other costs; changes in financial services laws and regulations, including laws and regulations relating to the tax refund industry; technological changes, including, but not limited to, the protection of our electronic systems and information; the impact of acquisitions and divestitures; litigation risk; the growth of the Company’s business, as well as expenses related thereto; continued maintenance by the Bank of its status as a well-capitalized institution; changes in consumer borrowing, spending and saving habits; losses from fraudulent or illegal activity; technological risks and developments and cyber threats, attacks, or events; emerging external focus among regulators and other officials related to risks in connection with the development and use of artificial intelligence; the success of the Company at maintaining its high quality asset level and managing and collecting assets of borrowers in default should problem assets increase; and the potential adverse effects of unusual and infrequently occurring events, including the impact on financial markets from geopolitical conflicts, government shutdowns, weather-related disasters, or public health events, such as pandemics, and any governmental or societal responses thereto.
The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K, for the Company’s fiscal year ended September 30, 2025, and in the Company's other filings made with the SEC. The Company expressly disclaims any intent or obligation to update, revise or clarify any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changed circumstances, or future events or for any other reason, except as required by applicable law.
Condensed Consolidated Statements of Financial Condition (Unaudited)
| (Dollars in Thousands, Except Share Data) | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
| ASSETS | | | | | |
| Cash and cash equivalents | $149,412 | $157,602 | $331,217 | $120,568 | $258,343 |
| Securities available for sale, at fair value | 1,219,616 | 1,271,353 | 1,310,047 | 1,327,843 | 1,367,340 |
| Securities held to maturity, at amortized cost | 27,101 | 28,068 | 28,662 | 29,308 | 30,273 |
| Federal Reserve Bank and Federal Home Loan Bank Stock, at cost | 30,915 | 25,480 | 24,310 | 24,708 | 29,451 |
| Loans held for sale | 97,288 | 53,072 | 87,969 | 179,421 | 49,767 |
| Loans and leases | 5,107,841 | 4,867,165 | 4,982,855 | 4,664,908 | 4,743,324 |
| Allowance for credit losses | (109,780) | (98,279) | (58,840) | (53,319) | (105,995) |
| Accrued interest receivable | 36,966 | 36,127 | 36,174 | 38,520 | 39,996 |
| Premises, furniture, and equipment, net | 43,313 | 42,254 | 42,370 | 40,632 | 39,799 |
| Rental equipment, net | 152,451 | 146,190 | 154,533 | 159,446 | 181,370 |
| Goodwill and intangible assets | 308,023 | 308,741 | 309,712 | 310,430 | 311,193 |
| Other assets | 251,227 | 274,626 | 311,196 | 329,879 | 284,983 |
| Total assets | $7,314,373 | $7,112,399 | $7,560,205 | $7,172,344 | $7,229,844 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| LIABILITIES | | | | | |
| Deposits | 5,950,309 | 5,851,696 | 6,350,394 | 5,886,947 | 6,005,246 |
| Short-term borrowings | 167,500 | 26,000 | - | 9,000 | 115,000 |
| Long-term borrowings | 33,533 | 33,508 | 33,482 | 33,456 | 33,431 |
| Accrued expenses and other liabilities | 311,885 | 350,518 | 322,617 | 385,487 | 258,019 |
| Total liabilities | 6,463,227 | 6,261,722 | 6,706,493 | 6,314,890 | 6,411,696 |
| STOCKHOLDERS’ EQUITY | | | | | |
| Preferred stock | - | - | - | - | - |
| Common stock, $.01 par value | 210 | 213 | 222 | 228 | 230 |
| Common stock, Nonvoting, $.01 par value | - | - | - | - | - |
| Additional paid-in capital | 657,682 | 655,128 | 651,199 | 648,330 | 646,044 |
| Retained earnings | 339,252 | 340,744 | 346,529 | 359,830 | 337,321 |
| Accumulated other comprehensive loss | (142,706) | (141,086) | (134,996) | (145,461) | (159,709) |
| Treasury stock, at cost | (3,537) | (3,537) | (8,419) | (4,882) | (4,882) |
| Total equity attributable to parent | 850,901 | 851,462 | 854,535 | 858,045 | 819,004 |
| Noncontrolling interest | 245 | (785) | (823) | (591) | (856) |
