US Market News
2 months ago
Pathward Financial, Inc. Announces Results for 2026 Fiscal Second QuarterApril 22, 2026 4:05 PM
Business Wire
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 results for the 2026 fiscal second quarter. The Company reported net income of $72.9 million, or $3.35 per share, for the three months ended March 31, 2026, compared to net income of $75.0 million, or $3.14 per share, for the three months ended March 31, 2025.
CEO Brett Pharr said, "At the midpoint of our fiscal year, we continue to make good progress on our goals and execute on our long-term strategy — being the trusted platform that enables our partners to thrive. Our tax season is going very well with tax-related products leading the way in revenue growth for the quarter. Additionally, new and existing partnerships announced last year are developing nicely and the Partner Solutions pipeline remains robust. Net interest income from our commercial finance loans also increased significantly as well. All in all, our core businesses remain healthy and we are pleased with the results achieved in the quarter."
Company Highlights
The Company's subsidiary Pathward®, N.A. announced it became Certified™ by Great Place To Work® for the fourth year in a row. This year, 88% of employees surveyed said Pathward is a Great Place To Work® – 31 points higher than the typical U.S. company. Great Place to Work® describes itself as the global authority on workplace culture, employee experience, and the leadership behaviors proven to deliver market-leading revenue, employee retention and increased innovation.
Financial Highlights for the 2026 Fiscal Second Quarter
All highlights are compared to the same fiscal quarter in the prior year period.
Total revenue was $276.3 million, which was driven by a 9% increase in noninterest income. This was primarily driven by growth in card and deposit fees of 22%, refund advance and other tax fee income of 18%, and refund transfer product fees of 7%. Noninterest income represented 55% of total revenue.
New loan originations, excluding tax services, increased from $902 million to $1.31 billion, primarily driven by the new contract announced during fiscal 2025 within consumer finance.
Annualized return on average assets was 3.56% and return on average tangible equity was 54.41%.
The Company repurchased 855,201 shares of common stock at an average share price of $84.15. As of March 31, 2026, there were 3,430,811 shares available for repurchase under the current common stock share repurchase program.
Tax Season
All reported numbers are for the six months ended March 31, 2026 and are compared to the same fiscal period in the prior year.
Total tax services product revenue was $95.7 million, an increase of 13% compared to the prior year. This was driven by an increase in the number of refund advances, as well as higher origination volumes and an increase in refund transfers. Total tax services product fee income increased by $10.6 million and net interest income on tax services loans increased $0.2 million. Total tax services product expense increased $0.8 million when compared to the prior year.
Provision for credit losses for the tax services portfolio decreased $4.4 million when compared to the prior year 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 30% to $62.0 million from $47.6 million. This increase is the result of significant work to grow this business, increase market share and evolve the underwriting model.
For the 2026 tax season through March 31, 2026, the Company originated $1.87 billion in refund advance loans compared to $1.66 billion during the 2025 tax season.
Net Interest Income
Net interest income for the second quarter of fiscal 2026 was $125.1 million, a decrease of 8% compared to the same quarter in fiscal 2025, which was primarily driven by decreases in interest income of $12.8 million on the consumer finance portfolio and $4.2 million of cash and fed funds sold. 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 $8.4 million over that same period.
The Company’s average interest-earning assets for the second quarter of fiscal 2026 decreased by $107.4 million to $7.65 billion compared to the same quarter in fiscal 2025 due to decreases in the average outstanding balances in cash and fed funds sold and total investments securities. The decrease was partially offset by an increase in the average outstanding balance of total loans and leases. These results are expected as the Company continues to shift the balance sheet toward higher returning assets. The second quarter average outstanding balance of loans and leases increased $437.9 million compared to the same quarter of the prior fiscal year due to increases in the commercial finance and tax services portfolios, partially offset by decreases in the consumer finance and warehouse finance portfolios.
