What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 136 added, 126 removed, 1061 unchanged (20% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Financial Condition

(Dollars in thousands, except per share data) March 31, 2024 September 30, 2023

(Dollars in thousands, except per share data) June 30, 2024 September 30, 2023

ASSETS (Unaudited) (Audited)

20 unchanged sentences

STOCKHOLDERS’ EQUITY

Preferred stock, 3,000,000 shares authorized, no shares issued, none outstanding at March 31, 2024 and September 30, 2023, respectively

Preferred stock, 3,000,000 shares authorized, no shares issued, none outstanding at June 30, 2024 and September 30, 2023, respectively

Common stock, $ 0.01 par value;

90,000,000 shares authorized, 25,507,915 and 26,225,563 shares issued, 25,377,986 and 26,183,583 shares outstanding at March 31, 2024 and September 30, 2023, respectively

90,000,000 shares authorized, 25,215,159 and 26,225,563 shares issued, 25,085,230 and 26,183,583 shares outstanding at June 30, 2024 and September 30, 2023, respectively

Common stock, Nonvoting, $ 0.01 par value;

3,000,000 shares authorized, no shares issued, none outstanding at March 31, 2024 and September 30, 2023, respectively

3,000,000 shares authorized, no shares issued, none outstanding at June 30, 2024 and September 30, 2023, respectively

Additional paid-in capital 636,284 628,500

1 unchanged sentence

Accumulated other comprehensive loss ( 207,992 ) ( 255,443 )

Treasury stock, at cost, 129,929 and 41,980 common shares at March 31, 2024 and September 30, 2023, respectively

Treasury stock, at cost, 129,929 and 41,980 common shares at June 30, 2024 and September 30, 2023, respectively

( 6,181 ) ( 344 )

7 unchanged sentences

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands, except per share data) 2024 2023 2024 2023

17 unchanged sentences

Gain on sale of trademarks — — — 10,000

Gain (loss) on sale of other 1,695 ( 666 ) 4,535 ( 164 )

Gain on sale of other 4,675 821 9,210 657

Other income 4,965 5,889 16,188 13,921

24 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands) 2024 2023 2024 2023

23 unchanged sentences

Stockholders’

Three Months Ended March 31, 2024

Balance, December 31, 2023 $ 260 $ 629,737 $ 293,463 $ ( 188,433 ) $ ( 5,235 ) $ 729,792 $ ( 510 ) $ 729,282

Three Months Ended June 30, 2024

Balance, March 31, 2024 $ 254 $ 634,415 $ 317,964 $ ( 206,570 ) $ ( 6,181 ) $ 739,882 $ ( 420 ) $ 739,462

Cash dividends declared on common stock ($ 0.05 per share)

— — ( 1,257 ) — — ( 1,257 ) — ( 1,257 )

Issuance of common stock due to restricted stock 2 — — — — 2 — 2

Repurchases of common stock ( 3 ) 3 ( 15,150 ) — — ( 15,150 ) — ( 15,150 )

3 unchanged sentences

Net distribution to noncontrolling interest — — — — — — ( 298 ) ( 298 )

Balance, March 31, 2024

Balance, June 30, 2024

$ 251 $ 636,284 $ 343,392 $ ( 207,992 ) $ ( 6,181 ) $ 765,754 $ ( 506 ) $ 765,248

Three Months Ended March 31, 2023

Balance, December 31, 2022 $ 282 $ 620,681 $ 246,891 $ ( 201,690 ) $ ( 6,824 ) $ 659,340 $ ( 207 ) $ 659,133

Three Months Ended June 30, 2023

Balance, March 31, 2023 $ 271 $ 623,250 $ 245,046 $ ( 187,829 ) $ ( 6,943 ) $ 673,795 $ ( 551 ) $ 673,244

Cash dividends declared on common stock ($ 0.05 per share)

2 unchanged sentences

Stock compensation — 2,570 — — — 2,570 — 2,570

Total other comprehensive income — — — 13,861 — 13,861 — 13,861

Total other comprehensive loss — — — ( 20,067 ) — ( 20,067 ) — ( 20,067 )

Net income — — 45,096 — — 45,096 508 45,604

Net distribution to noncontrolling interest — — — — — — ( 588 ) ( 588 )

Balance, March 31, 2023

Balance, June 30, 2023

$ 266 $ 625,825 $ 267,100 $ ( 207,896 ) $ ( 6,943 ) $ 678,352 $ ( 631 ) $ 677,721

9 unchanged sentences

Stockholders’

Six Months Ended March 31, 2024

Nine Months Ended June 30, 2024

Balance, September 30, 2023

8 unchanged sentences

Net income — — 134,760 — — 134,760 718 135,478

Net investment by noncontrolling interest — — — — — — 79 79

Balance, March 31, 2024

Net distribution to noncontrolling interest — — — — — — ( 219 ) ( 219 )

