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FinWise Bancorp Reports Second Quarter 2024 Results

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FinWise Bancorp (NASDAQ: FINW) reported its Q2 2024 results, with net income of $3.2 million and diluted EPS of $0.24. Key highlights include:

- Loan originations of $1.2 billion, consistent with Q2 2023
- Net interest income of $14.6 million, up from $13.7 million in Q2 2023
- Efficiency ratio of 66.3%, increased from 52.7% in Q2 2023
- Annualized return on average equity (ROAE) of 7.9%, down from 12.8% in Q2 2023

The company saw growth in its loan portfolio and deposits, with total assets reaching $617.8 million. However, nonperforming loans increased to $27.9 million, or 6.5% of total loans receivable. FinWise maintains strong capital levels, with a leverage ratio of 20.8% at the Bank level.

FinWise Bancorp (NASDAQ: FINW) ha riportato i risultati del secondo trimestre 2024, con un reddito netto di 3,2 milioni di dollari e un utile per azione diluito di 0,24 dollari. I punti salienti includono:

- Origini di prestiti per 1,2 miliardi di dollari, in linea con il secondo trimestre 2023
- Reddito netto da interessi di 14,6 milioni di dollari, in aumento rispetto a 13,7 milioni di dollari nel secondo trimestre 2023
- Rapporto di efficienza del 66,3%, aumentato dal 52,7% nel secondo trimestre 2023
- Rendimento annualizzato su patrimonio medio (ROAE) del 7,9%, in calo rispetto al 12,8% nel secondo trimestre 2023

L'azienda ha registrato una crescita nel proprio portafoglio prestiti e nei depositi, con attivi totali che raggiungono 617,8 milioni di dollari. Tuttavia, i prestiti non performanti sono aumentati a 27,9 milioni di dollari, ovvero il 6,5% dei prestiti totali. FinWise mantiene forti livelli di capitale, con un rapporto di leva finanziaria del 20,8% a livello di banca.

FinWise Bancorp (NASDAQ: FINW) reportó sus resultados del segundo trimestre de 2024, con un ingreso neto de 3,2 millones de dólares y una utilidad por acción diluida de 0,24 dólares. Los aspectos más destacados incluyen:

- Originaciones de préstamos por 1,2 mil millones de dólares, consistente con el segundo trimestre de 2023
- Ingreso neto por intereses de 14,6 millones de dólares, un aumento desde 13,7 millones de dólares en el segundo trimestre de 2023
- Ratio de eficiencia de 66,3%, incrementado desde el 52,7% en el segundo trimestre de 2023
- Retorno anualizado sobre el capital promedio (ROAE) de 7,9%, disminuyendo desde el 12,8% en el segundo trimestre de 2023

La compañía vio un crecimiento en su cartera de préstamos y depósitos, con activos totales alcanzando 617,8 millones de dólares. Sin embargo, los préstamos en mora aumentaron a 27,9 millones de dólares, o el 6,5% de los préstamos totales. FinWise mantiene niveles de capital sólidos, con un ratio de apalancamiento del 20,8% a nivel bancario.

FinWise Bancorp (NASDAQ: FINW)는 2024년 2분기 결과를 발표했으며, 순이익 320만 달러희석주당순이익 0.24달러를 기록했습니다. 주요 요소는 다음과 같습니다:

- 12억 달러의 대출 발생, 2023년 2분기와 일치
- 순이자 수익 1460만 달러, 2023년 2분기 1370만 달러에서 증가
- 효율성 비율 66.3%, 2023년 2분기 52.7%에서 증가
- 평균 자본에 대한 연환산 수익률 (ROAE) 7.9%, 2023년 2분기 12.8%에서 감소

회사는 대출 포트폴리오와 예금에서 성장세를 보였으며, 총 자산은 6억1780만 달러에 도달했습니다. 그러나 부실채권은 2790만 달러로 증가했으며, 이는 총 대출의 6.5%입니다. FinWise는 은행 차원에서 20.8%의 레버리지 비율로 강한 자본 수준을 유지하고 있습니다.

FinWise Bancorp (NASDAQ: FINW) a annoncé ses résultats du deuxième trimestre 2024, affichant un revenu net de 3,2 millions de dollars et un bénéfice par action dilué de 0,24 dollar. Les points forts comprennent :

- Origination de prêts de 1,2 milliard de dollars, conforme au deuxième trimestre 2023
- Revenu net d'intérêts de 14,6 millions de dollars, en hausse par rapport à 13,7 millions de dollars au deuxième trimestre 2023
- Ratio d'efficacité de 66,3%, à la hausse par rapport à 52,7% au deuxième trimestre 2023
- Rendement annualisé sur le capital moyen (ROAE) de 7,9%, en baisse par rapport à 12,8% au deuxième trimestre 2023

L'entreprise a connu une croissance de son portefeuille de prêts et de ses dépôts, avec des actifs totaux atteignant 617,8 millions de dollars. Cependant, les prêts non performants ont augmenté à 27,9 millions de dollars, soit 6,5% de l'ensemble des prêts débitrices. FinWise maintient de solides niveaux de capital, avec un ratio d'endettement de 20,8% au niveau de la banque.