Fiscal 2026 second quarter net interest margin ("NIM") decreased to 6.63% from 7.12% in the second 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 5.32% in the fiscal 2026 second quarter compared to 5.09% during the fiscal 2025 second 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 48 basis point to 6.95% compared to the prior year quarter. The yield on the loan and lease portfolio was 8.43% compared to 9.54% for the comparable period last year and the TEY on the securities portfolio was 3.06% compared to 3.11% 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 0.33% during the fiscal 2026 second quarter, as compared to 0.32% during the prior year quarter. The Company's overall cost of deposits was 0.25% in the fiscal second quarter of 2026, as compared to 0.23% 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 1.63% in the fiscal 2026 second quarter, a decrease from 1.75% 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 second quarter noninterest income increased 9% to $151.2 million, compared to $138.5 million for the same period of the prior year. The increase was driven by increases in refund advance and other tax fee income, card and deposit fees, and refund transfer product fees, partially offset by decreases in secondary market revenue and rental income. Secondary market revenue in the prior year period was elevated by the gain from a portfolio sale within working capital. That gain was partially offset by a loss on sale of securities and a loss on divestiture that were also recognized in the prior year period.
Servicing fee income on custodial deposits totaled $7.8 million during the 2026 fiscal second quarter, as compared to $3.4 million for the fiscal quarter ended December 31, 2025, and $6.5 million for the same period of the prior year. The sequential and year-over-year increases in servicing fee income on custodial deposit balances held at partner banks was due to higher quarterly average deposits balances held at partner banks.
Noninterest Expense
Noninterest expense decreased 3% to $143.5 million in the second quarter of fiscal 2026, compared to $148.2 million for the same quarter last year. The decrease was primarily attributable to reductions in card processing and other expense, partially offset by increases in compensation and benefits and building and software expense. We believe that the Company continues to manage expenses well while simultaneously investing in people, processes and systems to execute on its long-term strategy.
Card processing expense is primarily driven by rate-related agreements with Partner Solutions relationships. The amount of expense paid under those agreements is based on an agreed upon rate index that varies depending on the 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 66% of the deposit portfolio was subject to these rate-related processing expenses during the fiscal 2026 second quarter. For the fiscal quarter ended March 31, 2026, contractual, rate-related processing expense was $25.4 million, as compared to $23.8 million for the fiscal quarter ended December 31, 2025, and $28.4 million for the fiscal quarter ended March 31, 2025.
Income Tax Expense
The Company recorded an income tax expense of $14.2 million, representing an effective tax rate of 16.2% for the fiscal 2026 second quarter, compared to an income tax expense of $16.2 million, representing an effective tax rate of 17.7%, for the second quarter last fiscal year. The current quarter decrease in income tax expense compared to the prior year quarter was primarily driven by research tax credits.
The Company originated $8.0 million in renewable energy leases during the fiscal 2026 second quarter, resulting in $2.0 million in total net investment tax credits. During the second quarter of fiscal 2025, the Company originated $1.9 million in renewable energy leases resulting in $0.5 million in total net investment tax credits. For the six months ended March 31, 2026, the Company originated $27.7 million in renewable energy leases, compared to $11.2 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)
March 31, 2026
December 31, 2025
September 30, 2025
June 30, 2025
March 31, 2025
Total investments
$
1,299,421
$
1,338,709
$
1,357,151
$
1,397,613
$
1,442,855
Loans held for sale
Term lending
—
5,000
—
5,736
—
Lease financing
566
619
690
93
—
SBA/USDA
20,811
31,338
15,654
9,564
15,188
Consumer finance
31,695
51,012
163,077
34,374
30,579
Total loans held for sale
53,072
87,969
179,421
49,767
45,767
Term lending
2,501,855
2,506,777
2,302,540
2,003,699
1,766,432
Asset-based lending
660,220
629,317
593,265
610,852
542,483
Factoring
213,269
213,888
217,501
241,024
224,520
Lease financing
126,902
136,505
149,236
134,214
134,856
SBA/USDA
536,637
520,461
511,488
674,902
701,736
Other commercial finance
73,694
140,229
149,939
153,321
154,728
Commercial finance
4,112,577
4,147,177
3,923,969
3,818,012
3,524,755
Consumer finance
90,912
132,045
93,319
226,380
246,202
Tax services
60,191
62,049
2,532
37,419
55,973
Warehouse finance
604,642
641,669
645,186
664,110
643,124
Total loans and leases
4,868,322
4,982,940
4,665,006
4,745,921
4,470,054
Net deferred loan origination costs (fees)
(1,157
)
(85
)
(98
)
(2,597
)
(5,184
)
Total gross loans and leases
4,867,165
4,982,855
4,664,908
4,743,324
4,464,870
Allowance for credit losses
(98,279
)
(58,840
)
(53,319
)
(105,995
)
(102,890
)
Total loans and leases, net
$
4,768,886
$
4,924,015
$
4,611,589
$
4,637,329
$
4,361,980
The Company's investment security balances at March 31, 2026 totaled $1.30 billion, as compared to $1.34 billion at December 31, 2025 and $1.44 billion at March 31, 2025. The year-over-year decrease was primarily related to normal paydown activity of investment security balances and the sale of investment securities AFS during the fourth quarter of fiscal 2025.
