What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-11-25 compared with 2024-11-26 · 394 added, 226 removed, 1658 unchanged (27% of the section changed)

4 unchanged sentences

Statements of Operations

Statements of Comprehensive Income (Loss)

Statements of Comprehensive Income

Statements of Changes in Stockholders’ Equity

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We have audited the accompanying consolidated statements of financial condition of Pathward Financial, Inc.

and Subsidiaries (the "Company") as of September 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2024, and the related notes (collectively referred to as the "financial statements").

and Subsidiaries (the "Company") as of September 30, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated November 26, 2024 expressed an unqualified opinion.

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated November 25, 2025, expressed an adverse opinion on the Company’s internal control over financial reporting because of the material weakness related to the accounting and financial reporting for certain consumer lending program agreements in the Consumer Solutions business.

We considered the material weakness in determining the nature, timing, and extent of audit procedures applied in our audit of the 2025 financial statements, and our report on Internal Control over Financial Reporting does not affect this report on the financial statements.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of the critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Credit Losses (ACL) – Qualitative Adjustments

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◦ Testing the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation.

Credit Enhancements Contained Within Third-Party Consumer Lending Agreements

The Company has agreements with third parties to service consumer finance loans that are included in the Company’s loan portfolio as described in Notes 1 and 4 to the consolidated financial statements.

As part of these programs, several third-party providers offer various credit enhancements with respect to loans originated under the programs, including contributions to reserve accounts, yield maintenance and certain other payments.

The Company has determined that the borrower payments and credit enhancement payments under the programs should be accounted for separately.

Interest income is recorded at the gross borrower loan rate, and credit losses and associated provisions for credit losses are recorded on a gross basis over the life of the loans.

The third-party agreements represent a total return derivative recognized at fair value on the consolidated statement of financial condition.

Changes in fair value of the total return derivative are recognized in noninterest expense.

We identified auditing the accounting associated with the credit enhancement contained within the third-party agreements as a critical audit matter due to the nature and extent of audit effort required, including the need for individuals with specialized knowledge.

Additionally, a material weakness was identified by the Company related to the accounting and financial reporting for certain consumer lending program agreements in the Consumer Solutions business, including the continuing application of U.S.

GAAP to such transactions.

The primary procedure we performed to address this critical audit matter included involving experienced audit personnel and our internal specialists to evaluate the third-party agreements and the related accounting treatment.

/s/ Crowe LLP

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Refund transfer product fees 43,980 40,178 39,452

Refund advance fee income 43,473 37,433 40,557

Refund advance and other tax fee income 48,705 43,473 37,433

Card and deposit fees 124,971 125,943 150,746

Rental income 51,686 54,157 54,190

(Loss) on sale of securities ( 25,084 ) — —

Gain on divestitures 15,044 — —

Gain on sale of trademarks — — 10,000

Gain (loss) on sale of other 12,669 2,663 ( 6,207 )

Secondary market revenue 37,022 5,920 412

Gain on sale of other 5,151 6,749 2,251

Other income 26,625 23,167 22,115

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Card processing 138,443 137,938 105,498

Occupancy and equipment expense 36,587 34,691 34,909

Building and software 42,094 36,587 34,691

Operating lease equipment depreciation 45,636 41,757 45,710

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AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Fiscal Year Ended September 30,

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Change in net unrealized gain (loss) on debt securities ( 12,293 ) 136,028 ( 56,255 )

Net loss realized on debt securities 25,084 — —

12,791 136,028 ( 56,255 )

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Total other comprehensive income (loss) 7,933 102,049 ( 42,363 )

Total comprehensive income (loss) 271,699 123,444 ( 61,325 )

Total comprehensive income 194,720 286,561 103,095

Total comprehensive income attributable to noncontrolling interest 915 1,293 2,192

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— — ( 5,426 ) — — ( 5,426 ) — ( 5,426 )

Issuance of common stock due to ESOP 1 2,885 — — — 2,886 — 2,886

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

Repurchases of common stock ( 27 ) 27 ( 117,985 ) — ( 2,452 ) ( 120,437 ) — ( 120,437 )

Retirement of treasury stock — — ( 6,943 ) — 6,943 — — —

Stock compensation — 11,070 — — — 11,070 — 11,070

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Stock compensation — 10,286 — — — 10,286 — 10,286

Total other comprehensive loss — — — ( 42,363 ) — ( 42,363 ) — ( 42,363 )

Total other comprehensive income — — — 102,049 — 102,049 — 102,049

Joint venture membership interest divestiture — — ( 523 ) — — ( 523 ) — ( 523 )

Net income — — 183,219 — — 183,219 1,293 184,512

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— — ( 4,686 ) — — ( 4,686 ) — ( 4,686 )

Issuance of common stock due to restricted stock 3 — — — — 3 — 3

Repurchases of common stock ( 20 ) 20 ( 158,414 ) — ( 4,633 ) ( 163,047 ) — ( 163,047 )

Retirement of treasury stock — — ( 6,181 ) — 6,181 — — —

Stock compensation — 9,507 — — — 9,507 — 9,507

Total other comprehensive income — — — 7,933 — 7,933 — 7,933

Joint venture membership interest divestiture — — ( 523 ) — — ( 523 ) — ( 523 )

Net income — — 185,872 — — 185,872 915 186,787

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Provision for credit loss 56,774 58,101 109,242

Provision for deferred taxes 11,115 ( 175 ) 17,587

Provision for (reversal of) deferred taxes 16,799 16,166 ( 7,140 )

Originations of loans held for sale ( 2,497,787 ) ( 2,034,977 ) ( 1,208,684 )

1 unchanged sentence

Net change in loans held for sale 3,620 18,127 25,922

Fair value adjustment of foreclosed real estate — — 301

Net realized (gain) on securities available for sale — — ( 154 )

Net realized (gain) loss on loans held for sale ( 5,920 ) ( 268 ) 3,694

Net realized (gain) on loans held for sale ( 37,022 ) ( 5,920 ) ( 268 )

Net realized loss (gain) on securities available for sale 25,084 — —

Net realized (gain) on divestitures ( 15,044 ) — —

Net realized loss on premise, furniture, and equipment — — 65

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Impairment on rental equipment 2,915 2,013 24

Impairment of intangibles — — 670

Net change in accrued interest receivable ( 7,135 ) ( 8,103 ) ( 5,303 )

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Purchases of loans and leases ( 226,228 ) ( 298,262 ) ( 215,266 )

Proceeds from sales of loans and leases — — 123,241

Net change in loans and leases ( 733,046 ) 102,272 ( 332,275 )

Purchases of premises, furniture, and equipment ( 11,678 ) ( 10,141 ) ( 8,623 )

Proceeds from sales of premises, furniture, and equipment — — 35

Purchases of rental equipment ( 202,347 ) ( 266,613 ) ( 441,047 )

3 unchanged sentences

Proceeds from death benefit of bank-owned life insurance — — 1,040

Proceeds from divestitures, net of transaction costs 608,455 — —

Proceeds from sale of trademarks — — 10,000

Proceeds from sale of other assets 471 6,465 —

Net cash (used in) investing activities ( 227,661 ) ( 920,758 ) ( 310,872 )

Proceeds from loans held for sale previously classified as portfolio loans 146,158 — —

Net cash provided by (used in) investing activities 25,843 ( 262,929 ) ( 945,560 )

Cash flows from financing activities:

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Net change in short-term borrowings ( 368,000 ) 364,000 13,000

Redemption of long-term borrowings — — ( 75,000 )

Proceeds from long-term borrowings — — 20,000

Principal payments on capital lease obligations — — ( 75 )

Principal payments on other liabilities — ( 621 ) ( 1,747 )

2 unchanged sentences

Issuance of common stock due to restricted stock — 3 1

Issuance of common stock due to ESOP — — 2,886

Repurchases of common stock ( 163,047 ) ( 86,853 ) ( 120,437 )

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Loans and leases to rental equipment 4,490 4,847 3,122

Loans and leases to foreclosed real estate and repossessed assets — — 49

Rental equipment to loan and leases 180,015 225,870 377,250

2 unchanged sentences

See Notes to Consolidated Financial Statements.

