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What changed in PATHWARD FINANCIAL, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PATHWARD FINANCIAL, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+361 added−396 removedSource: 10-K (2025-11-25) vs 10-K (2024-11-26)

Top changes in PATHWARD FINANCIAL, INC.'s 2025 10-K

361 paragraphs added · 396 removed · 310 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

143 edited+19 added−54 removed186 unchanged
Biggest changeAt and For the Fiscal Year Ended September 30, 2024 2023 (Dollars in thousands) Net Loan Charge-offs Average Outstanding Balance Percent of Net Charge-offs to Average Loans Net Loan Charge-offs Average Outstanding Balance Percent of Net Charge-offs to Average Loans Term lending $ 15,850 $ 1,462,403 1.1 % $ 9,476 $ 1,184,055 0.8 % Asset-based lending (255) 429,726 (0.1) % 2,317 369,686 0.6 % Factoring 2,229 341,571 0.7 % 1,513 342,447 0.4 % Lease financing 103 170,962 0.1 % 1,176 190,661 0.6 % Insurance premium finance 870 639,825 0.1 % 1,162 558,018 0.2 % SBA/USDA 754 566,255 0.1 % 5 409,296 — % Other commercial finance — 159,472 — % — 166,422 — % Commercial finance 19,551 3,770,214 0.5 % 15,649 3,220,585 0.5 % Consumer finance 4,061 318,886 1.3 % 2,263 231,242 1.0 % Tax services 22,995 153,713 15.0 % 35,778 141,210 25.3 % Warehouse finance — 416,988 — % — 343,168 — % Total $ 46,607 $ 4,659,801 1.0 % $ 53,690 $ 3,936,205 1.4 % 12 Table of Contents The distribution of the Company’s ACL at the dates indicated is summarized as follows: At September 30, 2024 2023 (Dollars in thousands) Amount Percent of Loans and Leases in Each Category of Total Loans and Leases Amount Percent of Loans and Leases in Each Category of Total Loans and Leases Term lending $ 30,394 38.2 % $ 25,686 30.0 % Asset-based lending 1,356 11.6 % 2,738 8.8 % Factoring 5,757 8.9 % 6,566 8.2 % Lease financing 1,189 3.7 % 3,302 4.2 % Insurance premium finance — — % 2,637 18.4 % SBA/USDA 3,273 14.0 % 2,962 12.0 % Other commercial finance 607 4.6 % 3,089 3.8 % Commercial finance 42,576 81.0 % 46,980 85.4 % Consumer finance 2,240 6.1 % 2,346 5.8 % Tax services 2 0.2 % 2 0.1 % Warehouse finance 518 12.7 % 377 8.7 % Total $ 45,336 100.0 % $ 49,705 100.0 % Management closely monitors economic developments and considers these factors when assessing the appropriateness of its ACL.
Biggest changeAt and For the Fiscal Year Ended September 30, 2025 2024 (Dollars in thousands) Net Loan Charge-offs Average Outstanding Balance Percent of Net Charge-offs to Average Loans Net Loan Charge-offs Average Outstanding Balance Percent of Net Charge-offs to Average Loans Term lending 13,777 $ 1,862,337 0.7 % $ 15,850 $ 1,462,403 1.1 % Asset-based lending 5,561 566,187 1.0 % (255) 429,726 (0.1) % Factoring 770 284,144 0.3 % 2,229 341,571 0.7 % Lease financing 1,389 143,304 1.0 % 103 170,962 0.1 % Insurance premium finance 91 47,593 0.2 % 870 642,927 0.1 % SBA/USDA 2,566 682,364 0.4 % 754 566,255 0.1 % Other commercial finance — 163,786 — % — 159,472 — % Commercial finance 24,154 3,749,715 0.6 % 19,551 3,773,316 0.5 % Consumer finance 28,744 282,975 10.2 % 40,222 318,886 12.6 % Tax services 22,093 166,157 13.3 % 22,995 153,713 15.0 % Warehouse finance — 640,598 — % — 416,988 — % Total $ 74,991 $ 4,839,445 1.5 % $ 82,768 $ 4,662,903 1.8 % 12 Table of Contents The distribution of the Company’s ACL at the dates indicated is summarized as follows: September 30, 2025 September 30, 2024 (Dollars in thousands) Amount Percent of Loans and Leases in Each Category of Total Loans and Leases Amount Percent of Loans and Leases in Each Category of Total Loans and Leases Term lending $ 28,345 49.3 % $ 30,394 38.2 % Asset-based lending 7,650 12.7 % 1,356 11.6 % Factoring 4,319 4.7 % 5,757 8.9 % Lease financing 1,040 3.2 % 1,189 3.7 % Insurance premium finance — — % — — % SBA/USDA 4,807 11.0 % 3,273 14.0 % Other commercial finance 90 3.2 % 607 4.6 % Commercial finance 46,251 84.1 % 42,576 81.0 % Consumer finance 6,422 2.0 % 28,669 6.1 % Tax services — 0.1 % 2 0.2 % Warehouse finance 646 13.8 % 518 12.7 % Total $ 53,319 100.0 % $ 71,765 100.0 % Management closely monitors economic developments and considers these factors when assessing the appropriateness of the Company's ACL.
For information on custodial off-balance sheet deposits, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Financial Condition” of this Annual Report on Form 10-K.
For information on off-balance sheet custodial deposits, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Financial Condition” of this Annual Report on Form 10-K.
As of the date of the filing of this Annual Report on Form 10-K, several provisions of the Dodd-Frank Act remain subject to further rulemaking and interpretation by the federal banking agencies; moreover, certain provisions of the act that were implemented by federal agencies have been revised or rescinded pursuant to legislative changes adopted by the U.S. Congress.
As of the date of the filing of this Annual Report on Form 10-K, several provisions of the Dodd-Frank Act remain subject to further rulemaking and interpretation by the federal banking agencies; moreover, certain provisions of the act that were implemented by federal agencies have been revised or rescinded pursuant to legislative changes adopted by the U.S.
Total Rewards As part of our total rewards strategy, we aspire to offer and maintain market competitive total rewards programs for our employees that attract and retain superior talent. In addition to competitive base wages, we offer other variable pay depending on an employee's position, including an annual bonus or commission plan.
Total Rewards As part of our total rewards strategy, we aspire to offer and maintain market competitive total rewards programs for our employees to attract and retain superior talent. In addition to competitive base wages, we offer other variable pay depending on an employee's position, including an annual bonus or commission plan.
Pathward Financial aims to increase financial availability, choice, and opportunity across two business lines: Partner Solutions and Commercial Finance. These strategic business lines provide end-to-end support to individuals and businesses. As a nationally chartered bank, Pathward sits at the hub of the financial ecosystem where traditional banking and financial technology intersect.
Pathward Financial aims to increase financial availability, choice, and opportunity across two business lines: Partner Solutions and Commercial Finance. These strategic business lines provide support to individuals and businesses. As a nationally chartered bank, Pathward sits at the hub of the financial ecosystem where traditional banking and financial technology intersect.
With expert talent and access to world-class partners, Pathward moves money seamlessly across a multitude of solutions while mitigating risk and anticipating changes to a complicated, regulatory landscape. The Bank, a wholly-owned full-service banking subsidiary of Pathward Financial, operates through three reportable segments (Consumer, Commercial, and Corporate Services/Other). See Note 16. Segment Reporting for further information on the reportable segments.
With expert talent and access to world-class partners, Pathward moves money seamlessly across a multitude of solutions while mitigating risk and anticipating changes to a complicated regulatory landscape. The Bank, a wholly-owned full-service banking subsidiary of Pathward Financial, operates through three reportable segments (Consumer, Commercial, and Corporate Services/Other). See Note 17. Segment Reporting for further information on the reportable segments.
Professional tax solutions offer tax-related financial products, such as electronic refund advances and refund transfers, that ease the pressure of tax season and help over 38,000 independent tax offices stay competitive in a crowded marketplace. The Commercial segment includes the Company's Commercial Finance business line, which helps businesses access funds they need to launch, operate, and grow.
Professional tax solutions offer tax-related financial products, such as electronic refund advances and refund transfers, that ease the pressure of tax season and help over 42,000 independent tax offices stay competitive in a crowded marketplace. The Commercial segment includes the Company's Commercial Finance business line, which helps businesses access funds they need to launch, operate, and grow.
Customer Identification Programs for Holders of Prepaid Cards The federal banking agencies, including the OCC and the FRB, issued guidance in 2016 that extends the requirements of the Customer Identification Program required by Section 326 of the USA PATRIOT Act to prepaid accounts where the cardholder has either the (i) ability to reload funds, or (ii) access to credit or overdraft features.
Customer Identification Programs for Holders of Prepaid Cards The federal banking agencies, including the OCC and the Federal Reserve, issued guidance in 2016 that extends the requirements of the Customer Identification Program required by Section 326 of the USA PATRIOT Act to prepaid accounts where the cardholder has either the (i) ability to reload funds, or (ii) access to credit or overdraft features.
All asset-based facilities have standardized loan policies, established and authorized credit limits, attentive portfolio management and the use of lock box agreements and similar arrangements which result in the Company receiving and controlling the debtors' cash receipts. As of September 30, 2024, approximately 65% of asset-based loans were backed by accounts receivable. Factoring.
All asset-based facilities have standardized loan policies, established and authorized credit limits, attentive portfolio management and the use of lock box agreements and similar arrangements which result in the Company receiving and controlling the debtors' cash receipts. As of September 30, 2025, approximately 65% of asset-based loans were backed by accounts receivable. Factoring.
Pathward's innovative approach and customized financial products offer the flexibility traditional bank products cannot. This diverse range of commercial finance products is available through the following lending solutions: working capital, equipment finance, structured finance, and insurance premium finance. Working capital provides ready cash for liquidity needs to new or growing companies or companies in cyclical or seasonal industries.
Pathward's innovative approach and customized financial products offer the flexibility traditional bank products cannot. This diverse range of commercial finance products is available through the following lending solutions: working capital, equipment finance, and structured finance. Working capital provides ready cash for liquidity needs to new or growing companies or companies in cyclical or seasonal industries.
In the normal course of business, the Company has received requests for information from these regulators. Such requests have been considered routine and incidental to the Company’s operations. 33 Table of Contents Federal and State Taxation Pathward Financial and its subsidiaries file a consolidated federal income tax return and various consolidated state income tax returns.
In the normal course of business, the Company has received requests for information from these regulators. Such requests have been considered routine and incidental to the Company’s operations. 31 Table of Contents Federal and State Taxation Pathward Financial and its subsidiaries file a consolidated federal income tax return and various consolidated state income tax returns.
As of September 30, 2024, the Bank exceeded all of its regulatory capital requirements and was designated as “well capitalized” under federal guidelines. There have been several developments which are intended to reduce the regulatory capital burden on smaller or less complex banking organizations like the Company and the Bank.
As of September 30, 2025, the Bank exceeded all of its regulatory capital requirements and was designated as “well capitalized” under federal guidelines. There have been several developments which are intended to reduce the regulatory capital burden on smaller or less complex banking organizations like the Company and the Bank.
At September 30, 2024, there were no outstanding loans sold by the Company with recourse. When loans or leases are sold, the Company may retain the responsibility for collecting and remitting loan payments, making certain that escrow payments are made on behalf of borrowers, and otherwise servicing the loans.
At September 30, 2025, there were no outstanding loans sold by the Company with recourse. When loans or leases are sold, the Company may retain the responsibility for collecting and remitting loan payments, making certain that escrow payments are made on behalf of borrowers, and otherwise servicing the loans.
The Company elected to phase in the regulatory capital impact as permitted under this final rule. The CECL transition amount is being phased out of regulatory capital over a three-year period that began October 1, 2022 and ends on September 30, 2025.
The Company elected to phase in the regulatory capital impact as permitted under this final rule. The CECL transition amount is being phased out of regulatory capital over a three-year period that began October 1, 2022 and ended on September 30, 2025.
The remaining 20% are a variety of other general purpose commercial loans. Asset-Based Lending . The Bank provides asset-based loans secured by short-term assets such as accounts receivable and inventory. Asset-based loans may also be secured by equipment supported by third party independent appraisals.
The remaining 15% are a variety of other general purpose commercial loans. Asset-Based Lending . The Bank provides asset-based loans secured by short-term assets such as accounts receivable and inventory. Asset-based loans may also be secured by equipment supported by third party independent appraisals.
Management believes that, based on a detailed review of the loan and lease portfolio, historic loan and lease losses, current economic conditions, the size of the loan and lease portfolio and other factors, the level of the ACL at September 30, 2024 reflected an appropriate allowance against expected credit losses from the lending portfolio.
Management believes that, based on a detailed review of the loan and lease portfolio, historic loan and lease losses, current economic conditions, the size of the loan and lease portfolio and other factors, the level of the ACL at September 30, 2025 reflected an appropriate allowance against expected credit losses from the lending portfolio.
Technology has accelerated the growth and speed of transactional payments for corporate and financial organizations. Prompt movement of money creates efficiency, speed and a robust marketplace for consumers, B2B and business-to-consumer ("B2C") companies. Pathward is a Nacha Top 30 bank for receiving and originating payments.
Technology has accelerated the growth and speed of transactional payments for corporate and financial organizations. Prompt movement of money creates efficiency, speed and a robust marketplace for consumers, B2B and business-to-consumer ("B2C") companies. Pathward is a Nacha Top 50 bank for receiving and originating payments.
In addition to regulation and supervision by the FRB, the Company is a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is required to file reports with the SEC and otherwise comply with federal securities laws. As described broadly below, the banking industry is subject to significant regulation.
In addition to regulation and supervision by the Federal Reserve, the Company is a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is required to file reports with the SEC and otherwise comply with federal securities laws. As described broadly below, the banking industry is subject to significant regulation.
The subsidiary has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The outstanding balance of the trust preferred securities at September 30, 2024 was $13.7 million.
The subsidiary has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The outstanding balance of the trust preferred securities at September 30, 2025 was $13.7 million.
In July 2024, the federal banking agencies, including the FRB and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism (“CFT”) programs.
In July 2024, the federal banking agencies, including the Federal Reserve and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism (“CFT”) programs.
These securities are recorded at fair value with unrealized gains and losses, due to changes in fair value, reflected in earnings. Interest and dividend income from these securities is recognized in interest income. See Note 2. Securities for additional information on marketable equity securities.
These securities are recorded at fair value with unrealized gains and losses, due to changes in fair value, reflected in earnings. Interest and dividend income from these securities is recognized in interest income. See Note 3. Securities for additional information on marketable equity securities.
Overall, the products and services offered by the Company are generally designed to facilitate the processing and settlement of authorized electronic transactions involving the movement of funds. 20 Table of Contents While the Company has seasoned banking expertise and time-tested risk and compliance infrastructure, no guarantee can be made that the Company will not experience losses in the Partner Solutions business line.
Overall, the products and services offered by the Company are generally designed to facilitate the processing and settlement of authorized electronic transactions involving the movement of funds. While the Company has seasoned banking expertise and time-tested risk and compliance infrastructure, no guarantee can be made that the Company will not experience losses in the Partner Solutions business line.
Most of the Company's prepaid cards are open loop. Pathward is one of the leading prepaid card issuers in the United States. The prepaid card business can generally be divided into two program categories: Consumer Use and Business or Commercial Use products. These programs are typically offered through a third-party relationship. Consumer Use.
Most of the Company's prepaid cards are open loop. Pathward is one of the leading prepaid card issuers in the United States. 20 Table of Contents The prepaid card business can generally be divided into two program categories: Consumer Use and Business or Commercial Use products. These programs are typically offered through a third-party relationship. Consumer Use.
Pathward currently provides financial processing services for approximately 300,000 freestanding ATMs nationwide providing consumers with access to funds at ATMs frequently found in malls, retail chains, convenience stores, events, fairs and other small business locations across the U.S. Digital Payments Money Movement Solutions.
Pathward currently provides financial processing services for approximately 300,000 freestanding ATMs in the U.S. and U.S. territories providing consumers with access to funds at ATMs frequently found in malls, retail chains, convenience stores, events, fairs and other small business locations. Digital Payments Money Movement Solutions.
Pathward acts as an acquiring bank to sponsor acquiring activity on behalf of merchant customers by leveraging partnerships with partners who act as merchant processors, third-party service providers, independent sales organizations (“ISOs”), and/or payment facilitators to identify, onboard and support merchant customers. 21 Table of Contents ATM Sponsorship.
Pathward acts as an acquiring bank to sponsor acquiring activity on behalf of merchant customers by leveraging partnerships with partners who act as merchant processors, third-party service providers, independent sales organizations (“ISOs”), and/or payment facilitators to identify, onboard and support merchant customers. ATM Sponsorship.
As a national bank, the Bank is supervised and examined by the Office of the Comptroller of the Currency ("OCC"), as its primary federal regulator, and the FDIC, the federal agency that administers the DIF. As a BHC, the Company is supervised and examined by the FRB.
As a national bank, the Bank is supervised and examined by the Office of the Comptroller of the Currency ("OCC"), as its primary federal regulator, and the FDIC, the federal agency that administers the DIF. As a BHC, the Company is supervised and examined by the Federal Reserve.
The flow of deposits is influenced significantly by general economic conditions, changes in prevailing interest rates, and competition. The variety of deposit accounts offered by the Company has allowed it to be competitive in obtaining funds and to respond with flexibility to changes in consumer demand.
The flow of deposits is influenced significantly by general economic conditions, changes in prevailing interest rates, and competition. 16 Table of Contents The variety of deposit accounts offered by the Company has allowed it to be competitive in obtaining funds and to respond with flexibility to changes in consumer demand.
Any change in such laws and regulations or interpretations thereof negatively impacting the Bank's or the Company's current operations, whether by the OCC, the FDIC, the Bureau, the FRB or through legislation, could have a material adverse impact on the Bank and its operations and on the Company and its stockholders.
Any change in such laws and regulations or interpretations thereof negatively impacting the Bank's or the Company's current operations, whether by the OCC, the FDIC, the Bureau, the Federal Reserve or through legislation, could have a material adverse impact on the Bank and its operations and on the Company and its stockholders.
Summary of Significant Accounting Policies to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information on these transactions.
See Note 1. Summary of Significant Accounting Policies to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information on these transactions.
We empower our employees by providing opportunities to grow and develop in their careers, supported by strong compensation, benefits, and health and well-being programs. We seek to provide a diverse, inclusive, safe, and healthy workplace, recognizing our employees enable us to deliver on our purpose.
We empower our employees by providing opportunities to grow and develop in their careers, supported by strong compensation, benefits, and health and well-being programs. We seek to provide an inclusive, safe, and healthy workplace, recognizing our employees enable us to deliver on our purpose.
At September 30, 2024, $19.7 million in aggregate principal amount in subordinated debentures were outstanding. On July 16, 2001, the Company issued all of the 10,310 authorized shares of Company Obligated Mandatorily Redeemable Preferred Securities of First Midwest Financial Capital Trust I (preferred securities of subsidiary trust) holding solely trust preferred securities. Distributions are paid semiannually.
At September 30, 2025, $19.8 million in aggregate principal amount in subordinated debentures were outstanding. On July 16, 2001, the Company issued all of the 10,310 authorized shares of Company Obligated Mandatorily Redeemable Preferred Securities of First Midwest Financial Capital Trust I (preferred securities of subsidiary trust) holding solely trust preferred securities. Distributions are paid semiannually.
The Bank’s deposit insurance premium expense totaled $5.3 million for 2024, $4.3 million for 2023, and $3.1 million for 2022. A significant increase in DIF insurance premiums would have an adverse effect on the operating expenses and results of operations of the Bank.
The Bank’s deposit insurance premium expense totaled $4.5 million for 2025, $5.3 million for 2024, and $4.3 million for 2023. A significant increase in DIF insurance premiums would have an adverse effect on the operating expenses and results of operations of the Bank.
The Company also will provide copies of its Annual Report on Form 10-K, free of charge, upon written request to Darby Schoenfeld, SVP Chief of Staff and Investor Relations, at the Company’s address.
The Company also will provide copies of its Annual Report on Form 10-K, free of charge, upon written request to Darby Schoenfeld, SVP Chief of Staff and Investor Relations, at the Company’s address. 33 Table of Contents
Subsequent Events to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information on the sale and transaction.