Balance, June 30, 2024

$ 251 $ 636,284 $ 343,392 $ ( 207,992 ) $ ( 6,181 ) $ 765,754 $ ( 506 ) $ 765,248

Six Months Ended March 31, 2023

Nine Months Ended June 30, 2023

Balance, September 30, 2022

8 unchanged sentences

Net distribution to noncontrolling interest — — — — — — ( 2,286 ) ( 2,286 )

Balance, March 31, 2023

Balance, June 30, 2023

$ 266 $ 625,825 $ 267,100 $ ( 207,896 ) $ ( 6,943 ) $ 678,352 $ ( 631 ) $ 677,721

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended March 31,

Nine Months Ended June 30,

(Dollars in thousands) 2024 2023

10 unchanged sentences

Net realized (gain) on trademarks — ( 10,000 )

Net realized (gain) loss on other ( 3,165 ) 272

Net realized (gain) on other ( 6,119 ) ( 91 )

Impairment on rental equipment 2,013 24

5 unchanged sentences

Cash flows from investing activities:

Purchases of securities available for sale — ( 150,751 )

Proceeds from maturities of and principal collected on securities available for sale 141,801 127,071

11 unchanged sentences

Proceeds from sale of other assets 6,466 —

Net cash provided by (used in) investing activities 19,105 ( 131,072 )

Net cash (used in) investing activities ( 148,074 ) ( 620,974 )

Cash flows from financing activities:

2 unchanged sentences

Principal payments on other liabilities ( 621 ) ( 1,416 )

Proceeds from other liabilities — ( 1,026 )

Payment of debt issuance costs — ( 511 )

3 unchanged sentences

Investment by (distributions to) noncontrolling interest ( 219 ) ( 2,286 )

Net cash (used in) financing activities ( 262,236 ) ( 8,644 )

Net cash provided by (used in) financing activities ( 246,840 ) 558,616

Effect of exchange rate changes on cash ( 259 ) 942

2 unchanged sentences

Cash and cash equivalents at end of fiscal period $ 298,926 $ 515,271

Six Months Ended March 31,

Nine Months Ended June 30,

(Dollars in thousands) 2024 2023

5 unchanged sentences

Supplemental schedule of non-cash investing activities:

Purchases/sales of securities accrued, not settled

Trade Date Purchases - AFS — 3,026

Held for sale to loans and leases 8,403 158

Loans and leases to rental equipment 3,847 2,168

9 unchanged sentences

Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented.

The results of the three and six months ended March 31, 2024 are not necessarily indicative of the results expected for the fiscal year ending September 30, 2024.

The results of the three and nine months ended June 30, 2024 are not necessarily indicative of the results expected for the fiscal year ending September 30, 2024.

Certain prior fiscal year amounts have been reclassified to conform to the current year financial statement presentation.

14 unchanged sentences

Debt Securities AFS

At March 31, 2024

At June 30, 2024

Corporate securities $ 25,000 $ — $ ( 5,375 ) $ 19,625

14 unchanged sentences

Debt Securities HTM

At March 31, 2024

At June 30, 2024

Non-bank qualified obligations of states and political subdivisions $ 31,970 $ — $ ( 3,521 ) $ 28,449

12 unchanged sentences

Debt Securities AFS

At March 31, 2024

At June 30, 2024

Corporate securities $ — $ — $ 19,625 $ ( 5,375 ) $ 19,625 $ ( 5,375 )

14 unchanged sentences

Debt Securities HTM

At March 31, 2024

At June 30, 2024

Non-bank qualified obligations of states and political subdivisions $ — $ — $ 28,449 $ ( 3,521 ) $ 28,449 $ ( 3,521 )

5 unchanged sentences

Total debt securities HTM $ — $ — $ 31,425 $ ( 5166 ) $ 31,425 $ ( 5,166 )

The decrease in the fair value of investment securities balances when comparing March 31, 2024 to September 30, 2023 was primarily driven by principal pay downs during the six months.

At March 31, 2024, there were 194 securities AFS in an unrealized loss position.

All of the mortgage-backed securities ("MBS") in an unrealized loss position at March 31, 2024 were government guaranteed or issued by a private label where the Company held a senior tranche.

The decrease in the fair value of investment securities balances when comparing June 30, 2024 to September 30, 2023 was primarily driven by principal pay downs during the nine months.

At June 30, 2024, there were 193 securities AFS in an unrealized loss position.

All of the mortgage-backed securities ("MBS") in an unrealized loss position at June 30, 2024 were government guaranteed.

Management assessed each investment security with unrealized losses for credit loss and determined all unrealized losses on these securities were due to adverse market conditions and/or change in interest rates versus credit loss.

As part of that assessment, management evaluated and concluded that it is more-likely-than-not that the Company will not be required and does not intend to sell any of the securities prior to recovery of the amortized cost.

