PATHWARD FINANCIAL, INC. 10-Q

Item 1. Financial Statements. PATHWARD FINANCIAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Financial Condition (Dollars in thousands, except per share data) March 31, 2025 September 30, 2024 ASSETS (Unaudited) (Audited) Cash and cash equivalents $ 254,249 $ 158,337 Securities available for sale, at fair value 1,411,520 1,741,221 Securities held to maturity, at amortized cost (fair value $ 26,492 and $ 30,236 , respectively) 31,335 33,092 Federal Reserve Bank and Federal Home Loan Bank Stock, at cost 24,276 36,014 Loans held for sale 45,767 691,688 Loans and leases 4,464,870 4,075,195 Allowance for credit losses ( 102,890 ) ( 71,765 ) Accrued interest receivable 37,081 31,385 Premises, furniture, and equipment, net 39,542 39,055 Rental equipment, net 202,194 205,339 Goodwill and intangible assets 311,992 326,094 Other assets 274,850 266,362 Total assets $ 6,994,786 $ 7,532,017 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Deposits $ 5,819,209 $ 5,875,085 Short-term borrowings — 377,000 Long-term borrowings 33,405 33,354 Accrued expenses and other liabilities 328,125 424,389 Total liabilities 6,180,739 6,709,828 STOCKHOLDERS’ EQUITY Preferred stock, 3,000,000 shares authorized, no shares issued, none outstanding at March 31, 2025 and September 30, 2024, respectively — — Common stock, $ 0.01 par value; 90,000,000 shares authorized, 23,629,154 and 24,851,122 shares issued, 23,558,939 and 24,847,353 shares outstanding at March 31, 2025 and September 30, 2024, respectively 235 248 Common stock, Nonvoting, $ 0.01 par value; 3,000,000 shares authorized, no shares issued, none outstanding at March 31, 2025 and September 30, 2024, respectively — — Additional paid-in capital 643,888 638,803 Retained earnings 341,775 337,058 Accumulated other comprehensive loss ( 166,311 ) ( 153,394 ) Treasury stock, at cost, 70,215 and 3,769 common shares at March 31, 2025 and September 30, 2024, respectively ( 4,882 ) ( 249 ) Total equity attributable to parent 814,705 822,466 Noncontrolling interest ( 658 ) ( 277 ) Total stockholders’ equity 814,047 822,189 Total liabilities and stockholders’ equity $ 6,994,786 $ 7,532,017 See Notes to Condensed Consolidated Financial Statements. 2 Table of Contents PATHWARD FINANCIAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (Dollars in thousands, except per share data) 2025 2024 2025 2024 (As Restated) (As Restated) Interest and dividend income: Loans and leases, including fees $ 119,755 $ 113,083 $ 231,604 $ 216,937 Mortgage-backed securities 8,580 9,998 17,566 20,047 Other investments 13,669 14,013 21,190 24,899 142,004 137,094 270,360 261,883 Interest expense: Deposits 4,086 6,685 4,861 10,211 FHLB advances and other borrowings 1,639 1,775 3,971 4,111 5,725 8,460 8,832 14,322 Net interest income 136,279 128,634 261,528 247,561 Provision for credit loss 35,266 29,744 53,927 37,502 Net interest income after provision for credit loss 101,013 98,890 207,601 210,059 Noninterest income: Refund transfer product fees 32,663 28,942 33,073 29,364 Refund advance and other tax fee income 48,585 43,200 49,110 43,311 Card and deposit fees 30,793 35,344 59,859 66,094 Rental income 13,200 13,720 26,908 27,179 (Loss) on sale of securities ( 7,228 ) — ( 22,899 ) — Gain (loss) on divestitures ( 1,360 ) — 15,044 — Secondary market revenue 15,378 1,401 19,755 1,370 Gain on sale of other 627 294 1,614 3,165 Other income 5,866 6,044 13,438 11,223 Total noninterest income 138,524 128,945 195,902 181,706 Noninterest expense: Compensation and benefits 51,905 54,073 101,197 100,725 Refund transfer product expense 8,475 7,366 8,583 7,558 Refund advance expense 1,265 1,846 1,299 1,876 Card processing 36,239 35,163 69,552 69,747 Occupancy and equipment expense 10,306 9,293 20,013 18,141 Operating lease equipment depreciation 11,779 10,424 23,206 20,847 Legal and consulting 5,879 6,141 11,103 11,033 Intangible amortization 1,082 1,240 1,894 2,224 Impairment expense 1,514 2,013 1,514 2,013 Other expense 19,733 13,183 37,612 27,655 Total noninterest expense 148,177 140,742 275,973 261,819 Income before income tax expense 91,360 87,093 127,530 129,946 Income tax expense 16,166 16,926 22,171 24,623 Net income before noncontrolling interest 75,194 70,167 105,359 105,323 Net income attributable to noncontrolling interest 237 249 436 506 Net income attributable to parent $ 74,957 $ 69,918 $ 104,923 $ 104,817 Earnings per common share: Basic $ 3.16 $ 2.74 $ 4.37 $ 4.07 Diluted $ 3.14 $ 2.74 $ 4.35 $ 4.07 See Notes to Condensed Consolidated Financial Statements. 3 Table of Contents PATHWARD FINANCIAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31, Six Months Ended March 31, (Dollars in thousands) 2025 2024 2025 2024 (As Restated) (As Restated) Net income before noncontrolling interest $ 75,194 $ 70,167 $ 105,359 $ 105,323 Other comprehensive income (loss): Change in net unrealized gain (loss) on debt securities 25,517 ( 23,414 ) ( 36,823 ) 65,121 Net loss realized on debt securities 7,228 — 22,899 — 32,745 ( 23,414 ) ( 13,924 ) 65,121 Unrealized gain (loss) on currency translation ( 22 ) ( 579 ) ( 2,039 ) 39 Deferred income tax effect 8,117 ( 5,856 ) ( 3,046 ) 16,287 Total other comprehensive income (loss) 24,606 ( 18,137 ) ( 12,917 ) 48,873 Total comprehensive income 99,800 52,030 92,442 154,196 Total comprehensive income attributable to noncontrolling interest 237 249 436 506 Comprehensive income attributable to parent $ 99,563 $ 51,781 $ 92,006 $ 153,690 See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents PATHWARD FINANCIAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Three Months Ended (Dollars in thousands, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Pathward Financial, Inc. Stockholders’ Equity Noncontrolling interest Total Stockholders’ Equity Balance, December 31, 2024 (As Restated) $ 241 $ 640,422 $ 313,446 $ ( 190,917 ) $ ( 4,882 ) $ 758,310 $ ( 756 ) $ 757,554 Cash dividends declared on common stock ($ 0.05 per share) — — ( 1,190 ) — — ( 1,190 ) — ( 1,190 ) Repurchases of common stock ( 6 ) 6 ( 45,438 ) — — ( 45,438 ) — ( 45,438 ) Stock compensation — 3,460 — — — 3,460 — 3,460 Total other comprehensive income — — — 24,606 — 24,606 — 24,606 Net income — — 74,957 — — 74,957 237 75,194 Net distribution to noncontrolling interest — — — — — — ( 139 ) ( 139 ) Balance, March 31, 2025 $ 235 $ 643,888 $ 341,775 $ ( 166,311 ) $ ( 4,882 ) $ 814,705 $ ( 658 ) $ 814,047 Balance, December 31, 2023 (As Restated) $ 260 $ 629,737 $ 268,427 $ ( 188,433 ) $ ( 5,235 ) $ 704,756 $ ( 510 ) $ 704,246 Cash dividends declared on common stock ($ 0.05 per share) — — ( 1,267 ) — — ( 1,267 ) — ( 1,267 ) Issuance of common stock due to restricted stock 2 — — — — 2 — 2 Repurchases of common stock ( 8 ) 8 ( 39,500 ) — ( 946 ) ( 40,446 ) — ( 40,446 ) Stock compensation — 4,670 — — — 4,670 — 4,670 Total other comprehensive loss — — — ( 18,137 ) — ( 18,137 ) — ( 18,137 ) Net income (Restated) — — 69,918 — — 69,918 249 70,167 Net distribution to noncontrolling interest — — — — — — ( 159 ) ( 159 ) Balance, March 31, 2024 (As Restated) $ 254 $ 634,415 $ 297,578 $ ( 206,570 ) $ ( 6,181 ) $ 719,496 $ ( 420 ) $ 719,076 Six Months Ended (Dollars in thousands, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Pathward Financial, Inc. Stockholders’ Equity Noncontrolling interest Total Stockholders’ Equity Balance, September 30, 2024 (As Restated) $ 248 $ 638,803 $ 337,058 $ ( 153,394 ) $ ( 249 ) $ 822,466 $ ( 277 ) $ 822,189 Cash dividends declared on common stock ($ 0.10 per share) — — ( 2,392 ) — — ( 2,392 ) — ( 2,392 ) Repurchases of common stock ( 13 ) 13 ( 97,814 ) — ( 4,633 ) ( 102,447 ) — ( 102,447 ) Stock compensation — 5,072 — — — 5,072 — 5,072 Total other comprehensive loss — — — ( 12,917 ) — ( 12,917 ) — ( 12,917 ) Net income — — 104,923 — — 104,923 436 105,359 Net distribution to noncontrolling interest — — — — — — ( 817 ) ( 817 ) Balance, March 31, 2025 $ 235 $ 643,888 $ 341,775 $ ( 166,311 ) $ ( 4,882 ) $ 814,705 $ ( 658 ) $ 814,047 Balance, September 30, 2023 (As Restated) $ 262 $ 628,500 $ 246,377 $ ( 255,443 ) $ ( 344 ) $ 619,352 $ ( 1,005 ) $ 618,347 Cash dividends declared on common stock ($ 0.10 per share) — — ( 2,566 ) — — ( 2,566 ) — ( 2,566 ) Issuance of common stock due to restricted stock 3 — — — — 3 — 3 Repurchases of common stock ( 11 ) 11 ( 50,527 ) — ( 5,837 ) ( 56,364 ) — ( 56,364 ) Stock compensation — 5,904 — — — 5,904 — 5,904 Total other comprehensive income — — — 48,873 — 48,873 — 48,873 Joint venture membership interest divestiture — — ( 523 ) — — ( 523 ) — ( 523 ) Net income (Restated) — — 104,817 — — 104,817 506 105,323 Net distribution to noncontrolling interest — — — — — — 79 79 Balance, March 31, 2024 (As Restated) $ 254 $ 634,415 $ 297,578 $ ( 206,570 ) $ ( 6,181 ) $ 719,496 $ ( 420 ) $ 719,076 See Notes to Condensed Consolidated Financial Statements. 