Divestitures to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information on the sale and transaction.
Federal banking policy is designed to protect customers of and depositors in insured depository institutions, the DIF, and the U.S. banking system. 22 Table of Contents The framework by which both the Company and the Bank are supervised and examined is complex.
Federal banking policy is designed to protect customers of and depositors in insured depository institutions, the DIF, and the U.S. banking system. The framework by which both the Company and the Bank are supervised and examined is complex.
On August 25, 2023, the Company's Board of Directors authorized a new stock repurchase program pursuant to which the Company may repurchase up to an additional 7,000,000 shares of the Company's outstanding common stock on or before September 30, 2028.
On August 25, 2023, the Company's Board of Directors authorized a stock repurchase program pursuant to which the Company may repurchase up to 7,000,000 shares of the Company's outstanding common stock on or before September 30, 2028.
This letter generally sets forth principles describing when a BHC must consult, provide notice, or seek approval from the FRB prior to a capital distribution including the payment of dividends, stock redemptions, or stock repurchases.
This letter generally sets forth principles describing when a BHC must consult, provide notice, or seek approval from the Federal Reserve prior to a capital distribution including the payment of dividends, stock redemptions, or stock repurchases.
Although, as of the date of the filing of this Annual Report on Form 10-K, the interchange fee restrictions in the Durbin Amendment do not apply to the Bank because debit card issuers with total worldwide assets of less than $10 billion are exempt, such restrictions may negatively impact the pricing all debit card processors in the market, including the Bank, may charge. 23 Table of Contents Incentive Compensation.
Although, as of the date of the filing of this Annual Report on Form 10-K, the interchange fee restrictions in the Durbin Amendment do not apply to the Bank because debit card issuers with total worldwide assets of less than $10 billion are exempt, such restrictions may negatively impact the pricing all debit card processors in the market, including the Bank, may charge.
According to FRB staff, the FRBs are likely to require holding companies to eliminate, defer or reduce dividends if these payments are not fully covered by the net income available to shareholders for the past four quarters, earnings retention is not consistent with capital needs or the holding company will not meet or is in danger of not meeting minimum regulatory capital adequacy ratios.
According to Federal Reserve staff, the Federal Reserve banks are likely to require holding companies to eliminate, defer or reduce dividends if these payments are not fully covered by the net income available to shareholders for the past four quarters, earnings retention is not consistent with capital needs or the holding company will not meet or is in danger of not meeting minimum regulatory capital adequacy ratios.
The decrease in the balance of accruing loans and leases 90 days or more past due was primarily within the commercial finance portfolio, partially offset by increases within the consumer finance and seasonal tax services portfolios. For information on classified assets, see “Item 7.
The increase in the balance of accruing loans and leases 90 days or more past due was primarily within the commercial finance portfolio, partially offset by decreases within the seasonal tax services and consumer finance portfolios. For information on classified assets, see “Item 7.
To date, the Company has not experienced any unexpected significant outflows related to the Partner Solutions business line deposits, though no assurance can be given that this will continue to be the case. As of September 30, 2024, the Company had total investment securities with an amortized cost of $1.98 billion compared to $2.18 billion as of September 30, 2023.
To date, the Company has not experienced any unexpected significant outflows related to the Partner Solutions business line deposits, though no assurance can be given that this will continue to be the case. As of September 30, 2025, the Company had total investment securities with an amortized cost of $1.55 billion compared to $1.98 billion as of September 30, 2024.
With capabilities ranging from prepaid cards and deposit accounts to payment processing and consumer lending, the Company enables its partners to deliver programs that provide a financial path forward for all. 3 Table of Contents The Company delivers a diversified portfolio of offerings including issuing, acquiring, digital payments, financial institution solutions, credit solutions, and professional tax solutions.
With capabilities ranging from prepaid cards and deposit accounts to payment processing and consumer lending, the Company enables its partners to deliver programs that provide a financial path forward for all. 3 Table of Contents The Company delivers a diversified portfolio of offerings including sponsorship solutions, financial institution solutions, credit solutions, and professional tax solutions.
On October 31, 2024 (the "Closing Date"), the Bank completed the sale of substantially all of the assets and liabilities related to its commercial insurance premium finance business to AFS IBEX Financial Services, LLC, a subsidiary of Honor Capital Holdings, LLC. See Note 20.
On October 31, 2024, the Bank completed the sale of substantially all of the assets and liabilities related to its commercial insurance premium finance business to AFS IBEX Financial Services, LLC, a subsidiary of Honor Capital Holdings, LLC. See Note 2.
This calculation is performed on a rolling basis as described in the OCC’s earnings limitation regulations. The Bank paid cash dividends in the amount of $87.0 million to the Company during fiscal 2024, to be used to fund share repurchases under the common stock share repurchase programs that were authorized by the Company's Board of Directors.
This calculation is performed on a rolling basis as described in the OCC’s earnings limitation regulations. The Bank paid cash dividends in the amount of $159.5 million to the Company during fiscal 2025, to be used to fund share repurchases under the common stock share repurchase programs that were authorized by the Company's Board of Directors.
Certain provisions of the Dodd-Frank Act that directly impact the operation of the Company or the Bank are highlighted below: Consumer Financial Protection Bureau. Pursuant to the Dodd-Frank Act, the Bank is subject to regulations promulgated by the Consumer Financial Protection Bureau (the “Bureau”).
Congress. 22 Table of Contents Certain provisions of the Dodd-Frank Act that directly impact the operation of the Company or the Bank are highlighted below: Consumer Financial Protection Bureau. Pursuant to the Dodd-Frank Act, the Bank is subject to regulations promulgated by the Consumer Financial Protection Bureau (the “Bureau”).
The majority of these deposits represent funds available to spend on prepaid debit cards and other stored value products, of which $5.59 billion are included with noninterest-bearing checking accounts and $47.5 million are included with savings deposits on the Company’s Consolidated Statements of Financial Condition.
The majority of these deposits represent funds available to spend on prepaid debit cards and other stored value products, of which $5.62 billion are included with noninterest-bearing checking accounts and $45.2 million are included with savings deposits on the Company’s Consolidated Statements of Financial Condition.
At September 30, 2024, the Company had $104.9 million and $1.7 million in interest bearing deposits held at the FRB and FHLB, respectively. At September 30, 2023, the Company had $260.3 million and $1.9 million in interest bearing deposits held at the FRB and FHLB, respectively.
At September 30, 2024, the Company had $104.9 million and $1.7 million in interest bearing deposits held at the FRB and FHLB, respectively.
Department of the Treasury’s Bureau of the Fiscal Service (“Fiscal Service”), the Bank issued 16.5 million prepaid cards in conjunction with the three Economic Impact Payment ("EIP") stimulus programs, totaling approximately $24.15 billion. As of September 30, 2024, the Company had $433.3 million in deposits related to government stimulus funds.
Department of the Treasury’s Bureau of the Fiscal Service (“Fiscal Service”), the Bank issued 16.5 million prepaid cards in conjunction with the three Economic Impact Payment ("EIP") stimulus programs, totaling approximately $24.15 billion. As of September 30, 2025, the Company had $326.0 million in deposits related to government stimulus funds.
Partner Solutions delivers a diversified portfolio of offerings including issuing, acquiring, digital payments, financial institution solutions, credit solutions, and professional tax solutions with an operating structure that streamlines banking processes and ensures reliable and sustainable programs with unparalleled commitment to enabling our partners' success.
Partner Solutions delivers a diversified portfolio of offerings including sponsorship solutions, financial institution solutions, credit solutions, and professional tax solutions with an operating structure that streamlines banking processes and ensures reliable and sustainable programs with unparalleled commitment to enabling our partners' success.
Additionally, third party relationship risk management and banking as a service arrangements (including with respect to deposit products and services) have been topics of focus for federal bank regulators in 2024 and further rulemaking activity or guidance may be forthcoming.
Additionally, third party relationship risk management and banking as a service arrangements (including with respect to deposit products and services) may continue to be topics of focus for federal bank regulators and further rulemaking activity or guidance may be forthcoming.
For calendar year 2024, the FDIC set the DRR at 2.00%, which is consistent with the DRR set for each calendar year since 2011 and the FDIC's goal to maintain the DRR at or above the statutory threshold. 25 Table of Contents Brokered Deposits The FDIC limits the ability to accept brokered deposits to those insured depository institutions that are well capitalized.
For calendar year 2025, the FDIC set the DRR at 2.00%, which is consistent with the DRR set for each calendar year since 2011 and the FDIC's goal to maintain the DRR at or above the statutory threshold. Brokered Deposits The FDIC limits the ability to accept brokered deposits to those insured depository institutions that are well capitalized.
The Company had 24 other lending relationships in excess of $22.5 million as of September 30, 2024. 5 Table of Contents Loan and Lease Portfolio Composition The following table shows the composition of the Company’s loan and lease portfolio by fixed- and adjustable-rate at the dates indicated.
The Company had 24 other lending relationships in excess of $28.3 million as of September 30, 2025. 5 Table of Contents Loan and Lease Portfolio Composition The following table shows the composition of the Company’s loan and lease portfolio by fixed- and adjustable-rate at the dates indicated.
The lease may contain provisions that transfer ownership to the lessee at the end of the initial term, contain a bargain purchase option or allow for purchase of the equipment at fair market value. Residual values are estimated at the inception of the lease. Lease maturities are generally no greater than 84 months. Insurance Premium Finance.
The lease may contain provisions that transfer ownership to the lessee at the end of the initial term, contain a bargain purchase option or allow for purchase of the equipment at fair market value. Residual values are estimated at the inception of the lease. Lease maturities are generally no greater than 84 months. Government Guaranteed Lending.
Our performance management program is an interactive practice that engages our employees beginning with aligning objectives at the enterprise level to drive individual goal setting and quarterly conversations designed to review progress and accomplishments and calibrate on focus areas for the upcoming quarter, driving progress against objectives, alignment, and performance feedback throughout the year.
Our performance management program is an interactive practice that engages our employees by aligning objectives at the enterprise level to drive individual goal setting, promoting quarterly conversations designed to review progress and accomplishments and designate focus areas for the upcoming quarter, driving progress against objectives, alignment, and performance feedback throughout the year.
Subsequent Events to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information on the sale and transaction. In the normal course of business, the Company enters into off-balance sheet transactions with special purpose entities ("SPEs"). See Note 1.
Divestitures to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information on the sale and transaction. 8 Table of Contents In the normal course of business, the Company enters into off-balance sheet transactions with special purpose entities ("SPEs").
The majority of these loans are guaranteed by the hospital providing the service to the debtor and this guarantee serves to reduce credit risk as the guarantors agree to repurchase severely delinquent loans. Credit risk is minimized on these loans based on the guarantor’s repurchase agreement. This loan category also includes commercial real estate loans.
The majority of these loans are guaranteed by the hospital providing the service to the debtor and this guarantee serves to reduce credit risk as the guarantors agree to repurchase severely delinquent loans. Credit risk is minimized on these loans based on the guarantor’s repurchase agreement.
At September 30, (Dollars in thousands) 2024 2023 Trust preferred securities $ 13,661 $ 13,661 Subordinated debentures 19,693 19,591 Overnight fed funds purchased 377,000 13,000 Other borrowings — 621 Total borrowings $ 410,354 $ 46,873 Weighted average interest rate of trust preferred securities 8.91 % 9.39 % Weighted average interest rate of subordinated debentures 6.63 % 6.63 % Weighted average interest rate of overnight fed funds purchased 5.11 % 5.57 % Partner Solutions Activities The Company's core differentiators, including industry experience, operational excellence, committed partnership, and mature risk and compliance infrastructure are important for payment innovators in an evolving marketplace.
(Dollars in thousands) September 30, 2025 September 30, 2024 Trust preferred securities $ 13,661 $ 13,661 Subordinated debentures 19,795 19,693 Overnight fed funds purchased 9,000 377,000 Other borrowings — — Total borrowings $ 42,456 $ 410,354 Weighted average interest rate of trust preferred securities 8.09 % 8.91 % Weighted average interest rate of subordinated debentures 6.63 % 6.63 % Weighted average interest rate of overnight fed funds purchased 4.33 % 5.11 % Partner Solutions Activities The Company's core differentiators, including industry experience, operational excellence, committed partnership, and mature risk and compliance infrastructure are important for payment innovators in an evolving marketplace.
Borrowings, including FHLB advances, overnight federal funds purchased, repurchase agreements, other short-term borrowings, and funds available through the FRB Discount Window, may be used at times to compensate for seasonal reductions in deposits or deposit inflows at less than projected levels, may be used to compensate for short-term delays in deposit funding, may be used on a longer-term basis to support expanded lending activities, and may also be used to match the funding of a corresponding asset. 16 Table of Contents Deposits The Company offers a variety of deposit accounts having a wide range of interest rates and terms.
Borrowings, including FHLB advances, overnight federal funds purchased, repurchase agreements, other short-term borrowings, and funds available through the FRB Discount Window, may be used at times to compensate for seasonal reductions in deposits or deposit inflows at less than projected levels, may be used to compensate for short-term delays in deposit funding, may be used on a longer-term basis to support expanded lending activities, and may also be used to match the funding of a corresponding asset.
Pathward works to promote diversity throughout our organization and provide an equal opportunity for employment and success regardless of background and identity, as reflected in our Code of Business Conduct and Employee Handbook. 34 Table of Contents Talent Acquisition A core tenet of our talent system is to both develop talent from within and enrich our talent pool with external hires to support a continuous improvement mindset.
Pathward works to provide an equal opportunity for employment and success, as reflected in our Code of Business Conduct and Employee Handbook. Talent Acquisition A core tenet of our talent system is to both develop talent from within and enrich our talent pool with external hires to support a continuous improvement mindset.
As of September 30, 2024, 41% of the term lending portfolio exposure is concentrated in solar/alternative energy, most of which are construction projects that will convert to longer term government guaranteed facilities upon completion of the construction phase. Equipment finance agreements make up 39% of the term lending total as of September 30, 2024.
As of September 30, 2025, 60% of the term lending portfolio exposure is concentrated in solar/alternative energy, most of which are construction projects that will convert to longer term government guaranteed facilities upon completion of the construction phase. Equipment finance makes up 25% of the term lending total as of September 30, 2025.
On October 31, 2024, as part of the insurance premium finance business sale, the Company sold $588.4 million of commercial insurance premium finance loans. See Note 20.
On October 31, 2024, as part of the insurance premium finance business sale, the Company sold commercial insurance premium finance loans. See Note 2.
The Bank did not elect to implement the relief provided under the simplification rule. 29 Table of Contents On November 21, 2018, the FDIC, the OCC, and the FRB jointly issued a proposed rule required by the Regulatory Relief Act that would permit qualifying banks that have less than $10 billion in consolidated assets to elect to be subject to a 9% leverage ratio that would be applied using less complex leverage calculations (referred to as the “community bank leverage ratio” or “CBLR”).
On November 21, 2018, the FDIC, the OCC, and the Federal Reserve jointly issued a proposed rule required by the Regulatory Relief Act that would permit qualifying banks that have less than $10 billion in consolidated assets to elect to be subject to a 9% leverage ratio that would be applied using less complex leverage calculations (referred to as the “community bank leverage ratio” or “CBLR”).
Certain guaranteed portions of these loans may be sold to the secondary market. See "Originations, Sales and Servicing of Loans and Leases" below for further details. Other Commercial Finance. Included in this category of loans are the Company's healthcare receivables loan portfolio primarily comprised of loans to individuals for medical services received.
See "Originations, Sales and Servicing of Loans and Leases" below for further details. Other Commercial Finance. Included in this category of loans are the Company's healthcare receivables loan portfolio primarily comprised of loans to individuals for medical services received.
At September 30, 2024, the Company had $15.2 million in accruing loans and leases delinquent 90 days or more, compared to $18.8 million at September 30, 2023.
Accruing Loans and Leases Delinquent 90 Days or More. At September 30, 2025, the Company had $17.7 million in accruing loans and leases delinquent 90 days or more, compared to $15.2 million at September 30, 2024.
The fair value of debt securities available for sale ("AFS") decreased $63.0 million at September 30, 2024 when compared to September 30, 2023 while the amortized cost of debt securities held to maturity ("HTM") decreased $3.5 million over the same period.
The fair value of debt securities available for sale ("AFS") decreased $413.4 million at September 30, 2025 when compared to September 30, 2024 while the amortized cost of debt securities held to maturity ("HTM") decreased $3.8 million over the same period.
Notably, the FDIC has the authority to increase an institution’s deposit insurance premium if it determines that an insured depository institution significantly relies upon brokered deposits. As of September 30, 2024, 2023 and 2022, the Bank’s deposit insurance assessment rate was 7 basis points, 7 basis points, and 5 basis points, respectively.
Notably, the FDIC has the authority to increase certain institutions' deposit insurance premium if it determines that the institution significantly relies upon brokered deposits. As of September 30, 2025, 2024 and 2023, the Bank’s deposit insurance assessment rate was 6 basis points, 7 basis points, and 7 basis points, respectively.
Short-term and Long-term Borrowings to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
For additional information regarding the Company’s collateralization of borrowings, see Note 11. Short-term and Long-term Borrowings to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
The assessments are paid to the OCC on a semi-annual basis. During the fiscal year ended September 30, 2024, the Bank paid assessments (standard assessments) of $789,608 to the OCC.
The assessments are paid to the OCC on a semi-annual basis. During the fiscal year ended September 30, 2025, the Bank paid assessments (standard assessments) of $655,404 to the OCC.
Although a final rule has not been issued, the Company and the Bank have undertaken efforts to ensure that their incentive compensation plans do not encourage inappropriate risks, consistent with the principles identified above.
It is unclear when or whether this rule will be finalized. Although a final rule has not been issued, the Company and the Bank have undertaken efforts to ensure that their incentive compensation plans do not encourage inappropriate risks, consistent with the principles identified above.
The final rule became effective April 1, 2020 for the amendments to simplify capital rules, and October 1, 2019 for revisions to the pre-approval requirements for the redemption of common stock and other technical amendments.
The final rule became effective April 1, 2020 for the amendments to simplify capital rules, and October 1, 2019 for revisions to the pre-approval requirements for the redemption of common stock and other technical amendments. The Bank did not elect to implement the relief provided under the simplification rule.
For the fiscal year ended September 30, 2024, dividends paid by the FHLB to the Bank totaled $0.7 million. 31 Table of Contents Other Regulation The Bank is also subject to a variety of other regulations with respect to its business operations including, but not limited to, the Truth in Lending Act, the Truth in Savings Act, the Consumer Leasing Act, the Equal Credit Opportunity Act, the Electronic Funds Transfer Act, the Military Lending Act, the Servicemembers’ Civil Relief Act, the Fair Housing Act, the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Fair Credit Reporting Act.
Other Regulation The Bank is also subject to a variety of other regulations with respect to its business operations including, but not limited to, the Truth in Lending Act, the Truth in Savings Act, the Consumer Leasing Act, the Equal Credit Opportunity Act, the Electronic Funds Transfer Act, the Military Lending Act, the Servicemembers’ Civil Relief Act, the Fair Housing Act, the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Fair Credit Reporting Act.
The servicing fee is recognized as income over the life of the loans. As of September 30, 2024, the Company was servicing $350.7 million of SBA/USDA loans and $13.8 million of term lending loans. 8 Table of Contents The Company may sell the guaranteed portion of its SBA 7(a) loans and USDA program loans in the secondary market.
The servicing fee is recognized as income over the life of the loans. As of September 30, 2025, the Company was servicing $782.1 million of SBA/USDA loans and $209.4 million of term lending loans. The Company may sell the guaranteed portion of its SBA 7(a) loans and USDA program loans in the secondary market.
Maturity (Dollars in thousands) 3 Months or Less Over 3 to 6 Months Over 6 to 12 Months Over 12 Months Total Certificates of deposit $ 675 $ 579 $ 750 $ 602 $ 2,606 The following table shows rate and maturity information for the Company’s certificates of deposit at September 30, 2024.
Maturity (Dollars in thousands) 3 Months or Less Over 3 to 6 Months Over 6 to 12 Months Over 12 Months Total Certificates of deposit $ — $ 1,136 $ 750 $ — $ 1,886 The following table shows rate and maturity information for the Company’s certificates of deposit at September 30, 2025.