Total gross loans and leases totaled $4.87 billion at March 31, 2026, as compared to $4.98 billion at December 31, 2025 and $4.46 billion at March 31, 2025. The drivers for the sequential quarter decrease were decreases in the consumer finance, warehouse finance, and the commercial finance portfolios. The year-over-year increase was due to growth in the commercial finance and seasonal tax services portfolios, 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 portfolio.
Commercial finance loans, which comprised 84% of the Company's loan and lease portfolio, totaled $4.11 billion at March 31, 2026, reflecting a decrease of $34.6 million, or 1%, from December 31, 2025 and an increase of $587.8 million, or 17%, from March 31, 2025. The sequential quarter decrease in the commercial finance portfolio was primarily driven by a decrease of $66.5 million in other commercial finance, partially offset by a $30.9 million increase in asset-based lending. The year-over-year increase was primarily driven by an increase of $735.4 million in term lending and an increase of $117.7 million in asset-based lending, partially offset by a decrease of $165.1 million in SBA/USDA and a decrease of $81.0 million in other commercial finance. These changes are primarily the result of the Company's efforts to optimize the balance sheet.
Asset Quality
The Company’s allowance for credit losses ("ACL") totaled $98.3 million at March 31, 2026, an increase compared to $58.8 million at December 31, 2025 and a decrease compared to $102.9 million at March 31, 2025. The sequential increase in the ACL was primarily due to an increase of $34.2 million in the allowance related to the seasonal tax services portfolio and an increase of $7.7 million in the allowance related to the commercial finance portfolio, partially offset by a $2.5 million decrease in the allowance related to the consumer finance portfolio.
The $4.6 million year-over-year decrease in the ACL was primarily driven by a decrease in the allowance related to the consumer finance portfolio of $23.1 million, partially offset by a $17.0 million increase in the allowance related to the commercial finance portfolio and a $1.5 million increase in the allowance related to the seasonal tax services portfolio.
The following table presents the Company's ACL as a percentage of its total loans and leases.
As of the Period Ended
(Unaudited)
March 31, 2026
December 31, 2025
September 30, 2025
June 30, 2025
March 31, 2025
Commercial finance
1.36
%
1.16
%
1.18
%
1.27
%
1.10
%
Consumer finance
7.25
%
6.85
%
6.88
%
11.69
%
12.04
%
Tax services
58.63
%
1.71
%
—
%
81.32
%
60.35
%
Warehouse finance
0.10
%
0.10
%
0.10
%
0.10
%
0.10
%
Total loans and leases
2.02
%
1.18
%
1.14
%
2.23
%
2.30
%
Total loans and leases excluding tax services
1.31
%
1.17
%
1.14
%
1.60
%
1.57
%
The Company's ACL as a percentage of total loans and leases increased to 2.02% at March 31, 2026 from 1.18% at December 31, 2025 and decreased from 2.30% at March 31, 2025. The sequential increase in the total loans and leases coverage ratio was primarily driven by the seasonality in the tax services portfolio, along with 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
Six Months Ended
(Dollars in thousands)
March 31, 2026
December 31, 2025
March 31, 2025
March 31, 2026
March 31, 2025
Beginning balance
$
58,840
$
53,319
$
74,337
$
53,319
$
71,765
Provision (reversal of) - tax services loans
24,476
(1,398
)
26,178
23,078
27,479
Provision (reversal of) - all other loans and leases
20,800
4,706
8,750
25,506
26,292
Charge-offs - tax services loans
—
—
—
—
(741
)
Charge-offs - all other loans and leases
(16,767
)
(3,407
)
(15,001
)
(20,174
)
(31,987
)
Recoveries - tax services loans
9,752
2,459
6,813
12,211
7,041
Recoveries - all other loans and leases
1,178
3,161
1,813
4,339
3,041
Ending balance
$
98,279
$
58,840
$
102,890
$
98,279
$
102,890
The Company recognized a provision for credit losses of $45.6 million for the quarter ended March 31, 2026, compared to $35.3 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 $19.0 million, partially offset by decreases in the consumer finance portfolio of $6.9 million and the tax services portfolio of $1.7 million. The Company recognized net charge-offs of $5.8 million for the quarter ended March 31, 2026, compared to net charge-offs of $6.4 million for the quarter ended March 31, 2025. Net charge-offs attributable to the commercial finance portfolio and consumer finance portfolio were $14.5 million and $1.1 million, respectively, while net recoveries of $9.7 million were recognized in the seasonal tax services portfolio. Net charge-offs attributable to the commercial finance portfolio and consumer finance portfolio for the same quarter of the prior year were $6.9 million and $6.3 million, respectively, while net recoveries of $6.8 million were recognized in the tax services portfolio.