5 Table of Contents PATHWARD FINANCIAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended March 31, (Dollars in thousands) 2025 2024 Cash flows from operating activities: (As Restated) Net income before noncontrolling interest $ 105,359 $ 105,323 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 30,330 29,457 Provision for credit loss 53,927 37,502 Provision for deferred taxes 11,919 8,058 Originations of loans held for sale ( 1,377,073 ) ( 933,786 ) Proceeds from sales of loans held for sale 1,146,702 968,998 Net change in loans held for sale 266,707 17,924 Net realized loss (gain) on securities available for sale 22,899 — Net realized (gain) loss on loans held for sale ( 19,755 ) ( 1,370 ) Net realized (gain) loss on divestitures ( 15,044 ) — Net realized (gain) on other ( 1,614 ) ( 3,165 ) Impairment on rental equipment 1,514 2,013 Net change in accrued interest receivable ( 5,696 ) ( 7,012 ) Net change in other assets ( 15,137 ) ( 14,007 ) Net change in accrued expenses and other liabilities ( 93,517 ) 16,671 Stock compensation 5,072 5,904 Net cash provided by operating activities 116,593 232,510 Cash flows from investing activities: Purchases of securities available for sale ( 2,280 ) — Proceeds from sales of securities available for sale 217,883 — Proceeds from maturities of and principal collected on securities available for sale 77,087 89,476 Proceeds from maturities of and principal collected on securities held to maturity 1,668 1,811 Purchases of Federal Reserve Bank and Federal Home Loan Bank stock ( 138,834 ) ( 183,010 ) Redemption of Federal Reserve Bank and Federal Home Loan Bank stock 150,572 185,377 Purchases of loans and leases ( 166,651 ) ( 163,091 ) Net change in loans and leases ( 302,546 ) 238,799 Purchases of premises, furniture, and equipment ( 5,668 ) ( 3,592 ) Purchases of rental equipment ( 87,111 ) ( 173,005 ) Proceeds from sales of rental equipment 8,308 4,951 Net change in rental equipment 368 188 Proceeds from divestitures, net of transaction costs 608,455 — Proceeds from sale of other assets 407 4,091 Proceeds from loans held for sale previously classified as portfolio loans 146,158 — Net cash provided by (used in) investing activities 507,816 1,995 Cash flows from financing activities: Net change in deposits ( 43,802 ) ( 220,838 ) Net change in short-term borrowings ( 377,000 ) 18,000 Principal payments on other liabilities — ( 550 ) Dividends paid on common stock ( 2,392 ) ( 2,566 ) Issuance of common stock due to restricted stock — 3 Repurchases of common stock ( 102,447 ) ( 56,364 ) Investment by (distributions to) noncontrolling interest ( 817 ) 79 Net cash provided by (used in) financing activities ( 526,458 ) ( 262,236 ) 6 Table of Contents Effect of exchange rate changes on cash ( 2,039 ) 39 Net change in cash and cash equivalents 95,912 ( 27,692 ) Cash and cash equivalents at beginning of fiscal year 158,337 375,580 Cash and cash equivalents at end of fiscal period $ 254,249 $ 347,888 Six Months Ended March 31, (Dollars in thousands) 2025 2024 Supplemental disclosure of cash flow information (As Restated) Cash paid during the period for: Interest $ 9,220 $ 12,608 Income taxes 9,730 9,694 Franchise and other taxes 401 398 Supplemental schedule of non-cash investing activities: Transfers Held for sale to loans and leases $ 22,686 $ — Loans and leases to held for sale 130,011 — Loans and leases to rental equipment 2,588 2,538 Rental equipment to loan and leases 60,398 143,752 Recognition of operating lease ROU assets, net of measurements — 654 Joint venture membership interest divestiture — 524 See Notes to Condensed Consolidated Financial Statements. 7 Table of Contents PATHWARD FINANCIAL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements NOTE 1. BASIS OF PRESENTATION The interim unaudited Condensed Consolidated Financial Statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended September 30, 2024 included in Pathward Financial, Inc.’s ("Pathward Financial" or the “Company") Annual Report on Form 10-K, as amended by Amendment No. 1 thereto, filed with the Securities and Exchange Commission ("SEC") on August 29, 2025 (the "Form 10-K/A"). Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted. The financial information of the Company included herein has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. 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, 2025 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, the Company began using "Secondary Market Revenue" on the Condensed Consolidated Statement of Operations for the interim period ending March 31, 2025 versus the previous caption of "Gain (Loss) on Sale of Loans and Leases". This line item exclusively comprises gains or losses realized from the sale of loans and leases, including any adjustments to record loans held for sale at the lower of amortized cost basis or fair value in accordance with ASC 860-20-50-5. There were no reclassifications of fiscal year amounts or prior period amounts as a result of this change in financial statement caption description. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS UPDATES ("ASU") Significant accounting policies in effect and disclosed within the Company’s most recent audited consolidated financial statements as of September 30, 2024 remain substantially unchanged. 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 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 8 Table of Contents consolidated financial statements. The Company is currently evaluating the impact of this ASU on required annual and interim disclosures. NOTE 3. DIVESTITURES 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) December 31, 2024 Settlement Adjustments March 31, 2025 Assets Purchased and Liabilities Assumed Cash and cash equivalents $ 4,686 $ — $ 4,686 Loans 594,541 ( 1,360 ) 593,181 Premises, furniture, and equipment, net 484 — 484 Total assets purchased $ 599,711 $ ( 1,360 ) $ 598,351 Deposits $ 16,760 $ — $ 16,760 Accrued expenses and other liabilities 1,158 120 1,278 Total liabilities assumed $ 17,918 $ 120 $ 18,038 Net assets purchased $ 581,793 $ ( 1,480 ) $ 580,313 Consideration paid at close 603,290 8,223 611,513 Consideration due 9,703 ( 9,703 ) — Purchase price 612,993 ( 1,480 ) 611,513 Premium on transaction 31,200 — 31,200 Other adjustments: Goodwill derecognition ( 11,577 ) — ( 11,577 ) Intangible derecognition ( 631 ) — ( 631 ) Building lease derecognition 471 — 471 Deferred loan origination cost derecognition — ( 1,360 ) ( 1,360 ) Transaction costs ( 3,059 ) — ( 3,059 ) Total other adjustments ( 14,796 ) ( 1,360 ) ( 16,156 ) Gain on divestitures $ 16,404 $ ( 1,360 ) $ 15,044 After final settlement adjustments, the sale resulted in an overall gain of $ 15.0 million before tax that was recognized within noninterest income on the Company's Condensed Consolidated Statements of Operations. The settlement adjustments during the three months ended March 31, 2025 resulted in a $ 1.4 million decrease of the previously recognized gain as of December 31, 2024 as a result of certain deferred loan origination costs that were excluded from the final settlement. See Note 8. 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. 9 Table of Contents NOTE 4. SECURITIES 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 Value Debt Securities AFS March 31, 2025 Corporate securities $ 25,000 $ — $ ( 3,875 ) $ 21,125 SBA securities 13,122 — ( 1,208 ) 11,914 Obligations of states and political subdivisions 200 — — 200 Non-bank qualified obligations of states and political subdivisions 223,512 26 ( 31,536 ) 192,002 Asset-backed securities 159,206 358 ( 2,303 ) 157,261 Mortgage-backed securities 1,207,481 13 ( 178,476 ) 1,029,018 Total debt securities AFS $ 1,628,521 $ 397 $ ( 217,398 ) $ 1,411,520 September 30, 2024 Corporate securities $ 25,000 $ — $ ( 5,250 ) $ 19,750 SBA securities 86,036 — ( 4,101 ) 81,935 Obligations of states and political subdivisions 501 — ( 21 ) 480 Non-bank qualified obligations of states and political subdivisions 246,233 44 ( 28,287 ) 217,990 Asset-backed securities 192,979 337 ( 3,618 ) 189,698 Mortgage-backed securities 1,393,549 84 ( 162,265 ) 1,231,368 Total debt securities AFS $ 1,944,298 $ 465 $ ( 203,542 ) $ 1,741,221 Debt Securities HTM March 31, 2025 Non-bank qualified obligations of states and political subdivisions $ 29,350 $ — $ ( 4,613 ) $ 24,737 Mortgage-backed securities 1,985 — ( 230 ) 1,755 Total debt securities HTM $ 31,335 $ — $ ( 4,843 ) $ 26,492 September 30, 2024 Non-bank qualified obligations of states and political subdivisions $ 31,060 $ — $ ( 2,668 ) $ 28,392 Mortgage-backed securities 2,032 — ( 188 ) 1,844 Total debt securities HTM $ 33,092 $ — $ ( 2,856 ) $ 30,236 10 Table of Contents Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous loss position, were as follows: LESS THAN 12 MONTHS OVER 12 MONTHS TOTAL (Dollars in thousands) Fair Value Gross Unrealized (Losses) Fair Value Gross Unrealized (Losses) Fair Value Gross Unrealized (Losses) Debt Securities AFS March 31, 2025 Corporate securities $ — $ — $ 21,125 $ ( 3,875 ) $ 21,125 $ ( 3,875 ) SBA securities — — 11,914 ( 1,208 ) 11,914 ( 1,208 ) Non-bank qualified obligations of states and political subdivisions — — 190,046 ( 31,536 ) 190,046 ( 31,536 ) Asset-backed securities 36,156 ( 313 ) 63,930 ( 1,990 ) 100,086 ( 2,303 ) Mortgage-backed securities 14,473 ( 123 ) 1,013,605 ( 178,353 ) 1,028,078 ( 178,476 ) Total debt securities AFS $ 50,629 $ ( 436 ) $ 1,300,620 $ ( 216,962 ) $ 1,351,249 $ ( 217,398 ) September 30, 2024 Corporate securities $ — $ — $ 19,750 $ ( 5,250 ) $ 19,750 $ ( 5,250 ) SBA securities — — 81,935 ( 4,101 ) 81,935 ( 4,101 ) Obligations of state and political subdivisions — — 280 ( 21 ) 280 ( 21 ) Non-bank qualified obligations of states and political subdivisions — — 215,956 ( 28,287 ) 215,956 ( 28,287 ) Asset-backed securities 52,101 ( 176 ) 88,576 ( 3,442 ) 140,677 ( 3,618 ) Mortgage-backed securities 2,377 ( 15 ) 1,215,781 ( 162,250 ) 1,218,158 ( 162,265 ) Total debt securities AFS $ 54,478 $ ( 191 ) $ 1,622,278 $ ( 203,351 ) $ 1,676,756 $ ( 203,542 ) Debt Securities HTM March 31, 2025 Non-bank qualified obligations of states and political subdivisions $ — $ — $ 24,737 $ ( 4,613 ) $ 24,737 $ ( 4,613 ) Mortgage-backed securities — — 1,755 ( 230 ) 1,755 ( 230 ) Total debt securities HTM $ — $ — $ 26,492 $ ( 4,843 ) $ 26,492 $ ( 4,843 ) September 30, 2024 Non-bank qualified obligations of states and political subdivisions $ — $ — $ 28,392 $ ( 2,668 ) $ 28,392 $ ( 2,668 ) Mortgage-backed securities — — 1,844 ( 188 ) 1,844 ( 188 ) Total debt securities HTM $ — $ — $ 30,236 $ ( 2,856 ) $ 30,236 $ ( 2,856 ) The decrease in the fair value of investment securities balances when comparing March 31, 2025 to September 30, 2024 was primarily driven by the sale of $ 217.9 million debt securities AFS and principal pay downs during the six months. The sale of debt securities AFS in the first quarter of fiscal 2025 stemmed from the decision to offset the gain on the sale of the commercial insurance premium finance business. The sale of debt securities AFS in the second quarter of fiscal 2025 stemmed from the decision to offset the gain on the sale of the transportation portfolio within working capital. Individual securities were identified for sale upon close of the transactions in order to reposition the debt securities AFS portfolio. At March 31, 2025, there were 152 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 March 31, 2025, there was no allowance for credit losses ("ACL") for debt securities AFS. 11 Table of Contents The amortized cost and fair value of debt securities by contractual maturity are shown below. 