SIOUX FALLS, SD, August 28, 2024–(BUSINESS WIRE)–Pathward Financial, Inc. (the “Company”) (Nasdaq: CASH) today announced that its wholly owned subsidiary Pathward®, NA (“Pathward”), an industry-leading financial empowerment company driven by its purpose to support financial inclusion, has entered into a definitive agreement to sell its commercial insurance premium finance business to AFS IBEX Financial Services, LLC (“AFS”), a Delaware limited liability company and a subsidiary of Honor Capital Holdings, LLC, a Delaware limited liability company (“Honor”). Through its subsidiaries, Honor originates and services premium finance loans and is one of the largest independently owned insurance premium finance companies in the nation with offices in Massachusetts, New York, Florida, Texas, and California. Honor will guarantee AFS’ obligations under the agreement.
The agreement includes, among other things, AFS’s commitment to offer employment to those engaged in the commercial insurance premium finance business under certain conditions, to purchase its commercial insurance premium finance loan portfolio, which had a balance of $617.1 million as of June 30, 2024, and to assume its real property leases.
The cash purchase price payable by AFS at closing consists of the final net asset value of the assets purchased under the Purchase Agreement, which was $617.1 million as of June 30, 2024, plus a premium of $31.2 million, subject to fluctuations in the loan portfolio, plus the assumption of certain liabilities, subject to adjustment.
“As I have stated previously, we need to have the right balance sheet with an optimized asset mix to achieve our fiscal 2025 strategy. This transaction supports our simplification strategy and provides us with the opportunity to accelerate our rotation into higher-yielding assets in verticals where we believe we have a competitive advantage,” said Brett Pharr, the Company’s chief executive officer.
The Company believes, excluding related gains, that the transaction will be relatively neutral to fiscal 2024 net income and diluted earnings per share. However, the Company expects the transaction to become increasingly profitable as the Company reallocates the released capital and deposits to other commercial finance loans and leases. The Company expects the transaction to close by the end of fiscal 2024 and will update its fiscal 2025 guidance at that time.
The transaction has been approved by the Board of Directors of the Company and Pathward and is subject to the satisfaction or waiver of certain closing conditions. Colonnade Securities LLC acted as financial advisor to Pathward.
Conference Call
The Company will host a conference call and webcast with related presentation at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) on Thursday, August 29, 2024. A live webcast of the call can be accessed from Pathward Investor Relations’ website at www.pathwardfinancial.com. Call participants may access the conference call by dialing 1-833-470-1428 approximately 10 minutes prior to the start time and referencing access code 675477.
An Investor Presentation prepared for use in connection with the Company’s conference call and webcast is available at the Presentations link in the Investor Relations – Events & Presentations section of the Company’s website at www.pathwardfinancial.com. A recording of the webcast will also be archived at www.pathwardfinancial.com for one year.
About Pathward Financial, Inc.
Pathward Financial, Inc. (Nasdaq: CASH) is a U.S.-based financial holding company driven by its purpose to advance financial inclusion. Through our subsidiary, Pathward®, NA, we strive to increase financial availability, choice and opportunity across our Banking as a Service and Commercial Finance lines of business. These strategic lines of business provide comprehensive support to individuals and businesses. Learn more at www.pathwardfinancial.com.
Forward-Looking Statements
The Company and Pathward may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the Securities and Exchange Commission (“SEC”), the Company’s reports to shareholders, and in other communications by the Company and Pathward, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
You can identify forward-looking statements by words such as “may,” “expect,” “will,” “should,” “anticipate,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” “target,” or the negative of these terms, or other words of similar meaning or similar expression. You should read statements containing these words carefully because they address our future expectations or express other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements regarding the Company’s beliefs, expectations, estimates and intentions, which are subject to significant risks and uncertainties, and are subject to change based on a variety of factors, some of which are beyond the Company’s control. These risks, uncertainties and other factors could cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Among other things, these forward-looking statements include expectations regarding the estimated cash purchase price of the closing transaction, the expected timetable for completing the transaction, the hiring of employees by AFS, the assumption of real property leases by AFS, the impact of the transaction on net income and diluted earnings per share, the timing of providing additional financial details, if any, and other benefits of the transaction to the Company. The Company’s actual actions or results may differ materially from those anticipated or anticipated in the forward-looking statements because of known and unknown risks and uncertainties. Specific factors that might cause such differences include but are not limited to: uncertainty about whether the transaction will be completed on a timely basis or at all; conditions precedent to completion of the transaction, including the ability to obtain third-party approvals on a timely basis or at all or on the expected terms; and the risk of unanticipated costs, liabilities or delays.
The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. Additional discussion of factors affecting the Company’s business and prospects is reflected under the heading “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2023, and in other filings made with the SEC. Except as required by law, the Company expressly disclaims any intention or obligation to update, revise or clarify any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changes in circumstances or future events or for any other reason.
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Contact
Investor Relations Contact:
Darby Schoenfeld, Public Accountant
Senior Vice President, Chief of Staff & Investor Relations
Phone: 877-497-7497
investorrelations@pathward.com