The Company's past due loans and leases were as follows for the periods presented.
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
As of December 31, 2025
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
$
148
$
150
$
235
$
533
$
87,436
$
87,969
$
235
$
—
$
235
Commercial finance
54,278
22,871
90,103
167,252
3,979,925
4,147,177
11,447
96,781
108,228
Consumer finance
1,383
691
602
2,676
129,369
132,045
602
—
602
Tax services
—
—
—
—
62,049
62,049
—
—
—
Warehouse finance
—
—
—
—
641,669
641,669
—
—
—
Total loans and leases held for investment
55,661
23,562
90,705
169,928
4,813,012
4,982,940
12,049
96,781
108,830
Total loans and leases
$
55,809
$
23,712
$
90,940
$
170,461
$
4,900,448
$
5,070,909
$
12,284
$
96,781
$
109,065
The Company's nonperforming assets at March 31, 2026 were $119.8 million, representing 1.68% of total assets, compared to $111.5 million, or 1.47% of total assets at December 31, 2025 and $41.6 million, or 0.59% of total assets at March 31, 2025.
The increase in the nonperforming assets as a percentage of total assets at March 31, 2026, compared to December 31, 2025, was driven by an increase in nonperforming loans in the commercial finance portfolio. 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 March 31, 2026, were $117.7 million, representing 2.39% of total gross loans and leases, compared to $109.1 million, or 2.15% of total gross loans and leases at December 31, 2025 and $39.8 million, or 0.88% of total gross loans and leases at March 31, 2025.
Deposits, Borrowings and Other Liabilities
The average balance of total deposits and interest-bearing liabilities was $7.14 billion for the quarter ended March 31, 2026, compared to $7.30 billion for the same period in the prior fiscal year. Total average deposits for the fiscal 2026 second quarter decreased by $160.3 million to $7.02 billion compared to the same period in fiscal 2025. The decrease in average deposits was primarily due to a decrease in noninterest-bearing deposits, partially offset by an increase in wholesale deposits and money market deposits.
Total end-of-period deposits increased 1% to $5.85 billion at March 31, 2026, from $5.82 billion at March 31, 2025. The increase in end-of-period deposits was primarily driven by an increase in money market deposits of $33.0 million and interest bearing checking of $32.9 million, partially offset by a decrease in noninterest-bearing deposits of $24.3 million.