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. Therefore, MBS are not included in the maturity categories in the following maturity summary. The expected maturities of certain SBA securities may differ from contractual maturities because the borrowers may have the right to prepay the obligation. However, certain prepayment penalties may apply. (Dollars in thousands) March 31, 2025 September 30, 2024 Debt Securities AFS Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 380 $ 382 $ 1,826 $ 1,796 Due after one year through five years 1,750 1,773 14,772 14,211 Due after five years through ten years 40,206 36,413 70,894 63,636 Due after ten years 378,704 343,934 463,257 430,210 421,040 382,502 550,749 509,853 Mortgage-backed securities 1,207,481 1,029,018 1,393,549 1,231,368 Total debt securities AFS $ 1,628,521 $ 1,411,520 $ 1,944,298 $ 1,741,221 Debt Securities HTM Due after ten years $ 29,350 $ 24,737 $ 31,060 $ 28,392 29,350 24,737 31,060 28,392 Mortgage-backed securities 1,985 1,755 2,032 1,844 Total debt securities HTM $ 31,335 $ 26,492 $ 33,092 $ 30,236 Federal Reserve Bank ("FRB") Stock. The Bank is required by federal law to subscribe to capital stock (divided into shares of $100 each) as a member of the FRB of Minneapolis with an amount equal to six per centum of the paid-up capital stock and surplus. 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, 2025 and September 30, 2024. These equity securities are 'restricted' in that they can only be owned by member banks. Federal Home Loan Bank ("FHLB") Stock. The Company's borrowings from the FHLB are secured by specific investment securities. Such advances can be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. The investments in the FHLB stock are required investments related to the Company's membership in and current borrowings from the FHLB of Des Moines. The investments in the FHLB of Des Moines could be adversely impacted by the financial operations of the FHLB and actions of their regulator, the Federal Housing Finance Agency. 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 $ 4.6 million and $ 16.3 million at March 31, 2025 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. Therefore, FRB and FHLB stocks are less liquid than other marketable equity securities, and the cost approximates fair value. Equity Securities. 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 March 31, 2025 and September 30, 2024, respectively. The Company recognized $ 0.1 million unrealized losses and no unrealized gains on marketable equity securities during the six months ended March 31, 2025 and 2024, respectively. No such securities were sold during the six months ended March 31, 2025. 12 Table of Contents Non-marketable equity securities with a readily determinable fair value totaled $ 12.8 million and $ 11.8 million at March 31, 2025 and September 30, 2024, respectively. These securities are held within other assets on the Condensed Consolidated Statements of Financial Condition. The Company recognized $ 0.8 million and $ 0.4 million in unrealized gains during the six months ended March 31, 2025 and 2024, respectively. No such securities were sold during the six months ended March 31, 2025. Non-marketable equity securities without readily determinable fair value totaled $ 14.7 million and $ 13.6 million at March 31, 2025 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 six months ended March 31, 2025, the Company recognized a $ 0.4 million gain on Visa shares which were carried at a cost basis of $0. This gain was recognized within the gain on sale of other on the Condensed Consolidated Statements of Operations. There were no additional such securities sold during the six months ended March 31, 2025. Equity Securities Impairment. The Company evaluates impairment for investments held at cost on at least an annual basis based on the ultimate recoverability of the par value. 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 impairment for such investments for the six months ended March 31, 2025 and 2024. NOTE 5. LOANS AND LEASES, NET Loans and leases consist of the following: (Dollars in thousands) March 31, 2025 September 30, 2024 Term lending $ 1,766,432 $ 1,554,641 Asset-based lending 542,483 471,897 Factoring 224,520 362,295 Lease financing 134,856 152,174 SBA/USDA 701,736 568,628 Other commercial finance 154,728 185,964 Commercial finance 3,524,755 3,295,599 Consumer finance 246,202 248,800 Tax services 55,973 8,825 Warehouse finance 643,124 517,847 Total loans and leases 4,470,054 4,071,071 Net deferred loan origination costs (fees) ( 5,184 ) 4,124 Total gross loans and leases 4,464,870 4,075,195 Allowance for credit losses ( 102,890 ) ( 71,765 ) Total loans and leases, net $ 4,361,980 $ 4,003,430 During the six months ended March 31, 2025 and 2024, the Company originated $ 1.38 billion and $ 933.8 million of commercial finance and consumer finance as held for sale, respectively. The Company sold held for sale loans resulting in proceeds of $ 1.15 billion and a $ 19.8 million gain on sale during the six months ended March 31, 2025. 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. Gains and losses from the sale of loans and leases are included in secondary market revenue on the Condensed Consolidated Statements of Operations. See Note 3. Divestitures to the Condensed Consolidated Financial Statements for further information on the sale of the Company's commercial insurance premium finance business. 13 Table of Contents Loans purchased and sold by portfolio segment, including participation interests, were as follows: Three Months Ended March 31, Six Months Ended March 31, (Dollars in thousands) 2025 2024 2025 2024 Loans Purchased Loans held for investment: Commercial finance $ — $ — $ 19,540 $ — Warehouse finance 27,292 73,701 147,111 163,091 Total purchases $ 27,292 $ 73,701 $ 166,651 $ 163,091 Loans Sold Loans held for sale: Commercial finance $ 182,667 $ 21,173 $ 248,469 $ 25,045 Consumer finance 491,761 321,489 1,044,391 943,953 Total sales $ 674,428 $ 342,662 $ 1,292,860 $ 968,998 Leasing Portfolio. The net investment in direct financing and sales-type leases was comprised of the following: (Dollars in thousands) March 31, 2025 September 30, 2024 Minimum lease payments receivable $ 145,382 $ 162,757 Unguaranteed residual assets 7,621 9,300 Unamortized initial direct costs 82 102 Unearned income ( 18,145 ) ( 19,883 ) Total net investment in direct financing and sales-type leases $ 134,940 $ 152,276 The components of total lease income were as follows: Three Months Ended March 31, Six Months Ended March 31, (Dollars in thousands) 2025 2024 2025 2024 Interest income - loans and leases Interest income on net investments in direct financing and sales-type leases $ 2,800 $ 2,853 $ 5,987 $ 5,961 Leasing and equipment finance noninterest income Lease income from operating lease payments 12,930 13,605 26,379 26,860 Other (1) 1,139 869 2,446 1,593 Total leasing and equipment finance noninterest income 14,069 14,474 28,825 28,453 Total lease income $ 16,869 $ 17,327 $ 34,812 $ 34,414 (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. 14 Table of Contents Undiscounted future minimum lease payments receivable for direct financing and sales-type leases, and a reconciliation to the carrying amount recorded at March 31, 2025 were as follows: (Dollars in thousands) Remaining in 2025 $ 29,353 2026 45,692 2027 31,293 2028 19,336 2029 12,939 Thereafter 6,769 Total undiscounted future minimum lease payments receivable for direct financing and sales-type leases 145,382 Third-party residual value guarantees — Total carrying amount of minimum lease payments for direct financing and sales-type leases $ 145,382 The Company did not record any contingent rental income from direct financing and sales-type leases in the six months ended March 31, 2025. A number of factors that began to affect the economic environment in 2023 have continued into 2025, including economic uncertainty, inflation, increased interest rates, with the Federal Reserve beginning to lower the target federal funds rate at the end of 2024, and geopolitical conflict. Since early 2025, global markets and the U.S. economy have also experienced disruption and volatility resulting from tariffs and other policies of the U.S. administration, which may continue during the remainder of 2025. 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. 