Fiscal Year Ended September 30, (Dollars in thousands) 2024 2023 Maximum Balance: Trust preferred securities $ 13,661 $ 13,661 Subordinated debentures 19,693 19,626 Overnight fed funds purchased 377,000 440,000 Other borrowings 523 2,178 Average Balance: Trust preferred securities $ 13,661 $ 13,661 Subordinated debentures 19,638 19,560 Overnight fed funds purchased 99,290 74,812 Other borrowings 201 1,447 The following table sets forth certain information as to the Company’s trust preferred securities, subordinated debentures, overnight fed funds purchased, and other borrowings.
Fiscal Year Ended September 30, (Dollars in thousands) 2025 2024 Maximum Balance: Trust preferred securities $ 13,661 $ 13,661 Subordinated debentures 19,795 19,693 Overnight fed funds purchased 286,000 377,000 Other borrowings — 523 Average Balance: Trust preferred securities $ 13,661 $ 13,661 Subordinated debentures 19,740 19,638 Overnight fed funds purchased 74,948 99,290 Other borrowings — 201 19 Table of Contents The following table sets forth certain information as to the Company’s trust preferred securities, subordinated debentures, overnight fed funds purchased, and other borrowings.
Borrowings Although deposits are the Company’s primary source of funds, the Company’s practice has been to utilize borrowings when they are a less costly source of funds, can be invested at a positive interest rate spread, or when the Company desires additional capacity to fund loan demand. Borrowings from various sources mature based on stated payment schedules.
Borrowings Although deposits are the Company’s primary source of funds, the Company’s practice has been to utilize borrowings to manage cyclical deposit changes, when they are a less costly source of funds, can be invested at a positive interest rate spread, or when the Company desires additional capacity to fund loan demand.
Specific provisions of the Regulatory Relief Act that benefit smaller banks include modifications to the “qualified mortgage” criteria under the “ability to repay” rules for certain mortgages that are held and maintained on the Bank’s retained portfolio as well as relief from certain capital requirements required by an international banking capital framework with the creation of a “community bank leverage ratio.” See “Regulatory Capital Requirements” and “Brokered Deposits.” Temporary Regulatory Capital Relief Related to Impact of CECL On August 26, 2020, the federal banking agencies adopted a final rule that delayed the estimated impact on regulatory capital resulting from the adoption of CECL.
Specific provisions of the Regulatory Relief Act that benefit smaller banks include modifications to the “qualified mortgage” criteria under the “ability to repay” rules for certain mortgages that are held and maintained on the Bank’s retained portfolio as well as relief from certain capital requirements required by an international banking capital framework with the creation of a “community bank leverage ratio.” See “Regulatory Capital Requirements” and “Brokered Deposits.” Many of the Regulatory Relief Act's changes were implemented through rules promulgated by the federal banking agencies.
Further, the Bank’s board of directors may not declare a dividend if paying the dividend would result in the Bank being undercapitalized under the OCC’s PCA rule. 30 Table of Contents The Bank also must obtain prior approval from the OCC to pay a cash dividend if the dividend would exceed the sum of current period net income and retained earnings from the past two years, after deducting the following transactions during that period: (i) any dividends previously declared, (ii) extraordinary transfers required by the OCC, and (iii) payments made for the retirement of preferred stock.
The Bank also must obtain prior approval from the OCC to pay a cash dividend if the dividend would exceed the sum of current period net income and retained earnings from the past two years, after deducting the following transactions during that period: (i) any dividends previously declared, (ii) extraordinary transfers required by the OCC, and (iii) payments made for the retirement of preferred stock.
Consumer Finance The Bank offers a variety of installment and revolving consumer lending products through its credit solutions. The Bank designs its credit program relationships with certain desired outcomes, including liquidity, credit protection, and risk retention by the program partner.
This loan category also includes commercial real estate loans. 7 Table of Contents Consumer Finance The Bank offers a variety of installment and revolving consumer lending products through its credit solutions. The Bank designs its credit program relationships with certain desired outcomes, including liquidity, credit protection, and risk retention by the program partner.
CMPs may encourage an affected party to correct violations, unsafe or unsound practices or breaches of fiduciary duty. CMPs are also intended to serve as a deterrent to future violations of law, regulations, orders and other conditions.
In addition, the OCC has the authority to assess CMPs against bank service companies and service providers. CMPs may encourage an affected party to correct violations, unsafe or unsound practices or breaches of fiduciary duty. CMPs are also intended to serve as a deterrent to future violations of law, regulations, orders and other conditions.
On September 17, 2024, the OCC issued a final rule related to its regulations for business combinations involving national banks and a policy statement that summarizes the principles the OCC uses when it reviews proposed bank merger transactions under the Bank Merger Act (“BMA”).
In September 2024, the OCC issued a final rule related to its regulations for business combinations involving national banks and a policy statement summarizing the principles the OCC uses when it reviews proposed bank merger transactions under the Bank Merger Act (“BMA”), both of which expressed the OCC's heightened scrutiny of business combinations involving national banks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Regulation of the Company and the Bank We operate in a highly regulated environment, and our failure to comply with laws and regulations, or changes in laws and regulations to which we are subject, may adversely affect our business, prospects, results of operations and financial condition.
Biggest changeIf our efforts to remediate an identified material weakness are not successful or other significant control deficiencies occur, our ability to accurately and timely report our financial results could be impaired, which could result in additional late filings of our annual and quarterly reports under the Exchange Act, additional restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common stock from NASDAQ, and have an adverse effect on our business, financial condition and results of operations. 47 Table of Contents Risks Related to Regulation of the Company and the Bank We operate in a highly regulated environment, and our failure to comply with laws and regulations, or changes in laws and regulations to which we are subject, may adversely affect our business, prospects, results of operations and financial condition.
A deterioration in business, political or economic conditions, including those arising from pandemics, geopolitical turmoil and war, government shutdowns or defaults, or increases in unemployment, could result in an increase in loan delinquencies and nonperforming assets, decreases in loan collateral values, and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations.
A deterioration in business, political or economic conditions, including those arising from government shutdowns or defaults, geopolitical turmoil and war, increases in unemployment, or pandemics, could result in an increase in loan delinquencies and nonperforming assets, decreases in loan collateral values, and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations.
In the wake of the repeal of the True Lender Rule, several states have announced their intention to broaden oversight of non-bank fintech lenders, and several states have adopted legislation and guidance regarding "true lenders." Additionally, certain parties have initiated litigation in order to obtain court guidance on how particular jurisdictions may weigh loan program facts and rule on “true lender” challenges.
In the wake of the repeal of the True Lender Rule, several states announced their intention to broaden oversight of non-bank fintech lenders, and several states have adopted legislation and guidance regarding "true lenders." Additionally, certain parties have initiated litigation in order to obtain court guidance on how particular jurisdictions may weigh loan program facts and rule on “true lender” challenges.
Risks Related to Regulation of the Company and the Bank • We operate in a highly regulated environment, and our failure to comply with laws and regulations, or changes in laws and regulations to which we are subject, may adversely affect our business, prospects, results of operations and financial condition. • The Bureau's rulemaking and enforcement of prohibitions against unfair, deceptive or abusive practices have directly impacted, and may continue to impact, the Bank's consumer financial products and service offerings. • Regulatory scrutiny of bank provision of partner solutions and related technology considerations has increased. • Increased scrutiny and evolving expectations from stakeholders with respect to ESG practices may impose additional costs on us or expose us to new or additional risks. • We will be subject to heightened regulatory requirements if our total assets exceed $10 billion as of December 31 of any calendar year. • We will become subject to reduced interchange income and could face related adverse business consequences if our total assets exceed $10 billion as of December 31 of any calendar year. • Any change in the Bank's ability to gather brokered deposits may adversely impact the Bank. • As a BHC, we are required to serve as a "source of strength" for the Bank. • If we fail to maintain sufficient capital, our financial condition, liquidity, results of operations, and compliance with regulatory requirements would be adversely affected. • Changes in federal, state, and local tax laws, interpretations of existing tax laws, or adverse determinations by tax authorities, could increase our tax burden or otherwise have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Regulation of the Company and the Bank • We operate in a highly regulated environment, and our failure to comply with laws and regulations, or changes in laws and regulations to which we are subject, may adversely affect our business, prospects, results of operations and financial condition. • The Bureau's rulemaking and enforcement of prohibitions against unfair, deceptive or abusive practices have directly impacted, and may continue to impact, the Bank's consumer financial products and service offerings. • Regulatory scrutiny of bank provision of partner solutions and related technology considerations has increased. • Increased scrutiny and evolving expectations from stakeholders with respect to sustainability practices may impose additional costs on us or expose us to new or additional risks. • We will be subject to heightened regulatory requirements if our total assets exceed $10 billion as of December 31 of any calendar year. • We will become subject to reduced interchange income and could face related adverse business consequences if our total assets exceed $10 billion as of December 31 of any calendar year. • Any change in the Bank's ability to gather brokered deposits may adversely impact the Bank. • As a BHC, we are required to serve as a "source of strength" for the Bank. • If we fail to maintain sufficient capital, our financial condition, liquidity, results of operations, and compliance with regulatory requirements would be adversely affected. • Changes in federal, state, and local tax laws, interpretations of existing tax laws, or adverse determinations by tax authorities, could increase our tax burden or otherwise have a material adverse effect on our business, financial condition, and results of operations.
Risks inherent in the Bank's participation in such programs, through its Commercial Finance business line, include: (i) some of these programs guarantee only a portion of the commercial loan made by the Bank; as such, if the borrower defaults and losses exceed those guaranteed by the government agency, the Bank could realize significant losses; (ii) certain programs, including some guaranteed by the United States Department of Agriculture, limit the geographic scope of such loans; as such, if the Commercial Finance business line is not able to market these loans to potential borrowers, the Bank's share in this market may be negatively impacted; (iii) the intended beneficiaries of such loan programs may experience a contraction in their credit quality due to local, national, or global economic events or because of factors specific to their business, including, for example, businesses dependent upon the farming and agriculture industry; as such, any negative impact to certain commercial business lines designed to benefit from such government-sponsored loan programs could constrict the Bank's business in these areas; and (iv) nearly all of these guaranteed loan programs are subject to an appropriations process, either at the legislative or regulatory level; this means that funds that may be currently available to guarantee loans or portions of loans could be limited or eliminated in their entirety with little or no advance warning.
Risks inherent in the Bank's participation in such programs, through its Commercial Finance business line, include: (i) some of these programs guarantee only a portion of the commercial loan made by the Bank; as such, if the borrower defaults and losses exceed those guaranteed by the government agency, the Bank could realize significant losses; (ii) certain programs, including some guaranteed by the United States Department of Agriculture, limit the geographic scope of such loans; as such, if the Commercial Finance business line is not able to market these loans to potential borrowers, the Bank's share in this market may be negatively impacted; (iii) the intended beneficiaries of such loan programs may experience a contraction in their credit quality due to local, national, or global economic 44 Table of Contents events or because of factors specific to their business, including, for example, businesses dependent upon the farming and agriculture industry; as such, any negative impact to certain commercial business lines designed to benefit from such government-sponsored loan programs could constrict the Bank's business in these areas; and (iv) nearly all of these guaranteed loan programs are subject to an appropriations process, either at the legislative or regulatory level; this means that funds that may be currently available to guarantee loans or portions of loans could be limited or eliminated in their entirety with little or no advance warning.
We believe that our future organic growth will depend on competitive factors and on the ability of our senior management to continue to maintain a robust system of internal controls and procedures and manage a growing number of customer relationships.
We believe that our future organic growth will depend on competitive factors and on the ability of our senior management to maintain a robust system of internal controls and procedures and manage a growing number of customer relationships.
For example, if our underwriting practices or criteria fail to adequately identify, price, and mitigate credit risks, such as risks related to economic disruption and the risk in our refund advance loan portfolio that the IRS or the relevant state revenue department does not pay our customer's tax refund in full or the risk that any of our EROs will facilitate or engage in malfeasance or offer the Bank's products 38 Table of Contents and services in a manner that does not comply with applicable law or contractual representations, warranties and covenants, it is possible that losses in our loan portfolio will exceed the amounts the Bank has set aside for loss reserves and result in reduced interest income and increased provision for credit loss, which could have an adverse effect on our financial condition and results of operations.
For example, if our underwriting practices or criteria fail to adequately identify, price, and mitigate credit risks, such as risks related to economic disruption and the risk in our refund advance loan portfolio that the IRS or the relevant state revenue department does not pay our customer's tax refund in full or the risk that any of our EROs will facilitate or engage in malfeasance or offer the Bank's products and services in a manner that does not comply with applicable law or contractual representations, warranties and covenants, it is possible that losses in our loan portfolio will exceed the amounts the Bank has set aside for loss reserves and result in reduced interest income and increased provision for credit loss, which could have an adverse effect on our financial condition and results of operations.
Even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction, including: • increased regulatory and compliance requirements; • implementation or remediation of controls, procedures and policies at the acquired company; • diversion of management time and focus from operation of our then-existing business; 44 Table of Contents • integration and coordination of product, sales, marketing, program and systems management functions; • integration of the acquired company’s systems and operations generally with ours; • integration of employees from the acquired company into our organization; • loss or termination, including costs associated with the termination or replacement, of employees; • liability for activities of the acquired company prior to the acquisition, including violations of law, commercial disputes and tax and other known and unknown liabilities; and • increased litigation or other claims in connection with the acquired company, including claims brought by terminated employees, customers, former stockholders or other third parties.
Even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction, including: • increased regulatory and compliance requirements; • implementation or remediation of controls, procedures and policies at the acquired company; • diversion of management time and focus from operation of our then-existing business; • integration and coordination of product, sales, marketing, program and systems management functions; • integration of the acquired company’s systems and operations generally with ours; • integration of employees from the acquired company into our organization; • loss or termination, including costs associated with the termination or replacement, of employees; • liability for activities of the acquired company prior to the acquisition, including violations of law, commercial disputes and tax and other known and unknown liabilities; and • increased litigation or other claims in connection with the acquired company, including claims brought by terminated employees, customers, former stockholders or other third parties.
In addition, if any of our counterparties is unable to or otherwise does not fulfill (or does not timely fulfill) its obligations to us for any reason (including, but not limited to, bankruptcy, computer or other technological interruptions or failures, personnel loss, negative regulatory actions, or acts of God) or engages in fraud or other misconduct during the course of such relationship, we may need to seek alternative third party service providers, or discontinue certain products or programs in their entirety.
In addition, if any of our counterparties are unable to or otherwise does not fulfill (or does not timely fulfill) its obligations to us for any reason (including, but not limited to, bankruptcy, computer or other technological interruptions or failures, personnel loss, negative regulatory actions, or acts of God) or engages in fraud or other misconduct during the course of such relationship, we may need to seek alternative third party service providers, or discontinue certain products or programs in their entirety.
While our deposit base primarily consists of millions of retail cards and other small dollar accounts with an average balance less than $1,000 and we maintain a liquidity position with numerous funding options available totaling over $2.0 billion as of September 30, 2024, we cannot be assured that unusual deposit withdrawal activity will not affect banks generally in the future or us in particular.
While our deposit base primarily consists of millions of retail cards and other small dollar accounts with an average balance less than $1,000 and we maintain a liquidity position with numerous funding options available totaling over $2.0 billion as of September 30, 2025, we cannot be assured that unusual deposit withdrawal activity will not affect banks generally in the future or us in particular.
To the extent that we or our customers experience increases in costs, including with respect to compliance with any additional regulatory or disclosure requirements or expectations, reductions in the value of assets, constraints on operations or similar concerns driven by changes in ESG oversight and regulation, our results of operations, financial condition, and business could be adversely affected.
To the extent that we or our customers experience increases in costs, including with respect to compliance with any additional regulatory or disclosure requirements or expectations, reductions in the value of assets, constraints on operations or similar concerns driven by changes in sustainability oversight and regulation, our results of operations, financial condition, and business could be adversely affected.
See “Funding Activities – Deposits” for further breakdown of balances as of September 30, 2024. We are not insured against these settlement or partner risks. Our business strategy includes plans for organic growth, and our financial condition and results of operation could be adversely affected if we fail to grow or fail to manage our growth effectively.
See “Funding Activities – Deposits” for further breakdown of balances as of September 30, 2025. We are not insured against these settlement or partner risks. Our business strategy includes plans for organic growth, and our financial condition and results of operation could be adversely affected if we fail to grow or fail to manage our growth effectively.
Should the Bank ever fail to be well capitalized in the future as a result of not meeting the well capitalized requirements or the imposition of an individual minimum capital requirement or similar formal requirement, then, the Bank would be prohibited, absent waiver from the FDIC, from utilizing brokered deposits (i.e., no insured depository 51 Table of Contents institution that is deemed to be less than "well capitalized" may accept, renew or rollover brokered deposits absent a waiver from the FDIC).
Should the Bank ever fail to be well capitalized in the future as a result of not meeting the well capitalized requirements or the imposition of an individual minimum capital requirement or similar formal requirement, then, the Bank would be prohibited, absent waiver from the FDIC, from utilizing brokered deposits (i.e., no insured depository institution that is deemed to be less than "well capitalized" may accept, renew or rollover brokered deposits absent a waiver from the FDIC).
Risks and exposures related to cybersecurity attacks have increased as a result of greater reliance on remote working, and are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, the proliferation of malicious actors internationally, and the expanding use of technology-based products and services by us and our customers.
Risks and exposures related to cybersecurity attacks have increased as a result of greater reliance on remote working, and are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, the proliferation of malicious actors internationally, and the expanding use of 43 Table of Contents technology-based products and services by us and our customers.
The amount of any impairment charge could be significant and could have a material adverse impact on our financial condition and results of operations for the period in which the charge is taken. 45 Table of Contents We may incur losses due to fraudulent and negligent acts, as well as errors, by third parties or our employees.
The amount of any impairment charge could be significant and could have a material adverse impact on our financial condition and results of operations for the period in which the charge is taken. We may incur losses due to fraudulent and negligent acts, as well as errors, by third parties or our employees.
Natural disasters and severe weather conditions could harm our operations through interference with communications, including the interruption or loss of our computer systems, which could prevent or impede us from gathering deposits, originating loans, and processing and controlling the flow of business, as well as through the destruction of facilities and our operational, financial and management information systems.
Natural disasters and severe weather conditions could harm our operations through interference with communications, including the interruption or loss of our computer systems, which could prevent or impede us from gathering deposits, originating loans, and processing and controlling the flow of business, as well as through the destruction of facilities and our operational, 52 Table of Contents financial and management information systems.
If we sell our used leased equipment at prices significantly below our projections or in lesser quantities than we anticipated at the time we entered into the lease, our results of operations and cash flows may be negatively impacted. 41 Table of Contents Changes in interest rates could adversely affect our results of operations and financial condition.
If we sell our used leased equipment at prices significantly below our projections or in lesser quantities than we anticipated at the time we entered into the lease, our results of operations and cash flows may be negatively impacted. Changes in interest rates could adversely affect our results of operations and financial condition.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could reduce our revenues and potentially generate losses. An impairment charge of goodwill or other intangibles could have a material adverse impact on our financial condition and results of operations.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could reduce our revenues and potentially generate losses. 42 Table of Contents An impairment charge of goodwill or other intangibles could have a material adverse impact on our financial condition and results of operations.
Damage to our reputation could adversely impact our ability to attract new, and maintain existing, loan 55 Table of Contents and deposit customers, employees and business relationships, and, particularly with respect to our Partner Solutions business line, could result in the imposition of new regulatory requirements, operational restrictions, enhanced supervision and/or civil money penalties.
Damage to our reputation could adversely impact our ability to attract new, and maintain existing, loan and deposit customers, employees and business relationships, and, particularly with respect to our Partner Solutions business line, could result in the imposition of new regulatory requirements, operational restrictions, enhanced supervision and/or civil money penalties.
See also "If our actual loan and lease losses exceed our allowance for credit losses, our net income will decrease." The electronic payments industry, including the prepaid financial services segment within that industry in which the Partner Solutions business line operates, depends heavily upon the overall level of consumer spending, which may decrease if economic or political conditions in the United States deteriorate and result in a reduction of the number of our prepaid accounts that are purchased or reloaded, the number of transactions involving our cards and the use of our reloadable card products and related services.