As of March 31, 2026, the Company managed $1.07 billion of customer deposits at other banks in its capacity as custodian, compared to $1.05 billion as of December 31, 2025 and $1.12 billion as of March 31, 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 March 31, 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. The decrease in Tier 1 leverage capital ratio for the period as compared to the sequential quarter is the result of higher quarterly average assets related to the Company's seasonal tax business. The Bank's Tier 1 leverage capital ratio using end-of-period assets of 10.35% better reflects the expected capital position of the Company post-tax season. See non-GAAP reconciliation 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
March 31, 2026(1)
December 31, 2025
September 30,
2025
June 30,
2025
March 31,
2025
Company
Tier 1 leverage capital ratio
8.62
%
9.51
%
9.79
%
9.78
%
8.31
%
Common equity Tier 1 capital ratio
12.65
%
12.02
%
12.70
%
12.87
%
13.64
%
Tier 1 capital ratio
12.89
%
12.26
%
12.95
%
13.12
%
13.91
%
Total capital ratio
14.52
%
13.67
%
14.27
%
14.76
%
15.57
%
Bank
Tier 1 leverage ratio
8.85
%
9.84
%
10.00
%
10.00
%
8.51
%
Common equity Tier 1 capital ratio
13.24
%
12.67
%
13.23
%
13.43
%
14.25
%
Tier 1 capital ratio
13.24
%
12.67
%
13.23
%
13.43
%
14.25
%
Total capital ratio
14.49
%
13.73
%
14.19
%
14.68
%
15.51
%
(1) March 31, 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(1)
As of the Periods Indicated
(Dollars in thousands)
March 31,
2026
December 31,
2025
September 30,
2025
June 30,
2025
March 31,
2025
Total stockholders' equity
$
850,677
$
853,712
$
857,454
$
818,146
$
814,046
Adjustments:
LESS: Goodwill, net of associated deferred tax liabilities
284,471
284,815
285,158
285,482
285,865
LESS: Certain other intangible assets
17,306
17,746
18,077
17,091
16,363
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards
1,207
5,877
5,733
2,669
5,788
LESS: Net unrealized (losses) on available for sale securities
(138,462
)
(133,516
)
(143,190
)
(158,673
)
(163,206
)
LESS: Noncontrolling interest
(785
)
(823
)
(591
)
(856
)
(658
)
ADD: Adoption of Accounting Standards Update 2016-13
—
—
1,788
1,788
1,788
Common Equity Tier 1(1)
686,940
679,613
694,055
674,221
671,682
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
(382
)
(437
)
(307
)
(513
)
(381
)
Total Tier 1 capital
700,219
692,837
707,409
687,369
684,962
Allowance for credit losses
68,278
59,687
52,455
65,960
62,042
Subordinated debentures, net of issuance costs
19,846
19,821
19,796
19,770
19,744
Total capital
$
788,343
$
772,345
$
779,660
$
773,099
$
766,748
(1) 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, April 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 222526753.
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.
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 financial guidance; our fiscal 2026 goals and strategy; 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; expected nonperforming loan resolutions and net charge-off rates; the performance of our securities portfolio; the impact of card balances related to government stimulus programs; 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 such as the military conflicts in Ukraine and the Middle East, 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, as amended, 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.
Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Share Data)
March 31, 2026
December 31, 2025
September 30, 2025
June 30, 2025
March 31, 2025
ASSETS
Cash and cash equivalents
$
157,602
$
331,217
$
120,568
$
258,343
$
254,249
Securities available for sale, at fair value
1,271,353
1,310,047
1,327,843
