Pathward Financial, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Pathwork Financial's first quarter fiscal year 2024 investor conference call. During the presentation, all participants will be in a listen-only mode. Following the prepared remarks, we will conduct a Q&A session. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Darby Schoenfeld, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and welcome. With me today are Password Financial's CEO, Brett Farr, and CFO, Greg Sigris, who will discuss our operating and financial results for the first quarter of fiscal 2024, after which we will take your questions. Additional information, including the earnings release, the investor presentation that accompanies our prepared remarks, and supplemental slides may be found on our website at PasswordFinancial.com. As a reminder, our comments may include forward-looking statements, including with respect to anticipated results for future periods. 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 statements. Please refer to the cautionary language in the earnings release, investor presentation, and in the company's filings with the Securities and Exchange Commission, including our most recent filings. for additional information covering factors that could cause actual and anticipated results to differ materially from the 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 the company's results and performance trends. Reconciliations for such non-GAAP measures are included in the appendix of the investor presentation. Finally, all time periods referenced are fiscal quarters and fiscal years, And all comparisons are to the prior year period, unless otherwise noted. Now, let me turn the call over to Brett Farr, our CEO.

Thank you, Darby, and welcome everyone to our first quarter 2024 conference call. I want to provide a special warm welcome to Greg, our CFO, to his first earnings call with us. We're very pleased with our results in the quarter and have started off the year by laying the groundwork to deliver on our key goals for the year. Those are, number one, building BAS into a one-stop shop for our partners, and number two, smart growth in commercial finance to help ensure proper yields and a credit profile for this financial environment. Before I get into a deeper discussion of our business, I want to start out by providing some first quarter highlights. We reported net income of $27.7 million and $1.06 per diluted share. When you adjust the first quarter of 2023 for the gain on sale of names and trademarks, expenses related to rebranding, efforts and separation expense, what we will refer to collectively as rebranding for the remainder of the call, net income grew 19% and EPS increased 31%. Earnings growth was driven through expansion of our net interest margin to 6.23%, an increase of 61 basis points. Our adjusted NIM, including rate-related processing expenses, grew to 4.71% from 4.68%. Our return on average assets for the quarter was 1.46%, and return on average tangible equity was 33.95%. Remember that return on average assets is impacted by seasonality with tax season revenue and income occurring next quarter. For reference, ROA in the first quarter of last year was 1.71%, but if you adjusted for our rebranding efforts, it was 1.42%, which we are running slightly ahead of this year. Finally, we are reiterating our guidance range of $6.20 to $6.70 in earnings per share for the full year. Greg will give you more color on this in his remarks. On the asset side of the house, we saw pretty significant growth in total loans and leases, especially when compared to the first quarter of last year, with growth in nearly every loan category across the enterprise. Greg will get deeper into the details of the drivers of our year-over-year financial performance in a moment. But I did want to comment on some of these trends. After very strong growth in insurance premium finance in the third and fourth quarters last year, we're starting to see that business normalize, and we would expect to maintain balances near the December 31 levels. In structured finance, there's a strong pipeline, especially in the renewable energy and government guarantee verticals. However, these renewable energy deals are not the type of transactions that will generate income tax credits for us. As we have previously communicated, we believe our opportunity for ITC will be lower than last year, and this is included in our guidance. On credit, the quality of our portfolio remains steady. Our non-performing loans ratio has improved 38 basis points sequentially, primarily due to the work out of a deal a single deal that caused the increase in the last two quarters. We think this is a secret sauce of our business. Our non-performing loan ratio may increase from time to time, but we are typically in a position to resolve these loans and generally experience a recovery in the one or two quarters following the increase. This has generated an annual net charge off rate that trends in the 50 to 70 basis point range. And with our yields, we're very comfortable with that range. Finally, as we mentioned in the last call, our 2024 focus in commercial finance is smart balance sheet growth, and we're accomplishing this by ensuring that the loans we are adding to the portfolio have the proper risk-adjusted yields. This is an undertaking across all of our loan products, and we continue to evaluate all loans in this context. We are working on optimizing our capital and asset mix with an eye toward further expanding net interest margin. On banking as a service, our performance continues to be strong. As is typical this quarter, we saw growth in deposits from the end of fiscal year 2023. To remind you, our deposit base does experience seasonality. Our typical pattern is to see growth in the first quarter from the sale of gift cards during the holiday season. This then grows again in the second quarter with our tax season business. And then deposits typically trend down from there as the seasonal balances get spent. with the lowest level usually at fiscal year end. Additionally to seasonal trends, we have also seen increases in deposits from some of our current partners. This is translated to solid performance and core card fee income. From a business development perspective, we signed agreements with three new partners during the quarter. While the impact of this is already contemplated in our guidance today, it speaks to the strength of our pipeline, which we believe to be healthy. Additionally, on January 16th, we announced a multi-year extension with a long-standing partner that allows for collaboration on product innovation and expanded product offerings for a range of programs in market and under development. Regulatory environments put us in what we believe to be a strong competitive position in the BAS industry. However, these deals tend to have a much longer sales cycle. due in large part to the regulatory processes that are required before a program can go live. Deals we are working on now would benefit deposits and card fee income later this year and into fiscal year 2025. The value of our deposit base continues to put us in what we believe to be a position of strength, with the two sides of our balance sheet being well matched. Based on our decay model, our non-interest bearing deposits have a weighted average life of around five and a half years. Our loan portfolio's weighted average life is a little over two years, and our securities portfolio duration is around five years. We believe this to be particularly beneficial in today's environment. Now, I'd like to turn it over to Greg, who will take you through the financials.