See also "If our actual loan and lease losses exceed our allowance for credit losses, our net income will decrease." The electronic payments industry, including the prepaid financial services segment within that industry in which the Partner Solutions business line operates, could vary depending upon the overall level of consumer spending, which may decrease if economic or political conditions in the United States deteriorate and result in a reduction of the number of our prepaid accounts that are purchased or reloaded, the number of transactions involving our cards and the use of our reloadable card products and related services.
These laws, regulations and standards are rapidly evolving and increasing in complexity and could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, 46 Table of Contents sharing, retention and safeguarding of consumer and employee information, and some current or planned business activities.
These laws, regulations and standards are rapidly evolving and increasing in complexity and could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer and employee information, and some current or planned business activities.
See "We operate in an extremely competitive market, and our business will suffer if we are unable to compete effectively." We may not be able to implement changes or improvements to these internal controls and procedures in an efficient or timely manner and may discover deficiencies in existing systems and controls.
See "We operate in an extremely competitive market, and our business will suffer if we are unable to compete effectively." We may not be able to implement changes or improvements to these internal controls and procedures in an efficient or timely manner and have, and may in the future, discover deficiencies in existing systems and controls.
Any of these impacts, or any other impacts resulting from the events described above, could have a material adverse effect on our liquidity and our current and/or projected business operations and financial condition and results of operations. 40 Table of Contents Ineffective liquidity management could adversely affect our financial condition and results of operation. Liquidity is essential to our business.
Any of these impacts, or any other impacts resulting from the events described above, could have a material adverse effect on our liquidity and our current and/or projected business operations and financial condition and results of operations. Ineffective liquidity management could adversely affect our financial condition and results of operation. Liquidity is essential to our business.
See “Forward-Looking Statements.” 36 Table of Contents Risk Factor Summary These risks and uncertainties include: Risks Related to Our Industry and Business • Our framework for managing risk, including our underwriting practices, may not prevent future losses. • We are subject to credit risk in connection with our lending and leasing activities, and our financial condition and results of operations may be negatively impacted by factors that adversely affect our borrowers. • If our actual credit losses exceed our allowance for credit losses, our net income will decrease. • Our earnings are significantly affected by general business, political and economic conditions. • Adverse developments or concerns affecting the financial services industry or specific financial institutions could adversely affect our financial condition and results of operations. • Ineffective liquidity management could adversely affect our financial condition and results of operation. • Our investments in certain tax-advantaged projects may not generate anticipated returns, causing an adverse impact on our results of operations. • The residual value of leased equipment at the time of its disposition may be less than forecasted at the time we entered into the lease. • Changes in interest rates could adversely affect our results of operations and financial condition. • We operate in an extremely competitive market, and our business will suffer if we are unable to compete effectively. • Our business could suffer if consumer behaviors, or other factors, in connection with the use of prepaid cards change, or there are adverse developments with respect to the prepaid financial services industry in general. • Our operations depend upon third-party relationships; our ability to maintain such relationships and such third parties' performances could adversely affect our business. • We derive a significant percentage of our deposits, total assets and income from deposit accounts that we generate through Payments' customer relationships, of which a limited number of program manager relationships are particularly significant to our operations. • We are exposed to fraud losses from customer accounts. • We are exposed to settlement and other losses from payments customers. • Our business strategy includes plans for organic growth, and our financial condition and results of operation could be adversely affected if we fail to grow or fail to manage our growth effectively. • Acquisitions and other strategic transactions, or the failure to consummate such transactions, could disrupt our business and harm our financial condition and may not yield the intended benefits. • New lines of business or new products and services may subject us to additional risks. • An impairment charge of goodwill or other intangibles could have a material adverse impact on our financial condition and results of operations. • We may incur losses due to fraudulent and negligent acts, as well as errors, by third parties or our employees. • Security breaches involving us, the Bank or any third parties with which we do business could expose us to liability and litigation, adversely affecting our reputation and operating revenues. • Failure to comply satisfactorily with certain privacy and data protection laws, regulations, and standards to which we are subject could adversely affect our reputation and operating revenues. • Our reputation and financial condition may be harmed by system failures, computer viruses and other technological interruptions to our operations. • Agency, technological, or human error could lead to tax refund processing delays, which could adversely affect our reputation and operating revenues. • The Commercial Finance business line generates government-backed loans funded by the Bank, any of which could be negatively impacted by a variety of factors. • Agreements between the Bank and third parties to market and service Bank-originated consumer loans may subject the Bank to credit, fraud and other risks, as well as claims from regulatory agencies and third parties that, if successful, could negatively impact the Bank's current and future business. • The OCC's grant of bank charters to fintech companies and special purpose fintech charter could present a market risk to us generally and the Partner Solutions business line specifically. • The loss or transition of key members of our senior management team or key employees in the Bank's divisions, or our inability to attract and retain qualified personnel, could adversely affect our business. • We regularly assess our investments in technology, and changes in technology could be costly. 37 Table of Contents • Our ability to receive dividends from the Bank could affect our liquidity and ability to pay dividends on our common stock, interest on our trust preferred securities and principal on our debt. • Unclaimed funds represented by unused value on the cards presents compliance and other risks.
See “Forward-Looking Statements.” Risk Factor Summary These risks and uncertainties include: Risks Related to Our Industry and Business • Our framework for managing risk, including our underwriting practices, may not prevent future losses. • We are subject to credit risk in connection with our lending and leasing activities, and our financial condition and results of operations may be negatively impacted by factors that adversely affect our borrowers. • If our actual credit losses exceed our allowance for credit losses, our net income will decrease. • Our earnings are significantly affected by general business, political and economic conditions. • Adverse developments or concerns affecting the financial services industry or specific financial institutions could adversely affect our financial condition and results of operations. • Ineffective liquidity management could adversely affect our financial condition and results of operation. • Our investments in certain tax-advantaged projects may not generate anticipated returns, causing an adverse impact on our results of operations. • The residual value of leased equipment at the time of its disposition may be less than forecasted at the time we entered into the lease. • Changes in interest rates could adversely affect our results of operations and financial condition. • We operate in an extremely competitive market, and our business will suffer if we are unable to compete effectively. • Our business could suffer if consumer behaviors, or other factors, in connection with the use of prepaid cards change, or there are adverse developments with respect to the prepaid financial services industry in general. • Our operations depend upon third-party relationships; our ability to maintain such relationships and such third parties' performances could adversely affect our business. • We derive a significant percentage of our deposits, total assets and income from deposit accounts that we generate through Payments' customer relationships, of which a limited number of program manager relationships are particularly significant to our operations. • We are exposed to fraud losses from customer accounts. • We are exposed to settlement and other losses from payments customers. • Our business strategy includes plans for organic growth, and our financial condition and results of operation could be adversely affected if we fail to grow or fail to manage our growth effectively. • Acquisitions and other strategic transactions, or the failure to consummate such transactions, could disrupt our business and harm our financial condition and may not yield the intended benefits. • New lines of business or new products and services may subject us to additional risks. • An impairment charge of goodwill or other intangibles could have a material adverse impact on our financial condition and results of operations. • We may incur losses due to fraudulent and negligent acts, as well as errors, by third parties or our employees. • Security breaches involving us, the Bank or any third parties with which we do business could expose us to liability and litigation, adversely affecting our reputation and operating revenues. 34 Table of Contents • Failure to comply satisfactorily with certain privacy and data protection laws, regulations, and standards to which we are subject could adversely affect our reputation and operating revenues. • Our reputation and financial condition may be harmed by system failures, computer viruses and other technological interruptions to our operations. • Agency, technological, or human error could lead to tax refund processing delays, which could adversely affect our reputation and operating revenues. • The Commercial Finance business line generates government-backed loans funded by the Bank, any of which could be negatively impacted by a variety of factors. • Agreements between the Bank and third parties to market and service Bank-originated consumer loans may subject the Bank to credit, fraud and other risks, as well as claims from regulatory agencies and third parties that, if successful, could negatively impact the Bank's current and future business. • The OCC's grant of bank charters to fintech companies and special purpose fintech charter could present a market risk to us generally and the Partner Solutions business line specifically. • The loss or transition of key members of our senior management team or key employees in the Bank's divisions, or our inability to attract and retain qualified personnel, could adversely affect our business. • We regularly assess our investments in technology, and failure to effectively implement technology initiatives or anticipate future technology needs or demands could adversely affect our business or financial results. • Our ability to receive dividends from the Bank could affect our liquidity and ability to pay dividends on our common stock, interest on our trust preferred securities and principal on our debt. • Unclaimed funds represented by unused value on the cards presents compliance and other risks. • We have identified a material weakness in our internal control over financial reporting, and our management has concluded that our disclosure controls and procedures were not effective as of September 30, 2025.
Many of the laws, rules, regulations and supervisory policies governing our business are intended primarily for the protection of our depositors, our customers, the financial system and the FDIC insurance fund, not our stockholders 49 Table of Contents or other creditors and are subject to regular modification and change.
Many of the laws, rules, regulations and supervisory policies governing our business are intended primarily for the protection of our depositors, our customers, the financial system and the FDIC insurance fund, not our stockholders or other creditors and are subject to regular modification and change.
Any reduction in interchange income as a result of the loss of the exemption for small issuers under the Durbin Amendment could have a significant adverse effect on our business, financial condition and results of operations.
Any reduction in interchange income 49 Table of Contents as a result of the loss of the exemption for small issuers under the Durbin Amendment could have a significant adverse effect on our business, financial condition and results of operations.
Because the loans originated under such programs are unsecured, in the event a borrower does not repay the loan in accordance with its terms or otherwise defaults on the loan, the Bank may not be able to recover from the borrower an amount sufficient to pay any 47 Table of Contents remaining balance on the loan.
Because the loans originated under such programs are unsecured, in the event a borrower does not repay the loan in accordance with its terms or otherwise defaults on the loan, the Bank may not be able to recover from the borrower an amount sufficient to pay any remaining balance on the loan.
Any sale of investment securities that are held in an unrealized loss position by financial institutions for liquidity or other purposes will cause actual losses to be realized.
Any sale of investment securities that 37 Table of Contents are held in an unrealized loss position by financial institutions for liquidity or other purposes will cause actual losses to be realized.
The market value of any given piece of leased equipment could be less than its depreciated value at the time it is sold due to various factors, including factors beyond our control.
The market value of any given piece of leased equipment could be less than its depreciated value at the time it is sold due to various factors, 38 Table of Contents including factors beyond our control.
Similarly, if a significant program manager relationship was not replaced, we may be required to seek higher-rate funding sources as compared to the existing program manager relationship or see a significant reduction in fee income. 43 Table of Contents We are exposed to fraud losses from customer accounts.
Similarly, if a significant program manager relationship was not replaced, we may be required to seek higher-rate funding sources as compared to the existing program manager relationship or see a significant reduction in fee income. We are exposed to fraud losses from customer accounts.
Many borrowers have been negatively impacted by recent events impacting financial, real estate, and securities markets, including geopolitical turmoil, higher interest rates, inflation, adverse developments in the financial services industry, and other events that have caused market and economic volatility, and may continue to be similarly or more severely affected in the future.
Many borrowers have been negatively impacted by recent events impacting financial, real estate, and securities markets, including geopolitical turmoil, higher interest rates, inflation, tariffs, and other events that have caused market and economic volatility, and may continue to be similarly or more severely affected in the future.
In addition, federal and state regulators periodically review our allowance for credit losses and may require us to increase our provision for credit loss or recognize loan charge-offs. Material additions to our allowance would materially decrease our net income.
In addition, federal and state regulators periodically review our allowance for credit losses and may require us to increase our provision for credit loss or recognize loan charge-offs. Material additions to our allowance 36 Table of Contents would materially decrease our net income.
If, in the future, the OCC determines to grant any SPNB applications or continues to grant bank charters to fintech applicants, recipients of such charters may enter the U.S. payments market, BaaS solutions market, and other business lines in which the Bank operates, which could increase the competition we face and have a material adverse effect on the Bank and the Partner Solutions business line.
If, in the future, the OCC determines to grant any SPNB applications or continues to grant bank charters to fintech applicants, recipients of such charters may enter the U.S. payments market, banking as a service ("BaaS") solutions 45 Table of Contents market, and other business lines in which the Bank operates, which could increase the competition we face and have a material adverse effect on the Bank and the Partner Solutions business line.
We have continued to experience considerable growth recently, having increased our assets from $2.53 billion at September 30, 2015 to $7.55 billion at September 30, 2024, primarily due to strategic transactions, such as the Crestmark Acquisition, through participation in government stimulus programs such as the EIP, and through organic growth.
We have continued to experience considerable growth, having increased our assets from $2.53 billion at September 30, 2015 to $7.17 billion at September 30, 2025, primarily due to strategic transactions, such as the Crestmark Acquisition, through participation in government stimulus programs such as the EIP, and through organic growth.
If a partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuing bank from the sales of our products and services, we are liable for any amounts owed to our customers. At September 30, 2024, we had assets subject to settlement risk of $365.9 million.
If a partner becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuing bank from the sales of our products and services, we are liable for any amounts owed to our customers. At September 30, 2025, we had assets subject to settlement risk of $267.3 million.
We will be subject to heightened regulatory requirements if our total assets exceed $10 billion as of December 31 of any calendar year. As of September 30, 2024, our total assets were $7.55 billion.
We will be subject to heightened regulatory requirements if our total assets exceed $10 billion as of December 31 of any calendar year. As of September 30, 2025, our total assets were $7.17 billion.
In addition, the Consumer Financial Protection Bureau and the Federal Trade Commission have each announced their intention to explore their authority to supervise nonbank lending partnerships in markets for consumer financial products and services.
In addition, the Bureau and the Federal Trade Commission previously announced their intention to explore their authority to supervise nonbank lending partnerships in markets for consumer financial products and services.
General Risk Factors • The price of our common stock may be volatile, which may result in losses for investors. • An investment in our common stock is not an insured deposit. • Future sales or additional issuances of our capital stock may depress prices of shares of our common stock or otherwise dilute the book value of shares then outstanding. • Changes in accounting policies or accounting standards, or changes in how accounting standards are interpreted or applied, could materially affect how we report our financial results and condition. • If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and our reputation. • Federal regulations and our organizational documents may inhibit a takeover, prevent a transaction you favor or limit our growth opportunities, causing the market price of our common stock to decline. • We may not be able to pay dividends in the future in accordance with past practice. • Catastrophic events could negatively impact our operations, the operations of third parties with which we do business, and the communities in which we do business. • Legal challenges to and regulatory investigations of our, or the Bank's, operations could have a significant material adverse effect on us. • Our reputation and business could be damaged by negative publicity. • Existing insurance policies may not adequately protect us and our subsidiaries.
General Risk Factors • The price of our common stock may be volatile, which may result in losses for investors. • An investment in our common stock is not an insured deposit. • Future sales or additional issuances of our capital stock may depress prices of shares of our common stock or otherwise dilute the book value of shares then outstanding. • Changes in accounting policies or accounting standards, or changes in how accounting standards are interpreted or applied, could materially affect how we report our financial results and condition. • Federal regulations and our organizational documents may inhibit a takeover, prevent a transaction you favor or limit our growth opportunities, causing the market price of our common stock to decline. 35 Table of Contents • We may not be able to pay dividends in the future in accordance with past practice. • Catastrophic events could negatively impact our operations, the operations of third parties with which we do business, and the communities in which we do business. • Legal challenges to and regulatory investigations of our, or the Bank's, operations could have a significant material adverse effect on us. • Our reputation and business could be damaged by negative publicity. • Existing insurance policies may not adequately protect us and our subsidiaries.
We are subject to taxation at the federal state and local levels. The governing tax laws and applicable tax rates vary by jurisdiction and are subject to interpretation and changes. We may be subject to examination by the tax authorities and such authorities may disagree with our tax positions, which could adversely affect our financial condition.
The governing tax laws and applicable tax rates vary by jurisdiction and are subject to interpretation and changes. We may be subject to examination by the tax authorities and such authorities may disagree with our tax positions, which could adversely affect our financial condition.
If the cost of coverage becomes too high, we may need to reduce our policy limits, increase the deductibles or agree to certain exclusions from our coverage in order to reduce the premiums to an acceptable amount. Item 1B. Unresolved Staff Comments. None.
If the cost of coverage becomes too high, we may need to reduce our policy limits, increase the deductibles or agree to certain exclusions from our coverage in order to reduce the premiums to an acceptable amount.
Our ability to receive dividends from the Bank could affect our liquidity and ability to pay dividends on our common stock, interest on our trust preferred securities and principal on our debt. We are a legal entity separate and distinct from the Bank. Our primary source of cash, other than securities offerings, is dividends from the Bank.
We are a legal entity separate and distinct from the Bank. Our primary source of cash, other than securities offerings, is dividends from the Bank. These dividends are a principal source of funds to pay dividends on our common stock, interest on our trust preferred securities and interest and principal on our debt.
Many of the Commercial Finance business line's competitors have been in business for many years, have established customer bases, are larger and may offer other services that neither the Commercial Finance business line nor the Bank do. Several banking institutions have adopted business strategies similar to ours, particularly with respect to the banking-as-a-service ("BaaS") business.
Many of the Commercial Finance business line's competitors have been in business for many years, have established customer bases, are larger and may offer other services that neither the Commercial Finance business line nor the Bank do. 39 Table of Contents Several banking institutions have adopted business strategies similar to ours, particularly with respect to the Partner Solutions business.
Additionally, an unpredictable or volatile political environment in the United States, including any social unrest and uncertainty as a result of the 2024 U.S. presidential election, could negatively impact business and market 39 Table of Contents conditions, economic growth, financial stability, and business, consumer, investor, and regulatory sentiments, any one or more of which could have a material adverse impact on our financial condition and results of operations.
Additionally, an unpredictable or volatile political environment in the United States, including any social unrest, could negatively impact business and market conditions, economic growth, financial stability, and business, consumer, investor, and regulatory sentiments, any one or more of which could have a material adverse impact on our financial condition and results of operations.
The Bureau has broad rulemaking authority to administer and carry out the purposes and objectives of "federal consumer financial laws, and to prevent evasions thereof" with respect to all financial institutions that offer financial products and services to consumers.
The Bureau has broad rulemaking authority to administer and carry out the purposes and objectives of "federal consumer financial laws, and to prevent evasions thereof" with respect to all financial institutions that offer financial products and services to consumers. However, there is currently uncertainty surrounding the ongoing operations of the Bureau.
We have historically and may continue to evaluate, consider and engage in strategic transactions, combinations, acquisitions and dispositions. These transactions could be material to our financial condition and results of operations if consummated. Identifying appropriate business opportunities can be difficult, time-consuming and costly, and we may not be successful in negotiating favorable terms and/or consummating the transaction.
These transactions could be material to our financial condition and results of operations if consummated. Identifying appropriate business opportunities can be difficult, time-consuming and costly, and we may not be successful in negotiating favorable terms and/or consummating the transaction.
The market price for shares of our common stock has been volatile in the past, and several factors, including factors outside of our control and unrelated to our performance, could cause the price to fluctuate substantially in the future.
General Risk Factors The price of our common stock may be volatile, which may result in losses for investors. The market price for shares of our common stock has been volatile in the past, and several factors, including factors outside of our control and unrelated to our performance, could cause the price to fluctuate substantially in the future.
The third parties that use these partner solutions, and with which we often partner in marketing efforts, are typically considered fintech companies but may also include other financial intermediaries.
We provide products and services to third parties through sponsorship solutions, financial institution solutions, credit solutions, and professional tax solutions. The third parties that use these partner solutions, and with which we often partner in marketing efforts, are typically considered fintech companies but may also include other financial intermediaries.
As of September 30, 2024, we were authorized to issue up to 90,000,000 shares of common stock, of which 24,847,353 shares were outstanding, and 3,769 shares were held as treasury stock. We were also authorized to issue up to 3,000,000 shares of preferred stock and 3,000,000 shares of non-voting common stock, none of which were outstanding or reserved for issuance.
