PATHWARD FINANCIAL, INC.

Previous wording

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,” "target," or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which 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 may 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. Such statements address, among others, the following subjects: future operating results, including our performance expectations; progress on key strategic initiatives; expected results of our partnerships; impacts of our improved data analytics, underwriting, and monitoring processes; expected nonperforming loan resolutions and net charge-off rates; the performance of our securities portfolio; the impact of card balances related to government stimulus programs; customer retention; loan and other product demand; new products and services; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; and technology, including impacts of technology investments. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; our ability to successfully implement measures designed to reduce expenses and increase efficiencies; changes in trade, monetary, and fiscal policies and laws, including actual changes in interest rates and the Fed Funds rate and changes in international trade policies, tariffs and treaties affecting imports and exports, and their related impacts on macroeconomic conditions, customer behavior, funding costs and loan and securities portfolios; changes in tax laws; trade disputes, barriers to trade or the emergence of trade restrictions; the strength of the United States' economy, and the local economies in which the Company operates; adverse developments in the financial services industry generally such as bank failures, responsive measures to mitigate and manage such developments, related superv…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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,” "target," or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which 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 may 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. Such statements address, among others, the following subjects: future operating results, including our performance expectations; progress on key strategic initiatives; expected results of our partnerships; impacts of our improved data analytics, underwriting, and monitoring processes; expectations with respect to credit performance; expected nonperforming loan resolutions and net charge-off rates; the performance of our securities portfolio; customer retention; loan and other product demand; new products and services; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; and technology, including impacts of technology investments. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; our ability to successfully implement measures designed to reduce expenses and increase efficiencies; changes in trade, monetary, and fiscal policies and laws, including actual changes in interest rates and the Fed Funds rate and changes in international trade policies, tariffs and treaties affecting imports and exports, and their related impacts on macroeconomic conditions, customer behavior, funding costs and loan and securities portfolios; changes in tax laws; trade disputes, barriers to trade or the emergence of trade restrictions; the strength of the United States' economy, and the local economies in which the Company operates; adverse developments in the financial services industry generally such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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 Quarterly Report on Form 10-Q speak only as of the date hereof. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2025, and in the Company's other filings made with the SEC. The Company expressly disclaims any intent 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, changed circumstances, or future events or for any other reason.

Current wording

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 Quarterly Report on Form 10-Q speak only as of the date hereof. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2025, and in the Company's other filings made with the SEC. The Company expressly disclaims any intent 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, changed circumstances, or future events or for any other reason, except as required by applicable law.

Previous wording

The following discussion focuses on the consolidated financial condition of the Company at March 31, 2026, compared to September 30, 2025, and the consolidated results of operations for the three and six months ended March 31, 2026 and 2025. This discussion should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, for the fiscal year ended September 30, 2025 and the related management's discussion and analysis of financial condition and results of operations contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Current wording

The following discussion focuses on the consolidated financial condition of the Company at June 30, 2026, compared to September 30, 2025, and the consolidated results of operations for the three and nine months ended June 30, 2026 and 2025. This discussion should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, for the fiscal year ended September 30, 2025 and the related management's discussion and analysis of financial condition and results of operations contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Previous wording

Financial Highlights for the 2026 Fiscal Second Quarter

Current wording

Financial Highlights for the 2026 Fiscal Third Quarter

Previous wording

•The Company repurchased 855,201 shares of common stock at an average share price of $84.15. As of March 31, 2026, there were 3,430,811 shares available for repurchase under the current common stock share repurchase program.

Current wording

•The Company repurchased 303,632 shares of common stock at an average share price of $92.18. As of June 30, 2026, there were 3,127,179 shares available for repurchase under the current common stock share repurchase program.

Previous wording

All reported numbers are for the six months ended March 31, 2026 and are compared to the same fiscal period in the prior year.

Current wording

All reported numbers are for the nine months ended June 30, 2026 and are compared to the same fiscal period in the prior year.