At March 31, 2024, there was no allowance for credit losses ("ACL") for debt securities AFS or debt securities HTM.

At June 30, 2024, there was no allowance for credit losses ("ACL") for debt securities AFS or debt securities HTM.

The amortized cost and fair value of debt securities by contractual maturity are shown below.

4 unchanged sentences

However, certain prepayment penalties may apply.

(Dollars in thousands) At March 31, 2024 At September 30, 2023

(Dollars in thousands) At June 30, 2024 At September 30, 2023

Debt Securities AFS Amortized Cost Fair

15 unchanged sentences

One-half of the subscription is paid at time of application, and one-half is subject to call of the Board of Governors of the Federal Reserve System.

FRB of Minneapolis stock held by the Bank totaled $ 19.7 million at March 31, 2024 and September 30, 2023.

FRB of Minneapolis stock held by the Bank totaled $ 19.7 million at June 30, 2024 and September 30, 2023.

These equity securities are 'restricted' in that they can only be owned by member banks.

5 unchanged sentences

The FHLB stock is carried at cost since it is generally redeemable at par value.

The carrying value of the stock held at the FHLB was $ 6.2 million and $ 8.5 million at March 31, 2024 and at September 30, 2023, respectively.

The carrying value of the stock held at the FHLB was $ 4.8 million and $ 8.5 million at June 30, 2024 and at September 30, 2023, respectively.

These equity securities are ‘restricted’ in that they can only be sold back to the respective institution from which they were acquired or another member institution at par.

1 unchanged sentence

Equity Securities.

The Company held $ 4.3 million and $ 3.4 million in marketable equity securities within other assets on the Condensed Consolidated Statements of Financial Condition at March 31, 2024 and September 30, 2023, respectively.

The Company recognized no unrealized gains on marketable equity securities during the six months ended March 31, 2024 and 2023.

No such securities were sold during the six months ended March 31, 2024.

Non-marketable equity securities with a readily determinable fair value totaled $ 10.0 million and $ 8.4 million at March 31, 2024 and September 30, 2023, respectively.

The Company held $ 4.3 million and $ 3.4 million in marketable equity securities within other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2024 and September 30, 2023, respectively.

The Company recognized $ 0.2 million unrealized losses on marketable equity securities during the nine months ended June 30, 2024 and 2023.

No such securities were sold during the nine months ended June 30, 2024.

Non-marketable equity securities with a readily determinable fair value totaled $ 10.5 million and $ 8.4 million at June 30, 2024 and September 30, 2023, respectively.

These securities are held within other assets on the Condensed Consolidated Statements of Financial Condition.

The Company recognized $ 0.4 million in unrealized gains and $ 0.1 million in unrealized losses during the six months ended March 31, 2024 and 2023, respectively.

No such securities were sold during the six months ended March 31, 2024.

Non-marketable equity securities without readily determinable fair value totaled $ 14.8 million and $ 16.2 million at March 31, 2024 and September 30, 2023, respectively.

There was one such security sold during the six months ended March 31, 2024 for a $ 2.5 million gain which is included in gain on sale of other on the Condensed Consolidated Statements of Operations.

The Company recognized $ 0.6 million in unrealized gains and $ 0.1 million in unrealized losses during the nine months ended June 30, 2024 and 2023, respectively.

No such securities were sold during the nine months ended June 30, 2024.

Non-marketable equity securities without readily determinable fair value totaled $ 13.8 million and $ 16.2 million at June 30, 2024 and September 30, 2023, respectively, reflecting Company ownership interests in other entities through its Pathward Venture Capital, LLC, a wholly-owned service corporation subsidiary of the Bank that was formed in 2017 for the purpose of making minority equity investments, and other corporate investments.

During the quarter ended June 30, 2024, the Company recognized a $ 2.4 million gain on Visa shares previously carried at cost basis of $0 since 2008.

On April 8, 2024, Visa Inc.

announced the commencement of an exchange offer for Visa Class B-1 common stock and the Company subsequently tendered its Visa Class B-1 common stock in exchange for a combination of Visa Class C common stock and Visa Class B-2 common stock.

After entering the exchange, the Company sold its Visa Class C and Visa Class B-2 common stock in the secondary market.

There was one additional such security sold during the nine months ended June 30, 2024 for a $ 2.5 million gain which is included in gain on sale of other on the Condensed Consolidated Statements of Operations.

Equity Securities Impairment.

1 unchanged sentence

All other equity investments, including those under the equity method, are reviewed for other-than-temporary impairment on at least a quarterly basis.

The Company recognized no and $ 0.5 million impairment for such investments for the six months ended March 31, 2024 and 2023, respectively.

The Company recognized $ 1.0 million and $ 3.2 million impairment for such investments for the nine months ended June 30, 2024 and 2023, respectively.

