帕斯沃德金融 (CASH) 2026财年第四季度业绩电话会议：重申2027财年每股收益指引lg...

Pathward Financial (NASDAQ: CASH) 2026财年收官，商业金融收入增加，银行卡及存款手续费增长强劲，贷款保持持续增长。信贷状况仍是投资者关注的焦点，同时管理层重申其2027财年摊薄后每股收益指引为9.50美元至10.00美元。

核心要点

• 2026财年净利润为1.757亿美元，即摊薄后每股收益为8.14美元。平均资产回报率为2.30%，平均有形股东权益回报率达32.9%。
• 截至9月30日，贷款及租赁业务增长9%。受信贷赞助业务增长推动，全年新发放贷款额同比从13亿美元增加至22亿美元。
• 得益于生息资产结构改善和贷款重定价，第四季度调整后净息差升至5.51%。
• 不良贷款及租赁占比环比升至5.61%。季度净核销额为5200万美元，其中包括与商业金融相关的2030万美元。
• 管理层重申2027财年摊薄后每股收益指引为9.50美元至10.00美元，前提是假设本财年不再发生利率变化、有效税率为18%至22%，且季度二级市场收入为500万美元至700万美元。
• Pathward表示，没有单一合作伙伴的收入贡献占比超过5%，凸显出其合作伙伴基底的多元化。

核心财务数据

业务与经营业绩

商业金融业务推动季度净利息收入增长近600万美元。整个财年，商业金融利息收入增加了近3000万美元，主要归因于结构化融资业务。

第四季度非利息收入实现两位数百分比增长。银行卡及存款手续费收入增加近800万美元，其中大部分增长来自核心支付业务。

尽管截至9月30日Pathward资产负债表上的存款小幅下降，但平均托管存款仍比上年同期增加了4亿多美元。公司赚取的托管存款手续费收入与有效联邦基金利率挂钩。

Pathward继续拓展结构化融资、定期贷款、美国小型企业管理局（SBA）与美国农业部（USDA）贷款，以及营运资金资产担保贷款业务。该公司还跻身SBA 7(a)项目前20大贷款机构之列。

信贷赞助是新发放贷款额增长的主要驱动力。管理层表示，基于近期新增和扩大的合作伙伴项目，更高的贷款发放水平代表了新的运行速率。

Pathward延长了与H&R Block的长期合作伙伴关系至7月中旬。该公司还强调了此前宣布的与Clair的续约。管理层表示，增长继续来自于新合作伙伴以及现有合作伙伴对更多产品的采用。

运营费用得益于法律和咨询费用的下降，但被大楼和软件费用的增加部分抵消。Pathward计划继续在技术、风险控制、合规、人员和流程方面进行针对性投入。

管理层业绩指引

Pathward重申2027财年摊薄后每股收益指引为9.50美元至10.00美元。该前景展望基于以下假设：

• 财年内不再发生额外的利率变动。
• 有效税率为18%至22%。
• 季度二级市场收入为500万美元至700万美元。
• 预计进行股票回购。

管理层预计2027财年的投资将于12月季度开始。第一季度的招聘预计将在财年初提高薪酬和福利的常态支出水平，而上半年的咨询支出应保持小幅上升。

公司预计，随着不良贷款的逐步处置，信贷成本将在2027财年趋于正常化。管理层指出，商业金融业务的历史正常化信贷损失准备金率为120至130个基点，具体取决于新业务的组合构成。根据当前情况，预计未来的计提准备金将主要由贷款增长驱动，而非信贷质量的进一步恶化。

证券投资组合预计随着时间的推移将稳定在约8亿美元至10亿美元。管理层预计2027财年约1.4亿至1.5亿美元的本金到期流出将大部分重新投向贷款投资组合，尽管有限的证券购买可能会在降息环境下提供保护。

风险与关注领域

信贷质量仍是近期关注的主要焦点。不良贷款及租赁率上升至5.61%，核销额居高不下。管理层表示，这些问题集中在先前讨论过的信贷项目中（包括可再生能源项目），并不代表整体投资组合的广泛恶化。

