fourth quarter and fiscal year 2026
Filed Oct 21, 2026Pathward reported fourth-quarter net income attributable to parent of $38.6 million and diluted EPS of $1.85, while fiscal 2026 net income attributable to parent was $175.7 million and diluted EPS was $8.14.
Fourth-quarter noninterest income increased 12% and noninterest expense decreased 10%, but net interest income decreased 8%, provision for credit losses increased to $10.3 million from a reversal of provision of $6.4 million, and nonperforming loans and leases rose to $289.3 million.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest income, three months ended September 30GAAP | $117.6M | – | decrease of 8% |
| Net interest income, year ended September 30GAAP | $474.9M | – | – |
| Provision for credit loss, three months ended September 30GAAP | $10.30M | – | – |
| Provision for credit loss, year ended September 30GAAP | $87.46M | – | – |
| Total noninterest income, three months ended September 30GAAP | $65.56M | – | increased 12% |
| Total noninterest income, year ended September 30GAAP | $347.2M | – | – |
| Card and deposit fees, three months ended September 30GAAP | $35.83M | – | – |
| Secondary market revenue, three months ended September 30GAAP | $11.34M | – | – |
| Rental income, three months ended September 30GAAP | $8.50M | – | – |
| Total noninterest expense, three months ended September 30GAAP | $129.7M | – | decreased 10% |
| Total noninterest expense, year ended September 30GAAP | $529.5M | – | – |
| Compensation and benefits, three months ended September 30GAAP | $51.79M | – | – |
| Card processing expense, three months ended September 30GAAP | $30.17M | – | – |
| Income before income tax expense, three months ended September 30GAAP | $43.13M | – | – |
| Income tax expense, three months ended September 30GAAP | $4.37M | – | – |
| Effective tax rate, three months ended September 30GAAP | 10.1% | – | – |
| Net income attributable to parent, three months ended September 30GAAP | $38.63M | – | – |
| Net income attributable to parent, year ended September 30GAAP | $175.7M | – | – |
| Diluted earnings per common share, three months ended September 30GAAP | $1.85 | – | – |
| Diluted earnings per common share, year ended September 30GAAP | $8.14 | – | – |
| Basic earnings per common share, three months ended September 30GAAP | $1.86 | – | – |
| Net interest margin, three months ended September 30GAAP | 6.79% | – | – |
| Adjusted net interest margin, three months ended September 30non-GAAP | 5.51% | – | – |
| Cost of deposits, three months ended September 30GAAP | 0.01% | – | – |
| Adjusted cost of deposits, three months ended September 30non-GAAP | 1.40% | – | – |
| Return on average assets, three months ended September 30GAAP | 2.08% | – | – |
| Return on average tangible equity, three months ended September 30other | 28.72% | – | – |
| Return on average assets, year ended September 30GAAP | 2.30% | – | – |
| Return on average tangible equity, year ended September 30other | 32.89% | – | – |
| Total gross loans and leases, September 30GAAP | $5.08B | – | – |
| Commercial finance loans, September 30GAAP | $4.44B | increase of $118.2 million, or 3% | increase of $517.0 million, or 13% |
| Allowance for credit losses, September 30GAAP | $67.3M | – | – |
| Allowance for credit losses as a percentage of total loans and leases, September 30GAAP | 1.33% | – | – |
| Net charge-offs, three months ended September 30GAAP | $52M | – | – |
| Nonperforming assets, September 30GAAP | $290.4 million, representing 4.00% of total assets | – | – |
| Nonperforming loans and leases, September 30GAAP | $289.3 million, representing 5.61% of total gross loans and leases | – | – |
| Deposits, September 30GAAP | $5.69B | – | decreased 3% |
| Total assets, September 30GAAP | $7.25B | – | – |
| Total stockholders' equity, September 30GAAP | $820.4M | – | – |
| Cash and cash equivalents, September 30GAAP | $162.4M | – | – |
| Short-term borrowings, September 30GAAP | $334.5M | – | – |
| Long-term borrowings, September 30GAAP | $33.56M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- The Company repurchased 281,562 shares of common stock at an average share price of $88.75.
- As of September 30, 2026, there were 2,845,617 shares available for repurchase under the current common stock share repurchase program.
What drove it
- Interest income from commercial finance loans increased by $5.6 million, driven by strong originations within structured finance.
- The decline in net interest income reflected an $11.1 million reduction in interest income from the credit sponsorship portfolio and a $3.3 million reduction from the warehouse finance portfolio.
- Card and deposit fees excluding servicing fee income on custodial deposits increased $6.4 million as contracts signed last year generated growth.
- New loan originations nearly doubled from $1.3 billion to $2.2 billion, primarily driven by increased credit sponsorship loan originations resulting from a new contract announced during fiscal 2025 and growth with current partners.
- Commercial finance growth was driven year over year by term lending, asset-based lending and SBA/USDA growth.