LOANS AND LEASES, NET

Loans and leases consist of the following:

(Dollars in thousands) March 31, 2024 September 30, 2023

(Dollars in thousands) June 30, 2024 September 30, 2023

Term lending $ 1,533,722 $ 1,308,133

14 unchanged sentences

Total loans and leases, net $ 4,532,716 $ 4,316,411

During the six months ended March 31, 2024 and 2023, the Company originated $ 933.8 million and $ 608.6 million of commercial finance and consumer finance as held for sale, respectively.

The Company sold held for sale loans resulting in proceeds of $ 969.0 million and a $ 1.4 million gain on sale during the six months ended March 31, 2024.

The Company sold held for sale loans resulting in proceeds of $ 604.4 million and gain on sale of $ 0.1 million during the six months ended March 31, 2023.

During the nine months ended June 30, 2024 and 2023, the Company originated $ 1.43 billion and $ 941.5 million of commercial finance and consumer finance as held for sale, respectively.

The Company sold held for sale loans resulting in proceeds of $ 1.47 billion and a $ 3.1 million gain on sale during the nine months ended June 30, 2024.

The Company sold held for sale loans resulting in proceeds of $ 870.1 million and gain on sale of $ 0.2 million during the nine months ended June 30, 2023.

Loans purchased and sold by portfolio segment, including participation interests, were as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands) 2024 2023 2024 2023

1 unchanged sentence

Loans held for investment:

Commercial finance $ 11,000 $ — $ 11,000 $ —

Warehouse finance 55,821 9,715 218,912 197,549

6 unchanged sentences

The net investment in direct financing and sales-type leases was comprised of the following:

(Dollars in thousands) March 31, 2024 September 30, 2023

(Dollars in thousands) June 30, 2024 September 30, 2023

Minimum lease payments receivable $ 164,458 $ 191,807

4 unchanged sentences

The components of total lease income were as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands) 2024 2023 2024 2023

7 unchanged sentences

(1) Other leasing and equipment finance noninterest income consists of gains (losses) on sales of leased equipment, fees and service charges on leases and gains (losses) on sales of leases.

Undiscounted future minimum lease payments receivable for direct financing and sales-type leases, and a reconciliation to the carrying amount recorded at March 31, 2024 were as follows:

Undiscounted future minimum lease payments receivable for direct financing and sales-type leases, and a reconciliation to the carrying amount recorded at June 30, 2024 were as follows:

(Dollars in thousands)

4 unchanged sentences

Total carrying amount of direct financing and sales-type leases $ 164,458

The Company did not record any contingent rental income from direct financing and sales-type leases in the six months ended March 31, 2024.

The Company did not record any contingent rental income from direct financing and sales-type leases in the nine months ended June 30, 2024.

A number of factors affected the economic environment in 2023 including geopolitical conflict, supply chain disruptions, inflation, rising interest rates, and bank failures brought on by, among other things, rising interest rates, deposit outflows and liquidity crises.

1 unchanged sentence

Activity in the allowance for credit losses and balances of loans and leases by portfolio segment was as follows:

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

(Dollars in thousands) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance

16 unchanged sentences

(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

(Dollars in thousands) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance

16 unchanged sentences

(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.

Six Months Ended March 31, 2024

Nine Months Ended June 30, 2024

(Dollars in thousands) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance

16 unchanged sentences

(1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition.

Six Months Ended March 31, 2023

Nine Months Ended June 30, 2023

(Dollars in thousands) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance

17 unchanged sentences

Information on loans and leases that are deemed to be collateral dependent and are evaluated individually for the ACL was as follows:

(Dollars in thousands) At March 31, 2024 At September 30, 2023

(Dollars in thousands) At June 30, 2024 At September 30, 2023

Term lending $ 14,425 $ 3,516

9 unchanged sentences

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

The balance of these pass rated cash collateral loans totaled $ 119.1 million and $ 117.0 million at March 31, 2024 and at September 30, 2023, respectively.

The balance of these pass rated cash collateral loans totaled $ 109.0 million and $ 117.0 million at June 30, 2024 and at September 30, 2023, respectively.

Federal regulations provide for the classification of loans 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.” The loan classification and risk rating definitions are as follows:

22 unchanged sentences

Due to the unique risks associated with these portfolios, the Company monitors other credit quality indicators in its evaluation of the appropriateness of the ACL on these portfolios, and as such, these loans are not included in the asset classification table below.

The outstanding balances of consumer finance loans and tax services loans were $ 267.0 million and $ 84.5 million at March 31, 2024, respectively, and $ 254.4 million and $ 5.2 million at September 30, 2023, respectively.

The outstanding balances of consumer finance loans and tax services loans were $ 253.4 million and $ 43.2 million at June 30, 2024, respectively, and $ 254.4 million and $ 5.2 million at September 30, 2023, respectively.