Previous wording

Total tax services product revenue was $95.7 million, an increase of 13% compared to the prior year. This was driven by an increase in the number of refund advances, as well as higher origination volumes and an increase in refund transfers. Total tax services product fee income increased by $10.6 million and net interest income on tax services loans increased $0.2 million. Total tax services product expense increased $0.8 million when compared to the prior year.

Current wording

The Tax Services business saw strong performance during fiscal 2026 as a result of significant work to grow the business, increase market share and evolve the underwriting model. Total tax services product revenue was $107.7 million, an increase of 13% compared to the prior year. This was driven by increases in refund advance and refund transfer product fees. Total tax services product fee income increased by $12.4 million and net interest income on tax services loans increased $0.2 million. Total tax services product expense increased $0.9 million.

Previous wording

Provision for credit losses for the tax services portfolio decreased $4.4 million when compared to the prior year as a result of the continued work on enhancing underwriting models and data analytics capabilities.

Current wording

Provision for credit losses for the tax services portfolio decreased $5.7 million as a result of the continued work on enhancing underwriting models and data analytics capabilities.

Previous wording

Total tax services product income, net of losses and direct product expenses, increased 30% to $62.0 million from $47.6 million. This increase is the result of significant work to grow this business, increase market share and evolve the underwriting model.

Current wording

Total tax services product income, net of losses and direct product expenses, increased 29% to $77.1 million from $59.8 million.

Previous wording

At March 31, 2026, the Company’s total assets decreased to $7.11 billion compared to $7.17 billion at September 30, 2025, primarily due to reductions of $126.3 million in loans held for sale, $56.5 million in debt securities AFS, $55.3 million in other assets, and an increase of $45.0 million in allowance for credit losses, partially offset by growth of $202.3 million in loans and leases and $37.0 million in cash and cash equivalents.

Current wording

At June 30, 2026, the Company’s total assets increased to $7.31 billion compared to $7.17 billion at September 30, 2025, primarily due to growth of $442.9 million in loans and leases, partially offset by reductions of $108.2 million in debt securities AFS, $82.1 million in loans held for sale, $78.7 million in other assets, and an increase of $56.5 million in allowance for credit losses.

Previous wording

Total cash and cash equivalents were $157.6 million at March 31, 2026, increasing from $120.6 million at September 30, 2025. The Company maintains its cash investments primarily in interest-bearing overnight deposits with the FHLB of Des Moines and the FRB. At March 31, 2026, the Company did not have any federal funds sold.

Current wording

Total cash and cash equivalents were $149.4 million at June 30, 2026, increasing from $120.6 million at September 30, 2025. The Company maintains its cash investments primarily in interest-bearing overnight deposits with the FHLB of Des Moines and the FRB. At June 30, 2026, the Company did not have any federal funds sold.

Previous wording

The Company's investment security balances at March 31, 2026 totaled $1.30 billion, as compared to $1.36 billion at September 30, 2025, due to principal pay downs. The Company’s portfolio of securities customarily consists primarily of MBS, which have expected lives much shorter than the stated final maturity, non-bank qualified obligations of states and political subdivisions, which mature in approximately 15 years or less, and other tax exempt municipal mortgage related pass through securities which have average lives much shorter than their stated final maturities. During the six months ended March 31, 2026, the Company made no purchases of investment securities.

Current wording

The Company's investment security balances at June 30, 2026 totaled $1.25 billion, as compared to $1.36 billion at September 30, 2025, due to principal pay downs. The Company’s portfolio of securities customarily consists primarily of MBS, which have expected lives much shorter than the stated final maturity, non-bank qualified obligations of states and political subdivisions, which mature in approximately 15 years or less, and other tax exempt municipal mortgage related pass through securities which have average lives much shorter than their stated final maturities. During the nine months ended June 30, 2026, the Company made no purchases of investment securities.

Previous wording

Through the Bank, the Company owns stock in the FHLB due to the Bank’s membership and participation in this banking system as well as stock in the FRB. The FHLB requires a level of stock investment based on a pre-determined formula. The Company’s investment in these stocks was $25.5 million at March 31, 2026 and $24.7 million at September 30, 2025, as purchases of FHLB membership stock were partially offset by redemptions during the six months ended March 31, 2026.