部分可再生能源项目在完工和出售前仍需资金支持。在标的项目出售前，这些建设预付款仍处于非应计状态，这可能会使处置过程中的呈报不良资产水平维持高位。

较高利率可能会增加资金成本并要求追加股权，从而改变可再生能源项目的经济性。尽管如此，管理层表示，项目的回报率通常仍可使可行的交易在调整结构后继续推进。

公司还指出，基于合同交易量的激励付款可能会在季度间发生移动，从而导致银行卡及存款手续费收入出现波动，尽管全年总付款保持相对稳定。

分析师问答精选

管理层表示，Pathward的增长业务线涵盖信贷赞助、嵌入式金融、发卡、收单及其他由合作伙伴驱动的产品。由于新发卡项目通常需要更长的上线和爬坡期，预计现有合作伙伴仍将是近期收入增长的最大来源。

关于竞争定位，首席执行官Brett Pharr认为企业文化是竞争对手最难复制的能力。他主张，银行业务基础设施和项目管理需要不同的运营文化，这使得完全的垂直整合变得十分困难。

随着浮动利率贷款发放量的增加，Pathward目前呈轻微的资产敏感型。首席财务官Gregory Sigrist估计，加息25个基点可能会使全年税前利润增加约200万美元或略多，不过管理层预计资产负债表随着时间的推移将重新趋于中性。

管理层表示，经济放缓可能会为营运资金和资产担保贷款带来更多机遇，因为传统商业借款人会寻求替代融资渠道。公司还表示，合作伙伴申请独立银行牌照不会构成重大威胁，部分原因在于合作伙伴基底多元化，且没有单一合作伙伴贡献超过5%的收入。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Thank you. Ladies and gentlemen, thank you for standing by and welcome to Pathward Financial's Fourth Quarter 2026 Investor Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Darby Schoenfeld, Senior Vice President, Chief of Staff and Investor Relations. Please go ahead.

Darby Schoenfeld

Thank you, Operator, and welcome. With me today are Pathward Financial CEO Brett Pharr and CFO Gregory Sigrist, who will discuss our operating and financial results for the fourth quarter and full fiscal year of 2026, after which we will take your questions. Additional information, including the earnings release, the investor presentation that accompanies and supplemental slides may be found on our website at pathwardfinancial.com. As a reminder, our comments may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. These statements speak only as of this date, and the company undertakes no obligation to update any forward-looking statement, except as may be required by applicable law. Please refer to the cautionary language in the earnings release, investor presentation, and in the company's filings with the Securities and Exchange Commission, including our most recent filings, for additional information covering factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Additionally, today we will be discussing certain non-GAAP financial measures on this conference call. References to non-GAAP measures are only provided to you to assist in understanding the company's results and additional information regarding these non-GAAP measures as well as reconciliations are included in the earnings release and the appendix of the investor presentation. All time periods referenced are fiscal quarters and fiscal years and all comparisons are to the prior year period unless otherwise noted. Now let me turn the call over to Brett Pharr, our CEO.