PATHWARD FINANCIAL, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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The assets recognized as a result of consolidating the LLCs are the property of the LLCs and are not available for any other purpose.

(Dollars in thousands) At September 30, 2024

(Dollars in thousands) September 30, 2025

Cash and cash equivalents $ 222

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The Company’s maximum exposure to loss from the SPE is limited to its equity investment.

At September 30, 2024 and 2023, there were $ 4.6 million and no commercial term loans classified as held for sale related to this SPE, respectively.

At September 30, 2025 and 2024, there were no and $ 4.6 million commercial term loans classified as held for sale related to this SPE, respectively.

NATURE OF BUSINESS AND INDUSTRY SEGMENT INFORMATION

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Segment Reporting for additional information on the Company's segment reporting.

RECLASSIFICATION AND REVISION OF PRIOR PERIOD BALANCES

Certain prior 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 beginning with 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.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

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Actual results could differ from those estimates.

Certain significant estimates include the valuation of residual values within lease receivables, allowance for credit losses, the valuation of goodwill and intangible assets and the fair values of securities and other financial instruments.

Certain significant estimates include the valuation of residual values within lease receivables, allowance for credit losses, the valuation of goodwill and intangible assets, Consumer Loan Program derivatives and the fair values of securities and other financial instruments.

These estimates are reviewed by management regularly;

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Management's intent to sell may be impacted by secondary market conditions, loan credit quality, or other factors.

The following table summarizes the activity pertaining to loans held for sale:

Fiscal Year Ended September 30,

(Dollars in thousands) Consumer Commercial Consumer Commercial

Beginning of year balance $ 77,779 $ — $ 21,071 $ —

Originations 1,901,593 133,388 1,206,201 2,483

Proceeds from sales ( 1,937,079 ) ( 99,005 ) ( 1,123,271 ) ( 16,610 )

Gain (loss) on sales — 5,102 — 268

Principal collections, net of deferred fees and costs ( 18,083 ) ( 48 ) ( 26,222 ) 280

Non-cash transfers, net — 563,495 — 13,579

End of year balance $ 24,210 $ 602,932 $ 77,779 $ —

LOANS AND LEASES

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Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are classified as held for investment and are generally reported at their outstanding principal balances net of any unearned income, cumulative charge-offs, unamortized deferred fees and costs on originated loans, and unamortized premiums or discounts on purchased loans (amortized cost).

Interest income on loans is accrued over the term of the loans based upon the amount of principal outstanding except when serious doubt exists as to the collectability of a loan, in which case the accrual of interest is discontinued.

Unearned income, deferred loan fees and costs, and discounts and premiums are amortized to interest income over the contractual life of the loan using the interest method.

Interest income on loans is generally accrued over the term of the loans based upon the amount of principal outstanding except when serious doubt exists as to the collectability of a loan, in which case the accrual of interest is discontinued.

Unearned income, deferred loan fees and costs, and discounts and premiums are amortized to interest income over the contractual life of the loan generally using the interest method.

The Company's business lines follow a nonaccrual policy with certain commercial finance, consumer finance and tax service loans not generally being placed on non-accrual status, but instead are charged off when the collection of principal and interest become doubtful.

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For consumer loans, the Company fully charges off or charges down to net realizable value when deemed uncollectible due to bankruptcy or other factors, or meets a defined number of days past due.

Consumer Loan Programs

The Company partners with third-parties to originate and service consumer loans to further deploy financing offerings to the underserved and underbanked (the Programs).

Loan options under the Programs include secured and unsecured installment products.

The Programs allow for loans to be originated as held for sale or held for investment, with the majority of the loans being originated as held for sale and not retained by the Company.

The loans are originated with terms up to 73 months, although the effective life of the loans may be much shorter.

The Programs are governed by multiple interrelated agreements including the loan agreement between the Company and the borrower and the agreements with the third-party partners.

For loans held for investment, the structure of the Programs is intended to generate loans that yield a targeted return to the Bank on a portfolio basis while also providing credit enhancements from the third-party partner.

Key characteristics of the Programs include:

• The Bank has thresholds in place on the maximum amount of loans to be retained by the Bank.

The majority of loans originated under these Programs are originated as held for sale.

• For loans retained by the Bank, only interest received is allocated between the Bank and third-party partners.

All principal cash collections for loans are retained by the Bank and reduce the outstanding principal balance.

• For loans retained by the Bank, interest received is first applied to charge offs and then to the Bank for its targeted yield under the applicable Program.

Any remaining interest received in excess of the targeted yield is then allocated to the third-party partner, which includes compensation for servicing, and recorded in noninterest expense.

If there is no remaining interest received after charge offs and the Bank’s yield, there is no excess interest paid or due to the third-party partners.

• The third-party partners contribute funds to a reserve account at the time of Program execution to be used for any future charge-offs not covered by interest collections, as well as any Bank required yield, as outlined in the contract.

The reserve account is required to maintain minimum thresholds over the term of the Program.

The Company's agreements with multiple unrelated parties are required to be accounted for separately in accordance with U.S.

GAAP relevant to each unit of account.

The Company accounts for the Programs into multiple units of account as follows:

• The loans and related interest income are accounted for under ASC 310, Receivables, and are included in the Company’s expected credit losses estimation process under CECL.

Due to the nature of the product, the Company recognizes interest income based on the monthly interest.

• The agreement with the third-party partner that governs the excess interest, required Bank yield, and credit enhancements meets the definition of a derivative financial instrument and is accounted for in accordance with ASC 815, Derivatives and Hedging.

The derivative is accounted for at fair value in the Company’s Consolidated Statements of Financial Condition in other assets or liabilities with changes in fair value each period reported in the Consolidated Statements of Operations within noninterest expense.

– Noninterest expense each period includes actual amounts paid during the period for excess interest.

The Company had $ 256.4 million and $ 273.0 million of loans outstanding in the Programs, or 5 % a nd 6 % of its total gross loan portfolio, as of September 30, 2025 and 2024 , respectively.

As of September 30, 2025 and 2024, $ 163.1 million and $ 24.2 million, respectively, were included in loans held for sale at the lower of cost or fair value as a result of the Company’s decision to pursue a sale of that portion of the portfolio.

As of September 30, 2025 and 2024 , $ 93.3 million and $ 248.8 million were included in loans held for investment, respectively.

Loans in the Programs held for investment are included within the Consumer Finance category disclosures in Note 4.

Loans and Leases, Net.

Leases Receivable

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If the carrying amount is not fully recoverable, an impairment loss is recognized to reduce the carrying amount to fair value, where fair value is based on the condition of the rental equipment and the projected net cash flows from rental and sale adjusted for current market conditions.