Current wording

Through the Bank, the Company owns stock in the FHLB due to the Bank’s membership and participation in this banking system as well as stock in the FRB. The FHLB requires a level of stock investment based on a pre-determined formula. The Company’s investment in these stocks was $30.9 million at June 30, 2026 and $24.7 million at September 30, 2025, as purchases of FHLB membership stock were partially offset by redemptions during the nine months ended June 30, 2026.

Previous wording

Loans held for sale at March 31, 2026 totaled $53.1 million, decreasing from $179.4 million at September 30, 2025. This decrease was primarily driven by the sale of the consumer finance portfolio in October 2025, partially offset by an increase in SBA/USDA loans held for sale at March 31, 2026 compared to September 30, 2025.

Current wording

Loans held for sale at June 30, 2026 totaled $97.3 million, decreasing from $179.4 million at September 30, 2025. This decrease was primarily driven by the sale of the consumer finance portfolio in October 2025, partially offset by an increase in SBA/USDA loans held for sale.

Previous wording

Total gross loans and leases totaled $4.87 billion at March 31, 2026, as compared to $4.66 billion at September 30, 2025. The increase was due to growth in the commercial finance and seasonal tax services portfolios, partially offset by a decrease in the consumer finance portfolio due to the aforementioned loan sale within that portfolio in October 2025, as well as a decrease in the warehouse finance portfolio. See Note 4. Loans and Leases, Net to the “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Current wording

Total gross loans and leases totaled $5.11 billion at June 30, 2026, as compared to $4.66 billion at September 30, 2025. The increase was driven by growth across all portfolios, primarily within commercial finance. See Note 4. Loans and Leases, Net to the “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Previous wording

Commercial finance loans, which comprised 84% of the Company's loan and lease portfolio, totaled $4.11 billion at March 31, 2026, reflecting an increase of $188.6 million, or 5%, from September 30, 2025. The increase was primarily driven by an increase of $199.3 million in term lending and $67.0 million in asset-based lending, partially offset by a decrease of $76.2 million in other commercial finance. These changes are primarily the result of the Company's efforts to optimize the balance sheet.

Current wording

Commercial finance loans, which comprised 85% of the Company's loan and lease portfolio, totaled $4.32 billion at June 30, 2026, reflecting an increase of $398.8 million, or 10%, from September 30, 2025. The increase was primarily driven by an increase of $364.4 million in term lending and $104.4 million in asset-based lending, partially offset by a decrease of $100.4 million in other commercial finance. These changes are primarily the result of the Company's efforts to optimize the balance sheet.

Previous wording

Total end-of-period deposits decreased 1% to $5.85 billion at March 31, 2026, from $5.89 billion at September 30, 2025, primarily driven by a decrease in noninterest-bearing deposits of $89.8 million, partially offset by an increase in interest-bearing checking of $46.7 million.

Current wording

Total end-of-period deposits increased 1% to $5.95 billion at June 30, 2026, from $5.89 billion at September 30, 2025, primarily driven by an increase in noninterest-bearing deposits of $84.7 million, partially offset by a decrease in money market deposits of $44.2 million.

Previous wording

The Company's total borrowings increased from $42.5 million at September 30, 2025 to $59.5 million at March 31, 2026, driven by an increase in short-term borrowings of $17.0 million. The Company's short-term borrowings fluctuate on a daily basis due to the nature of a portion of its noninterest-bearing deposit base.

Current wording

The Company's total borrowings increased from $42.5 million at September 30, 2025 to $201.0 million at June 30, 2026, driven by an increase in short-term borrowings of $158.5 million. The Company's short-term borrowings fluctuate on a daily basis due to the nature of a portion of its noninterest-bearing deposit base.

Previous wording

At March 31, 2026, the Company’s stockholders’ equity totaled $850.7 million, a decrease of $6.8 million, from $857.5 million at September 30, 2025. The decrease was primarily attributable to a decrease in retained earnings, partially offset by an increase in additional paid-in capital and a decrease in accumulated other comprehensive loss. The Company and Bank remained above the federal regulatory minimum capital requirements at March 31, 2026, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies. See “Liquidity and Capital Resources” for further information.