Brett Pharr

Thanks, Darby, and good evening, everyone. Thank you for joining our earnings call. We're looking forward to sharing our updates today, but I'd like to start by taking a moment to reflect on an important milestone. This quarter marks five years since my first earnings call as CEO of Pathward. Looking back, it's remarkable to reflect on everything the Pathward team has accomplished. We have navigated the challenges of COVID, rebranded the company as Pathward, expanded our executive team, and strategically reshaped our balance sheet, all while evolving our business and strengthening our position as a trusted platform that enables our partners to thrive. Through each chapter, one thing has remained constant, and that's the dedication and commitment of our employees. Our success has always been rooted in our people. Every day, talented employees across Pathward work with customers and businesses to enable financial availability, choice, and opportunity. Their unwavering commitment to true partnership is what has enabled us to adapt, execute, and continue delivering for all of our stakeholders. I'm very proud that we've continued to sustainably grow while staying true to our purpose of powering financial inclusion. That is not a coincidence. Our purpose continues to guide our strategy, and we believe that this diligent focus helps drive long-term value for our shareholders. And while I find tremendous value in times of reflection, I'm even more excited about what lies ahead. We have a strong foundation, a team that embodies our values and is committed to success, as well as a clear strategy to guide us forward. With that, let me spend a few minutes on our strategy. Then I'll provide a quick update on credit before turning the call over to Greg. Fiscal 2026 was another important year of execution for Pathward. They successfully advanced their strategic priorities we set out to accomplish last year, and this was by no means a small feat. We had some major wins across each area, starting with maintaining an optimized balance sheet. Commercial finance growth combined with reductions in our lower yielding securities portfolio reflects our disciplined approach while remaining cognizant of our balance sheet capacity. We deployed capital where we believed to provide us with optionality or generated strong risk adjusted returns. We made significant inroads in the Small Business Administration loan market, moving up within the top 20 SBA 7A program lenders in the country. We continue to make investments in technology, risk, and compliance. We believe these continued investments will allow our partners, both present and future, to deliver with confidence as they leverage our expertise, infrastructure, and collaborative support. The world is only moving faster, and we are proud to enable our partners by offering a broad suite of capabilities. Furthermore, we are very proud to have been recognized by a few different organizations throughout the year for our standout workforce and culture. We believe part of our success can be attributed to our Talent Anywhere approach. Through this talent strategy, we have been very successful in expanding our reach beyond local candidates as a remote-enabled employer and strengthening our ability to meet the evolving needs of our business. The last strategic priority is the client experience. We believe our partners see the value in Pathward's platform and our ability to grow alongside them. Last quarter, we announced that we had renewed our relationship with Clair, a company that has empowered workforce management and payroll platforms to offer early access to earned wages to employees at no cost to employers. This quarter, we are pleased to announce that we've renewed our contract with longstanding partner H&R Block, extending our relationship through mid-July. H&R Block has been a leader in the tax preparation industry for more than 70 years with a deep commitment to their clients, associates, and community. We are excited to continue to support them. We still see significant opportunity in our pipeline with both new and existing partners to build on this momentum by expanding the products and capabilities we deliver. As we look ahead to fiscal 2027, our strategy will remain consistent. We believe the continuity in our strategy reflects the confidence that we have, both in the direction of the business and the progress we have made throughout fiscal 2026. Our focus is now on continuing to execute against these areas and building momentum across the organization. Importantly, we believe our diversified mix of partners, products, and capabilities remains a key differentiator of Pathward. We are not dependent on a single partner, industry, or market, which we believe delivers a resilient business model while providing multiple avenues for growth. Our broad suite of solutions allows us to create opportunities, deepen relationships, and deliver value. As a result, we believe we are well positioned to capitalize on the opportunities in front of us. We continue to work through the renewable energy projects that we mentioned last quarter and still believe we have line of sight to bringing them to completion. While we made significant progress during the quarter, these things take time. We will continue to provide transparency in connection with these credit items. Additionally, we continue to believe that these events are not indicative of a broader systemic issue within the portfolio. Aside from credit, we are very pleased with the results of the year. Now I'd like to turn it over to Greg, who will take you through the details of our financials and fiscal year 2027 guidance.

