Core Insights - FinWise Bancorp reported solid financial performance for the first quarter of 2025, with loan originations of $1.3 billion and net income of $3.2 million, reflecting a resilient business model despite macroeconomic uncertainties [2][4][6]. Financial Performance - Loan originations totaled $1.3 billion, consistent with the previous quarter and up from $1.1 billion year-over-year [6][8]. - Net income for the quarter was $3.2 million, an increase from $2.8 million in the prior quarter but a slight decrease from $3.3 million in the same quarter last year [6][16]. - Diluted earnings per share (EPS) were $0.23, compared to $0.20 in the previous quarter and $0.25 in the same quarter last year [6][16]. - Net interest income decreased to $14.3 million from $15.5 million in the prior quarter, but increased from $14.0 million year-over-year [6][7]. Asset Quality - Nonperforming loans decreased to $29.9 million, or 6.1% of total loans held-for-investment, down from $36.5 million (7.8%) in the previous quarter [25][26]. - The allowance for credit losses was $14.2 million, representing 2.9% of total loans held-for-investment [28]. Balance Sheet - Total assets increased to $804.1 million, up from $746.0 million in the previous quarter and $610.8 million year-over-year [17][40]. - Total deposits rose to $605.8 million, driven by increases in brokered time certificates of deposits and demand deposits [20]. Efficiency and Ratios - The efficiency ratio was 64.8%, slightly up from 64.2% in the previous quarter and 61.0% year-over-year [14]. - The leverage ratio was 18.8%, down from 20.6% in the previous quarter, but still above the well-capitalized requirement of 9.0% [22]. Non-Interest Income - Total non-interest income for the quarter was $7.8 million, an increase from $5.6 million in the prior year, driven by higher strategic program fees and other miscellaneous income [11][12]. Strategic Initiatives - The company announced a new strategic program agreement to provide lending and credit enhancement products, aiming to enhance its business model and shareholder value [4].

Core Insights - FinWise Bancorp has launched a strategic lending program in partnership with fintech Backd Business Funding to provide business installment loans to small and medium-sized businesses [1][2] - The partnership allows FinWise to offer Backd access to its Credit Enhanced Balance Sheet program, enhancing capital efficiency and diversifying funding sources [2][3] - Backd aims to empower SMBs in the U.S. with fast financing solutions, highlighting the significant market potential as SMBs represent nearly 44% of overall GDP and a $734 billion digital lending market [3] Company Overview - FinWise Bancorp provides banking and payment solutions to fintech brands, with a focus on scalable API-driven infrastructure for deposit, lending, and payment programs [5] - The company manages various lending programs, including SBA 7(a), Owner Occupied Commercial Real Estate, and Leasing, while also expanding into Payments and BIN Sponsorship offerings [5] - FinWise emphasizes compliance oversight and risk management to assist fintechs in navigating regulatory requirements [5] Backd Overview - Backd was established to support entrepreneurs by providing fast and flexible financing solutions to address critical financial challenges [4][5] - The company focuses on transparency, integrity, and partnership, aiming to help business owners overcome obstacles and drive growth [4][5] - Backd has demonstrated success in sectors such as healthcare and e-commerce, indicating a strong potential for growth in the SMB financing market [3]

Core Viewpoint - FinWise Bancorp will report its first quarter 2025 financial results and host a conference call on April 30, 2025, after market close [1]. Group 1: Conference Call Details - The conference call is scheduled for 5:30 p.m. ET, with a toll-free dial-in number of 1-877-423-9813 and an international number of 1-201-689-8573 [2]. - Participants are encouraged to dial in 10 minutes prior to the start time [2]. Group 2: Webcast Information - The webcast will be available on the Company's website, and a replay will be accessible for six months following the call [3]. Group 3: Question Submission - The Company will accept questions submitted via email prior to the conference call, with a deadline of 5:30 p.m. ET on April 30, 2025 [4]. Group 4: Company Overview - FinWise Bancorp provides banking and payment solutions to fintech brands and is diversifying its business model by incorporating Payments and BIN Sponsorship offerings [5]. - The Company operates a Strategic Program Lending business through scalable API-driven infrastructure, supporting deposit, lending, and payment programs for leading fintech brands [5]. - FinWise also manages various lending programs, including SBA 7(a), Owner Occupied Commercial Real Estate, and Leasing, aimed at disciplined balance sheet growth [5]. - The Company emphasizes compliance oversight and risk management to assist fintechs in navigating regulatory requirements [5].