1,367,340
1,411,520
Securities held to maturity, at amortized cost
28,068
28,662
29,308
30,273
31,335
Federal Reserve Bank and Federal Home Loan Bank Stock, at cost
25,480
24,310
24,708
29,451
24,276
Loans held for sale
53,072
87,969
179,421
49,767
45,767
Loans and leases
4,867,165
4,982,855
4,664,908
4,743,324
4,464,870
Allowance for credit losses
(98,279
)
(58,840
)
(53,319
)
(105,995
)
(102,890
)
Accrued interest receivable
36,127
36,174
38,520
39,996
37,081
Premises, furniture, and equipment, net
42,254
42,370
40,632
39,799
39,542
Rental equipment, net
146,190
154,533
159,446
181,370
202,194
Goodwill and intangible assets
308,741
309,712
310,430
311,193
311,992
Other assets
274,626
311,196
329,879
284,983
274,850
Total assets
$
7,112,399
$
7,560,205
$
7,172,344
$
7,229,844
$
6,994,786
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits
5,851,696
6,350,394
5,886,947
6,005,246
5,819,209
Short-term borrowings
26,000
—
9,000
115,000
—
Long-term borrowings
33,508
33,482
33,456
33,431
33,405
Accrued expenses and other liabilities
350,518
322,617
385,487
258,019
328,125
Total liabilities
6,261,722
6,706,493
6,314,890
6,411,696
6,180,739
STOCKHOLDERS’ EQUITY
Preferred stock
—
—
—
—
—
Common stock, $.01 par value
213
222
228
230
235
Common stock, Nonvoting, $.01 par value
—
—
—
—
—
Additional paid-in capital
655,128
651,199
648,330
646,044
643,888
Retained earnings
340,744
346,529
359,830
337,321
341,775
Accumulated other comprehensive loss
(141,086
)
(134,996
)
(145,461
)
(159,709
)
(166,311
)
Treasury stock, at cost
(3,537
)
(8,419
)
(4,882
)
(4,882
)
(4,882
)
Total equity attributable to parent
851,462
854,535
858,045
819,004
814,705
Noncontrolling interest
(785
)
(823
)
(591
)
(856
)
(658
)
Total stockholders’ equity
850,677
853,712
857,454
818,148
814,047
Total liabilities and stockholders’ equity
$
7,112,399
$
7,560,205
$
7,172,344
$
7,229,844
$
6,994,786
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended
Six Months Ended
(Dollars in thousands, except per share data)
March 31, 2026
December 31, 2025
March 31, 2025
March 31, 2026
March 31, 2025
Interest and dividend income:
Loans and leases, including fees
$
114,829
$
107,775
$
119,755
$
222,604
$
231,604
Mortgage-backed securities
7,590
7,812
8,580
15,402
17,566
Other investments
8,457
5,635
13,669
14,092
21,190
130,876
121,222
142,004
252,098
270,360
Interest expense:
Deposits
4,274
206
4,086
4,480
4,861
FHLB advances and other borrowings
1,478
1,678
1,639
3,156
3,971
5,752
1,884
5,725
7,636
8,832
Net interest income
125,124
119,338
136,279
244,462
261,528
Provision for credit loss
45,616
3,230
35,266
48,846
53,927
Net interest income after provision for credit loss
79,508
116,108
101,013
195,616
207,601
Noninterest income:
Refund transfer product fees
34,789
355
32,663
35,144
33,073
Refund advance and other tax fee income
57,514
131
48,585
57,645
49,110
Card and deposit fees
37,526
30,140
30,793
67,666
59,859
Rental income
10,947
11,620
13,200
22,567
26,908
(Loss) on sale of securities
—
—
(7,228
)
—
(22,899
)
Gain (loss) on divestitures
—
—
(1,360
)
—
15,044
Secondary market revenue
3,574
4,157
15,378
7,731
19,755
Gain on sale of other
883
488
627
1,371
1,614
Other income
5,947
6,872
5,866
12,819
13,438
Total noninterest income
151,180
53,763
138,524
204,943
195,902
Noninterest expense:
Compensation and benefits
55,405
51,864
51,905
107,269
101,197
Refund transfer product expense
9,127
73
8,475
9,200
8,583
Refund advance expense
1,425
72
1,265
1,497
1,299
Card processing
33,475
30,437
36,239
63,912
69,552
Building and software
12,201
12,580
10,306
24,781
20,013
Operating lease equipment depreciation
9,075
9,995
11,779
19,070
23,206
Legal and consulting