A $ 2.0 million impairment expense from rental equipment was recognized for the fiscal year ended September 30, 2024, a nominal impairment expense was recognized for fiscal year ended September 30, 2023, and no impairment expense was recognized for the fiscal year ended September 30, 2022.

A $ 2.9 million impairment expense from rental equipment was recognized for the fiscal year ended September 30, 2025, a $ 2.0 million impairment expense was recognized for fiscal year ended September 30, 2024, and a nominal impairment expense was recognized for the fiscal year ended September 30, 2023.

Loan Servicing and Transfers of Financial Assets

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The service fees and ancillary income related to these loans were immaterial.

For consumer loans originated, the Bank relies on third-party services regardless of if the loans are held for investment or sold.

Transfers of loans, portions of loans meeting the definition of a participating interest, and other financial assets are accounted for as sales on the transaction settlement date when control has been surrendered.

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Credit loss for all other loans and leases is evaluated collectively by various characteristics.

The collective evaluation of expected losses in all commercial finance portfolios is based on a cohort loss rate and adjustments for forward-looking information, including industry and macroeconomic forecasts.

The collective evaluation of expected losses in all commercial finance and consumer lending portfolios is based on a cohort loss rate and adjustments for forward-looking information, including industry and macroeconomic forecasts.

The cohort loss rate is a life of loan loss rate that immediately reverts to historical loss information for the remaining maturity of the financial asset.

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The various quantitative and qualitative factors used in the methodologies are reviewed quarterly.

The collective evaluation of expected credit losses for certain consumer lending portfolios utilize different methodologies when estimating expected credit losses.

The determination of the allowance is governed by structured tiers that dictate how cash collections are applied to losses to assess if there are sufficient available funds to cover expected credit losses.

The consumer lending programs are structured with freestanding credit enhancements that are not incorporated in management’s estimate of expected credit losses in accordance with ASC 326, Financial Instruments – Credit Losses.

Rather these credit enhancements are reflected in the Company’s noninterest expense section of the Consolidated Statements of Income (Loss) from Operations.

The amount of ACL depends significantly on management’s estimates or key factors and assumptions affecting valuation, appraisals of collateral, evaluations of performance and status, the amounts and timing of future cash flows expected to be received, forecasts of future economic conditions and reversion periods.

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Commercial Finance

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

These products include term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending and other commercial finance products offered on a nationwide basis that are subject to adverse market conditions which may impact the borrower’s ability to make repayment on the loan or lease or could cause a decline in the value of the collateral that secures the loan or lease.

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

These products include term lending, asset-based lending, factoring, lease financing, government guaranteed lending and other commercial finance products offered on a nationwide basis that are subject to adverse market conditions which may impact the borrower’s ability to make repayment on the loan or lease or could cause a decline in the value of the collateral that secures the loan or lease.

The loans or leases are primarily made based on the operating cash flows of the borrower and on the underlying collateral provided by the borrower.

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Most commercial finance loans and leases are secured by the assets being financed or other business assets such as accounts receivable or inventory.

Although the loans and leases are often collateralized by equipment, inventory, accounts receivable, insurance premiums or other business assets, the liquidation of collateral in the event of a borrower default may be an insufficient source of repayment, because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use.

Although the loans and leases are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of a borrower default may be an insufficient source of repayment, because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use.

The Company attempts to mitigate these risks by adhering to its underwriting policies in evaluating the management of the business and the credit-worthiness of borrowers and guarantors.

Subsequent Events for further information on the Company's commercial premium finance insurance business.

Divestitures for information on the sale of the Bank's commercial premium finance insurance business, which was completed on October 31, 2024.

Consumer Finance

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

These program credit protections are considered freestanding credit enhancements under ASC 326 and are not considered in the Company's estimate for the ACL.

Rather, these program credit protections are captured in the Company's noninterest activities on the Consolidated Statements of Operations.

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

Derivative Instruments

Derivatives are financial instruments that meet the criteria in ASC 815, Derivatives and Hedging, to be recognized as either freestanding or embedded derivatives.

The Company’s derivatives are recognized as either assets or liabilities in the Consolidated Statements of Financial Condition at fair value.

Changes in the fair value of the derivatives are recorded through noninterest expense in the Consolidated Statements of Operations.

The Company does not utilize derivative instruments for trading or speculative purposes.

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.

This agreement to pay the third-party excess interest and receive credit enhancements meets the definition of a derivative instrument.

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.

Each reporting period, 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.

A s of September 30, 2025 and 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 Bank's Partner Solutions business line also offers tax solutions, which includes short-term refund advance loans.

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At September 30, 2025 and 2024, the Company had no loans or deposits outstanding with individuals deemed under Regulation O to be directors, executive officers and/or employees of the Company.

RECLASSIFICATION AND REVISION OF PRIOR PERIOD BALANCES

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

These changes and reclassifications did not impact previously reported net income or comprehensive income (loss).

RECENTLY ADOPTED ACCOUNTING STANDARDS UPDATES ("ASU")

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The following ASU became effective for the Company on October 1, 2024.

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

Troubled Debt Restructurings and Vintage Disclosures.

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

The ASU also requires current period gross charge-offs by year of origination to be disclosed for loans and leases within scope of ASC Topic 326, Financial Instruments – Credit Losses.

The following ASUs have been issued and are considered applicable to the Company, but have not yet been adopted as of September 30, 2024.

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

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

The amendments will be effective for the Company beginning with the fiscal year ended September 30, 2025 and subsequent interim periods.

The amendments will be applied retrospectively to all prior periods in the consolidated financial statements.

The Company is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

The amendments were effective for the Company beginning October 1, 2024, and the amended guidance was first applied to the Company's annual consolidated financial statements for the fiscal 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.

Segment Reporting.

The following ASUs have been issued and are considered applicable to the Company, but have not yet been adopted as of September 30, 2025.

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

1 unchanged sentence

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.

The amendments in this ASU will be effective for the Company beginning on October 1, 2025 and will apply to the Company's annual consolidated financial statements for the fiscal year ending September 30, 2026.

The Company is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

The amortized cost, gross unrealized gains and losses and estimated fair values of AFS and HTM debt securities are presented below.

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

This ASU requires public entities to provide enhanced disaggregation of certain expense categories presented in the income statement to improve transparency and consistency in financial reporting.

The new guidance aims to provide investors with more detailed information regarding the nature of a company’s expenses.

The amendments will be effective for the Company beginning with the fiscal year ending September 30, 2027, and interim periods within that fiscal year.

The amendments are to be applied retrospectively to all prior periods presented.

The Company is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

ASU 2025-05 , Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets .

This ASU clarifies the measurement of expected credit losses for accounts receivable and contract assets arising from revenue transactions, aligning the application of Topic 326 with the revenue recognition guidance in Topic 606.

The amendments are intended to reduce diversity in practice and improve the consistency of credit loss estimates across similar financial assets.

The amendments will be effective for the Company beginning on October 1, 2026, and will apply to interim periods within the fiscal year ending September 30, 2027.

The Company is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

ASU 2025-06 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) .

This ASU modernizes the accounting for internally used software by streamlining when costs may be capitalized and by enhancing disclosure and presentation requirements.

The amendments will be effective for the Company beginning on October 1, 2028, and will apply to interim periods within the fiscal year ending September 30, 2029.

The Company is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

ASU 2025-07 , Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) .

This ASU refines the scope of derivative accounting and clarifies the treatment of certain share-based noncash consideration received from customers.