Financial Condition and Risks - The company may recognize realized and/or unrealized losses in future periods due to adverse economic conditions, which could materially affect its financial condition and results of operations [175]. - The company relies heavily on deposits for liquidity and funding, and recent media coverage of bank failures has increased the risk of deposit run-off [180]. - Climate change poses risks to the company's operations and could lead to increased delinquency rates and credit losses due to its impact on customers' ability to repay loans [184]. - The company may incur losses on line of credit accounts if agreements with Fintech Banking and Payment Solutions customers do not adequately cover potential losses [190]. - The company’s reputation could be adversely affected by negative public opinion or regulatory actions, impacting customer acquisition and retention [178]. - Increased FDIC insurance premiums could adversely affect profitability and limit business opportunities [210]. - Regulatory actions could adversely impact the financial condition, results of operations, and reputation of the Company [200]. - Non-compliance with consumer protection laws may lead to damages, penalties, and negative publicity [212]. Regulatory Compliance and Legal Risks - Regulatory compliance costs are increasing, which may reduce net income and restrict growth opportunities for the company [192]. - The company is subject to periodic examinations by the FDIC and UDFI, which may require changes in asset valuations or capital levels, adversely affecting operations [194]. - Legislative and regulatory actions may increase costs and impact the business, governance structure, financial condition, or results of operations [195]. - Noncompliance with anti-money laundering laws could lead to significant penalties and restrictions on business operations [201]. - Regulatory scrutiny on disparate impact claims may result in administrative burdens and potential liability for failures to comply with anti-discrimination laws [208]. - Compliance with privacy and data protection laws could increase operational costs and restrict business activities [203]. - The Bank is subject to stringent capital requirements under the Dodd-Frank Act, which could affect growth initiatives and investor confidence [199]. - The regulatory framework for Strategic Programs is evolving, with potential new laws and regulations that may negatively affect business operations [218]. Strategic Programs and Revenue Generation - Approximately $54.1 million, or 55.9% of total revenues for the year ended December 31, 2024, were generated through Strategic Programs [215]. - Approximately $24.6 million, or 25.5% of total revenues for the year ended December 31, 2024, were generated from Strategic Programs with annual interest rates above 36% [221]. - The company may face increased litigation risks due to consumer claims under various state and federal laws, which could lead to significant legal costs and reputational harm [214]. - Inadequate oversight of relationships with Strategic Program service providers could lead to regulatory actions, negatively impacting business and financial condition [217]. - Fraudulent activity associated with Strategic Program service providers could harm operating results and brand reputation [226]. - The company’s agreements with service providers are non-exclusive, allowing them to work with competitors, which could impact loan origination and revenue growth [215]. Interest Rate and Market Risks - The company's economic value of equity analysis shows a potential decrease of 20.6% under a -400 bps interest rate shock scenario as of December 31, 2024 [403]. - The earnings at risk analysis indicates a potential decrease of 17.3% in net interest income under a -400 bps interest rate shock scenario as of December 31, 2024 [401]. - Fluctuations in interest rates are a primary component of market risk, impacting both income levels and market values of interest-earning assets [404]. - The company does not engage in leveraged derivatives or financial options to mitigate interest rate risk, focusing instead on balance sheet management [406]. - Management employs methodologies to manage interest rate risk, including analysis of interest-earning assets and interest-bearing liabilities [407]. Governance and Ownership - As of December 31, 2024, executive management and board of directors own approximately 21.2% of the company's common stock, potentially influencing shareholder votes [239]. - The company is classified as an emerging growth company, allowing it to take advantage of reduced regulatory and reporting requirements until it exceeds $1.235 billion in total annual gross revenue [240]. Acquisition and Strategic Collaboration Risks - The company may pursue strategic acquisitions, which could involve risks that adversely affect business strategy and shareholder value [231]. - The company faces significant competition in seeking appropriate acquisitions or strategic collaborations, which may complicate negotiations [236]. - Regulatory requirements may delay or prevent acquisitions, as any party seeking control must obtain prior written approval from relevant authorities [245].