Current wording

At June 30, 2026, the Company’s stockholders’ equity totaled $851.1 million, a decrease of $6.3 million, from $857.5 million at September 30, 2025. The decrease was primarily attributable to a decrease in retained earnings, partially offset by an increase in additional paid-in capital and a decrease in accumulated other comprehensive loss. The Company and Bank remained above the federal regulatory minimum capital requirements at June 30, 2026, and continued to be classified as well-capitalized, and in good standing with the regulatory agencies. See “Liquidity and Capital Resources” for further information.

Previous wording

As of March 31, 2026, the Company managed $1.07 billion of customer deposits at other banks in its capacity as custodian. These deposits provide the Company with the ability to earn servicing fee income, typically reflective of the EFFR.

Current wording

As of June 30, 2026, the Company managed $575.0 million of customer deposits at other banks in its capacity as custodian. These deposits provide the Company with the ability to earn servicing fee income, typically reflective of the EFFR.

Previous wording

The Company reported net income of $72.9 million, or $3.35 per diluted share, for the three months ended March 31, 2026, compared to net income of $75.0 million, or $3.14 per diluted share, for the three months ended March 31, 2025.

Current wording

The Company reported net income of $29.0 million, or earnings per diluted share of $1.37, for the three months ended June 30, 2026, compared to net income of $42.1 million, or earnings per diluted share of $1.81, for the three months ended June 30, 2025.

Previous wording

The Company reported net income of $108.1 million, or $4.89 per diluted share, for the six months ended March 31, 2026, compared to net income of $104.9 million, or $4.35 per diluted share, for the six months ended March 31, 2025.

Current wording

The Company reported net income of $137.0 million, or earnings per diluted share of $6.29, for the nine months ended June 30, 2026, compared to net income of $147.1 million, or earnings per diluted share of $6.17, for the nine months ended June 30, 2025.

Previous wording

Net interest income for the second quarter of fiscal 2026 was $125.1 million, a decrease of 8% compared to the same quarter in fiscal 2025, which was primarily driven by decreases in interest income of $12.8 million on the consumer finance portfolio and $4.2 million of cash and fed funds sold. Interest income on the consumer finance portfolio was impacted by the sale of a portfolio in October 2025 that was previously accounted for using a gross accounting methodology, and therefore, recorded at higher yields with offsetting entries not included in net interest income. Partially offsetting that decrease, interest income from commercial finance loans and leases increased $8.4 million over that same period.

Current wording

Net interest income for the third quarter of fiscal 2026 was $112.9 million, a decrease of 8% compared to the same quarter in fiscal 2025. The decrease was primarily driven by an $11.6 million reduction in interest income on the consumer finance portfolio. Interest income on the consumer finance portfolio was impacted by the sale of a portfolio in October 2025 that was previously accounted for using a gross accounting methodology, and therefore, recorded at higher yields with offsetting entries not included in net interest income. Partially offsetting that decrease, interest income from commercial finance loans and leases increased $6.1 million year-over-year as the Company continues to have strong originations.

Previous wording

For the six months ended March 31, 2026, net interest income was $244.5 million, a decrease of 7% compared to the same period in the prior fiscal year.

Current wording

For the nine months ended June 30, 2026, net interest income was $357.4 million, a decrease of 7% compared to the same period in the prior fiscal year.

Previous wording

The Company’s average interest-earning assets for the second quarter of fiscal 2026 decreased by $107.4 million to $7.65 billion compared to the same quarter in fiscal 2025, due to decreases in the average outstanding balances in cash and fed funds sold and total investments securities. The decrease was partially offset by an increase in the average outstanding balance of total loans and leases. These results are expected as the Company continues to shift the balance sheet toward higher returning assets. The second quarter average outstanding balance of loans and leases increased $437.9 million compared to the same quarter of the prior fiscal year, due to increases in the commercial finance and tax services portfolios, partially offset by decreases in the consumer finance and warehouse finance portfolios.

