What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-11-22 compared with 2021-11-23 · 270 added, 279 removed, 890 unchanged (38% of the section changed)

Meta, a registered bank holding company, was incorporated in Delaware on June 14, 1993.

Meta's principal assets are all the issued and outstanding shares of the Bank, a national bank, the accounts of which are insured up to applicable limits by the Federal Deposit Insurance Corporation ("FDIC") as administrator of the Deposit Insurance Fund (“DIF”).

Unless the context otherwise requires, references herein to the Company include Meta and the Bank, and all subsidiaries of Meta, direct or indirect, on a consolidated basis.

Pathward Financial, a registered bank holding company, was incorporated in Delaware on June 14, 1993.

Pathward Financial's principal assets are all the issued and outstanding shares of the Bank, a South Dakota chartered, national bank, the accounts of which are insured up to applicable limits by the Federal Deposit Insurance Corporation ("FDIC") as administrator of the Deposit Insurance Fund (“DIF”).

Unless the context otherwise requires, references herein to the Company include Pathward Financial and the Bank, and all subsidiaries of Pathward Financial, direct or indirect, on a consolidated basis.

As a nationwide provider of Banking as a Service ("BaaS") solutions and commercial finance products, the Company has offices across the country.

The principal executive office is located at 5501 South Broadband Lane, Sioux Falls, South Dakota, 57108.

Its telephone number at that address is (877) 497-7497.

The Company is subject to comprehensive regulation and supervision.

See "Regulation and Supervision" herein.

The Company's purpose of financial inclusion for all® means everyone deserves access to high quality financial services.

It is why for the past two decades Pathward Financial has been building solutions to help those who have been underserved by traditional banking providers.

The Company strives to remove barriers to financial access and promote economic mobility by working with third parties to provide responsible, secure, high quality financial products that contribute to the social and economic benefit of communities at the core of the real economy.

Meta works to increase financial availability, choice, and opportunity for all.

The Company's national bank charter, coordination with regulators, and deep understanding of risk mitigation and compliance help to disrupt traditional banking norms, guide its partners, and deliver financial products, services, and funding to the businesses and people who need them most.

Meta believes in financial inclusion for all®.

The Bank, a wholly-owned full-service banking subsidiary of Meta, operates through three reportable segments (Consumer, Commercial, and Corporate Services/Other).

Pathward Financial strives to increase financial availability, choice, and opportunity across two business lines:

BaaS 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.

With expert talent and access to world-class partners, Pathward moves money seamlessly across a multitude of solutions while mitigating risk by 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).

Segment Reporting for further information on the reportable segments.

The business of the Bank primarily consists of attracting deposits and investing those funds in its loan and lease portfolios, along with providing banking-as-a-service (BaaS) solutions to third parties to offer their customers financial solutions.

In addition to originating loans and leases, the Bank also occasionally contracts to sell loans, such as tax refund advance loans, consumer credit product loans, and government guaranteed loans, to third party buyers.

The business of the Bank is to collaborate with partners through the BaaS business line to provide solutions that attract low-cost deposits and generate fee income.

The low-cost deposits are primarily invested into loan and lease products offered through the Commercial Finance business line.

In addition to originating loans and leases, the Bank also occasionally contracts to sell loans, such as consumer credit product loans, refund advance loans, and government guaranteed loans to third party buyers.

The Bank also sells and purchases loan participations from time to time to and from other financial institutions, as well as mortgage-backed securities ("MBS") and other investments permissible under applicable regulations.

In addition to its lending and deposit gathering activities, the Bank offers BaaS solutions by issuing prepaid cards, offering innovative consumer credit products, sponsoring merchant acquiring and automated teller machines (“ATMs”) in various debit networks, and offering tax refund-transfer services and other payment industry products and services.

Through its activities, the Meta Payments division generates both fee income and low-cost deposits for the Bank.

The Consumer segment includes the BaaS business line, which collaborates with partners to navigate payment and lending needs.

With capabilities ranging from prepaid cards and deposit accounts to payment processing and consumer lending, the Company empowers its partners to deliver programs that provide a financial path forward for all.

The Company offers the following innovative solutions:

payment, issuing, credit, and tax.

Payment solutions accepts and processes payments for all customers' personal and business needs.

The Bank moves funds daily through high speed banking rails, including ACH, wire transfers, and push to debit.

With its Issuing solutions, Pathward is one of the leading debit and prepaid card issuers in the country and holds funds for the programs of its partners in order to provide the consumer protections of a traditional bank account.

Credit solutions enables the Bank's partners' lending solutions that serve the borrowing needs of customers in a diverse credit pool.

Tax solutions offer electronic refund advances and refund transfers with some of the largest tax companies, as well as thirty-thousand independent tax preparers nationwide.

The Commercial segment includes the Company's Commercial Finance business line, which helps businesses access funds they need to launch, operate, and grow.

Pathward's innovative approach and customized financial products offer the flexibility traditional bank products cannot.

This diverse range of commercial financial 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.

Working capital financing is secured by business collateral (assets) such as accounts receivable, inventory, and equipment.

Equipment finance provides financing in the form of leases and loans for equipment needs.

Structured finance assists small- and mid-sized business and rural borrowers to fund growth, expansion, and restructuring.

Products include alternative energy financing, conventional loans, and loans administered through partnerships with the Small Business Administration (" SBA") and United States Department of Agriculture ("USDA").

Insurance premium finance is short-term financing to facilitate the purchase of property, casualty, and liability insurance premiums.

OTHER SUBSIDIARIES

Meta Capital, LLC ("Meta Capital"), a wholly-owned service corporation subsidiary of MetaBank was formed in 2017 for the purpose of making minority equity investments.

Meta Capital focuses on investing in companies in the financial services industry.

First Midwest Financial Capital Trust I, a wholly-owned subsidiary of Meta, was established in July 2001 and Crestmark Capital Trust I, acquired by the Company in August 2018, was established in June 2005 for the purpose of issuing trust preferred securities.

The Consumer segment, which provides payments products and services and lending solutions nationwide, primarily operates out of Sioux Falls, South Dakota, with additional offices in Louisville, Kentucky and Easton, Pennsylvania.

Within the Company's Commercial segment, the AFS/IBEX division operates out of its headquarters in Dallas, Texas with other offices throughout the country.

The Crestmark division, which was created when the Company completed its acquisition of Crestmark Bancorp, Inc.

and its Michigan state-chartered bank subsidiary, Crestmark Bank (the "Crestmark Acquisition"), operates out of its headquarters in Troy, Michigan, with other offices throughout the country.

The principal executive office of the Company is located at 5501 South Broadband Lane, Sioux Falls, South Dakota 57108.

Its telephone number at that address is (877) 497-7497.

The Company is subject to comprehensive regulation and supervision.

See “Regulation and Supervision” herein.

Pathward Venture Capital, LLC ("Pathward Venture Capital"), a wholly-owned service corporation subsidiary of the Bank was formed in 2017 for the purpose of making minority equity investments.

Pathward Venture Capital focuses on investing in companies in the financial services industry.

First Midwest Financial Capital Trust I, a wholly-owned subsidiary of Pathward Financial, was established in July 2001 and Crestmark Capital Trust I, acquired by the Company in August 2018, was established in June 2005.

Both subsidiaries were established for the purpose of issuing trust preferred securities.

LENDING ACTIVITIES

The Company focuses its lending activities on the origination of commercial finance loans, consumer finance loans and taxpayer advance loans.

The Company focuses its lending activities on the origination of commercial finance loans, consumer finance loans and tax services loans.

The Company emphasizes credit quality and seeks to avoid undue concentrations of loans and leases to a single industry or based on a single class of collateral.

8 unchanged sentences

Loan and Lease Portfolio Composition

The following table provides information about the composition of the Company’s loan and lease portfolio in dollar amounts and in percentages as of the dates indicated.

In general, for the fiscal year ended September 30, 2021, the aggregate principal amounts in all categories of loans and leases discussed below, except community banking loans, increased over levels from the prior fiscal year.

At September 30,

2021 2020 2019 2018 2017

(Dollars in Thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent

Real Estate Loans

Commercial finance $ 154,991 4.3 % $ 52,207 1.6 % $ 42,266 1.2 % $ 14,971 0.5 % $ — — %

Community banking 192,337 5.3 % 464,661 14.1 % 1,121,565 30.7 % 1,008,841 34.3 % 844,016 63.6 %

Total real estate loans 347,328 9.6 % 516,868 15.7 % 1,163,831 31.9 % 1,023,812 34.8 % 844,016 63.6 %

Other Loans and Leases

Commercial finance 2,570,504 71.3 % 2,255,777 68.1 % 1,873,964 51.3 % 1,494,878 50.8 % 255,308 19.2 %

Consumer finance 252,857 7.0 % 224,151 6.8 % 268,198 7.3 % 270,361 9.2 % 140,229 10.6 %

Tax services 10,405 0.3 % 3,066 0.1 % 2,240 0.1 % 1,073 — % 192 — %

Warehouse finance 419,926 11.6 % 293,375 8.8 % 262,924 7.2 % 65,000 2.2 % — — %

Community banking 6,795 0.2 % 20,903 0.5 % 80,256 2.2 % 89,865 3.0 % 87,087 6.6 %

Total other loans and leases 3,260,487 90.4 % 2,797,272 84.3 % 2,487,582 68.1 % 1,921,177 65.2 % 482,816 36.4 %

Total loans and leases, net $ 3,607,815 100.0 % $ 3,314,140 100.0 % $ 3,651,413 100.0 % $ 2,944,989 100.0 % $ 1,326,832 100.0 %

The following table shows the composition of the Company’s loan and lease portfolio by fixed- and adjustable-rate at the dates indicated.

