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FinWise Bancorp Reports Fourth Quarter and Full Year 2022 Results

- Net Income of $6.5 Million for Fourth Quarter of 2022-

- Diluted Earnings Per Share of $0.49 for Fourth Quarter of 2022-

MURRAY, Utah, Jan. 25, 2023 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights

  • Loan originations were $1.2 billion, compared to $1.5 billion for the quarter ended September 30, 2022, and $2.3 billion for the fourth quarter of the prior year
  • Net interest income was $12.6 million for the quarter ended December 31, 2022, compared to $12.5 million for the quarter ended September 30, 2022, and $15.3 million for the fourth quarter of the prior year
  • Net Income was $6.5 million, compared to $3.7 million for the quarter ended September 30, 2022, and $10.1 million for the fourth quarter of the prior year
  • Diluted earnings per share (“EPS”) were $0.49 for the quarter, compared to $0.27 for the quarter ended September 30, 2022, and $0.90 for the quarter ended December 31, 2021
  • Efficiency ratio was 45.6%, compared to 42.3% for the quarter ended September 30, 2022, and 34.3% for the fourth quarter of the prior year
  • Maintained strong returns with annualized return on average equity (ROAE) of 19.1%, compared to 11.0% in the quarter ended September 30, 2022, and 43.8% in the fourth quarter of the prior year
  • Asset quality remained solid with a non-performing loans to total loans ratio of 0.1%

“The FinWise team executed well in substantially all facets of the business during 2022, culminating the year with solid results in the fourth quarter, an outstanding accomplishment given more challenging economic conditions throughout the year,” said Kent Landvatter, Chief Executive Officer and President of FinWise. “This performance is further validation of our differentiated and diverse business model coupled with our steadfast focus on working with our strategic relationships and serving our clients. As we progress into 2023, we will continue to build on our strengths and plan to reinvest in the company so that we remain well positioned to maximize shareholder value by continuing to generate sustainable and profitable long-term growth.”

Selected Financial Data

 For the Three Months EndedFor the Years Ended 
($s in thousands, except per share amounts, annualized ratios)12/31/2022  9/30/2022  12/31/2021  12/31/2022  12/31/2021 
               
Net Income$​6,545  $​3,654  $​10,111  $​25,115  $​31,583 
Diluted EPS$0.49  $0.27  $0.90  $1.87  $3.27 
Return on average assets 6.6%  3.9%  11.3%  6.4%  9.1%
Return on average equity 19.1%  11.0%  43.8%  19.6%  39.2%
Yield on loans 19.04%  18.94%  21.62%  18.52%  19.01%
Cost of deposits 1.98%  1.16%  0.75%  1.17%  1.05%
Net interest margin 14.27%  14.93%  16.62%  14.04%  15.10%
Efficiency Ratio(1) 45.6%  42.3%  34.3%  43.9%  37.0%
Tangible book value per share(2)$10.95  $10.44  $9.04  $10.95  $9.04 
Tangible shareholders’ equity to tangible assets(2) 34.9%  34.8%  30.4%  34.9%  30.4%
Leverage Ratio (Bank under CBLR) 25.1%  24.9%  17.7%  25.1%  17.7%

(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 noninterest expense divided by the sum of net interest income and noninterest income. We believe this measure is important as an indicator of productivity because it shows the amount of revenue generated for each dollar spent.

(2) This measure is not a measure recognized under 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. 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. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights or loan trailing fee asset as intangible assets for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity as of each of the dates indicated.

Net Income

Net income was $6.5 million for the fourth quarter of 2022, compared to $3.7 million for the third quarter of 2022, and $10.1 million for the fourth quarter of 2021. The increase from the previous quarter was primarily due to higher gain on sale, lower provision for income taxes and lower provision for loan losses as our credit quality remained solid, partially offset by an increase in non-interest expense and lower strategic program fees. Compared to the prior year period, the decline was primarily driven by a decrease in net interest income and strategic program fees, and an increase in non-interest expenses, partially offset by higher gain on sale and a lower provision for income taxes.   