Current wording

The Company’s average interest-earning assets for the third quarter of fiscal 2026 increased by $273.8 million to $6.88 billion compared to the same quarter in fiscal 2025 due to increases in the average outstanding balances in total loans and leases and cash and fed funds sold. The increase was partially offset by a decrease in the average outstanding balance of total investments. The third quarter average outstanding balance of loans and leases increased $406.2 million compared to the same quarter of the prior fiscal yeardue to an increase in the commercial finance portfolio, partially offset by decreases in the consumer finance portfolio and warehouse finance portfolio.

Previous wording

Fiscal 2026 second quarter NIM decreased to 6.63% from 7.12% in the second fiscal quarter of 2025 primarily due to the aforementioned sale of the consumer finance portfolio in October 2025. The overall reported tax-equivalent yield (“TEY”) on average interest-earning assets decreased 48 basis points to 6.95% compared to the prior year quarter. The yield on the loan and lease portfolio was 8.43% compared to 9.54% for the comparable period last year and the TEY on the securities portfolio was 3.06% compared to 3.11% over that same period. The decreases in the TEY on average interest-earning assets and the yield on the loan and lease portfolio were also primarily driven by the aforementioned sale of the consumer finance portfolio.

Current wording

Fiscal 2026 third quarter NIM decreased to 6.59% from 7.43% in the third fiscal quarter of 2025 primarily due to the aforementioned sale of the consumer finance portfolio in October 2025. The overall reported tax-equivalent yield (“TEY”) on average interest-earning assets decreased 86 basis points to 6.66% compared to the prior year quarter. The yield on the loan and lease portfolio was 7.99% compared to 9.33% for the comparable period last year and the TEY on the securities portfolio was 3.00% compared to 3.10% over that same period. The decreases in the TEY on average interest-earning assets and the yield on the loan and lease portfolio were also primarily driven by the aforementioned sale of the consumer finance portfolio.

Previous wording

For the six months ended March 31, 2026, NIM was 6.78%, a decrease of 46 basis points from 7.24% compared to the same period in the prior fiscal year.

Current wording

For the nine months ended June 30, 2026, NIM was 6.72%, a decrease of 58 basis points from 7.30% compared to the same period in the prior fiscal year.

Previous wording

The Company's cost of funds for all deposits and borrowings averaged 0.33% during the fiscal 2026 second quarter, as compared to 0.32% during the prior year quarter. The Company's overall cost of deposits was 0.25% in the fiscal second quarter of 2026, as compared to 0.23% during the prior year quarter.

Current wording

The Company's cost of funds for all deposits and borrowings averaged 0.07% during the fiscal 2026 third quarter, as compared to 0.08% during the prior year quarter. The Company's overall cost of deposits was 0.01% in the fiscal third quarter of 2026, as compared to 0.02% during the prior year quarter.

Previous wording

The Company recognized a provision for credit losses of $48.8 million for the six months ended March 31, 2026, compared to $53.9 million for the comparable period in the prior fiscal year. The decrease was primarily due to decreases in provision for credit losses in the consumer finance portfolio of $12.2 million and tax services portfolio of $4.4 million, partially offset by an increase in the commercial finance portfolio of $11.6 million. The Company recognized net charge-offs of $3.6 million for the six months ended March 31, 2026, compared to net charge-offs of $22.6 million for the six months ended March 31, 2025. Net charge-offs attributable to the commercial finance portfolio and the consumer finance portfolio for the six months ended March 31, 2026 were $13.2 million and $2.6 million, respectively, while net recoveries of $12.2 million were recognized in the tax services portfolio. Net charge-offs attributable to the commercial finance portfolio and the consumer finance portfolio were $14.9 million and $14.0 million, respectively, for the same six months of the prior year, while net recoveries of $6.3 million were recognized in the tax services portfolio.