The amortized cost basis of loans and leases by asset classification and year of origination was as follows:

1 unchanged sentence

(Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total

At March 31, 2024 2024 2023 2022 2021 2020 Prior

At June 30, 2024 2024 2023 2022 2021 2020 Prior

Pass $ 401,657 $ 475,168 $ 119,617 $ 67,910 $ 52,871 $ 46,207 $ — $ 1,163,430

116 unchanged sentences

Past due loans and leases were as follows:

At March 31, 2024

At June 30, 2024

Accruing and Nonaccruing Loans and Leases Nonperforming Loans and Leases

34 unchanged sentences

(Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total Nonaccrual with No ACL

At March 31, 2024 2024 2023 2022 2021 2020 Prior

At June 30, 2024 2024 2023 2022 2021 2020 Prior

Term lending $ 9,284 $ 2,830 $ 5,082 $ 1,712 $ 1,218 $ 3,745 $ — $ 23,871 $ —

17 unchanged sentences

(Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total

At March 31, 2024 2024 2023 2022 2021 2020 Prior

Loans held for sale $ — $ 843 $ — $ — $ — $ — $ — $ 843

At June 30, 2024 2024 2023 2022 2021 2020 Prior

Term lending $ 1,570 $ 2,154 $ 746 $ 175 $ 180 $ 18 $ — $ 4,843

1 unchanged sentence

Insurance premium finance 699 528 — — — — — 1,227

SBA/USDA — — — — 48 16 — 64

Commercial finance 2,489 2,682 2,004 462 281 509 — 8,427

18 unchanged sentences

The following table provides the average recorded investment in nonaccrual loans and leases:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands) 2024 2023 2024 2023

6 unchanged sentences

Total loans and leases $ 24,462 $ 32,910 $ 29,857 $ 24,102

The recognized interest income on the Company's nonaccrual loans and leases for the three and six months ended March 31, 2024 and 2023 was not significant.

The recognized interest income on the Company's nonaccrual loans and leases for the three and nine months ended June 30, 2024 and 2023 was not significant.

Effective October 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures on a prospective basis.

Financial information at and for the three and six months ended March 31, 2024 is reflected as such.

Financial information at and for the three and nine months ended June 30, 2024 is reflected as such.

The historical information disclosed is in accordance with Subtopic ASC 310-40, Receivables – Troubled Debt Restructurings by Creditors .

Modifications made to borrowers experiencing financial difficulty during the three and six months ended March 31, 2024 were $ 1.6 million in the commercial finance loan portfolio.

No loans were modified in a TDR during the three and six months ended March 31, 2023.

The Company had an immaterial amount and $ 0.1 million of commercial finance loans that were modified within the previous 12 months experience a payment default during the three and six months ended March 31, 2023, respectively.

TDR net charge-offs and the impact of TDRs on the Company's allowance for credit losses were insignificant during the six months ended March 31, 2023.

Modifications made to borrowers experiencing financial difficulty during the three and nine months ended June 30, 2024 were $ 6.1 million and $ 7.6 million in the commercial finance loan portfolio, respectively.

The types of modifications granted were term extensions and reduced payments.

During the three and nine months ended June 30, 2024, the Company had $ 1.5 million of commercial finance loans where a modification was granted in the previous 12 months in which there was a payment default.

As of June 30, 2024, $ 1.5 million of modifications granted were in the 60-89 days past due category.

No loans were modified in a TDR during the three and nine months ended June 30, 2023.

The Company had an immaterial amount and $ 0.4 million of commercial finance loans that were modified within the previous 12 months experience a payment default during the three and nine months ended June 30, 2023, respectively.

TDR net charge-offs and the impact of TDRs on the Company's allowance for credit losses were insignificant during the nine months ended June 30, 2023.

EARNINGS PER COMMON SHARE ("EPS")

7 unchanged sentences

A reconciliation of net income and common stock share amounts used in the computation of basic and diluted earnings per share is presented below.

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands, except per share data) 2024 2023 2024 2023

17 unchanged sentences

(1) Represents the effect of the assumed exercise of stock options and vesting of performance share units and restricted stock, as applicable, utilizing the treasury stock method.

(2) Excluded from the computation of diluted earnings per share for the three months ended March 31, 2024 and 2023, respectively, were 204,877 and 422,461 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive.

Excluded from the computation of diluted earnings per share for the six months ended March 31, 2024 and 2023, respectively, were 206,060 and 417,012 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive.

(2) Excluded from the computation of diluted earnings per share for the three months ended June 30, 2024 and 2023, respectively, were 260,415 and 409,666 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive.

Excluded from the computation of diluted earnings per share for the nine months ended June 30, 2024 and 2023, respectively, were 224,035 and 414,539 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive.

