What changed in this filing

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Item 1. Financial Statements

2025-02-06 compared with 2024-08-06 · 228 added, 285 removed, 912 unchanged (36% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Financial Condition

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

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

ASSETS (Unaudited) (Audited)

20 unchanged sentences

STOCKHOLDERS’ EQUITY

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

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

Common stock, $ 0.01 par value;

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

90,000,000 shares authorized, 24,189,631 and 24,851,122 shares issued, 24,119,416 and 24,847,353 shares outstanding at December 31, 2024 and September 30, 2024, respectively

Common stock, Nonvoting, $ 0.01 par value;

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

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

Additional paid-in capital 640,422 638,803

1 unchanged sentence

Accumulated other comprehensive loss ( 190,917 ) ( 153,394 )

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

Treasury stock, at cost, 70,215 and 3,769 common shares at December 31, 2024 and September 30, 2024, respectively

( 4,882 ) ( 249 )

7 unchanged sentences

Condensed Consolidated Statements of Operations (Unaudited)

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

Three Months Ended December 31,

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

7 unchanged sentences

FHLB advances and other borrowings 2,331 2,336

3,083 1,881 17,405 6,166

Net interest income 116,133 110,036

6 unchanged sentences

Rental income 13,708 13,459

Gain on sale of trademarks — — — 10,000

(Loss) on sale of securities ( 15,671 ) —

Gain on divestitures 16,404 —

Gain (loss) on sale of loans and leases 4,378 ( 31 )

Gain on sale of other 987 2,871

10 unchanged sentences

Intangible amortization 812 984

Impairment expense 999 2,749 3,012 3,273

Other expense 13,642 12,669

11 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

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

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

2 unchanged sentences

Change in net unrealized gain (loss) on debt securities ( 62,340 ) 88,535

Net loss realized on investment securities 15,671 —

( 46,669 ) 88,535

2 unchanged sentences

Total other comprehensive income (loss) ( 37,523 ) 67,010

Total comprehensive income 40,625 25,537 182,929 134,578

Total comprehensive income (loss) ( 5,897 ) 94,924

Total comprehensive income attributable to noncontrolling interest 199 257

Comprehensive income attributable to parent $ 40,413 $ 25,029 $ 182,211 $ 132,893

Comprehensive income (loss) attributable to parent $ ( 6,096 ) $ 94,667

See Notes to Condensed Consolidated Financial Statements.

12 unchanged sentences

Stockholders’

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 )

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

Stock compensation — 1,866 — — — 1,866 — 1,866

Total other comprehensive loss — — — ( 1,422 ) — ( 1,422 ) — ( 1,422 )

Net income — — 41,835 — — 41,835 212 42,047

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

Balance, June 30, 2024

Three Months Ended December 31, 2024

Balance, September 30, 2024

$ 248 $ 638,803 $ 354,474 $ ( 153,394 ) $ ( 249 ) $ 839,882 $ ( 277 ) $ 839,605

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)

5 unchanged sentences

Net distribution to noncontrolling interest — — — — — — ( 678 ) ( 678 )

Balance, June 30, 2023

Balance, December 31, 2024

$ 241 $ 640,422 $ 332,322 $ ( 190,917 ) $ ( 4,882 ) $ 777,186 $ ( 756 ) $ 776,430

(Dollars in thousands, except per share data) Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Treasury

Stock Total Pathward Financial, Inc.

Stockholders’

Equity Noncontrolling interest Total

Stockholders’

Nine Months Ended June 30, 2024

Three Months Ended December 31, 2023

Balance, September 30, 2023

9 unchanged sentences

Net distribution to noncontrolling interest — — — — — — 238 238

Balance, June 30, 2024

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

Nine Months Ended June 30, 2023

Balance, September 30, 2022

$ 288 $ 617,403 $ 245,394 $ ( 213,080 ) $ ( 4,835 ) $ 645,170 $ ( 30 ) $ 645,140

Cash dividends declared on common stock ($ 0.15 per share)

— — ( 4,115 ) — — ( 4,115 ) — ( 4,115 )

Issuance of common stock due to restricted stock 1 — — — — 1 — 1

Repurchases of common stock ( 23 ) 23 ( 101,888 ) — ( 2,108 ) ( 103,996 ) — ( 103,996 )

Stock compensation — 8,399 — — — 8,399 — 8,399

Total other comprehensive income — — — 5,184 — 5,184 — 5,184

Net income — — 127,709 — — 127,709 1,685 129,394

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

Balance, June 30, 2023

Balance, December 31, 2023

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

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended June 30,

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

8 unchanged sentences

Net change in loans held for sale 264,136 13,829

Net realized (gain) on loans held for sale ( 3,091 ) ( 235 )

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

Net realized (gain) loss on loans held for sale ( 4,378 ) 31

Net realized loss on securities available for sale 15,671 —

Net realized (gain) on divestitures ( 16,404 ) —

Net realized (gain) on other ( 987 ) ( 2,871 )

Impairment on rental equipment 2,013 24

Net change in accrued interest receivable ( 3,894 ) ( 3,798 )

2 unchanged sentences

Stock compensation 1,612 1,234

Net cash provided by operating activities 318,519 188,649

Net cash provided by (used in) operating activities ( 76,615 ) 22,444

Cash flows from investing activities:

