Core Viewpoint - FinWise Bancorp (FINW) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of a company's shares, leading to buying or selling actions that affect stock prices [4]. Recent Performance of FinWise Bancorp - FinWise Bancorp's rising earnings estimates indicate an improvement in the company's underlying business, which is expected to drive the stock price higher [5]. - For the fiscal year ending December 2025, the company is projected to earn $1.25 per share, with a 15.2% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of FinWise Bancorp to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - FinWise Bancorp demonstrates a strong Return on Invested Capital (ROIC) of 30.90% and a Weighted Average Cost of Capital (WACC) of 12.15%, resulting in a ROIC to WACC ratio of 2.54, indicating superior efficiency in capital utilization [2][5] - In comparison, peers such as Third Coast Bancshares and Southern States Bancshares exhibit significantly lower ROIC to WACC ratios of 0.33 and 0.53 respectively, suggesting less efficiency in generating returns relative to their cost of capital [3][5] - USCB Financial Holdings shows a ROIC to WACC ratio of 0.62, indicating potential for growth but still trailing behind FinWise's performance [4] - Five Star Bancorp and Primis Financial Corp. have even lower ratios of 0.09 and 0.08 respectively, highlighting their challenges in achieving returns above their cost of capital [4][5]

Group 1: Stock Performance and Price Targets - FinWise Bancorp (FINW) closed at $17.99, with a 0.5% gain over the past four weeks, and a mean price target of $22.67 suggests a 26% upside potential [1] - The average price target ranges from a low of $21.00 to a high of $24.00, indicating a potential increase of 16.7% to 33.4% from the current price level, with a standard deviation of $1.53 reflecting the variability of estimates [2] - Analysts have shown strong agreement about the company's ability to report better earnings than previously predicted, which supports the view of potential upside [4] Group 2: Analyst Insights and Earnings Estimates - There has been increasing optimism among analysts regarding FINW's earnings prospects, as indicated by a 9.7% increase in the Zacks Consensus Estimate for the current year, with no negative revisions [12] - FINW holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, suggesting a strong potential for upside in the near term [13] - A tight clustering of price targets, indicated by a low standard deviation, suggests a high degree of agreement among analysts about the stock's price movement direction [9]

Financial Performance - For the three months ended September 30, 2025, loan originations increased to $1.8 billion, up from $1.4 billion in the same period of 2024, representing a 28.6% increase[169] - Net income for the three months ended September 30, 2025, was $4.9 million, a 41.6% increase compared to $3.5 million in the same period of 2024[170] - Interest income for the three months ended September 30, 2025, was $23.966 million, a 26.6% increase from $18.924 million in the same period of 2024[170] - Non-interest income surged to $18.052 million for the three months ended September 30, 2025, up 198.2% from $6.054 million in the same period of 2024[170] - Net interest income for the nine months ended September 30, 2025, was $47,614 thousand, compared to $43,384 thousand in 2024, representing an increase of 5.3%[176] - Net income for the nine months ended September 30, 2025, was $12.2 million, compared to $10.0 million in the same period of 2024[185] Asset and Liability Management - Total assets increased by $154.0 million to $899.9 million as of September 30, 2025, compared to December 31, 2024[169] - Total assets grew by $154.0 million, or 20.6%, to $899.9 million as of September 30, 2025, from $746.0 million at December 31, 2024[192] - Total liabilities rose to $712.2 million, a 24.4% increase from $572.3 million as of December 31, 2024, mainly due to the increase in deposits[245] - Shareholders' equity increased by $14.0 million to $187.8 million at September 30, 2025, compared to $173.7 million at December 31, 2024, primarily due to earnings of $12.2 million reported for the period[253] - Liquid assets totaled $105.6 million, constituting 11.7% of total assets as of September 30, 2025, providing adequate liquidity for at least the next 12 months[251] Loan Portfolio and Credit Quality - Loans held for investment generated interest income of $42,052 thousand in 2025, with a yield of 10.85%, compared to $37,847 thousand and 12.61% in 2024[176] - As of September 30, 2025, total loans held-for-investment amounted to $567.8 million, an increase from $465.2 million as of December 31, 2024, representing a growth of 22.1%[202] - The company reported a total of $567.8 million in loans held-for-investment, with fixed rate loans totaling $209.7 million and variable rate loans totaling $358.1 million[213] - The total amount of fixed rate loans maturing in one year or less is $162.7 million, while those maturing after five years total $214.5 million[213] - The company has established underwriting guidelines and monitors delinquency levels to maintain the quality of its loan portfolio[216] - The allowance for credit losses (ACL) reached $25,778 thousand as of September 30, 2025, compared to $13,176 thousand as of December 31, 2024, reflecting increased credit risks associated with Strategic Program loans[235] Credit Losses and Provisions - Provision for credit losses increased significantly to $12.799 million for the three months ended September 30, 2025, compared to $2.157 million in the same period of 2024, marking a 493.4% increase[170] - The provision for credit losses for the nine months ended September 30, 2025, was $20,761 thousand, significantly higher than $7,482 thousand for the same period in 2024[233] - Net charge-offs (NCO) for the three months ended September 30, 2025, totaled $3,127 thousand, with an annualized NCO to average loans ratio of 2.3%[237] - The ratio of ACL to total loans held-for-investment increased to 4.5% as of September 30, 2025, compared to 2.8% as of December 31, 2024[236] Deposits and Funding - Total deposits reached $482,990 thousand in 2025, up from $331,950 thousand in 2024, reflecting a growth of 45.5%[176] - Total deposits increased by $137.4 million, reaching $682.3 million as of September 30, 2025, compared to $544.9 million at December 31, 2024, driven primarily by brokered time deposits[243] - The Bank's total estimated uninsured deposits were $182.0 million as of September 30, 2025, slightly down from $183.2 million at December 31, 2024[244] Strategic Initiatives and Future Outlook - The company revised its reportable segments to three: traditional banking, banking as a service (BaaS), and treasury and administration, reflecting operational growth[167] - The BaaS segment reported strong performance, contributing significantly to overall growth, while traditional banking provided a stable foundation[190] - Looking ahead, the company expects continued growth in the BaaS segment as it expands fintech partnerships and product offerings[191] Interest Rate Sensitivity - The economic value of equity analysis indicated a decrease of 20.9% under a -400 bps interest rate shock scenario as of September 30, 2025[271] - The company’s asset/liability management strategy allows for adjustments to asset and liability durations to manage interest rate sensitivity[269] - The ALCO regularly reviews the sensitivity of assets and liabilities to interest rate changes and other financial metrics[275]

Core Insights - FinWise Bancorp (FINW) is experiencing solid improvement in earnings estimates, indicating a positive outlook for the company's stock price [1][2] - The upward trend in estimate revisions reflects growing analyst optimism regarding FinWise Bancorp's earnings prospects, which is expected to influence its stock price positively [2][3] Current-Quarter Estimate Revisions - The earnings estimate for the current quarter is $0.35 per share, representing a 75.0% increase from the previous year [6] - Over the last 30 days, one estimate has been revised upward with no negative revisions, leading to a 16.67% increase in the Zacks Consensus Estimate [6] Current-Year Estimate Revisions - For the full year, FinWise Bancorp is expected to earn $1.25 per share, reflecting a 34.4% increase from the prior year [7] - The trend for current-year estimate revisions is also positive, with one upward revision and no negative changes, resulting in a 9.65% increase in the consensus estimate [8] Zacks Rank - FinWise Bancorp has achieved a Zacks Rank of 2 (Buy), indicating favorable estimate revisions that suggest strong potential for stock performance [9] - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [9] Stock Performance - FinWise Bancorp shares have increased by 6% over the past four weeks, reflecting investor confidence in the company's earnings growth prospects [10]