RENTAL EQUIPMENT, NET

Rental equipment consists of the following:

(Dollars in thousands) March 31, 2024 September 30, 2023

(Dollars in thousands) June 30, 2024 September 30, 2023

Computers and IT networking equipment $ 23,908 $ 25,094

6 unchanged sentences

Net book value $ 209,544 $ 211,750

Future minimum lease payments expected to be received for operating leases at March 31, 2024 were as follows:

Future minimum lease payments expected to be received for operating leases at June 30, 2024 were as follows:

(Dollars in thousands)

3 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

The Company held a total of $ 309.5 million of goodwill at March 31, 2024.

The Company held a total of $ 309.5 million of goodwill at June 30, 2024.

The recorded goodwill is a result of multiple business combinations that occurred from 2015 to 2018.

There have been no changes to the carrying amount of goodwill during the six months ended March 31, 2024.

There have been no changes to the carrying amount of goodwill during the nine months ended June 30, 2024.

The changes in the carrying amount of the Company’s intangible assets were as follows:

4 unchanged sentences

Amortization during the period ( 790 ) — ( 2,018 ) ( 399 ) ( 3,207 )

At March 31, 2024 $ 6,950 $ — $ 7,679 $ 3,867 $ 18,496

At June 30, 2024 $ 6,687 $ — $ 7,092 $ 3,734 $ 17,513

Gross carrying amount $ 13,774 $ 301 $ 77,578 $ 7,732 $ 99,385

1 unchanged sentence

Accumulated impairment — — ( 10,918 ) ( 153 ) ( 11,071 )

At March 31, 2024 $ 6,950 $ — $ 7,679 $ 3,867 $ 18,496

At June 30, 2024 $ 6,687 $ — $ 7,092 $ 3,734 $ 17,513

At September 30, 2022 $ 8,605 $ — $ 12,395 $ 4,691 $ 25,691

Amortization during the period ( 868 ) — ( 2,595 ) ( 398 ) ( 3,861 )

At March 31, 2023 $ 7,996 $ — $ 10,576 $ 4,426 $ 22,998

At June 30, 2023 $ 7,737 $ — $ 9,800 $ 4,293 $ 21,830

Gross carrying amount $ 14,624 $ 2,481 $ 82,088 $ 9,940 $ 109,133

1 unchanged sentence

Accumulated impairment — — ( 10,918 ) ( 218 ) ( 11,136 )

At March 31, 2023 $ 7,996 $ — $ 10,576 $ 4,426 $ 22,998

At June 30, 2023 $ 7,737 $ — $ 9,800 $ 4,293 $ 21,830

(1) Book amortization period of 5 - 15 years.

5 unchanged sentences

The estimated amortization expense of intangible assets assumes no activities, such as acquisitions, which would result in additional amortizable intangible assets.

Estimated amortization expense of intangible assets in the remaining six months of fiscal 2024 and subsequent fiscal years at March 31, 2024 was as follows:

Estimated amortization expense of intangible assets in the remaining three months of fiscal 2024 and subsequent fiscal years at June 30, 2024 was as follows:

(Dollars in thousands)

2 unchanged sentences

Total anticipated intangible amortization $ 17,513

There were no impairments to intangible assets during the six months ended March 31, 2024 and 2023.

There were no impairments to intangible assets during the nine months ended June 30, 2024 and 2023.

Intangible impairment expense is recorded within the impairment expense line of the Condensed Consolidated Statements of Operations.

OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES

Operating lease right-of-use ("ROU") assets, included in other assets , were $ 26.0 million and $ 26.9 million at March 31, 2024 and September 30, 2023, respectively.

Operating lease liabilities, included in accrued expenses and other liabilities , were $ 27.8 million and $ 28.8 million at March 31, 2024 and September 30, 2023, respectively.

Undiscounted future minimum operating lease payments and a reconciliation to the amount recorded as operating lease liabilities at March 31, 2024 were as follows:

Operating lease right-of-use ("ROU") assets, included in other assets , were $ 25.2 million and $ 26.9 million at June 30, 2024 and September 30, 2023, respectively.

Operating lease liabilities, included in accrued expenses and other liabilities , were $ 27.0 million and $ 28.8 million at June 30, 2024 and September 30, 2023, respectively.

Undiscounted future minimum operating lease payments and a reconciliation to the amount recorded as operating lease liabilities at June 30, 2024 were as follows:

(Dollars in thousands)

5 unchanged sentences

The weighted-average discount rate and remaining lease term for operating leases were as follows:

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Weighted-average discount rate 2.44 % 2.38 %

1 unchanged sentence

The components of total lease costs for operating leases were as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

(Dollars in thousands) 2024 2023 2024 2023

8 unchanged sentences

On August 25, 2023, the Company's Board of Directors announced a share repurchase program to repurchase up to an additional 7,000,000 shares of the Company's outstanding common stock on or before September 30, 2028.

During the six months ended March 31, 2024 and 2023, the Company repurchased 996,773 and 1,826,694 shares, respectively, as part of the share repurchase programs.