The amendments are intended to enhance clarity and consistency in applying derivative and revenue recognition guidance.

The amendments will be effective for the Company beginning on October 1, 2027 and will apply to interim periods within the fiscal year ending September 30, 2028.

The Company is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

On October 31, 2024, the Company completed the sale of 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 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 sale included substantially all of the assets and liabilities related to the Bank's commercial insurance premium finance business.

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

(Dollars in thousands) December 31, 2024 Settlement Adjustments September 30, 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.

Goodwill and Intangible Assets and Note 9.

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

The amortized cost, gross unrealized gains and losses and estimated fair values of debt securities AFS and HTM are presented below.

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

Debt Securities AFS

At September 30, 2024

September 30, 2025

Corporate securities $ 25,000 $ — $ ( 3,750 ) $ 21,250

5 unchanged sentences

Total debt securities AFS $ 1,518,129 $ 103 $ ( 190,389 ) $ 1,327,843

At September 30, 2023

September 30, 2024

Corporate securities $ 25,000 $ — $ ( 5,250 ) $ 19,750

6 unchanged sentences

Debt Securities HTM

At September 30, 2024

September 30, 2025

Non-bank qualified obligations of states and political subdivisions $ 27,373 $ — $ ( 3,430 ) $ 23,943

1 unchanged sentence

Total debt securities HTM $ 29,308 $ — $ ( 3,655 ) $ 25,653

At September 30, 2023

September 30, 2024

Non-bank qualified obligations of states and political subdivisions $ 31,060 $ — $ ( 2,668 ) $ 28,392

8 unchanged sentences

Debt Securities AFS

At September 30, 2024

September 30, 2025

Corporate securities $ — $ — $ 21,250 $ ( 3,750 ) $ 21,250 $ ( 3,750 )

SBA securities — — 10,769 ( 1,022 ) 10,769 ( 1,022 )

Obligations of state and political subdivisions — — 280 ( 21 ) 280 ( 21 )

Non-bank qualified obligations of states and political subdivisions — — 185,089 ( 26,057 ) 185,089 ( 26,057 )

2 unchanged sentences

Total debt securities AFS $ 66,097 $ ( 558 ) $ 1,248,920 $ ( 189,831 ) $ 1,315,017 $ ( 190,389 )

At September 30, 2023

September 30, 2024

Corporate securities $ — $ — $ 19,750 $ ( 5,250 ) $ 19,750 $ ( 5,250 )

6 unchanged sentences

Debt Securities HTM

At September 30, 2024

September 30, 2025

Non-bank qualified obligations of states and political subdivisions $ — $ — $ 23,943 $ ( 3,430 ) $ 23,943 $ ( 3,430 )

1 unchanged sentence

Total debt securities HTM $ — $ — $ 25,653 $ ( 3,655 ) $ 25,653 $ ( 3,655 )

At September 30, 2023

September 30, 2024

Non-bank qualified obligations of states and political subdivisions $ — $ — $ 28,392 $ ( 2,668 ) $ 28,392 $ ( 2,668 )

1 unchanged sentence

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

The decrease in the fair value of investment securities balances when comparing September 30, 2024 to the prior year was primarily driven by principal pay downs during the fiscal year.

The decrease in the fair value of investment securities balances when comparing September 30, 2025 to the prior year was primarily driven by the sale of $ 239.3 million debt securities AFS and principal pay downs during the fiscal year.

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 September 30, 2025, there were 147 debt securities AFS in an unrealized loss position.

8 unchanged sentences

However, certain prepayment penalties may apply.

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Debt Securities AFS Amortized Cost Fair

19 unchanged sentences

Gross losses on sales 25,084 — —

Net gain on securities AFS $ — $ — $ 154

Net loss on securities AFS $ ( 25,084 ) $ — $ —

There was no activity related to the sale of securities held to maturity during the fiscal years ended September 30, 2025, 2024, and 2023.

6 unchanged sentences

At fiscal year-end 2025 and 2024, the Company pledged securities with fair values of $ 385.5 million and $ 533.8 million against FRB advances, respectively.

Included in interest and dividend income from other investments is $ 1.2 million, $ 1.2 million, and $ 1.2 million related to dividend income on FRB stock for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

For each of the fiscal years ended September 30, 2025, 2024, and 2023, $ 1.2 million related to dividend income on FRB stock is included in interest and dividend income from other investments.

The Company’s borrowings from the FHLB are secured by specific investment securities.

4 unchanged sentences

The carrying value of the stock held at the FHLB was $ 5.0 million and $ 16.3 million at September 30, 2025 and 2024, respectively.

At fiscal year-end 2024 and 2023, the Company pledged securities with fair values of approximately $ 1.04 billion and $ 996.9 million, respectively, as collateral against FHLB advances.

At fiscal year-end 2025 and 2024, the Company pledged securities with fair values of approximately $ 955.3 million and $ 1.04 billion, respectively, as collateral against FHLB advances.

There was approximately $ 223.0 million and $ 136.9 million of qualifying loans pledged as collateral at September 30, 2025 and 2024, respectively.

3 unchanged sentences

Equity Securities.

The Company held $ 3.3 million and $ 3.4 million in marketable equity securities at September 30, 2024 and 2023, respectively.

The Company held $ 3.8 million and $ 3.3 million in marketable equity securities within other assets on the Consolidated Statements of Financial Condition at September 30, 2025 and 2024, respectively.

The Company recognized $ 0.1 million and $ 0.1 million in unrealized losses on marketable equity securities during the fiscal years ended September 30, 2025 and 2024, respectively.

No such securities were sold during the fiscal year.

Non-marketable equity securities with a readily determinable fair value totaled $ 11.8 million and $ 8.4 million at September 30, 2024 and 2023, respectively.

The Company recognized $ 1.1 million in unrealized gains and $ 0.2 million in unrealized losses during the fiscal years ended September 30, 2024 and 2023, respectively.

Non-marketable equity securities that are measured at fair value using NAV as a practical expedient totaled $ 13.2 million and $ 11.8 million at September 30, 2025 and 2024, respectively.

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

The Company recognized $ 1.6 million and $ 1.1 million in unrealized gains during the fiscal years ended September 30, 2025 and 2024, respectively.

No such securities were sold during the fiscal year.

Non-marketable equity securities without readily determinable fair value totaled $ 12.0 million and $ 13.6 million at September 30, 2025 and 2024, respectively, reflecting the Company's ownership interests in other entities through 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 fiscal year, the Company recognized a $ 2.4 million gain on Visa shares previously carried at cost basis of $0 since 2008.

On April 8, 2024, Visa Inc.

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

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

There was one additional security sold during the fiscal year for a $ 2.5 million gain which is included in gain on sale of other on the Consolidated Statements of Operations.

The Company recognized a $ 0.4 million gain and a $ 2.4 million gain on Visa shares previously carried at a cost basis of $0 during the fiscal years ended September 30, 2025 and 2024, respectively.

This gain was recognized within the gain on sale of other on the Consolidated Statements of Operations.

There was one security sold during the fiscal year ended September 30, 2025 for a $ 0.4 million gain which is included in gain on sale of other on the Consolidated Statements of Operations.

Equity Securities Impairment.

1 unchanged sentence

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

The Company recognized $ 1.0 million, $ 3.3 million, and zero in impairment for such investments for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

The Company recognized $ 3.0 million, $ 1.0 million, and $ 3.3 million in impairment for such investments for the fiscal years ended September 30, 2025, 2024, and 2023, respectively.