FinWise Bancorp (NASDAQ: FINW) hat die Ergebnisse für das zweite Quartal 2024 veröffentlicht, mit einem Nettogewinn von 3,2 Millionen US-Dollar und einem verwässerten Gewinn pro Aktie von 0,24 US-Dollar. Wichtige Highlights sind:

- Kreditvergaben von 1,2 Milliarden US-Dollar, konsistent mit dem 2. Quartal 2023
- Zinserträge von 14,6 Millionen US-Dollar, gestiegen von 13,7 Millionen US-Dollar im 2. Quartal 2023
- Effizienzquote von 66,3%, erhöht von 52,7% im 2. Quartal 2023
- Annualisierte Rendite auf das durchschnittliche Eigenkapital (ROAE) von 7,9%, gesunken von 12,8% im 2. Quartal 2023

Das Unternehmen verzeichnete ein Wachstum seines Kreditportfolios und der Einlagen, mit einer Bilanzsumme von 617,8 Millionen US-Dollar. Allerdings stiegen die notleidenden Kredite auf 27,9 Millionen US-Dollar, was 6,5% der gesamten Forderungen entspricht. FinWise hält starke Kapitalquoten, mit einer Eigenkapitalquote von 20,8% auf Bankebene.

Positive
  • Loan originations remained strong at $1.2 billion
  • Net interest income increased to $14.6 million, up 6.6% year-over-year
  • Total assets grew to $617.8 million, up 24.7% year-over-year
  • Bank's leverage ratio remains strong at 20.8%, well above regulatory requirements
Negative
  • Net income decreased to $3.2 million from $4.6 million in Q2 2023
  • Diluted EPS declined to $0.24 from $0.35 in Q2 2023
  • Efficiency ratio increased to 66.3% from 52.7% in Q2 2023, indicating higher expenses
  • Nonperforming loans increased significantly to $27.9 million from $1.9 million in Q2 2023

Insights

FinWise Bancorp's Q2 2024 results reveal a mixed financial performance with some concerning trends. Net income decreased to $3.2 million from $4.6 million in Q2 2023, while diluted EPS fell to $0.24 from $0.35. The efficiency ratio deteriorated to 66.3% from 52.7% year-over-year, indicating rising costs relative to revenue.

On the positive side, loan originations remained stable at $1.2 billion and net interest income increased to $14.6 million from $13.7 million in Q2 2023. The bank's capital position remains strong with a leverage ratio of 20.8%, well above the 9% requirement.

However, asset quality is a significant concern. Nonperforming loans surged to $27.9 million or 6.5% of total loans, up from just $1.9 million or 0.7% a year ago. This sharp increase, primarily in SBA loans, suggests potential challenges in the small business sector and warrants close monitoring.

The bank's strategic initiatives, including new partnerships and expansion into payments, could drive future growth but are also increasing expenses in the near term. Investors should weigh these growth opportunities against the current profitability and asset quality challenges.

- Net Income of $3.2 Million for Second Quarter of 2024 -

- Diluted Earnings Per Share of $0.24 for Second Quarter of 2024 -

MURRAY, Utah, July 25, 2024 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter ended June 30, 2024.

Second Quarter 2024 Highlights

  • Loan originations were $1.2 billion, compared to $1.1 billion for the quarter ended March 31, 2024, and $1.2 billion for the second quarter of the prior year
  • Net interest income was $14.6 million, compared to $14.0 million for the quarter ended March 31, 2024, and $13.7 million for the second quarter of the prior year
  • Net Income was $3.2 million, compared to $3.3 million for the quarter ended March 31, 2024, and $4.6 million for the second quarter of the prior year
  • Diluted earnings per share (“EPS”) were $0.24 for the quarter, compared to $0.25 for the quarter ended March 31, 2024, and $0.35 for the second quarter of the prior year
  • Efficiency ratio was 66.3%, compared to 60.6% for the quarter ended March 31, 2024, and 52.7% for the second quarter of the prior year (1)
  • Annualized return on average equity (“ROAE”) was 7.9%, compared to 8.4% in the quarter ended March 31, 2024, and 12.8% in the second quarter of the prior year
  • Nonperforming loans were $27.9 million as of June 30, 2024, compared to $26.0 million as of March 31, 2024, and $1.9 million as of the second quarter of the prior year of which $15.8 million, $14.8 million, and $1.1 million as of June 30, 2024, March 31, 2024, and June 30, 2023, respectively, were guaranteed by the Small Business Administration (“SBA”).

(1)  See “Reconciliation of Non-GAAP to GAAP Financial Measures” for a reconciliation of this non-GAAP measure.

“FinWise delivered another strong quarter, driven by continued growth in loan originations, solid revenue and stable credit quality,” said Kent Landvatter, Chief Executive Officer of FinWise. “These results highlight the strength and resiliency of our existing business, as they do not include any benefit from recently announced strategic partnerships and expansion strategies. Our team has also delivered, ahead of schedule, on multiple initiatives, including the launch of our first Payments partner, the start of our Credit-Enhanced Balance Sheet program and the launch of our first card product. Additionally, we remain on schedule to be operational with our Payment Hub platform later this year. Looking ahead, we remain excited about future growth opportunities and are steadfastly committed to executing on our strategic goals to further enhance value for our shareholders.”