At September 30,

2021 2020 2019 2018 2017

(Dollars in Thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent

(Dollars in thousands) Amount Percent Amount Percent

Fixed-Rate Loans and Leases

9 unchanged sentences

Tax services (1)

— — % — — % — — % — — % 192 — %

Warehouse finance 74,574 2.1 % 97,244 2.7 %

6 unchanged sentences

(1) Certain tax services loans do not bear interest.

The following table illustrates the maturity analysis of the Company’s loan and lease portfolio at September 30, 2021 and reflects management’s estimate of the effects of loan and lease prepayments or curtailments based on data from the Company’s historical experiences and other third-party sources.

Due In 1 Year Or Less Due After 1 Year Through 5 Years Due After 5 Years Total

(Dollars in Thousands) Amount Weighted Average Rate Amount Weighted Average Rate Amount Weighted Average Rate Amount

The following table illustrates the contractual maturities of the Company’s loan and lease portfolio and the distribution by changes in interest rates for loans with a contractual maturity greater than one year at September 30, 2022.

Loan Maturities Loans Maturing After One Year

(Dollars in thousands) Due in 1 Year Or Less Due After 1 Year Through 5 Years After 5 Years Through 15 Years After 15 Years Total Fixed Interest Rate Floating/Variable Interest Rate

Commercial finance $ 968,371 $ 1,444,060 $ 331,342 $ 279,900 $ 3,023,673 $ 1,256,970 $ 798,332

2 unchanged sentences

Warehouse finance 89,963 236,887 — — 326,850 236,887 —

Community banking 33,267 4.15 % 93,965 4.15 % 71,901 4.05 % 199,133

Total loans and leases $ 1,104,534 $ 1,811,477 $ 333,369 $ 279,900 $ 3,529,280 $ 1,626,414 $ 798,332

Commercial Finance

The Company's commercial finance product lines include term lending, asset based lending, factoring, lease financing, insurance premium finance, government guaranteed lending and other commercial finance products offered on a nationwide basis.

The Company's Commercial Finance business line offers a variety of products through its working capital, equipment finance, structured finance, and insurance premium finance lending solutions.

These products include term lending, asset based lending, factoring, lease financing, insurance premium finance, government guaranteed lending and other commercial finance products offered on a nationwide basis.

Term Lending .

Through its Crestmark division, the Bank originates a variety of collateralized conventional term loans and notes receivable.

The Bank originates a variety of collateralized conventional term loans and notes receivable.

While terms range from three years to 25 years, the weighted average life of these loans is approximately 53 months.

6 unchanged sentences

Asset Based Lending .

Through its Crestmark division, 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 real estate and equipment.

The primary sources of repayment are the operating income of the borrower, the collection of the receivables securing the loan, and/or the sale of the inventory securing the loan.

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 primary sources of repayment are the collection of the receivables and/or the sale of the inventory securing the loan, as well as the operating income of the borrower.

Loans are typically revolving lines of credit with terms of one year to three years, whereby the Bank withholds a contingency reserve representing the difference between the amount advanced and the fair value of the invoice amount or other collateral value.

Credit risk is managed through advance rates appropriate for the collateral (generally, advance rates on accounts receivable ranges from 80% to 95% and inventory advance rates range from 40% to 50%), 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, 2021, approximately 55% of these loans were backed by accounts receivable.

Through its Crestmark division, the Bank provides factoring lending where clients provide detailed accounts receivable reports for lending arrangements.

Credit risk is managed through advance rates appropriate for the collateral (generally, advance rates on accounts receivable ranges from 80% to 90% and inventory advance rates range from 40% to 60%).

In certain cases, inventory advances are supported by the third party independent appraisals.

Collateral is further supported and verified via field audits conducted up to three times per year.

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, 2022, approximately 65% of asset based loans were backed by accounts receivable.

The Bank provides factoring lending where clients provide detailed accounts receivable reporting for lending arrangements.

The factoring clients are diversified as to industry and geography.

With these loans, the Crestmark division withholds a contingency reserve, which is the difference between the fair value of the invoice amount or other collateral value and the amount advanced (generally, advance rates range between 80% and 95% on accounts receivable).

With these loans, the Commercial Finance business line withholds a contingency reserve, which is the difference between the fair value of the invoice amount or other collateral value and the amount advanced (generally, advance rates range between 80% and 95% on accounts receivable).

This reserve is withheld for nonpayment of factored receivables, service fees and other adjustments.

2 unchanged sentences

Lease Financing.

Through its Crestmark division, the Bank provides creative, flexible lease solutions for equipment needs of middle market companies.

The Bank provides creative, flexible lease solutions for equipment needs of its clients.

Leases that transfer substantially all of the benefits and risks of ownership to the lessee are accounted for as sales-type or direct financing leases.

3 unchanged sentences

Insurance Premium Finance.

Through its AFS/IBEX division the Bank provides, on a national basis, short-term, primarily collateralized financing to facilitate the commercial customers’ purchase of insurance for various forms of risk, otherwise known as insurance premium financing.

The Bank provides, on a national basis, short-term, primarily collateralized financing to facilitate the commercial customers’ purchase of insurance for various forms of risk, otherwise known as insurance premium financing.

This includes, but is not limited to, policies for commercial property, casualty and liability risk.

Premiums are advanced either directly to the insurance carrier or through an intermediary/broker and repaid by the policyholder with interest during the policy term.

The policyholder generally makes a 20% to 25% down payment to the insurance broker and finances the remainder over nine months to 10 months on average.

The policyholder generally makes a 20% to 25% down payment to the insurance broker and finances the remainder over nine to 10 months on average.

The down payment is set such that if the policy is canceled, the unearned premium is typically sufficient to cover the loan balance and accrued interest and is returned by the insurer to the Bank on a pro rata basis.

Over 95% of the portfolio finances policies provided by investment grade-rated insurance company partners.

Small Business Administration ("SBA") and United States Department of Agriculture ("USDA").

SBA and USDA.

The Bank originates loans through programs partially guaranteed by the SBA or USDA.

These loans are made to small businesses and professionals.

Certain guaranteed portions of these loans are generally sold to the secondary market.

Certain guaranteed portions of these loans are sold to the secondary market.

See "Originations, Sales and Servicing of Loans and Leases" below for further details.

As part of the CARES Act, the SBA will pay six months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020.

As of September 30, 2021, there were 10 loans with a retained outstanding balance of $1.8 million receiving six months principal and interest from the SBA.

The Company is also participating in the Paycheck Protection Program (the "PPP") which is being administered by the SBA.

1 unchanged sentence

Loans funded through the PPP are fully guaranteed by the U.S.

As of September 30, 2021, the Company had 370 loans outstanding with total loan balances of $96.0 million originated as part of the PPP program.

In total, 69% of the PPP loan balances were forgiven through September 30, 2021.

As of September 30, 2022, the Company had 41 loans outstanding with total loan balances of $13.5 million originated as part of the PPP.

Other Commercial Finance.

2 unchanged sentences

Credit risk is minimized on these loans based on the guarantor’s repurchase agreement.

This loan category also includes commercial real estate loans to customers of the Crestmark division.

This loan category also includes commercial real estate loans.

Consumer Finance

The Company's BaaS business line offers its consumer credit products and Emerald Advance products through its credit solutions.

Consumer Credit Products.

The Bank designs its credit program relationships with certain desired outcomes.

Three high priority outcomes are liquidity, credit protection, and risk retention.

Three high priority outcomes are liquidity, credit protection, and risk retention by the program partner.

The Bank believes the benefits of these outcomes not only support its goals but the goals of the credit program partner as well.

The Bank designs its program credit protections in a manner so that the Bank earns a reasonable risk adjusted return, but is protected by certain layers of credit support, similar to what you would find in structured finance.

The Bank will hold a sizable portion of the originated asset on its own balance sheet but retains the flexibility to sell a portion of the originated asset to other interested parties, thereby supporting program liquidity.

Certain loans are sold to third parties based on terms and conditions within the Program Agreement.

See "Originations, Sales and Servicing of Loans and Leases" below for further details.

As of September 30, 2022, the Bank has multiple consumer credit programs.

The loan products offered under these programs are generally closed-end installment loans with terms between 12 months and 84 months.

Emerald Advance.

Through the Bank’s partner program, the Bank serves as the originator of a line of credit, where customers draw on a line of credit and the balance must be paid down to zero by February 15 to maintain an account with good standing.

Funds are loaded onto a prepaid card and the line of credit gives customers the ability to repeatedly borrow and repay money and has an annual resting period from January 27 to February 15 during which draws cannot generally be made.

As of September 30, 2022, there were no outstanding loan balances on the Company's balance sheet for this product type.

The Company expects balances on the line of credit to increase with the new Emerald Advance promotional period in the first quarter of fiscal 2023.

Other Consumer Finance

Student Lending.