15 Table of Contents Activity in the allowance for credit losses by portfolio segment was as follows: (Dollars in thousands) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance Three Months Ended March 31, 2025 Allowance for credit losses: Term lending $ 29,925 $ 1,384 $ ( 6,208 ) $ 1,118 $ 26,219 Asset-based lending 1,762 440 ( 172 ) — 2,030 Factoring 5,765 ( 767 ) ( 96 ) 32 4,934 Lease financing 881 1,374 ( 1,019 ) 7 1,243 SBA/USDA 3,807 775 ( 609 ) 48 4,021 Other commercial finance 421 ( 37 ) — — 384 Commercial finance 42,561 3,169 ( 8,104 ) 1,205 38,831 Consumer finance 30,361 5,563 ( 6,897 ) 608 29,635 Tax services 790 26,178 — 6,813 33,781 Warehouse finance 625 18 — — 643 Total loans and leases 74,337 34,928 ( 15,001 ) 8,626 102,890 Unfunded commitments (1) 513 338 — — 851 Total $ 74,850 $ 35,266 $ ( 15,001 ) $ 8,626 $ 103,741 (As Restated) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance Three Months Ended March 31, 2024 Allowance for credit losses: Term lending $ 27,013 $ 6,303 $ ( 5,176 ) $ 487 $ 28,627 Asset-based lending 1,370 ( 254 ) — 99 1,215 Factoring 7,433 ( 623 ) ( 12 ) 16 6,814 Lease financing 4,008 ( 2,547 ) 28 62 1,551 Insurance premium finance 2,123 ( 532 ) ( 295 ) 113 1,409 SBA/USDA 3,289 ( 347 ) — — 2,942 Other commercial finance 3,312 ( 1,592 ) — — 1,720 Commercial finance 48,548 408 ( 5,455 ) 777 44,278 Consumer finance 41,635 3,923 ( 10,823 ) 346 35,081 Tax services 507 25,221 — 5,800 31,528 Warehouse finance 350 45 — — 395 Total loans and leases 91,040 29,597 ( 16,278 ) 6,923 111,282 Unfunded commitments (1) 596 147 — — 743 Total $ 91,636 $ 29,744 $ ( 16,278 ) $ 6,923 $ 112,025 (1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition. 16 Table of Contents (Dollars in thousands) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance Six Months Ended March 31, 2025 Allowance for credit losses: Term lending $ 30,394 $ 8,673 $ ( 14,583 ) $ 1,735 $ 26,219 Asset-based lending 1,356 846 ( 172 ) — 2,030 Factoring 5,757 ( 937 ) ( 170 ) 284 4,934 Lease financing 1,189 1,127 ( 1,082 ) 9 1,243 Insurance premium finance — 91 ( 93 ) 2 — SBA/USDA 3,273 1,606 ( 906 ) 48 4,021 Other commercial finance 607 ( 223 ) — — 384 Commercial finance 42,576 11,183 ( 17,006 ) 2,078 38,831 Consumer finance 28,669 14,984 ( 14,981 ) 963 29,635 Tax services 2 27,479 ( 741 ) 7,041 33,781 Warehouse finance 518 125 — — 643 Total loans and leases 71,765 53,771 ( 32,728 ) 10,082 102,890 Unfunded commitments (1) 695 156 — — 851 Total $ 72,460 $ 53,927 $ ( 32,728 ) $ 10,082 $ 103,741 (As Restated) Beginning Balance Provision (Reversal) Charge-offs Recoveries Ending Balance Six Months Ended March 31, 2024 Allowance for credit losses: Term lending $ 25,686 $ 12,125 $ ( 10,297 ) $ 1,113 $ 28,627 Asset-based lending 2,738 ( 1,764 ) — 241 1,215 Factoring 6,566 128 ( 35 ) 155 6,814 Lease financing 3,302 ( 1,781 ) ( 125 ) 155 1,551 Insurance premium finance 2,637 ( 771 ) ( 660 ) 203 1,409 SBA/USDA 2,962 ( 20 ) — — 2,942 Other commercial finance 3,089 ( 1,369 ) — — 1,720 Commercial finance 46,980 6,548 ( 11,117 ) 1,867 44,278 Consumer finance 49,496 3,888 ( 18,924 ) 621 35,081 Tax services 2 26,577 ( 1,145 ) 6,094 31,528 Warehouse finance 377 18 — — 395 Total loans and leases 96,855 37,031 ( 31,186 ) 8,582 111,282 Unfunded commitments (1) 272 471 — — 743 Total $ 97,127 $ 37,502 $ ( 31,186 ) $ 8,582 $ 112,025 (1) Reserve for unfunded commitments is recognized within other liabilities on the Condensed Consolidated Statements of Financial Condition. Information on loans and leases that are deemed to be collateral dependent and are evaluated individually for the ACL was as follows: 17 Table of Contents (Dollars in thousands) March 31, 2025 September 30, 2024 Term lending $ 15,510 $ 15,491 Asset-based lending 783 — Factoring 1,126 — Lease financing 4,137 5,300 SBA/USDA 2,390 1,419 Commercial finance (1) 23,946 22,210 Total $ 23,946 $ 22,210 (1) For commercial finance, collateral dependent financial assets have collateral in the form of cash, equipment, or other business assets. Management has identified certain structured finance credits for alternative energy projects in which a substantial cash collateral account has been established to mitigate credit risk. 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 $ 117.5 million and $ 105.1 million at March 31, 2025 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: Pass - A pass asset is of sufficient quality in terms of repayment, collateral and management to preclude a special mention or an adverse rating. Watch - A watch asset is generally a credit performing well under current terms and conditions but with identifiable weakness meriting additional scrutiny and corrective measures. Watch is not a regulatory classification but can be used to designate assets that are exhibiting one or more weaknesses that deserve management’s attention. These assets are of better quality than special mention assets. Special Mention - A special mention asset is a credit with potential weaknesses deserving management’s close attention and, if left uncorrected, may result in deterioration of the repayment prospects for the asset. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special mention is a temporary status with aggressive credit management required to garner adequate progress and move to watch or higher. The adverse classifications are as follows: Substandard - A substandard asset is inadequately protected by the net worth and/or repayment ability or by a weak collateral position. Assets so classified will have well-defined weaknesses creating a distinct possibility the Bank will sustain some loss if the weaknesses are not corrected. Loss potential does not have to exist for an asset to be classified as substandard. Doubtful - A doubtful asset has weaknesses similar to those classified substandard, with the degree of weakness causing the likely loss of some principal in any reasonable collection effort. Due to pending factors, the asset’s classification as loss is not yet appropriate. Loss - A loss asset is considered uncollectible and of such little value that the asset’s continuance on the Bank’s balance sheet is no longer warranted. This classification does not necessarily mean an asset has no recovery or salvage value leaving room for future collection efforts. 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 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. The Company individually evaluates loans and leases that do not share similar risk characteristics with other financial assets, which generally means loans and leases identified as modifications or loans and leases on nonaccrual status. 18 Table of Contents The Company recognizes that concentrations of credit may naturally occur and may take the form of a large volume of related loans and leases to an individual, a specific industry, or a geographic location. Credit concentration is a direct, indirect, or contingent obligation that has a common bond where the aggregate exposure equals or exceeds a certain percentage of the Company’s Tier 1 Capital plus the allowable Allowance for Credit Losses. The Company has various portfolios of consumer finance and tax services loans that present unique risks that are statistically managed. 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 $ 246.2 million and $ 56.0 million at March 31, 2025, 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: Amortized Cost Basis (Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total March 31, 2025 2025 2024 2023 2022 2021 Prior Term lending Pass $ 367,175 $ 492,482 $ 320,262 $ 117,245 $ 63,969 $ 47,725 $ — $ 1,408,858 Watch 18,687 30,695 84,454 7,886 17,374 13,247 — 172,343 Special mention 1,100 54,125 5,543 607 16,579 93 — 78,047 Substandard 242 12,821 28,643 24,521 16,044 21,082 — 103,353 Doubtful — 49 954 948 1,724 156 — 3,831 Total 387,204 590,172 439,856 151,207 115,690 82,303 — 1,766,432 Current period charge-offs — 7,637 3,998 2,032 656 260 — 14,583 Asset-based lending Pass — — — — — — 294,029 294,029 Watch — — — — — — 221,559 221,559 Special mention — — — — — — 13,046 13,046 Substandard — — — — — — 13,777 13,777 Doubtful — — — — — — 72 72 Total — — — — — — 542,483 542,483 Current period charge-offs — — — — — — 172 172 Factoring Pass — — — — — — 173,851 173,851 Watch — — — — — — 46,897 46,897 Special mention — — — — — — 1,061 1,061 Substandard — — — — — — 2,292 2,292 Doubtful — — — — — — 419 419 Total — — — — — — 224,520 224,520 Current period charge-offs — — — — — — 170 170 Lease financing Pass 16,997 35,768 38,520 7,522 3,118 6,254 — 108,179 Watch 1,457 3,148 2,979 1,475 1,974 1,783 — 12,816 Special mention — — 220 — 325 — — 545 Substandard — — 6,116 1,839 4,260 1,060 — 13,275 Doubtful — — — — 2 39 — 41 Total 18,454 38,916 47,835 10,836 9,679 9,136 — 134,856 Current period charge-offs — — 16 — 1,005 61 — 1,082 Insurance premium finance Current period charge-offs — 62 31 — — — — 93 SBA/USDA Pass 100,469 102,236 172,239 161,572 18,827 48,008 — 603,351 Watch 903 6,218 118 9,791 1,000 12,955 — 30,985 Special mention — — — 2,548 482 1,787 — 4,817 19 Table of Contents Substandard 70 2,291 18,115 14,042 2,875 24,546 — 61,939 Doubtful — — 376 55 55 158 — 644 Total 101,442 110,745 190,848 188,008 23,239 87,454 — 701,736 Current period charge-offs — — 171 — — 735 — 906 Other commercial finance Pass 625 62,895 2,150 127 12,181 66,083 — 144,061 Watch — — 2,447 — — — — 2,447 Substandard — — 479 — 7,741 — — 8,220 Total 625 62,895 5,076 127 19,922 66,083 — 154,728 Current period charge-offs — — — — — — — — Warehouse finance Pass — — — — — — 643,124 643,124 Total — — — — — — 643,124 