Pathward Financial, Inc.

Thank you, and welcome to the Meta Financial Group conference call and webcast, where President and CEO Brad Hanson and Executive Vice President and CFO Glenn Herrick will discuss the results of our first fiscal quarter ended December 31st, 2020. Also participating in the call is Brett Farr, Co-President and COO of MetaBank. Additional information, including the earnings release and investor presentation, may be found on our website at metafinancialgroup.com. As a reminder, our comments may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to update any forward-looking statement. Please refer to the cautionary language in the earnings release, investor presentation, and in MEDIS filings with the Securities and Exchange Commission, including our most recent filings, for additional information covering factors that could cause actual results to differ materially from forward-looking statements. Additionally, today we will be discussing certain non-GAAP financial measures on this conference call. References to non-GAAP measures are only provided to assist you in understanding META's results and performance trends. Reconciliations for such non-GAAP measures are included within the appendix of the investor presentation. Now, I will turn the call over to Brad Hanson.

Thanks, Brittany. Thank you all for joining Meta Financial's first fiscal quarter year 2021 earnings call. It is my pleasure to discuss our strong results achieved in the first fiscal quarter. I want to start by acknowledging our excellent team and thank our employees for generating these results while dealing with the challenges of the pandemic and serving our customers remotely. Compared to the same quarter last year, revenue was up 9 percent to $111 million, net income was up 33 percent to $28 million, and earnings per share was up 50 percent to 84 cents per share. Our focus on improving our efficiency ratio resulted in improvement of six percentage points to 62.2 percent over last year, which was achieved without any COVID-related layoffs, or salary reductions. Our loan portfolios continue to perform well. Non-performing loans and leases as a percentage of loans and leases for commercial finance were 86 basis points, the lowest level in over a year and a half. As Brett will discuss, we remain focused on the hospitality and movie theater loans in our legacy community bank portfolio, as well as our small ticket leasing and finance relationships in our commercial finance division, and we stay in regular contact with those borrowers. Due to our conservative approach to ramping up provision during the early days of the pandemic, we believe that current reserves are adequate to withstand projected losses in the existing portfolio. The effects of government stimulus programs have had a significant impact on our balance sheet. These programs include the Paycheck Protection Program loans, economic impact payments, or EIP, and enhanced unemployment benefits that flow through to existing card programs. Total average payments divisions deposits, including stimulus funds associated with EIP programs, were up 83% year over year. While it's not possible to determine the exact amount of the deposit growth associated with government stimulus programs, our analysis of our deposit base, including several large programs that we moved over from other banks during the year, lead us to believe a more realistic run rate would be somewhere in the mid-teens, excluding any stimulus-related impact. Card and deposit fee income for our payments division is up 5% over the first fiscal quarter of last year to $22.6 million. This was quite an accomplishment given the lower card volumes, especially in our loyalty awards and promotions or rebate card area and our gift card promotions programs that were caused by COVID-related shutdowns during the latter half of the fiscal year. Some of this volume, especially in gift cards, rebounded nicely in the fiscal first quarter of 2021. In addition, fee income was negatively impacted from the previous year by the closure of two program managers who were forced to cease operations due to the pandemic. Fortunately, increased activity on other card programs and our new transaction-related payments initiatives, like Faster Payments and Acquiring, more than made up for these reductions. Overall, fee income plays an important role in our financial performance, accounting for 49 percent of total revenue for the last 12 months. We expect our fee income-related programs to be an even bigger part of our story going forward. As previously mentioned, MetaBank is a financial agent of the U.S. Department of the Treasury's Bureau of the Fiscal Service and was tasked with issuing prepaid debit cards for disbursement of economic impact payments to consumers under the CARES Act during fiscal year 2020. We recently reported that we were again tasked to distribute prepaid debit cards to individuals as part of the second round of the EIP program to accommodate this program. We have partnered with Pfizer and Visa to distribute approximately 11.6 million cars totaling $13.5 billion in stimulus funds for the two programs combined. Obviously, a program of this size has significant impact on our balance sheet and performance metrics. For example, our capital leverage ratio, net interest margin, and return on assets will be skewed much lower since the associated deposits are held in cash. Risk-based capital ratios remain largely unchanged, and we should see a slightly positive impact on earnings overall. Additionally, we are working closely with our regulators, the OCC and the Federal Reserve. The OCC has granted us an exemption from meeting capital leverage ratios due to the significant but temporary increase in deposits associated with the EIP program. We remain in good standing with regulatory agencies, will not be deemed undercapitalized, and will not be under any regulatory restrictions due to our participation in this program. Now I'd like to spend a few minutes to talk about our mission. and some of the important enhancements we made to our environmental, social, and governance programs during the quarter. Our long-term mission is providing financial inclusion for all. Meta is a financial enablement company who works with FinTech and FinServ innovators to increase financial availability, choice, and opportunity for all. Banking as a service has always been a core feature of our business model, And I like to say that we offered banking as a service since before it was cool. Our national bank charter, coordination with regulators, and deep understanding of risk mitigation and compliance allows us to guide and support our partners to deliver financial products to those who need them most and contribute to the social benefit of communities we serve. MetaBank is the fiduciary who issues the accounts, holds the funds, and manages the money, moving billions of dollars each day. Our years of experience and proprietary techniques for actively monitoring collateral and mitigating risk allows us to enter markets and serve customers that traditional financial institutions often shy away from. We go where others won't because we're willing to do the hard work that others don't. Our mission and ESG efforts are strongly aligned with them and embedded in our strategy so that our priorities stay fixed on helping our communities to move towards prosperity and success. ESG along with diversity, equity, and inclusion are critical to the long-term success of our company and our commitment to them is reflected in our hiring of a vice president of ESG and community impact who is responsible for advancing and sustaining a measurable ESG strategy and community outreach effort. This initiative will be overseen by a newly formed ESG committee of our board of directors. Medibank is committed to expanding who and how the financial industry helps, and we strongly believe that financial enablement and economic mobility are fundamental to our cause. These key ESG enhancements are meant to ensure that we stay true to our mission, helping those at the heart of the real economy by providing pathways towards prosperity and success as we endeavor to bring financial inclusion to all. Now let me turn the call over to Brett to provide some updates on our lines of business.