Selected Financial Data     
 As of and For the Three Months Ended
($ in thousands, except per share amounts)6/30/2024 3/31/2024 6/30/2023
      
Net Income$3,180  $3,315  $4,638 
Diluted EPS$0.24  $0.25  $0.35 
Return on average assets 2.1%  2.2%  3.9%
Return on average equity 7.9%  8.4%  12.8%
Yield on loans 14.89%  14.80%  17.77%
Cost of interest bearing deposits 4.80%  4.71%  4.02%
Net interest margin 10.31%  10.12%  12.14%
Efficiency ratio(1) 66.3%  60.6%  52.7%
Tangible book value per share(2)$12.61  $12.70  $11.59 
Tangible shareholders’ equity to tangible assets(2) 26.8%  26.6%  29.7%
Leverage Ratio (Bank under CBLR) 20.8%  20.6%  22.4%
Full-time Equivalent (FTEs) 191   175   148 

(1)  This measure is not a measure recognized under United States generally accepted accounting principles, or GAAP, and is therefore considered to be a non-GAAP financial measure. See “Reconciliation of Non-GAAP to GAAP Financial Measures” for a reconciliation of this measure to its most comparable GAAP measure. The efficiency ratio is defined as total non-interest expense divided by the sum of net interest income and non-interest income. The Company believes this measure is important as an indicator of productivity because it shows the amount of revenue generated for each dollar spent.
(2)  Tangible shareholders’ equity to tangible assets is considered a non-GAAP financial measure. Tangible shareholders’ equity is defined as total shareholders’ equity less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholder’s equity to total assets. The Company had no goodwill or other intangible assets at the end of any period indicated. The Company has not considered loan servicing rights or loan trailing fee assets as intangible assets for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity at the end of each of the periods indicated.

Net Income
Net income was $3.2 million for the second quarter of 2024, compared to $3.3 million for the first quarter of 2024 and $4.6 million for the second quarter of 2023. The decrease from the prior quarter was primarily due to increased compensation cost driven by increased spending on business infrastructure to support the payments and bank identification number (“BIN”) initiatives and enhance governance and lower non-interest income primarily resulting from acceleration of servicing fee amortization due to increased early payoffs of SBA loans. These were offset in part by an increase in net interest income reflecting higher average balances and an increase in yields on our held-for-sale loan portfolio, a decrease in the provision for credit losses reflecting lower levels of charge-offs, and a decrease in our effective tax rate. The decrease from the prior year period was primarily due to increases in compensation expense and other expenses driven by increased spending on business infrastructure and was offset in part by increases in net interest income driven by growth in the loans held for investment portfolio as well as a reduction in tax expense reflecting the lower level of pre-tax income.

Net Interest Income
Net interest income was $14.6 million for the second quarter of 2024, compared to $14.0 million for the first quarter of 2024 and $13.7 million for the second quarter of 2023. The increase from the prior quarter was primarily due to an increase in the loans held for investment portfolio and an increase in the yield on our held-for-sale loan portfolio partially offset by increases in the Bank’s average balances of, and rates paid for, certificates of deposit. The increase from the prior year period was primarily due to increases in the Bank’s average balances for the loans held for investment portfolio, partially offset by increased interest rates paid on deposits and increased average interest-bearing deposit balances.

Loan originations totaled $1.2 billion for the second quarter of 2024, compared to $1.1 billion for the prior quarter and $1.2 billion for the prior year period. For the first three weeks of July 2024, originations are tracking at approximately the same level as the second quarter of 2024 originations.

Net interest margin for the second quarter of 2024 was 10.31%, compared to 10.12% for the prior quarter and 12.14% for the prior year period. The increase from the prior quarter is primarily attributable to an increase in the loans held for investment balance and higher yields on the loans held-for-sale portfolio, partially offset by increases in the Bank’s average balances of, and rates paid for, certificates of deposit. The decrease from the prior year period was primarily due to decreases in the yields of the loans held-for-sale and loans held for investment portfolios reflecting the Bank’s efforts to increase loans outstanding to borrowers with lower credit risk and lower average yields.

Provision for Credit Losses
The Company’s provision for credit losses was $2.4 million for the second quarter of 2024, compared to $3.2 million for the prior quarter and $2.7 million for the prior year period. The provision decreased when compared to the prior quarter and the prior year period as the Company experiences lower levels of charge offs. Nonperforming assets have remained stable in the first half of 2024 when compared to the increases experienced in the latter half of 2023.

Non-interest Income

 For the Three Months Ended
($ in thousands)6/30/2024 3/31/2024 6/30/2023
Non-interest income     
Strategic Program fees$4,035  $3,965  $4,054 
Gain on sale of loans 356   415   700 
SBA loan servicing fees and servicing asset amortization (124)  466   226 
Change in fair value on investment in BFG (200)  (124)   
Other miscellaneous income 771   742   308 
Total non-interest income$4,838  $5,464  $5,288 
 

Non-interest income was $4.8 million for the second quarter of 2024, compared to $5.5 million for the prior quarter and $5.3 million for the prior year period. The decrease from the prior quarter was primarily due to acceleration of servicing fee amortization due to increased payoffs on higher rate SBA loans. The decrease from the prior year period was related to a decrease in income from the gain on sale of loans, and a decrease in the fair value of our investment in BFG. Offsetting these decreases in part were increases in Strategic Program fees as origination volume increased, and other miscellaneous income related to rental income on our commercial operating leases.