Gregory Sigrist

Thank you, Brett. We were pleased with the performance during the quarter as our core businesses delivered solid results. Starting with the balance sheet, our Treasury-led model continues to deliver with growth of nearly $6 million in net interest income from our commercial finance business. We also delivered double-digit percentage growth in non-interest income, primarily due to an increase of almost $8 million in card and deposit fee income, the majority of which was driven by growth in the core payments business. Non-interest expense improved in the quarter as a result of disciplined expense management with lower legal and consulting expense. This is partially offset by building and software expense. Additionally, we will continue to make targeted investments in our people, processes, and technology to facilitate evolution and scalability. Aside from the credit items Brett discussed, we are pleased with our full year results and equally important, how our teams delivered them. Their focus, collaboration, and consistent execution throughout the year drove strong performance across the business. Interest income growth in commercial finance was nearly $30 million, driven primarily by an increase in structured finance. Solid partner growth combined with disciplined expense management led to full year net income of $175.7 million or $8.14 of diluted earnings per share. With that, our return metrics remain strong, with a 230 basis point return on average assets and a 32.9% return on average tangible equity. We believe that these results reflect the quality of our business model, discipline of our teams, and consistent execution, not to mention our capacity to generate earnings and to create capital to cover events as they arise. We believe this continues to differentiate Pathward and provide a strong foundation as we enter fiscal 2027. While deposits held on the company's balance sheet at September 30th experienced a modest decrease versus a year ago, we held more than $400 million more in average custodial deposits. As a reminder, we do earn fee income on custodial deposits that is tied to the effective Fed funds rate. Average partner deposits were strong in the quarter, giving us the ability to generate additional servicing fee income. Loans and leases at September 30th grew 9%. We continue to be successful in growing structured finance, term lending, and SBA and USDA loans, as well as working capital asset-based lending. Adjusted net interest margin improved to 551 basis points in the fourth quarter as we continue to improve our earning asset mix and see the benefit of repricing. Year-over-year loan originations increased from $1.3 billion to $2.2 billion, driven primarily by significant growth in our credit sponsorship business from both a new contract signed last year and expansion with current partners. Regarding credit, the non-performing loans and lease ratio did increase modestly to 5.61% sequentially. While there are always normal flows in and out, the increase was largely attributable to additional work being done to bring certain credits to completion. Net charge-offs were $52 million in the quarter, of which $20.3 million was associated with commercial finance portfolio. We continue to expect credit to normalize in 2027 as we work down our non-performing loans. The strength of our balance sheet, along with our earnings and capital accretion power, allows for return of capital to shareholders. As of September 30th, our liquidity was $3.1 billion, and during the quarter, we were able to repurchase approximately 282,000 shares at an average share price of $88.75. For a total of over 2 million shares, for the year. This leaves 2.8 million shares still available for repurchase under the current stock repurchase program. We are reiterating our fiscal year 2027 guidance range of $9.50 to $10 per share, which includes the following assumptions: No additional rate changes during the year. An effective tax rate of 18 to 22%. Expected secondary market revenues between $5 million to $7 million per quarter, and includes expected share repurchases. Lastly, a comment on expenses. As we have said, we will continue to invest in people, processes, and technology. In prior years, that has largely shown up as an investment ramping throughout the year. For fiscal 2027, we expect those investments to begin in the December quarter. This will manifest as additional hirings in the first quarter that will increase the compensation and benefits run rate earlier in the year, but will still hold the normal seasonal pattern. Similarly, we will continue to use consultants with modestly elevated spend in the first half of the year. This concludes our prepared remarks. Operator, please open the line for questions.

Operator

We will now begin the question and answer session. [Operator Instructions] Your first question comes from Tim Switzer with KBW. Tim, your line is now open. Please go ahead.

分析师问答

Timothy Switzer

Hey, Tim. Sounds like good progress on the partnership side, now it's on H&R Block and Clair and some other ones recently. I'm curious on, you know, where do you think the new partners will be coming from, specific industries and is it more on the credit sponsorship side, embedded finance? You know, the card and debit business. We'd love to get an update there.

Brett Pharr

Yes, so I, I think there's a variety of ways. It's pretty broad. One of the things we could emphasize is our diversified business model and product set. And so it's all of the above we're seeing. And we've said it before, a lot come from potential new partners. And also, an awful lot of our increase in revenue comes from existing partners. But there's not one that I would single out and say that it is a higher percentage of it. This is all about the breadth and depth of our offerings. And our partners really want understand that and be a part of it.

Timothy Switzer

Okay. Um, and do you guys feel like there's any areas right now we need to invest a little bit more in to keep up with the competition in the BaaS and embedded finance space? Where are you directing most of your investment dollars right now?

Brett Pharr

Greg, I'll get you to talk about this a little bit, but I mean, we've said for a while that we've been in our run rate investing in technology and enhancing the infrastructure and the backbone.

Gregory Sigrist

Anything you want to add to that? No, I think that's right. I mean, it's more just staying contemporary with their clients to really help them support their own, you know, endeavors. And as I said in my prepared remarks, we also invest on the risk and compliance side because with the onboarding we've done and just the increase in the volumes today and in the future, we just want to make sure that stays, you know, state of the art and stays at the strength that we've had historically. So that's just an area we want to make sure we stay ahead of.

Timothy Switzer

Okay. That's helpful. And I want to ask a few on the credit side here. With the charge-offs this quarter, and I guess in the last few, which were – some of them were in the renewable energy space, were there any specific verticals or industries that these are concentrated in this quarter?

Brett Pharr

No, none specific that we would call out. Um, and, you know, a lot of this is related to transactions that we've already talked about before as we work through the process. Um, so there's not anything new or any new kind of asset classes that we would bring to the table and say we're seeing things here.

