SIOUX FALLS, South Dakota–(BUSINESS WIRE)–Pathward Financial, Inc. (the “Company”) (Nasdaq: CASH) today announced that its wholly owned subsidiary, Pathward®, NA (“Pathward”), a leading financial empowerment company with a purpose to advance financial inclusion, has entered into a definitive agreement to sell its commercial premium finance business to AFS IBEX Financial Services, LLC (“AFS”), a Delaware limited liability company and subsidiary of Honor Capital Holdings, LLC (“Honor”), a Delaware limited liability company. Honor, through its subsidiaries, originates and services premium finance loans and is one of the largest independently owned premium finance firms 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, that AFS will provide jobs to people working in the commercial premium finance business, subject to certain conditions, purchase the commercial premium finance loan portfolio with an outstanding balance of $617.1 million as of June 30, 2024, and assume its real estate leases.
The cash purchase price to be paid by AFS at closing will consist of the final net asset value of the assets purchased under the purchase agreement ($617.1 million as of June 30, 2024) plus a premium of $31.2 million that will fluctuate based on changes in the loan portfolio and the assumption of certain liabilities, subject to adjustment.
“As we have previously stated, delivering on our 2025 strategy requires a right-sized balance sheet and optimized asset mix. This transaction supports our simplification strategy and provides us with the opportunity to accelerate rotation into higher-yielding assets in areas where we believe we have a competitive advantage,” said Brett Pharr, the company’s CEO.
The Company believes that, excluding related gains, the transaction will be relatively neutral to net income and diluted earnings per share in fiscal 2024. However, the Company expects the transaction to become increasingly profitable as it redeploys the freed-up capital and deposits to other commercial finance loans and leases. The Company expects the transaction to close by the end of fiscal 2024, at which point it will update its fiscal 2025 guidance.
The transaction has been approved by the Company’s and Pathward’s boards of directors and is subject to the satisfaction or waiver of certain customary closing conditions. Colonnade Securities LLC acted as financial advisor to Pathward.
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Conference Call
The Company will host a conference call and webcast with corresponding presentation on Thursday, August 29, 2024 at 4:00 p.m. ET (5:00 p.m. ET). A live webcast of the conference call can be accessed on Pathward’s Investor Relations website at www.pathwardfinancial.com. To join the conference call, please dial 1-833-470-1428 approximately 10 minutes prior to the start time and reference access code 675477.
The investor presentation prepared for use in connection with our conference call and webcast will be available at the Presentations link in the Investor Relations – Events and Presentations section of our website at www.pathwardfinancial.com. A replay 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 with the purpose of advancing financial inclusion. Through its subsidiary, Pathward®, NA, we strive to expand financial availability, choice and opportunity across our Banking as a Service and Commercial Finance business lines. These strategic business lines provide end-to-end support to individuals and businesses. For more information, please visit 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 other communications by the Company and Pathward, which are made by the Company in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “potential,” “future,” “goal,” or the negative of these words or other words of similar meaning or expression. Statements containing these words discuss our expectations for the future or state other “forward-looking” information and should be read carefully. These forward-looking statements are based on information currently available to us and assumptions about future events and include statements about our beliefs, expectations, estimates and intentions. They are subject to significant risks and uncertainties and are subject to change based on various factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed or implied by these forward-looking statements. Among other things, these forward-looking statements include expectations regarding the estimated final cash purchase price for the transaction, the anticipated timeline for closing the transaction, the hiring of employees by AFS, the assumption of real estate leases by AFS, the impact of the transaction on net income and diluted earnings per share, the timing (if any) of the provision of additional financial details, and other benefits of the transaction to the Company. The Company’s actual actions or results may differ materially from those anticipated or projected in the forward-looking statements due to both known and unknown risks and uncertainties. Certain factors that may cause such differences include, but are not limited to, uncertainties as to whether the transaction will be completed on a timely basis or at all, the conditions precedent to the closing of the transaction (including whether third party consents can be secured on a timely basis or at all or on the terms expected), and the risks of unanticipated costs, liabilities and delays.
The above list of factors is not exclusive. You are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained 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 in other sections of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and in other documents filed with the SEC. Except as required by law, the Company expressly disclaims any intention or obligation to update, amend or clarify any written or oral forward-looking statements made from time to time by or on behalf of the Company or any of its subsidiaries, whether as a result of new information, changed circumstances, future events or otherwise.
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contact address
Investor Relations Contact:
Darby Schoenfeld, CPA
Senior Vice President, Chief of Staff & Investor Relations
877-497-7497
investorrelations@pathward.com