Net Interest Income

Net interest income rose slightly to $12.6 million for the fourth quarter of 2022, from $12.5 million for the third quarter of 2022, and down from $15.3 million for the fourth quarter of 2021. The increase from the prior quarter was primarily due to an increase in interest rates being paid on our cash balances at the Federal Reserve which was partially offset by an increase in the Bank’s deposit rates being paid to customers. The decline from the prior year period was primarily due to lower average loans held for sale balances.

Loan originations totaled $1.2 billion for the fourth quarter of 2022, down from $1.5 billion for the third quarter of 2022 and $2.3 billion for the fourth quarter of 2021.

Net interest margin for the fourth quarter of 2022 decreased to 14.27% compared to 14.93% for the third quarter of 2022 and 16.62% for the fourth quarter of 2021. The decrease from the previous quarter was primarily driven by the reduction in average balances in the loans held for sale portfolio along with the shifting of the deposit portfolio mix from lower costing deposits to higher costing demand deposits. The net interest margin decrease from the fourth quarter of 2021 was primarily driven by lower average loans held for sale balances and an increase in higher rate deposit balances.

Provision for Loan Losses

The Company’s provision for loan losses was $3.2 million for the fourth quarter of 2022, compared to $4.5 million for the third quarter of 2022 and $2.5 million for the fourth quarter of 2021. Compared to the previous quarter, the decrease in provision for loan losses for the fourth quarter of 2022 was primarily due to a decrease in strategic program loans held for investment. Compared to the prior year period, the increase in the provision for loan losses for the fourth quarter of 2022 was primarily due to higher net charge-offs and growth of unguaranteed loans held for investment.

Non-interest Income

 For the Three Months Ended 
($s in thousands) 12/31/2022  9/30/2022  12/31/2021 
Noninterest income:         
Strategic Program fees $4,487  $5,136  $6,082 
Gain on sale of loans  4,163   1,923   1,813 
SBA loan servicing fees  547   327   356 
Change in fair value on investment in BFG  430   65   864 
Other miscellaneous income  148   72   14 
Total noninterest income $9,775  $7,523  $9,129 
             

Non-interest income was $9.8 million for the fourth quarter of 2022, compared to $7.5 million for the third quarter of 2022 and $9.1 million for the fourth quarter of 2021. The increase from the previous quarter was driven primarily by an increase in gain on sale of loans recorded to establish a new Loan Trailing Fee Asset of approximately $2.3 million and an increase in fair value of the Company’s investment in Business Funding Group, LLC (“BFG”), partially offset by lower strategic program fees due to the decline in loan origination volumes. Compared to the prior year period, the increase in non-interest income was primarily due to an increase in gain on sale of loans, partially offset by lower strategic program fees resulting primarily from a decline in loan origination volumes and a decrease in the change in fair value of the Company’s investment in BFG.

Non-interest Expense

  For the Three Months Ended 
($s in thousands) 12/31/2022  9/30/2022  12/31/2021 
Noninterest expense:         
Salaries and employee benefits $5,805  $5,137  $6,052 
Professional Services  1,609   1,701   287 
Occupancy and equipment expenses  843   640   208 
(Recovery) impairment of SBA servicing asset  779   (127)  800 
Other operating expenses  1,184   1,118   1,024 
Total noninterest expense $10,220  $8,469  $8,371 
             

Non-interest expense was $10.2 million for the fourth quarter of 2022, compared to $8.5 million for the third quarter of 2022 and $8.4 million for the fourth quarter of 2021. The increase from the previous quarter was primarily due to an impairment on the Company’s SBA servicing asset in the fourth quarter of 2022, which did not occur in the third quarter of 2022, higher employee head count related to developing and upgrading new and existing technology, and increased business infrastructure. The increase compared to the fourth quarter of 2021 was primarily due to increased professional services relating primarily to an increase in consulting fees and increased depreciation from the buildout of our corporate office which was partially offset by a decrease in salaries and employee benefits.

The Company’s efficiency ratio was 45.6% for the fourth quarter of 2022 as compared to 42.3% for the third quarter of 2022 and 34.3% for the fourth quarter of 2021.