643,124 Current period charge-offs — — — — — — — — Total loans and leases Pass 485,266 693,381 533,171 286,466 98,095 168,070 1,111,004 3,375,453 Watch 21,047 40,061 89,998 19,152 20,348 27,985 268,456 487,047 Special mention 1,100 54,125 5,763 3,155 17,386 1,880 14,107 97,516 Substandard 312 15,112 53,353 40,402 30,920 46,688 16,069 202,856 Doubtful — 49 1,330 1,003 1,781 353 491 5,007 Total $ 507,725 $ 802,728 $ 683,615 $ 350,178 $ 168,530 $ 244,976 $ 1,410,127 $ 4,167,879 Current period charge-offs $ — $ 7,699 $ 4,216 $ 2,032 $ 1,661 $ 1,056 $ 342 $ 17,006 Amortized Cost Basis (Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total September 30, 2024 2024 2023 2022 2021 2020 Prior Term lending Pass $ 548,597 $ 398,832 $ 117,180 $ 77,585 $ 42,950 $ 24,166 $ — $ 1,209,310 Watch 47,765 52,317 34,964 31,025 2,720 2,312 — 171,103 Special mention 44,617 3,106 9,121 14,772 7,238 2 — 78,856 Substandard 9,798 24,187 18,537 11,660 18,894 2,631 — 85,707 Doubtful 4,314 1,465 2,247 758 114 767 — 9,665 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 Pass — — — — — — 233,268 233,268 Watch — — — — — — 221,521 221,521 Special mention — — — — — — 13,187 13,187 Substandard — — — — — — 3,921 3,921 Total — — — — — — 471,897 471,897 Current period charge-offs — — — — — — — — Factoring Pass — — — — — — 292,436 292,436 Watch — — — — — — 62,270 62,270 Special mention — — — — — — 271 271 Substandard — — — — — — 7,306 7,306 Doubtful — — — — — — 12 12 Total — — — — — — 362,295 362,295 Current period charge-offs — — — — — — 2,453 2,453 Lease financing Pass 44,883 48,851 12,862 7,101 7,938 1,733 — 123,368 Watch 1,837 3,537 370 6,264 1,362 40 — 13,410 Special mention — 250 — — 174 — — 424 Substandard — 6,691 2,723 2,717 2,069 603 — 14,803 20 Table of Contents Doubtful — — — 138 31 — — 169 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 SBA/USDA Pass 60,636 171,136 179,490 20,825 28,588 39,319 — 499,994 Watch 5,244 6,967 — 639 10 3,026 — 15,886 Special mention — — — 156 — 363 — 519 Substandard 1,037 15,923 12,158 2,003 9,519 11,134 — 51,774 Doubtful — 185 55 55 62 98 — 455 Total 66,917 194,211 191,703 23,678 38,179 53,940 — 568,628 Current period charge-offs — 549 79 — 127 — — 755 Other commercial finance Pass 73,330 2,210 6,685 12,351 1,274 70,203 — 166,053 Watch — 2,480 — — — — — 2,480 Substandard — 508 — 16,923 — — — 17,431 Total 73,330 5,198 6,685 29,274 1,274 70,203 — 185,964 Current period charge-offs — — — — — — — — Warehouse finance Pass — — — — — — 517,847 517,847 Total — — — — — — 517,847 517,847 Current period charge-offs — — — — — — — — Total loans and leases Pass 727,446 621,029 316,217 117,862 80,750 135,421 1,043,551 3,042,276 Watch 54,846 65,301 35,334 37,928 4,092 5,378 283,791 486,670 Special mention 44,617 3,356 9,121 14,928 7,412 365 13,458 93,257 Substandard 10,835 47,309 33,418 33,303 30,482 14,368 11,227 180,942 Doubtful 4,314 1,650 2,302 951 207 865 12 10,301 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 21 Table of Contents Past due loans and leases were as follows: Accruing and Nonaccruing Loans and Leases Nonperforming Loans and Leases (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due > 89 Days Past Due Total Past Due Current Total Loans and Leases Receivable > 89 Days Past Due and Accruing Nonaccrual Balance Total March 31, 2025 Loans held for sale $ — $ — $ — $ — $ 45,767 $ 45,767 $ — $ — $ — Term lending 23,308 9,380 10,724 43,412 1,723,020 1,766,432 7 23,080 23,087 Asset-based lending — — — — 542,483 542,483 — 719 719 Factoring — — — — 224,520 224,520 — 1,613 1,613 Lease financing 13,318 468 4,159 17,945 116,911 134,856 — 4,689 4,689 SBA/USDA 4,535 5,085 3,390 13,010 688,726 701,736 1,352 5,948 7,300 Other commercial finance — — — — 154,728 154,728 — — — Commercial finance 41,161 14,933 18,273 74,367 3,450,388 3,524,755 1,359 36,049 37,408 Consumer finance 3,922 2,769 2,398 9,089 237,113 246,202 2,398 — 2,398 Tax services 1,036 — — 1,036 54,937 55,973 — — — Warehouse finance — — — — 643,124 643,124 — — — Total loans and leases held for investment 46,119 17,702 20,671 84,492 4,385,562 4,470,054 3,757 36,049 39,806 Total loans and leases $ 46,119 $ 17,702 $ 20,671 $ 84,492 $ 4,431,329 $ 4,515,821 $ 3,757 $ 36,049 $ 39,806 September 30, 2024 Loans held for sale $ 2,266 $ 1,361 $ 1,050 $ 4,677 $ 687,011 $ 691,688 $ 1,050 $ — $ 1,050 Term lending 19,776 5,124 17,694 42,594 1,512,047 1,554,641 1,923 23,462 25,385 Asset-based lending — — — — 471,897 471,897 — — — Factoring — — — — 362,295 362,295 — 29 29 Lease financing 3,605 1,595 109 5,309 146,865 152,174 60 746 806 SBA/USDA — 952 2,172 3,124 565,504 568,628 331 2,175 2,506 Other commercial finance — — — — 185,964 185,964 — — — Commercial finance 23,381 7,671 19,975 51,027 3,244,572 3,295,599 2,314 26,412 28,726 Consumer finance 3,962 3,186 3,053 10,201 238,599 248,800 3,053 — 3,053 Tax services — — 8,733 8,733 92 8,825 8,733 — 8,733 Warehouse finance — — — — 517,847 517,847 — — — Total loans and leases held for investment 27,343 10,857 31,761 69,961 4,001,110 4,071,071 14,100 26,412 40,512 Total loans and leases $ 29,609 $ 12,218 $ 32,811 $ 74,638 $ 4,688,121 $ 4,762,759 $ 15,150 $ 26,412 $ 41,562 22 Table of Contents Nonaccrual loans and leases by year of origination were as follows: Amortized Cost Basis (Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total Nonaccrual with No ACL March 31, 2025 2025 2024 2023 2022 2021 Prior Term lending $ — $ 1,027 $ 3,058 $ 4,559 $ 11,552 $ 2,884 $ — $ 23,080 $ 8,109 Asset-based lending — — — — — — 719 719 — Factoring — — — — — — 1,613 1,613 — Lease financing — — 454 — 3,488 747 — 4,689 4,137 SBA/USDA — 3,547 1,504 411 83 403 — 5,948 — Commercial finance — 4,574 5,016 4,970 15,123 4,034 2,332 36,049 12,246 Total nonaccrual loans and leases $ — $ 4,574 $ 5,016 $ 4,970 $ 15,123 $ 4,034 $ 2,332 $ 36,049 $ 12,246 Amortized Cost Basis (Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total Nonaccrual with No ACL September 30, 2024 2024 2023 2022 2021 2020 Prior Term lending $ 9,281 $ 3,433 $ 5,369 $ 1,386 $ 625 $ 3,368 $ — $ 23,462 $ 2,579 Factoring — — — — — — 29 29 — Lease financing — 577 11 46 2 110 — 746 — SBA/USDA — 738 55 55 742 585 — 2,175 681 Commercial finance 9,281 4,748 5,435 1,487 1,369 4,063 29 26,412 3,260 Total nonaccrual loans and leases $ 9,281 $ 4,748 $ 5,435 $ 1,487 $ 1,369 $ 4,063 $ 29 $ 26,412 $ 3,260 Loans and leases that are 90 days or more delinquent and accruing by year of origination were as follows: Amortized Cost Basis (Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total March 31, 2025 2025 2024 2023 2022 2021 Prior Term lending $ — $ — $ — $ — $ — $ 7 $ — $ 7 SBA/USDA — — 1,352 — — — — 1,352 Commercial finance — — 1,352 — — 7 — 1,359 Consumer finance 266 896 1,037 190 9 — — 2,398 Total loans and leases held for investment 266 896 2,389 190 9 7 — 3,757 Total 90 days or more delinquent and accruing $ 266 $ 896 $ 2,389 $ 190 $ 9 $ 7 $ — $ 3,757 Amortized Cost Basis (Dollars in thousands) Term Loans and Leases by Origination Year Revolving Loans and Leases Total September 30, 2024 2024 2023 2022 2021 2020 Prior Loans held for sale $ 1,031 $ 19 $ — $ — $ — $ — $ — $ 1,050 Term lending — 621 354 719 217 12 — 1,923 Lease financing — — — 2 58 — — 60 SBA/USDA — — 331 — — — — 331 Commercial finance — 621 685 721 275 12 — 2,314 Consumer finance 736 1,841 388 88 — — — 3,053 Tax services 8,733 — — — — — — 8,733 Total loans and leases held for investment 9,469 2,462 1,073 809 275 12 — 14,100 Total 90 days or more delinquent and accruing $ 10,500 $ 2,481 $ 1,073 $ 809 $ 275 $ 12 $ — $ 15,150 23 Table of Contents Certain loans and leases 90 days or more past due as to interest or principal continue to accrue because they are (1) well-secured and in the process of collection or (2) consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. The following table provides the average recorded investment in nonaccrual loans and leases: Three Months Ended March 31, Six Months Ended March 31, (Dollars in thousands) 2025 2024 2025 2024 Term lending $ 27,521 $ 18,999 $ 25,365 $ 18,209 Asset-based lending 530 82 555 4,896 Factoring 1,398 5,745 831 3,463 Lease financing 4,887 1,639 3,226 1,631 SBA/USDA 3,096 2,329 2,498 1,908 Commercial finance 37,432 28,794 32,475 30,107 Total loans and leases $ 37,432 $ 28,794 $ 32,475 $ 30,107 The recognized interest income on the Company's nonaccrual loans and leases for the three and six months ended March 31, 2025 and 2024 was not significant. Modifications made to borrowers experiencing financial difficulty during the three and six months ended March 31, 2025 were $ 5.9 million and $ 9.1 million, respectively, in the commercial finance loan portfolio. The types of modifications granted were term extensions. 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. During the six months ended March 31, 2025, the Company had $ 6.1 million of commercial finance loans where a modification was granted in the previous 12 months in which there was a payment default. As of March 31, 2025, no modifications granted during the current six month period were in the 60-89 days past due category. During the six months ended March 31, 2024, the Company had no modifications granted in the previous 12 months in which there was a payment default. NOTE 6. EARNINGS PER COMMON SHARE ("EPS") The Company has granted restricted share awards with dividend rights that are considered to be participating securities. Accordingly, a portion of the Company’s earnings is allocated to those participating securities in the earnings per share calculation under the two-class method. Basic EPS is computed using the two-class method by dividing income available to common stockholders after the allocation of dividends and undistributed earnings to the participating securities by the weighted average number of common shares outstanding for the period. 