Non-interest Expense

 For the Three Months Ended
($ in thousands)6/30/2024 3/31/2024 6/30/2023
Non-interest expense     
Salaries and employee benefits$8,609  $7,562  $6,681 
Professional services 1,282   1,567   1,305 
Occupancy and equipment expenses 1,121   980   718 
Recovery of SBA servicing asset (328)  (198)  (339)
Other operating expenses 2,206   1,896   1,634 
Total non-interest expense$12,890  $11,807  $9,999 
 

Non-interest expense was $12.9 million for the second quarter of 2024, compared to $11.8 million for the prior quarter and $10.0 million for the prior year period. The increase from the prior quarter was primarily due to an increase in compensation costs and other operating expenses as the Company continues to build-out our business infrastructure for new business initiatives and enhance our governance structure. The increase from the prior year period was primarily due to an increase in salaries and employee benefits and other operating expenses driven by increased spending on business infrastructure along with an increase in occupancy and equipment expenses reflecting the growth in our business.

Reflecting the expenses incurred to develop our business infrastructure, the Company’s efficiency ratio was 66.3% for the second quarter of 2024, compared to 60.6% for the prior quarter and 52.7% for the prior year period. As a result of the infrastructure build, the Company anticipates the efficiency ratio will remain elevated until the Company begins to realize the revenues associated with the new programs being developed.

Tax Rate
The Company’s effective tax rate was 23.9% for the second quarter of 2024, compared to 26.5% for the prior quarter and 26.1% for the prior year period. The decrease from the prior quarter and prior year period was due primarily to more favorable resolution of historical state tax matters.

Balance Sheet
The Company’s total assets were $617.8 million as of June 30, 2024, an increase from $610.8 million as of March 31, 2024 and $495.6 million as of June 30, 2023. The increase from March 31, 2024 was primarily due to continued growth in the Company’s commercial leases, owner occupied commercial real estate, and residential real estate loan portfolios. The increase in total assets compared to June 30, 2023 was primarily due to increases in the Company’s SBA, commercial leases, owner occupied commercial real estate and consumer loan portfolios supported by a similar increase in deposits and growth in equity from retained earnings. Also contributing to the increase in total assets compared to the prior year period was an increase in the Company’s investment in BFG.

The following table shows the gross loans held for investment balances as of the dates indicated:

 6/30/2024 3/31/2024 6/30/2023
($ in thousands)Amount % of total loans Amount % of total loans Amount % of total loans
SBA$249,281   60.2% $247,810   63.4% $189,028   65.0%
Commercial leases 56,529   13.7%  46,690   11.9%  22,109   7.6%
Commercial, non-real estate 1,999   0.5%  2,077   0.5%  2,742   1.0%
Residential real estate 42,317   10.2%  39,006   10.0%  30,378   10.5%
Strategic Program loans 17,861   4.3%  17,216   4.4%  20,732   7.1%
Commercial real estate:           
Owner occupied 28,340   6.8%  21,300   5.4%  9,926   3.4%
Non-owner occupied 2,134   0.5%  2,155   0.6%  8,751   3.0%
Consumer 15,880   3.8%  14,689   3.8%  6,993   2.4%
Total period end loans$414,341   100.0% $390,943   100.0% $290,659   100.0%
 

Note: SBA loans as of June 30, 2024, March 31, 2024 and June 30, 2023 include $147.8 million, $141.7 million and $85.5 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA. The held for investment balance on Strategic Program loans with annual interest rates below 36% as of June 30, 2024, March 31, 2024 and June 30, 2023 was $2.6 million, $2.7 million and $5.5 million, respectively.

Total gross loans held for investment as of June 30, 2024 were $414.3 million, an increase from $390.9 million and $290.7 million as of March 31, 2024 and June 30, 2023, respectively. The increase compared to March 31, 2024 was primarily due to increases in the commercial leases, owner occupied commercial real estate, and residential real estate loan portfolios. The increase compared to June 30, 2023 was primarily due to increases in the SBA 7(a), commercial leases, commercial real estate owner occupied, residential real estate, and consumer loan portfolios.

The following table shows the Company’s deposit composition as of the dates indicated:

 As of
6/30/2024 3/31/2024 6/30/2023
($ in thousands)Amount Percent Amount Percent Amount Percent
Non-interest bearing demand deposits$107,083   24.9% $107,076   25.3% $93,347   28.1%
Interest-bearing deposits:           
Demand 48,319   11.3%  48,279   11.4%  46,335   13.9%
Savings 9,746   2.3%  11,206   2.6%  9,484   2.9%
Money market 9,788   2.3%  9,935   2.3%  14,473   4.3%
Time certificates of deposit 254,259   59.2%  247,600   58.4%  168,891   50.8%
Total period end deposits$429,195   100.0% $424,096   100.0% $332,530   100.0%
 

Total deposits as of June 30, 2024 increased to $429.2 million from $424.1 million and $332.5 million as of March 31, 2024 and June 30, 2023, respectively. The increase from March 31, 2024 was driven primarily by an increase in brokered time certificates of deposits. The increase from June 30, 2023 was driven primarily by an increase in brokered time certificate of deposits and non-interest bearing demand deposits. As of June 30, 2024, 31.3% of deposits at the Bank level were uninsured, compared to 32.4% as of March 31, 2024, and 36.3% as of June 30, 2023. As of June 30, 2024, 7.6% of total deposits at the Bank were required under the Company’s Strategic Program agreements and an additional 8.6% were associated with other accounts owned by the Company or the Bank.