Financial Data and Key Metrics Changes - The company reported net income of $4.9 million for Q3 2025, a 19% increase from $4.1 million in the prior quarter and a 42% increase year over year [16] - Diluted earnings per share rose to $0.34, up from $0.29 in the previous quarter and $0.25 in the same quarter last year [16] - Total end-of-period assets reached nearly $900 million for the first time in the company's history, reflecting robust balance sheet expansion [18] Business Line Data and Key Metrics Changes - Loan originations totaled $1.8 billion, a 21% increase quarter over quarter and a 24% increase year over year [8] - Credit-enhanced balances reached $41 million at the end of Q3 2025, with projections of approximately $115 million by the end of Q4 2025 [9][10] - Quarterly SBA 7(a) loan originations declined 7.8% quarter over quarter but increased 68% year over year [10] Market Data and Key Metrics Changes - Average loan balances totaled $683 million for the quarter, compared to $634 million in the prior quarter [18] - Average interest-bearing deposits increased to $524 million from $494 million in the prior quarter [18] - Net interest margin increased to 9.01% compared to 7.81% in the prior quarter [19] Company Strategy and Development Direction - The company is focused on disciplined growth and operational excellence as key drivers of sustained progress and meaningful returns for shareholders [7] - Strategic partnerships with DreamFi and Tally Technologies are expected to enhance product offerings and support growth in credit-enhanced portfolios [4][5] - The company is evaluating a measured increase in higher-yielding loans while maintaining internal limits established in 2018 [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong momentum across the business, despite potential macroeconomic shifts [8] - The recent federal government shutdown may impact SBA lending operations, particularly loan approvals and closings [10][11] - The company anticipates a gradual moderation in non-performing loan (NPL) migration, with expectations of approximately $10 to $12 million in watchlist loans migrating to NPL in Q4 [15] Other Important Information - The total provision for credit losses was $12.8 million in Q3, compared to $4.7 million in the prior quarter [12] - Non-interest income for the quarter was $18.1 million, driven by a substantial increase in strategic program fees and higher gains on loan sales [22] - The efficiency ratio improved to 47.6% from 59.5% in the prior quarter, reflecting strong revenue growth and disciplined expense management [23] Q&A Session Summary Question: Can you discuss the level of concentration you're comfortable with for credit-enhanced loans in your portfolio? - The concentration policies limit each program to about 15% of the portfolio [26] Question: Can you elaborate on the net reductions in FTEs in compliance and risk functions? - The reduction is due to disciplined management rather than automation; the company is analyzing potential efficiency impacts from AI [28] Question: What is the difference between credit enhancement program expenses and credit enhancement guaranteed expenses? - Credit enhancement expenses refer to guarantees, while servicing costs related to those loans are included but not specified [29] Question: Can you quantify the impact of accrued interest reversals in the quarter? - The accrued interest reversal was about $175,000 this quarter compared to $514,000 last quarter [31] Question: Should we expect the entirety of loan growth to come from credit-enhanced products? - Growth will primarily come from credit-enhanced products, but there will also be growth in other areas like SBA and equipment leasing [33] Question: What could cause deviations from the established baseline for credit-enhanced growth in 2026? - Positive deviations could come from improved performance in existing programs, while negative deviations could arise from material weaknesses in performance [36] Question: Can you break apart the decision on credit-enhanced and non-guaranteed loans? - The company has both credit enhancement programs and full risk retention programs, with the latter capturing all yield and credit risk [44] Question: How much margin decrease is expected in Q4? - The margin could fluctuate due to the new partnership with Tally Technologies, which has a different revenue structure [49]