During the nine months ended June 30, 2024 and 2023, the Company repurchased 1,283,693 and 2,316,814 shares, respectively, as part of the share repurchase programs.

Under the repurchase programs, repurchased shares were retired and designated as authorized but unissued shares.

1 unchanged sentence

When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings.

As of March 31, 2024, 7,669,663 shares of common stock remained available for repurchase.

For the six months ended March 31, 2024 and 2023, the Company also repurchased 122,452 and 59,626 shares, or $ 5.8 million and $ 2.1 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.

As of June 30, 2024, 7,382,743 shares of common stock remained available for repurchase.

For the nine months ended June 30, 2024 and 2023, the Company also repurchased 122,452 and 59,626 shares, or $ 5.8 million and $ 2.1 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock.

Retirement of Treasury Stock.

1 unchanged sentence

When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings.

The Company retired no shares of common stock held in treasury during the six months ended March 31, 2024 and 2023.

The Company retired no shares of common stock held in treasury during the nine months ended June 30, 2024 and 2023.

STOCK COMPENSATION

6 unchanged sentences

The fair value is determined based on the fair market value of the Company’s stock on the grant date.

Director shares are issued to the Company’s directors, and these shares have historically vested from immediate to up to one year from the grant date.

Director shares are issued to the Company’s directors, and these shares have historically vested from immediately to up to one year from the grant date.

The Company also grants selected executives PSU awards.

The vesting of these awards is contingent on meeting company-wide performance goals, including earnings per share.

PSUs are generally granted at the market value of the underlying share on the date of grant, adjusted for dividends, as performance share units do not participate in dividends.

PSUs are generally granted at the market value of the underlying share on the date of grant, adjusted for dividends, as PSUs do not participate in dividends.

The awards contingently vest over a period of three years and have payout levels ranging from a threshold of 50 % to a maximum of 200 %.

Upon vesting, each performance share unit earned is converted into one share of common stock.

Upon vesting, each PSU earned is converted into one share of common stock.

The fair value of the PSUs is determined by the dividend-adjusted fair value on the grant date for those awards subject to a performance condition.

2 unchanged sentences

These stock awards vest in equal installments over eight years .

The following tables show the activity of share awards (including shares of restricted stock subject to vesting, fully-vested restricted stock, and PSUs) granted, exercised or forfeited under all of the Company's incentive plans during the six months ended March 31, 2024.

Number of Shares Weighted Average Fair Value at Grant

3 unchanged sentences

Forfeited or expired ( 13,864 ) 42.49

Nonvested shares outstanding, March 31, 2024 263,593 $ 41.27

Nonvested shares outstanding, June 30, 2024 257,757 $ 41.71

Number of Units (1)

4 unchanged sentences

Forfeited or expired ( 4,483 ) 44.59

Performance share units outstanding, March 31, 2024 146,945 $ 47.35

(1) The activity in this table includes 60,984 shares related to the fiscal year 2021 performance share units, which are included in this table under the assumption of a target performance achievement.

Performance share units outstanding, June 30, 2024 142,462 $ 47.24

(1) The activity in this table includes 60,984 shares related to the fiscal year 2021 PSUs, which are included in this table under the assumption of a target performance achievement.

The final performance was assessed after September 30, 2023, resulted in an achievement greater than target, and an additional 47,252 shares were allocated to the participants in the plan.

2 unchanged sentences

The Company has elected to record forfeitures as they occur.

At March 31, 2024, stock-based compensation expense not yet recognized in income totaled $ 10.5 million, which is expected to be recognized over a weighted average remaining period of 1.61 years.

The Company recorded an income tax expense of $ 21.0 million for the six months ended March 31, 2024, resulting in an effective tax rate of 18.33 %, compared to an income tax expense of $ 15.8 million, or an effective tax rate of 15.83 %, for the six months ended March 31, 2023.

At June 30, 2024, stock-based compensation expense not yet recognized in income totaled $ 8.5 million, which is expected to be recognized over a weighted average remaining period of 1.54 years.

The Company recorded an income tax expense of $ 26.1 million for the nine months ended June 30, 2024, resulting in an effective tax rate of 16.15 %, compared to an income tax expense of $ 19.0 million, or an effective tax rate of 12.80 %, for the nine months ended June 30, 2023.

The Company’s effective tax rate was lower than the U.S.

2 unchanged sentences

The table below compares the income tax expense components for the periods presented.