Gregory Sigrist

Yes, and Tim, I think the key point there with Frederick, yes, I think the key point which you really touched on though is that the elevated charge-offs and frankly still the NPL and the NPL ratio, it's concentrated in the credits we've already talked about. And I think importantly, we're making resolutions. You saw the past dues have declined. That's important to see too, and we've not seen any evidence that it's going to be if there's any other issues spreading across the portfolios.

Timothy Switzer

Okay. I mean, I guess with the charge-off this quarter, we still see NPAs staying around the same level. Should we expect further charge-offs? Starting next year what, you know, what kind of assumptions should we have.

Brett Pharr

Keep in mind, and we talked last time about a number of um the projects that we were going to take over and have to lead to completion. That means you fund the projects and then eventually complete them, get them producing, and then you sell them. Well, for the existing portfolio, when you fund some of that construction, those dollars go into non-accrual until you sell the product.

Gregory Sigrist

Yes, but specifically on charge off the ten, you have to separate and differentiate the charge offs from when you take and how that kind of dovetails with the lifecycle Brett just mentioned, right? The charge offs you're seeing a result of, you know, specific reserves that we've taken in prior quarters, and you have to differentiate that against our ongoing credit cost of, you know, credit, right? Which is what we provision for. You know, we talked about last quarter. We see credit normalizing into 2027 and what that really means is the cost of credit which is our credit provisioning is getting I feel it's going to migrate back to our historic levels. The charge offs are a bit more episodic and they're tied to the idiosyncratic loans that we've talked about over the last year, frankly, but it's a byproduct of just the natural progress of working through some of those.

Timothy Switzer

Okay, all right. My last one here, and Greg, you just touched on this, but what kind of provision expense expectations are embedded within your guidance for 27?

Gregory Sigrist

Yes, I touched on it last quarter too, and where I said we would normalize back to kind of the historic run rate. And I think I said this last quarter too. What that really means is if you focus solely on the commercial finance portfolio, the historic ACL ratio has been, you can see it in the deck, it's in there, but it could be down roughly 120 to 130 basis points is probably a normalized level. I think that's the starting point. And then anything up or below that's really just going to be a more of a function of the mix of new production. What you saw this quarter, frankly, the provisioning in the quarter is really just provisioning for new, you know, for new for loan growth. Upon what that mix was. And that's the way I kind of see next year playing out is more akin to that 120 to 130 basis point range.

Timothy Switzer

Okay, since you're already near those levels, it seems like the provision going forward to be more for loan growth rather than credit deterioration.

Gregory Sigrist

Based upon the facts we have right now, that's exactly the way we're feeling about it.

Timothy Switzer

All right. Good to hear. Thanks for taking all my questions.

Operator

Thank you. Your next question from the line of Joseph Yanchunis with Raymond James. Your line is now open. Please go ahead.

Joseph Yanchunis

I'm doing well. So new originations, you know, increased pretty meaningfully this quarter, you know, largely driven by credit sponsorship and you'd reference growth with existing partners. How much of that growth represents a new normalized run rate versus potentially some acceleration-specific programs? I'm just kind of curious what you're seeing in the pipeline today that gives you confidence in that continued growth.

Gregory Sigrist

Yeah, I believe that really represents the new run rate based upon the programs and the partners we've announced and onboarded. And I think, you know, we tend to ramp into those programs more rapidly than an issuing partner or acquiring is pretty rapid, too. But I think that's the new normal. And from here, it's really just growth in partner programs and then growth in the partner base.

Joseph Yanchunis

That's great to hear. Um and then Brett, you know, having completed five years of earnings calls for Pathward and congratulations for that, I was hoping you could talk a little bit about the next five years. And what do you think the themes will be in the BaaS space and, you know, how do you expect consolidation in the regulatory environment will play out?

