Pathward Financial, Inc.

25 investor conference call. During the presentation, all participants will be in a listen-only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded. I would like to turn the conference call over to Darby Schoenfeld, Senior Vice President, Chief of Staff, and Investor Relations. Please go ahead.

Thank you, Operator, and welcome. With me today are PathWord Financial CEO Brett Farr and CFO Greg Sigrist, who will discuss our operating and financial results for the first quarter of fiscal year 2025, after which we will take your questions. Additional information, including the earnings release, the presentation that accompanies our prepared remarks, and supplemental slides may be found on our website at pathwordfinancial.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 statement. 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 statement. Additionally, today we will be discussing certain non-GAAP financial measures on this call. References to non-GAAP measures are provided to assist you in understanding the company's results and performance trends, particularly in competitive analysis. Reconciliation for such non-GAAP measures are included in the earnings release and the appendix of the investor presentation. Included in the non-GAAP measures, this quarter we will begin reporting an adjusted net interest margin, including contractual rate-related card processing expenses associated with deposits that are on the company's balance sheet. All mentions of adjusted net interest margin on this call will refer to the updated metric. This will replace our previously reported adjusted net interest margin, which included contractual rate-related card processing expenses associated with all deposits, including custodial deposits. You will find this adjusted net interest margin measure included in our non-GAAP reconciliations in the earnings release and the supplemental slides that were filed today in conjunction with the earnings release. 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.

Thanks, Darby, and welcome everyone to our earnings conference call. Fiscal 2025 has started out well. During the quarter, we made good progress against the strategy we laid out last year. The biggest step we took was closing the sale of our insurance premium finance business in October, along with the subsequent sale of securities. This move started the process of optimizing close to $800 million on our balance sheet by putting us in a position to reallocate those funds into higher yielding assets or those with optionality. Keeping our focus has helped us deliver strong results. We reported earnings of $1.29 per share for the first quarter, which represents year-over-year growth of 22% and net income of $31.4 million. Our results were driven in part by an increase in net interest income of 6% when compared to the same quarter last year. We also expanded our quarterly net interest margin and adjusted net interest margin, which includes contractual rate-related processing expense associated with deposits on the company's balance sheet to 6.84% and 5.41% respectively. Performance metrics were strong for the quarter, with return on average assets for the quarter of 1.69% and return on average tangible equity of 25.65%. We are also reiterating our fiscal 2025 guidance of $7.25 to $7.75 earnings per diluted share. Our focus on the loan side of the balance sheet has not changed. Given our competitive position in the payment space, we are limited to an asset size of $10 billion in order to remain under the Durbin Amendment threshold, which leads us to focus on optimizing the assets that we keep on balance sheet. This focus means our assets either have high risk adjusted returns or optionality for balance sheet velocity. As a part of this focus, we executed the sale of our insurance premium finance business, as I mentioned before. We also announced a strategic partnership to support renewable energy loan growth. Renewable energy continues to be a focus for Pathwork, where we are underwriting conventional construction loans and USDA guaranteed loans with proper risk-adjusted returns and providing us optionality on the balance sheet. Our partner brings strong industry experience to the table, and we expect that co-innovation in this partnership will accelerate efficient, scalable, and predictable growth within PAPR's renewable energy initiative. Our fiscal first quarter originations were strong, particularly in renewable energy, equipment finance, and working capital, and we believe that this origination momentum will continue. Another aspect of the lending side that we're focused on is credit sponsorships, where we act as a lender of record. We continue to expand our reach through growth with our existing partners and nurturing a strong pipeline of prospective partners who are mission aligned and share our risk and compliance posture. During the first quarter, we originated more of these loans than any other first quarter in the company's history. These loans are protected by certain layers of credit support, and offer us additional balance sheet flexibility. In the first quarter of fiscal year 2025, our partner solutions team extended contracts with two of our top issuing partners, one for an additional two years and one for an additional five years. After the quarter ended, we also signed a contract with a new partner. We remain dedicated to growing and nurturing our partnerships while addressing new opportunities in our pipeline. The pipeline remains strong and we continue to work tirelessly with potential new clients to show them the breadth of products we offer, our ability to scale and expand with them, and an expertise that comes with being in the industry for 20 years. Tax season has begun. We're off to a good start with 12% more enrolled tax offices than last year. We look forward to updating you more on the next call. For a couple of quarters now, we've talked about our strategy to be the trusted platform that enables our partners to thrive. We believe this strategy will help us deliver our goal to drive growth in revenue and net income in the next few years. This growth will come in two forms. In the short term, our focus on optimizing the balance sheet should drive an expanded net interest margin with additional net interest income. This is due to rotating assets out to higher yielding assets. In addition to the changes we have already made, we also have a portion of loans on the balance sheet that were underwritten prior to the increase in interest rates. Longer term, having the right people, process, and systems will allow us to continue to grow partner solutions. This team produces primarily non-interest income, diversifying our revenue stream. With the increased desire for embedded finance, combined with the innovation from FriendTax and other payments-focused companies, The opportunity for growth in this aspect of our business is significant. We offer an array of products, issuing, acquiring, digital payments, including direct to debit and ACH, financial institution solutions, credit solutions, and professional tax solutions, allowing Pathwork to provide an array of products to partners. We can provide multiple solutions while offering expertise, operational excellence, True partnership and a mature risk and compliance infrastructure that is led by our consultative governance approach. Now I'd like to turn it over to Greg, who will take you through the financials and guidance in more detail.