Group 1 - FinWise Bancorp (FINW) has experienced significant selling pressure, resulting in a 15.7% decline over the past four weeks, but it is now in oversold territory with expectations of better earnings ahead [1] - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - The RSI for FINW is currently at 29.93, suggesting that the heavy selling may be exhausting itself, indicating a potential bounce back towards equilibrium [5] Group 2 - There has been a strong consensus among sell-side analysts to raise earnings estimates for FINW, with a 9.1% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6] - FINW holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Core Viewpoint - FinWise Bancorp has appointed Jim Noone as the new CEO of FinWise Bank, while Kent Landvatter continues as Chairman and CEO of FinWise Bancorp [1][2]. Group 1: Leadership Changes - Jim Noone has been with FinWise for seven years and has held various leadership roles, including President since March 2023 [2]. - Noone has over 20 years of experience in financial services, including commercial banking, investment banking, and private equity [2]. Group 2: Strategic Direction - Kent Landvatter expressed confidence in Noone's ability to manage day-to-day operations and work on long-term strategy and market positioning [3]. - Noone emphasized the strength of the company's opportunities and relationships, committing to banking innovation and delivering long-term benefits to stakeholders [3]. Group 3: Company Overview - FinWise provides banking and payment solutions to fintech brands and is diversifying its business model with offerings like MoneyRails™ and BIN Sponsorship [4]. - The company operates a Strategic Program Lending business that supports deposit, lending, and payment programs for fintech brands, along with a Credit Enhancement Program to improve funding sources and capital efficiency [4]. - FinWise also manages various lending programs, including SBA 7(a) and Owner Occupied Commercial Real Estate, aimed at disciplined balance sheet growth [4].

Core Viewpoint - FinWise Bancorp is highlighted as a strong investment opportunity with a Zacks Rank of 1 (Strong Buy) and a significant increase in earnings estimates [1]. Group 1: Company Performance - FinWise Bancorp has seen its earnings estimate for the current year increase by 14.4% over the last 60 days [1]. - The company's shares have gained 6.6% over the last three months, outperforming the S&P 500, which gained only 0.4% during the same period [2]. - FinWise Bancorp holds a Momentum Score of B, indicating strong momentum characteristics [2].

Core Viewpoint - FinWise Bancorp (FINW) is positioned as a strong investment opportunity due to significant revisions in earnings estimates, indicating a positive earnings outlook and potential for continued stock price appreciation [1][2]. Current-Quarter Estimate Revisions - For the current quarter, FinWise Bancorp is projected to earn $0.25 per share, unchanged from the previous year [4]. - The Zacks Consensus Estimate for the company has increased by 36.11% over the last 30 days, with two estimates moving higher and no negative revisions [4]. Current-Year Estimate Revisions - For the full year, the expected earnings per share for FinWise Bancorp is $1.03, reflecting a year-over-year increase of 10.75% [5]. - The consensus estimate has risen by 13.6% over the past month, supported by two upward revisions and no negative changes [5]. Favorable Zacks Rank - FinWise Bancorp currently holds a Zacks Rank 1 (Strong Buy), indicating strong analyst agreement on positive earnings revisions [6]. - Stocks with a Zacks Rank 1 and 2 are shown to significantly outperform the S&P 500 [6]. Bottom Line - The strong estimate revisions have led to a 10.4% increase in FinWise Bancorp's stock price over the past four weeks, suggesting further upside potential [7].