| Total stockholders’ equity | 851,146 | 850,677 | 853,712 | 857,454 | 818,148 |
| Total liabilities and stockholders’ equity | $7,314,373 | $7,112,399 | $7,560,205 | $7,172,344 | $7,229,844 |
Condensed Consolidated Statements of Operations (Unaudited)
| Three Months Ended | Nine Months Ended |
|---|
| (Dollars in thousands, except per share data) | June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 |
| Interest and dividend income: | | | | | |
| Loans and leases, including fees | $101,289 | | $114,829 | | $108,766 | | $323,893 | | $340,370 | |
| Mortgage-backed securities | 7,396 | | 7,590 | | 8,337 | | 22,798 | | 25,903 | |
| Other investments | 5,348 | | 8,457 | | 6,489 | | 19,440 | | 27,679 | |
| 114,033 | | 130,876 | | 123,592 | | 366,131 | | 393,952 | |
| Interest expense: | | | | | |
| Deposits | 140 | | 4,274 | | 287 | | 4,620 | | 5,147 | |
| FHLB advances and other borrowings | 980 | | 1,478 | | 992 | | 4,136 | | 4,963 | |
| 1,120 | | 5,752 | | 1,279 | | 8,756 | | 10,110 | |
| Net interest income | 112,913 | | 125,124 | | 122,313 | | 357,375 | | 383,842 | |
| Provision for credit loss | 28,309 | | 45,616 | | 9,278 | | 77,155 | | 63,205 | |
| Net interest income after provision for credit loss | 84,604 | | 79,508 | | 113,035 | | 280,220 | | 320,637 | |
| Noninterest income: | | | | | |
| Refund transfer product fees | 11,209 | | 34,789 | | 9,846 | | 46,353 | | 42,919 | |
| Refund advance and other tax fee income | 696 | | 57,514 | | 307 | | 58,341 | | 49,416 | |
| Card and deposit fees | 34,570 | | 37,526 | | 37,342 | | 102,236 | | 97,201 | |
| Rental income | 9,607 | | 10,947 | | 12,913 | | 32,174 | | 39,822 | |
| (Loss) on sale of securities | - | | - | | - | | - | | (22,899) | |
| Gain on divestitures | - | | - | | - | | - | | 15,044 | |
| Secondary market revenue | 13,969 | | 3,574 | | 7,144 | | 21,700 | | 26,900 | |
| Gain (loss) on sale of other | (51) | | 883 | | 394 | | 1,320 | | 2,007 | |
| Other income | 6,731 | | 5,947 | | 5,496 | | 19,550 | | 18,934 | |
| Total noninterest income | 76,731 | | 151,180 | | 73,442 | | 281,674 | | 269,344 | |
| Noninterest expense: | | | | | |
| Compensation and benefits | 52,361 | | 55,405 | | 48,559 | | 159,630 | | 149,755 | |
| Refund transfer product expense | 2,758 | | 9,127 | | 2,818 | | 11,958 | | 11,401 | |
| Refund advance expense | 90 | | 1,425 | | (74) | | 1,587 | | 1,225 | |
| Card processing | 30,671 | | 33,475 | | 36,197 | | 94,583 | | 105,750 | |
| Building and software | 13,054 | | 12,201 | | 10,633 | | 37,835 | | 30,646 | |
| Operating lease equipment depreciation | 7,545 | | 9,075 | | 11,569 | | 26,615 | | 34,775 | |
| Legal and consulting | 6,122 | | 5,331 | | 11,094 | | 17,007 | | 22,197 | |
| Intangible amortization | 718 | | 971 | | 798 | | 2,407 | | 2,693 | |
| Impairment expense | 177 | | - | | 1,077 | | 177 | | 2,590 | |
| Other expense | 15,625 | | 16,446 | | 16,651 | | 47,991 | | 54,264 | |
| Total noninterest expense | 129,121 | | 143,456 | | 139,322 | | 399,790 | | 415,296 | |
| Income before income tax expense | 32,214 | | 87,232 | | 47,155 | | 162,104 | | 174,685 | |
| Income tax expense | 3,062 | | 14,171 | | 4,795 | | 24,426 | | 26,966 | |
| Net income before noncontrolling interest | 29,152 | | 73,061 | | 42,360 | | 137,678 | | 147,719 | |
| Net income attributable to noncontrolling interest | 183 | | 151 | | 213 | | 633 | | 650 | |
| Net income attributable to parent | $28,969 | | $72,910 | | $42,147 | | $137,045 | | $147,069 | |
| Less: Allocation of Earnings to participating securities | | 28 | | 70 | | 151 | | 154 | | 550 |
| Net income attributable to common shareholders | | 28,941 | | 72,840 | | 41,996 | | 136,891 | | 146,519 |
| Earnings per common share: | | | | | |
| Basic | $1.37 | | $3.37 | | $1.83 | | $6.32 | | $6.20 | |
| Diluted | $1.37 | | $3.35 | | $1.81 | | $6.29 | | $6.17 | |
| Shares used in computing earnings per common share: | | | | | |
| Basic | 21,065,733 | | 21,612,033 | | 23,006,454 | | 21,665,670 | | 23,629,565 | |
| Diluted | 21,165,826 | | 21,720,222 | | 23,140,124 | | 21,773,592 | | 23,745,086 | |
Amounts presented are used in the two-class earnings per common share calculation.