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 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. Diluted EPS shown below reflects the two-class method, as diluted EPS under the two-class method was more dilutive than under the treasury stock method. 24 Table of Contents 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, (Dollars in thousands, except per share data) 2025 2024 2025 2024 (As Restated) (As Restated) Basic income per common share: Net income attributable to Pathward Financial, Inc. $ 74,957 $ 69,918 $ 104,923 $ 104,817 Dividends and undistributed earnings allocated to participating securities ( 264 ) ( 562 ) ( 402 ) ( 839 ) Basic net earnings available to common stockholders 74,693 69,356 104,521 103,978 Undistributed earnings allocated to nonvested restricted stockholders 260 552 393 819 Reallocation of undistributed earnings to nonvested restricted stockholders ( 259 ) ( 551 ) ( 392 ) ( 818 ) Diluted net earnings available to common stockholders $ 74,694 $ 69,357 $ 104,522 $ 103,979 Total weighted-average basic common shares outstanding 23,657,145 25,281,743 23,941,980 25,529,186 Effect of dilutive securities (1) PSUs 118,878 29,401 97,040 26,470 Total effect of dilutive securities 118,878 29,401 97,040 26,470 Total weighted-average diluted common shares outstanding 23,776,023 25,311,144 24,039,020 25,555,656 Net earnings per common share: Basic earnings per common share $ 3.16 $ 2.74 $ 4.37 $ 4.07 Diluted earnings per common share (2) $ 3.14 $ 2.74 $ 4.35 $ 4.07 (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 March 31, 2025 and 2024, respectively, were 83,665 and 204,877 weighted average share 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, 2025 and 2024, respectively, were 92,172 and 206,060 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive. NOTE 7. RENTAL EQUIPMENT, NET Rental equipment consists of the following: (Dollars in thousands) March 31, 2025 September 30, 2024 Computers and IT networking equipment $ 12,254 $ 21,308 Motor vehicles and other 152,871 140,920 Other furniture and equipment 38,836 38,755 Solar panels and equipment 133,964 128,296 Total 337,925 329,279 Accumulated depreciation ( 136,665 ) ( 124,987 ) Unamortized initial direct costs 934 1,047 Net book value $ 202,194 $ 205,339 25 Table of Contents Future minimum lease payments expected to be received for operating leases at March 31, 2025 were as follows: (Dollars in thousands) Remaining in 2025 $ 21,322 2026 36,044 2027 27,855 2028 19,116 2029 13,262 Thereafter 6,366 Total $ 123,965 NOTE 8. GOODWILL AND INTANGIBLE ASSETS The Company held a total of $ 297.9 million of goodwill at March 31, 2025. The recorded goodwill is a result of multiple business combinations that occurred from 2015 to 2018. During the six months ended March 31, 2025, 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. See Note 3. 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 September 30, 2024 $ 87,145 $ 222,360 $ — $ 309,505 Divestiture — ( 11,577 ) — ( 11,577 ) March 31, 2025 $ 87,145 $ 210,783 $ — $ 297,928 September 30, 2023 $ 87,145 $ 222,360 $ — $ 309,505 March 31, 2024 $ 87,145 $ 222,360 $ — $ 309,505 26 Table of Contents The changes in the carrying amount of the Company’s intangible assets during the six months ended March 31, 2025 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. See Note 3. Divestitures to the Condensed Consolidated Financial Statements for further information. (Dollars in thousands) Trademark (1) Non-Compete Customer Relationships (2) All Others (3) Total September 30, 2024 $ 6,422 $ — $ 6,566 $ 3,601 $ 16,589 Amortization during the period ( 538 ) — ( 1,064 ) ( 292 ) ( 1,894 ) Write-offs and disposals during the period — — ( 631 ) — ( 631 ) March 31, 2025 $ 5,884 $ — $ 4,871 $ 3,309 $ 14,064 Gross carrying amount $ 13,774 $ 301 $ 70,338 $ 7,732 $ 92,145 Accumulated amortization ( 7,890 ) ( 301 ) ( 54,549 ) ( 4,270 ) ( 67,010 ) Accumulated impairment — — ( 10,918 ) ( 153 ) ( 11,071 ) March 31, 2025 $ 5,884 $ — $ 4,871 $ 3,309 $ 14,064 September 30, 2023 $ 7,477 $ — $ 9,110 $ 4,133 $ 20,720 Amortization during the period ( 527 ) — ( 1,431 ) ( 266 ) ( 2,224 ) March 31, 2024 $ 6,950 $ — $ 7,679 $ 3,867 $ 18,496 Gross carrying amount $ 13,774 $ 301 $ 77,578 $ 7,798 $ 99,451 Accumulated amortization ( 6,824 ) ( 301 ) ( 58,981 ) ( 3,712 ) ( 69,818 ) Accumulated impairment — — ( 10,918 ) ( 219 ) ( 11,137 ) March 31, 2024 $ 6,950 $ — $ 7,679 $ 3,867 $ 18,496 (1) Book amortization period of 5 - 15 years. Amortized using the straight line and accelerated methods. (2) Book amortization period of 10 - 30 years. Amortized using the accelerated method. (3) Book amortization period of 3 - 20 years. Amortized using the straight line method. 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 2025 and subsequent fiscal years at March 31, 2025 was as follows: (Dollars in thousands) Remaining in 2025 $ 1,562 2026 3,103 2027 2,483 2028 2,194 2029 1,581 Thereafter 3,141 Total anticipated intangible amortization $ 14,064 There were no impairments to intangible assets during the six months ended March 31, 2025 and 2024. Intangible impairment expense is recorded within the impairment expense line of the Condensed Consolidated Statements of Operations. NOTE 9. OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES Operating lease right-of-use ("ROU") assets, included in other assets , were $ 24.1 million and $ 24.4 million at March 31, 2025 and September 30, 2024, respectively. Operating lease liabilities, included in accrued expenses and other liabilities , were $ 25.2 million and $ 26.0 million at March 31, 2025 and September 30, 2024, respectively. 27 Table of Contents The decreases in lease ROU assets and liabilities relate to normal amortization and lease payments made during the six months ended March 31, 2025, but also include adjustments for lease assignments that occurred as a result of the commercial insurance premium finance business sale during the first 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. See Note 3. 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 March 31, 2025 were as follows: (Dollars in thousands) Remaining in 2025 $ 1,822 2026 3,391 2027 3,306 2028 3,397 2029 3,436 Thereafter 13,107 Total undiscounted future minimum lease payments 28,459 Discount ( 3,210 ) Total operating lease liabilities $ 25,249 The weighted-average discount rate and remaining lease term for operating leases were as follows: March 31, 2025 September 30, 2024 Weighted-average discount rate 2.67 % 2.45 % Weighted-average remaining lease term (years) 8.41 8.78 The components of total lease costs for operating leases were as follows: Three Months Ended March 31, Six Months Ended March 31, (Dollars in thousands) 2025 2024 2025 2024 Lease expense $ 998 $ 992 $ 1,917 $ 2,017 Short-term and variable lease cost 23 30 44 23 Sublease income ( 351 ) ( 269 ) ( 703 ) ( 639 ) Total lease cost for operating leases $ 670 $ 753 $ 1,258 $ 1,401 NOTE 10. STOCKHOLDERS' EQUITY Repurchase of Common Stock. 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 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 six months ended March 31, 2025 and 2024, the Company repurchased 1,277,664 and 996,773 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 credited to paid-in capital up to the par value of those shares. When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings. As of March 31, 2025, 5,722,336 shares of common stock remained available for repurchase. 28 Table of Contents For the six months ended March 31, 2025 and 2024, the Company also repurchased 66,446 and 122,452 shares, or $ 4.6 million and $ 5.8 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock. Retirement of Treasury Stock. The Company accounts for the retirement of repurchased shares, including treasury stock, 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. 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, 2025 and 2024. NOTE 11. STOCK COMPENSATION On February 27, 2024, the shareholders of the Company voted to approve the Pathward Financial, Inc. 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 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. Shares have previously been granted each year to executives and senior leadership members under the applicable Company incentive plan. These shares vest at various times ranging from immediately to three years based on circumstances at time of grant. 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 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 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 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. For those PSUs subject to a market condition, a simulation valuation is performed. In addition, during the first and second quarters of fiscal year 2017, shares were granted to certain executive officers of the Company in connection with their signing of employment agreements with the Company. These stock awards vest in equal installments over eight years . 