The Bank's purchased student loan portfolios are seasoned, floating rate, private portfolios that are serviced by a third-party servicer.

The portfolio purchased during the fiscal 2018 first quarter is indexed to one-month of the London Interbank Offered Rate ("LIBOR"), while the portfolio purchased in the fiscal 2017 first quarter is indexed to three-month LIBOR plus various margins.

The Company received written notification on June 18, 2018 from ReliaMax Surety Company ("ReliaMax"), the company that provided insurance coverage for the student loan portfolios, which informed policy holders that the South Dakota Division of Insurance filed a petition to have ReliaMax declared insolvent and to adopt a plan of liquidation.

An Order of Liquidation was entered on June 27, 2018 by the Sixth Circuit Court in Hughes County, South Dakota, declaring ReliaMax insolvent and appointing the South Dakota Division of Insurance as liquidator to adopt a plan of liquidation.

The Company expects to ultimately recover a portion of the unearned premiums.

During fiscal year 2021 the Bank recovered $4.99 million of these unearned premiums which have been recorded in other income.

Direct to Consumer.

The Bank is piloting a new direct line of credit, which will enhance the products offered to many of our existing BaaS partners.

Emerald Advance.

Through the Bank’s partner program, the Bank serves as a facilitator of a line of credit, where customers draw on a line of credit and the balance must be paid down to zero by February 15 to maintain an account with good standing.

The primary source of repayment is the income tax refund.

Upon the end of the 2021 tax season the remaining loan balances were acquired by H&R Block in accordance with an agreement between MetaBank and H&R Block.

As of September 30, 2021, there were no remaining loan balances for this product type and no new balances are expected until the 2022 tax season begins in the first quarter of fiscal 2022.

The Bank's Tax Services division provides short-term taxpayer advance loans.

Taxpayers are underwritten to determine eligibility for these unsecured loans.

Due to the nature of taxpayer advance loans, it typically takes no more than three e-file cycles (the period of time between scheduled IRS payments) from when the return is accepted by the IRS to collect from the borrower.

In the event of default, the Bank has no recourse against the tax consumer.

The Bank will charge off the balance of a taxpayer advance loan if there is a balance at the end of the calendar year, or when collection of principal becomes doubtful.

Through its tax services division and partner programs, the Bank provides short-term electronic return originator ("ERO") advance loans on a nationwide basis.

These loans are typically utilized by tax preparers to purchase tax preparation software and to prepare tax office operations for the upcoming tax season.

EROs go through an underwriting process to determine eligibility for the unsecured advances.

ERO loans are not collateralized.

During the fourth quarter of fiscal 2022, the Bank sold its entire student loan portfolio consisting of seasoned, floating rate, private portfolios serviced by a third-party servicer.

The Bank's BaaS business line also offers tax solutions, which includes short-term refund advance loans and short-term electronic return originator ("ERO") advance loans.

Refund Advance Loans.

Refund advance loans are unsecured loans to taxpayers that are determined to be eligible based on underwriting criteria designed for this product.

Due to the nature of refund advance loans, it typically takes no more than three e-file cycles (the period of time between scheduled IRS payments) from when the return is accepted by the IRS to collect from the borrower.

In the event of default, the Bank has no recourse against the taxpayer.

The Bank will charge off the balance of a refund advance loan if there is a balance at the end of the calendar year, or when collection of principal becomes doubtful.

ERO Advance Loans.

ERO advance loans are unsecured advances that are typically utilized by tax preparers to purchase tax preparation software and to prepare tax office operations for the upcoming tax season.

EROs go through an underwriting process to determine eligibility.

Collection on ERO advances begins once the ERO begins to process refund transfers.

Generally, the Bank will charge off the balance of an ERO advance loan if there is a balance at the end of June, or when collection of principal becomes doubtful.

Under the Refund Transfer program, the Bank opens a temporary bank account for each customer who is receiving an income tax refund and elects to defer payment of his or her tax preparation fees.

After the IRS and any state income tax authorities transfer the refund into the customer’s account, the net funds are transferred to the customer and the temporary deposit account is closed.

Warehouse Finance

2 unchanged sentences

Community Banking

Effective on February 29, 2020 (the "Closing Date") of the Community Bank division sale to Central Bank, the Company substantially ceased originating loans within its Community Banking loan portfolio.

The Company entered into a servicing agreement with Central Bank for the retained Community Bank loan portfolio that became effective on the Closing Date.

Divestitures for further information related to the Community Banking lending portfolio.

The Company’s only remaining loan balances for the Community Bank division were commercial and multi-family real estate loans which consist primarily of hospitality and theater loans which are secured primarily by theater buildings and hotels.

Commercial and multi-family real estate loans generally are underwritten with terms not exceeding 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property securing the loan, and are typically secured by guarantees of the borrowers.

Subsequent to September 30, 2021 the Company agreed to two loan sales that included the significant majority of the remaining loan balances in the community banking loan portfolio.

Subsequent Events for further information on these sales.

The Company completed its final sale of retained Community Bank loans in the first quarter of fiscal 2022.

ORIGINATIONS, SALES AND SERVICING OF LOANS AND LEASES

3 unchanged sentences

The servicing fee is recognized as income over the life of the loans.

As of September 30, 2021, the Company serviced loans that it originated and sold totaling $307.3 million, all of which were SBA/USDA guaranteed loan balances sold to the secondary market.

The Company generally sells the guaranteed portion of its SBA 7(a) loans and USDA program loans in the secondary market.

As of September 30, 2022, the Company was servicing $336.6 million SBA/USDA loans.

The Company may sell the guaranteed portion of its SBA 7(a) loans and USDA program loans in the secondary market.

These sales have resulted in premium income for the Company at the time of sale and created a stream of future servicing income.

When the Company sells the guaranteed portion of its loans, it incurs credit risk on the non-guaranteed portion of the loans, and, if a customer defaults on the loan, the Company shares any loss and recovery related to the loan pro-rata with the SBA or USDA, as applicable.

When the Company sells the guaranteed portion of its loans, it retains credit risk on the non-guaranteed portion of the loans, and, if a customer defaults on the loan, the Company shares any loss and recovery related to the loan pro-rata with the SBA or USDA, as applicable.

If the SBA or USDA establishes that a loss on a guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by the Company, the SBA or USDA may seek recovery of the principal loss related to the deficiency from the Company, which could materially adversely affect our business, results of operations and financial condition.

During the fiscal year ended September 30, 2020, the Company sold the Bank's Community Bank division, a component of the Company's Corporate segment, to Central Bank, a state-chartered bank headquartered in Storm Lake, Iowa.

The sale included $268.6 million of loans along with deposits, premises, furniture, and equipment and other assets.

Since the Closing Date, the Company has entered into subsequent loan portfolio sale agreements with Central Bank.

The Company sold additional loans from the retained Community Bank portfolio in the amount of $192.5 million and $308.1 million for the fiscal years ended September 30, 2022 and 2021, respectively.

Divestitures and Note 25.

Subsequent Events for further information related to the Community Banking lending portfolio.

All loans from the retained Community Bank portfolio have been sold as of December 31, 2021.

In periods of economic uncertainty, the Company’s ability to originate large dollar volumes of loans and leases may be substantially reduced or restricted, with a resultant decrease in related loan origination fees, other fee income and operating earnings.

6 unchanged sentences

Tax services 1,898,511 1,841,326

Community banking — 210,267 535,656

Total loans and leases originated 14,982,951 12,618,372

13 unchanged sentences

Net increase (decrease) $ (86,047) $ 147,322

(1) Certain tax services loans do not bear interest.

NONPERFORMING ASSETS, OTHER LOANS AND LEASES OF CONCERN AND CLASSIFIED ASSETS

28 unchanged sentences

Tax services (1)

7,962 1,743 2,240 1,073 —

Community banking — 50 — 79 34,314

Total accruing loans and leases delinquent 90 days or more 15,808 21,687

3 unchanged sentences

Commercial finance 1 2,077

Community banking — — 28,122 30,082 292

Total foreclosed and repossessed assets 1 2,077

7 unchanged sentences

At September 30, 2021, the Company had $34.2 million in nonaccruing loans which also constituted 0.9% of its gross loan and lease portfolio.

The fiscal 2021 increase in nonaccruing loans and leases was primarily driven by one $14.9 million relationship in the community bank portfolio.

The fiscal 2022 decrease in nonaccruing loans and leases was primarily driven by a reduction of $14.9 million in the community bank portfolio, along with a decrease in the commercial finance portfolio.

Accruing Loans and Leases Delinquent 90 Days or More.

At September 30, 2022, the Company had $15.8 million in accruing loans and leases delinquent 90 days or more, compared to $21.7 million at September 30, 2021.

This balance of accruing loans and leases 90 days or more past due was mainly comprised of commercial finance, tax services, and consumer finance loans and leases.

This balance of accruing loans and leases 90 days or more past due was mainly comprised of tax services, commercial finance, and consumer finance loans and leases.

Classified Assets.

Federal regulations provide for the classification of certain loans, leases, and other assets such as debt and equity securities considered by the Bank's primary regulator, the OCC, to be of lesser quality as “substandard,” “doubtful” or “loss,” with each such classification dependent on the facts and circumstances surrounding the assets in question.