Current wording

The Company recognized a provision for credit losses of $77.2 million for the nine months ended June 30, 2026, compared to $63.2 million for the comparable period in the prior fiscal year. The increase was primarily due to an increase in provision for credit losses in the commercial finance portfolio of $34.1 million, partially offset by a decrease in the consumer finance portfolio provision of $15.2 million. The Company recognized net charge-offs of $19.7 million for the nine months ended June 30, 2026, compared to net charge-offs of $28.8 million for the nine months ended June 30, 2025. Net charge-offs attributable to the commercial finance portfolio and the consumer finance portfolio for the nine months ended June 30, 2026 were $29.1 million and $3.7 million, respectively, while net recoveries of $13.1 million were recognized in the tax services portfolio. Net charge-offs attributable to the commercial finance portfolio and the consumer finance portfolio were $16.6 million and $19.8 million, respectively, for the same nine months of the prior year, while net recoveries of $7.7 million were recognized in the tax services portfolio.

Previous wording

Fiscal 2026 second quarter noninterest income increased 9% to $151.2 million, compared to $138.5 million for the same period of the prior year. The increase was driven by increases in refund advance and other tax fee income, card and deposit fees, and refund transfer product fees, partially offset by decreases in secondary market revenue and rental income. Secondary market revenue in the prior year period was elevated by the gain from a portfolio sale within working capital. That gain was partially offset by a loss on sale of securities and a loss on divestiture that were also recognized in the prior year period.

Current wording

Fiscal 2026 third quarter noninterest income increased 4% to $76.7 million, compared to $73.4 million for the same period of the prior year. The increase was driven by increases in secondary market revenue as the Company was able to catch up on sales as government agencies cleared earlier-year backlogs, higher refund transfer product fees, and other income. This was partially offset by decreases in rental income and card and deposit fees.

Previous wording

Servicing fee income on custodial deposits totaled $7.8 million during the 2026 fiscal second quarter, as compared to$6.5 million for the same period of the prior year. The year-over-year increase in servicing fee income on custodial deposit balances held at Program Banks was due to higher quarterly average deposits balances held at Program Banks.

Current wording

Servicing fee income on custodial deposits totaled $7.5 million during the 2026 fiscal third quarter, as compared to$7.9 million for the same period of the prior year.

Previous wording

Noninterest income for the six months ended March 31, 2026 increased to $204.9 million from $195.9 million for the same period of the prior year.

Current wording

Noninterest income for the nine months ended June 30, 2026 increased to $281.7 million from $269.3 million for the same period of the prior year.

Previous wording

Noninterest expense decreased 3% to $143.5 million in the second quarter of fiscal 2026, compared to $148.2 million for the same quarter last year. The decrease was primarily attributable to reductions in card processing and other expense, partially offset by increases in compensation and benefits and building and software expense.

Current wording

Noninterest expense decreased 7% to $129.1 million in the third quarter of fiscal 2026, compared to $139.3 million for the same quarter last year. The decrease was primarily attributable to reductions in card processing expense and lower legal and consulting expense. These decreases were partially offset by increases in compensation and benefits and building and software expenses that directly correlate to the execution of the Company's long-term strategy, particularly investments in people, processes, and technology.

Previous wording

Card processing expense is primarily driven by rate-related agreements with Partner Solutions relationships. The amount of expense paid under those agreements is based on an agreed upon rate index that varies depending on the deposit levels, floor rates, market conditions, and other performance conditions. Generally, this rate index is based on a percentage of the EFFR and reprices immediately upon a change in the EFFR. Approximately 66% of the deposit portfolio was subject to these rate-related processing expenses during the fiscal 2026 second quarter. For the fiscal quarter ended March 31, 2026, contractual, rate-related processing expenses were $25.4 million, as compared to $28.4 million for the fiscal quarter ended March 31, 2025.

Current wording

Card processing expense is primarily driven by rate-related agreements with Partner Solutions relationships and subject to deposit levels, floor rates, market conditions, and other performance conditions. Generally, this rate index is based on a percentage of the EFFR and reprices immediately upon a change in the EFFR. Approximately 68% of the deposit portfolio was subject to these rate-related processing expenses during the fiscal 2026 third quarter. For the fiscal quarter ended June 30, 2026, contractual, rate-related processing expense was $23.3 million, as compared to $25.1 million for the fiscal quarter ended June 30, 2025.