Concerns
- The Company recognized a provision for credit losses of $10.3 million for the quarter ended September 30, 2026, compared to a reversal of provision of $6.4 million for the comparable prior-year period.
- Net charge-offs were $52.0 million for the quarter ended September 30, 2026, compared to $46.2 million for the quarter ended September 30, 2025.
- Nonperforming loans and leases were $289.3 million, representing 5.61% of total gross loans and leases, at September 30, 2026.
- The primary reason for higher nonperforming commercial finance loans compared with September 30, 2025 was certain renewable energy construction projects with a common developer.
- Total end-of-period deposits decreased 3% to $5.69 billion at September 30, 2026 from $5.89 billion at September 30, 2025.
What to watch
- Resolution and credit performance of renewable energy construction projects with a common developer.
- Commercial finance asset quality, including nonaccrual balances and credit-loss provisioning.
- The effect of the October 2025 credit sponsorship portfolio sale on reported net interest income and net interest margin.
- Growth in card and deposit fees from contracts signed last year.
- Deposit levels and contractual, rate-related processing expense, which was $23.0 million for the fiscal quarter ended September 30, 2026.
Balance sheet and cash flow
- Cash and cash equivalents were $162,398 (Dollars in thousands) at September 30, 2026.
- Total investments were $1,190,318 (Dollars in thousands) at September 30, 2026, compared to $1,246,718 (Dollars in thousands) at June 30, 2026 and $1,357,151 (Dollars in thousands) at September 30, 2025.
- Total loans and leases, net were $5,017,295 (Dollars in thousands) at September 30, 2026.
- Deposits were $5,691,644 (Dollars in thousands) and short-term borrowings were $334,500 (Dollars in thousands) at September 30, 2026.
- The Company managed $630.0 million of customer deposits at other banks in its capacity as custodian at September 30, 2026.
Analysis
Pathward's fourth-quarter earnings were stable year over year at $38.6 million of net income attributable to parent, while diluted EPS increased to $1.85 from $1.69. Fiscal 2026 net income attributable to parent was $175.7 million compared with $185.9 million in fiscal 2025, while diluted EPS was $8.14 compared with $7.87. The quarter combined lower net interest income with a materially better noninterest expense outcome and higher fee income.
Net interest income was $117.6 million, a decrease of 8% from the prior-year quarter. Management attributed the decline principally to an $11.1 million reduction in credit sponsorship interest income following the October 2025 portfolio sale and a $3.3 million reduction in warehouse finance interest income. Commercial finance provided a partial offset, with interest income rising $5.6 million. Reported net interest margin was 6.79%, versus 7.46% a year earlier, whereas adjusted net interest margin was 5.51%, versus 5.43%.
Fee trends were favorable. Total noninterest income increased 12% to $65.6 million, led by card and deposit fees and secondary market revenue. Card and deposit fees excluding servicing fee income on custodial deposits increased $6.4 million, and custodial-deposit servicing fee income was $6.1 million. Expense control also supported quarterly profitability: noninterest expense decreased 10% to $129.7 million, primarily from lower legal and consulting expense, partly offset by building and software expense.
The loan mix continued shifting toward commercial finance. Commercial finance loans totaled $4.44 billion, increasing $118.2 million, or 3%, from June 30, 2026 and $517.0 million, or 13%, from September 30, 2025. Total gross loans and leases were $5.08 billion at September 30, 2026. Deposits were $5.69 billion, down 3% year over year, while short-term borrowings were $334.5 million.
Credit indicators remain the central issue. The Company recorded a $10.3 million provision for credit losses versus a $6.4 million reversal in the prior-year quarter, and net charge-offs increased to $52.0 million from $46.2 million. Nonperforming loans and leases reached $289.3 million, or 5.61% of total gross loans and leases, compared with $99.1 million, or 2.05%, a year earlier. The Company identified certain renewable energy construction projects with a common developer as the primary reason for higher nonperforming commercial finance loans. The allowance for credit losses declined sequentially to $67.3 million from $109.8 million, but remained above $53.3 million a year earlier.
Management, verbatim
Fiscal 2026 was another important year of execution for Pathward. We successfully advanced the strategic priorities we set out to accomplish last year, and this was no small feat. We had some major wins across each area, and are very proud of the results the team delivered. While we continue to track and manage some of the credit items we mentioned last quarter, all other areas of the business yielded positive results. We extended contracts with partners, grew noninterest income, and grew net interest income in commercial finance.
Brett Pharr, Chief Executive Officer
Not in the filing
stated, not guessed- Fiscal 2027 financial guidance figures were not provided in the supplied filing text.
- Prior-release outlook was not provided.
- Operating cash flow was not provided.
- Free cash flow was not provided.
- Dividend declaration or payment was not provided.
- Reportable segment revenue and profitability were not provided.
- GAAP and non-GAAP revenue and gross-margin measures were not provided, as the Company reported banking income-statement metrics rather than revenue and gross margin.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.