Sept. 30, 2024

It’s not hard to find a place to park at the Sioux Falls office of Pathward Financial Inc.

A casual observer might assume the building in a southwest Sioux Falls office park essentially is vacant, which on many days isn’t far from the truth.

There are rows of empty workstations, unoccupied offices and common areas.

“In any given day — unless we have an event — there’s not a lot of people in the office, and we’ve made that work for us,” said Brett Pharr, who became CEO in 2021 after serving as co-president and chief operating officer since 2020.

“It’s the commitment of the geography because the talent is so key.”

Pharr leads a company that has evolved in multiple ways this decade. It adopted its current name two years ago, following a sale of the “Meta” trademark from parent company Meta Financial Group Inc. to Meta Platforms Inc.

Describing itself as a “financial empowerment company,” Pathward’s products and services increase access to financial services, from banking as a service to commercial finance.

The company’s MetaBank division, which has three Sioux Falls branches, was sold to Iowa-based Central Bank in early 2020.

Then came the pandemic, which drove Pathward’s path to almost fully remote work.

“I don’t know that we did much easing back,” Pharr said. “We have not required people to come back into the office, and that has worked really well for us. It’s a top satisfier for our employee base.”

The company has earned certification from the Great Place To Work organization for two consecutive years, with 86 percent of employees surveyed for 2024 calling it a “great place to work” — eight points higher than the company’s 2023 score and 29 points higher than the average U.S. company.

Pathward’s workplace strengths based on survey findings included remote work, well-being and company culture, along with competitive benefits and community involvement.

“This industry has become increasingly tech-focused,” Pharr said. “When people can live anywhere and work for us, that’s been an advantage.”

The estimated 1,200-person workforce still has a concentration in Sioux Falls, where about 330 people are based. An additional couple hundred employees in the Detroit area support commercial financing, while others sites “are much smaller,” or people work fully remote from wherever they’re based. The Sioux Falls site is led by Beth Ormseth, senior vice president of strategic business operations; Matt Wahl, senior vice president and chief compliance officer, and Jenn Warren, senior vice president and chief accounting officer.

In Pathward’s payments segment of the business, for instance, employees’ resumes might show a last job in Silicon Valley.

Pharr himself is based in Nashville. Two others in the C-suite are in Arizona. One is in New York, another in Connecticut. The chief of staff is in Virginia Beach.

“We travel a lot, intentionally,” Pharr said, estimating he’s in Sioux Falls four or five times annually. “We’re together every six weeks for a lot of time because you need to, but we’ve also made the remote thing work very well. We can get ahold of each other easily. It’s a new way of doing things that’s working out.”

There’s also a national scope to the board of directors, said Sioux Falls attorney Doug Hajek who has served on the board since 2013. Fellow board member Ken Stork, former president and CEO of Citibank in Sioux Falls, is a member as well.

But they’re joined by “people from both coasts and Kansas City — they come from all over,” Hajek said, adding that at the August meeting in Sioux Falls, board members from New York “were so impressed by how busy it was downtown,” he said.

“On a Sunday night, tables were full outside. One of the board members from New York said … he was so impressed with the look of Sioux Falls, and he said it shows why there are so many people who move out of the urban areas now to places like this because of their ability to work remotely.”

Making remote work work

In the Sioux Falls office, teams such as audit or compliance might meet on a common morning each week. At other sites, a team might get together once or twice a month, Pharr said.

Certain operations involving financials still must be done in the office for security reasons, he added.

For talent development, interactions that used to take place across a desk now are done virtually, Pharr said. He gives an example of underwriters meeting on a video call and looking through deals together.

“It’s a different way of accomplishing the same thing, which might be a team class exercise,” he said, adding that leaders still are “managing by wandering around — you’re just wandering around in a different way. You’ve got to put some very specific business practices in place.”

Chat tools also offer easy access to co-workers, he continued. More broadly, the company provides video updates to enhance internal communication.