Tax Rate

The Company’s effective tax rate was approximately 27.3% for the fourth quarter of 2022, compared to 48.7% for the third quarter of 2022 and 25.3% for the fourth quarter of 2021. An immaterial error was corrected during the third quarter of 2022 and is the primary reason for the higher effective tax rate in that quarter.  

Balance Sheet  

The Company’s total assets were $402.2 million at December 31, 2022, an increase from $385.6 million at September 30, 2022 and $380.2 million at December 31, 2021. The increase from September 30, 2022 was primarily due to an increase in deposits utilized to fund the Company’s growth in cash and held for investment loan portfolio, partially offset by a decrease in deposits utilized to fund the Company’s held for sale loan portfolio. The increase in total assets compared to December 31, 2021 was primarily due to an increase in cash from growth in deposits to fund the Company’s held for investment loan portfolio, partially offset by a decrease in deposits utilized to fund the Company’s held for sale loan portfolio.

The following table shows the loan portfolio as of the dates indicated:

  As of 
 12/31/20229/30/202212/31/2021 
($s in thousands) Amount  % of total loans  Amount  % of total loans  Amount  % of total loans 
SBA $145,172   55.8% $127,455   49.6% $142,392   53.6%
Commercial, non real estate  11,484   4.4%  12,970   5.1%  3,428   1.3%
Residential real estate  37,815   14.5%  34,501   13.4%  27,108   10.2%
Strategic Program loans  47,848   18.4%  70,290   27.4%  85,850   32.3%
Commercial real estate  12,063   4.7%  6,149   2.4%  2,436   0.9%
Consumer  5,808   2.2%  5,455   2.1%  4,574   1.7%
Total period end loans $260,190   100.0% $256,820   100.0% $265,788   100.0%

Note: SBA loans as of December 31, 2022, September 30, 2022 and December 31, 2021 include $0.6 million, $0.7 million and $1.1 million in PPP loans, respectively. SBA loans as of December 31, 2022, September 30, 2022 and December 31, 2021 include $49.5 million, $42.6 million and $75.7 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA. The held for investment balance on Strategic Programs with annual interest rates below 36% as of December 31, 2022, September 30, 2022 and December 31, 2021 was $8.5 million, $10.2 million and $8.5 million, respectively.

Total loans receivable at December 31, 2022 increased to $260.2 million from $256.8 million at September 30, 2022 and decreased from $265.8 million at December 31, 2021. The increase in loans receivable compared to the amount at September 30, 2022 was due primarily to increases in SBA 7(a) loan balances, and commercial real estate loans, partially offset by a decrease in strategic program held for sale loans. The decrease in loans receivable compared to the amount at December 31, 2021 was due primarily to decreases in strategic program held for sale loans and SBA 7(a) loan balances that are guaranteed by the SBA, partially offset by increases in SBA 7(a) loan balances that are not guaranteed by the SBA, residential real estate loans, commercial real estate loans, and commercial non-real estate loans.

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

  As of 
 12/31/20229/30/202212/31/2021 
($s in thousands) Amount  Percent  Amount  Percent  Amount  Percent 
Noninterest-bearing demand deposits $78,817   32.5% $97,654   42.0% $110,548   43.9%
Interest-bearing deposits:                        
Demand  50,746   20.8%  55,152   23.6%  5,399   2.1%
Savings  8,289   3.4%  7,252   3.1%  6,685   2.7%
Money market  10,882   4.5%  12,281   5.3%  31,076   12.3%
Time certificates of deposit  94,264   38.8%  60,499   26.0%  98,184   39.0%
Total period end deposits $242,998   100.0% $232,838   100.0% $251,892   100.0%
                         

Total deposits at December 31, 2022 increased to $243.0 million from $232.8 million at September 30, 2022, and decreased from $251.9 million at December 31, 2021. The increase from the amount at September 30, 2022 was driven primarily by an increase in time certificates of deposits, partially offset by decreases in noninterest-bearing and interest-bearing demand deposits.   The decrease from the amount at December 31, 2021 was driven primarily by decreases in noninterest-bearing demand deposits, money market deposits and time certificates of deposit, partially offset by an increase in interest-bearing demand deposits. The increase in interest-bearing demand deposits compared to December 31, 2021, is primarily due to new HSA deposits from Lively, Inc., a technology focused Health Savings Account provider.