Total shareholders’ equity as of June 30, 2024 increased $3.3 million to $165.8 million from $162.5 million at March 31, 2024. Compared to June 30, 2023, total shareholders’ equity increased by $18.4 million from $147.4 million. The increase from March 31, 2024 was primarily due to the Company’s net income. The increase from June 30, 2023 was primarily due to the Company’s net income as well as the additional capital issued in exchange for the Company’s increased ownership in BFG, partially offset by the repurchase of common stock under the Company’s repurchase program.

Bank Regulatory Capital Ratios
The following table presents the leverage ratios for the Bank as of the dates indicated as determined under the Community Bank Leverage Ratio Framework of the Federal Deposit Insurance Corporation:

As of  
Capital Ratios6/30/2024 3/31/2024 6/30/2023 Well-
Capitalized
Requirement
Leverage Ratio20.8% 20.6% 22.4% 9.0%
 

The leverage ratio increase from the prior quarter resulted from assets growing slower than earnings generated by operations. The leverage ratio decrease from the prior year period resulted primarily from the growth in the loan portfolio. The Bank’s capital levels remain significantly above well-capitalized guidelines as of June 30, 2024.

Share Repurchase Program
As of June 30, 2024, the Company has repurchased a total of 44,608 shares for $0.5 million under the Company’s share repurchase program announced in March 2024.

Asset Quality
Nonperforming loans were $27.9 million, or 6.5% of total loans receivable, as of June 30, 2024, compared to $26.0 million or 6.6% of total loans receivable, as of March 31, 2024 and $1.9 million, or 0.7% of total loans receivable as of June 30, 2023. Of the $27.9 million, $26.0 million, and $1.9 million nonperforming loans as of June 30, 2024, March 31, 2024, and June 30, 2023, respectively, $15.8 million, $14.8 million, and $1.1 million, respectively, are guaranteed by the SBA and $12.1 million, $11.2 million, and $0.7 million, respectively, is the balance of loans which do not carry SBA guarantees. The increase in nonperforming loans from the prior quarter was primarily attributable to SBA 7(a) loans classified as nonperforming during the quarter of which $1.3 million was guaranteed by the SBA. The increase in nonperforming loans from the prior year was primarily attributable to loans in the SBA 7(a) loan portfolio being classified as non-accrual mainly due to the negative impact of elevated interest rates on the Company’s small business borrowers. The Company’s allowance for credit losses to total loans held for investment was 3.2% as of June 30, 2024 compared to 3.2% as of March 31, 2024 and 4.2% as of June 30, 2023. The decrease from the prior year was primarily due to the Company’s increased retention of most of the originated guaranteed portions in its SBA 7(a) loan program.

The Company’s net charge-offs were $1.9 million, $3.4 million and $2.4 million for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. The decrease for the quarter ended June 30, 2024 when compared to the quarters ended March 31, 2024 and June 30, 2023 was primarily due to decreased net charge-offs in the Strategic Program loans portfolio.

The following table presents a summary of changes in the allowance for credit losses and asset quality ratios for the periods indicated:

 For the Three Months Ended
($ in thousands)6/30/2024 3/31/2024 6/30/2023
Allowance for credit losses:     
Beginning balance$12,632  $12,888  $12,034 
Provision for credit losses(1) 2,393   3,145   2,675 
Charge offs     
Residential real estate    (64)  (121)
Commercial real estate     
Owner occupied    (525)   
Commercial and industrial (184)  (54)  (66)
Consumer (18)  (41)  (19)
Lease financing receivables (69)  (111)   
Strategic Program loans (1,962)  (2,946)  (2,516)
Recoveries     
Residential real estate 3   53   81 
Commercial real estate     
Owner occupied    3    
Commercial and industrial 15      1 
Consumer 1       
Lease financing receivables 7       
Strategic Program loans 309   284   252 
Ending Balance$13,127  $12,632  $12,321 
      
Asset Quality RatiosAs of and For the Three Months Ended
($ in thousands, annualized ratios)6/30/2024 3/31/2024 6/30/2023
Nonperforming loans(2)$28,091  $25,996  $1,927 
Nonperforming loans to total loans held for investment 6.5%  6.6%  0.7%
Net charge offs to average loans held for investment 1.9%  3.5%  3.4%
Allowance for credit losses to loans held for investment 3.2%  3.2%  4.2%
Net charge offs$1,898  $3,401  $2,388 

(1)  Excludes the provision for unfunded commitments.
(2)  Nonperforming loans as of June 30, 2024, March 31, 2024, and June 30, 2023 include $15.8 million, $14.8 million, and $1.1 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.

