SHF Holdings, Inc. Q2 FY2023 earnings call

• Safe Harbor has been focused on leveraging its fintech platform to provide compliant financial solutions to cannabis-related businesses, with a record $1 billion+ in quarterly deposits processed for a second consecutive year, totaling nearly $20 billion since inception. • The company's fintech platform offers a single point of access for commercial deposit accounts, payment services, and treasury management. • It has strong partnerships with cannabis-friendly financial institutions like Partner Colorado Credit Union, Five Star Bank, and Pacific Valley Bank, with a recent partnership with Five Star Bank in May enabling access to interest-bearing money market accounts and additional loan options. • Completed post-acquisition integration of Abaca, leading to efficiencies and reduction of redundancies. • Strengthened lending pipeline with over $300 million in nationwide lending opportunities and originated over $15 million in senior secured loans for CRPs. • Expanded social equity program in May 2023, offering a 20% discount on account application and monthly fees for social equity licensees, opening 13 new accounts across 3 states.

In the second quarter of 2023, Safe Harbor Financial saw significant growth in deposit activity. Total deposits increased by 36% to $1.1 billion compared to the second quarter of 2022. The balance on deposits increased 60% to $230.7 million in Q2 2023 from $143.8 million in Q2 2022. Active average accounts increased 64.5% to 1,002 in Q2 2023 from 609 in Q2 2022. Deposit fees increased by 90% to $2.56 million compared to $1.34 million in the same period last year. In terms of lending, the company strengthened its pipeline of nationwide lending opportunities to over $300 million and originated over $15 million of senior secured loans for CRPs. Loan interest income and fees increased from 7% of annual income in Q2 2022 to 12% of annual income in Q2 2023.

• Management expects full year 2023 revenue to be in the range of $15.3 million to $16.3 million.

• Termination of the banking relationship with Central Bank of Arkansas, which may lead to top line revenue reduction in the near term. • Impairment of goodwill and long-lived intangible assets due to the termination of the Central Bank relationship, as fair value determination is sensitive to changes in underlying assumptions and factors. • Risks associated with the complexity of state-by-state cannabis regulations and banking limitations under the Bank Secrecy Act, which could impact the company's ability to serve cannabis-related businesses.