Total shareholders’ equity at December 31, 2022 increased $6.2 million to $140.5 million from $134.3 million at September 30, 2022. Compared to December 31, 2021, total shareholders’ equity at December 31, 2022 increased $25.1 million from $115.4 million. The increase over both prior periods was primarily due to the Company’s net income, partially offset by the repurchase of common stock under the Company’s share 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 2022  2021 
Capital Ratios 12/31/2022  9/30/2022  12/31/2021 Well-
Capitalized
Requirement
  Well-
Capitalized
Requirement
 
Leverage Ratio  25.1%  24.9% 17.7% 9.0%  8.5%
                   

The Bank’s capital levels remain significantly above well-capitalized guidelines as of the end of the fourth quarter of 2022.

Share Repurchase Program

On August 18, 2022, the Company’s Board of Directors authorized a share repurchase program pursuant to which the Company may repurchase up to 5% of outstanding common stock as of August 16, 2022, or 644,241 shares of the Company’s common stock, through August 31, 2024. As of December 31, 2022, the Company has repurchased a total of 120,000 shares for a total of $1.1 million.

Asset Quality

Nonperforming loans were $0.4 million or 0.1% of total loans receivable at December 31, 2022, compared to $0.7 million or 0.2% of total loans receivable at December 31, 2021. The Company did not have any nonperforming loans as of September 30, 2022. As noted above, the provision for loan losses was $3.2 million for the fourth quarter of 2022, compared to $4.5 million for the third quarter of 2022 and $2.5 million for the fourth quarter of 2021. The Company’s allowance for loan losses to total loans was 4.6% at December 31, 2022 compared to 4.7% at September 30, 2022 and 3.7% at December 31, 2021.

For the fourth quarter of 2022, the Company’s net charge-offs were $3.2 million, compared to $3.1 million for the third quarter of 2022 and $2.3 million for the fourth quarter of 2021. The increase in net charge-offs compared to the third quarter of 2022 was primarily driven by higher net charge-offs related to retained strategic programs. The increase in net charge-offs compared to the fourth quarter of 2021 was primarily driven by some normalization of credit losses to pre-pandemic market conditions and growth in the unguaranteed loans held for investment balances.

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

  For the Three Months Ended 
($s in thousands) 12/31/2022  9/30/2022  12/31/2021 
Allowance for Loan and Lease Losses:         
Beginning Balance $11,968  $10,602  $9,640 
Provision  3,202   4,457   2,503 
Charge offs            
SBA     (259)  (99)
Commercial, non real estate         
Residential real estate         
Strategic Program loans  (3,440)  (3,070)  (2,380)
Commercial real estate         
Consumer  (62)  (4)  (1)
Recoveries            
SBA  9   9   5 
Commercial, non real estate        11 
Residential real estate         
Strategic Program loans  244   233   176 
Commercial real estate         
Consumer  64       
Ending Balance $11,985  $11,968  $9,855 
             
Asset Quality Ratios As of and For the Three Months Ended 
($s in thousands, annualized ratios) 12/31/2022  9/30/2022  12/31/2021 
Nonperforming loans $356  $  $657 
Nonperforming loans to total loans  0.1%  0.0%  0.2%
Net charge offs to average loans  4.9%  4.7%  3.2%
Allowance for loan losses to loans held for investment  5.1%  5.6%  4.8%
Allowance for loan losses to total loans  4.6%  4.7%  3.7%
Net charge offs $3,185  $3,091  $2,288 
             

Webcast and Conference Call Information

FinWise will host a conference call today at 5:30 PM ET to discuss its financial results for the fourth quarter of 2022. 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/events/event-details/finwise-bancorp-fourth-quarter-2022-earnings-conference-call.