“That’s working very well, and we can tell because we’ve had succession going on,” Pharr said. “We’ve seen people step into the next role, and they were developed well.”

Other workers have made “zig-zag” moves from operations to finance and audit.

“Those are really important strategic career moves for people, and you can do that just as well or more easily in a remote environment,” he said.

And while workers live nationwide, the “very wide geographic adjustments” in pay largely are a thing of the past, Pharr said.

“We still have them, but they’re much smaller,” he said. “If you live in a very expensive environment, that’s your choice.”

Workers also come together for volunteer opportunities and for what Pathward calls “patio parties” a few times a year for the whole team.

“Lots of teams come in and do their own thing, and it’s about getting to know your colleagues,” Pharr added. “That’s very, very useful, and yet people are so much more productive when they work from home, in their life in general. A lot of times, they work later into the evening because they choose to, and they take care of personal things during the day, and it’s not a problem as long as you’re getting your work done.”

The decision to offer that level of flexibility was discussed at a board level, Hajek said.

“It’s not an easy thing to balance,” he said. “It’s worked out really well for us, and our local people have really appreciated it, and I think frankly it’s helped us retain locally some very good talent because people just like that.”

While some who were based in Sioux Falls now work remotely from places such as the Black Hills — also a lifestyle choice, Pharr said — the hope is to continue cultivating a talent base in the city.

Sioux Falls enjoys a strong financial services history that has evolved into fintech, leading to what Pharr called one of the highest concentration of talent nationwide in the payments industry.

“We still have a very significant employee base in Sioux Falls and expect it’s going to stay that way,” Hajek added. “But keeping part of that financial infrastructure involves the availability of local talent.”

To that end, the company is the named sponsor of the Augustana University Fintech Program by Pathward, which launched in the fall of 2023 and is an interdisciplinary program that includes accounting, finance, computer science, statistics and economics courses.

“We really wanted to show that commitment to the town and the talent, and that’s the next generation of talent,” Pharr said. “They’ve got 15 students in it, and we’ll do internships, and when they graduate, a metric for me is to hire some of them.”

The availability of cybersecurity talent through nearby Dakota State University also is critical, Hajek added.

“Having that resource … is really another thing that’s so important to keep the industry vibrant.”

Measuring success

Whether work is completed in a home office or a leased one, the proof of effectiveness is in the company’s performance, Pharr said.

Pathward’s most recent earrings for the quarter that ended June 30 showed net income of $41.8 million, or $1.66 per share, down slightly from $45.1 million, or $1.68 per share, a year ago.

“At the end of the day, we’re measured based on business performance,” Pharr said. “And if you look at our numbers and compare to a traditional bank and our own history, we’ve been performing. That shows it’s working, and it’s very exciting.”

Turnover also is “very low, well below the industry,” he added.

Pathward devotes “a lot of attention to people and culture,” Hajek said. “You have to be very conscious of that … and I think good companies are a lot more conscious of appropriate performance metrics, and it requires investments in technology to continually improve productivity and at the same time provide the products and services that customers demand.”

A group of Pathward Sioux Falls employees volunteered together at the Sioux Falls Habitat for Humanity ReStore. Collectively, the company has 2,300 volunteer hours so far this fiscal year, which ends today, supporting nearly 70 nonprofits.

The growth in fintech areas such as digital wallets and demand for faster payments will continue to drive growth, Pharr said.

“There are still a lot of opportunities, and that’s where the growth is going to be,” he said. “I think related specifically to Sioux Falls, it’s where the talent is, so making sure we keep growing the talent and having the talent here, learning from everybody that has it is going to be the focus.”

He said he anticipates retaining the approximately 50,000-square-foot building being used by Pathward in southwest Sioux Falls.

“On any given day … we need to have the footprint we have for a variety of reasons and likely will continue to do that here,” he said. “When we have a patio party or some big events, it gets pretty full.”