Purchases of securities available for sale ( 1,168 ) —

Proceeds from sales of securities available for sale 160,135 —

Proceeds from maturities of and principal collected on securities available for sale 39,727 41,936

8 unchanged sentences

Net change in rental equipment 118 ( 79 )

Proceeds from sales of foreclosed real estate and repossessed assets — 1

Proceeds from sale of trademarks — 10,000

Proceeds from divestitures, net of transaction costs 600,232 —

Proceeds from sale of other assets 408 4,077

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

Net cash provided by (used in) investing activities 297,639 ( 43,623 )

Cash flows from financing activities:

2 unchanged sentences

Principal payments on other liabilities — ( 284 )

Payment of debt issuance costs — ( 511 )

Dividends paid on common stock ( 1,202 ) ( 1,299 )

2 unchanged sentences

Investment by (distributions to) noncontrolling interest ( 678 ) 238

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

Net cash provided by financing activities 220,052 316,611

Effect of exchange rate changes on cash ( 2,017 ) 618

2 unchanged sentences

Cash and cash equivalents at end of fiscal period $ 597,396 $ 671,630

Nine Months Ended June 30,

Three Months Ended December 31,

(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 2,500 —

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

The results of the three months ended December 31, 2024 are not necessarily indicative of the results expected for the fiscal year ending September 30, 2025.

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

These reclassifications did not impact previously reported net income, comprehensive income or the statement of financial condition.

Additionally, certain prior fiscal year amounts within Note 4.

Loans and Leases, Net have been revised.

Prior fiscal year tables that were revised include the amortized cost basis of loans and leases by asset classification and year of origination, nonaccrual loans and leases by year of origination, and loans and leases that are 90 days or more delinquent and accruing by year of origination.

The revisions were related to the year of origination and did not impact total loan balances, total asset classification balances, total nonaccrual balances, or total past due loan balances.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS UPDATES ("ASU")

1 unchanged sentence

The following ASU became effective for the Company on October 1, 2024, and did not have a material impact on the Company’s significant accounting policies or Condensed Consolidated Financial Statements:

ASU 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this ASU eliminate accounting guidance for troubled-debt restructurings ("TDRs") by creditors in Subtopic ASC 310-40, Receivables – Troubled Debt Restructurings by Creditors, and enhance disclosure requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty.

The ASU also requires current-period gross charge-offs by year of origination to be disclosed for loans and leases within scope of Topic 326.

The amortized cost, gross unrealized gains and losses and estimated fair values of available for sale ("AFS") and held to maturity ("HTM") debt securities are presented below.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU improves reportable segment disclosures primarily by enhancing disclosure requirements about significant segment expenses and additional interim disclosure requirements.

The amendments will first be applied to the Company's annual financial statements for the year ending September 30, 2025 using a retrospective transition method.

This ASU impacts disclosure only, and therefore does not have an impact on our consolidated financial statements.

The following ASUs have been issued and are considered applicable to the Company but have not yet been adopted.

ASU 2023-09, Income Taxes (ASC 740):

Improvements to Income Tax Disclosures .

This ASU requires enhanced income tax disclosures primarily related to the rate reconciliation and income taxes paid information to provide further transparency surrounding the Company’s income tax position.

The amendments in this ASU will be effective for the Company beginning on October 1, 2025.

This ASU impacts annual income tax disclosures only.

The Company is currently evaluating the impact of such amendments to our Income Tax disclosures.

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures .

This ASU requires entities to disclose specified information about certain costs and expenses within relevant expense captions in both annual and interim financial reporting.

If costs and expenses do not fall within one of the disaggregated captions, qualitative description is required.

The amendments in this ASU will be effective for the Company beginning October 1, 2027.

This ASU impacts disclosure only, and therefore will not impact our consolidated financial statements.

The Company is currently evaluating the impact of this ASU on required annual and interim disclosures.

On October 31, 2024, the Company completed the sale of substantially all of the assets and liabilities related to the Bank's commercial insurance premium finance business, a component of the Company's Commercial segment, pursuant to the Asset Purchase and Sale Agreement (the "Purchase Agreement") dated August 28, 2024 with Honor Capital Corporation, a Florida corporation (the "Purchaser"), the successor by assignment to AFS IBEX Financial Services, LLC, and Honor Capital Holdings, LLC as guarantor.

The purchase price at closing was based on the net asset value of the assets purchased and liabilities assumed pursuant to the Purchase Agreement plus a $ 31.2 million premium.

The Company has summarized the results of the transaction as follows:

(Dollars in thousands)

Assets Purchased and Liabilities Assumed

Cash and cash equivalents $ 4,686

Loans 594,541

Premises, furniture, and equipment, net 484

Total assets purchased $ 599,711

Deposits $ 16,760

Accrued expenses and other liabilities 1,158

Total liabilities assumed $ 17,918

Net assets purchased $ 581,793

Consideration paid at close 603,290

Consideration due 9,703

Total purchase price 612,993

Premium on transaction 31,200

Other adjustments:

Goodwill derecognition ( 11,577 )

Intangible derecognition ( 631 )

Building lease derecognition 471

Transaction costs ( 3,059 )

Total other adjustments ( 14,796 )

Gain on divestitures $ 16,404

The sale resulted in a gain of $ 16.4 million before tax that was recognized within noninterest income on the Company's Condensed Consolidated Statements of Operations.

Goodwill and Intangible Assets and Note 9.