Webcast and Conference Call Information

FinWise will host a conference call today at 5:30 PM ET to discuss its financial results for the second quarter of 2024. A simultaneous audio webcast of the conference call will be available on the Company’s investor relations section of the website at https://investors.finwisebancorp.com/.

The dial-in number for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). The conference ID is 13746967. Please dial the number 10 minutes prior to the scheduled start time.

A webcast replay of the call will be available at investors.finwisebancorp.com for six months following the call.

Website Information

The Company intends to use its website, www.finwisebancorp.com, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Such disclosures will be included in the Company’s website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of the Company’s website, in addition to following its press releases, filings with the Securities and Exchange Commission (“SEC”), public conference calls, and webcasts. To subscribe to the Company’s e-mail alert service, please click the “Email Alerts” link in the Investor Relations section of its website and submit your email address. The information contained in, or that may be accessed through, the Company’s website is not incorporated by reference into or a part of this document or any other report or document it files with or furnishes to the SEC, and any references to the Company’s website are intended to be inactive textual references only.

About FinWise Bancorp

FinWise Bancorp is a Utah bank holding company headquartered in Murray, Utah which wholly owns FinWise Bank, a Utah chartered state bank, and FinWise Investment LLC (together “FinWise). FinWise provides Bank and Payments solutions to fintech brands. 2024 is a key expansion year for the company as it expands and diversifies its business model by launching and incorporating Payments Hub and BIN Sponsorship offerings into its current platforms. FinWise’s existing Strategic Program Lending business, done through scalable API-driven infrastructure, powers deposit, lending and payments programs for leading fintech brands. In addition, FinWise manages other Lending programs such as SBA 7(a), Owner Occupied Real Estate, and Leasing, which provides flexibility for disciplined balance sheet growth. Through its compliance oversight and risk management-first culture, the Company is well positioned to guide fintechs through a rigorous process to facilitate regulatory compliance. For more information about FinWise visit https://investors.finwisebancorp.com.

Contacts

investors@finwisebank.com

media@finwisebank.com

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to, among other things, future events and its financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “budget,” “goal,” “target,” “would,” “aim” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry and management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. The inclusion of these forward-looking statements should not be regarded as a representation by the Company or any other person that such expectations, estimates and projections will be achieved. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: (a) the success of the financial technology industry, as well as the continued evolution of the regulation of this industry; (b) the ability of the Company’s Strategic Program or Fintech Banking Solutions service providers to comply with regulatory regimes, and the Company’s ability to adequately oversee and monitor its Strategic Program and Fintech Banking Solutions service providers; (c) the Company’s ability to maintain and grow its relationships with its service providers; (d) changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters, including the application of interest rate caps or maximums; (e) the Company’s ability to keep pace with rapid technological changes in the industry or implement new technology effectively; (f) system failure or cybersecurity breaches of the Company’s network security; (g) potential exposure to fraud, negligence, computer theft and cyber-crime and other disruptions in the Company’s computer systems relating to its development and use of new technology platforms; (h) the Company’s reliance on third-party service providers for core systems support, informational website hosting, internet services, online account opening and other processing services; (i) general economic and business conditions, either nationally or in the Company’s market areas; (j) increased national or regional competition in the financial services industry; (k) the Company’s ability to measure and manage its credit risk effectively and the potential deterioration of the business and economic conditions in the Company’s primary market areas; (l) the adequacy of the Company’s risk management framework; (m) the adequacy of the Company’s allowance for credit losses (“ACL”); (n) the financial soundness of other financial institutions; (o) new lines of business or new products and services; (p) changes in Small Business Administration (“SBA”) rules, regulations and loan products, including specifically the Section 7(a) program or changes to the status of the Bank as an SBA Preferred Lender; (q) the value of collateral securing the Company’s loans; (r) the Company’s levels of nonperforming assets; (s) losses from loan defaults; (t) the Company’s ability to protect its intellectual property and the risks it faces with respect to claims and litigation initiated against the Company; (u) the Company’s ability to implement its growth strategy; (v) the Company’s ability to launch new products or services successfully; (w) the concentration of the Company’s lending and depositor relationships through Strategic Programs in the financial technology industry generally; (x) interest-rate and liquidity risks; (y) the effectiveness of the Company’s internal control over financial reporting and its ability to remediate any future material weakness in its internal control over financial reporting; (z) dependence on our management team and changes in management composition; (aa) the sufficiency of the Company’s capital; (bb) compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, capital requirements, the Bank Secrecy Act and other anti-money laundering laws, predatory lending laws, and other statutes and regulations; (cc) results of examinations of the Company by its regulators; (dd) the Company’s involvement from time to time in legal proceedings; (ee) natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities, and other matters beyond the Company’s control; (ff) future equity and debt issuances; (gg) that the anticipated benefits new lines of business that the Company may enter or investments or acquisitions the Company may make are not realized within the expected time frame or at all as a result of such things as the strength or weakness of the economy and competitive factors in the areas where the Company and such other businesses operate; and (hh) other factors listed from time to time in the Company’s filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent reports on Form 10-Q and Form 8-K. The timing and amount of purchases under the Company’s share repurchase program will be determined by management based upon market conditions and other factors. Purchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The program does not require the Company to purchase any specific number or amount of shares and may be suspended or reinstated at any time at the Company’s discretion and without notice.