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

A webcast replay of the call will be available on the Company’s website at https://finwisebank.gcs-web.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. FinWise operates through its wholly-owned subsidiary, FinWise Bank, a Utah state-chartered non-member bank. FinWise currently operates one full-service banking location in Sandy, Utah. FinWise is a nationwide lender to and takes deposits from consumers and small businesses. Learn more at www.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, the development and acceptance of which is subject to a high degree of uncertainty, as well as the continued evolution of the regulation of this industry; (b) the ability of the Company’s Strategic Program service providers to comply with regulatory regimes, including laws and regulations applicable to consumer credit transactions, and the Company’s ability to adequately oversee and monitor its Strategic Program service providers; (c) the Company’s ability to maintain and grow its relationships with its Strategic Program 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) conditions relating to the Covid-19 pandemic, including the severity and duration of the associated economic slowdown either nationally or in the Company’s market areas, and the response of governmental authorities to the Covid-19 pandemic and the Company’s participation in Covid-19-related government programs such as the Paycheck Protection Program; (g) system failure or cybersecurity breaches of the Company’s network security; (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 conditions, either nationally or in the Company’s market areas (including interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation and deflation), that impact the financial services industry and/or the Company’s business; (j) increased competition in the financial services industry, particularly from regional and national institutions and other companies that offer banking services; (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 loan losses (“ALL”); (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, changes in SBA standard operating procedures or changes to the status of the Bank as an SBA Preferred Lender; (q) changes in the value of collateral securing the Company’s loans; (r) possible increases in the Company’s levels of nonperforming assets; (s) potential losses from loan defaults and nonperformance on loans; (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 inability of small- and medium-sized businesses to whom the Company lends to weather adverse business conditions and repay loans; (v) the Company’s ability to implement aspects of its growth strategy and to sustain its historic rate of growth; (w) the Company’s ability to continue to originate, sell and retain loans, including through its Strategic Programs; (x) the concentration of the Company’s lending and depositor relationships through Strategic Programs in the financial technology industry generally; (y) the Company’s ability to attract additional merchants and retain and grow its existing merchant relationships; (z) interest rate risk associated with the Company’s business, including sensitivity of its interest earning assets and interest bearing liabilities to interest rates, and the impact to its earnings from changes in interest rates; (aa) 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; (bb) 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; (cc) the Company’s dependence on its management team and changes in management composition; (dd) the sufficiency of the Company’s capital, including sources of capital and the extent to which it may be required to raise additional capital to meet its goals; (ee) compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, capital requirements, the Bank Secrecy Act, anti-money laundering laws, predatory lending laws, and other statutes and regulations; (ff) the Company’s ability to maintain a strong core deposit base or other low-cost funding sources; (gg) results of examinations of the Company by its regulators, including the possibility that its regulators may, among other things, require the Company to increase its ALL or to write-down assets; (hh) the Company’s involvement from time to time in legal proceedings, examinations and remedial actions by regulators; (ii) further government intervention in the U.S. financial system; (jj) 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; (kk) future equity and debt issuances; and (ll) 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, 2021 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 in 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
($s in thousands)
   
 As of
 
  12/31/2022  9/30/2022  12/31/2021
 
  (Unaudited)  (Unaudited)   
ASSETS        
Cash and cash equivalents        
Cash and due from banks $386  $410  $411 
Interest-bearing deposits  100,181   92,053   85,343 
Total cash and cash equivalents  100,567   92,463   85,754 
Investment securities held-to-maturity, at cost  14,292   13,925   11,423 
Investment in Federal Home Loan Bank (FHLB) stock, at cost  449   449   378 
Strategic Program loans held-for-sale, at lower of cost or fair value  23,589   43,606   60,748 
Loans receivable, net  224,217   200,485   198,102 
Premises and equipment, net  9,478   6,830   3,285 
Accrued interest receivable  1,818   1,672   1,548 
Deferred taxes, net  1,167   2,164   1,823 
SBA servicing asset, net  5,210   5,269   3,938 
Investment in Business Funding Group (BFG), at fair value  4,800   4,500   5,900 
Operating lease right-of-use (“ROU”) assets  6,470   6,691    
Other assets  10,152   7,515   7,315 
Total assets $402,209  $385,569  $380,214 
            