LOANS AND LEASES, NET

Loans and leases consist of the following:

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Term lending $ 2,302,540 $ 1,554,641

2 unchanged sentences

Lease financing 149,236 152,174

Insurance premium finance — 800,077

SBA/USDA 511,488 568,628

5 unchanged sentences

Total loans and leases 4,665,006 4,071,071

Net deferred loan origination costs 4,124 6,435

Net deferred loan origination costs (fees) ( 98 ) 4,124

Total gross loans and leases 4,664,908 4,075,195

4 unchanged sentences

The Company sold held for sale loans resulting in proceeds of $ 2.04 billion and gain on sale of $ 5.9 million during the fiscal year ended September 30, 2024.

Gains and losses from the sale of loans and leases are included in secondary market revenue on the Consolidated Statements of Operations.

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

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

12 unchanged sentences

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

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Minimum lease payments receivable $ 157,271 $ 162,757

20 unchanged sentences

Third-party residual value guarantees —

Total carrying amount of direct financing and sales-type leases $ 162,757

Total carrying amount of minimum lease payments for direct financing and sales-type leases $ 157,271

The Company did not record any contingent rental income from direct financing and sales-type leases in the fiscal year ended September 30, 2025.

A number of factors affected the economic environment in 2023 continued throughout 2024 including geopolitical conflict, supply chain disruptions, inflation, and increased interest rates.

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

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

Activity in the allowance for credit losses was as follows:

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.

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

Fiscal Year Ended September 30,

5 unchanged sentences

Ending balance $ 53,319 $ 71,765

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

At September 30, 2024

Fiscal Year Ended September 30, 2025

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

16 unchanged sentences

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

At September 30, 2023

Fiscal Year Ended September 30, 2024

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

16 unchanged sentences

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

At September 30, 2022

Fiscal Year Ended September 30, 2023

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

11 unchanged sentences

Warehouse finance 327 50 — — 377

Community banking 12,262 ( 12,686 ) — 424 —

Total loans and leases 63,796 109,336 ( 83,932 ) 7,655 96,855

4 unchanged sentences

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

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

(Dollars in thousands) September 30, 2025 September 30, 2024

Term lending $ 33,042 $ 15,491

Asset-based lending 24,273 —

Factoring — 1,133

Lease financing 3,985 5,300

24 unchanged sentences

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

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

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

Action is taken to charge off 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.

8 unchanged sentences

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

At September 30, 2024 2024 2023 2022 2021 2020 Prior

September 30, 2025 2025 2024 2023 2022 2021 Prior

Pass $ 935,599 $ 399,968 $ 298,678 $ 99,820 $ 43,216 $ 35,971 $ — $ 1,813,252

10 unchanged sentences

Substandard — — — — — — 24,730 24,730

Doubtful — — — — — — 2,164 2,164

Total — — — — — — 593,265 593,265

4 unchanged sentences

Substandard — — — — — — 1,537 1,537

Doubtful — — — — — — 12 12

Total — — — — — — 217,501 217,501

37 unchanged sentences

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

At September 30, 2023 2023 2022 2021 2020 2019 Prior

September 30, 2024 2024 2023 2022 2021 2020 Prior

Pass $ 548,597 $ 398,832 $ 117,180 $ 77,585 $ 42,950 $ 24,166 $ — $ 1,209,310

4 unchanged sentences

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

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

Asset-based lending

3 unchanged sentences

Substandard — — — — — — 3,921 3,921

Doubtful — — — — — — 501 501

Total — — — — — — 471,897 471,897

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

Pass — — — — — — 292,436 292,436

2 unchanged sentences

Substandard — — — — — — 7,306 7,306

Doubtful — — — — — — 12 12

Total — — — — — — 362,295 362,295

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

Lease financing

5 unchanged sentences

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

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

Insurance premium finance

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

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

4 unchanged sentences

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

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

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

Special mention — — 530 — — — — 530

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

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

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

Other commercial finance

3 unchanged sentences

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

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

Warehouse finance

1 unchanged sentence

Total — — — — — — 517,847 517,847

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

Total loans and leases

5 unchanged sentences

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

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

Past due loans and leases were as follows :

At September 30, 2024

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

September 30, 2025

Loans held for sale $ 2,319 $ 1,860 $ 1,521 $ 5,700 $ 173,721 $ 179,421 $ 1,521 $ — $ 1,521

11 unchanged sentences

Total loans and leases $ 34,733 $ 20,699 $ 58,657 $ 114,089 $ 4,730,338 $ 4,844,427 $ 17,724 $ 81,416 $ 99,140

At September 30, 2023

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

September 30, 2024

Loans held for sale $ 2,266 $ 1,361 $ 1,050 $ 4,677 $ 687,011 $ 691,688 $ 1,050 $ — $ 1,050

3 unchanged sentences

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

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

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

9 unchanged sentences

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

At September 30, 2024 2024 2023 2022 2021 2020 Prior

September 30, 2025 2025 2024 2023 2022 2021 Prior

Term lending $ — $ 1,383 $ 23,220 $ 3,469 $ 10,887 $ — $ — $ 38,959 $ 18,072

Asset-based lending — — — — — — 24,327 24,327 2,110

Factoring — — — — — — 1,291 1,291 —

5 unchanged sentences

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

At September 30, 2023 2023 2022 2021 2020 2019 Prior

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

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

Factoring — — — — — — 29 29 —

6 unchanged sentences

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

At September 30, 2024 2024 2023 2022 2021 2020 Prior

September 30, 2025 2025 2024 2023 2022 2021 Prior

Loans held for sale $ 521 $ 835 $ 150 $ 15 $ — $ — $ — $ 1,521

9 unchanged sentences

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

At September 30, 2023 2023 2022 2021 2020 2019 Prior

September 30, 2024 2024 2023 2022 2021 2020 Prior

Loans held for sale $ 1,031 $ 19 $ — $ — $ — $ — $ — $ 1,050

1 unchanged sentence

Lease financing — — — 2 58 — — 60

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

SBA/USDA — — 331 — — — — 331

Other commercial finance — — — — — 91 — 91

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

15 unchanged sentences

The recognized interest income on the Company's nonaccrual loans and leases for the fiscal years ended September 30, 2025 and 2024 was not significant.

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

Troubled Debt Restructurings and Vintage Disclosures on a prospective basis.

Financial information at and for the fiscal year ended September 30, 2024 is reflected as such.

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

Modifications made to borrowers experiencing financial difficulty during the fiscal year ended September 30, 2025 were $ 6.7 million in the commercial finance loan portfolio.

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

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

At September 30, 2024, $ 1.5 million of modifications granted were in the over 89 days past due category.

There were $ 1.1 million loans that were modified in a trouble debt restructuring ("TDR") during the fiscal year ended September 30, 2023.

The Company had $ 0.9 million of commercial finance loans that were modified within the previous 12 months experience a payment default during the fiscal year ended September 30, 2023.

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

Modifications made to borrowers experiencing financial difficulty during the fiscal year ended September 30, 2024 were $ 9.8 million in the commercial finance loan portfolio.

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

During the fiscal years ended September 30, 2025 and 2024, the Company had $ 5.9 million and $ 1.5 million of commercial finance loans where a modification was granted in the previous 12 months in which there was a payment default, respectively.