Financial Performance - Loan originations totaled $1.8 billion, a 20% increase from $1.5 billion in the prior quarter and a 29% increase from $1.4 billion in the same quarter last year[5] - Net income was $4.9 million, representing a 19% increase from $4.1 million in the prior quarter and a 42% increase from $3.5 million year-over-year[4] - Diluted earnings per share (EPS) were $0.34, up from $0.29 in the prior quarter and $0.25 in the same quarter last year[5] - Net interest income was $18.6 million, up from $14.7 million in the prior quarter and $14.8 million year-over-year[9] - Total non-interest income reached $18,052,000 for the three months ended September 30, 2025, compared to $10,337,000 in the previous quarter, a growth of 74.8%[43] - Strategic Program fees increased to $6,180,000 for the three months ended September 30, 2025, compared to $5,404,000 in the previous quarter, a rise of 14.3%[43] - Net income for the three months ended September 30, 2025, was $4,891,000, up from $4,097,000 in the previous quarter, reflecting a growth of 19.4%[43] Asset and Loan Management - Total assets reached $899.9 million, an increase from $842.5 million as of June 30, 2025, and $683.0 million as of September 30, 2024[22] - As of September 30, 2025, total loans held-for-investment (HFI) increased to $567.8 million, up $37.8 million from June 30, 2025, and $133.8 million from September 30, 2024[24] - Loans held-for-investment totaled $550,534 million with an average yield of 11.76%, compared to $514,222 million and 10.02% in the previous quarter, marking a significant increase in both volume and yield[49] - The composition of loans includes 42.2% in SBA loans, 15.8% in commercial leases, and 14.7% in owner-occupied commercial real estate as of September 30, 2025[23] Credit Quality and Losses - Nonperforming loan balances were $42.8 million, an increase from $39.7 million in the prior quarter and $30.6 million year-over-year[5] - The provision for credit losses was $12.8 million, compared to $4.7 million in the prior quarter and $2.2 million in the same quarter last year[13] - Nonperforming loans totaled $42.8 million, or 7.5% of total loans HFI, as of September 30, 2025, unchanged from the previous quarter but up from 7.1% a year earlier[29] - The allowance for credit losses increased to $25.8 million as of September 30, 2025, reflecting a provision for credit losses of $12.7 million during the quarter[31] - Net charge-offs for the three months ended September 30, 2025, were $3.1 million, compared to $2.8 million in the previous quarter and $2.4 million a year earlier[30] Efficiency and Ratios - The efficiency ratio improved to 47.6%, down from 59.5% in the prior quarter and 67.5% in the same quarter last year[19] - The effective tax rate was 23.7%, down from 24.5% in the prior quarter and 25.1% year-over-year[20] - The leverage ratio decreased to 17.2% as of September 30, 2025, from 18.0% on June 30, 2025, and 20.3% on September 30, 2024, remaining above the well-capitalized requirement of 9.0%[27] - The adjusted efficiency ratio, accounting for credit enhancement program expenses, was 59.7% for the three months ended September 30, 2025, compared to 65.3% in the previous quarter[47] Deposits and Equity - Total deposits as of September 30, 2025, reached $682.3 million, an increase from $635.2 million on June 30, 2025, and $488.7 million on September 30, 2024, driven by growth in brokered time certificates of deposits[25] - Total shareholders' equity increased to $187.8 million as of September 30, 2025, up $5.8 million from June 30, 2025, and $17.4 million from September 30, 2024[26] - Shareholders' equity increased to $183,882 million, up from $178,223 million in the previous quarter, reflecting a positive trend in the company's financial health[45] Strategic Initiatives - The company is expanding its business model by incorporating Payments (MoneyRails™) and BIN Sponsorship offerings to enhance its service capabilities[35] - The strategic program loans with credit enhancement increased by $29.6 million to $41.4 million during the quarter, aligning with the company's strategy to enhance its loan portfolio quality[24]