Operating Lease Right-of-Use Assets and Liabilities to the Condensed Consolidated Financial Statements for further information on the amounts included in the divestiture.

The amortized cost, gross unrealized gains and losses and estimated fair values of debt securities available for sale ("AFS") and held to maturity ("HTM") are presented below.

(Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair

Debt Securities AFS

At June 30, 2024

At December 31, 2024

Corporate securities $ 25,000 $ — $ ( 4,000 ) $ 21,000

14 unchanged sentences

Debt Securities HTM

At June 30, 2024

At December 31, 2024

Non-bank qualified obligations of states and political subdivisions $ 29,992 $ — $ ( 4,297 ) $ 25,695

12 unchanged sentences

Debt Securities AFS

At June 30, 2024

At December 31, 2024

Corporate securities $ — $ — $ 21,000 $ ( 4,000 ) $ 21,000 $ ( 4,000 )

SBA securities — — 30,528 ( 3,972 ) 30,528 ( 3,972 )

Obligations of state and political subdivisions — — 466 ( 36 ) 466 ( 36 )

Non-bank qualified obligations of states and political subdivisions — — 198,747 ( 34,436 ) 198,747 ( 34,436 )

11 unchanged sentences

Debt Securities HTM

At June 30, 2024

At December 31, 2024

Non-bank qualified obligations of states and political subdivisions $ — $ — $ 25,695 $ ( 4,297 ) $ 25,695 $ ( 4,297 )

5 unchanged sentences

Total debt securities HTM $ — $ — $ 30,236 $ ( 2,856 ) $ 30,236 $ ( 2,856 )

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.

The decrease in the fair value of investment securities balances when comparing December 31, 2024 to September 30, 2024 was primarily driven by the sale of $ 160.1 million debt securities AFS and principal pay downs during the three months.

The sale of debt securities AFS in the current period stemmed from the close of the commercial insurance premium finance business sale and associated gain that was recognized.

Individual securities were identified for sale upon close of the transaction.

At December 31, 2024, there were 163 debt securities AFS in an unrealized loss position.

Management assessed each investment security with unrealized losses for credit loss by evaluating qualitative factors, including materiality of loss position as a percentage of book value, credit ratings, outstanding principal and interest payments, and changes in the underlying implicit or explicit guarantee of the security, 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 June 30, 2024, there was no allowance for credit losses ("ACL") for debt securities AFS or debt securities HTM.

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

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

Certain securities have call features that allow the issuer to call the security prior to maturity.

Certain securities have call features which allow the issuer to call the security prior to maturity.

Expected maturities may differ from contractual maturities in MBS because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

2 unchanged sentences

However, certain prepayment penalties may apply.

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

(Dollars in thousands) At December 31, 2024 At September 30, 2024

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 June 30, 2024 and September 30, 2023.

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

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 $ 4.8 million and $ 8.5 million at June 30, 2024 and at September 30, 2023, respectively.

The carrying value of the stock held at the FHLB was $ 4.8 million and $ 16.3 million at December 31, 2024 and at September 30, 2024, 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 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.

The Company held $ 3.6 million and $ 3.3 million in marketable equity securities within other assets on the Condensed Consolidated Statements of Financial Condition at December 31, 2024 and September 30, 2024, respectively.

The Company recognized $ 0.1 million unrealized losses and $ 0.1 million unrealized gains on marketable equity securities during the three months ended December 31, 2024 and 2023, respectively.

No such securities were sold during the three months ended December 31, 2024.

Non-marketable equity securities with a readily determinable fair value totaled $ 11.9 million and $ 11.8 million at December 31, 2024 and September 30, 2024, respectively.

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

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.

The Company recognized $ 0.3 million in unrealized gains during the three months ended December 31, 2024 and 2023.

No such securities were sold during the three months ended December 31, 2024.

Non-marketable equity securities without readily determinable fair value totaled $ 14.1 million and $ 13.6 million at December 31, 2024 and September 30, 2024, 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 December 31, 2024, the Company recognized a $ 0.4 million gain on Visa shares, which is included in gain on sale of other on the Condensed Consolidated Statements of Operations, carried at a cost basis of $0.

There was no additional such security sold during the three months ended December 31, 2024.

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

The Company recognized no impairment for such investments for the three months ended December 31, 2024 and 2023.

LOANS AND LEASES, NET

Loans and leases consist of the following:

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

(Dollars in thousands) December 31, 2024 September 30, 2024

Term lending $ 1,735,539 $ 1,554,641

2 unchanged sentences

Lease financing 138,305 152,174

Insurance premium finance 617,054 800,077

SBA/USDA 595,965 568,628

5 unchanged sentences

Total loans and leases 4,565,947 4,071,071

Net deferred loan origination costs 5,857 6,435

Net deferred loan origination costs (fees) ( 3,266 ) 4,124

Total gross loans and leases 4,562,681 4,075,195

1 unchanged sentence

Total loans and leases, net $ 4,513,704 $ 4,029,859

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.

During the three months ended December 31, 2024 and 2023, the Company originated $ 853.1 million and $ 631.9 million of commercial finance and consumer finance as held for sale, respectively.

The Company sold held for sale loans resulting in proceeds of $ 618.4 million and a $ 4.4 million gain on sale during the three months ended December 31, 2024.

The Company sold held for sale loans resulting in proceeds of $ 626.3 million and a nominal gain on sale during the three months ended December 31, 2023.