Thank you, Brad. Today, I'll share some updates on a few of our business lines not yet covered, starting with commercial finance. At December 31st, commercial finance loans made up 70% of the company's gross loan and lease portfolio and totaled $2.42 billion, a 5% increase from the linked quarter. We saw solid growth in term lending, primarily related to our solar lending business, and strong asset-based lending originations. During the quarter, our solar credits balance increased 29 percent from last quarter to $323.9 million. While we have a strong pipeline, we expect that we could see a slowdown in asset-based lending and factoring as a result of the second round of PPP loans reducing temporary demand for funding. From a credit perspective, We continue to closely monitor each of our lending portfolios, paying significant attention to our legacy community bank hospitality and movie theater loans, as well as our small ticket equipment finance relationships in the Crestmark division. Our credit management team has remained in regular contact with these borrowers, and we feel comfortable with the level of reserves and collateral in place on these credits. Our legacy community bank portfolio balances continue to decline as the portfolio winds down. The portfolio is performing well, and we have not experienced any further deterioration as such. We believe our credit metrics demonstrate the company's ability to weather the worst of the pandemic. Movie theater and hospitality loans in our legacy community bank portfolio continue to account for most of our total deferral balances. Our current level of reserves reflects the elevated level of risk in these portfolios, but we are pleased that we are starting to see some positive developments in these relationships. For example, most of the hospitality loans that were on deferral are now back to making P&I payments. In our consumer lending portfolios, credit remains strong, and we have seen no measurable change in performance due to COVID-19. This reinforces the strength of our program structuring and guardrails in place. Nonperforming assets increased slightly during the quarter, primarily related to an increase in legacy community banking nonperforming loans. The increase in nonaccrual balances was driven by one community bank relationship operating in the movie theater industry that moved to nonaccrual status in the fiscal 2021 first quarter. As a reminder, this relationship is roughly 50% reserved for it. We believe this to be isolated and not a representation of our overall loan and lease portfolio. Finally, I would like to highlight our money line relationship, as it is a great example of banking as a service and how we are leveraging our balance sheet to create relationships that advance our capabilities and create future revenue generating opportunities. Through our venture capital arm, MetaVentures, We were a strategic investor in MoneyLion before we helped power their checking account product called Vore Money. MetaVentures is focused on investing in early-stage companies that are on the cutting edge of payments and likely to be future users of our platform. By investing in and partnering with fintechs like MoneyLion, we continue to stay on the forefront of payments industry innovation. Now I'd like to turn it over to Glenn Herrick.