Pathward Financial, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Password Financial's first quarter fiscal year 2026 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 now 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 Pathwork Financial's CEO, Brett Farr, and CFO, Greg Sigrist, who will discuss our operating and financial results for the first quarter of fiscal year 2026, 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 PathworkFinancial.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 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, particularly in competitive analysis. Reconciliations for such non-GAAP measures are included in the earnings release and 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.

Thanks, Darby, and welcome everyone to our earnings conference call. We kicked off the year in a position of strength, and overall we are pleased with the financial results the team achieved in the quarter. I want to take a moment to talk about what we do, how we do it, and why we believe Pathwork is uniquely positioned as a leader in this space. Whether you are an investor, analyst, or another member of the financial community, you likely have an understanding of how a traditional bank works. Banks take deposits from individuals or corporations, lend those deposits, and move money. In this, password is no different. Where we differ is how we do those things. First of all, we move money. Where we differ is we work with partners and facilitate payments through issuing sponsorship, merchant acquiring sponsorship, independent ATM sponsorship, consumer credit sponsorship, and digital payments. assisting them with the moving of significant amounts of money relative to our size across the nation. In issuing sponsorship, we move money and facilitate payments via products such as prepaid cards, gift cards, loyalty cards, payroll cards, and general purpose reloadable cards. With over 20 years of experience in payments facilitation, Baffert's value proposition is anchored in four principal pillars. Our leadership is seasoned and has deep expertise in payments and sponsorship. Second, our combination of people, processes, and operating structure delivers a streamlined approach to banking and provides reliable and sustainable partner programs. Third, we deliver partnership with a commitment that enables our partner success. And lastly, a consultative governance approach rooted in our stable risk and compliance infrastructure It helps partners manage a regulatory framework that is often complex and difficult to manage. Second, we hold deposits. Where we differ is that generally our issuing partnerships provide passwords with stable deposits. As one of the most mature and experienced sponsor banks, we work with our partners to help them grow and scale and co-create solutions that facilitate innovation. Because of our differences, we are able to generate significant fee income. This leads us to lending. Like other banks, we lend our deposits. However, we specialize in working with businesses that, for a multitude of reasons, may not be able to work with or borrow from a traditional bank. We provide lending products that help these businesses access funds they need to launch, operate, and grow. In some cases, we are also working through partners to originate commercial finance loans. Tafford's strengths help us deliver on our purpose of financial inclusion. Our partnerships offer financial solutions that help individuals and businesses who are underserved, underrepresented, or even unbanked. Additionally, as our world grows increasingly dependent and relied upon digital-first or digital-only solutions, Tafford's role in fulfilling the needs of these individuals and companies both expands and increases. While at a high level, we operate the same as a traditional bank. We believe it is our unique value propositions, partnerships, and position in the marketplace that allows us to help a greater variety of consumers and businesses, as well as generate results that we believe exceed those of a traditional bank. This is characterized by disciplined balance sheet optimization and fee income working together to generate positive performance. Last year, our return on average assets was over 2%. Our return on average tangible equity was over 38%, and roughly 40% of our revenue came from non-interest income. Our business model optimizes our long-term strategy, being the trusted platform that enables our partners to thrive. Our 2026 goals are off to a great start. As part of our commitment to the client experience, we announced the rollout of an evolved operating model last month. We firmly believe this model better aligns with our partners by supporting their growth and scalability and creating a more seamless experience. Each of the respective leaders have strong, relevant industry backgrounds and a solid commitment to Pathway's culture. We believe this decision ultimately positions our clients for greater success and revenue enablement and the company for increased innovation and growth. Building upon the progress we've made over the last few years, we believe revenue growth will come from three main areas during the fiscal year. It's important to note that we have prioritized areas that are not dependent on growing our balance sheet in order to grow revenue. First, we have additional capacity to optimize the balance sheet through the continued rotation from securities to loans, increasing net interest income without growing the overall asset size. As we continue to optimize, We are also looking at the yields of each asset, and we intend to continue to favor areas where we believe we have a competitive advantage to deliver a higher risk-adjusted return or optionality. This leads to the second area of revenue growth, fee income from balance sheet velocity. Our business model supports the ability to originate and sell loans, thereby generating additional revenue. By utilizing velocity for both commercial and consumer loans, our balance sheet can remain steady while generating both interest income and non-interest income for the business. Finally, in 2025, we announced multiple contracts for products such as merchant acquiring sponsorship, which has little impact on the balance sheet that generates non-interest income. Money movement, specifically issuing sponsorship, was how Password entered into sponsor banking and is still the core of our business. And with our partners searching for a bank that can provide multiple products outside of issuing, offering multi-threaded solutions across a breadth of banking needs is an important differentiator. Finally, tax season has begun, and we are one step ahead with over 11% more enrolled tax offices than at this point last year. We do look forward to a number of possible benefits. First has to do with the change in tax code for 2025. We believe this change has the potential to drive more consumers into the tax preparation offices that we serve. Second, we exited last year's season with renewed agreements across all of our tax software partners. And finally, we continue to make technology improvements throughout the year for greater efficiencies when compared to years past and look forward to reaping those benefits in 2026. As an industry leader in tax-related financial products, We pride ourselves in offering one of the most comprehensive product mixes in the tax industry, including products and services like refund transfers, refund advances, ERO loans, and facilitating refunds on prepaid cards. We feel confident that we will be able to deliver on our goals and look forward to providing a more robust tax update next quarter. Now I'd like to turn it over to Greg, who will take you through the financials.