At September 30, 2025 and 2024, $ 5.9 million of modifications granted were in the 60 to 89 days past due category and $ 1.5 million of modifications granted were in the over 89 days past due category, respectively.

EARNINGS PER COMMON SHARE ("EPS")

3 unchanged sentences

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

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

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

Antidilutive securities are disregarded in earnings per share calculations.

13 unchanged sentences

Effect of dilutive securities (1)

Performance share units 31,813 92,527 5,176

PSUs 125,140 31,813 92,527

Total effect of dilutive securities 125,140 31,813 92,527

4 unchanged sentences

$ 7.87 $ 7.20 $ 5.24

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

(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 fiscal years ended September 30, 2025, 2024, and 2023, respectively, were 87,324 , 232,601 , and 408,477 weighted average shares of nonvested restricted stock because their inclusion would be anti-dilutive.

1 unchanged sentence

Premises, furniture, and equipment consists of the following:

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Land $ 1,354 $ 1,354

4 unchanged sentences

Net book value $ 40,632 $ 39,055

Depreciation expense of premises, furniture and equipment included in occupancy and equipment expense was approximately $ 10.2 million, $ 11.1 million and $ 11.3 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

Depreciation expense of premises, furniture and equipment included in building and software was approximately $ 9.6 million, $ 10.2 million and $ 11.1 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively.

RENTAL EQUIPMENT, NET

Rental equipment consists of the following:

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Computers and IT networking equipment $ 11,723 $ 21,308

14 unchanged sentences

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

There have been no changes to the carrying amount of goodwill during the fiscal years ended September 30, 2024 and 2023.

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

During the fiscal year ended September 30, 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.

Divestitures to the 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 )

September 30, 2025 $ 87,145 $ 210,783 $ — $ 297,928

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

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

The changes in the carrying amount of the Company’s intangible assets during the fiscal year ended September 30, 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.

Divestitures to the Consolidated Financial Statements for further information.

(Dollars in thousands) Trademark (1)

1 unchanged sentence

All Others (3)

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

September 30, 2024 $ 6,422 $ — $ 6,566 $ 3,601 $ 16,589

Amortization during the period ( 1,076 ) — ( 1,824 ) ( 556 ) ( 3,456 )

At September 30, 2024 $ 6,422 $ — $ 6,566 $ 3,601 $ 16,589

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

September 30, 2025 $ 5,346 $ — $ 4,111 $ 3,045 $ 12,502

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

1 unchanged sentence

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

At September 30, 2024 $ 6,422 $ — $ 6,566 $ 3,601 $ 16,589

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

September 30, 2025 $ 5,346 $ — $ 4,111 $ 3,045 $ 12,502

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

Amortization during the period ( 1,055 ) — ( 2,544 ) ( 532 ) ( 4,131 )

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

September 30, 2024 $ 6,422 $ — $ 6,566 $ 3,601 $ 16,589

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

1 unchanged sentence

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

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

September 30, 2024 $ 6,422 $ — $ 6,566 $ 3,601 $ 16,589

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

14 unchanged sentences

Operating lease liabilities, included in accrued expenses and other liabilities , were $ 24.0 million and $ 26.0 million at September 30, 2025 and 2024, respectively.

The decreases in lease ROU assets and liabilities relate to normal amortization and lease payments made during the fiscal year ended September 30, 2025, but also include adjustments for lease assignments that occurred as a result of the commercial insurance premium finance business sale during the fiscal 2025 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.

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 September 30, 2025 were as follows:

5 unchanged sentences

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

At September 30,

September 30, 2025 September 30, 2024

Weighted-average discount rate 2.65 % 2.45 %

5 unchanged sentences

Short-term and variable lease cost 78 75 142

ROU asset impairment — — 670

Sublease income ( 1,377 ) ( 1,300 ) ( 1,409 )

4 unchanged sentences

(Dollars in thousands)

(1) As of September 30, 2024, the Company had $ 25.0 million certificates of deposit recorded in wholesale deposits on the Consolidated Statements of Financial Condition.

(1) As of September 30, 2025, the Company had no certificates of deposit recorded in wholesale deposits on the Consolidated Statements of Financial Condition.

Under the Dodd-Frank Act, IRA and non-IRA deposit accounts are insured up to $ 250,000 by the DIF under management of the FDIC.

1 unchanged sentence

Short-Term Borrowings

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Overnight fed funds purchased $ 9,000 $ 377,000

Total $ 9,000 $ 377,000

The Company had $ 257.0 million of overnight federal funds purchased from the FHLB and $ 120.0 million from other financial institutions at September 30, 2024, as compared to $ 13.0 million from the FHLB at September 30, 2023.

The Company had $ 9.0 million of overnight federal funds purchased from the FHLB and none from other financial institutions at September 30, 2025, as compared to $ 257.0 million from the FHLB and $ 120.0 million from other financial institutions at September 30, 2024.

The Bank has executed blanket pledge agreements whereby the Bank assigns, transfers, and pledges to the FHLB and grants to the FHLB a security interest in real estate and securities collateral.

1 unchanged sentence

Under the agreement, the Bank must maintain “eligible collateral” that has a “lending value” at least equal to the “required collateral amount,” all as defined by the agreement.

At September 30, 2024 and 2023, the Bank pledged securities with fair values of approximately $ 1.04 billion and $ 996.9 million, respectively, to be used against FHLB advances as needed.

At September 30, 2025 and 2024, the Bank pledged securities with fair values of approximately $ 955.3 million and $ 1.04 billion, respectively, to be used against FHLB advances as needed.

In addition, qualifying loans of approximately $ 223.0 million were pledged as collateral at September 30, 2025 compared to $ 136.9 million at September 30, 2024.

1 unchanged sentence

Long-Term Borrowings

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Trust preferred securities $ 13,661 $ 13,661

Subordinated debentures, net of issuance costs 19,795 19,693

Other long-term borrowings (1)

Total $ 33,456 $ 33,354

(1) Includes zero and $ 0.6 million of discounted leases at September 30, 2024 and 2023, respectively.

Scheduled maturities of the Company's long-term borrowings at September 30, 2025 were as follows for the fiscal years ending:

34 unchanged sentences

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

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

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

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

4 unchanged sentences

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

The Company retired 129,929 and 149,679 shares of common stock held in treasury during the fiscal years ended September 30, 2024 and 2023, respectively.

The Company retired zero and 129,929 shares of common stock held in treasury during the fiscal years ended September 30, 2025 and 2024, respectively.

STOCK COMPENSATION

The Company previously maintained the Pathward Financial, Inc.

2002 Omnibus Incentive Plan, as amended and restated (the "Prior Omnibus Incentive Plan").

No awards were granted under the Prior Omnibus Incentive Plan following November 25, 2022, the date that the Prior Omnibus Incentive Plan expired by its terms.

On February 27, 2024, the shareholders of the Company voted to approve the Pathward Financial, Inc.

3 unchanged sentences

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.

In addition, beginning in fiscal year 2025, awards were made to certain employees as time-vesting restricted stock units settleable in shares ("RSUs").

These shares and RSUs generally vest at various times ranging from immediately to three years based on circumstances at time of grant.

The grant date fair value is determined based on the fair market value of the Company’s stock on the grant date, determined in accordance with applicable accounting standards.

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.

1 unchanged sentence

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 %.

The awards generally 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.

The fair value of the PSUs (other than PSUs subject to a market condition) 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 .

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 fiscal years ended September 30, 2024 and 2023.