Federal regulations provide for the classification of certain loans, leases, and other assets such as debt and equity securities considered by the Bank's primary regulator, the Office of the Comptroller of the Currency (the "OCC"), to be of lesser quality as “substandard,” “doubtful” or “loss,” with each such classification dependent on the facts and circumstances surrounding the assets in question.

An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

4 unchanged sentences

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.

Meta has revised its credit administration policies and reviewed its loan portfolio to better align with OCC guidance for national banks, a process that began during the quarter ending June 30, 2021 and was completed as of September 30, 2021.

Pathward has revised its credit administration policies and reviewed its loan portfolio to better align with OCC guidance for national banks, a process that began during the quarter ending June 30, 2021 and was completed as of September 30, 2021.

These credit policy revisions had an impact on our loan and lease risk ratings, resulting in downgrades of certain credits in several categories.

Our loan and collateral management practices have proven effective in managing losses during previous economic cycles;

and while we expect this process will result in setting a new baseline for portfolio metrics going forward, it does not indicate a deterioration in our portfolio's expected performance.

On the basis of management’s review of its classified assets, at September 30, 2021, the Company had classified loans and leases of $264.7 million as substandard, $12.1 million as doubtful and none as loss.

Further, at September 30, 2021, the Company owned real estate or other assets as a result of foreclosure of loans with a value of $2.1 million.

and this process resulted in setting a new baseline for portfolio metrics going forward, it does not indicate a deterioration in our portfolio's expected performance.

On the basis of management’s review of its loans, leases, and other assets, at September 30, 2022, the Company had classified loans and leases of $203.7 million as substandard, $4.0 million as doubtful and none as loss.

At September 30, 2021, the Company classified loans and leases of $264.2 million as substandard, $12.1 million as doubtful and none as loss.

Further, at September 30, 2022, the Company owned an insignificant amount of real estate or other assets as a result of foreclosure of loans, as compared to $2.1 million at September 30, 2021.

Allowance for Credit Losses.

5 unchanged sentences

The Company individually evaluates loans and leases that do not share similar risk characteristics with other financial assets for credit loss, generally this means loans and leases identified as troubled debt restructurings or loans and leases on nonaccrual status.

Management has also identified certain structured finance credits for alternative energy projects in which a substantial cash collateral accounts have been established to mitigate credit risk.

Due to the nature of the transactions and significant cash collateral positions, these credits are evaluated individually.

All other loans and leases are evaluated collectively for credit loss.

3 unchanged sentences

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.

Management closely monitors economic developments and considers these factors when assessing the appropriateness of its ACL.

The Company's allowance for credit losses as a percentage of total loans and leases increased to 1.89% at September 30, 2021 from 1.70% at September 30, 2020.

The increase in the allowance at September 30, 2021 was driven primarily by the adoption of the CECL accounting standard noted above.

The CECL methodology requires loss estimates for the remaining estimated life of the assets to be measured using historical loss data, adjustments for current conditions, and adjustments for reasonable and supportable forecasts of future economic conditions, which led to the increase in the ACL as of the October 1, 2020 adoption date.

The Company expects to continue to diligently monitor the allowance for loan and lease losses and adjust as necessary in future periods to maintain an appropriate and supportable level.

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, 2021 reflected an appropriate allowance against expected credit losses from the lending portfolio.

Although the Company maintains its ACL at a level it considers to be appropriate, investors and others are cautioned that there can be no assurance that future losses will not exceed estimated amounts, or that additional provisions for loan and lease losses will not be required in future periods.

The following table sets forth an analysis of the Company’s allowance for credit losses.

The following table sets forth an analysis of the Company’s ACL.

At September 30,

4 unchanged sentences

Consumer finance — 5,998

Tax services — — — — —

Warehouse finance — (1)

4 unchanged sentences

Tax services (30,852) (34,354)

Warehouse finance — — — — —

Community banking — (144)

3 unchanged sentences

Tax services 2,762 1,078

Warehouse finance — — — — —

Community banking 424 —

7 unchanged sentences

Allowance to total loans and leases 1.30 % 1.89 %

Ratio of allowance to total nonaccrual loans 3.44 1.99

For more information on the Provision for Credit Losses, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in Item 7 of this Annual Report on Form 10-K.

The distribution of the Company’s allowance for credit losses at the dates indicated is summarized as follows:

The following table presents net loan charge-offs per lending category and the percentage of net charge-offs to average loan and lease balances.

At and For the Fiscal Year Ended September 30,

(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 $ 9,580 $ 1,040,003 0.9 % $ 12,803 $ 886,678 1.4 %

Asset based lending (416) 358,683 (0.1) % 777 241,195 0.3 %

Factoring 9,140 380,544 2.4 % (1,175) 293,468 (0.4) %

Lease financing (335) 235,475 (0.1) % 2,596 285,402 0.9 %

Insurance premium finance 541 444,184 0.1 % (785) 382,382 (0.2) %

SBA/USDA 578 258,039 0.2 % (21) 346,224 — %

Other commercial finance — 167,657 — % — 113,986 — %

Commercial finance 19,088 2,884,585 0.7 % 14,195 2,549,335 0.6 %

Consumer credit products — 182,447 — % — 108,060 — %

Other consumer finance 4,442 112,909 3.9 % 3,004 140,697 2.1 %

Consumer finance 4,442 295,356 1.5 % 3,004 248,757 1.2 %

Tax services 28,090 179,611 15.6 % 33,276 214,835 15.5 %

Warehouse finance — 433,121 — % — 330,224 — %

Community banking (424) 34,758 (1.2) % 144 375,258 — %

Total $ 51,196 $ 3,827,431 1.3 % $ 50,619 $ 3,718,409 1.4 %

The distribution of the Company’s ACL at the dates indicated is summarized as follows:

At September 30,

2021 2020 2019 2018 2017

(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 Amount Percent of Loans and Leases in Each Category of Total Loans and Leases Amount Percent of Loans in Each Category of Total Loans Amount Percent of Loans in Each Category of Total Loans

(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 $ 24,621 30.9 % $ 29,351 26.6 %

Asset based lending 1,050 10.0 % 1,726 8.3 %

Factoring 6,556 10.5 % 3,997 10.1 %

Lease financing 5,902 6.0 % 7,629 7.4 %

Insurance premium finance 1,450 13.5 % 1,394 11.9 %

SBA/USDA 3,263 10.2 % 2,978 6.9 %

Other commercial finance 1,310 4.5 % 1,168 4.4 %

Commercial finance 44,152 85.6 % 48,243 75.6 %

Consumer credit products 1,400 4.1 % 1,242 3.6 %

Other consumer finance 63 0.7 % 6,112 3.4 %

Consumer finance 1,463 4.8 % 7,354 7.0 %

2 unchanged sentences

Community banking — — % 12,262 5.5 %

Unallocated — — % — — % — — % — — % 527 — %

Total $ 45,947 100.0 % $ 68,281 100.0 %

As of September 30, 2021, $39.1 million of the loans and leases that were granted deferral payments by the Company were still in their deferment period.

As of September 30, 2020, loans and leases totaling $170.0 million were within their deferment period.

For additional information regarding the Company’s COVID-19 related deferments and modifications, see Note 2 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.

Management closely monitors economic developments and considers these factors when assessing the appropriateness of its ACL.

The Company's ACL as a percentage of total loans and leases decreased to 1.30% at September 30, 2022 from 1.89% at September 30, 2021.

The decrease in the total loans and leases coverage ratio was primarily driven by the sale of the community bank portfolio, along with a decrease in the coverage ratio for both the commercial and consumer finance portfolios.

The decrease in the consumer finance portfolio coverage ratio was attributable to the sale of the student loan portfolio.

T he Company expects to continue to diligently monitor the ACL and adjust as necessary in future periods to maintain an appropriate and supportable level.

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, 2022 reflected an appropriate allowance against expected credit losses from the lending portfolio.

Investment Activities

2 unchanged sentences

The Company closely monitors balances in these accounts and maintains a portfolio of highly liquid assets to fund potential deposit outflows or other liquidity needs.

To date, the Company has not experienced any significant outflows related to the Meta Payments division deposits, though no assurance can be given that this will continue to be the case.

To date, the Company has not experienced any significant outflows related to the BaaS business line deposits, though no assurance can be given that this will continue to be the case.

As of September 30, 2022, investment securities and MBS with fair values of approximately $924.2 million and $804.0 million were pledged as collateral for the Bank’s Federal Reserve Bank (“FRB”) advances and Federal Home Loan Bank of Des Moines (“FHLB”) advances, respectively.

11 unchanged sentences

Investment Securities Available for Sale ("AFS")

Corporate securities $ 22,187 $ 25,000

Asset-backed securities 147,790 394,859

4 unchanged sentences

Common equities and mutual funds (1)

12,668 2,969 2,606

Investment Securities Held to Maturity ("HTM")

45 unchanged sentences

Mortgage-Backed Securities

The Company’s mortgage-backed and related securities portfolio as of September 30, 2021 consisted entirely of securities issued by U.S.

Government agencies or instrumentalities, including those of Ginnie Mae, Fannie Mae, Freddie Mac and Farmer Mac.

The Company’s mortgage-backed and related securities portfolio as of September 30, 2022 consisted of securities issued by U.S.

Government agencies or instrumentalities, including those of Ginnie Mae, Fannie Mae, Freddie Mac and Farmer Mac, along with private label institutions.