Divestitures to the Condensed Consolidated Financial Statements for further information on the sale of the Company's commercial insurance premium finance business.

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

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

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

10 unchanged sentences

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

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

(Dollars in thousands) December 31, 2024 September 30, 2024

Minimum lease payments receivable $ 147,969 $ 162,757

4 unchanged sentences

The components of total lease income were as follows:

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

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

3 unchanged sentences

Lease income from operating lease payments 13,448 13,255

1,051 833 2,644 1,179

Total leasing and equipment finance noninterest income 14,755 13,979

1 unchanged sentence

(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 June 30, 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 December 31, 2024 were as follows:

(Dollars in thousands)

4 unchanged sentences

Total carrying amount of direct financing and sales-type leases $ 147,969

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.

While the ultimate impact of these factors, some of which continue to impact the economic environment in 2024, on the Company's loan and lease portfolio remains difficult to predict, management continues to evaluate the loan and lease portfolio in order to assess the impact on repayment sources and underlying collateral that could result in additional losses and the impact to our customers and businesses as a result of these factors impacting the economy and will refine its estimate as developments occur and more information becomes available.

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

Three Months Ended June 30, 2024

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

Allowance for credit losses:

Term lending $ 28,627 $ 5,962 $ ( 4,628 ) $ 698 $ 30,659

Asset-based lending 1,215 10 — 9 1,234

Factoring 6,814 1,369 ( 2,389 ) 18 5,812

Lease financing 1,551 ( 86 ) — 29 1,494

Insurance premium finance 1,409 480 ( 263 ) 26 1,652

SBA/USDA 2,942 358 ( 456 ) — 2,844

Other commercial finance 1,720 ( 321 ) — — 1,399

Commercial finance 44,278 7,772 ( 7,736 ) 780 45,094

Consumer finance 4,576 1,099 ( 36 ) — 5,639

Tax services 31,528 ( 3,285 ) ( 820 ) 1,230 28,653

Warehouse finance 395 55 — — 450

Total loans and leases 80,777 5,641 ( 8,592 ) 2,010 79,836

Unfunded commitments (1)

743 240 — — 983

Total $ 81,520 $ 5,881 $ ( 8,592 ) $ 2,010 $ 80,819

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

Three Months Ended June 30, 2023

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

Allowance for credit losses:

Term lending $ 28,415 $ 250 $ ( 2,852 ) $ 825 $ 26,638

Asset-based lending 1,081 68 — 154 1,303

Factoring 5,588 493 ( 140 ) 1 5,942

Lease financing 4,549 ( 355 ) ( 302 ) ( 26 ) 3,866

Insurance premium finance 1,263 1,094 ( 443 ) 158 2,072

SBA/USDA 2,640 24 — — 2,664

Other commercial finance 4,332 ( 253 ) — — 4,079

Commercial finance 47,868 1,321 ( 3,737 ) 1,112 46,564

Consumer finance 2,965 738 ( 1,860 ) — 1,843

Tax services 33,094 ( 229 ) ( 404 ) 671 33,132

Warehouse finance 377 — — — 377

Total loans and leases 84,304 1,830 ( 6,001 ) 1,783 81,916

Unfunded commitments (1)

356 ( 57 ) — — 299

Total $ 84,660 $ 1,773 $ ( 6,001 ) $ 1,783 $ 82,215

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

Nine Months Ended June 30, 2024

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

A number of factors that affected the economic environment in 2023 continued throughout 2024 including geopolitical conflict, supply chain disruptions, inflation, and increased interest rates, with the Federal Reserve beginning to lower the target federal funds rate at the end of 2024.

The 2023 bank failures that were brought on by, among other things, rising interest rates, deposit outflows and liquidity crises also continued to impact the banking industry.

Management continues to evaluate the loan and lease portfolio in order to assess the impact on repayment sources and underlying collateral that could result in additional losses and the impact to our customers and businesses as a result of these factors impacting the economy and will refine its estimate as developments occur and more information becomes available.

Activity in the allowance for credit losses by portfolio segment was as follows:

Three Months Ended December 31, 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.

Nine Months Ended June 30, 2023

Three Months Ended December 31, 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 June 30, 2024 At September 30, 2023

(Dollars in thousands) At December 31, 2024 At September 30, 2024

Term lending $ 14,034 $ 15,491

Asset-based lending — 19,226

Factoring — 1,133

Lease financing 1,302 5,300

6 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 $ 109.0 million and $ 117.0 million at June 30, 2024 and at September 30, 2023, respectively.

The balance of these pass rated cash collateral loans totaled $ 116.4 million and $ 105.1 million at December 31, 2024 and at September 30, 2024, 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:

15 unchanged sentences

Loans and leases, or portions thereof, are generally charged off when collection of principal becomes doubtful.

Typically, this is associated with a delay or shortfall in payments of 210 days or more for insurance premium finance, 120 days or more for consumer credit products and leases, and 90 days or more for commercial finance loans.

Typically, this is associated with a delay or shortfall in payments of 120 days or more for consumer credit products and leases, and 90 days or more for commercial finance loans.

Action is taken to charge off electronic return originator ("ERO") loans if such loans have not been collected by the end of June and refund advance loans if such loans have not been collected by the end of the calendar year.