Average Balances, Interest Rates and Yields
The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and in rates. Only the yield/rate reflects tax-equivalent adjustments. Nonaccruing loans and leases have been included in the table as loans carrying a zero yield.
| Three Months Ended June 30, | | | | 2026 | | | | 2025 |
| (Dollars in thousands) | Average Outstanding Balance | Interest Earned / Paid | Yield /Rate | Average Outstanding Balance | Interest Earned / Paid | Yield /Rate |
| Interest-earning assets: | | | | | | |
| Cash and fed funds sold | $326,147 | $1,963 | 2.41% | | $281,545 | $2,326 | 3.31% | |
| Mortgage-backed securities | 1,077,514 | 7,396 | 2.75% | | 1,198,015 | 8,337 | 2.79% | |
| Tax-exempt investment securities | 102,169 | 724 | 3.60% | | 113,886 | 782 | 3.49% | |
| Asset-backed securities | 121,341 | 1,363 | 4.50% | | 152,635 | 1,968 | 5.17% | |
| Other investment securities | 166,454 | 1,298 | 3.13% | | 179,942 | 1,413 | 3.15% | |
| Total investments | 1,467,478 | 10,781 | 3.00% | | 1,644,478 | 12,500 | 3.10% | |
| Commercial finance | 4,289,858 | 82,791 | 7.74% | | 3,717,018 | 76,736 | 8.28% | |
| Consumer finance | 121,678 | 5,156 | 17.00% | | 268,132 | 16,791 | 25.12% | |
| Tax services | 41,206 | 45 | 0.44% | | 43,035 | 48 | 0.45% | |
| Warehouse finance | 629,727 | 13,297 | 8.47% | | 648,059 | 15,191 | 9.40% | |
| Total loans and leases | 5,082,469 | 101,289 | 7.99% | | 4,676,244 | 108,766 | 9.33% | |
| Total interest-earning assets | $6,876,094 | $114,033 | 6.66% | | $6,602,267 | $123,592 | 7.52% | |
| Noninterest-earning assets | 532,081 | | | 567,794 | | |
| Total assets | $7,408,175 | | | $7,170,061 | | |
| Interest-bearing liabilities: | | | | | | |
| Interest-bearing checking | $2,375 | $ - | 0.02% | | $1,196 | $ - | 0.06% | |
| Savings | 50,792 | 4 | 0.03% | | 53,450 | 4 | 0.03% | |
| Money markets | 188,249 | 120 | 0.26% | | 171,503 | 264 | 0.62% | |
| Time deposits | 2,640 | 6 | 0.91% | | 2,855 | 7 | 1.03% | |
| Wholesale deposits | 1,060 | 10 | 3.62% | | 1,035 | 12 | 4.56% | |
| Total interest-bearing deposits (a) | 245,116 | 140 | 0.23% | | 230,039 | 287 | 0.50% | |
| Overnight fed funds purchased | 39,743 | 369 | 3.72% | | 31,365 | 360 | 4.61% | |
| Subordinated debentures | 19,855 | 357 | 7.21% | | 19,753 | 355 | 7.21% | |
| Other borrowings | 13,661 | 254 | 7.45% | | 13,661 | 277 | 8.13% | |
| Total borrowings | 73,259 | 980 | 5.36% | | 64,779 | 992 | 6.14% | |
| Total interest-bearing liabilities | 318,375 | 1,120 | 1.41% | | 294,818 | 1,279 | 1.74% | |
| Noninterest-bearing deposits (b) | 5,928,352 | - | - % | | 5,772,508 | - | - % | |
| Total deposits and interest-bearing liabilities | $6,246,727 | $1,120 | 0.07% | | $6,067,326 | $1,279 | 0.08% | |
| Other noninterest-bearing liabilities | 315,151 | | | 304,786 | | |
| Total liabilities | 6,561,878 | | | 6,372,112 | | |
| Shareholders' equity | 846,297 | | | 797,949 | | |
| Total liabilities and shareholders' equity | $7,408,175 | | | $7,170,061 | | |
| Net interest income and net interest rate spread including noninterest-bearing deposits | | $112,913 | 6.59% | | | $122,313 | 7.44% | |
| Net interest margin | | | 6.59% | | | | 7.43% | |
| Tax-equivalent effect | | | 0.01% | | | | 0.01% | |
| Net interest margin, tax-equivalent | | | 6.60% | | | | 7.44% | |
| Total cost of deposits (a+b) | 6,173,468 | 140 | 0.01% | | 6,002,547 | 287 | 0.02% | |
Tax rate used to arrive at the TEY for the three months ended June 30, 2026 and 2025 was 21%.