Core Insights - FinWise Bancorp reported strong financial results for the third quarter of 2025, with net income of $4.9 million, a 19% increase from the previous quarter and a 42% increase year-over-year, driven by robust loan originations and disciplined expense management [4][20]. Financial Performance - Loan originations totaled $1.8 billion, up from $1.5 billion in the prior quarter and $1.4 billion year-over-year [6][10]. - Net interest income was $18.6 million, compared to $14.7 million in the previous quarter and $14.8 million in the same quarter last year [9][6]. - Diluted earnings per share (EPS) were $0.34, an increase from $0.29 in the prior quarter and $0.25 year-over-year [6][20]. - The efficiency ratio improved to 47.6%, down from 59.5% in the previous quarter and 67.5% year-over-year, indicating better productivity [18][6]. Asset Quality - Nonperforming loans were recorded at $42.8 million, representing 7.5% of total loans held-for-investment, compared to $39.7 million (7.5%) in the previous quarter and $30.6 million (7.1%) year-over-year [30][31]. - The allowance for credit losses increased to $25.8 million, reflecting a higher provision for credit losses due to growth in the credit-enhanced loan portfolio [32][30]. Balance Sheet Highlights - Total assets reached $899.9 million, up from $842.5 million in the previous quarter and $683.0 million year-over-year [21][22]. - Total deposits increased to $682.3 million, driven by growth in brokered time certificates of deposits [26][25]. - Total shareholders' equity rose to $187.8 million, an increase of $5.8 million from the previous quarter and $17.4 million year-over-year [27][44]. Strategic Initiatives - The company announced two strategic program agreements with DreamFi Inc. and Tallied Technologies, aiming to expand its strategic initiatives [4]. - FinWise continues to focus on disciplined growth and operational excellence to drive long-term progress and sustainable value creation for shareholders [4].

Company Overview - FinWise is a banking and payments solutions provider to fintechs, emphasizing compliance and risk management[11] - The company has a resilient and profitable business model with compelling growth opportunities[11] - A significant portion of FinWise's workforce, 36% or 69 out of 194 FTEs, is dedicated to IT, Compliance, Risk Management, and BSA functions as of 3Q25[13] Strategic Program Lending (SPL) - Strategic Program Lending (SPL) contributed 48.1% of 3Q25 gross revenue[15] - As of September 30, 2025, Strategic Platform Loans on the balance sheet totaled $219.7 million, with 71.3% held-for-sale (HFS) and 28.7% held-for-investment (HFI)[15] - Strategic Program Fees generated $6.4 million, representing 35.7% of non-interest income in 3Q25[15] Loan Portfolio - As of 3Q25, 40% of the loan portfolio is SBA Guaranteed and Strategic Program HFS[11] - SBA Loans on the balance sheet amounted to $240.1 million as of September 30, 2025, with 55.1% guaranteed and 44.9% unguaranteed[15] - Combined SBA Guaranteed and Strategic Program Loans Held-for-Sale (HFS) increased to 39.9% of the portfolio as of 3Q25[50] Financial Performance - Total deposits reached $682.3 million as of September 30, 2025[51] - The company's efficiency ratio was 47.6% in 3Q25, or 59.7% on a core basis when adjusted for credit enhancement related accounting[79] - Tangible book value per share was $13.84 as of September 30, 2025[87]

Core Insights - FinWise Bancorp has entered into a partnership with Tallied Technologies to deliver credit card products and processing solutions to fintechs and their customers [1][2][4] - The partnership will launch two Mastercard co-branded credit card programs in November 2025, focusing on consumer and business rewards [2][3] - Tallied will manage various aspects of the card programs, while FinWise will act as the issuing bank, providing compliance and risk management oversight [3][4] Company Overview - FinWise Bancorp provides banking and payment solutions to fintech brands, leveraging a scalable API-driven infrastructure for deposit, lending, and payment programs [6] - The company is expanding its business model to include payments and BIN sponsorship offerings, while maintaining a strong focus on compliance and risk management [6] Partnership Details - The collaboration aims to enhance Tallied's growth in credit card programs and diversify FinWise's revenue through interest and fee-related income [4] - Tallied's platform supports the entire credit card value chain, emphasizing operational efficiency and fraud control [5]