The Ginnie Mae, Fannie Mae, Freddie Mac and Farmer Mac certificates are modified pass‑through MBS representing undivided interests in underlying pools of fixed‑rate, or certain types of adjustable-rate, predominantly single-family mortgages issued by these U.S.

15 unchanged sentences

Ginnie Mae 814,971 683,285

Private Label 254,552 —

Total MBS AFS $ 1,348,997 $ 1,017,029

18 unchanged sentences

Ginnie Mae — — — 814,971 968,049 814,971

Private Label — — — 254,552 295,128 254,552

Total MBS AFS $ — $ — $ 92,070 $ 1,256,927 $ 1,581,452 $ 1,348,997

34 unchanged sentences

To the extent we determined that a security was deemed to be other-than-temporarily impaired, an impairment loss was recognized.

In fiscal 2020 and 2019, there were no other-than-temporary impairments recorded.

In fiscal 2020, there were no other-than-temporary impairments recorded.

Equity Securities.

11 unchanged sentences

The Company’s deposits primarily consists of demand deposit accounts, savings accounts, money market savings accounts, and certificate accounts currently ranging in terms from three months to five years, many of which are related to prepaid cards.

In addition, the Company may periodically utilize brokered or other wholesale deposits to target strategic maturities related to its seasonal tax refund advance lending.

The tax refund advance lending season typically lasts six weeks or less and it is generally more efficient to fund these short-term loans by using brokered deposits rather than by selling investment securities.

In addition, the Company may periodically utilize brokered or other wholesale deposits to target strategic maturities related to its seasonal refund advance lending.

The refund advance lending season typically lasts six weeks or less and it is generally more efficient to fund these short-term loans by using brokered deposits rather than by selling investment securities.

Other sources of wholesale deposits may also be utilized periodically to take advantage of balance sheet funding opportunities.

6 unchanged sentences

Department of the Treasury’s Bureau of the Fiscal Service (“Fiscal Service”) to disburse Economic Impact Payment (“EIP”) stimulus payments through the distribution of prepaid cards.

The Company’s Meta Payments division, in collaboration with Fiserv and Visa, is serving in an ongoing role to provide a safe and secure mechanism for individuals, including the underbanked, to receive their stimulus payments.

In 2020, the Bank dispensed approximately $6.42 billion of the first round of EIP payments under the Coronavirus Aid, Relief, and Economic Security Act through the distribution of 3.6 million Bank-issued prepaid cards, and in 2021 dispensed approximately $7.10 billion of the second round of EIP payments under the Consolidated Appropriations Act of 2021 through the distribution of 8.1 million Bank-issued prepaid cards.

The Company’s BaaS business line, in collaboration with Fiserv and Visa, is serving in an ongoing role to provide a safe and secure mechanism for individuals, including the underbanked, to receive their stimulus payments.

In 2020, the Bank disbursed approximately $6.42 billion of the first round of EIP payments under the Coronavirus Aid, Relief, and Economic Security Act through the distribution of 3.6 million Bank-issued prepaid cards, and in 2021 disbursed approximately $7.10 billion of the second round of EIP payments under the Consolidated Appropriations Act of 2021 through the distribution of 8.1 million Bank-issued prepaid cards.

On March 11, 2021, the U.S.

3 unchanged sentences

Through this third round, the Bank disbursed approximately $10.64 billion of EIP payments through the distribution of 4.7 million Bank-issued prepaid cards.

Of the 16.5 million prepaid cards issued in conjunction with the three EIP stimulus programs, totaling approximately $24.15 billion, $1.64 billion were outstanding as of September 30, 2021, of which only $69.8 million of deposits was on Meta’s balance sheet with the remainder being held by other banks.

Of the 16.5 million prepaid cards issued in conjunction with the three EIP stimulus programs, totaling approximately $24.15 billion, $1.08 billion were outstanding as of September 30, 2022, of which $681.4 million of deposits was on Pathward Financial’s balance sheet with the remainder being held by other banks.

At September 30, 2022, $5.70 billion of the Company’s $5.87 billion deposit portfolio was attributable to the Consumer segment.

The majority of these deposits represent funds available to spend on prepaid debit cards and other stored value products, of which $5.00 billion are included with noninterest-bearing checking accounts and $339.4 million are included with interest-bearing checking and savings deposits on the Company’s Consolidated Statements of Financial Condition.

The Consumer segment originates debit card programs through outside sales agents and other financial institutions.

The majority of these deposits represent funds available to spend on prepaid debit cards and other stored value products, of which $5.63 billion are included with noninterest-bearing checking accounts, $65.9 million are included with savings deposits on the Company’s Consolidated Statements of Financial Condition.

The BaaS business line originates debit card programs through outside sales agents and other financial institutions.

As such, these deposits carry a somewhat higher degree of concentration risk than traditional consumer products.

If a major client or card program were to leave the Bank, deposit outflows could be more significant than if the Bank were to lose a more traditional customer, although it is considered unlikely that all deposits related to a program would leave the Bank without significant advance notification.

As such, and as

historical results indicate, the Company believes that its deposit portfolio attributable to the Consumer segment is stable.

The increase in deposits arising from the payments division has allowed the Bank to reduce its reliance on wholesale deposits, certificates of deposit and public funds, which typically have relatively higher costs.

The Company may hold negative balances associated with cardholder programs in the payments division that are included within noninterest-bearing deposits on the Company's Consolidated Statements of Financial Condition.

As such, and as historical results indicate, the Company believes that its deposit portfolio attributable to the Consumer segment is stable.

The increase in deposits arising from the BaaS business line has allowed the Bank to reduce its reliance on wholesale deposits, certificates of deposit and public funds, which typically have relatively higher costs.

The Company may hold negative balances associated with cardholder programs in the BaaS business line that are included within noninterest-bearing deposits on the Company's Consolidated Statements of Financial Condition.

Negative balances can relate to any of the following payments functions:

2 unchanged sentences

– Discount fundings:

The Company funds cards in an amount that is estimated to be less than final breakage values on card programs.

The Company funds cards in alignment to expected breakage values on the card.

Consumers may spend more than is estimated.

These discounts are netted at a pooled partner level using ASC 210-20.

The majority of these discount fundings relate to one partner.

The majority of these discount fundings relate to a small number of partners, and analyzed on an ongoing basis.

– Demand Deposit Account ("DDA") overdrafts:

2 unchanged sentences

The Company meets the Right of Set off criteria in ASC 210-20, Balance Sheet - Offsetting, for all payments negative deposit balances with the exception of DDA overdrafts.

The following table summarizes the Company's negative deposit balances within the payments division:

The following table summarizes the Company's negative deposit balances within the BaaS business line:

At September 30,

11 unchanged sentences

Withdrawals (1,414,230,916) (1,041,124,905)

Sold — (290,511) —

Interest credited 38 601

Ending balance $ 5,866,037 $ 5,514,971

Net increase (decrease) $ 535,772 $ 642,195 $ (93,982)

Percent increase (decrease) 10.76 % 14.81 % -2.12 %

Net increase $ 351,066 $ 535,772

Percent increase 6.37 % 10.76 %

The following table sets forth the dollar amount of deposits in the various types of deposit programs offered by the Company for the periods indicated.

At September 30,

2021 2020 2019

(Dollars in Thousands) Amount Percent of Total Amount Percent of Total Amount Percent of Total

(Dollars in thousands) Amount Percent of Total Amount Percent of Total

Transactions and Savings Deposits:

7 unchanged sentences

Time Certificates of Deposit:

Variable — — % — — % 81 — %

0.00 - 0.99% 7,311 0.1 % 25,604 0.5 %

1 unchanged sentence

2.00 - 2.99% 99 — % 3,567 0.1 %

3.00 - 3.99% — — % — — % 4,593 0.1 %

Total time certificates of deposit (2)

1 unchanged sentence

Total deposits $ 5,866,037 100.0 % $ 5,514,971 100.0 %

(1) Of the total balance as of September 30, 2021, $254.3 million are interest-bearing deposits where interest expense is paid by a third party and not by the Company.

(1) Of the total balance as of September 30, 2021, $254.3 million were interest-bearing deposits where interest expense was paid by a third party and not by the Company.

On October 1, 2021, the Company reclassified the balances related to that program to noninterest bearing checking due to the product moving to noninterest bearing.

(2) As of September 30, 2022, total time certificates of deposit included $0.1 million of wholesale certificates of deposit.

As of September 30, 2022 and 2021, total deposits that exceed FDIC insurance limits, or are otherwise uninsured, were estimated to be $211.4 million and $135.1 million, respectively.

Estimated uninsured domestic deposits reflect amounts, disclosed in U.S.

regulatory reports of the Bank, with adjustments for amounts related to consolidated subsidiaries.

The following table presents contractual maturities of estimated time deposits in excess of FDIC insurance limits or are otherwise uninsured.

(Dollars in thousands) 3 Months or Less After 3 to 6 Months After 6 to 12 Months After 12 Months Total

Certificates of deposit $ 940 $ 727 $ 880 $ 613 $ 3,160

The following table shows rate and maturity information for the Company’s certificates of deposit at September 30, 2022.