(Dollars in thousands, except per share data) Number of Shares Weighted Average Fair Value at Grant

These stock awards generally vest in equal installments over eight years .

Finally, awards of shares or RSUs may be made at other times during the fiscal year for new hire, promotion, or retention awards.

The following tables show the activity of share awards (including shares of restricted stock subject to vesting, fully-vested restricted stock, RSUs, and PSUs) granted, exercised or forfeited under all of the Company’s incentive plans during the fiscal years ended September 30, 2025 and 2024.

Number of Shares Weighted Average Fair Value at Grant

Restricted Stock Awards

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

8 unchanged sentences

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

(Dollars in thousands, except per share data) Number of Units Weighted Average Fair Value at Grant

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

Nonvested shares outstanding, September 30, 2024 — $ —

Granted 97,062 79.20

Forfeited or expired ( 4,442 ) 79.39

Nonvested shares outstanding, September 30, 2025 92,620 $ 79.19

Number of Units Weighted Average Fair Value at Grant

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

Vested ( 34,304 ) 57.21

Forfeited or expired — —

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

Performance share units outstanding, September 30, 2022 96,689 $ 42.59

PSUs outstanding, September 30, 2025 142,366 $ 52.59

PSUs outstanding, September 30, 2023 155,804 $ 41.20

Vested ( 60,984 ) 55.47

Forfeited or expired ( 4,483 ) 44.59

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

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

(1) The activity in this table includes 34,304 shares related to the fiscal year 2022 PSUs, which are included in this table under the assumption of a target performance achievement.

The final performance was assessed after September 30, 2024, resulted in an achievement greater than target, and an additional 6,847 shares were allocated to the participants in the plan.

(2) The number of PSUs granted reflects the target number of PSUs able to be earned under a given award.

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

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

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 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.

17 unchanged sentences

The tax effects of the Company's temporary differences that give rise to significant portions of its deferred tax assets and liabilities were:

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Deferred tax assets:

9 unchanged sentences

Premises and equipment 4,998 3,939

Deferred income 2,386 —

Other assets 2,276 3,940

1 unchanged sentence

Deferred tax liabilities:

Premises and equipment — ( 2,016 )

Intangibles ( 8,366 ) ( 7,859 )

1 unchanged sentence

Right-of-use assets ( 5,678 ) ( 6,218 )

Life insurance redemption ( 3,493 ) —

Other liabilities ( 466 ) ( 1,346 )

19 unchanged sentences

General business credits ( 20,773 ) ( 9.3 ) % ( 21,132 ) ( 9.7 ) % ( 28,633 ) ( 18.5 ) %

Life insurance redemption 3,116 1.4 % — — % — — %

Other, net ( 1,805 ) ( 0.8 ) % ( 532 ) ( 0.2 ) % ( 474 ) ( 0.3 ) %

8 unchanged sentences

A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits follows:

At September 30,

(Dollars in thousands) 2024 2023

(Dollars in thousands) September 30, 2025 September 30, 2024

Balance at beginning of fiscal year $ 577 $ 521

17 unchanged sentences

to be Adequately Capitalized Under Prompt Corrective Action Provisions Minimum to be Well Capitalized Under Prompt Corrective Action Provisions

At September 30, 2024

September 30, 2025

Tier 1 leverage capital ratio 9.79 % 10.00 % 4.00 % 5.00 %

2 unchanged sentences

Total capital ratio 14.27 14.19 8.00 10.00

At September 30, 2023

September 30, 2024

Tier 1 leverage capital ratio 9.05 % 9.22 % 4.00 % 5.00 %

39 unchanged sentences

Refund transfer product fees 43,980 40,178 — — — — 43,980 40,178

Refund advance fee income (1)

Refund advance and other tax fee income (1)

48,705 43,473 — — — — 48,705 43,473

2 unchanged sentences

— — 50,804 53,443 882 714 51,686 54,157

Gain on trademarks (1)

(Loss) on sale of securities (1)

— — — — ( 25,084 ) — ( 25,084 ) —

Gain on sale of divestitures (1)

— — — — 15,044 — 15,044 —

Secondary market revenue (1)

59 ( 5 ) 23,634 5,925 13,329 — 37,022 5,920

Gain (loss) on sale of other (1)

37 unchanged sentences

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 custodial off-balance sheet deposits.

Also included within Card and Deposit Fees for the Consumer reporting segment are monthly 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 FDIC.

1 unchanged sentence

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.

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 ("CODM") to appropriately allocate entity resources and evaluate performance.

The Company has identified the CODM to be the Chief Executive Officer ("CEO") of Pathward Financial, Inc.

Operating segments are aggregated into reportable segments if certain criteria are met.

1 unchanged sentence

Consumer, Commercial, and Corporate Services/Other.

The Company evaluated the listed operating segments based on their business processes, consumers, and variety of economic characteristics.

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

1 unchanged sentence

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.

The CODM reviews the performance and aggregates resources based on various factors but primarily through the evaluation of income (loss) before income tax expense.

The significant expenses that have been deemed meaningful to the segments and regularly reported to the CODM are summarized below.

These expenses are directly attributable to each of the three business segments.

Shared services are an area of focus for the Company and as such, the table below includes the significant selling, general, and administrative ("SG&A") allocations of such shared services.

The following tables present segment data for the Company:

1 unchanged sentence

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

Interest and dividend income $ 317,686 $ 307,348 $ ( 101,642 ) $ 523,392

Interest expense 17,673 121,851 ( 127,926 ) 11,598

Net interest income 300,013 185,497 26,284 511,794

Provision for credit loss 28,587 28,059 128 56,774

Net interest income after provision for credit loss 271,426 157,438 26,156 455,020

Noninterest income 227,248 90,904 9,948 328,100

Noninterest expense

Compensation and benefits 29,764 48,419 122,312 200,495

Building and software 9,384 9,320 23,390 42,094

Operating lease equipment depreciation — 45,636 — 45,636

Rate related card expenses 104,081 — — 104,081

Other card expenses 34,321 — 41 34,362

Tax product expenses 12,775 — — 12,775

Loan expenses 1,128 16,104 — 17,232

Legal and consulting 2,404 4,003 30,062 36,469

SG & A intercompany allocations 70,348 29,312 ( 99,660 ) —

Consumer lending program expenses (1)

20,034 — — 20,034

Other expenses 14,256 8,741 23,892 46,889

Total noninterest expense 298,495 161,535 100,037 560,067

Income (loss) before income tax expense 200,179 86,807 ( 63,933 ) 223,053

2 unchanged sentences

Total deposits 5,665,100 122 221,725 5,886,947

(1) Consumer lending program expenses relate to the excess interest that gets passed to our partners for loans originated and retained by the Company under the various partner programs.

Refer to Derivative Instruments in Note 1.

Significant Accounting Policies for additional information on these expenses.