As of September 30, 2025, we were authorized to issue up to 90,000,000 shares of common stock, of which 22,772,570 shares were outstanding, and 70,215 shares were held as treasury stock. We were also authorized to issue up to 3,000,000 shares of preferred stock and 3,000,000 shares of non-voting common stock, none of which were outstanding or reserved for issuance.
The competition for 48 Table of Contents qualified personnel in the financial services industry is intense, and the loss of any of our key personnel or an inability to continue to attract, retain, and motivate key personnel could adversely affect our business. We regularly assess our investments in technology, and changes in technology could be costly.
The competition for qualified personnel in the financial services industry is intense, and the loss of any of our key personnel or an inability to continue to attract, retain, and motivate key personnel could adversely affect our business.
If we or the Bank fail to meet applicable minimum capital requirements or cease to be well capitalized, such failure would cause us and the Bank to be subject to regulatory restrictions and could adversely affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on common stock and/or repurchase shares, our ability to make distributions on our trust preferred securities, our ability to make acquisitions, and our business, results of operations and financial condition, generally. 52 Table of Contents Changes in federal, state, and local tax laws, interpretations of existing tax laws, or adverse determinations by tax authorities, could increase our tax burden or otherwise have a material adverse effect on our business, financial condition, and results of operations.
If we or the Bank fail to meet applicable minimum capital requirements or cease to be well capitalized, such failure would cause us and the Bank to be subject to regulatory restrictions and could adversely affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on common stock and/or repurchase shares, our ability to make distributions on our trust preferred securities, our ability to make acquisitions, and our business, results of operations and financial condition, generally.
In September 2024 and November 2024, the Federal Reserve lowered the target range for the federal funds rate to its current range of 4.50% to 4.75% in light of the progress on inflation. As market interest rates have risen, we have experienced competitive pressures to increase the rates we pay on deposits, which may decrease our net interest income.
In September 2024, the Federal Reserve began lowering the target range for the federal funds rate, which is now at a target range of 3.75% to 4.00%. As market interest rates have risen, we have experienced competitive pressures to increase the rates we pay on deposits, which may decrease our net interest income.
Growth of prepaid financial services as an electronic payment mechanism may not 42 Table of Contents occur or may occur more slowly than estimated. These factors could have a material adverse effect on our financial condition and results of operations.
Growth of prepaid financial services as an electronic payment mechanism may not occur or may occur more slowly than estimated. These factors could have a material adverse effect on our financial condition and results of operations. Our operations depend upon third-party relationships; our ability to maintain such relationships and such third parties' performances could adversely affect our business.
In addition, changes to FDIC regulations regarding brokered deposits or interpretations of such regulations by federal banking agencies could have an adverse impact on the Bank’s ability to accept brokered deposits.
In addition, changes to FDIC regulations regarding brokered deposits or interpretations of such regulations by federal banking agencies could have an adverse impact on the Bank’s ability to accept brokered deposits. Additionally, brokered deposits are highly sensitive to changes in interest rates and, accordingly, can be a more volatile source of funding.
While we believe we are a leader in managing, monitoring and overseeing partner solutions relationships with third parties and corresponding technologies, we could be subject to additional regulatory scrutiny with respect to that portion of our business. 50 Table of Contents Increased scrutiny and evolving expectations from stakeholders with respect to ESG practices may impose additional costs on us or expose us to new or additional risks.
While we believe we are a leader in managing, monitoring and overseeing partner solutions relationships with third parties and corresponding technologies, we could be subject to additional regulatory scrutiny with respect to that portion of our business.
Investment in our common stock is inherently subject to risks, including those described in this "Risk Factors" section, and is subject to forces that affect the financial markets in general.
Investment in our common stock is inherently subject to risks, including those described in this "Risk Factors" section, and is subject to forces that affect the financial markets in general. As a result, if you hold or acquire our common stock, it is possible that you may lose all or a portion of your investment.
Securities litigation could result in substantial costs and divert management’s attention and resources from our normal business. An investment in our common stock is not an insured deposit. Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund, or by any other public or private entity.
Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund, or by any other public or private entity.
As a regulated financial institution and a publicly traded company, we are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to ESG practices and disclosure. Investor advocacy groups, investment funds, and influential investors are increasingly focused on these practices, especially as they relate to climate risk, hiring practices, diversity, health and safety and human rights.
Regulators, politicians, investor advocacy groups, investment funds, and influential investors are increasingly focused on these practices, especially as they relate to climate risk, hiring practices, diversity, health and safety and human rights.
For example, the Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017, made broad and complex changes to the U.S. tax code. General Risk Factors The price of our common stock may be volatile, which may result in losses for investors.
For example, the Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017, made broad and complex changes to the U.S. tax code.
See "Business - Regulation and Supervision - Bank Regulation and Supervision" in Part I, Item 1 of this Annual Report on Form 10-K. Regulatory scrutiny of bank provision of partner solutions and related technology considerations has increased. We provide products and services to third parties through issuing, acquiring, digital payments, financial institution solutions, credit solutions, and professional tax solutions.
See "Business - Regulation and Supervision - Bank Regulation and Supervision" in Part I, Item 1 of this Annual Report on Form 10-K. 48 Table of Contents Regulatory scrutiny of bank provision of partner solutions and related technology considerations has increased.
This is especially true with respect to our Partner Solutions business line, which requires significant expenditures to exploit technology and to develop new products and services to meet customers' needs.
To keep up with our competition, we regularly evaluate technology to determine whether it may help us compete on a cost-effective basis. This is especially true with respect to our Partner Solutions business line, which requires significant expenditures to exploit technology and to develop new products and services to meet customers' needs.
Controls and Procedures - Inherent Limitations on the Effectiveness of Controls " in this Annual Report on Form 10-K for inherent limitations in a control system. 54 Table of Contents Federal regulations and our organizational documents may inhibit a takeover, prevent a transaction you favor or limit our growth opportunities, causing the market price of our common stock to decline.
Federal regulations and our organizational documents may inhibit a takeover, prevent a transaction you favor or limit our growth opportunities, causing the market price of our common stock to decline.
Although we comply with all current applicable capital requirements, we may be subject to more stringent regulatory capital requirements in the future, and we may need additional capital in order to meet those requirements.
If we fail to meet these capital and other regulatory requirements, our financial condition, liquidity and results of operations could be materially and adversely affected. 50 Table of Contents Although we comply with all current applicable capital requirements, we may be subject to more stringent regulatory capital requirements in the future, and we may need additional capital in order to meet those requirements.
Consequently, continued organic growth, if achieved, may place a strain on our administrative and operational infrastructure, which could have a material adverse effect on our financial condition and results of operations. Acquisitions and other strategic transactions, or the failure to consummate such transactions, could disrupt our business and harm our financial condition and may not yield the intended benefits.
Consequently, continued 41 Table of Contents organic growth, if achieved, may place a strain on our administrative and operational infrastructure, which could have a material adverse effect on our financial condition and results of operations.
Additionally, although our network of tax preparation partners is expansive, it is possible that our EROs may choose to offer tax-related products of other companies that provide products and services similar to the Bank's if such other companies offer superior pricing or for other competitive reasons.
Moreover, if our regulators examine our third-party service providers and find questionable or illegal acts or practices, our regulators could require us to restructure or terminate our agreements with such providers or enhance management and risk oversight practices with respect thereto. 40 Table of Contents Additionally, although our network of tax preparation partners is expansive, it is possible that our EROs may choose to offer tax-related products of other companies that provide products and services similar to the Bank's if such other companies offer superior pricing or for other competitive reasons.
Intended to promote economic opportunity and spur financial innovation, SPNBs may engage in paying checks, lending money and taking deposits. While the OCC has not granted any SPNB charters as of the date of this filing, it has granted national bank charters to companies that were previously non-bank fintech companies.
While the OCC has not granted any SPNB charters as of the date of this filing, it has granted national bank charters to companies that were previously non-bank fintech companies and approved the acquisition of national bank charters by fintech companies.
As a result, if you hold or acquire our common stock, it is possible that you may lose all or a portion of your investment. 53 Table of Contents Future sales or additional issuances of our capital stock may depress prices of shares of our common stock or otherwise dilute the book value of shares then outstanding.
Future sales or additional issuances of our capital stock may depress prices of shares of our common stock or otherwise dilute the book value of shares then outstanding.
We cannot assure you that we will be able to raise additional capital if needed or raise additional capital on terms acceptable to us. If we fail to meet these capital and other regulatory requirements, our financial condition, liquidity and results of operations could be materially and adversely affected.
We cannot assure you that we will be able to raise additional capital if needed or raise additional capital on terms acceptable to us.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact the Company’s reputation, ability to do business with certain partners, and stock price. Both recently adopted and pending government regulations will result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
Failure to adapt to or comply with regulatory requirements or regulatory, investor or stakeholder expectations and standards could negatively impact the Company’s reputation, ability to do business with certain partners, and stock price. Ongoing legislative or regulatory uncertainties, divergence and changes regarding sustainability may result in higher compliance, credit and reputational risks and costs.
It is difficult to predict the legislative and regulatory changes that may result due to the upcoming presidential election. A new administration, or a change in the make-up of either the Senate and/or House of Representatives may cause broader economic changes due to changes in governing ideology and style.
It is difficult to predict the legislative, executive and regulatory changes that will result from the current Congress and Presidential Administration, which may cause broader economic changes due to various changes in the federal government's approach to regulation and administration.
These dividends are a principal source of funds to pay dividends on our common stock, interest on our trust preferred securities and interest and principal on our debt.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our business or financial results. 46 Table of Contents Our ability to receive dividends from the Bank could affect our liquidity and ability to pay dividends on our common stock, interest on our trust preferred securities and principal on our debt.
Removed
Our operations depend upon third-party relationships; our ability to maintain such relationships and such third parties' performances could adversely affect our business.
Added
Failure to remediate this material weakness or otherwise to maintain an effective system of internal control and effective disclosure controls and procedures could have a material adverse effect on our results of operations and financial condition.
Removed
Moreover, if our regulators examine our third-party service providers and find questionable or illegal acts or practices, our regulators could require us to restructure or terminate our agreements with such providers or enhance management and risk oversight practices with respect thereto.
Added
Future legislation, regulation and changes in policy, as well as changes in the way in which existing statutes and regulations are interpreted or applied by courts and government agencies, could affect the economy and banking industry, including our business and results of operations, in ways that are difficult to predict.
Removed
The fintech industry is undergoing technological innovation at a fast pace. To keep up with our competition, we regularly evaluate technology to determine whether it may help us compete on a cost-effective basis.
Added
Acquisitions and other strategic transactions, or the failure to consummate such transactions, could disrupt our business and harm our financial condition and may not yield the intended benefits. We have historically and may continue to evaluate, consider and engage in strategic transactions, combinations, acquisitions and dispositions.
Removed
Additionally, ongoing legislative or regulatory uncertainties and changes regarding ESG, including climate risk, management and practices may result in higher compliance, credit and reputational risks and costs.
Added
Intended to promote economic opportunity and spur financial innovation, SPNBs may engage in paying checks, lending money and taking deposits.
Removed
On July 30, 2024, the FDIC released a notice of proposed rulemaking to revise its regulations regarding brokered deposits, which would significantly change the FDIC’s current approach to brokered deposits. If the FDIC adopts these amendments as proposed, it could have an adverse impact on the Bank’s ability to accept brokered deposits.
Added
We regularly assess our investments in technology, and failure to effectively implement technology initiatives or anticipate future technology needs or demands could adversely affect our business or financial results. The fintech industry is undergoing technological innovation at a fast pace.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe current CPTO has over 30 years of experience in senior leadership positions in the areas of information technology, technology innovation and enterprise architecture, and has been recognized for various technology and leadership awards.
Biggest changeRole of Management Pathward’s Information Security Program is managed by the Company’s Chief Information and Operations Officer ("CIOO") and Chief Information Security Officer ("CISO"). The current CIOO has over 30 years of experience in senior leadership positions in the areas of information technology, technology innovation and enterprise architecture, and has been recognized for various technology and leadership awards.
Pathward is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect Pathward, including its business strategy, results of operations or financial condition, during the fiscal year ended September 30, 2024. Yet, in this modern, evolving world cybersecurity remains a high risk regardless.
Pathward is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect Pathward, including its business strategy, results of operations or financial condition, during the fiscal year ended September 30, 2025. Yet, in this modern, evolving world cybersecurity remains a high risk regardless.
The current CISO reports to the CPTO and has extensive years of experience in information security both at Pathward and at other companies as well as many years of executive management experience.
The current CISO reports to the CIOO and has extensive years of experience in information security both at Pathward and at other companies as well as many years of executive management experience.
Security Awareness Training All Pathward employees play a crucial role in cybersecurity defense. Pathward has implemented a security awareness training program that includes annual mandatory training for employees and contractors as well as ongoing phishing resiliency testing. The security awareness program also includes periodic videos and educational articles that are shared with employees through a partnership with corporate communications.
Pathward has implemented a security awareness training program that includes annual mandatory training for employees and contractors as well as ongoing phishing resiliency testing. The security awareness program also includes periodic videos and educational articles that are shared with employees through a partnership with corporate communications.
For further information about the cybersecurity risks Pathward faces, and potential impacts, see Item 1A. “Risk Factors”. 57 Table of Contents
For further information about the cybersecurity risks Pathward faces, and potential impacts, see Item 1A. “Risk Factors”.
The CISO provides quarterly updates on information security and cybersecurity risk to the Board Risk Committee, as well as an annual cybersecurity overview and information security report to the full Board of Directors. The Risk Committee oversees the Information Security Program including through the annual review and approval of any material changes to the Information Security Policy.
The CISO provides quarterly updates on information security and cybersecurity risk to the Board Risk Committee, as well as an annual cybersecurity overview and information security report to the full Board of Directors.
The ERM department provides monthly and quarterly risk reporting to management and the Board of Directors. The ERM department ensures accurate and timely risk assessments are prepared throughout the organization.
The ERM department provides monthly and quarterly risk reporting to management and the Board of Directors. The ERM department ensures accurate and timely risk assessments are prepared throughout the organization. The ERM department and compliance team also administer a documented regulatory change control process when new and revised regulations need to be implemented.
Removed
The ERM department and compliance team also administer a documented regulatory change control process when new and revised regulations need to be implemented. 56 Table of Contents Role of Management Pathward’s Information Security Program is managed by the Company’s Chief Product and Technology Officer (“CPTO”) and Chief Information Security Officer (“CISO”).
Added
The Risk Committee oversees the Information Security Program including through the annual review and approval of any material changes to the Information Security Policy. 54 Table of Contents Security Awareness Training All Pathward employees play a crucial role in cybersecurity defense.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed1 unchanged
Biggest changeThe Partner Solutions business line operates out of the Company's corporate headquarters along with additional offices in Louisville, Kentucky and Easton, Pennsylvania. The Company has corporate and shared services offices located in Scottsdale, Arizona and Washington, D.C.
Biggest changeThe Partner Solutions business line operates out of the Company's corporate headquarters along with additional offices in Louisville, Kentucky and Easton, Pennsylvania. The Company has a corporate and shared services office located in Phoenix, Arizona. Of the Company's seven properties, the Company leases six of them, all on market terms. See Note 6.
Item 2. Properties. The Company's corporate headquarters is located at 5501 South Broadband Lane in Sioux Falls, South Dakota. The Company has 10 non-branch offices from which its Commercial Finance and Partner Solutions business lines operate. The Commercial Finance business line operates out of offices in Troy, Michigan; Newport Beach, California; Franklin, Tennessee; Addison, Texas; and Toronto, Ontario, Canada.
Item 2. Properties. The Company's corporate headquarters is located at 5501 South Broadband Lane in Sioux Falls, South Dakota. The Company has six non-branch offices from which its Commercial Finance and Partner Solutions business lines operate. The Commercial Finance business line operates out of offices in Troy, Michigan; Franklin, Tennessee; and Toronto, Ontario, Canada.
Of the Company's eight properties, the Company leases seven of them, all on market terms. See Note 5. Premises, Furniture, and Equipment, Net to the “Notes to Consolidated Financial Statements” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Premises, Furniture, and Equipment, Net to the “Notes to Consolidated Financial Statements” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Removed
The offices in Newport Beach, California and Addison, Texas were included in the sale of the commercial insurance premium finance business that closed October 31, 2024. After the sale, the Company has eight non-branch offices from which its Commercial Finance and Partner Solutions business lines operate.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeFrom time to time, we are involved in a variety of litigation matters in the ordinary course of our business and anticipate that we will become involved in new litigation matters in the future. Item 4. Mine Safety Disclosures. Not applicable. PART II
Biggest changeFrom time to time, we are involved in a variety of litigation matters in the ordinary course of our business and anticipate that we will become involved in new litigation matters in the future. 55 Table of Contents Item 4. Mine Safety Disclosures. Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed3 unchanged
Biggest changeThe table below sets forth information regarding repurchases of our common stock during the fiscal 2024 fourth quarter. 58 Table of Contents Period Total Number of Shares Repurchased (1) Average Price Paid per Share (1)(2) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number Of Shares that may yet be Purchased Under the Plans or Programs July 1 to 31 108,200 $ 62.60 108,200 7,274,543 August 1 to 31 115,100 63.76 115,100 7,159,443 September 1 to 30 16,777 67.17 13,008 7,000,000 (3) Total 240,077 236,308 (1) Of the total number of shares acquired during the period, 3,769 shares were acquired in satisfaction of the tax withholding obligations of holders of restricted stock unit awards, which vested during the quarter.
Biggest changePeriod Total Number of Shares Repurchased (1) Average Price Paid per Share (1)(2) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number Of Shares that may yet be Purchased Under the Plans or Programs July 1 to 31 180,740 $ 82.95 180,740 4,937,816 August 1 to 31 — — — 4,937,816 September 1 to 30 — — — 4,937,816 Total 180,740 180,740 (1) No shares were acquired during the period in satisfaction of the tax withholding obligations of holders of restricted stock unit awards, which vested during the quarter, or otherwise outside of the publicly announced repurchase program.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s common stock trades on the NASDAQ Global Select Market ® under the symbol “CASH.” Quarterly dividends for all quarters of fiscal years 2024 and 2023 were $0.05 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s common stock trades on the NASDAQ Global Select Market ® under the symbol “CASH.” Quarterly dividends for all quarters of fiscal years 2025 and 2024 were $0.05 per share.
Total Stock Return Performance Graph The following graph compares the cumulative total stockholder return on Pathward Financial common stock over the last five fiscal years with the cumulative total return of the NASDAQ Composite Index and the S&P 600 Financials Index (assuming the investment of $100 in each index on October 1, 2019 and reinvestment of all dividends).
Total Stock Return Performance Graph The following graph compares the cumulative total stockholder return on Pathward Financial common stock over the last five fiscal years with the cumulative total return of the NASDAQ Composite Index and the S&P 600 Financials Index (assuming the investment of $100 in each index on October 1, 2020 and reinvestment of all dividends).
As of November 20, 2024, the Company had (i) 24,119,508 shares of common stock outstanding, which were held by approximately 194 stockholders of record, (ii) no shares of nonvoting common stock outstanding, and (iii) 70,123 shares of common stock held in treasury. The transfer agent for the Company’s common stock is Computershare, P.O. Box 43078, Providence, RI 02940-3078.
As of November 19, 2025, the Company had (i) 22,339,006 shares of common stock outstanding, which were held by approximately 148 stockholders of record, (ii) no shares of nonvoting common stock outstanding, and (iii) 41,798 shares of common stock held in treasury. The transfer agent for the Company’s common stock is Computershare, P.O. Box 43078, Providence, RI 02940-3078.