Brett Pharr

Well, so I think it's a broad set of things are there. Obviously there's lots and continual change in all kinds of payments products. I mean, if you think about where we were five years ago and the products that we offered and provided and then what we offer today is vastly different. And I think five years from now, there will be a lot more of things that are, let's say, not just issuing and interchange related. Uh and that's going to continue to advance. Some of which are the products we're already doing, some of which are products that we don't even know about or that are coming. We've got to let all that play out. We've got to let AI play out. That's going to have a material impact on our industry. I think it's going to be more on the customer front end ultimately and how that shows up. So that's going to be a big part of think of five years out. And I think we're in a period of time where some are looking at vertical integration. We're going to see if that's right or wrong, and I'm not sure. I think there are pros and cons to that, and so I think we'll watch that play out. That won't be five years, that'll be two years, and we'll watch as that plays out. You know, very optimistic always been about third party delivery and about people being creative, innovative, entrepreneurial, upfront with the customer, and then us providing the infrastructure. The backbone behind the customer service is obviously wrapped in risk and compliance. And I just think that's a fabulous business model for whatever is coming. So excited about the future and you know, we lead based on what our partners lead into. And so we watch them and what they're doing. Then we help sort for them to do that and often co-create and I think we'll keep doing that.

Joseph Yanchunis

You mentioned the budget and your answer then, I've been on the past probably five, six, seven calls with you guys. With more fintech, chartered and banks, you mentioned the Bertel integration, your answer there, and I believe this question has come up on the past probably five or six earnings calls with you guys. With more fintechs considering their own charters and more banks building BaaS capabilities, the hardest aspect for a competitor to replicate? You know, do you think it's the regulatory infrastructure, product breadth, technology, or just the relationships?

Brett Pharr

It's the culture. Culture matters and there is a distinct reason that banks do banking, and our program managers do what they do. And by the way, you can't hire culture. You have to spend a lot of time creating it. And I think the best business model has worked because the banks had the bank culture and the program managers had the program manager culture. I think we've already had in the past household names that you know that tried vertical integration and failed. Now some of them as we go forward, we'll figure it out. Some of them have narrow based charters that can let him do some things, and so it won't be quite as hard, but the full, the vertical integrated model, I think it's hard to get up every day and have a culture that meets the needs of a banking infrastructure in the background and all the things you need on the front end as a program manager. And as I said, you can't hire that.

Gregory Sigrist

That's a good point.

Joseph Yanchunis

And one more for me here to bring Greg kind of back in the fold. The securities portfolio continues to wind down. Now it's under $1.2 billion. You have about another $150 million cash flowing in fiscal 2027.

Gregory Sigrist

Where would you like to see the portfolio settle out? You know, we still keep it there largely as a reservoir of liquidity just in case we need it. You know, it's pledged. We borrow against it. That's part of, you know, how we fund tax season. But the reality is, I think we can let that run down to the $800 million to perhaps a billion dollar range, and it'll settle out there. You know, we're in that environment, though, where rates are. Said, historically, we'll take that $140 or $150 million of principal off the portfolio and reinvest it back into the loan book. The reality is, though, there's probably a benefit for us to buy a few securities along the way, just to give us, you know, in the event there is a down rate scenario, a bit of coverage on the OCI front. I wouldn't say it's going it's going to be a lot, but I would say there might be a little bit there. But that's still, in my view, we're going to normalize around that $800 million to a billion.

Joseph Yanchunis

All right, great. Well, thank you for taking my questions.

Gregory Sigrist

Thanks, Joe.

Operator

Your next question from the line of Manuel Navas with Piper Sandler. Your line is now open. Please go ahead.

Manuel Navas

With this higher rate environment, can you kind of talk through – and also you had a NIM rebound this quarter. Can you just kind of talk through what are some of the expectations from the September hike? How a potential December hike could impact your EPS trajectory. And also maybe touch on is this how this could show up potentially down the road in credit?

Gregory Sigrist

Let me tackle the first one first, then I may hand off to Brett so we can do a little tag team here. But I'll break it down maybe just broadly on the adjusted net interest margin, how I think about headwinds, tailwinds there. And you touched on the September hike, the possibility of a December hike. But more broadly, we have been fairly neutral from an asset liability perspective. So each 25 basis point rate cut or increase has been pretty close to, pretty negligible. The balance of 2026 did shift a little bit of new production toward floating rate loans, particularly tied to prime. So that's put us at a moment in time at a slightly asset sensitive position. So from this point, if we have a 25 basis point raise in December or the next meeting, perhaps $2 million pre-tax, maybe a little bit more for the full year. But I point out at this point in time because a lot of that new production came from the uh the renewable space, from the infrastructure space, and it's in the construction loans. And I think we're probably at a high water market where those are going to be. So over time, as that portfolio comes down, and also the Treasury teams looking over the next, you know, notifying timeline. But I think we'll get the assets back to neutral, you know, certainly over the next couple of years. I don't think there's a long term trend. I think it's a short term trend, but it's a trend that's helpful at this point in time, just given where the rate environment's going. I think the other tailwind, though, we've talked about this consistently, is just the middle part of the curve. You know, roughly 35% of the of the book and new production is fixed rate loans, which price off of the three to five year part of the curve. And with the curve, you know, five year had, you know, touched 5% and backed off a little bit. You think about the loan portfolio, which is currently book yielding around 3% and you assume that we're taking $100 or $150 million and and recycling that's a pretty large tailwind for us as we continue to do that. Not to mention the fixed rate loans in the book that are continuing to reprice because some of those still came on pre 2022, which has been really great. You're obviously over time going to have some offsets. You know, cost of deposits will go up a little bit, but it's going to be more than offset with the rate environment. Did that make sense? I'll assume yes, because you might be on mute.