4 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 $ 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 outstanding balances of consumer finance loans and tax services loans were $ 280.0 million and $ 45.1 million at December 31, 2024, respectively, and $ 248.8 million and $ 8.8 million at September 30, 2024, 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 June 30, 2024 2024 2023 2022 2021 2020 Prior

At December 31, 2024 2025 2024 2023 2022 2021 Prior

Pass $ 166,954 $ 579,028 $ 406,327 $ 108,421 $ 73,456 $ 58,759 $ — $ 1,392,945

28 unchanged sentences

Insurance premium finance

Pass 600,053 16,207 — — — — — 616,260

Watch 228 133 — — — — — 361

Special mention 82 73 — — — — — 155

Substandard 41 108 — — — — — 149

Doubtful 33 96 — — — — — 129

Total 600,437 16,617 — — — — — 617,054

Current period charge-offs 62 31 — — — — — 93

33 unchanged sentences

Total 655,091 479,907 182,049 135,800 71,916 29,878 — 1,554,641

Current period charge-offs 114 3,102 8,502 3,576 2,184 715 — 18,193

Asset-based lending

3 unchanged sentences

Substandard — — — — — — 3,921 3,921

Doubtful — — — — — — 501 501

Total — — — — — — 471,897 471,897

Current period charge-offs — — — — — — — —

Pass — — — — — — 292,436 292,436

2 unchanged sentences

Substandard — — — — — — 7,306 7,306

Doubtful — — — — — — 12 12

Total — — — — — — 362,295 362,295

Current period charge-offs — — — — — — 2,453 2,453

Lease financing

5 unchanged sentences

Total 46,720 59,329 15,955 16,220 11,574 2,376 — 152,174

Current period charge-offs — — — 207 80 — — 287

Insurance premium finance

Current period charge-offs 86 890 173 — — — — 1,149

Pass 60,636 171,136 179,490 20,825 28,588 39,319 — 499,994

4 unchanged sentences

Total 66,917 194,211 191,703 23,678 38,179 53,940 — 568,628

Pass 158,675 148,525 26,244 36,274 8,798 18,252 — 396,768

Watch 49,010 48,833 658 51 357 2,572 — 101,481

Special mention — — 530 — — — — 530

Substandard 252 2,356 1,718 5,418 8,509 7,718 — 25,971

Total 207,937 199,714 29,150 41,743 17,664 28,542 — 524,750

Current period charge-offs — 549 79 — 127 — — 755

Other commercial finance

3 unchanged sentences

Total 73,330 5,198 6,685 29,274 1,274 70,203 — 185,964

Current period charge-offs — — — — — — — —

Warehouse finance

1 unchanged sentence

Total — — — — — — 517,847 517,847

Current period charge-offs — — — — — — — —

Total loans and leases

5 unchanged sentences

Total $ 842,058 $ 738,645 $ 396,392 $ 204,972 $ 122,943 $ 156,397 $ 1,352,039 $ 3,813,446

Current period charge-offs $ 200 $ 4,541 $ 8,754 $ 3,783 $ 2,391 $ 715 $ 2,453 $ 22,837

Past due loans and leases were as follows:

At June 30, 2024

At December 31, 2024

Accruing and Nonaccruing Loans and Leases Nonperforming Loans and Leases

5 unchanged sentences

Lease financing 4,278 3,878 1,440 9,596 128,709 138,305 59 2,038 2,097

Insurance premium finance 1,584 2,463 1,227 5,274 611,780 617,054 1,227 — 1,227

SBA/USDA 1,504 187 1,983 3,674 592,291 595,965 486 1,803 2,289

14 unchanged sentences

Lease financing 3,605 1,595 109 5,309 146,865 152,174 60 746 806

Insurance premium finance 2,159 1,262 2,339 5,760 794,317 800,077 2,339 — 2,339

SBA/USDA — 952 2,172 3,124 565,504 568,628 331 2,175 2,506

9 unchanged sentences

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

At June 30, 2024 2024 2023 2022 2021 2020 Prior

At December 31, 2024 2025 2024 2023 2022 2021 Prior

Term lending $ — $ 5,456 $ 6,958 $ 4,703 $ 1,200 $ 3,909 $ — $ 22,226 $ 6,552

Asset-based lending — — — — — — 603 603 —

Factoring — — — — — — 561 561 —

7 unchanged sentences

Term lending $ 9,281 $ 3,433 $ 5,369 $ 1,386 $ 625 $ 3,368 $ — $ 23,462 $ 2,579

Asset-based lending — — — — — — 18,082 18,082 —

Factoring — — — — — — 29 29 —

6 unchanged sentences

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

At June 30, 2024 2024 2023 2022 2021 2020 Prior

At December 31, 2024 2025 2024 2023 2022 2021 Prior

Term lending $ — $ — $ — $ 560 $ 4,448 $ 2 $ — $ 5,010

Lease financing — 55 1 — 1 2 — 59

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

SBA/USDA — — — 330 156 — — 486

9 unchanged sentences

Lease financing — — — 2 58 — — 60

Insurance premium finance — 414 114 — 334 1,477 — 2,339

SBA/USDA — — 331 — — — — 331

Other commercial finance — — — — — 91 — 91

Commercial finance — 621 685 721 275 12 — 2,314

5 unchanged sentences

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

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

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

6 unchanged sentences

Total loans and leases $ 27,529 $ 31,421

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 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 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.

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

Modifications made to borrowers experiencing financial difficulty during the three months ended December 31, 2024 were $ 3.3 million in the commercial finance loan portfolio.