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Liabilities            
Deposits            
Noninterest-bearing $78,817  $97,654  $110,548 
Interest-bearing  164,181   135,184   141,344 
Total deposits  242,998   232,838   251,892 
Accrued interest payable  54   30   48 
Income taxes payable, net  1,077   1,066   233 
PPP Liquidity Facility  314   345   1,050 
Operating lease liabilities  8,449   7,249    
Other liabilities  8,858   9,756   11,549 
Total liabilities  261,750   251,284   264,772 
            
Shareholders’ equity            
Common Stock  13   13   13 
Additional paid-in-capital  54,614   55,113   54,836 
Retained earnings  85,832   79,159   60,593 
Total shareholders’ equity  140,459   134,285   115,442 
Total liabilities and shareholders’ equity $402,209  $385,569  $380,214 
             


 
FINWISE BANCORP
CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts; Unaudited)
    
  For the Three Months Ended
 
  12/31/2022  9/30/2022  12/31/2021 
          
Interest income         
Interest and fees on loans $12,440  $12,481  $15,500 
Interest on securities  73   52   28 
Other interest income  757   290   25 
Total interest income  13,270   12,823   15,553 
             
Interest expense            
Interest on deposits  624   303   279 
Interest on PPP Liquidity Facility     1   2 
Total interest expense  624   304   281 
Net interest income  12,646   12,519   15,272 
             
Provision for loan losses  3,202   4,457   2,503 
Net interest income after provision for loan losses  9,444   8,062   12,769 
             
Non-interest income            
Strategic Program fees  4,487   5,136   6,082 
Gain on sale of loans, net  4,163   1,923   1,813 
SBA loan servicing fees  547   327   356 
Change in fair value on investment in BFG  430   65   864 
Other miscellaneous income  148   72   14 
Total non-interest income  9,775   7,523   9,129 
             
Non-interest expense            
Salaries and employee benefits  5,805   5,137   6,052 
Professional services  1,609   1,701   287 
Occupancy and equipment expenses  843   640   208 
(Recovery) impairment of SBA servicing asset  779   (127)  800 
Other operating expenses  1,184   1,118   1,024 
Total non-interest expense  10,220   8,469   8,371 
Income before income tax expense  8,999   7,116   13,527 
             
Provision for income taxes  2,454   3,462   3,416 
Net income $6,545  $3,654   10,111 
             
Earnings per share, basic $0.51  $0.28  $0.95 
Earnings per share, diluted $0.49  $0.27  $0.90 
             
Weighted average shares outstanding, basic  12,740,933   12,784,298   10,169,005 
Weighted average shares outstanding, diluted  13,218,403   13,324,059   10,818,984 
Shares outstanding at end of period  12,831,345   12,864,821   12,772,010 
             


 
FINWISE BANCORP
CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts)
   
  For the Years Ended
 
  12/31/2022  12/31/2021
 
  (Unaudited)  
Interest income     
Interest and fees on loans $50,941  $49,135 
Interest on securities  208   47 
Other interest income  1,180   61 
Total interest income  52,329   49,243 
         
Interest expense        
Interest on deposits  1,432   1,138 
Interest on PPP Liquidity Facility  2   127 
Total interest expense  1,434   1,265 
Net interest income  50,895   47,978 
         
Provision for loan losses  13,519   8,039 
Net interest income after provision for loan losses  37,376   39,939 
         
Non-interest income        
Strategic Program fees  22,467   17,959 
Gain on sale of loans, net  13,550   9,689 
SBA loan servicing fees  1,603   1,156 
Change in fair value on investment in BFG  (478)  2,991 
Other miscellaneous income  269   49 
Total non-interest income  37,411   31,844 
         
Non-interest expense        
Salaries and employee benefits  24,489   22,365 
Professional services  5,454   1,049 
Occupancy and equipment expenses  2,204   810 
(Recovery) impairment of SBA servicing asset  1,728   800 
Other operating expenses  4,881   4,487 
Total non-interest expense  38,756   29,511 
Income before income tax expense  36,031   42,272 
         
