Pathward Financial, Inc. Reports Strong Q4 and Full-Year 2025 Financial Results, Highlighting Strategic Growth and Operational Milestones
Pathward Financial, Inc. (“Pathward Financial” or the “Company”) (Nasdaq: CASH) has announced its financial performance for the fiscal fourth quarter and the full fiscal year ending September 30, 2025. The Company delivered strong earnings growth, reflecting both strategic portfolio management and operational efficiency, alongside key organizational and business developments over the past year.
For the three months ended September 30, 2025, Pathward Financial reported net income of $38.8 million, or $1.69 per share. This represents an increase from $33.5 million, or $1.34 per share, recorded during the same period in fiscal 2024, marking a year-over-year net income increase of $5.3 million. The growth in earnings per share underscores the Company’s effective management of both its interest-earning assets and operational expenses.
For the full fiscal year 2025, the Company reported net income of $185.9 million, or $7.87 per share, compared to $183.2 million, or $7.20 per share, in fiscal 2024. These results translate to a return on average assets of 2.46%, return on average equity of 23.44%, and return on average tangible equity of 38.75%. While slightly lower than the prior year’s figures of 2.40%, 25.78%, and 47.89% respectively, these metrics remain strong indicators of the Company’s disciplined growth and profitability strategy.
CEO Commentary and Strategic Achievements
Brett Pharr, CEO of Pathward Financial, expressed satisfaction with the year’s achievements, stating, “We are very pleased with our performance in the fiscal year. We completed the sale of our Insurance Premium Finance business, as well as a transportation portfolio, hired a new Chief People and Culture Officer, and won multiple awards. We did all of this and still delivered on the strategy we laid out for fiscal 2025 at the end of last year, generating both net income and earnings per diluted share growth. We believe we have put ourselves in a strong position to continue delivering on our strategy and remaining the trusted platform that enables our partners to thrive.”
Financial Highlights for Fiscal 2025 Fourth Quarter
During the fourth quarter of fiscal 2025, total revenue reached $186.7 million, reflecting a $7.2 million increase, or 4%, over the same quarter in the previous year. This growth was primarily driven by a 13% increase in noninterest income, highlighting the Company’s efforts to diversify revenue streams beyond traditional interest-based income.
The Company’s net interest margin (NIM) improved by 14 basis points to 7.46% in the fourth quarter, compared to 7.32% in the same period of fiscal 2024. The increase was largely driven by an improved earning asset mix, resulting from continued balance sheet optimization efforts. When including contractual, rate-related processing expenses associated with deposits on the Company’s balance sheet, NIM would have been 6.04% for the fiscal 2025 fourth quarter, up from 5.91% in the prior year period.
Total gross loans and leases at September 30, 2025, increased by $589.7 million to $4.66 billion compared to September 30, 2024. However, sequentially, the balance decreased by $78.4 million compared to June 30, 2025. This sequential decline primarily resulted from moving $144.1 million of the held-for-investment consumer finance portfolio to held-for-sale due to a purchase agreement signed during the quarter. Notably, on October 3, 2025, Pathward Financial completed the sale of more than half of this held-for-sale consumer finance portfolio.
During the quarter, the Company repurchased 180,740 shares of common stock at an average price of $82.95 per share. As of September 30, 2025, 4,937,816 shares remained available for repurchase under the existing stock repurchase program, reflecting the Company’s continued commitment to returning capital to shareholders.
Net Interest Income Performance
Net interest income for the fourth quarter remained essentially flat at $128.0 million compared to the same period in fiscal 2024. The Company’s average interest-earning assets decreased by $125.0 million to $6.80 billion, driven by reductions in average investment securities balances, partially offset by growth in loans and leases. Loan and lease balances increased $254.9 million year-over-year, primarily due to expansions in the warehouse finance and commercial finance portfolios, partially offset by declines in consumer finance and seasonal tax services portfolios.
The tax-equivalent yield (TEY) on average interest-earning assets increased slightly by one basis point to 7.56%, reflecting an improved earning asset mix. Loan and lease portfolio yields were 9.25% compared to 9.64% in the prior year quarter, while TEY on securities was 3.06%, slightly down from 3.12% a year ago.
Pathward Financial’s cost of funds for deposits and borrowings averaged 0.09%, down from 0.24% in the prior year quarter. Overall cost of deposits declined to 0.02% from 0.07%, and when including contractual, rate-related processing expenses, overall deposit cost improved to 1.58%, compared to 1.65% in the previous year.
Noninterest Income and Expense Trends
Noninterest income for the quarter grew 13% to $58.8 million, driven by increased secondary market revenue, card and deposit fees, and other miscellaneous income. These gains were partially offset by losses on sales of investment securities and reductions in rental income and total tax services fee income. Servicing fee income on custodial deposits totaled $2.6 million, down from $3.2 million in the prior year quarter, due to lower Effective Federal Funds Rate (EFFR) levels and seasonal decreases in deposit balances held at partner banks.
Noninterest expense increased 9% to $144.8 million, reflecting higher legal and consulting expenses, impairment, other operating costs, and occupancy and equipment expenses. This increase was partly offset by decreases in compensation and benefits and card processing expenses. Notably, contractual, rate-related card processing expenses for the quarter totaled $24.9 million, reflecting agreements tied to deposit portfolio performance and EFFR changes.
Income Tax and Renewable Energy Initiatives
The Company recorded an income tax expense of $9.3 million, representing an effective tax rate of 19.2%, compared to $3.4 million, or 9.0%, in the prior year quarter. The increase was driven primarily by higher income levels and the surrender of life insurance policies.
During the quarter, Pathward Financial originated $82.1 million in renewable energy leases, generating $15.8 million in net investment tax credits, up from $26.1 million and $7.2 million, respectively, in the prior year period. For the full fiscal year, renewable energy lease originations totaled $95.5 million, reflecting continued focus on sustainable finance initiatives.
Loan and Lease Portfolio Overview
Total gross loans and leases stood at $4.66 billion as of September 30, 2025, slightly down from $4.74 billion at June 30, 2025, but up from $4.08 billion a year ago. Commercial finance loans, representing 84% of the loan and lease portfolio, totaled $3.92 billion, up $106.0 million sequentially and $628.4 million year-over-year. Growth was driven by term lending and asset-based lending, offset partially by declines in SBA/USDA and factoring loans.
Asset Quality Metrics
Pathward Financial’s allowance for credit losses (ACL) decreased to $53.3 million, compared to $106.0 million at June 30, 2025, and $71.8 million a year ago. This decline primarily reflects releases in the consumer finance and seasonal tax services portfolios. ACL as a percentage of total loans and leases declined to 1.14% from 2.23% in the prior quarter. The reversal of credit loss provisions totaled $6.4 million, driven by improvements in the consumer finance portfolio.
Net charge-offs for the quarter were $46.2 million, compared to $44.0 million in the prior year. Nonperforming assets increased to $101.7 million, representing 1.42% of total assets, largely due to higher commercial finance and seasonal tax service nonperforming loans.
Deposits, Borrowings, and Regulatory Capital
Average deposits during the quarter totaled $6.19 billion, slightly lower than $6.38 billion in the prior year, reflecting minor reductions in wholesale deposits partially offset by increases in noninterest-bearing deposits. End-of-period deposits increased marginally to $5.89 billion.
Regulatory capital ratios indicate that Pathward Financial and its subsidiary, Pathward®, N.A., remain well above federal minimum requirements and continue to be classified as well-capitalized. The Company’s securities portfolio primarily consists of amortizing securities, providing predictable cash flow and strong capital positioning.