Previous wording

Noninterest expense for the six months ended March 31, 2026 decreased to $270.7 million from $276.0 million for the same period of the prior year.

Current wording

Noninterest expense for the nine months ended June 30, 2026 decreased to $399.8 million from $415.3 million for the same period of the prior year.

Previous wording

The Company recorded an income tax expense of $14.2 million, representing an effective tax rate of 16.2%, for the fiscal 2026 second quarter, compared to an income tax expense of $16.2 million, representing an effective tax rate of 17.7%, for the second quarter last fiscal year. The current quarter decrease in income tax expense compared to the prior year quarter was primarily driven by research tax credits.

Current wording

The Company recorded an income tax expense of $3.1 million, representing an effective tax rate of 9.5%, for the fiscal 2026 third quarter, compared to an income tax expense of $4.8 million, representing an effective tax rate of 10.2%, for the third quarter last fiscal year. The current quarter decrease in income tax expense compared to the prior year quarter was primarily driven by a decrease in income.

Previous wording

The Company originated $8.0 million in renewable energy leases during the fiscal 2026 second quarter, resulting in $2.0 million in total net investment tax credits. During the second quarter of fiscal 2025, the Company originated $1.9 million in renewable energy leases resulting in $0.5 million in total net investment tax credits. For the six months ended March 31, 2026, the Company originated $27.7 million in renewable energy leases, compared to $11.2 million for the comparable prior year period. Investment tax credits related to renewable energy leases are recognized ratably based on income throughout each fiscal year.

Current wording

The Company originated $5.3 million in renewable energy leases during the fiscal 2026 third quarter, resulting in $1.4 million in total net investment tax credits. During the third quarter of fiscal 2025, the Company originated $2.1 million in renewable energy leases resulting in $0.2 million in total net investment tax credits. For the nine months ended June 30, 2026, the Company originated $32.9 million in renewable energy leases, compared to $13.3 million for the comparable prior year period. Investment tax credits related to renewable energy leases are recognized ratably based on income throughout each fiscal year.

Previous wording

The Company recorded an income tax expense of $21.4 million, representing an effective tax rate of 16.5% for the six months ended March 31, 2026, compared to an income tax expense of $22.2 million, or an effective tax rate of 17.4%, for the six months ended March 31, 2025.

Current wording

The Company recorded an income tax expense of $24.4 million, representing an effective tax rate of 15.1% for the nine months ended June 30, 2026, compared to an income tax expense of $27.0 million, or an effective tax rate of 15.4%, for the nine months ended June 30, 2025.

Previous wording

The Company's nonperforming assets at March 31, 2026 were $119.8 million, representing 1.68% of total assets, compared to $101.7 million, or 1.42% of total assets at September 30, 2025. The increase in the nonperforming assets as a percentage of total assets at March 31, 2026 compared to September 30, 2025, was driven by an increase in nonperforming loans in the commercial finance portfolio.

Current wording

The Company's nonperforming assets at June 30, 2026 were $277.5 million, representing 3.79% of total assets, compared to $101.7 million, or 1.42% of total assets at September 30, 2025. The increase in the nonperforming assets as a percentage of total assets at June 30, 2026 compared to September 30, 2025, was driven by an increase in nonperforming loans in the commercial finance and consumer finance portfolios.

Previous wording

The Company's nonperforming loans and leases at March 31, 2026 were $117.7 million, representing 2.39% of total gross loans and leases, compared to $99.1 million, or 2.05% of total gross loans and leases at September 30, 2025.

Current wording

The Company's nonperforming loans and leases at June 30, 2026 were $275.1 million, representing 5.28% of total gross loans and leases, compared to $99.1 million, or 2.05% of total gross loans and leases at September 30, 2025. The primary reason for the increase in nonperforming commercial finance loans was related to certain renewable energy construction projects with a common developer. The Company continues to work with other parties in these projects to bring them to completion.