The information contained in this section, including the following line graph, shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in future filings of Pathward Financial with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act. 59 Table of Contents Fiscal Year Ended September 30, Index 2019 2020 2021 2022 2023 2024 Pathward Financial, Inc. $ 100.00 $ 59.44 $ 163.03 $ 102.86 $ 144.43 $ 207.57 NASDAQ Composite Index 100.00 140.96 183.61 135.41 170.76 236.74 S&P 600 Financials Index 100.00 73.90 119.51 101.04 94.75 130.48 Item 6. [Reserved] 60 Table of Contents
The information contained in this section, including the following line graph, shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in future filings of Pathward Financial with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act. 56 Table of Contents Fiscal Year Ended September 30, Index 2020 2021 2022 2023 2024 2025 Pathward Financial, Inc. $ 100.00 $ 274.27 $ 173.04 $ 242.98 $ 349.21 $ 392.52 NASDAQ Composite Index 100.00 130.26 96.06 121.14 167.95 210.64 S&P 600 Financials Index 100.00 161.72 136.72 128.21 176.55 198.23 Item 6. [Reserved] 57 Table of Contents
On September 3, 2021, the Company's Board of Directors authorized a 6,000,000 share repurchase program that was publicly announced on September 7, 2021 and expired on September 30, 2024. The Company's Board of Directors authorized an additional 7,000,000 share repurchase program that was publicly announced on August 25, 2023 and is scheduled to expire September 30, 2028.
The Company's Board of Directors authorized a 7,000,000 share repurchase program that was publicly announced on August 25, 2023 and is scheduled to expire September 30, 2028. The table below sets forth information regarding repurchases of our common stock during the fiscal 2025 fourth quarter.
Removed
(3) In addition to the shares purchased as part of the publicly announced program and the shares acquired in satisfaction of withholding obligations, the Company’s authority to repurchase the remaining 146,435 shares under the program announced on September 7, 2021 expired on September 30, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+8 added−13 removed51 unchanged
Biggest changeNonaccruing loans and leases have been included in the table as loans or leases carrying a zero yield. 64 Table of Contents Fiscal Year Ended September 30, 2024 2023 2022 (Dollars in thousands) Average Outstanding Balance Interest Earned / Paid Yield / Rate (1) 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 $ 348,149 $ 15,446 4.44 % $ 316,222 $ 12,425 3.93 % $ 496,334 $ 3,535 0.71 % Mortgage-backed securities 1,450,601 39,402 2.72 % 1,541,909 41,197 2.67 % 1,292,804 26,846 2.08 % Tax-exempt investment securities 130,567 3,631 3.52 % 147,863 3,924 3.36 % 183,936 3,565 2.45 % Asset-backed securities 227,099 13,048 5.75 % 186,854 8,197 4.39 % 283,752 3,898 1.37 % Other investment securities 285,281 8,948 3.14 % 295,439 9,390 3.18 % 268,062 6,274 2.34 % Total investments 2,093,548 65,029 3.15 % 2,172,065 62,708 2.94 % 2,028,554 40,583 2.05 % Commercial finance 3,770,214 311,480 8.26 % 3,220,585 261,195 8.11 % 2,884,585 203,004 7.04 % Consumer finance 318,886 33,008 10.35 % 231,242 22,404 9.69 % 295,356 23,097 7.82 % Tax services 153,713 9,194 5.98 % 141,210 10,490 7.43 % 179,611 12,978 7.23 % Warehouse finance 416,988 42,194 10.12 % 343,168 29,513 8.60 % 433,121 27,474 6.34 % Community banking — — — % — — — % 34,758 1,525 4.39 % Total loans and leases (3) 4,659,801 395,876 8.50 % 3,936,205 323,602 8.22 % 3,827,431 268,078 7.00 % Total interest-earning assets 7,101,498 $ 476,351 6.72 % 6,424,492 $ 398,735 6.23 % 6,352,319 $ 312,196 4.93 % Noninterest-earning assets 560,259 585,719 751,555 Total assets $ 7,661,757 $ 7,010,211 $ 7,103,874 Interest-bearing liabilities: Interest-bearing checking $ 506 $ 1 0.22 % $ 355 $ 1 0.30 % $ 338 $ 1 0.32 % Savings 54,594 17 0.03 % 65,175 25 0.04 % 78,613 24 0.03 % Money markets 181,515 2,318 1.28 % 137,024 461 0.34 % 96,112 214 0.22 % Time deposits 4,754 13 0.28 % 6,488 10 0.15 % 8,493 38 0.45 % Wholesale deposits 191,276 10,670 1.18 % 81,153 3,859 4.75 % 63,529 223 0.35 % Total interest-bearing deposits (a) 432,645 13,019 3.01 % 290,195 4,356 1.50 % 247,085 500 0.20 % Overnight fed funds purchased 99,290 5,538 5.58 % 74,812 3,922 5.24 % 32,414 235 0.73 % Subordinated debentures 19,638 1,421 7.23 % 19,560 1,422 7.27 % 46,441 3,375 7.27 % Other borrowings 13,862 1,255 9.06 % 15,108 1,174 7.77 % 17,490 762 4.36 % Total borrowings 132,790 8,214 6.19 % 109,480 6,518 5.95 % 96,345 4,372 4.54 % Total interest-bearing liabilities 565,435 21,233 3.76 % 399,675 10,874 2.72 % 343,430 4,872 1.42 % Noninterest-bearing deposits (b) 6,113,217 — — % 5,739,084 — — % 5,776,852 — — % Total deposits and interest-bearing liabilities 6,678,652 $ 21,233 0.32 % 6,138,759 $ 10,874 0.18 % 6,120,282 $ 4,872 0.08 % Other noninterest-bearing liabilities 251,475 200,054 202,887 Total liabilities 6,930,127 6,338,813 6,323,169 Shareholders' equity 731,630 671,398 780,705 Total liabilities and shareholders' equity $ 7,661,757 $ 7,010,211 $ 7,103,874 Net interest income and net interest rate spread including noninterest-bearing deposits $ 455,118 6.40 % $ 387,861 6.05 % $ 307,324 4.85 % Net interest margin 6.41 % 6.04 % 4.84 % Tax-equivalent effect 0.01 % 0.01 % 0.01 % Net interest margin, tax equivalent (2) 6.42 % 6.05 % 4.85 % Total cost of deposits (a+b) 6,545,862 13,019 0.20 % 6,029,279 4,356 0.07 % 6,023,937 500 0.01 % (1) Tax rate used to arrive at the tax-equivalent yield ("TEY") for the fiscal years ended September 30, 2024, 2023, and 2022 was 21%.
Biggest changeFiscal Year Ended September 30, 2025 2024 2023 (Dollars in thousands) Average Outstanding Balance Interest Earned / Paid Yield / Rate (1) 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 $ 422,992 $ 15,559 3.68 % $ 348,149 $ 15,446 4.44 % $ 316,222 $ 12,425 3.93 % Mortgage-backed securities 1,229,621 34,052 2.77 % 1,450,601 39,402 2.72 % 1,541,909 41,197 2.67 % Tax-exempt investment securities 115,503 3,180 3.49 % 130,567 3,631 3.52 % 147,863 3,924 3.36 % Asset-backed securities 165,438 8,625 5.21 % 227,099 13,048 5.75 % 186,854 8,197 4.39 % Other investment securities 199,642 6,160 3.09 % 285,281 8,948 3.14 % 295,439 9,390 3.18 % Total investments 1,710,204 52,017 3.09 % 2,093,548 65,029 3.15 % 2,172,065 62,708 2.94 % Commercial finance 3,749,715 307,341 8.20 % 3,773,316 310,589 8.23 % 3,222,583 263,412 8.17 % Consumer finance 282,975 75,816 26.79 % 318,886 76,606 24.02 % 231,242 43,402 18.77 % Tax services 166,157 12,009 7.23 % 153,713 9,194 5.98 % 141,210 10,490 7.43 % Warehouse finance 640,598 60,650 9.47 % 416,988 42,194 10.12 % 343,168 29,513 8.60 % Total loans and leases (3) 4,839,445 455,816 9.42 % 4,662,903 438,583 9.41 % 3,938,203 346,817 8.81 % Total interest-earning assets 6,972,641 $ 523,392 7.52 % 7,104,600 $ 519,058 7.32 % 6,426,490 $ 421,950 6.58 % Noninterest-earning assets 594,993 536,466 566,550 Total assets $ 7,567,634 $ 7,641,066 $ 6,993,040 Interest-bearing liabilities: Interest-bearing checking $ 1,317 $ 1 0.08 % $ 506 $ 1 0.22 % $ 355 $ 1 0.30 % Savings 49,466 17 0.04 % 54,594 17 0.03 % 65,175 25 0.04 % Money markets 177,107 1,176 0.66 % 181,515 2,318 1.28 % 137,024 461 0.34 % Time deposits 3,476 18 0.51 % 4,754 13 0.28 % 6,488 10 0.15 % Wholesale deposits 93,528 4,218 4.51 % 191,276 10,670 5.58 % 81,153 3,859 4.75 % Total interest-bearing deposits (a) 324,894 5,430 1.67 % 432,645 13,019 3.01 % 290,195 4,356 1.50 % Overnight fed funds purchased 74,949 3,606 4.81 % 99,290 5,538 5.58 % 74,812 3,922 5.24 % Subordinated debentures 19,740 1,421 7.20 % 19,638 1,421 7.23 % 19,560 1,422 7.27 % Other borrowings 13,661 1,141 8.35 % 13,862 1,255 9.06 % 15,108 1,174 7.77 % Total borrowings 108,350 6,168 5.69 % 132,790 8,214 6.19 % 109,480 6,518 5.95 % Total interest-bearing liabilities 433,244 11,598 2.68 % 565,435 21,233 3.76 % 399,675 10,874 2.72 % Noninterest-bearing deposits (b) 6,034,254 — — % 6,113,217 — — % 5,739,084 — — % Total deposits and interest-bearing liabilities 6,467,498 $ 11,598 0.18 % 6,678,652 $ 21,233 0.32 % 6,138,759 $ 10,874 0.18 % Other noninterest-bearing liabilities 307,197 251,580 200,119 Total liabilities 6,774,695 6,930,232 6,338,878 Shareholders' equity 792,939 710,834 654,162 Total liabilities and shareholders' equity $ 7,567,634 $ 7,641,066 $ 6,993,040 Net interest income and net interest rate spread including noninterest-bearing deposits $ 511,794 7.34 % $ 497,825 7.00 % $ 411,076 6.40 % Net interest margin 7.34 % 7.01 % 6.40 % Tax-equivalent effect 0.01 % 0.01 % 0.01 % Net interest margin, tax equivalent (2) 7.35 % 7.02 % 6.41 % Total cost of deposits (a+b) 6,359,148 5,430 0.09 % 6,545,862 13,019 0.20 % 6,023,937 4,356 0.07 % (1) Tax rate used to arrive at the tax-equivalent yield ("TEY") for the fiscal years ended September 30, 2025, 2024, and 2023 was 21%.
Loans and Leases, Net to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information. 70 Table of Contents Allowance for Credit Losses The Company’s allowance for credit losses methodology estimates expected credit losses over the life of each financial asset as of the balance sheet date.
Loans and Leases, Net to the "Notes of Consolidated Financial Statements," which is included in Part II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, for more information. 67 Table of Contents Allowance for Credit Losses The Company’s allowance for credit losses methodology estimates expected credit losses over the life of each financial asset as of the balance sheet date.
Short-term and Long-term Borrowings to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.” The Company and the Bank met regulatory requirements for classification as well-capitalized institutions at September 30, 2024.
Short-term and Long-term Borrowings to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.” The Company and the Bank met regulatory requirements for classification as well-capitalized institutions at September 30, 2025.
The Company considers these relationships as being in the process of collection. Insurance premium finance loans, consumer finance and tax services loans are generally not placed on nonaccrual status, but are instead written off when the collection of principal and interest become doubtful. Loans and leases, or portions thereof, are generally charged-off when collection of principal becomes doubtful.
The Company considers these relationships as being in the process of collection. Consumer finance and tax services loans are generally not placed on nonaccrual status, but are instead written off when the collection of principal and interest become doubtful. Loans and leases, or portions thereof, are generally charged-off when collection of principal becomes doubtful.
Summary of Significant Accounting Policies to the "Notes of Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, for information regarding recently issued accounting pronouncements. 72 Table of Contents
Summary of Significant Accounting Policies to the "Notes of Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, for information regarding recently issued accounting pronouncements. 69 Table of Contents
The Company believes that the level of allowance for credit losses at September 30, 2024 was appropriate and reflected probable losses related to these loans and leases; however, there can be no assurance that all loans and leases will be fully collectible or that the present level of the allowance will be adequate in the future.
The Company believes that the level of allowance for credit losses at September 30, 2025 was appropriate and reflected probable losses related to these loans and leases; however, there can be no assurance that all loans and leases will be fully collectible or that the present level of the allowance will be adequate in the future.
No assurance can be given that our regulators will consider our liquidity level, or our capital level, though substantially in excess of current rules pursuant to which the Company and the Bank are considered “well-capitalized,” to be sufficiently high in the future. See Note 14.
No assurance can be given that our regulators will consider our liquidity level, or our capital level, though substantially in excess of current rules pursuant to which the Company and the Bank are considered “well-capitalized,” to be sufficiently high in the future. See Note 15.
Although management believes the levels of the allowance for credit losses at September 30, 2024 and September 30, 2023 are adequate to absorb expected credit losses in the financial assets evaluated, a decline in local economic conditions or other factors could result in increasing losses.
Although management believes the levels of the allowance for credit losses at September 30, 2025 and September 30, 2024 are adequate to absorb expected credit losses in the financial assets evaluated, a decline in local economic conditions or other factors could result in increasing losses.
Based on current and expected continued profitability and subject to continued access to capital markets, management believes that the Company and the Bank will continue to meet the capital conservation buffer of 2.5% in addition to required minimum capital ratios. See Note 14.
Based on current and expected continued profitability and subject to continued access to capital markets, management believes that the Company and the Bank will continue to meet the capital conservation buffer of 2.5% in addition to required minimum capital ratios. See Note 15.
See the section below titled “Allowance for Credit Losses” for further information. 68 Table of Contents The table below sets forth the amounts and categories of the Company's nonperforming assets.
See the section below titled “Allowance for Credit Losses” for further information. 65 Table of Contents The table below sets forth the amounts and categories of the Company's nonperforming assets.
When factoring in all resources, such as the FHLB, the FRB Discount Window and other unsecured funding and wholesale options, the Company has over $2.1 billion in available liquidity. Due to the characteristics of the Company's deposit portfolio, uninsured deposits remained less than 15% of total deposits during fiscal year 2024 and below the Company's available liquidity.
When factoring in all resources, such as the FHLB, the FRB Discount Window and other unsecured funding and wholesale options, the Company has over $2.30 billion in available liquidity. Due to the characteristics of the Company's deposit portfolio, uninsured deposits remained less than 15% of total deposits during fiscal year 2025 and below the Company's available liquidity.
During the fiscal year ended September 30, 2024, the Company made $3.5 million purchases of investment securities. Through the Bank, the Company owns stock in the FHLB due to the Bank’s membership and participation in this banking system as well as stock in the FRB. The FHLB requires a level of stock investment based on a pre-determined formula.
During the fiscal year ended September 30, 2025, the Company made $2.3 million purchases of investment securities. Through the Bank, the Company owns stock in the FHLB due to the Bank’s membership and participation in this banking system as well as stock in the FRB. The FHLB requires a level of stock investment based on a pre-determined formula.
Typically, this is associated with a delay or shortfall in payments of 210 days or more for commercial insurance premium finance, 120 days or more for consumer credit products and leases, and 90 days or more for commercial finance loans.
Typically, this is associated with a delay or shortfall in payments of 120 days or more for consumer credit products and leases and 90 days or more for commercial finance loans.
(3) Included in the yield computation are net loan fees of $22.7 million, $27.7 million, and $33.7 million, for the fiscal years ended September 30, 2024, 2023, and 2022, respectively. 65 Table of Contents Rate / Volume Analysis The following table presents, for the periods presented, the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities.
(3) Included in the yield computation are net loan fees of $27.6 million, $22.7 million, and $27.7 million, for the fiscal years ended September 30, 2025, 2024, and 2023, respectively. 62 Table of Contents Rate / Volume Analysis The following table presents, for the periods presented, the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities.
Approximately 57% of the deposit portfolio was subject to these higher rate-related processing expenses.
Approximately 64% of the deposit portfolio was subject to these higher rate-related processing expenses.
Comparison of Operating Results for the Fiscal Years Ended September 30, 2023, and September 30, 2022 A comparison of the 2023 results to the 2022 results and other 2022 information not included herein can be found in the Company's Annual Report on Form 10-K: Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” filed November 21, 2023 and is incorporated by reference herein.
Comparison of Operating Results for the Fiscal Years Ended September 30, 2024, and September 30, 2023 A comparison of the 2024 results to the 2023 results and other 2023 information not included herein can be found in the Company's Annual Report on Form 10-K/A: Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” filed August 29, 2025 and is incorporated by reference herein.
The Bank maintains the records of each cardholder’s deposits maintained at Program Banks. Program Banks undergo robust due diligence prior to becoming a Program Bank and are also subject to continuous monitoring. As of September 30, 2024, the Company managed $201.9 million of customer deposits at other banks in its capacity as custodian.
The Bank maintains the records of each cardholder’s deposits maintained at Program Banks. Program Banks undergo robust due diligence prior to becoming a Program Bank and are also subject to continuous monitoring. As of September 30, 2025, the Company managed $210.5 million of customer deposits at other banks in its capacity as custodian.
See Note 7. Goodwill and Intangibles to the Consolidated Financial Statements for further information. 71 Table of Contents LIQUIDITY AND CAPITAL RESOURCES The Company’s primary sources of funds are deposits, derived principally through its Partner Solutions business line, borrowings, principal and interest payments on loans and leases and mortgage-backed securities, and maturing investment securities.
See Note 8. Goodwill and Intangible Assets to the Consolidated Financial Statements for further information. 68 Table of Contents LIQUIDITY AND CAPITAL RESOURCES The Company’s primary sources of funds are deposits, derived principally through its Partner Solutions business line, borrowings, principal and interest payments on loans and leases and mortgage-backed securities, and maturing investment securities.
Capital Requirements and Restrictions on Retained Earnings to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Noninterest-bearing Checking Deposits.
See Note 15. Capital Requirements and Restrictions on Retained Earnings to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 59 Table of Contents Noninterest-bearing Checking Deposits.
The period-over-period decrease in provision for credit loss was primarily due to decreases in the tax services portfolio of $12.8 million and the commercial finance portfolio of $3.3 million, partially offset by an increase of $0.8 million in provision for credit loss in the consumer finance portfolio.
The period-over-period decrease in provision for credit loss was primarily due to decreases in provision for credit losses in the consumer finance portfolio of $12.9 million and the tax services portfolio of $0.9 million, partially offset by an increase of $12.7 million in provision for credit loss in the commercial finance portfolio.
Th e $4.4 million year-o ver-year decrease in the ACL was primarily driven by a $4.4 million decrease in the allowance related to the commercial finance portfolio and a $0.1 million decrease in the allowance related to the consumer finance portfolio, partially offset by a $0.1 million increase in the allowance related to the warehouse finance portfolio.
Th e $18.4 million year-o ver-year decrease in the ACL was primarily driven by a $22.2 million decrease in the allowance related to the consumer finance portfolio, partially offset by a $3.7 million increase in the allowance related to the commercial finance portfolio and a $0.1 million increase in the allowance related to the warehouse finance portfolio.
The following table summarizes the Company’s significant contractual obligations at September 30, 2024.
The following table summarizes the Company’s significant contractual obligations at September 30, 2025.
If an individually evaluated loan or lease is not collateral dependent, credit loss is measured at the present value of expected future cash flows discounted at the loan or lease initial effective interest rate. The Company's ACL totaled $45.3 million at September 30, 2024, a decrease compared to $49.7 million at September 30, 2023.
If an individually evaluated loan or lease is not collateral dependent, credit loss is measured at the present value of expected future cash flows discounted at the loan or lease initial effective interest rate. The Company's ACL totaled $53.3 million at September 30, 2025, a decrease compared to $71.8 million at September 30, 2024.
The decrease in the nonperforming assets as a percentage of total assets at September 30, 2024 compared to the prior fiscal year, was primarily driven by a decrease in nonperforming loans in the commercial finance portfolio, partially offset by increases in the tax services and consumer finance portfolios.
The increase in the nonperforming assets as a percentage of total assets at September 30, 2025 compared to the prior fiscal year, was primarily driven by an increase in nonperforming loans in the commercial finance portfolio, partially offset by decreases in the tax services and consumer finance portfolios.
The Company's nonperforming loans and leases at September 30, 2024, were $41.6 million, representing 0.87% of total gross loans and leases, compared to $56.2 million, or 1.26% of total gross loans and leases at September 30, 2023. Classified Assets .