6 unchanged sentences

December 31, 2023 762 — — 762 9.8 %

September 30, 2023 464 — — 464 1.4 %

December 31, 2023 200 — — 200 0.6 %

September 30, 2024 245 — — 245 0.8 %

March 31, 2024 1,045 — — 1,045 13.5 %

Total $ 7,311 $ 344 $ 99 $ 7,754 100.0 %

5 unchanged sentences

Total certificates of deposit $ 2,435 $ 1,227 $ 2,285 $ 1,807 $ 7,754

At September 30, 2021, there were $0.3 million in deposits from governmental and other public entities included in certificates of deposit.

At September 30, 2022, there were no deposits from governmental or other public entities included in certificates of deposit.

Custodial Off-Balance Sheet Deposits.

The Bank utilizes a custodial deposit transference structure for certain prepaid and deposit programs whereby the Bank, acting as custodian of cardholder funds, places a portion of such cardholder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a “Program Bank”).

Accounts opened at Program Banks are established in the Bank’s name as custodian, for the benefit of the Bank’s cardholders.

The Bank remains the issuer of all cards and holder of all accounts under the applicable cardholder agreements and has sole custodial control and transaction authority over the accounts opened at Program Banks.

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.

In return for record keeping services at Program Banks, the Bank receives a servicing fee (“Servicing Fee”).

For the fiscal year ended September 30, 2022, the Company recognized $6.4 million in servicing fee income.

In prior periods, the Servicing Fee was not significant.

The Servicing Fee has been typically reflective of the EFFR upon a renegotiation of the contracts with Program Banks.

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.

3 unchanged sentences

At September 30, 2022, the Bank had no overnight borrowings or term advances, but did have the ability to borrow up to an approximate additional $693.0 million from the FHLB.

The Company completed the public offering of $75.0 million of 5.75% fixed-to-floating rate subordinated debentures during fiscal year 2016.

These notes are due August 15, 2026.

The subordinated debentures were sold at par, resulting in net proceeds of approximately $73.9 million.

At September 30, 2021, $74.0 million in aggregate principal amount in subordinated debentures, net of issuance costs of $1.0 million, were outstanding.

On May 15, 2022, the Company retired the outstanding $75.0 million subordinated debt, which was due August 15, 2026.

On September 26, 2022, the Company announced the completion of a private placement of $20 million of its 6.625% Fixed-to-Floating Rate Subordinated Notes due 2032 to certain qualified institutional buyers and accredited investors.

The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes.

The Notes were issued under an indenture with UMB Bank, N.A., as trustee.

At September 30, 2022, $20.0 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.

23 unchanged sentences

Maximum Balance:

FHLB advances $ — $ 110,000 $ 110,000

Repurchase agreements — 2,550 4,306

Trust preferred securities $ 13,661 $ 13,661

3 unchanged sentences

Average Balance:

FHLB advances $ — $ 106,093 $ 42,712

Repurchase agreements — 328 3,542

Trust preferred securities $ 13,661 $ 13,661

5 unchanged sentences

(Dollars in thousands) 2022 2021

FHLB and FRB advances $ — $ — $ 110,000

Repurchase agreements — — 4,019

Trust preferred securities $ 13,661 $ 13,661

Subordinated debentures 20,000 73,980

Overnight fed funds purchased — — 642,000

Other borrowings 2,367 5,193

Total borrowings $ 36,028 $ 92,834

Weighted average interest rate of FHLB and FRB advances — % — % 2.41 %

Weighted average interest rate of repurchase agreements — % — % 2.83 %

Weighted average interest rate of trust preferred securities 7.68 % 3.72 %

Weighted average interest rate of subordinated debentures 6.63 % 5.75 %

Weighted average interest rate of overnight fed funds purchased — % — % 2.05 %

Payments Activities

The Company, through its Meta Payments division, is focused on innovation in the finserv and fintech industries by providing solid banking infrastructure, proven tech resource partners, and high-energy collaboration that enables its partners to deliver banking programs that meet their customers' demands.

The Meta Payments division offers a complement of payments related products and services that are marketed to consumers nationwide through financial institutions and other commercial entities.

Other solutions, such as merchant acquiring and transactional payments facilitate the movement of funds between an entity and the audience they serve, typically a consumer.

Payment, Issuing, and Tax Solutions

The Company's core capabilities of payment, issuing, and tax solutions focus on innovation in the finserv and fintech industries by providing solid banking infrastructure, proven tech resource partners, and high-energy collaboration that enables its partners to deliver banking programs that meet their customers' demands.

The BaaS business line offers a complement of payments related products and services that are marketed to consumers and businesses nationwide through financial institutions and other commercial entities.

Other solutions facilitate the movement of funds between an entity and the audience they serve, typically a consumer.

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 adopted policies and procedures to manage and monitor the risks attendant to this line of business, and the executives who manage the Company’s program have years of experience in this area of the Company's business, no guarantee can be made that the Company will not experience losses in the Meta Payments division.

While the Company has adopted policies and procedures to manage and monitor risks, and the executives who manage the Company’s program have years of experience, no guarantee can be made that the Company will not experience losses in the BaaS business line.

The Company has signed agreements with terms extending through the next few years with several of its largest sales agents/program managers, which the Company expects will help mitigate this risk.

Each line of the Meta Payments division is discussed generally below with examples to illustrate use cases.

The Company cross-utilizes personnel and resources across these lines of business (for example, the Meta Payments division may develop products for both prepaid and consumer banking solutions needs pursuant to a client's request).

Prepaid Solutions

Prepaid cards are similar to traditional debit cards in that they are embedded with a magnetic stripe, which encodes relevant card data (which may or may not include information about the user and/or purchaser of such card), or an EMV chip, which is equipped with a microprocessor chip and the technology used to authenticate chip card transactions.

Each core capability is discussed generally below with examples to illustrate use cases.

The Company cross-utilizes personnel and resources across these capabilities.

Payment Solutions

Acquiring Sponsorship.

Payment solutions include the acceptance, processing and settlement of credit card and debit card payments by an acquiring bank on behalf of merchants.

Pathward acts as an acquiring bank to sponsor acquiring activity on behalf of merchant clients by leveraging partnerships with partners who act as merchant processors, third-party service providers, ISOs, and/or payment facilitators to identify, onboard and support merchant clients.

Money Movement Solutions.

In today’s market, consumers want to move their money fast, with more visibility and control of their own financial transactions.

Pathward provides the financing operations for Automated Clearing House ("ACH") transactions, disburse to debit (through Visa Direct or Mastercard Send), wire or check processing which enable the faster, almost instantaneous movement of funds from sender to receiver.

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.

As of September 2022, Pathward typically processes a combined $2.5 billion per day in ACH and wire services, which supports that Pathward has earned the confidence of its partners by providing safe and efficient movement of money, unprecedented service, and operational success.

ATM Sponsorship.

The Company sponsors ATM independent sales organizations (“ISOs”) into various networks and provides associated sponsorships of encryption support organizations and third-party processors in support of the financial institutions and the ATM ISO sponsorships.

Sponsorship consists of the review and oversight of entities participating in debit and credit networks.

In certain instances, Pathward also has certain leasehold interests in certain ATMs which require bank ownership and registration for compliance with applicable state law.

Pathward currently provides financial processing services for approximately 65% of 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.

Issuing Solutions

Prepaid Cards.

Similar to traditional debit cards, prepaid cards are embedded with a magnetic stripe, which encodes relevant card data (which may or may not include information about the user and/or purchaser of such card), or an EMV chip, which is equipped with a microprocessor chip and the technology used to authenticate chip card transactions.

When the holder of such a card attempts a permitted transaction, necessary information, including the authorization for such transaction, is shared between the “point of use” or “point of sale” and authorization systems maintaining the account of record.

3 unchanged sentences

Although the funds are held in pooled accounts, the account of record indicates the funds held by each individual card.

The cards may work in a closed loop (e.g., the card will only work at one particular merchant and will not work anywhere else), a "Restricted Access Network" (e.g., the card will only work at a specific set of merchants such as a shopping mall), or in an open loop by way of a Visa or MasterCard branded debit card that will work wherever such cards are accepted for payment.

The cards may work in a closed loop (e.g., the card will only work at one particular merchant and will not work anywhere else), a "Restricted Access Network" (e.g., the card will only work at a specific set of merchants such as a shopping mall), or in an open loop by way of a Visa or MasterCard or Discover branded debit card that will work wherever such cards are accepted for payment.

Most of the Company's prepaid cards are open loop.

Meta is among the top 3 prepaid card issuers in the United States.

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:

1 unchanged sentence

These programs are typically offered through a third-party relationship.

Consumer Use.

Examples of consumer use prepaid card programs include payroll, general purpose reloadable ("GPR"), reward, gift and benefit/HSA cards.

4 unchanged sentences

Business or Commercial Use.

Prepaid cards are also frequently used by businesses for travel and entertainment, accounts payable and B2B settlement products.

Prepaid cards are also frequently used by businesses for travel and entertainment, accounts payable and business-to-business ("B2B") settlement products.

For example, virtual prepaid cards are used to facilitate one-time payments between a company and its vendors for monthly settlement.

1 unchanged sentence

Consumer Banking Solutions.

Partners looking to offer financial services in a mobile-first ecosystem typically employ a demand deposit account ("DDA"), Savings Account or debit card, or combination thereof.