Brett Pharr

I'll hand it over to Brett. Yeah, I think the other part of your question is really is what does higher rates for longer mean from a credit perspective or an economic standpoint? You've got to remember our asset-based lending and working capital portfolio actually benefits during that time because the commercial traditional C&I borrower that was at a high level that bank now is even being either pushed out of the bank or cannot get credit and so then they start looking for alternatives and that's where we step in and actually during higher rate and economic stressed environments where we get the better quality credit in the asset based lending and working capital portfolio. So I only see that kind of. It's kind of a dark view, but I only see that as a positive. When the economy slows down, we'll pick up more opportunities in that space. Higher interest rates do have an impact in the energy infrastructure portfolio because you have to use a higher capital cost. It impacts the value of the tax equity throughout the life cycle of the project, so more equity will have to come in. But these projects have such high rate of return that the incremental impact of the interest rates is not going to stop the projects. I'll just reframe the capitalization that goes in up front. So I don't expect there to be much there. The, you know, the consumer loan originations, um, you know, our partners are operating in a space that's not the credit. Uh, and as I often say, these people are always in a recession. Uh, and so the interest rate costs are not going to be very material in that space. And they may be repaying it with benefits payments rather than income payments, but they'll repay it anyway because of where they live and the and you know, the part of the economy that you're in. So, I'm not worried about an economic downturn. I actually think our credit. are built for those kinds of things they assume an economic downturn.

Manuel Navas

Is there a sort of a certain level of rate increases that you think would start impacting the demand for your product, your partner's origination levels, and where it would impact some credit. Is it like 100 basis points from here? Just trying to ballpark that.

Brett Pharr

Yeah, I mean, you know, let's suppose that prime goes up 200 basis points, that is going to slow down, um, commercial business. And that is exactly where we would excel in the working capital and the asset-based lending. And as I said, the 200 basis point increase in rates in the the alternative energy electricity infrastructure arena, it will change the economics, but because they're so rich, there will still be valid projects. You'll just structure them differently. So I don't expect that we will be impacted by a slowdown in that regard. In fact, in some ways we might be positively impacted by it.

Manuel Navas

Okay, that's helpful. I appreciate that. Just about thoughts on your partner population. Do you have a sense of any that are actively pursuing national security?

Brett Pharr

The national charters? We have had conversations where a small subset of them have talked about it and may be pursuing it. But it's one of things you gotta remember. If you're a private equity firm, is very difficult to become a bank holding company. And so there's an awful lot of them that are in that category. And it may be an exception here or there, but there's not any circumstance where we're having any kind of material threat from a partner because of it.

Gregory Sigrist

And part of that is just the lack of concentrations in that partner base in the first place.

Manuel Navas

That was going to be another question. I appreciate that, your commentary that you're not dependent on any one customer. Do you have a sense for at some sort of metric that you can track that? What's like your top three, top five, top 10, uh, partners.

Brett Pharr

Yes, so let me give you this number. No partner represents more than 5% of Pathward revenue.

Manuel Navas

Okay, I appreciate that. Is um one thing, one area that's been uh quite strong is that is the card. It kind of bounces around quarter to quarter, but there's very solid year-over-year growth. How should I think about that fee line over the next year?

Gregory Sigrist

Yes, if I heard the question on the card fee income line, I mean, Karen, I'm going to ask you to CD off balance sheet.