January 2025 Disclaimers "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This presentation 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 current views of FinWise Bancorp ("FinWise," "we," "us," or the "Company") with respect to, among other things, future events and its financial performance. These statements are often, but not always, mad ...

Financial Data and Key Metrics Changes - The company generated net income of $2.8 million or $0.20 per diluted common share for Q4 2024, bringing the full year 2024 earnings per diluted common share to $0.93 [28] - Average loan balances totaled $522.2 million for the quarter, compared to $492.9 million in the prior quarter, indicating growth from SBA 7(a) commercial leases and consumer programs [29] - Net interest income for the quarter was $15.5 million, up from $14.8 million in the prior quarter, driven by increased loan volumes and lower cost of funds [31] - Noninterest income was $5.6 million in the quarter, down from $6.1 million in the prior quarter, primarily due to a decline in miscellaneous income [33] - The efficiency ratio improved to 64.2% from 67.5% in the prior quarter, reflecting a deceleration in expense growth [35] Business Line Data and Key Metrics Changes - The company originated $1.3 billion in loans during Q4, bringing total originations for fiscal year 2024 to $5 billion, a 16% increase from $4.3 billion in the prior year [14] - SBA 7(a) loan originations increased in Q4 versus Q3, driven by a gradual pickup in qualified applicants [16] - Equipment leasing and owner-occupied commercial real estate loans showed solid growth, contributing to stable interest income and credit quality [17] Market Data and Key Metrics Changes - The company remains well capitalized, significantly above federal regulatory standards, with approximately 38% of total staff employed in compliance and risk management [8][10] - The company expects a gradual progression in growth as it moves through 2025, particularly from its credit enhancement solution and BIN sponsorship initiatives [11] Company Strategy and Development Direction - The company aims to expand and diversify its revenue sources to enhance long-term growth, with a focus on new lending programs and strategic partnerships [7][9] - The introduction of new products, including credit enhancement, payments, and card programs, is expected to provide both immediate and long-term growth opportunities [11][25] - The company is committed to generating positive operating leverage and expects expense growth to be production-driven moving forward [12][36] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the outlook for the business, anticipating stability in originations from existing programs and growth from new initiatives [10][11] - The management highlighted the importance of regulatory compliance and risk management as key components of their strategy to gain market share [9][10] - The company expects to see a gradual impact from new initiatives throughout 2025, with credit enhancement products expected to contribute significantly [87] Other Important Information - The company reported a provision for credit losses of $3.9 million in Q4, up from $2.2 million in Q3, primarily due to net charge-offs on non-guaranteed portions of SBA loans [19] - Nonperforming loan balances totaled $36.4 million, an increase from $30.6 million in the prior quarter, with 53% of the NPL balance guaranteed by the federal government [21][77] Q&A Session Summary Question: What drove the end-of-period loan growth in the quarter? - The increase was attributed to minimal growth in SBA loans and notable growth in leasing and owner-occupied commercial real estate portfolios, reflecting strong credit quality [41] Question: Is the 24% growth in the held-for-investment portfolio repeatable? - The company expressed confidence in continued growth rates, with expectations for a mix shift as credit-enhanced products gain traction [44][46] Question: What kept strategic program fees flat despite lower originations? - The flat fees were attributed to diversification among partners, which helped stabilize income despite seasonal deceleration in originations [48][49] Question: What is the expected growth from new card and payments initiatives in the next few years? - The company anticipates substantial growth in credit-enhanced balances in 2025, with expectations of $50 million to $100 million increase by year-end [54] Question: What are the criteria for selecting new partners? - The company focuses on mature, established fintechs for partnerships, which enhances the quality of the pipeline [56] Question: What are the main concerns for the company currently? - Key concerns include cybersecurity, regulatory issues, and ensuring proper oversight of fintech partners [59] Question: What is the expected impact of the credit enhancement product on financial performance? - The product is expected to provide stable interest income while minimizing credit risk, benefiting both the bank and its fintech partners [96]