29 Table of Contents 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, 2025. Number of Shares Weighted Average Fair Value at Grant Restricted Stock Awards Nonvested shares outstanding, September 30, 2024 248,670 $ 41.19 Granted 15,600 77.42 Vested ( 179,669 ) 41.24 Forfeited or expired ( 1,055 ) 50.15 Nonvested shares outstanding, March 31, 2025 83,546 $ 47.75 Restricted Stock Units Nonvested shares outstanding, September 30, 2024 — $ — Granted 86,200 79.51 Vested — — Forfeited or expired ( 572 ) 79.63 Nonvested shares outstanding, March 31, 2025 85,628 $ 79.51 Number of Units Weighted Average Fair Value at Grant PSUs PSUs outstanding, September 30, 2024 142,462 $ 47.24 Granted 34,208 79.47 Vested ( 34,304 ) 57.21 Forfeited or expired — — PSUs outstanding, March 31, 2025 142,366 $ 52.59 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. The exercise price of fair value of nonvested (restricted) shares and PSUs granted under the Company’s incentive plans is equal to the fair market value of the underlying stock at the grant date, adjusted for dividends where applicable. The Company has elected to record forfeitures as they occur. As of March 31, 2025, stock-based compensation expense not yet recognized in income totaled $ 11.7 million, which is expected to be recognized over a weighted average remaining period of 1.78 years. NOTE 12. INCOME TAXES The Company recorded an income tax expense of $ 22.2 million for the six months ended March 31, 2025, resulting in an effective tax rate of 17.38 %, compared to an income tax expense of $ 24.6 million, or an effective tax rate of 18.95 %, for the six months ended March 31, 2024. The Company’s effective tax rate was lower than the U.S. statutory rate of 21% primarily because of the effect of investment tax credits during fiscal year 2025. The Company's effective tax rate in the future will depend in part on actual investment tax credits generated from qualified renewable energy property. 30 Table of Contents The table below compares the income tax expense components for the periods presented. Six Months Ended March 31, 2025 2024 (Dollars in thousands) (As Restated) Provision at statutory rate $ 26,690 $ 27,183 Tax-exempt income ( 319 ) ( 341 ) State income taxes 4,773 5,172 Interim period effective rate adjustment ( 4,375 ) 4,351 Tax credit investments, net - federal ( 3,694 ) ( 11,363 ) IRC 162(m) nondeductible compensation 605 340 Other, net ( 1,509 ) ( 719 ) Income tax expense $ 22,171 $ 24,623 Effective tax rate 17.38 % 18.95 % 31 Table of Contents NOTE 13. 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. For additional descriptions of the Company’s operating segments, including additional financial information and the underlying management accounting process, see Note 14. Segment Reporting to the Condensed Consolidated Financial Statements. (Dollars in thousands) Consumer Commercial Corporate Services/Other Consolidated Company (As Restated) (As Restated) (As Restated) (As Restated) Three Months Ended March 31, 2025 2024 2025 2024 2025 2024 2025 2024 Net interest income (1) $ 75,633 $ 67,280 $ 41,987 $ 44,493 $ 18,659 $ 16,861 $ 136,279 $ 128,634 Noninterest income: Refund transfer product fees 32,663 28,942 — — — — 32,663 28,942 Refund advance and other tax fee income (1) 48,585 43,200 — — — — 48,585 43,200 Card and deposit fees 30,583 35,097 202 241 8 6 30,793 35,344 Rental income (1) — — 12,990 13,594 210 126 13,200 13,720 (Loss) on sale of securities (1) — — — — ( 7,228 ) — ( 7,228 ) — (Loss) on divestitures (1) — — — — ( 1,360 ) — ( 1,360 ) — Secondary market revenue (1) ( 25 ) 16 2,074 1,385 13,329 — 15,378 1,401 Gain on sale of other (1) — — 627 222 — 72 627 294 Other income (1) 2,221 2,432 2,225 2,307 1,420 1,305 5,866 6,044 Total noninterest income 114,027 109,687 18,118 17,749 6,379 1,509 138,524 128,945 Revenue $ 189,660 $ 176,967 $ 60,105 $ 62,242 $ 25,038 $ 18,370 $ 274,803 $ 257,579 Six Months Ended March 31, Net interest income (1) $ 156,694 $ 136,202 $ 85,280 $ 89,699 $ 19,554 $ 21,660 $ 261,528 $ 247,561 Noninterest income: Refund transfer product fees 33,073 29,364 — — — — 33,073 29,364 Refund advance and other tax fee income (1) 49,110 43,311 — — — — 49,110 43,311 Card and deposit fees 59,411 65,604 434 477 14 13 59,859 66,094 Rental income (1) — — 26,498 26,829 410 350 26,908 27,179 (Loss) on sale of securities (1) — — — — ( 22,899 ) — ( 22,899 ) — Gain on divestitures (1) — — — — 15,044 — 15,044 — Secondary market revenue (1) 15 ( 15 ) 6,412 1,385 13,328 — 19,755 1,370 Gain on sale of other (1) — — 1,158 584 456 2,581 1,614 3,165 Other income (1) 6,020 4,210 4,855 4,473 2,563 2,540 13,438 11,223 Total noninterest income 147,629 142,474 39,357 33,748 8,916 5,484 195,902 181,706 Revenue $ 304,323 $ 278,676 $ 124,637 $ 123,447 $ 28,470 $ 27,144 $ 457,430 $ 429,267 (1) These revenues are not within the scope of Topic 606. Additional details are included in other footnotes to the accompanying financial statements. The scope of Topic 606 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities, including loans, leases, and securities. Following is a discussion of key revenues within the scope of Topic 606. The Company provides services to customers that have related performance obligations that must be completed to recognize revenue. Revenues are generally recognized immediately upon the completion of the service or over time as services are performed. Any services performed over time generally require that the Company renders services each period; 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, 2025. 32 Table of Contents Refund Transfer Product Fees. 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. Refund transfer fees are recognized by the Company immediately after the taxpayer's refund has been disbursed in accordance with the contract and are based on standalone pricing included within the terms and conditions. Certain expenses to tax preparation software providers are netted with refund transfer fee income as the Company is considered the agent in these contractual relationships. All refund transfer fees are recorded within the Consumer reporting segment. Card and Deposit Fees. 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. Since interchange fees are generated by cardholder activity, the Company recognizes the income as transactions occur. Fee income for merchant services and other card related services reflect account management and transaction fees charged to merchants for processing card association network transactions. The associated income is recognized as transactions occur or as services are performed. For the Company's internally managed prepaid card programs, fees are based on standalone pricing within the terms and conditions of the cardholder agreement. The Company is considered the principal of these relationships resulting in all fee income being presented on a gross basis within the Condensed Consolidated Statement of Operations. For the Company's sponsorship prepaid card programs where a third-party is considered the Program Manager, the fees are based on standalone pricing within the terms and conditions of the Program Agreement. For these relationships, the Company is considered the agent and certain expenses with the Program Manager, networks and associations are netted with card fee revenue. All card fee income is included in the Consumer reporting segment. 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 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 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. 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"). The servicing fee is typically reflective of the effective federal funds rate ("EFFR"). NOTE 14. SEGMENT REPORTING An operating segment is generally defined as a component of a business for which discrete financial information is available and whose results are reviewed by the chief operating decision-maker. Operating segments are aggregated into reportable segments if certain criteria are met. The Company reports its results of operations through the following three business segments: Consumer, Commercial, and Corporate Services/Other. The Partner Solutions business line is reported in the Consumer segment. The Commercial Finance business line is reported in the Commercial segment. The Corporate Services/Other segment includes certain shared services as well as treasury related functions such as the investment portfolio, warehouse finance, wholesale deposits, and borrowings. 33 Table of Contents The following table presents segment data for the Company: (Dollars in thousands) Consumer Commercial Corporate Services/Other Total (As Restated) (As Restated) (As Restated) (As Restated) Three Months Ended March 31, 2025 2024 2025 2024 2025 2024 2025 2024 Net interest income $ 75,633 $ 67,280 $ 41,987 $ 44,493 $ 18,659 $ 16,861 $ 136,279 $ 128,634 Provision for credit loss 31,739 29,144 3,508 555 19 45 35,266 29,744 Noninterest income 114,027 109,687 18,118 17,749 6,379 1,509 138,524 128,945 Noninterest expense 66,948 59,763 33,601 38,130 47,628 42,849 148,177 140,742 Income (loss) before income tax expense 90,973 88,060 22,996 23,557 ( 22,609 ) ( 24,524 ) 91,360 87,093 Total assets 431,962 463,212 3,975,353 4,127,524 2,587,471 2,826,073 6,994,786 7,416,809 Total goodwill 87,145 87,145 210,783 222,360 — — 297,928 309,505 Total deposits 5,633,529 6,063,339 140 7,143 185,540 297,862 5,819,209 6,368,344 Six Months Ended March 31, Net interest income $ 156,694 $ 136,202 $ 85,280 $ 89,699 $ 19,554 $ 21,660 $ 261,528 $ 247,561 Provision for credit loss 42,463 30,466 11,339 7,018 125 18 53,927 37,502 Noninterest income 147,629 142,474 39,357 33,748 8,916 5,484 195,902 181,706 Noninterest expense 120,327 111,579 66,366 72,986 89,280 77,254 275,973 261,819 Income (loss) before income tax expense 141,533 136,631 46,932 43,443 ( 60,935 ) ( 50,128 ) 127,530 129,946 Total assets 431,962 463,212 3,975,353 4,127,524 2,587,471 2,826,073 6,994,786 7,416,809 Total goodwill 87,145 87,145 210,783 222,360 — — 297,928 309,505 Total deposits 5,633,529 6,063,339 140 7,143 185,540 297,862 5,819,209 6,368,344 NOTE 15. FAIR VALUES OF FINANCIAL INSTRUMENTS ASC 820, Fair Value Measurements defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system and requires disclosures about fair value measurement. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The fair value hierarchy is as follows: Level 1 Inputs - Valuation is based upon quoted prices for identical instruments traded in active markets that the Company has the ability to access at measurement date. Level 2 Inputs - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which significant assumptions are observable in the market. Level 3 Inputs - Valuation is generated from model-based techniques that use significant assumptions not observable in the market and are used only to the extent that observable inputs are not available. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. 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. 34 Table of Contents 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. Equity Securities. Marketable equity securities and certain non-marketable equity securities are recorded at fair value on a recurring basis. The fair values of marketable equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). Derivatives . The Bank's use of derivatives is limited to the Consumer Lending Programs. Under these Programs, the Bank has an agreement with a third party to originate consumer loans that are included in the Bank's held for investment or held for sale portfolios. The third party provides a target return to the Company on the portfolio of loans retained by the Bank and all interest received from borrowers on such loans above the target return and after all charge-offs have been covered is paid to the third party as excess interest and servicing. The primary drivers of the derivative value include the Company's ability to settle the loans at par value and the third party partners' rights of first refusal to purchase loans that the Company intends to sell. The Company estimates the fair value of the derivative instrument using a market approach considering primarily the average interest rate on the underlying loans and the credit spread relative to the risk-free rate in order to validate that the value of the loans is in excess of par and thus the derivative could be settled by either party at no cost. The Company considers this derivative instrument to be within Level 3 of the fair value hierarchy, as it utilizes inputs from sales or securitization transactions involving similar loans. As of March 31, 2025 and September 30, 2024, the Company determined the derivatives had no fair value, respectively, thus eliminating the need for further disclosures regarding Level 3 inputs as outlined in ASC 820. The following table summarizes the fair values of debt securities AFS and equity securities as they are measured at fair value on a recurring basis. (Dollars in thousands) Total Level 1 Level 2 Level 3 March 31, 2025 Debt securities AFS Corporate securities $ 21,125 $ — $ 21,125 $ — SBA securities 11,914 — 11,914 — Obligations of states and political subdivisions 200 — 200 — Non-bank qualified obligations of states and political subdivisions 192,002 — 192,002 — Asset-backed securities 157,261 — 157,261 — Mortgage-backed securities 1,029,018 — 1,029,018 — Total debt securities AFS $ 1,411,520 $ — $ 1,411,520 $ — Common equities and mutual funds (1) $ 3,569 $ 3,569 $ — $ — Non-marketable equity securities (2) $ 12,829 $ — $ — $ — September 30, 2024 Debt securities AFS Corporate securities $ 19,750 $ — $ 19,750 $ — SBA securities 81,935 — 81,935 — Obligations of states and political subdivisions 480 — 480 — Non-bank qualified obligations of states and political subdivisions 217,990 — 217,990 — Asset-backed securities 189,698 — 189,698 — Mortgage-backed securities 1,231,368 — 1,231,368 — Total debt securities AFS $ 1,741,221 $ — $ 1,741,221 $ — Common equities and mutual funds (1) $ 3,303 $ 3,303 $ — $ — Non-marketable equity securities (2) $ 11,828 $ — $ — $ — (1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at March 31, 2025 and September 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. 35 Table of Contents Loans and Leases. The Company does not record loans and leases at fair value on a recurring basis. However, if a loan or lease is individually evaluated for risk of credit loss and repayment is expected to be solely provided by the values of the underlying collateral, the Company measures fair value on a nonrecurring basis. Fair value is determined by the fair value of the underlying collateral less estimated costs to sell. The fair value of the collateral is determined based on the internal estimates and/or assessment provided by third-party appraisers and the valuation relies on discount rates ranging from 3 % to 28 %. The following table summarizes the assets of the Company that are measured at fair value in the Condensed Consolidated Statements of Financial Condition on a nonrecurring basis: (Dollars in thousands) Total Level 1 Level 2 Level 3 March 31, 2025 Loans and leases, net individually evaluated for credit loss Commercial finance $ 8,900 $ — $ — $ 8,900 Total loans and leases, net individually evaluated for credit loss 8,900 — — 8,900 Total $ 8,900 $ — $ — $ 8,900 September 30, 2024 Loans and leases, net individually evaluated for credit loss Commercial finance $ 7,652 $ — $ — $ 7,652 Total loans and leases, net individually evaluated for credit loss 7,652 — — 7,652 Total $ 7,652 $ — $ — $ 7,652 Quantitative Information About Level 3 Fair Value Measurements (Dollars in thousands) Fair Value at March 31, 2025 Fair Value at September 30, 2024 Valuation Technique Unobservable Input Range of Inputs Loans and leases, net individually evaluated for credit loss $ 8,900 $ 7,652 Market approach Appraised values (1) 3 % - 28 % (1) The Company generally relies on external appraisers to develop this information. Management reduced the appraised value by estimating selling costs and other inputs in a range of 3 % to 28 %. 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, 2025 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. However, since there is no active market for certain financial instruments of the Company, the estimates of fair value are subjective in nature, involve uncertainties, and include matters of significant judgment. Changes in assumptions as well as tax considerations could significantly affect the estimated values. Accordingly, the aggregate fair value estimates are not intended to represent the underlying value of the Company, on either a going concern or a liquidation basis. 36 Table of Contents The following tables present the carrying amount and estimated fair value of the financial instruments held by the Company: March 31, 2025 (Dollars in thousands) Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 254,249 $ 254,249 $ 254,249 $ — $ — Debt securities available for sale 1,411,520 1,411,520 — 1,411,520 — Debt securities held to maturity 31,335 26,492 — 26,492 — Common equities and mutual funds (1) 3,569 3,569 3,569 — — Non-marketable equity securities (1)(2) 22,528 22,528 — 9,699 — Loans held for sale 45,767 45,767 — 45,767 — Loans and leases 4,470,054 4,418,831 — — 4,418,831 Federal Reserve Bank and Federal Home Loan Bank stocks 24,276 24,276 — 24,276 — Accrued interest receivable 37,081 37,081 37,081 — — Financial liabilities Deposits 5,819,209 5,819,118 5,814,996 4,122 — Other short- and long-term borrowings 33,405 32,977 — 32,977 — Accrued interest payable 183 183 183 — — (1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at March 31, 2025. (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. September 30, 2024 (Dollars in thousands) Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 158,337 $ 158,337 $ 158,337 $ — $ — Debt securities available for sale 1,741,221 1,741,221 — 1,741,221 — Debt securities held to maturity 33,092 30,236 — 30,236 — Common equities and mutual funds (1) 3,303 3,303 3,303 — — Non-marketable equity securities (1)(2) 21,350 21,350 — 9,522 — Loans held for sale 691,688 691,688 — 691,688 — Loans and leases 4,071,071 4,036,490 — — 4,036,490 Federal Reserve Bank and Federal Home Loan Bank stocks 36,014 36,014 — 36,014 — Accrued interest receivable 31,385 31,385 31,385 — — Financial liabilities Deposits 5,875,085 5,874,994 5,845,879 29,115 — Overnight federal funds purchased 377,000 377,000 377,000 — — Other short- and long-term borrowings 33,354 31,787 — 31,787 — Accrued interest payable 571 571 571 — — (1) Equity securities at fair value are included within other assets on the Consolidated Statements of Financial Condition at September 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. NOTE 16. SUBSEQUENT EVENTS Management has evaluated subsequent events that occurred after March 31, 2025. 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, 2025. 37 Table of Contents NOTE 17. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The Company has restated its unaudited historical condensed consolidated financial statements as of March 31, 2024 and for the three and six months ended March 31, 2024 to correct for identified errors in its accounting for allowance for credit losses, interest income, provision for credit losses, and noninterest expense. In addition, the Company has corrected other unrelated immaterial errors which were previously not recorded or not recorded in the appropriate period. Prior period financial information restated for the three and six months ended March 31, 2024, was restated in the Form 10-K/A for the fiscal year ended September 30, 2024. 38 Table of Contents