Provision for income taxes  10,916   10,689 
Net income $25,115  $31,583 
         
Earnings per share, basic $1.96  $3.44 
Earnings per share, diluted $1.87  $3.27 
         
Weighted average shares outstanding, basic  12,729,898   8,669,724 
Weighted average shares outstanding, diluted  13,357,022   9,108,163 
Shares outstanding at end of period  12,831,345   12,772,010 
         


 
FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES
($s in thousands; Unaudited)
        
 For the Three Months EndedFor the Three Months Ended  For the Three Months Ended 
 12/31/2022  9/30/2022  12/31/2021 
          
  Average
Balance
  Interest  Average
Yield/Rate
  Average
Balance
  Interest  Average
Yield/Rate
  Average Balance  Interest  Average
Yield/Rate
 
Interest earning assets:                           
Interest-bearing deposits with the Federal Reserve, non-                           
U.S. central banks and other banks $78,619  $757   3.85% $59,337  $290   1.95% $72,746  $25   0.14%
Investment securities  14,414   73   2.03%  12,418   52   1.67%  8,078   28   1.39%
Loans held for sale  43,751   3,990   36.48%  50,516   4,533   35.89%  87,156   7,553   34.66%
Loans held for investment  217,619   8,450   15.53%  213,080   7,948   14.92%  199,609   7,947   15.93%
Total interest earning assets  354,403   13,270   14.98%  335,351   12,823   15.30%  367,589   15,553   16.92%
Less: ALL  (11,683)          (10,768)          (9,450         
Non-interest earning assets  32,891           32,626           24,379         
Total assets $375,611          $357,209          $382,518         
Interest bearing liabilities:                                    
Demand $44,115  $375   3.40% $11,857  $113   3.81% $7,411  $15   0.81%
Savings  7,605   5   0.26%  7,514   1   0.05%  7,573   1   0.05%
Money market accounts  15,109   45   1.19%  20,615   29   0.56%  28,859   21   0.28%
Certificates of deposit  59,273   199   1.34%  64,789   160   0.99%  104,134   242   0.93%
Total deposits  126,102   624   1.98%  104,775   303   1.16%  147,977   279   0.75%
Other borrowings  330      0.35%  360   1   0.35%  1,437   2   0.63%
Total interest bearing liabilities  126,432   624   1.97%  105,135   304   1.16%  149,414   281   0.75%
Non-interest bearing deposits  96,581           102,575           127,590         
Non-interest bearing liabilities  17,164           17,542           16,315         
Shareholders’ equity  135,434           131,957           89,199         
Total liabilities and shareholders’ equity $375,611          $357,209          $382,518         
Net interest income and interest rate spread     $12,646   13.01%     $12,519   14.14%     $15,272   16.17%
Net interest margin          14.27%          14.93%          16.62%
Ratio of average interest-earning assets to average interest- bearing liabilities          280.31%          318.97%          246.02%

Note: Average PPP loans for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021 were $0.6 million, $0.7 million and $1.5 million, respectively.

 
FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES
($s in thousands)
     
 For the Year EndedFor the Year Ended 
 12/31/2022  12/31/2021 
  (Unaudited)    
  Average
Balance
  Interest  Average
Yield/Rate
  Average
Balance
  Interest  Average
Yield/Rate
 
Interest earning assets:                  
Interest-bearing deposits with the Federal Reserve, non-                  
U.S. central banks and other banks $74,920  $1,180   1.58% $55,960  $61   0.11%
Investment securities  12,491   208   1.67%  3,298   47   1.43%
Loans held for sale  65,737   21,237   32.31%  59,524   22,461   37.73%
Loans held for investment  209,352   29,704   14.19%  198,992   26,674   13.40%
Total interest earning assets  362,500   52,329   14.44%  317,774   49,243   15.50%
Less: ALL  (10,816)          (7,548)        
Non-interest earning assets  30,141           17,002         
Total assets $381,825          $327,228         
Interest bearing liabilities:                        
Demand $17,564  $531   3.02% $6,060  $53   0.87%
Savings  7,310   7   0.10%  7,897   10   0.13%
Money market accounts  26,054   116   0.45%  21,964   75   0.34%
Certificates of deposit  71,661   778   1.09%  72,311   1,000   1.38%
Total deposits  122,589   1,432   1.17%  108,232   1,138   1.05%
Other borrowings  566   2   0.35%  36,363   127   0.35%
Total interest bearing liabilities  123,155   1,434   1.16%  144,595   1,265   0.87%
Non-interest bearing deposits  114,174           107,481         
Non-interest bearing liabilities  15,781           11,392         
Shareholders’ equity  128,715           63,760         
Total liabilities and shareholders’ equity $381,825          $327,228         
Net interest income and interest rate spread     $50,895   13.28%     $47,978   14.63%
Net interest margin          14.04%          15.10%
Ratio of average interest-earning assets to average interest- bearing liabilities          294.34%          219.77%