5,331
5,554
5,879
10,885
11,103
Intangible amortization
971
718
1,082
1,689
1,894
Impairment expense
—
—
1,514
—
1,514
Other expense
16,446
15,920
19,733
32,366
37,612
Total noninterest expense
143,456
127,213
148,177
270,669
275,973
Income before income tax expense
87,232
42,658
91,360
129,890
127,530
Income tax expense
14,171
7,193
16,166
21,364
22,171
Net income before noncontrolling interest
73,061
35,465
75,194
108,526
105,359
Net income attributable to noncontrolling interest
151
299
237
450
436
Net income attributable to parent
$
72,910
$
35,166
$
74,957
$
108,076
$
104,923
Less: Allocation of Earnings to participating securities(1)
70
49
263
128
402
Net income attributable to common shareholders(1)
72,840
35,117
74,694
107,948
104,521
Earnings per common share:
Basic
$
3.37
$
1.57
$
3.16
$
4.91
$
4.37
Diluted
$
3.35
$
1.57
$
3.14
$
4.89
$
4.35
Shares used in computing earnings per common share:
Basic
21,612,033
22,312,973
23,657,145
21,965,316
23,941,980
Diluted
21,720,222
22,381,460
23,776,023
22,065,346
24,039,020
(1) 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 March 31,
2026
2025
(Dollars in thousands)
Average
Outstanding
Balance
Interest
Earned /
Paid
Yield /
Rate(1)
Average
Outstanding
Balance
Interest
Earned /
Paid
Yield /
Rate(1)
Interest-earning assets:
Cash and fed funds sold
$
620,549
$
4,886
3.19
%
$
926,841
$
9,088
3.98
%
Mortgage-backed securities
1,100,278
7,590
2.80
%
1,240,243
8,580
2.81
%
Tax-exempt investment securities
104,537
747
3.67
%
116,976
797
3.50
%
Asset-backed securities
132,041
1,500
4.61
%
180,750
2,228
5.00
%
Other investment securities
170,063
1,324
3.16
%
207,973
1,556
3.03
%
Total investments
1,506,919
11,161
3.06
%
1,745,942
13,161
3.11
%
Commercial finance
4,128,461
81,463
8.00
%
3,597,280
73,053
8.24
%
Consumer finance
146,499
7,187
19.90
%
295,099
19,976
27.45
%
Tax services
620,285
12,695
8.30
%
557,229
11,913
8.67
%
Warehouse finance
631,052
13,484
8.67
%
638,747
14,813
9.41
%
Total loans and leases
5,526,297
114,829
8.43
%
5,088,355
119,755
9.54
%
Total interest-earning assets
$
7,653,765
$
130,876
6.95
%
$
7,761,138
$
142,004
7.43
%
Noninterest-earning assets
648,512
611,851
Total assets
$
8,302,277
$
8,372,989
Interest-bearing liabilities:
Interest-bearing checking
$
3,537
$
—
0.01
%
$
2,462
$
—
0.04
%
Savings
50,501
4
0.03
%
53,120
3
0.02
%
Money markets
209,841
138
0.27
%
179,591
270
0.61
%
Time deposits
2,640
6
0.91
%
4,213
3
0.25
%
Wholesale deposits
431,278
4,126
3.88
%
349,706
3,810
4.42
%
Total interest-bearing deposits (a)
697,797
4,274
2.48
%
589,092
4,086
2.81
%
Overnight fed funds purchased
87,836
862
3.98
%
88,522
1,003
4.60
%
Subordinated debentures
19,830
357
7.30
%
19,728
355
7.29
%
Other borrowings
13,661
259
7.68
%
13,661
281
8.34
%
Total borrowings
121,327
1,478
4.94
%
121,911
1,639
5.45
%
Total interest-bearing liabilities
819,124
5,752
2.85
%
711,003
5,725
3.27
%
Noninterest-bearing deposits (b)
6,323,247
—
—
%
6,592,216
—
—
%
Total deposits and interest-bearing liabilities
$
7,142,371
$
5,752
0.33
%
$
7,303,219
$
5,725
0.32
%
Other noninterest-bearing liabilities
307,071
294,080
Total liabilities
7,449,442
7,597,299
Shareholders' equity
852,835
775,690
Total liabilities and shareholders' equity
$
8,302,277
$
8,372,989
Net interest income and net interest rate spread including noninterest-bearing deposits
$
125,124
6.62
%
$
136,279
7.11
%
Net interest margin
6.63
%
7.12
%
Tax-equivalent effect
0.01
%
0.01
%
Net interest margin, tax-equivalent(2)
6.64
%
7.13
%
Total cost of deposits (a+b)
7,021,044
4,274
0.25
%
7,181,308
4,086
0.23
%
(1) Tax rate used to arrive at the TEY for the three months ended March 31, 2026 and 2025 was 21%.