Manuel Navas

Yep, that I, yes.

Gregory Sigrist

Yes. I think really what you're looking at right now is really sets the mark for going forward, and I think any variations from there are really just going to be volume based from here with the partners we're onboarding, onboarding the pace, and the like. So I think what you're seeing now, but keep in mind too, there's always seasonality in that line as we bring on deposits in the fourth quarter, spin them out in the March quarter. The quarter on the second quarter. So you're going to see the normal seasonality in that, but there's always kind of a you know, the ebb and flow, there's always a low watermark as the tide comes in and out.

Manuel Navas

And then just one kind of wrap up question on credit for me. How do you view, you have the rest of the tax services, kind of you ended that for the year, kind of the net charge-offs there. How do you kind of view that next year? I feel like you've talked in the past about how that business performed better on credit. Do you have any other kind of look back on that that you can apply for next year in your in terms of the tax services business itself.

Brett Pharr

So I think we've said that for the last several years we have continued to improve our underwriting, and that has shown up in the numbers. We'll maintain the gains that we have gotten, but I doubt we'll continue to improve at the same degree every year. So I would hope it is some better, but not as much better as it has been in past years.

Manuel Navas

Okay, I appreciate it.

Operator

Thank you. Your next question from the line of Tim Switzer with KBW. Your line is now open. Please go ahead.

Timothy Switzer

Hey, thanks for letting me back through the queue. Greg, you actually just kind of answered one of the questions I had in terms of the seasonality. Obviously, we're going to get the bump in first quarter next quarter, but has the seasonality for the rest of the quarter changed at all? Like, for example, a really strong fourth quarter, where it's typically be, you know, the down mid to high single digits, at least historically. It has growth from any individual partner or like the onboarding of new partners change that at all.

Gregory Sigrist

I think it's really the onboarding of, you know, new products and then new partners, new products and just that continued March of, you know, multi-threaded opportunities. That flattens out the seasonality a bit. I think with the prepaid card business though, you still see. You still see deposits grow in the December quarter, and then you see the fee income, core fee income in the March quarter. I think you'll always see that. But I think the continued march toward diversification of both products and partners helps to take away some of that seasonality, particularly in the fourth quarter. I think that's what you've seen when you track back, There is one nuance though. I mean, we talked about this last quarter a little bit. You know, we do receive some contractual, you know, volume based incentive payments, which can hit one quarter versus the next. And that was kind of the explanation last quarter for why when you did the year over year, fiscal 2024 was a little above, 2025 is a bit above fiscal 2026. For full year basis, we feel like we're going to get those incentive payments, but that could skew one quarter to the next. That would be the only caveat to what I just said.

Timothy Switzer

Got you. Okay, that that makes sense. Just qualitatively, are you able to kind of parse apart the acceleration we've seen year over year in fiscal 2026 on the card fees? Like how much of that is driven by new programs, new products, new partners versus, um, all older ones that were already in place in 2025.

Gregory Sigrist

I think you're always going to see for the foreseeable future. Growth year over year is still going to be driven more by existing partners. And I think when you think back over the last four to six or eight quarters, it's um a combination of just, you know, their putting on new programs, but also adding new multi-threaded products to the mix. And I think that's still, historically, that's probably been 75% to 80% of the And part of that is, you know, the new partners typically take a bit more time to onboard plus, part of which is going through the third party onboarding process, which takes some time. And we talked about how once we've gone through that process, it's a lot easier then to do multi threaded with new partners. But when I think out the next 12 months, I think it's still revenue growth still largely going to come from perhaps a bit more uplift from new products with those partners, but brand new partners typically, unless it's you know credit sponsorship, which we can get onboarded a little faster. Acquiring you can get those ramping a little faster, but if it's issuing business that typically takes longer. It's usually an uphill, part of the issuing they would have to ramp into those new programs, which really means you're talking the subsequent fiscal year before you really start to see uplift from that. But you know the partners in the pipelines have been talking about for new partner growth that is just tailwind for us, you know, exiting 2027 and going into 2028 and 2029.

Timothy Switzer

Got you. Okay. Thank you so much.

Gregory Sigrist

You're welcome, Tim. Thanks for coming back.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Brett Pharr, CEO, for closing remarks.

Brett Pharr

Thank you for joining the call this evening. We hope you have a good night.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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