Note: Average PPP loans for the years ended December 31, 2022 and December 31, 2021 were $0.8 million and $36.6 million, respectively.

 
FINWISE BANCORP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
($s in thousands, except per share amounts; Unaudited)
   
  As of and for the Three Months Ended
  12/31/2022  9/30/2022  12/31/2021 
          
Selected Loan Metrics         
Amount of loans originated $1,219,851  $1,506,100  $2,304,234 
Selected Income Statement Data            
Interest income $13,270  $12,823  $15,553 
Interest expense  624   304   281 
Net interest income  12,646   12,519   15,272 
Provision for loan losses  3,202   4,457   2,503 
Net interest income after provision for loan losses  9,444   8,062   12,769 
Non-interest income  9,775   7,523   9,129 
Non-interest expense  10,220   8,469   8,371 
Provision for income taxes  2,454   3,462   3,416 
Net income  6,545   3,654   10,111 
Selected Balance Sheet Data            
Total Assets $402,209  $385,569  $380,214 
Cash and cash equivalents  100,567   92,463   85,754 
Investment securities held-to-maturity, at cost  14,292   13,925   11,423 
Loans receivable, net  224,217   200,485   198,102 
Strategic Program loans held-for-sale, at lower of cost or fair value  23,589   43,606   60,748 
SBA servicing asset, net  5,210   5,269   3,938 
Investment in Business Funding Group, at fair value  4,800   4,500   5,900 
Deposits  242,998   232,838   251,892 
PPP Liquidity Facility  314   345   1,050 
Total shareholders' equity  140,459   134,285   115,442 
Tangible shareholders’ equity(1)  140,459   134,285   115,442 
Share and Per Share Data            
Earnings per share - basic $0.51  $0.28  $0.95 
Earnings per share - diluted $0.49  $0.27  $0.90 
Book value per share $10.95  $10.44  $9.04 
Tangible book value per share(1) $10.95  $10.44  $9.04 
Weighted avg outstanding shares - basic  12,740,933   12,784,298   10,169,005 
Weighted avg outstanding shares - diluted  13,218,403   13,324,059   10,818,984 
Shares outstanding at end of period  12,831,345   12,864,821   12,772,010 
Asset Quality Ratios            
Nonperforming loans to total loans  0.1%  0.0%  0.2%
Net charge offs to average loans  4.9%  4.7%  3.2%
Allowance for loan losses to loans held for investment  5.1%  5.6%  4.8%
Allowance for loan losses to total loans  4.6%  4.7%  3.7%
Capital Ratios            
Total shareholders' equity to total assets  34.9%  34.8%  30.4%
Tangible shareholders’ equity to tangible assets(1)  34.9%  34.8%  30.4%
Leverage Ratio (Bank under CBLR)  25.1%  24.9%  17.7%

(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. 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. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights or loan trailing fee asset as intangible assets for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity as of each of the dates indicated.

 
Reconciliation of Non-GAAP to GAAP Financial Measures
   
Efficiency ratio For the Three Months Ended
  12/31/2022  9/30/2022  12/31/2021 
($s in thousands)         
Non-interest expense $10,220  $8,469  $8,371 
Net interest income  12,646   12,519   15,272 
Total non-interest income  9,775   7,523   9,129 
Adjusted operating revenue $22,421  $20,042  $24,401 
Efficiency ratio  45.6%  42.3%  34.3%
             

 


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