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 dedicated to promoting financial inclusion, has entered into a definitive agreement to sell its commercial insurance premium financing business to AFS IBEX Financial Services, LLC (“AFS”), a Delaware limited liability company and subsidiary of Honor Capital Holdings, LLC, a Delaware limited liability company (“Honor”). Through its subsidiaries, Honor originates and services premium financing loans and is one of the largest independent insurance premium financing companies in the country with offices in Massachusetts, New York, Florida, Texas and California. Honor will guarantee AFS’s obligations under the agreement.
The agreement includes, among other things, AFS’s obligation to offer employment to employees in the commercial insurance premium financing business under certain conditions, to purchase the commercial insurance premium financing loan portfolio, which had a balance of $617.1 million as of June 30, 2024, and to assume the leases for the properties.
The cash purchase price to be paid by AFS at closing will consist of the final net asset value of the assets acquired pursuant to 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 previously mentioned, we must have a right-sized balance sheet and an optimized asset mix to execute on our fiscal 2025 strategy. This transaction supports our simplification strategy and gives us 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 CEO.
The Company expects the transaction, excluding any related gains, to be relatively neutral to net income and earnings per diluted share in fiscal 2024. However, the Company expects the transaction to be increasingly accretive as the capital and deposits released are redeployed into other commercial finance loans and leases. The Company expects the transaction to close by the end of fiscal 2024 and will update fiscal 2025 guidance at that time.
The transaction has been approved by the boards of directors of the Company and Pathward and is subject to the satisfaction or waiver of certain customary closing conditions. Colonnade Securities LLC acted as financial advisor to Pathward.
Conference call
The Company will host a conference call and webcast with a related presentation on Thursday, August 29, 2024 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). The live webcast of the conference call will be available on Pathward’s investor relations website at www.pathwardfinancial.com. Telephone participants may join the conference call by dialing 1-833-470-1428 approximately 10 minutes prior to the start time and quoting the access code 675477.
The investor presentation prepared for use on the Company’s conference call and webcast is available under the “Presentations” link in the “Investor Relations – Events & Presentations” section of the Company’s website at www.pathwardfinancial.com. A replay of the webcast will also be archived for one year at www.pathwardfinancial.com.
About Pathward Financial, Inc.
Pathward Financial, Inc. (Nasdaq: CASH) is a U.S.-based financial holding company dedicated to promoting financial inclusion. Through our subsidiary Pathward®, NA, we strive to increase financial availability, choice and opportunity in our Banking as a Service and Commercial Finance businesses. These strategic businesses provide comprehensive support to individuals and businesses. For more information, 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 from the Company and Pathward. These statements are made in the good faith of the Company and are made 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,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” “goal” or the negative of these terms or other words of similar meaning or similar expressions. You should read statements containing these words carefully because they discuss our future expectations or contain 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 that are subject to significant risks and uncertainties and are subject to change based on various factors, some of which are beyond the Company’s control. Such 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 or implied by these forward-looking statements. Among other things, these forward-looking statements include expectations regarding the estimated cash purchase price of the transaction, the expected timing of completion of the transaction, AFS’s hiring of employees, AFS’s acquisition of real estate leases, the impact of the transaction on net income and earnings per diluted 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 projected in the forward-looking statements as a result of known and unknown risks and uncertainties. Specific factors that may cause such a difference include, among others: uncertainty as to whether the transaction will be completed on a timely basis or at all; the conditions imposed on the completion of the transaction, including the ability to obtain third party consents in a timely manner or at all or on the terms expected; and risks of unexpected costs, liabilities or delays.
The foregoing list of factors is not exhaustive. We caution you 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. For further discussions of factors affecting the Company’s business and prospects, see the heading “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2023 and other filings 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, made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changed circumstances or future events or otherwise.
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Contacts
Contact for Investor Relations:
Darby Schoenfeld, CPA
Senior Vice President, Chief of Staff and Investor Relations
877-497-7497
[email protected]