The Company's nonperforming loans and leases at September 30, 2025, were $99.1 million, representing 2.05% of total gross loans and leases, compared to $41.6 million, or 0.87% of total gross loans and leases at September 30, 2024. Classified Assets .
The increase was primarily attributable to a decrease in accumulated other comprehensive loss and increases in additional paid-in capital and retained earnings. The Company and Bank remained above the federal regulatory minimum capital requirements at September 30, 2024, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies. See Note 14.
The increase was primarily attributable to increases in additional paid-in capital, retained earnings, and a decrease in accumulated other comprehensive loss, partially offset by a decrease in treasury stock. The Company and Bank remained above the federal regulatory minimum capital requirements at September 30, 2025, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies.
The increase was primarily attributable to increases in card processing expense, compensation and benefits expense, and other expense, partially offset by decreases in operating lease equipment depreciation and legal and consulting expense. The card processing expense increase was due to rate-related agreements with Partner Solutions relationships.
The increase was primarily attributable to increases in other expense, legal and consulting expense, building and software, operating lease equipment depreciation, and impairment expense, partially offset by decreases in compensation and benefits and intangible amortization expense. Card processing expense is primarily driven by rate-related agreements with Partner Solutions relationships.
The overall reported TEY on average earning asset yields increased 37 basis points to 6.42% compared to the prior fiscal year primarily driven by an improved earning asset mix.
The overall reported TEY on average earning asset yields increased 33 basis points to 7.35% compared to the prior fiscal year primarily driven by an improved earning asset mix.
Management believes that loan repayment and other sources of funds will be adequate to meet the Company’s foreseeable short- and long-term liquidity needs. The liquidity sources as of September 30, 2024 include $158.3 million in cash and cash equivalents and $201.9 million in off-balance sheet custodial deposits.
Management believes that loan repayment and other sources of funds will be adequate to meet the Company’s foreseeable short- and long-term liquidity needs. The liquidity sources as of September 30, 2025 include $120.6 million in cash and cash equivalents and $210.5 million in off-balance sheet custodial deposits.
The increase in net income was driven by an increase in net interest income and a decrease in provision for credit losses, partially offset by a decrease in noninterest income and increases in noninterest expense and income tax expense. Total revenue for fiscal 2024 was $754.7 million, compared to $704.5 million for fiscal 2023, an increase of 7%.
The increase in net income was driven by increases in noninterest income and net interest income and a decrease in provision for credit losses, partially offset by an increase in noninterest expense and income tax expense. Total revenue for fiscal 2025 was $839.9 million, compared to $797.4 million for fiscal 2024, an increase of 5%.
The yield on the loan and lease portfolio was 8.50% compared to 8.22% for the prior fiscal year and the TEY on the securities portfolio was 3.15% compared to 2.94% for the prior fiscal year. The Company’s cost of funds for all deposits and borrowings averaged 0.32% during fiscal 2024, as compared to 0.18% during fiscal 2023.
The yield on the loan and lease portfolio was 9.42% compared to 9.41% for the prior fiscal year and the TEY on the securities portfolio was 3.09% compared to 3.15% for the prior fiscal year. The Company’s cost of funds for all deposits and borrowings averaged 0.18% during fiscal 2025, as compared to 0.32% during fiscal 2024.
The increase was mainly attributable to increased yields, higher average interest-earning asset balances and an improved earning asset mix. 66 Table of Contents The Company's average interest-earning assets for fiscal 2024 increased by $677.0 million to $7.10 billion compared with fiscal 2023, primarily due to growth in average outstanding balances of loans and leases and cash balances, partially offset by a decrease in total investment security balances.
The increase was mainly attributable to an improved earning asset mix. 63 Table of Contents The Company's average interest-earning assets for fiscal 2025 decreased by $132.0 million to $6.97 billion compared with fiscal 2024, primarily due to a decrease in total investment security balances, partially offset by increases in average outstanding balances of loans and leases and cash balances.
As of September 30, 2024, there were 7,000,000 shares available for repurchase under the current common stock share repurchase program. Subsequent Events Management has evaluated and identified subsequent events that occurred after September 30, 2024. See Note 20.
As of September 30, 2025, there were 4,937,816 shares available for repurchase under the current common stock share repurchase program. Subsequent Events Management has evaluated and identified subsequent events that occurred after September 30, 2025. See Note 21. Subsequent Events for details on these events.
The Company's nonperforming assets at September 30, 2024 were $43.0 million, representing 0.57% of total assets, compared to $58.0 million, or 0.77% of total assets at September 30, 2023.
The Company's nonperforming assets at September 30, 2025 were $101.7 million, representing 1.42% of total assets, compared to $43.0 million, or 0.57% of total assets at September 30, 2024.
The decrease in card and deposit fee income was primarily related to lower servicing fee income due to a reduction in custodial deposits. Servicing fee income totaled $27.2 million during fiscal 2024, compared to $53.4 million for fiscal 2023. Noninterest Expense Noninterest expense increased 10% to $513.3 million for fiscal 2024 from $465.0 million for fiscal 2023.
The decrease in card and deposit fee income was primarily related to lower servicing fee income due to a reduction in custodial deposits. Servicing fee income totaled $21.4 million during fiscal 2025, compared to $27.2 million for fiscal 2024. Noninterest Expense Noninterest expense increased 8% to $560.1 million for fiscal 2025 from $520.7 million for fiscal 2024.
The financial information contained within these financial statements is, to a significant extent, based on approximate measures of the financial effects of transactions and events that have already occurred.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company’s financial statements are prepared in accordance with GAAP. The financial information contained within these financial statements is, to a significant extent, based on approximate measures of the financial effects of transactions and events that have already occurred.
Short-term and Long-term Borrowings to the “Notes to Consolidated Financial Statements,” which are included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 62 Table of Contents At September 30, 2024, the Company’s stockholders’ equity totaled $839.6 million, an increase of $189.0 million, from $650.6 million at September 30, 2023.
See Note 11. Short-term and Long-term Borrowings to the “Notes to Consolidated Financial Statements,” which are included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. At September 30, 2025, the Company’s stockholders’ equity totaled $857.5 million, an increase of $35.3 million, from $822.2 million at September 30, 2024.
For fiscal 2024, contractual, rate-related processing expenses were $110.8 million, as compared to $77.4 million for the fiscal year ended September 30, 2023. 67 Table of Contents Income Tax Expense The Company recorded an income tax expense of $29.1 million, representing an effective tax rate of 14.7%, for fiscal 2024, compared to an income tax expense of $16.3 million, representing an effective tax rate of 9.0%, for fiscal 2023.
For fiscal 2025, contractual, rate-related processing expenses were $104.1 million, as compared to $110.8 million for the fiscal year ended September 30, 2024. 64 Table of Contents Income Tax Expense The Company recorded an income tax expense of $36.3 million, representing an effective tax rate of 16.3%, for fiscal 2025, compared to an income tax expense of $34.1 million, representing an effective tax rate of 15.6%, for fiscal 2024.
Net charge-offs attributable to the tax services, commercial finance, and consumer finance portfolios for fiscal 2023 were $35.8 million, $15.6 million, and $2.3 million, respectively. See Note 3. Loans and Leases, Net for further information on the provision for credit loss. Noninterest Income Fiscal 2024 noninterest income decreased 5% to $299.6 million, compared to $316.6 million for fiscal 2023.
Net charge-offs attributable to the consumer finance, tax services, and commercial finance portfolios for fiscal 2024 were $40.2 million, $23.0 million, and $19.5 million, respectively. See Note 4. Loans and Leases, Net for further information on the provision for credit loss. Noninterest Income Fiscal 2025 noninterest income increased 10% to $328.1 million, compared to $299.6 million for fiscal 2024.
The Company uses its capital resources principally to meet ongoing commitments to fund maturing certificates of deposit and loan commitments, to maintain liquidity, and to meet operating expenses. See Note 20.
The Company uses its capital resources principally to meet ongoing commitments to fund maturing certificates of deposit and loan commitments, to maintain liquidity, and to meet operating expenses. At September 30, 2025, the Company had unfunded loan and lease commitments of $1.20 billion.
The Company's overall cost of deposits was 0.20% in fiscal 2024, as compared to 0.07% during fiscal 2023. Provision for Credit Loss The Company recognized a provision for credit loss of $42.7 million for fiscal 2024, compared to $57.4 million in fiscal 2023.
The Company's overall cost of deposits was 0.09% in fiscal 2025, as compared to 0.20% during fiscal 2024. Provision for Credit Loss The Company recognized a provision for credit loss of $56.8 million for fiscal 2025, compared to $58.1 million in fiscal 2024.
The following table summarizes the Company's negative deposit balances within the Partner Solutions business line: (Dollars in thousands) September 30, 2024 September 30, 2023 Noninterest-bearing deposits $ 5,982,992 $ 6,608,137 Prefunding (315,994) (230,749) Discount funding (38,665) (34,351) DDA overdrafts (11,236) (10,096) Noninterest-bearing checking, net $ 5,617,097 $ 6,332,941 Off-Balance Sheet Custodial Deposits.
The following table summarizes the Company's negative deposit balances within the Partner Solutions business line: (Dollars in thousands) September 30, 2025 September 30, 2024 Noninterest-bearing deposits $ 5,886,873 $ 5,982,992 Prefunding (245,841) (315,994) Discount funding (3,501) (38,665) DDA overdrafts (17,977) (11,236) Noninterest-bearing checking, net $ 5,619,554 $ 5,617,097 Off-Balance Sheet Custodial Deposits.
The Company recognized net charge-offs of $46.6 million for the fiscal year ended September 30, 2024, compared to net charge-offs of $53.7 million for the fiscal year ended September 30, 2023. Net charge-offs attributable to the tax services, commercial finance, and consumer finance portfolios for fiscal 2024 were $23.0 million, $19.5 million, and $4.1 million, respectively.
The Company recognized net charge-offs of $75.0 million for the fiscal year ended September 30, 2025, compared to net charge-offs of $82.8 million for the fiscal year ended September 30, 2024. Net charge-offs attributable to the consumer finance, commercial finance, and tax services portfolios for fiscal 2025 were $28.7 million, $24.2 million, and $22.1 million, respectively.
The Company’s investment in these stocks was $36.0 million at September 30, 2024, an increase from $28.2 million at September 30, 2023, as purchases of FHLB membership stock were partially offset by redemptions during the fiscal year. Loans held for sale at September 30, 2024 totaled $688.9 million, increasing from $77.8 million at September 30, 2023.
The Company’s investment in these stocks was $24.7 million at September 30, 2025, a decrease from $36.0 million at September 30, 2024, as redemptions were partially offset by purchases of FHLB membership stock during the fiscal year. Loans held for sale at September 30, 2025 totaled $179.4 million, decreasing from $691.7 million at September 30, 2024.
(Dollars in thousands) September 30, 2024 September 30, 2023 Nonperforming Loans and Leases Nonaccruing loans and leases: Commercial finance $ 26,412 $ 37,372 Total nonaccruing loans and leases 26,412 37,372 Accruing loans and leases delinquent 90 days or more: Loans held for sale 1,050 306 Commercial finance 2,314 11,242 Consumer finance 3,053 2,210 Tax services (1) 8,733 5,082 Total accruing loans and leases delinquent 90 days or more 15,150 18,840 Total nonperforming loans and leases 41,562 56,212 Other Assets Nonperforming operating leases 1,471 1,764 Total other assets 1,471 1,764 Total nonperforming assets $ 43,033 $ 57,976 Total as a percentage of total assets 0.57 % 0.77 % (1) Certain tax services loans do not bear interest.
(Dollars in thousands) September 30, 2025 September 30, 2024 Nonperforming Loans and Leases Nonaccruing loans and leases: Commercial finance $ 81,416 $ 26,412 Total nonaccruing loans and leases 81,416 26,412 Accruing loans and leases delinquent 90 days or more: Loans held for sale 1,521 1,050 Commercial finance 12,900 2,314 Consumer finance 826 3,053 Tax services (1) 2,477 8,733 Total accruing loans and leases delinquent 90 days or more 17,724 15,150 Total nonperforming loans and leases 99,140 41,562 Other Assets Nonperforming operating leases 2,571 1,471 Total other assets 2,571 1,471 Total nonperforming assets $ 101,711 $ 43,033 Total as a percentage of total assets 1.42 % 0.57 % (1) Certain tax services loans do not bear interest.
As of the Period Ended September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Commercial finance 1.29 % 1.17 % 1.21 % 1.30 % 1.26 % Consumer finance 0.90 % 2.23 % 1.71 % 1.45 % 0.92 % Tax services 0.02 % 66.35 % 37.31 % 1.52 % 0.04 % Warehouse finance 0.10 % 0.10 % 0.10 % 0.10 % 0.10 % Total loans and leases 1.11 % 1.73 % 1.83 % 1.22 % 1.14 % Total loans and leases excluding tax services 1.12 % 1.12 % 1.14 % 1.21 % 1.14 % The Company's ACL as a percentage of total loans and leases decreased to 1.11% at September 30, 2024 from 1.14% at September 30, 2023.
As of the Period Ended September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 Commercial finance 1.18 % 1.27 % 1.10 % 1.18 % 1.29 % Consumer finance 6.88 % 11.69 % 12.04 % 10.84 % 11.52 % Tax services — % 81.32 % 60.35 % 1.75 % 0.02 % Warehouse finance 0.10 % 0.10 % 0.10 % 0.10 % 0.10 % Total loans and leases 1.14 % 2.23 % 2.30 % 1.63 % 1.76 % Total loans and leases excluding tax services 1.14 % 1.60 % 1.57 % 1.63 % 1.77 % The Company's ACL as a percentage of total loans and leases decreased to 1.14% at September 30, 2025 from 1.76% at September 30, 2024.
Financial Highlights for the 2024 Fiscal Fourth Quarter • Total revenue for the fourth quarter was $167.9 million, an increase of $6.9 million, or 4%, compared to the same quarter in fiscal 2023, driven by an increase in net interest income, partially offset by a reduction in noninterest income. • Net interest margin ("NIM") increased 47 basis points to 6.66% fo r the fourth quarter from 6.19% during the same period of last year, p rimarily driven by increased yields on earning assets and an improved earning asset mix from the continued optimization of the portfolio. • Total gross loans and leases at September 30, 2024 decreased $290.9 million , to $4.08 billion compared to September 30, 2023.
EXECUTIVE SUMMARY Financial Highlights for the 2025 Fiscal Fourth Quarter • Total revenue for the fourth quarter was $186.7 million, an increase of $7.2 million, or 4%, compared to the same quarter in fiscal 2024, primarily driven by an increase of 13% in noninterest income. • Net interest margin ("NIM") increased 14 basis points to 7.46% fo r the fourth quarter from 7.32% during the same period of last year, primarily driven by an improved earning asset mix from continued balance sheet optimization. • Total gross loans and leases at September 30, 2025 increased $589.7 million , to $4.66 billion compared to September 30, 2024 an d decreased $78.4 million when compared to June 30, 2025.
Net Interest Income Net interest income for fiscal 2024 was $455.1 million, an increase of 17%, from $387.9 million for the same period of the prior year.
Net Interest Income Net interest income for fiscal 2025 was $511.8 million, an increase of 3%, from $497.8 million for the same period of the prior year.
The ACL represents management’s estimate of current credit losses expected to be incurred by the loan and lease portfolio over the life of each financial asset as of the balance sheet date.
At September 30, 2024, the Company classified loans and leases of $180.9 million as substandard, $10.3 million as doubtful and none as loss. Allowance for Credit Losses . The ACL represents management’s estimate of current credit losses expected to be incurred by the loan and lease portfolio over the life of each financial asset as of the balance sheet date.
(Dollars in thousands) Less Than 1 Year 1 to 3 Years 3 to 5 Years More Than 5 Years Total Time deposits $ 3,104 $ 1,102 $ — $ — $ 4,206 Wholesale time deposits — 25,000 — — 25,000 Short-term debt 377,000 — — — 377,000 Long-term debt — — — 33,354 33,354 Operating leases 3,985 6,587 5,936 12,703 29,211 Total $ 384,089 $ 32,689 $ 5,936 $ 46,057 $ 468,771 For more information on the Company’s short-term and long-term borrowings, see “Funding Activities – Borrowings” within Item 1 “Business,” which is included in Part I of this Annual Report on Form 10-K and Note 10.
(Dollars in thousands) Less Than 1 Year 1 to 3 Years 3 to 5 Years More Than 5 Years Total Time deposits $ 2,636 $ — $ — $ — $ 2,636 Wholesale time deposits — — — — — Short-term debt 9,000 — — — 9,000 Long-term debt — — — 33,456 33,456 Operating leases 3,441 6,803 6,763 9,830 26,837 Total $ 15,077 $ 6,803 $ 6,763 $ 43,286 $ 71,929 For more information on the Company’s short-term and long-term borrowings, see “Funding Activities – Borrowings” within Item 1 “Business,” which is included in Part I of this Annual Report on Form 10-K and Note 11.
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 rates. The balances presented in the table below are calculated on a daily average basis.
Noninterest expense is also impacted by operating lease equipment depreciation expense, building and software, legal and consulting expenses, and regulatory expense. 61 Table of Contents 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 rates.
The decrease was primarily driven by a decrease in card and deposit fees and the gain on sale of trademarks recognized in the prior year, partially offset by increases in gain on sale of other and tax services product fees.
The increase was primarily driven by increases in secondary market revenue, gain on divestiture, total tax services product fees, and other income, partially offset by a loss on sale of investment securities and decreases in rental income, gain on sale of other, and card and deposit fees.
Unless the context otherwise requires, references herein to the Company include Pathward Financial and the Bank, and all direct or indirect subsidiaries of Pathward Financial on a consolidated basis. EXECUTIVE SUMMARY Company Highlights and Business Developments • On August 28, 2024, Pathward announced the sale of its commercial insurance premium finance business. The sale was completed on October 31, 2024.
Unless the context otherwise requires, references herein to the Company include Pathward Financial and the Bank, and all direct or indirect subsidiaries of Pathward Financial on a consolidated basis.
The Bank’s determinations as to the classification of its assets and the amount of its valuation allowances are subject to review by its regulatory authorities, which may order the establishment of additional general or specific loss allowances.
The Bank’s determinations as to the classification of its assets and the amount of its valuation allowances are subject to review by its regulatory authorities, which may order the establishment of additional general or specific loss allowances. 66 Table of Contents On the basis of management’s review of its loans, leases, and other assets, at September 30, 2025, the Company had classified loans and leases of $244.9 million as substandard, $13.7 million as doubtful and none as loss.
The Company's average outstanding balance of loans and leases increased $723.6 million compared to the prior fiscal year due to increases across all loan portfolios. The Company’s average deposits and interest-bearing liabilities increased $539.9 million to $6.68 billion during fiscal 2024 from $6.14 billion during fiscal 2023.
The Company's average outstanding balance of loans and leases increased $176.5 million compared to the prior fiscal year primarily due to an increase in the warehouse finance portfolio. The Company’s average deposits and interest-bearing liabilities decreased $211.2 million to $6.47 billion during fiscal 2025 from $6.68 billion during fiscal 2024.
Total cash and cash equivalents were $158.3 million at September 30, 2024, decreasing from $375.6 million at September 30, 2023. The Company maintains its cash investments primarily in interest-bearing overnight deposits with the FHLB of Des Moines and the FRB. At September 30, 2024, the Company did not have any federal funds sold.
The Company maintains its cash investments primarily in interest-bearing overnight deposits with the FHLB of Des Moines and the FRB. At September 30, 2025, the Company did not have any federal funds sold. 58 Table of Contents The Company's investment security balances at September 30, 2025 totaled $1.36 billion, as compared to $1.77 billion at September 30, 2024.
The increase in income tax expense was primarily due a decrease in investment tax credits. For the fiscal year ended September 30, 2024, the Company originated $68.4 million in renewable energy leases, compared to $93.6 million for the prior fiscal year. Investment tax credits related to renewable energy leases are recognized ratably based on income throughout each fiscal year.