Six Months Ended March 31,

Nine Months Ended June 30,

(Dollars in thousands) 2024 2023

14 unchanged sentences

(Dollars in thousands) Consumer Commercial Corporate Services/Other Consolidated Company

Three Months Ended March 31, 2024 2023 2024 2023 2024 2023 2024 2023

Three Months Ended June 30, 2024 2023 2024 2023 2024 2023 2024 2023

Net interest income (1)

7 unchanged sentences

— — 13,615 13,756 164 224 13,779 13,980

Gain (loss) on sale of other (1)

Gain on sale of other (1)

20 — 2,264 812 2,391 9 4,675 821

3 unchanged sentences

Revenue $ 102,110 $ 89,397 $ 70,545 $ 69,776 $ 4,075 $ 6,025 $ 176,730 $ 165,198

Six Months Ended March 31,

Nine Months Ended June 30,

Net interest income (1)

8 unchanged sentences

Gain on sale of trademarks — — — — — 10,000 — 10,000

Gain (loss) on sale of other (1)

Gain on sale of other (1)

5 — 4,233 566 4,972 91 9,210 657

11 unchanged sentences

therefore, the Company measures progress in completing these services based upon the passage of time.

Revenue from contracts with customers did not generate significant contract assets and liabilities for the six months ended March 31, 2024.

Revenue from contracts with customers did not generate significant contract assets and liabilities for the nine months ended June 30, 2024.

Refund Transfer Product Fees.

22 unchanged sentences

Bank and deposit fees for the BaaS and Commercial Finance business lines are included in the Consumer and Commercial reporting segments, respectively.

Also included within Card and Deposit Fees for the Consumer reporting segment are servicing fees the Company recognizes for custodial off-balance sheet deposits.

Also included within Card and Deposit Fees for the Consumer reporting segment are servicing fees the Company recognizes for off-balance sheet custodial deposits.

This fee income is for services the Bank performs to maintain records of cardholder funds placed at one or more third-party banks insured by the Federal Deposit Insurance Corporation ("FDIC").

10 unchanged sentences

(Dollars in thousands) Consumer Commercial Corporate Services/Other Total

Three Months Ended March 31, 2024 2023 2024 2023 2024 2023 2024 2023

Three Months Ended June 30, 2024 2023 2024 2023 2024 2023 2024 2023

Net interest income $ 57,875 $ 40,683 $ 52,494 $ 53,067 $ 490 $ 3,715 $ 110,859 $ 97,465

Provision for credit loss 25,452 31,654 555 5,012 45 97 26,052 36,763

Provision for (reversal of) credit loss ( 2,187 ) 508 8,013 1,265 55 — 5,881 1,773

Noninterest income 44,235 48,714 18,051 16,709 3,585 2,310 65,871 67,733

4 unchanged sentences

Total deposits 6,190,419 6,130,524 13,592 7,550 227,505 168,902 6,431,516 6,306,976

Six Months Ended March 31,

Nine Months Ended June 30,

Net interest income $ 173,758 $ 116,373 $ 143,288 $ 142,149 $ 22,150 $ 24,405 $ 339,196 $ 282,927

22 unchanged sentences

The following tables summarize the fair values of debt securities available for sale and equity securities as they are measured at fair value on a recurring basis.

At March 31, 2024

At June 30, 2024

(Dollars in thousands) Total Level 1 Level 2 Level 3

11 unchanged sentences

$ 10,495 $ — $ — $ —

(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at March 31, 2024.

(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2024.

(2) Consists of certain non-marketable equity securities that are measured at fair value using net asset value ("NAV") per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

21 unchanged sentences

The following tables summarize the assets of the Company that are measured at fair value in the Condensed Consolidated Statements of Financial Condition on a nonrecurring basis:

At March 31, 2024

At June 30, 2024

(Dollars in thousands) Total Level 1 Level 2 Level 3

11 unchanged sentences

(Dollars in thousands) Fair Value at

March 31, 2024

June 30, 2024

Fair Value at

5 unchanged sentences

Management discloses the estimated fair value of financial instruments, including assets and liabilities on and off the Condensed Consolidated Statements of Financial Condition, for which it is practicable to estimate fair value.

These fair value estimates were made at March 31, 2024 and September 30, 2023 based on relevant market information and information about financial instruments.

These fair value estimates were made at June 30, 2024 and September 30, 2023 based on relevant market information and information about financial instruments.

Fair value estimates are intended to represent the price at which an asset could be sold or a liability could be settled.

3 unchanged sentences

The following tables present the carrying amount and estimated fair value of the financial instruments held by the Company:

At March 31, 2024

At June 30, 2024

(Dollars in thousands) Carrying

18 unchanged sentences

Accrued interest payable 1,664 1,664 1,664 — —

(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at March 31, 2024.

(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at June 30, 2024.

(2) Includes certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

23 unchanged sentences

SUBSEQUENT EVENTS

Management has evaluated subsequent events that occurred after March 31, 2024.

During this period, up to the filing date of this Quarterly Report on Form 10-Q, management did not identify any material subsequent events that would require recognition or disclosure in our Condensed Consolidated Financial Statements as of or for the quarter ended March 31, 2024.

Management has evaluated subsequent events that occurred after June 30, 2024.

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-Q

Item 1. Financial Statements