Net interest margin expressed on a fully-taxable-equivalent basis ("net interest margin, tax-equivalent") is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.
Selected Financial Information
| As of and For the Three Months Ended | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 |
| Equity to total assets | 11.64% | 11.96% | 11.29% | 11.96% | 11.32% |
| Book value per common share outstanding | $40.48 | $39.89 | $38.51 | $37.65 | $35.64 |
| Tangible book value per common share outstanding | $25.83 | $25.41 | $24.54 | $24.02 | $22.09 |
| Common shares outstanding | 21,023,902 | 21,327,534 | 22,169,535 | 22,772,570 | 22,953,608 |
| Nonperforming assets to total assets | 3.79% | 1.68% | 1.47% | 1.42% | 1.03% |
| Nonperforming loans and leases to total loans and leases | 5.28% | 2.39% | 2.15% | 2.05% | 1.49% |
| Net interest margin | 6.59% | 6.63% | 6.95% | 7.46% | 7.43% |
| Net interest margin, tax-equivalent | 6.60% | 6.64% | 6.96% | 7.47% | 7.44% |
| Return on average assets | 1.57% | 3.56% | 1.87% | 2.09% | 2.36% |
| Return on average equity | 13.73% | 34.67% | 16.76% | 18.93% | 21.19% |
| Return on average tangible equity | 21.61% | 54.41% | 26.72% | 30.65% | 34.77% |
| Full-time equivalent employees | 1,196 | 1,181 | 1,170 | 1,179 | 1,178 |
Non-GAAP Reconciliations
| Net Interest Margin and Cost of Deposits | At and For the Three Months Ended |
| (Dollars in thousands) | June 30, 2026 | March 31, 2026 | June 30, 2025 |
| Average interest earning assets | $6,876,094 | $7,653,765 | $6,602,267 |
| Net interest income | $112,913 | $125,124 | $122,313 |
| Net interest margin | 6.59% | 6.63% | 7.43% |
| Average total deposits | $6,173,468 | $7,021,044 | $6,002,547 |
| Deposit interest expense | $140 | $4,274 | $287 |
| Cost of deposits | 0.01% | 0.25% | 0.02% |
| Adjusted Net Interest Margin | | | |
| Average interest earning assets | $6,876,094 | $7,653,765 | $6,602,267 |
| Net interest income | 112,913 | 125,124 | 122,313 |
| Less: Contractual, rate-related processing expense associated with deposits on the Company's balance sheet | 21,897 | 23,971 | 23,831 |
| Less: Gross interest income on consumer finance loans | 718 | 814 | 10,717 |
| Adjusted net interest income | $90,298 | $100,339 | $87,765 |
| Adjusted net interest margin | 5.27% | 5.32% | 5.33% |
| Average total deposits | $6,173,468 | $7,021,044 | $6,002,547 |
| Deposit interest expense | 140 | 4,274 | 287 |
| Add: Contractual, rate-related processing expense associated with deposits on the Company's balance sheet | 21,897 | 23,971 | 23,831 |
| Adjusted deposit expense | $22,037 | $28,245 | $24,118 |
| Adjusted cost of deposits | 1.43% | 1.63% | 1.61% |
Adjusted net interest margin includes contractual, rate-related processing expense associated with deposits on the Company's balance sheet and excludes the gross interest income on consumer finance loans.
Adjusted cost of deposits includes contractual, rate-related card processing expense associated with deposits on the Company’s balance sheet.
Contacts
Darby Schoenfeld, CPA
SVP, Chief of Staff & Investor Relations
877-497-7497 investorrelations@pathward.com
mediarelations@pathward.com