The types of modifications granted were term extensions.

Modifications made to borrowers experiencing financial difficulty during the three months ended December 31, 2023 were insignificant.

During the three months ended December 31, 2024, the Company had $ 1.4 million of commercial finance loans where a modification was granted in the previous 12 months in which there was a payment default.

As of December 31, 2024, no modifications granted were in the 60-89 days past due category.

During the three months ended December 31, 2023, there were no modifications granted in the previous 12 months in which there was a payment default.

EARNINGS PER COMMON SHARE ("EPS")

3 unchanged sentences

Diluted EPS is calculated using the more dilutive of the two-class method or the treasury stock method.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, and is computed after giving consideration to the weighted average dilutive effect upon vesting of restricted stock grants and after the allocation of earnings to the participating securities.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, and is computed after giving consideration to the weighted average dilutive effect upon vesting of performance share units ("PSUs") and restricted stock grants, and after the allocation of earnings to the participating securities.

Antidilutive securities are disregarded in earnings per share calculations.

1 unchanged sentence

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 June 30, Nine Months Ended June 30,

Three Months Ended December 31,

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

9 unchanged sentences

Effect of dilutive securities (1)

Performance share units 33,733 100,339 29,021 86,028

PSUs 58,674 24,693

Total effect of dilutive securities 58,674 24,693

4 unchanged sentences

$ 1.29 $ 1.06

(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 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.

(1) Represents the effect of the assumed vesting of PSUs 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 December 31, 2024 and 2023, respectively, were 100,406 and 207,074 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) June 30, 2024 September 30, 2023

(Dollars in thousands) December 31, 2024 September 30, 2024

Computers and IT networking equipment $ 18,219 $ 21,308

6 unchanged sentences

Net book value $ 206,754 $ 205,339

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

Future minimum lease payments expected to be received for operating leases at December 31, 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 June 30, 2024.

The Company held a total of $ 297.9 million of goodwill at December 31, 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 nine months ended June 30, 2024.

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

During the three months ended December 31, 2024, the Company closed on the sale of the commercial insurance premium finance business and derecognized the goodwill associated with that reporting unit.

The goodwill was included in the carrying amount of the disposed business.

Divestitures to the Condensed Consolidated Financial Statements for further information.

The changes in the carrying amount of the Company's goodwill were as follows:

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

At September 30, 2024 $ 87,145 $ 222,360 $ — $ 309,505

Divestiture — ( 11,577 ) — ( 11,577 )

At December 31, 2024 $ 87,145 $ 210,783 $ — $ 297,928

At September 30, 2023 $ 87,145 $ 222,360 $ — $ 309,505

At December 31, 2023 $ 87,145 $ 222,360 $ — $ 309,505

The changes in the carrying amount of the Company’s intangible assets during the three months ended December 31, 2024 include certain intangibles disposed of as part of the commercial insurance premium finance business sale.

The relevant intangibles were included in the carrying amount of the disposed business.

Divestitures to the Condensed Consolidated Financial Statements for further information.

(Dollars in thousands) Trademark (1)

3 unchanged sentences

Amortization during the period ( 269 ) — ( 411 ) ( 132 ) ( 812 )

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

Write-offs and disposals during the period — — ( 631 ) — ( 631 )

At December 31, 2024 $ 6,153 $ — $ 5,524 $ 3,469 $ 15,146

Gross carrying amount $ 13,774 $ 301 $ 70,338 $ 7,732 $ 92,145

1 unchanged sentence

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

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

At December 31, 2024 $ 6,153 $ — $ 5,524 $ 3,469 $ 15,146

At September 30, 2023 $ 7,477 $ — $ 9,110 $ 4,133 $ 20,720

Amortization during the period ( 264 ) — ( 587 ) ( 133 ) ( 984 )

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

At December 31, 2023 $ 7,213 $ — $ 8,523 $ 4,000 $ 19,736

Gross carrying amount $ 13,774 $ 301 $ 77,578 $ 7,798 $ 99,451

1 unchanged sentence

Accumulated impairment — — ( 10,918 ) ( 219 ) ( 11,137 )

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

At December 31, 2023 $ 7,213 $ — $ 8,523 $ 4,000 $ 19,736

(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 three months of fiscal 2024 and subsequent fiscal years at June 30, 2024 was as follows:

Estimated amortization expense of intangible assets in the remaining nine months of fiscal 2025 and subsequent fiscal years at December 31, 2024 was as follows:

(Dollars in thousands)

2 unchanged sentences

Total anticipated intangible amortization $ 15,146

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

There were no impairments to intangible assets during the three months ended December 31, 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 $ 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:

Operating lease right-of-use ("ROU") assets, included in other assets , were $ 22.6 million and $ 24.4 million at December 31, 2024 and September 30, 2024, respectively.

Operating lease liabilities, included in accrued expenses and other liabilities , were $ 23.8 million and $ 26.0 million at December 31, 2024 and September 30, 2024, respectively.

The decreases in lease ROU assets and liabilities relate to normal amortization and lease payments made during the three months ended December 31, 2024, but also include adjustments for lease assignments that occurred as a result of the commercial insurance premium finance business sale during the quarter.

Two office locations, Newport Beach, California and Addison, Texas, were included in the sale of the commercial insurance premium finance business and the relevant lease ROU assets and liabilities are no longer reflected in the Company's Condensed Consolidated Financial Statements after the transaction closed.

