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Management Discussion

• Total revenue for the fiscal 2021 second quarter was $187.3 million, a slight decrease compared to $188.3 million for the same quarter in fiscal 2020, which benefited from the one-time $19.3 million gain from the divestiture of the Community Bank division.
• Net interest income for the second quarter was $73.9 million, compared to $67.7 million in the comparable quarter of the prior year. The increase was primarily driven by a reduction in total interest expense, partially offset by lower overall yields realized on investments and loans and leases. Net interest margin ("NIM") decreased to 3.07% for the fiscal 2021 second quarter from 4.78% during the same period of last year, chiefly reflecting excess cash associated with the Company's participation in the EIP program, as described further below.
• The Company's total gross loans and leases at March 31, 2021 increased $37.2 million, or 1%, to $3.65 billion, compared to March 31, 2020. Average deposits from the payments divisions for the fiscal 2021 second quarter increased nearly 181% to $9.29 billion when compared to the same quarter of the prior year. A significant portion of the year-over-year increase reflected the Company's participation in the EIP program, as described further below. The Company's cost of funds for all deposits and borrowings averaged 0.08% during the fiscal 2021 second quarter, compared to 0.83% during the prior year quarter, primarily due to an increase in the average balance of the Company's noninterest-bearing deposits from the EIP program.