Meta facilitates their ability to establish a direct deposit relationship with consumers, complete with online acceptance and digital funds transfer, as well as options such as overdraft protection in times of income shortfalls and the overall benefit of improved money management.

Faster Payments

In today’s market, consumers want to move their money fast, with more visibility and control of their own financial transactions.

Meta provides the financing back-end for Mastercard Send ® and Visa Direct which enable the faster, almost instantaneous movement of funds from sender to receiver.

Transactional 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 B2C companies.

Managing cash flow, risk, security, and compliance are essential Services offered by Meta include ACH, wire, receiving and originating.

Meta is a Nacha Top 50 bank for receiving and originating payments.

As of November 2021, Meta typically processes a combined $2.5 billion per day in Automated Clearing House ("ACH") and wire services, which supports that Meta has earned the confidence of its partners by providing safe and efficient movement of money, unprecedented service, and operational success.

ATM Sponsorship

Sponsorship consists of the review and oversight of entities participating in debit and credit networks.

In certain instances, Meta also has certain leasehold interests in certain ATMs which require bank ownership and registration for compliance with applicable state law.

Meta currently provides financial processing services for approximately 65% of freestanding ATMs nationwide providing consumers with access to funds at ATMs frequently founds in malls, retail chains, convenience stores, events, fairs and other small business locations across the U.S.

Acquiring Solutions

Acquiring solutions include the acceptance, processing and settlement of credit card and debit card payments by an acquiring bank on behalf of merchants.

Meta acts as an acquiring bank to sponsor acquiring activity on behalf of merchant clients by leveraging partnerships with partners who act as merchant processors, third-party service providers, ISOs, and/or payment facilitators to identify, onboard and support merchant clients.

Partners looking to offer financial services in an ecosystem typically employ a demand deposit account ("DDA"), savings account or debit card, or combination thereof.

Pathward facilitates their ability to establish a direct deposit relationship with consumers, complete with online acceptance and digital funds transfer, as well as options such as overdraft protection in times of income shortfalls and the overall benefit of improved money management.

Tax Solutions

Under the Refund Transfer program, the Bank opens a temporary bank account for each customer who is receiving an income tax refund and elects to defer payment of his or her tax preparation fees.

After the IRS and any state income tax authorities transfer the refund into the customer’s account, the net funds are transferred to the customer and the temporary deposit account is closed.

Regulation and Supervision

44 unchanged sentences

Enacted in 2018, the Regulatory Relief Act includes several provisions that positively affect smaller banking institutions (e.g., those with less than $10 billion in assets) like the Bank.

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 “Recent Developments Related to Capital Rules,” “Consumer Mortgage Lending,” and “Brokered Deposits.”

The Coronavirus Aid, Relief, and Economic Security Act

4 unchanged sentences

Furthermore, as the on-going COVID-19 pandemic evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19.

In addition, it is possible that Congress will enact supplementary COVID-19 response legislation, including amendments to the CARES Act or new bills comparable in scope to the CARES Act.

The Company continues to assess the impact of the CARES Act and other statues, regulations and supervisory guidance related to the COVID-19 pandemic.

28 unchanged sentences

The OCC announced on October 6, 2022 that its supervisory strategies for 2023 will focus on:

(a) strategic and operational planning to ensure banks maintain stable financial positions;

(b) credit risk management, allowances for loan and lease losses, and allowances for credit losses;

(a) strategic and operational planning;

(b) credit risk management and allowance for credit losses;

(d) oversight of third parties and related concentrations;

(e) Bank Secrecy Act/anti-money laundering (“BSA/AML”) compliance management;

(f) consumer compliance management systems and fair lending risk;

(g) Community Reinvestment Act performance;

(h) the impact of a low-rate environment and the transition to alternative reference rates given the cessation of London Interbank Offering Rate (“LIBOR”);

(i) payment systems products and services;

(j) fintech partnerships for potential cryptocurrency-related activities and other services;

and (k) climate change risk management.

(e) Bank Secrecy Act/anti-money laundering and Office of Foreign Assets Control/sanctions programs compliance management;

(f) interest rate risk and liquidity risk management;

(g) consumer compliance and fair lending risk;

(h) Community Reinvestment Act performance;

(i) new products and services, including those related to payments and fintech/digital assets;

and (j) climate-related financial risk management.

The OCC’s 2023 supervisory plan provides the foundation for policy initiatives and for supervisory strategies as applied to national banks as well as their technology service providers.

28 unchanged sentences

Generally, a person is a "deposit broker" if it is "engaged in the business of placing deposits, or facilitating the placement of deposits, of third parties with insured depository institutions or the business of placing deposits with insured depository institutions for the purpose of selling interests in those deposits to third parties." The final rule clarifies what it means to be in the business of placing deposits and facilitating the placement of deposits for purpose of the deposit broker definition.

In Section 29 and provides, in particular, that a person with an exclusive deposit placement arrangement with one insured depository institution will not be considered a deposit broker because it is not in the business of placing deposits or facilitating the placement of deposits.

Section 29 provides, in particular, that a person with an exclusive deposit placement arrangement with one insured depository institution will not be considered a deposit broker because it is not in the business of placing deposits or facilitating the placement of deposits.

The final rule also clarifies application of the “primary purpose exception” to Section 29 by identifying a number of common business relationships described as “designated exceptions” as meeting the primary purpose exception.

16 unchanged sentences

Consequently, the Bank's only banking office open to the public is its home office in Sioux Falls, South Dakota, where it accepts deposits.

Consumer Mortgage Lending

The Bureau’s ability to repay (“ATR”) rule applies to residential mortgage loan applications securing one-to-four unit dwellings and includes purchases, refinances and home equity loans for principal and second homes.

Under the ATR rules, a lender may not make a residential mortgage loan unless the lender makes a reasonable and good faith determination that is based on verified, documented information at or before consummation that the borrower has a reasonable ability to repay.

To determine a consumer’s reasonable ability to pay, a lender must review eight underwriting factors prescribed in the rule.

Liability for violations of the ATR rule include actual damages, statutory damages, court costs, and attorneys’ fees.

Additionally, the Bureau regulates “qualified mortgages” (“QMs”), which are mortgages for which there is a presumption that the lender has satisfied the ATR rules.

Pursuant to the Dodd-Frank Act, QMs must have certain product-feature prerequisites and affordability underwriting requirements.

Generally, to meet the QM test, the lender must calculate the monthly payments under the loan based on the highest payment that will apply in the first five years and the consumer must have a total debt-to-income ratio that is less than or equal to 43%.

The QM rule provides a safe harbor for lenders that make loans that satisfy the definition of a QM and are not higher priced.

With respect to higher-priced mortgage loans, there is a rebuttable presumption of compliance available to the lender with respect to compliance with the ATR rule.

With respect to QMs, the Regulatory Relief Act allows insured depository institutions with less than $10 billion in assets, like the Bank, to designate certain consumer mortgage loans it originates and holds in portfolio as QMs even though such mortgage loans do not meet the ATR requirements described above.

Prepaid Accounts under the Electronic Fund Transfer Act ("Regulation E") and the Truth In Lending Act ("Regulation Z")

38 unchanged sentences

Anti-Money Laundering (“AML”) Laws and Regulations

AML and financial transparency laws and regulations, including the Bank Secrecy Act and the U.S.

Patriot Act of 2001, impose strict standards for gathering and verifying customer information in order to ensure funds or other assets are not being placed in U.S.

AML and financial transparency laws and regulations, including the Bank Secrecy Act and the USA PATRIOT Act of 2001, impose strict standards for gathering and verifying customer information in order to ensure funds or other assets are not being placed in U.S.

financial institutions to facilitate terrorist financing and laundering of funds.

4 unchanged sentences

If either of these features is present, the issuer must verify the identity of the named account holder.

Privacy and Cybersecurity

The Bank is required by federal statutes and regulations to disclose its privacy policies to its customers.

The Bank is also required to appropriately safeguard its customers’ personal information.

In addition, certain state laws could potentially impact the Bank’s operations, including those related to applicable notification requirements when unauthorized access to customers’ nonpublic personal information has occurred.

On November 18, 2021, the federal banking agencies issued a final rule to improve the sharing of information about cyber incidents.

The final rule requires a banking organization to notify its primary federal regulator of any significant computer-security incident as soon as possible and no later than 36 hours after the banking organization determines that a cyber incident has occurred.

Notification is required for incidents that have materially affected—or are reasonably likely to materially affect—the viability of a banking organization's operations, its ability to deliver banking products and services, or the stability of the financial sector.

The final rule also requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours.

This rule became effective May 1, 2022.

In addition, certain state laws could potentially impact the Bank’s operations, including those related to applicable notification requirements when computer-security incident or unauthorized access to customers’ nonpublic personal information has occurred.

Examination Guidance for Third-Party Lending

3 unchanged sentences

The proposed interagency guidance is based on the OCC’s existing third-party risk management guidance from 2013 and seeks to, among other things, promote consistency in third-party risk management and provide sound risk management guidance for third-party relationships commensurate with a bank’s risk profile and complexity as well as the criticality of the activity.

The public comment period ended on September 17, 2021.

The public comment period ended on October 18, 2021.

When finalized, the proposed interagency guidance will replace each agency’s existing guidance on this topic and will be directed to all banking organizations supervised by the OCC, Federal Reserve, and FDIC.