Any forward-looking statement speaks only as of the date of this release, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether because of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence. In addition, the Company cannot assess the impact of each risk and uncertainty on its business or the extent to which any risk or uncertainty, or combination of risks and uncertainties, may cause actual results to differ materially from those contained in any forward-looking statements.



FINWISE BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($ in thousands; Unaudited)

 As of
 6/30/2024 3/31/2024 6/30/2023
ASSETS     
Cash and cash equivalents     
Cash and due from banks$5,158  $3,944  $369 
Interest-bearing deposits 83,851   111,846   118,674 
Total cash and cash equivalents 89,009   115,790   119,043 
Investment securities held-to-maturity, at cost 13,942   14,820   14,403 
Investment in Federal Home Loan Bank (“FHLB”) stock, at cost 349   349   476 
Strategic Program loans held-for-sale, at lower of cost or fair value 66,542   54,947   42,362 
Loans receivable, net 398,512   377,101   277,663 
Premises and equipment, net 15,665   15,098   13,154 
Accrued interest receivable 3,390   3,429   2,316 
SBA servicing asset, net 3,689   4,072   5,233 
Investment in Business Funding Group (“BFG”), at fair value 8,000   8,200   4,500 
Operating lease right-of-use (“ROU”) assets 3,913   4,104   4,668 
Income tax receivable, net 2,103   2,400   2,355 
Other assets 12,706   10,523   9,452 
Total assets$617,820  $610,833  $495,625 
     
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Liabilities     
Deposits     
Non-interest bearing$107,083  $107,076  $93,347 
Interest bearing 322,112   317,020   239,183 
Total deposits 429,195   424,096   332,530 
Accrued interest payable 601   588   466 
Income taxes payable, net    3,207    
Deferred taxes, net 1,154   508   140 
PPP Liquidity Facility 127   158   252 
Operating lease liabilities 5,788   6,046   6,792 
Other liabilities 15,159   13,748   7,997 
Total liabilities 452,024   448,351   348,177 
      
Shareholders’ equity     
Common Stock 13   13   13 
Additional paid-in-capital 55,441   55,304   52,625 
Retained earnings 110,342   107,165   94,810 
Total shareholders’ equity 165,796   162,482   147,448 
Total liabilities and shareholders’ equity$617,820  $610,833  $495,625 



FINWISE BANCORP
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share amounts; Unaudited)

 For the Three Months Ended
 6/30/2024 3/31/2024 6/30/2023
Interest income     
Interest and fees on loans$16,881  $16,035  $14,355 
Interest on securities 97   101   77 
Other interest income 1,444   1,509   1,437 
Total interest income 18,422   17,645   15,869 
      
Interest expense     
Interest on deposits 3,807   3,639   2,194 
Total interest expense 3,807   3,639   2,194 
Net interest income 14,615   14,006   13,675 
      
Provision for credit losses 2,385   3,154   2,688 
Net interest income after provision for credit losses 12,230   10,852   10,987 
      
Non-interest income     
Strategic Program fees 4,035   3,965   4,054 
Gain on sale of loans, net 356   415   700 
SBA loan servicing fees and servicing asset amortization (124)  466   226 
Change in fair value on investment in BFG (200)  (124)   
Other miscellaneous income 771   742   308 
Total non-interest income 4,838   5,464   5,288 
      
Non-interest expense     
Salaries and employee benefits 8,609   7,562   6,681 
Professional services 1,282   1,567   1,305 
Occupancy and equipment expenses 1,121   980   718 
Recovery of SBA servicing asset (328)  (198)  (339)
Other operating expenses 2,206   1,896   1,634 
Total non-interest expense 12,890   11,807   9,999 
Income before income tax expense 4,178   4,509   6,276 
      
Provision for income taxes 998   1,194   1,638 
Net income$3,180  $3,315  $4,638 
      
Earnings per share, basic$0.25  $0.26  $0.36 
Earnings per share, diluted$0.24  $0.25  $0.35 
      
Weighted average shares outstanding, basic 12,627,800   12,502,448   12,603,463 
Weighted average shares outstanding, diluted 13,109,708   13,041,605   12,989,530 
Shares outstanding at end of period 13,143,560   12,793,555   12,723,703 



FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES
($ in thousands; Unaudited)