The derecognition of the relevant lease ROU assets and liabilities resulted in a $ 0.5 million gain on remeasurement that was recognized as part of the overall gain on divestitures from the commercial insurance premium finance business sale.

Divestitures to the Condensed Consolidated Financial Statements for further information.

Undiscounted future minimum operating lease payments and a reconciliation to the amount recorded as operating lease liabilities at December 31, 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:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Weighted-average discount rate 2.50 % 2.45 %

1 unchanged sentence

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

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

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

6 unchanged sentences

The Company's Board of Directors authorized the September 3, 2021 share repurchase program to repurchase up to 6,000,000 shares of the Company's outstanding common stock.

This authorization is effective from September 3, 2021 through September 30, 2024.

This authorization was effective from September 3, 2021 through September 30, 2024, with 146,435 shares authorized by this repurchase program not repurchased when it expired.

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 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.

During the three months ended December 31, 2024 and 2023, the Company repurchased 701,860 and 232,588 shares, respectively, as part of the share repurchase programs.

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

The Company accounts for repurchased shares using the par value method under which the repurchase price is charged to paid-in capital up to the amount of the original proceeds of those shares.

The Company accounts for repurchased shares using the par value method under which the repurchase price is credited to paid-in capital up to the amount of the original proceeds of those shares.

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

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.

As of December 31, 2024, 6,298,140 shares of common stock remained available for repurchase.

For the three months ended December 31, 2024 and 2023, the Company also repurchased 66,446 and 103,641 shares, or $ 4.6 million and $ 4.9 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 nine months ended June 30, 2024 and 2023.

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

STOCK COMPENSATION

1 unchanged sentence

2023 Omnibus Incentive Plan (the "Plan").

The Plan permits the granting of various types of awards including but not limited to nonvested (restricted) shares and performance share units ("PSUs") to certain officers and directors of the Company.

The Plan permits the granting of various types of awards including but not limited to nonvested (restricted) shares and PSUs to certain officers and directors of the Company.

Awards may be granted by the Compensation Committee of the Board of Directors based on the performance of the award recipients or other relevant factors.

12 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 nine months ended June 30, 2024.

Number of Shares Weighted Average Fair Value at Grant

Restricted Stock Awards

Nonvested shares outstanding, September 30, 2024 248,670 $ 41.19

Granted 178,917 50.41

Vested ( 164,069 ) 37.80

Forfeited or expired ( 782 ) 50.15

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

Number of Units (1)

Weighted Average Fair Value at Grant

Performance share units outstanding, September 30, 2023 155,804 $ 41.20

Nonvested shares outstanding, December 31, 2024 83,819 $ 47.75

Restricted Stock Units

Nonvested shares outstanding, September 30, 2024 — $ —

Granted 84,038 79.66

Forfeited or expired — —

Nonvested shares outstanding, December 31, 2024 84,038 $ 79.66

Number of Units Weighted Average Fair Value at Grant

PSUs outstanding, September 30, 2024 142,462 $ 47.24

Granted 33,136 79.63

Vested ( 34,304 ) 57.21

Forfeited or expired — —

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.

PSUs outstanding, December 31, 2024 141,294 $ 52.42

Compensation expense for share-based awards is recorded over the vesting period at the fair value of the award at the time of the grant.

1 unchanged sentence

The Company has elected to record forfeitures as they occur.

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.

As of December 31, 2024, stock-based compensation expense not yet recognized in income totaled $ 13.7 million, which is expected to be recognized over a weighted average remaining period of 1.95 years.

The Company recorded an income tax expense of $ 6.3 million for the three months ended December 31, 2024, resulting in an effective tax rate of 16.60 %, compared to an income tax expense of $ 5.7 million, or an effective tax rate of 17.00 %, for the three months ended December 31, 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.

Nine Months Ended June 30,

Three Months Ended December 31,

(Dollars in thousands) 2024 2023

4 unchanged sentences

Tax credit investments, net - federal ( 3,167 ) ( 4,377 )

Research tax credit ( 602 ) ( 805 )

IRC 162(m) nondeductible compensation 55 ( 280 )

3 unchanged sentences

REVENUE FROM CONTRACTS WITH CUSTOMERS

Topic 606 applies to all contracts with customers unless such revenue is specifically addressed under existing guidance.

The table below presents the Company’s revenue by operating segment.

2 unchanged sentences

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

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

Three Months Ended December 31, 2024 2023 2024 2023 2024 2023 2024 2023

Net interest income (1)

7 unchanged sentences

— — 13,508 13,235 200 224 13,708 13,459

Gain on sale of other (1)

20 — 2,264 812 2,391 9 4,675 821

Other income (1)

2,020 1,929 1,922 1,888 1,023 2,072 4,965 5,889

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

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

Nine Months Ended June 30,

Net interest income (1)

(Loss) on sale of securities (1)

— — — — ( 15,671 ) — ( 15,671 ) —

Noninterest income:

Refund transfer product fees 38,475 39,144 — — — — 38,475 39,144

Refund advance fee income (1)

Gain on divestitures (1)

— — — — 16,404 — 16,404 —

Card and deposit fees 98,755 118,730 727 766 20 17 99,502 119,513

Rental income (1)

Gain (loss) on sale of loans and leases (1)

40 ( 31 ) 4,338 — — — 4,378 ( 31 )

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

Gain on sale of other (1)

12 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 nine months ended June 30, 2024.