86 unchanged sentences

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 Home Mortgage Disclosure 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 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.

It is possible that additional rulemaking could require significant revisions to the regulations under which the Bank operates and is supervised.

39 unchanged sentences

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.

In addition, on June 25, 2020, the Federal Reserve announced several capital assessment and related actions following its stress tests and sensitivity analyses to ensure large banks remain resilient despite the economic uncertainty related to the on-going COVID-19 pandemic.

Starting in the third quarter of 2020, the Federal Reserve is requiring large banks to preserve capital by suspending share repurchases, capping dividend payments, and limiting dividends based on recent income.

The Federal Reserve is also requiring banks to re-evaluate their longer-term capital plans.

Although these measures do not apply to the Company, the Company is monitoring the Federal Reserve’s evolving supervisory and regulatory responses to the COVID-19 pandemic in the event that similar supervisory expectations are imposed on banks with less than $10 billion in assets.

In August 2017, the Federal Reserve published proposed guidance related to supervisory expectations for boards of directors of BHCs.

7 unchanged sentences

Federal and State Taxation

Meta and its subsidiaries file a consolidated federal income tax return and various consolidated state income tax returns.

Additionally, Meta or its subsidiaries file separate company income tax returns in states where required.

Pathward Financial and its subsidiaries file a consolidated federal income tax return and various consolidated state income tax returns.

Additionally, Pathward Financial or its subsidiaries file separate company income tax returns in states where required.

All returns are filed on a fiscal year basis using the accrual method of accounting.

3 unchanged sentences

Competitors include a wide range of regional and national banks and financial services companies located both in the Company's market areas and across the nation.

The Company’s payments division serves customers nationally and also faces strong competition from large commercial banks and specialty providers of electronic payments processing and servicing, including prepaid, debit and credit card issuers, ACH processors and ATM network sponsors.

The Company’s BaaS business line serves customers nationally and also faces strong competition from large commercial banks and specialty providers of electronic payments processing and servicing, including prepaid, debit and credit card issuers, ACH processors and ATM network sponsors.

Many of these national players are aggressive competitors, leveraging relationships and economies of scale.

4 unchanged sentences

Our people are our number one asset and the source of our ability to deliver on our mission.

We hope to empower them by providing opportunities to grow and develop in their careers, supported by strong compensation, benefits, and health and well-being programs.

We strive to live our mission and provide a diverse, inclusive, safe, and healthy workplace for all.

We empower them by providing opportunities to grow and develop in their careers, supported by strong compensation, benefits, and health and well-being programs.

We live our mission and provide a diverse, inclusive, safe, and healthy workplace for all.

The following table describes the composition of our workforce as of September 30, 2022:

7 unchanged sentences

We believe that diversity of backgrounds, thoughts and experiences in our organization leads to more innovative solutions for our customers and partners as we seek to understand the unique needs in the niche markets that we serve.

All employees are expected to contribute to a culture of mutual respect and inclusion, and we encourage a workplace culture that is free from discrimination, harassment, or any other form of abuse.

All employees are expected to contribute to a culture of mutual respect and inclusion, and we promote a workplace culture that is free from discrimination, harassment, or any other form of abuse.

We approach the components of DEI as follows:

8 unchanged sentences

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.

One of our most important new initiatives is our “Talent Anywhere” recruitment strategy.

Historically, our organization has been centered in and around Sioux Falls, SD and Troy, MI and our talent pool was similarly local.

We reimagined our recruiting strategy to expand our reach beyond local candidates as a remote-enabled employer of choice.

As part of our DEI strategy, we started work on training our internal recruiters on how to mitigate unconscious bias in the hiring process and how to assemble diverse candidate slates for open positions.

Our in-house recruiting team have measurable diversity goals.

We continue to leverage technology and best-in-class processes to evolve and scale our recruiting function.

We have evolved our “Talent Anywhere” recruitment strategy to source candidates in anchor geographic hubs with flexibility to hire “anywhere” domestically.

This allows us to expand our talent pool to acquire the best talent available while encouraging the ability for interactivity in our hub locations to build connections and community.

This reimagined recruiting strategy allows us to expand our reach beyond local candidates as a remote-enabled employer of choice.

As part of our DEI strategy, we train our internal recruiters on how to mitigate unconscious bias in the hiring process and how to assemble diverse candidate slates for open positions.

Talent Assessment and Development

Assessing talent and leadership development are also critical areas to our talent growth and retention strategy.

We have been piloting an enterprise talent assessment framework, which began with our IT department.

Our plan is for this framework to be used throughout the company.

The aim is to better equip each department to have a clear line of sight on their teams’ strengths or opportunities in terms of skills, diversity or leadership potential.

At a senior level, we introduced a nine-month leadership development program for high-potential, high-performance employees.

Participants are paired with executive coaches and work on a curriculum that includes strategy setting, being an inclusive leader, and managing diverse perspectives.

For staff at all other levels, we transformed our training format from traditional classroom-based methods to a more progressive model—using micro learning methods, encouraging department leaders to be coaches for their staff, creating stretch assignments and soft skill workshops.

Our performance management program is an interactive practice that engages our employees through performance reviews, goal setting and managers providing on-going feedback to their team members.

We offer a variety of trainings to help team members and managers establish and meet personalized development goals, take on new roles and become better leaders.

Assessing talent and leadership development are also critical areas to our talent pipeline strategy.

We have continued to mature our enterprise talent management framework.

This framework is used throughout the company to better equip Pathward to have clear line of sight on their teams’ strengths and opportunities, by identifying capabilities needed to achieve our strategy and creating action plans to close gaps.

This ensures our internal talent supply keeps pace with demand, that we invest in our workforce with intention, have our highest performing, highest potential employees applied to our most critical work, and are preparing today’s talent for tomorrow’s needs.

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.

We offer a variety of support to help team members and managers establish and meet personalized development goals, take on new roles and become better leaders.

Employee Engagement

We recognize that team members who are involved in, enthusiastic about and committed to their work and workplace contribute meaningfully to the success of the company.

In mid-2021, we completed our enterprise-wide engagement survey that is also a recurring annual best practice.

The results of this survey are reviewed with the executive management team and are used to prioritize employee programs, initiatives, and communications.

As a normal course of business, we complete enterprise-wide engagement surveys.

The results of the survey are reviewed with the executive management team and are used to prioritize employee programs, initiatives, and communications.

Total Rewards

As part of our total rewards strategy, we aspire to offer and maintain market competitive total rewards programs for our employees and that attract and retain superior talent.

In addition to healthy base wages, we offer other variable pay including annual bonus and commission plans for our sales employees.

As part of our total rewards strategy, we aspire to offer and maintain market competitive total rewards programs for our employees and that attracts and retain superior talent.

In addition to healthy base wages, we offer other variable pay including an annual bonus or commission plan.

We offer a 401(k) plan with a highly competitive company match.

Our healthcare, insurance benefits, health savings and flexible spending accounts are equally competitive with low-cost share for the employee We understand how important it is that our employees have time to away from work.

To allow employees a time to recharge, we offer paid time off, family leave, family care resources, flexible work schedules, adoption assistance, employee assistance programs, and other rest and family related benefits.

Our healthcare, insurance benefits, health savings and flexible spending accounts are equally competitive with a low-cost share for the employee.

We understand how important it is that our employees have time away from work.

To allow employees time to recharge, we offer paid time off, family leave, family care resources, flexible work schedules, adoption assistance, employee assistance programs, and other rest and family related benefits.

We want our employees to be healthy and be able to bring their whole selves to the workplace.

We are fortunate in that no layoffs, furloughs or salary adjustments have been imposed due to COVID-19.

Health and Safety

1 unchanged sentence

Accordingly, we are committed to the health, safety, and wellness of our employees.

We are a remote-enabled employer and instituted a work-from-home program allowing hybrid access to our offices while imposing safety protocols.

In 2021, we became a fully remote-enabled employer and instituted a work-from-home program allowing hybrid access to our offices while imposing safety protocols.

We purchased laptops and related hardware for home-based employees who previously worked on desktop computers;

1 unchanged sentence

Our employees and their families were also supported with access to a variety of flexible and convenient health and welfare programs, including benefits that support their physical and mental health.

We are also monitoring local, state and federal regulations, including the recent emergency temporary order on vaccination and testing in the workplace issued by the Occupational Safety and Health Administration and are prepared to timely implement any applicable requirements.

We follow local, state and federal regulations issued by the Occupational Safety and Health Administration and are prepared to implement any applicable workplace requirements.

Available Information

The Company’s website address is www.metafinancialgroup.com.

The Company’s website address is www.pathwardfinancial.com.

The Company makes available, through a link with the SEC’s EDGAR database, free of charge, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and statements of ownership on Forms 3, 4, and 5.

1 unchanged sentence

The information found on the Company’s website is not incorporated by reference in this or any other report the Company files or furnishes to the SEC.

The Company also will provide copies of its Annual Report on Form 10-K, free of charge, upon written request to Brittany Kelley Elsasser, Director of 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 Justin Schempp, VP of Investor Relations and Financial Reporting, at the Company’s address.

Also posted on the Company's website, among other things, are the Environmental, Social and Governance Report, the charters of committees of the Board of Directors, as well as the Company's Code of Business Conduct.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business