For the Three Months Ended
6/30/2024 3/31/2024 6/30/2023
 Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
Interest earning assets:                 
Interest bearing deposits$105,563  $1,444   5.50% $111,911  $1,509   5.42% $113,721  $1,437   5.07%
Investment securities 14,795   97   2.65%  15,174   101   2.67%  14,137   77   2.19%
Strategic Program loans held for sale 49,000   4,020   33.00%  48,557   3,726   30.86%  41,390   3,860   37.41%
Loans held for investment 400,930   12,861   12.90%  381,195   12,309   12.99%  282,686   10,495   14.89%
Total interest earning assets 570,287   18,422   12.99%  556,837   17,645   12.74%  451,934   15,869   14.08%
Non-interest earning assets 46,531       39,123       21,825     
Total assets$616,818      $595,960      $473,759     
Interest bearing liabilities:                 
Demand$47,900  $441   3.70% $51,603  $503   3.92% $44,097  $426   3.88%
Savings 10,270   19   0.75%  9,301   19   0.83%  7,334   10   0.56%
Money market accounts 9,565   112   4.71%  10,200   66   2.60%  13,982   109   3.12%
Certificates of deposit 251,142   3,235   5.18%  239,577   3,051   5.12%  153,662   1,649   4.30%
Total deposits 318,877   3,807   4.80%  310,681   3,639   4.71%  219,075   2,194   4.02%
Other borrowings 142      0.35%  172      0.35%  267      0.35%
Total interest bearing liabilities 319,019   3,807   4.80%  310,853   3,639   4.71%  219,342   2,194   4.01%
Non-interest bearing deposits 108,519       100,507       95,257     
Non-interest bearing liabilities 27,700       25,446       14,206     
Shareholders’ equity 161,580       159,154       144,954     
Total liabilities and shareholders’ equity$616,818      $595,960      $473,759     
Net interest income and interest rate spread  $14,615   8.19%   $14,006   8.03%   $13,675   10.07%
Net interest margin     10.31%      10.12%      12.14%
Ratio of average interest-earning assets to average interest- bearing liabilities     178.76%      179.13%      206.04%



FINWISE BANCORP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
($ in thousands, except per share amounts; Unaudited)

 As of and for the Three Months Ended
 6/30/2024 3/31/2024 6/30/2023
Selected Loan Metrics     
Amount of loans originated$1,170,904  $1,091,479  $1,156,141 
Selected Income Statement Data     
Interest income$18,422  $17,645  $15,869 
Interest expense 3,807   3,639   2,194 
Net interest income 14,615   14,006   13,675 
Provision for credit losses 2,385   3,154   2,688 
Net interest income after provision for credit losses 12,230   10,852   10,987 
Non-interest income 4,838   5,464   5,288 
Non-interest expense 12,890   11,807   9,999 
Provision for income taxes 998   1,194   1,638 
Net income 3,180   3,315   4,638 
Selected Balance Sheet Data     
Total Assets$617,820  $610,833  $495,625 
Cash and cash equivalents 89,009   115,790   119,043 
Investment securities held-to-maturity, at cost 13,942   14,820   14,403 
Loans receivable, net 398,512   377,101   277,663 
Strategic Program loans held-for-sale, at lower of cost or fair value 66,542   54,947   42,362 
SBA servicing asset, net 3,689   4,072   5,233 
Investment in Business Funding Group, at fair value 8,000   8,200   4,500 
Deposits 429,195   424,096   332,530 
Total shareholders' equity 165,796   162,482   147,448 
Tangible shareholders’ equity(1) 165,796   162,482   147,448 
Share and Per Share Data     
Earnings per share - basic$0.25  $0.26  $0.36 
Earnings per share - diluted$0.24  $0.25  $0.35 
Book value per share$12.61  $12.70  $11.59 
Tangible book value per share(1)$12.61  $12.70  $11.59 
Weighted avg outstanding shares - basic 12,627,800   12,502,448   12,603,463 
Weighted avg outstanding shares - diluted 13,109,708   13,041,605   12,989,530 
Shares outstanding at end of period 13,143,560   12,793,555   12,723,703 
Capital Ratios     
Total shareholders' equity to total assets 26.8%  26.6%  29.7%
Tangible shareholders’ equity to tangible assets(1) 26.8%  26.6%  29.7%
Leverage Ratio (Bank under CBLR) 20.8%  20.6%  22.4%

(1)  Tangible shareholders’ equity to tangible assets is considered a non-GAAP financial measure. Tangible shareholders’ equity is defined as total shareholders’ equity less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholder’s equity to total assets. The Company had no goodwill or other intangible assets at the end of any period indicated. The Company has not considered loan servicing rights or loan trailing fee assets as intangible assets for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity at the end of each of the periods indicated.


Reconciliation of Non-GAAP to GAAP Financial Measures

Efficiency ratioThree Months Ended
 6/30/2024 3/31/2024 6/30/2023
($ in thousands)     
Non-interest expense$12,890  $11,807  $9,999 
      
Net interest income 14,615   14,006   13,675 
Total non-interest income 4,838   5,464   5,288 
Adjusted operating revenue$19,453  $19,470  $18,963 
Efficiency ratio 66.3%  60.6%  52.7%

FAQ

What was FinWise Bancorp's (FINW) net income for Q2 2024?

FinWise Bancorp reported a net income of $3.2 million for the second quarter of 2024.

How did FinWise Bancorp's (FINW) loan originations perform in Q2 2024?

Loan originations for FinWise Bancorp were $1.2 billion in Q2 2024, consistent with the same period in the previous year.

What was FinWise Bancorp's (FINW) efficiency ratio in Q2 2024?

FinWise Bancorp's efficiency ratio was 66.3% for the second quarter of 2024, an increase from 52.7% in the same quarter of the previous year.

How much did FinWise Bancorp's (FINW) nonperforming loans increase in Q2 2024?

Nonperforming loans increased to $27.9 million as of June 30, 2024, compared to $1.9 million as of June 30, 2023.

FinWise Bancorp Common

NASDAQ:FINW

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