Fiscal Year Ended September 30, 2024

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

Interest and dividend income $ 297,411 $ 310,599 $ ( 88,952 ) $ 519,058

Interest expense 17,801 116,524 ( 113,092 ) 21,233

Net interest income 279,610 194,075 24,140 497,825

Provision for credit loss 42,390 15,571 140 58,101

Net interest income after provision for credit loss 237,220 178,504 24,000 439,724

Noninterest income 217,107 71,748 10,732 299,587

Noninterest expense

Compensation and benefits 30,067 60,263 111,142 201,472

Building and software 8,259 11,725 16,603 36,587

Operating lease equipment depreciation — 41,757 — 41,757

Rate related card expenses 110,757 — — 110,757

Other card expenses 27,140 — 41 27,181

Tax product expenses 11,805 — — 11,805

Loan expenses 1,284 12,130 — 13,414

Legal and consulting 3,130 6,025 15,702 24,857

SG & A intercompany allocations 62,148 30,996 ( 93,144 ) —

Consumer lending program expenses 7,437 — — 7,437

Other expenses 15,336 10,244 19,844 45,424

Total noninterest expense 277,363 173,140 70,188 520,691

Income (loss) before income tax expense 176,964 77,112 ( 35,456 ) 218,620

2 unchanged sentences

Total deposits 5,643,228 10,935 220,922 5,875,085

(1) Consumer lending program expenses relate to the excess interest that gets passed to our partners for loans originated and retained by the Company under the various partner programs.

Refer to Derivative Instruments in Note 1.

Significant Accounting Policies for additional information on these expenses.

Fiscal Year Ended September 30, 2023

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

Interest and dividend income $ 186,716 $ 263,415 $ ( 28,181 ) $ 421,950

Interest expense 11,401 65,960 ( 66,487 ) 10,874

Net interest income 175,315 197,455 38,306 411,076

Provision for (reversal of) credit loss 30,680 14,674 ( 16,816 ) 28,538

Provision for credit loss 90,808 18,384 50 109,242

Net interest income after provision for credit loss 84,507 179,071 38,256 301,834

Noninterest income 233,544 66,051 17,004 316,599

Noninterest expense

Compensation and benefits 24,783 56,397 103,138 184,318

Building and software 7,962 11,545 15,184 34,691

Operating lease equipment depreciation — 45,710 — 45,710

Rate related card expenses 77,355 — — 77,355

Other card expenses 28,141 — 2 28,143

Tax product expenses 11,586 — — 11,586

Loan expenses 306 11,589 ( 6 ) 11,889

Legal and consulting 2,297 7,140 17,665 27,102

SG & A intercompany allocations 60,636 30,240 ( 90,876 ) —

Consumer lending program expenses ( 1,588 ) — — ( 1,588 )

Other expenses 13,353 9,246 21,583 44,182

Total noninterest expense 224,831 171,867 66,690 463,388

Income (loss) before income tax expense 93,220 73,255 ( 11,430 ) 155,045

2 unchanged sentences

Total deposits 6,376,467 5,958 206,757 6,589,182

(1) Consumer lending program expenses relate to the excess interest that gets passed to our partners for loans originated and retained by the Company under the various partner programs.

Refer to Derivative Instruments in Note 1.

Significant Accounting Policies for additional information on these expenses.

Expenses included in the Other Expenses line represent insignificant expenses to the various operating segments such as marketing, data processing, meals and travel, communications, office supplies, seminars and training, dues and subscriptions, regulatory expense, bank service charges, fraud and program losses, charitable giving, and intangible amortization that are included in income (loss) before income tax expense.

In addition, interest expense includes intercompany interest paid through allocations to appropriately fund each of the operating segments.

Management uses funds transfer pricing methodology to allocate the inter-segment interest appropriately, and as such, has determined the allocation to properly represent the interest rate environment at the Company.

PARENT COMPANY FINANCIAL STATEMENTS

52 unchanged sentences

Cash flows from financing activities:

Redemption of long-term borrowings — — ( 75,000 )

Payment of debt issuance costs — ( 511 ) —

Proceeds from long-term borrowings — — ( 511 )

1 unchanged sentence

Issuance of common stock due to restricted stock — 2 1

Issuance of common stock due to ESOP — — 2,886

Repurchases of common stock ( 163,047 ) ( 86,853 ) ( 120,437 )

11 unchanged sentences

Net interest income 125,251 136,279 122,313 127,951

Provision for credit loss 9,890 26,052 5,881 838

Provision for (reversal of) credit loss 18,661 35,266 9,278 ( 6,431 )

Noninterest income 57,378 138,524 73,442 58,756

19 unchanged sentences

Net interest income 88,430 105,673 102,815 114,158

Provision for (reversal of) credit loss 186 32,302 ( 1,302 ) ( 2,648 )

Provision for credit loss 16,758 41,960 22,517 28,007

Noninterest income 65,777 127,038 67,733 56,051

13 unchanged sentences

There were no transfers between levels of the fair value hierarchy for the fiscal years ended September 30, 2025 or 2024.

Debt Securities Available for Sale and Held to Maturity .

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

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

Debt Securities AFS and HTM .

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

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

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

2 unchanged sentences

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

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

At September 30, 2024

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 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 September 30, 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

September 30, 2025

Debt securities AFS

10 unchanged sentences

$ 13,237 $ — $ — $ —

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

(2) Consists of 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.

At September 30, 2023

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

September 30, 2024

Debt securities AFS

10 unchanged sentences

$ 11,828 $ — $ — $ —

(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at September 30, 2023.

(1) Equity securities at fair value are included within other assets on the Consolidated Statements of Financial Condition at September 30, 2025 and September 30, 2024.

(2) Consists of certain non-marketable equity securities that are measured at fair value using NAV as a practical expedient and are excluded from the fair value hierarchy.

Loans and Leases.

3 unchanged sentences

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 31 %.

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

At September 30, 2024

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

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

September 30, 2025

Loans and leases, net individually evaluated for credit loss

3 unchanged sentences

Total $ 32,321 $ — $ — $ 32,321

At September 30, 2023

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

September 30, 2024

Loans and leases, net individually evaluated for credit loss

2 unchanged sentences

for credit loss 7,652 — — 7,652

Foreclosed assets, net — — — —

Total $ 7,652 $ — $ — $ 7,652

6 unchanged sentences

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

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

These fair value estimates were made at September 30, 2025 and 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.

3 unchanged sentences

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

At September 30, 2024

September 30, 2025

(Dollars in thousands) Carrying

20 unchanged sentences

(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.

At September 30, 2023

September 30, 2024

(Dollars in thousands) Carrying

56 unchanged sentences

Management has evaluated subsequent events that occurred after September 30, 2025.

During this period, up to the filing date of this Annual Report on Form 10-K, management identified the following subsequent events:

• On October 31, 2024, Pathward, N.A.

completed the sale (the "Transaction") of substantially all of the assets and liabilities related to the Bank's commercial insurance premium finance business (the "Business") pursuant to an 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 cash purchase price paid by the Purchaser at the closing was $ 603.3 million, based on the net asset value of the assets purchased and liabilities assumed pursuant to the Purchase Agreement plus a $ 31.2 million premium, subject to customary post-closing adjustment based on the final determination of the net asset value of the assets purchased and liabilities assumed pursuant to the terms of the Purchase Agreement.

The Bank recorded a gain on the Transaction of $ 16.4 million.

As part of the Transaction, $ 588.4 million of commercial insurance premium finance loans were sold.

• On November 1, 2024, the Bank sold $ 161.6 million of debt securities AFS with a loss on sale of securities of $ 15.8 million.

This loss largely offsets the gain from the Transaction discussed above.

During this period, up to the filing date of this Annual Report on Form 10-K, management identified the following subsequent event:

• On September 26, 2025, the Company entered into an agreement to sell a portion of its consumer finance loan portfolio to a third party.

The transaction closed on October 3, 2025.

As part of the transaction, $ 115.1 million of consumer finance loans were sold, and there was no gain or loss associated with the sale of the loans.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data