(2) 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
March 31,
2026
December 31,
2025
September 30,
2025
June 30,
2025
March 31,
2025
Equity to total assets
11.96
%
11.29
%
11.96
%
11.32
%
11.64
%
Book value per common share outstanding
$
39.89
$
38.51
$
37.65
$
35.64
$
34.55
Tangible book value per common share outstanding
$
25.41
$
24.54
$
24.02
$
22.09
$
21.31
Common shares outstanding
21,327,534
22,169,535
22,772,570
22,953,608
23,558,939
Nonperforming assets to total assets
1.68
%
1.47
%
1.42
%
1.03
%
0.59
%
Nonperforming loans and leases to total loans and leases
2.39
%
2.15
%
2.05
%
1.49
%
0.88
%
Net interest margin
6.63
%
6.95
%
7.46
%
7.43
%
7.12
%
Net interest margin, tax-equivalent
6.64
%
6.96
%
7.47
%
7.44
%
7.13
%
Return on average assets
3.56
%
1.87
%
2.09
%
2.36
%
3.63
%
Return on average equity
34.67
%
16.76
%
18.93
%
21.19
%
39.19
%
Return on average tangible equity
54.41
%
26.72
%
30.65
%
34.77
%
65.66
%
Full-time equivalent employees
1,181
1,170
1,179
1,178
1,155
Non-GAAP Reconciliations
Net Interest Margin and Cost of Deposits
At and For the Three Months Ended
(Dollars in thousands)
March 31, 2026
December 31, 2025
March 31, 2025
Average interest earning assets
$
7,653,765
$
6,812,693
$
7,761,138
Net interest income
$
125,124
$
119,338
$
136,279
Net interest margin
6.63
%
6.95
%
7.12
%
Average total deposits
$
7,021,044
$
6,173,866
$
7,181,308
Deposit interest expense
$
4,274
$
206
$
4,086
Cost of deposits
0.25
%
0.01
%
0.23
%
Adjusted Net Interest Margin(1)
Average interest earning assets
$
7,653,765
$
6,812,693
$
7,761,138
Net interest income
125,124
119,338
136,279
Less: Contractual, rate-related processing expense associated with deposits on the Company's balance sheet
23,971
23,013
26,852
Less: Gross interest income on consumer finance loans
814
905
11,937
Adjusted net interest income
$
100,339
$
95,420
$
97,490
Adjusted net interest margin
5.32
%
5.56
%
5.09
%
Average total deposits
$
7,021,044
$
6,173,866
$
7,181,308
Deposit interest expense
4,274
206
4,086
Add: Contractual, rate-related processing expense associated with deposits on the Company's balance sheet
23,971
23,013
26,852
Adjusted deposit expense
$
28,245
$
23,219
$
30,938
Adjusted cost of deposits(2)
1.63
%
1.49
%
1.75
%
1) 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.
2) Adjusted cost of deposits includes contractual, rate-related card processing expense associated with deposits on the Company’s balance sheet
Pathward, N.A. Period-end Tier 1 Leverage
(Dollars in thousands)
March 31, 2026
Total stockholders' equity
$
882,773
Adjustments:
Less: Goodwill, net of associated deferred tax liabilities
284,471
Less: Certain other intangible assets
17,306
Less: Net deferred tax assets from operating loss and tax credit carry-forwards
1,207
Less: Net unrealized gains (losses) on available for sale securities
(138,462
)
Less: Noncontrolling interest
(785
)
Common Equity Tier 1
719,036
Tier 1 minority interest not included in common equity Tier 1 capital
—
Total Tier 1 capital
$
719,036
Total Assets (Quarter Average)
$
8,304,851
Add: Available for sale securities amortized cost
165,767
Add: Deferred tax
(41,027
)
Less: Deductions from CET1
302,983
Adjusted total assets
$
8,126,608
Pathward, N.A. Regulatory Tier 1 Leverage
8.85
%
Total Assets (Period End)
$
7,113,101
Add: Available for sale securities amortized cost
184,002
Add: Deferred tax
(45,541
)
Less: Deductions from CET1
302,983
Adjusted total assets
$
6,948,579
Pathward, N.A. Period-end Tier 1 Leverage
10.35
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20260422113396/en/
Investor Relations Contact
Darby Schoenfeld,
CPA SVP, Chief of Staff & Investor Relations
877-497-7497
investorrelations@pathward.com
Media Relations Contact
mediarelations@pathward.com
Original: Pathward Financial, Inc. Announces Results for 2026 Fiscal Second Quarter
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