The increase in income tax expense was primarily due to the increase in income and the surrender of life insurance policies. For the fiscal year ended September 30, 2025, the Company originated $95.5 million in renewable energy leases, compared to $68.4 million for the prior fiscal year.
The Company’s noninterest income is derived primarily from tax product fees, card and deposit fees, credit products, and ATM fees attributable to the Partner Solutions business line and fees charged on bank loans, leases and transaction accounts.
The allowance for credit losses represents management’s current estimate of credit losses expected to be incurred by the loan and lease portfolio over the life of each financial asset as of the balance sheet date. 60 Table of Contents The Company’s noninterest income is derived primarily from acquiring fee income, tax product fees, card and deposit fees, credit products, and ATM fees attributable to the Partner Solutions business line and fees charged on bank loans, leases and transaction accounts.
These deposits provide the Company with the ability to earn servicing fee income, typically reflective of the EFFR.
These deposits provide the Company with the ability to earn servicing fee income, typically reflective of the EFFR. RESULTS OF OPERATIONS The Company’s results of operations are dependent on net interest income, provision for credit loss, noninterest income, noninterest expense and income tax expense.
This income is offset by noninterest expenses, such as compensation and benefits associated with personnel, as well as card processing expenses and tax product expenses attributable to the Partner Solutions business line. Noninterest expense is also impacted by operating lease equipment depreciation expense, occupancy and equipment expense, legal and consulting expenses, and regulatory expense.
Noninterest income is also derived from rental income, net gains on the sale of securities, secondary market revenue, as well as the Company’s holdings of bank-owned life insurance. This income is offset by noninterest expenses, such as compensation and benefits associated with personnel, as well as card processing expenses and tax product expenses attributable to the Partner Solutions business line.
Commercial finance loans, which comprised 81% of the Company's loan and lease portfolio, totaled $3.30 billion at September 30, 2024 , reflecting a decrease of $427.6 million , or 11% , from September 30, 2023 . The decrease was primarily driven by the aforementioned commercial insurance premium finance loans along with a decrease in lease financing.
Commercial finance loans, which comprised 84% of the Company's loan and lease portfolio, totaled $3.92 billion at September 30, 2025 , reflecting an increase of $628.4 million , or 19% , from September 30, 2024 .
This increase was primarily due to increases in average noninterest-bearing deposits of $374.2 million, interest-bearing deposits of $142.5 million, and total borrowings of $23.3 million. Fiscal 2024 NIM increased to 6.41% from 6.04% in fiscal 2023.
This decrease was primarily due to decreases in average interest-bearing deposits of $107.8 million, noninterest-bearing deposits of $79.0 million, and total borrowings of $24.4 million. Fiscal 2025 NIM increased to 7.34% from 7.01% in fiscal 2024.
Fiscal Year Ended September 30, 2024 vs. 2023 2023 vs. 2022 (Dollars in thousands) Increase / (Decrease) Due to Volume Increase / (Decrease) Due to Rate Total Increase / (Decrease) Increase / (Decrease) Due to Volume Increase / (Decrease) Due to Rate Total Increase / (Decrease) Interest-earning assets: Cash and fed funds sold $ 1,320 $ 1,701 $ 3,021 $ (1,709) $ 10,599 $ 8,890 Mortgage-backed securities (2,515) 720 (1,795) 5,795 8,556 14,351 Tax-exempt investment securities (546) 253 (293) (1,032) 1,391 359 Asset-backed securities 1,986 2,865 4,851 (1,721) 6,020 4,299 Other investment securities (327) (115) (442) 691 2,425 3,116 Total investments (2,319) 4,640 2,321 3,115 19,010 22,125 Commercial finance 45,374 4,911 50,285 25,245 32,946 58,191 Consumer finance 8,985 1,619 10,604 (5,584) 4,891 (693) Tax services 873 (2,169) (1,296) (2,837) 349 (2,488) Warehouse finance 6,961 5,720 12,681 (6,457) 8,496 2,039 Community banking — — — (763) (762) (1,525) Total loans and leases 61,017 11,257 72,274 7,778 47,746 55,524 Total interest-earning assets $ 60,018 $ 17,598 $ 77,616 $ 9,184 $ 77,355 $ 86,539 Interest-bearing liabilities: Savings $ (3) $ (5) $ (8) $ 1 $ — $ 1 Money markets 196 1,661 1,857 247 — 247 Time deposits (4) 7 3 (28) — (28) Wholesale deposits 8,112 (1,301) 6,811 78 3,558 3,636 Total interest-bearing deposits 2,842 5,821 8,663 101 3,755 3,856 Overnight fed funds purchased 1,350 266 1,616 644 3,043 3,687 Subordinated debentures 6 (7) (1) (1,952) (1) (1,953) Other borrowings (102) 183 81 (116) 528 412 Total borrowings 1,429 267 1,696 653 1,493 2,146 Total interest-bearing liabilities $ 4,271 $ 6,088 $ 10,359 $ 754 $ 5,248 $ 6,002 Net effect on net interest income $ 55,747 $ 11,510 $ 67,257 $ 8,430 $ 72,107 $ 80,537 Comparison of Operating Results for the Fiscal Years Ended September 30, 2024 and September 30, 2023 The Company reported net income of $168.4 million, or $6.62 per diluted share, for the fiscal year ended September 30, 2024, compared to $163.6 million, or $5.99 per diluted share, for the fiscal year ended September 30, 2023, an increase of $4.7 million.
Fiscal Year Ended September 30, 2025 vs. 2024 2024 vs. 2023 (Dollars in thousands) Increase / (Decrease) Due to Volume Increase / (Decrease) Due to Rate Total Increase / (Decrease) Increase / (Decrease) Due to Volume Increase / (Decrease) Due to Rate Total Increase / (Decrease) Interest-earning assets: Cash and fed funds sold $ 3,013 $ (2,900) $ 113 $ 1,320 $ 1,701 $ 3,021 Mortgage-backed securities (6,059) 709 (5,350) (2,515) 720 (1,795) Tax-exempt investment securities (415) (36) (451) (546) 253 (293) Asset-backed securities (3,292) (1,131) (4,423) 1,986 2,865 4,851 Other investment securities (2,635) (153) (2,788) (327) (115) (442) Total investments (11,804) (1,208) (13,012) (2,319) 4,640 2,321 Commercial finance (1,965) (1,283) (3,248) 45,357 1,821 47,178 Consumer finance (9,122) 8,332 (790) 19,104 14,100 33,204 Tax services 787 2,028 2,815 873 (2,169) (1,296) Warehouse finance 21,332 (2,876) 18,456 6,961 5,720 12,681 Total loans and leases 16,819 414 17,233 66,865 24,901 91,766 Total interest-earning assets $ 8,028 $ (3,694) $ 4,334 $ 65,866 $ 31,241 $ 97,107 Interest-bearing liabilities: Interest-bearing checking $ 1 $ (1) $ — $ — $ — $ — Savings $ (2) $ 2 $ — $ (3) $ (5) $ (8) Money markets (54) (1,088) (1,142) 196 1,661 1,857 Time deposits (5) 10 5 (4) 7 3 Wholesale deposits (4,692) (1,760) (6,452) 8,112 (1,301) 6,811 Total interest-bearing deposits (2,723) (4,866) (7,589) 2,842 5,821 8,663 Overnight fed funds purchased (1,236) (696) (1,932) 1,350 266 1,616 Subordinated debentures 7 (7) — 6 (7) (1) Other borrowings (18) (96) (114) (102) 183 81 Total borrowings (345) (1,701) (2,046) 1,429 267 1,696 Total interest-bearing liabilities $ (3,068) $ (6,567) $ (9,635) $ 4,271 $ 6,088 $ 10,359 Net effect on net interest income $ 11,096 $ 2,873 $ 13,969 $ 61,595 $ 25,154 $ 86,749 Comparison of Operating Results for the Fiscal Years Ended September 30, 2025 and September 30, 2024 The Company reported net income of $185.9 million, or $7.87 per diluted share, for the fiscal year ended September 30, 2025, compared to $183.2 million, or $7.20 per diluted share, for the fiscal year ended September 30, 2024, an increase of $2.7 million.
The Company's total borrowings increased $363.5 million to $410.4 million at September 30, 2024 from $46.9 million at September 30, 2023, primarily driven by an increase in short-term borrowings of $364.0 million. See Note 10.
The increase in end-of-period deposits was primarily driven by increases in money market deposits of $32.3 million, partially offset by a decrease in wholesale deposits of $25.0 million. The Company's total borrowings decreased $367.9 million to $42.5 million at September 30, 2025 from $410.4 million at September 30, 2024, primarily driven by a decrease in short-term borrowings of $368.0 million.
The decrease in the total loans and leases coverage ratio was primarily driven by the tax services and consumer finance portfolios, partially offset by an increase in the commercial finance portfolio. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company’s financial statements are prepared in accordance with GAAP.
The decrease in the total loans and leases coverage ratio was primarily driven by the decrease in the ACL relative to the decrease in the consumer finance and the seasonal tax services portfolios. The decrease in the consumer finance portfolio coverage ratio was primarily driven by the aforementioned release in provision.
Subsequent Events for details on these events. 61 Table of Contents FINANCIAL CONDITION At September 30, 2024, the Company’s total assets increased slightly to $7.55 billion compared to $7.54 billion at September 30, 2023, primarily due to an increase of $611.1 million in loans held for sale and $8.1 million in accrued interest receivable, partially offset by decreases of $290.9 million in loans and leases, $217.2 million in cash and cash equivalents, $63.0 million in securities available for sale and $32.3 million in other assets.
FINANCIAL CONDITION At September 30, 2025, the Company’s total assets decreased to $7.17 billion compared to $7.53 billion at September 30, 2024, primarily due to reductions of $512.3 million in loans held for sale, $413.4 million in securities AFS, and $37.8 million in cash and cash equivalents, partially offset by growth of $589.7 million in loans and leases.
This increase was primarily related to the commercial insurance premium finance portfolio moving to held for sale at September 30, 2024. Total gross loans and leases totaled $4.08 billion at September 30, 2024, as compared to $4.37 billion at September 30, 2023.
Total gross loans and leases totaled $4.66 billion at September 30, 2025, as compared to $4.08 billion at September 30, 2024. The increase was due to an increase in the commercial finance and warehouse finance portfolios, partially offset by decreases in the consumer finance and seasonal tax services loan portfolios.
The decrease was primarily related to the commercial insurance premium finance portfolio moving to held for sale, partially offset by growth in commercial finance loans excluding commercial insurance premium finance loans and warehouse finance loans.
This decrease was primarily driven by the sale of the commercial insurance premium finance loans and a reduction in SBA/USDA loans held for sale, partially offset by an increase in consumer credit products held for sale at September 30, 2025 compared to September 30, 2024.
This decrease was partially offset by increases in term lending, asset-based lending, SBA/USDA, and other commercial finance portfolios. When excluding commercial insurance premium finance loans, commercial finance loans at September 30, 2024 increased $372.5 million, or 13%, compared to September 30, 2023.
The increase was primarily driven by increases in term lending of $747.9 million and asset-based lending of $121.4 million, partially offset by decreases of $144.8 million in factoring loans, $57.1 million in SBA/USDA, and $36.0 million in other commercial finance. Total end-of-period deposits increased slightly to $5.89 billion at September 30, 2025, compared to $5.88 billion at September 30, 2024.
Tax-equivalent adjustments have been made in yields on interest-bearing assets and NIM.
The balances presented in the table below are calculated on a daily average basis. Tax-equivalent adjustments have been made in yields on interest-bearing assets and NIM. Nonaccruing loans and leases have been included in the table as loans or leases carrying a zero yield.
The provision for credit loss is the adjustment to the allowance for credit losses balance for the applicable period. The allowance for credit losses represents management’s current estimate of credit losses expected to be incurred by the loan and lease portfolio over the life of each financial asset as of the balance sheet date.
The provision for credit loss is the adjustment to the allowance for credit losses balance for the applicable period.
Removed
Subsequent Events to the “Notes to Consolidated Financial Statements,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. • On September 25, 2024, the Bank celebrated its 20th year serving the payments industry with the announcement it renamed its "Banking as a Service" business line to "Partner Solutions." • On September 30, 2024, Pathward Financial and Pathward announced the Bank’s Partner Solutions line of business won the 2024 Finovate Award for Best Banking as a Service Provider.
Added
The primary driver for the sequential decrease was due to the Company moving $144.1 million of its held for investment consumer finance portfolio to held for sale due to a purchase agreement being signed during the 2025 fiscal fourth quarter.
Removed
According to Finovate, its awards recognize the companies driving fintech innovation forward and the individuals bringing new ideas to life.
Added
On October 3, 2025, the Company closed on the sale of more than half of the held for sale consumer finance portfolio. • During the 2025 fiscal fourth quarter, the Company repurchased 180,740 shares of common stock at an average share price of $82.95.
Removed
When excluding the insurance premium finance loans of $800.1 million at September 30, 2023, total gross loans and leases at September 30, 2024 increased $509.2 million, or 14%, when compared to September 30, 2023. • During the 2024 fiscal fourth quarter, the Company repurchased 236,308 shares of common stock at an average share price of $63.44.
Added
Total cash and cash equivalents were $120.6 million at September 30, 2025, decreasing from $158.3 million at September 30, 2024.
Removed
The total investment portfolio decreased $66.5 million to $1.77 billion at September 30, 2024, compared to $1.84 billion at September 30, 2023.
Added
The decrease was primarily due to the repayment of short-term borrowings partially offset by the proceeds from the sale of the commercial insurance premium finance business, net transaction costs, the sale of the transportation portfolio within the Company's working capital lending solutions, and the sale of debt securities AFS during the fiscal year ended September 30, 2025.
Removed
When excluding commercial insurance premium finance loans, total gross loan and leases at September 30, 2024 increased $509.2 million, or 14%, when compared to September 30, 2023. See Note 3.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−1 removed14 unchanged
Biggest changeThe following table shows the results of the scenarios as of September 30, 2024 and 2023: Net Sensitive Earnings at Risk Change in Interest Income/Expense for a given change in interest rates Over/(Under) Base Case Parallel Shift (Dollars in thousands) Book Value -200 -100 Base +100 +200 Balances as of September 30, 2024 Total interest income 6,676,417 411,926 440,588 470,620 499,529 527,533 Total interest expense 634,988 12,614 16,686 22,053 27,715 33,184 Net interest income 399,312 423,902 448,567 471,814 494,349 Percentage change from base -11.0 % -5.5 % — % 5.2 % 10.2 % Balances as of September 30, 2023 Total interest income 6,650,735 397,360 424,061 450,823 477,078 503,412 Total interest expense 269,861 1,069 1,905 3,530 5,429 7,352 Net interest income 396,291 422,156 447,293 471,649 496,060 Percentage change from base -11.4 % -5.6 % — % 5.4 % 10.9 % The EAR analysis reported at September 30, 2024 , shows that total interest income will change more rapidly than total interest expense over the next year.
Biggest changeThe following table shows the results of the scenarios as of September 30, 2025 and 2024: Net Sensitive Earnings at Risk Change in Interest Income/Expense for a given change in interest rates Over/(Under) Base Case Parallel Shift (Dollars in thousands) Book Value -200 -100 Base +100 +200 Balances as of September 30, 2025 Total interest income 6,309,960 415,683 433,904 462,434 494,959 527,497 Total interest expense 276,393 813 915 1,317 3,226 5,138 Net interest income 414,870 432,989 461,117 491,733 522,359 Percentage change from base -10.0 % -6.1 % — % 6.6 % 13.3 % Balances as of September 30, 2024 Total interest income 6,676,417 411,926 440,588 470,620 499,529 527,533 Total interest expense 634,988 12,614 16,686 22,053 27,715 33,184 Net interest income 399,312 423,902 448,567 471,814 494,349 Percentage change from base -11.0 % -5.5 % — % 5.2 % 10.2 % The EAR analysis reported at September 30, 2025 , shows that changes in market interest rates have a larger impact on total interest income than total interest expense.
This analysis may not represent all impacts driven by changes in the interest rate environment, such as certain other card fee income and expense line items tied to card processing expense derived from contractual agreements with certain Partner Solutions partners and servicing fees the Company recognizes from custodial off-balance sheet deposits.
This analysis may not represent all impacts driven by changes in the interest rate environment, such as certain other card fee income and expense line items tied to card processing expense derived from contractual agreements with certain Partner Solutions partners and servicing fees the Company recognizes from off-balance sheet custodial deposits.
In order to monitor IRR, the Company has created an Asset/Liability Committee whose principal responsibilities are to assess the Bank’s asset/liability mix and implement strategies that will enhance income while managing the Bank’s vulnerability to changes in interest rates. 73 Table of Contents The Company uses two approaches to model IRR: Earnings at Risk (“EAR analysis”) and Economic Value of Equity (“EVE analysis”).
In order to monitor IRR, the Company has created an Asset/Liability Committee whose principal responsibilities are to assess the Bank’s asset/liability mix and implement strategies that will enhance income while managing the Bank’s vulnerability to changes in interest rates. The Company uses two approaches to model IRR: Earnings at Risk (“EAR analysis”) and Economic Value of Equity (“EVE analysis”).
The following table shows the results of the scenario as of September 30, 2024 and 2023: Economic Value Sensitivity Standard (Parallel Shift) Economic Value of Equity at Risk % -200 -100 +100 +200 Balances as of September 30, 2024 Percentage change from base -10.0 % -3.9 % 2.6 % 4.2 % Balances as of September 30, 2023 Percentage change from base -9.9 % -4.3 % 3.4 % 6.3 % The EVE at risk reported at September 30, 2024 shows that the economic value of equity position is expected to benefit from rising interest rates due to the large amount of noninterest-bearing funding. 75 Table of Contents
The following table shows the results of the scenario as of September 30, 2025 and 2024: Economic Value Sensitivity Standard (Parallel Shift) Economic Value of Equity at Risk % -200 -100 +100 +200 Balances as of September 30, 2025 Percentage change from base -6.5 % -2.6 % 1.6 % 2.8 % Balances as of September 30, 2024 Percentage change from base -10.0 % -3.9 % 2.6 % 4.2 % The EVE at risk reported at September 30, 2025 shows that the economic value of equity position is expected to benefit from rising interest rates due to the large amount of noninterest-bearing funding. 71 Table of Contents
The EAR analysis used in the following table reflects the required analysis used no less than quarterly by management. It models basis point parallel shifts in market interest rates over the next one-year period.
The EVE analysis used in the following table reflects the required analysis used no less than quarterly by management. It models immediate basis point parallel shifts in market interest rates.
The Company performs various sensitivity analyses on assumptions of deposit attrition, loan prepayments, and asset re-pricing, as well as market-implied forward rates and various likely and extreme interest rate scenarios, including rapid and gradual interest rate ramps, rate shocks and yield curve twists.
The Company performs various sensitivity analyses on assumptions of deposit attrition, loan prepayments, and asset re-pricing, as well as market-implied forward rates and various likely and extreme interest rate scenarios, including rapid and gradual interest rate ramps, rate shocks and yield curve twists. 70 Table of Contents The EAR analysis used in the following table reflects the required analysis used no less than quarterly by management.
The Company actively manages interest rate risk, as changes in market interest rates can have a significant impact on reported earnings. The Company's IRR analysis is designed to compare income and economic valuation simulations in market scenarios designed to alter the direction, magnitude and speed of interest rate changes, as well as the slope of the yield curve.
The Company's IRR analysis is designed to compare income and economic valuation simulations in market scenarios designed to alter the direction, magnitude and speed of interest rate changes, as well as the slope of the yield curve.
Under EVE analysis, the economic value of financial assets, liabilities and off-balance sheet instruments is derived under each rate scenario.
Under EVE analysis, the economic value of financial assets, liabilities and off-balance sheet instruments is derived under each rate scenario. The economic value of equity is calculated as the difference between the estimated market value of assets and liabilities, net of the impact of off-balance sheet instruments.
It models immediate basis point parallel shifts in market interest rates.
It models basis point parallel shifts in market interest rates over the next one-year period.
Removed
The economic value of equity is calculated as the difference between the estimated market value of assets and liabilities, net of the impact of off-balance sheet instruments. 74 Table of Contents The EVE analysis used in the following table reflects the required analysis used no less than quarterly by management.

Other CASH 10-K year-over-year comparisons