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

Refund Transfer Product Fees.

Refund transfer fees are specific to the Banking as a Service ("BaaS") business line and reflect product fees offered by the Company through third-party tax preparers and tax preparation software providers where the Company acts as the partnering financial institution.

Refund transfer fees are specific to the Partner Solutions business line and reflect product fees offered by the Company through third-party tax preparers and tax preparation software providers where the Company acts as the partnering financial institution.

A refund transfer allows a taxpayer to pay tax preparation and filing fees directly from their federal or state government tax refund, with the remainder of the refund being disbursed in accordance with the terms and conditions of the taxpayer agreement, which may include satisfaction of other disbursement obligations before going directly to the taxpayer via check, direct deposit, or prepaid card.

3 unchanged sentences

Card and Deposit Fees.

Card fees relate to the BaaS business line and consists of income from prepaid cards and merchant services, including interchange fees from prepaid cards processed through card association networks, merchant services and other card related services.

Card fees relate to the Partner Solutions business line and consist of income from prepaid cards and merchant services, including interchange fees from prepaid cards processed through card association networks, merchant services and other card related services.

Interchange rates are generally set by card association networks based on transaction volume and other factors.

7 unchanged sentences

All card fee income is included in the Consumer reporting segment.

Deposit fees relate to the BaaS and Commercial Finance business lines and consist of income from banking and deposit-related services, including account services, overdraft protection, and wire transfers.

Deposit fees relate to the Partner Solutions and Commercial Finance business lines and consist of income from banking and deposit-related services, including account services, overdraft protection, and wire transfers.

Fee income for account services is recognized over the course of the month as the performance obligation is satisfied.

Fee income for overdraft protection and wire transfers is recognized at the point in time when such event occurs.

For BaaS, the fees for account services and overdraft protection are based on standalone pricing within the terms and conditions of the Program Agreement with the sponsorship partner.

For partner solutions, the fees for account services and overdraft protection are based on standalone pricing within the terms and conditions of the Program Agreement with the sponsorship partner.

For these relationships, the Company is considered the agent and certain expenses with the partner are netted with deposit fee revenue.

For Commercial Finance, fees for wire transfers are based on standalone pricing within the terms and conditions of the customer deposit agreement.

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

Bank and deposit fees for the Partner Solutions 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 off-balance sheet custodial deposits.

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Consumer, Commercial, and Corporate Services/Other.

The BaaS business line is reported in the Consumer segment.

The Partner Solutions business line is reported in the Consumer segment.

The Commercial Finance business line is reported in the Commercial segment.

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

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

Three Months Ended December 31, 2024 2023 2024 2023 2024 2023 2024 2023

Net interest income $ 69,127 $ 59,356 $ 46,111 $ 45,881 $ 895 $ 4,799 $ 116,133 $ 110,036

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Total deposits 6,305,236 6,587,052 1,439 3,669 212,278 345,334 6,518,953 6,936,055

Nine Months Ended June 30,

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

Provision for credit loss 26,719 35,402 15,031 12,860 73 50 41,823 48,312

Noninterest income 186,709 200,029 51,799 45,247 9,069 15,272 247,577 260,548

Noninterest expense 158,598 124,070 106,213 105,189 118,573 117,514 383,384 346,773

Income (loss) before income tax expense 175,150 156,930 73,843 69,347 ( 87,427 ) ( 77,887 ) 161,566 148,390

Total assets 450,044 455,540 4,321,893 3,914,924 2,758,343 3,088,161 7,530,280 7,458,625

Total goodwill 87,145 87,145 222,360 222,360 — — 309,505 309,505

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

FAIR VALUES OF FINANCIAL INSTRUMENTS

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These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.

Debt Securities Available for Sale and Held to Maturity .

Debt securities available for sale are recorded at fair value on a recurring basis and debt securities held to maturity are carried at amortized cost.

The fair value of debt securities available for sale, categorized primarily as Level 2, is recorded using prices obtained from independent asset pricing services that are based on observable transactions, but not quoted markets.

Debt Securities AFS and HTM .

Debt securities AFS are recorded at fair value on a recurring basis and debt securities HTM are carried at amortized cost.

The fair value of debt securities AFS, categorized primarily as Level 2, is recorded using prices obtained from independent asset pricing services that are based on observable transactions, but not quoted markets.

Management reviews the prices obtained from independent asset pricing services for unusual fluctuations and compares to current market trading activity.

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The fair values of marketable equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs).

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 June 30, 2024

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

At December 31, 2024

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

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$ 11,870 $ — $ — $ —

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

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

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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 June 30, 2024

At December 31, 2024

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

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(Dollars in thousands) Fair Value at

June 30, 2024

December 31, 2024

Fair Value at

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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 June 30, 2024 and September 30, 2023 based on relevant market information and information about financial instruments.

These fair value estimates were made at December 31, 2024 and September 30, 2024 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.

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

At June 30, 2024

At December 31, 2024

(Dollars in thousands) Carrying

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Deposits 6,518,953 6,518,852 6,514,740 4,112 —

Overnight federal funds purchased — — — — —

Other short- and long-term borrowings 33,380 32,332 — 32,332 —

Accrued interest payable 771 771 771 — —

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

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

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SUBSEQUENT EVENTS

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

Management has evaluated subsequent events that occurred after December 31, 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