Financial Data and Key Metrics Changes - The company originated approximately $1.3 billion in loans during the first quarter, with a tangible book value per common share increasing to $13.42 from $13.15 in the prior quarter [3][4] - Net income for the first quarter was $3.2 million, or $0.23 per diluted common share, with net interest income declining to $14.3 million from $15.5 million in the prior quarter [10][11] - The net interest margin (NIM) decreased to 8.27% from 10% in the prior quarter, primarily due to a change in the mix of loan originations and lower rates on variable rate loans [11][12] Business Line Data and Key Metrics Changes - The largest student lending program had strong originations but is expected to decelerate in the second quarter due to school calendars [6] - SBA seven loan originations decreased slightly quarter over quarter, driven by a lower average loan size, while equipment leasing and owner-occupied commercial real estate lines showed solid growth [7][8] - The provision for credit losses was $3.3 million in Q1, down from $3.9 million in the prior quarter, with non-performing asset (NPA) balances reduced to $29.9 million from $36.5 million [9] Market Data and Key Metrics Changes - Average loan balances increased to $565 million from $522 million in the prior quarter, with average interest-bearing deposits rising to $430 million from $355 million [10][11] - The company expects gradual growth driven by existing programs and new partnerships, with loan originations tracking at a quarterly rate of $1.2 billion in early April [5][6] Company Strategy and Development Direction - The company announced a new strategic program agreement with Fintech partner BACT to provide business installment loans to small and medium-sized businesses [4] - The focus remains on migrating the loan portfolio to a lower risk profile while maintaining profitability and increasing tangible book value [3][5] - The company anticipates that the credit enhanced balance sheet program will significantly contribute to earnings in 2025, particularly in the second half of the year [5][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook for the business, despite a more uncertain macro environment [5] - The company is closely monitoring economic conditions but remains comfortable with the guidance for gradual growth from new partners throughout 2025 [36] - Concerns about potential macro risks, such as a slowdown in consumer spending, were acknowledged, but no immediate issues were reported [36] Other Important Information - The efficiency ratio remained relatively flat at 64.8%, with expectations for future decreases as revenue from new programs materializes [14] - The effective tax rate for the first quarter was 28.1%, with an expected rate of approximately 27.5% for 2025 [15] Q&A Session Summary Question: What is the current expense run rate and expectations for future expenses? - Management indicated that the efficiency ratio is around 64.8%, with expenses expected to remain flat and increase as revenues grow [19][21] Question: What is the outlook for net interest income (NII) growth given margin pressures? - Management expects NII growth to come from a return to normal origination levels and growth in traditional banking products, despite a continued decline in NIM [22][24] Question: What are the current credit enhanced loan balances and the timeline for growth? - The credit enhanced portfolio balance was slightly under $2 million at the end of the quarter, with expectations to reach $50 million to $100 million by year-end with existing partners [31][30] Question: How does the company view the health of its strategic partners in the current market? - Management reported no concerns about strategic partners, with origination levels remaining healthy and a gradual pickup expected from newer partners [36] Question: What is the yield on owner-occupied commercial real estate loans? - The gross yield on owner-occupied commercial real estate loans is expected to be around prime minus 100 basis points [63]

Financial Performance - Net income for the first quarter of 2025 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 period last year[18]. - Diluted earnings per share (EPS) were $0.23 for the first quarter of 2025, compared to $0.20 in the prior quarter and $0.25 in the same period last year[5]. - Net income for the three months ended March 31, 2025, was $3,189 thousand, compared to $2,794 thousand for the previous quarter, reflecting an increase of 14.1%[45]. - Earnings per share (basic) for the three months ended March 31, 2025, was $0.24, up from $0.21 in the previous quarter, an increase of 14.3%[45]. Loan and Asset Management - Loan originations totaled $1.3 billion for the first quarter of 2025, consistent with the prior quarter and up from $1.1 billion in the same period last year[5]. - Total gross loans held-for-investment (HFI) as of March 31, 2025, increased by $27.0 million (5.8%) from December 31, 2024, and by $101.3 million (25.9%) from March 31, 2024, driven by growth in commercial real estate - owner occupied, commercial leases, and residential real estate loan portfolios[21]. - Loans held-for-investment reached $485.78 billion, generating $12.89 billion in interest income, resulting in a yield of 10.76%[50]. Income and Expenses - Net interest income was $14.3 million for the first quarter of 2025, down from $15.5 million in the prior quarter but up from $14.0 million in the same period last year[8]. - Total interest income decreased to $18,536 thousand for the three months ended March 31, 2025, down from $19,362 thousand in the previous quarter, a decline of 4.3%[45]. - Non-interest expense increased to $14,318 thousand for the three months ended March 31, 2025, compared to $13,563 thousand in the previous quarter, an increase of 5.6%[45]. - Total non-interest income was $7.81 billion, up from $5.60 billion in the previous quarter, reflecting a significant increase in revenue[49]. Asset and Equity Growth - Total assets increased to $804.1 million as of March 31, 2025, up from $746.0 million at the end of the prior quarter and $610.8 million a year ago[19]. - Total shareholders' equity as of March 31, 2025, rose to $177.4 million, an increase of $3.6 million (2.1%) from December 31, 2024, and an increase of $14.9 million (9.2%) from March 31, 2024, mainly due to net income and stock-based compensation[24]. - The company's total liabilities increased to $626,768 thousand as of March 31, 2025, from $572,256 thousand at December 31, 2024, an increase of 9.5%[43]. Credit Quality and Losses - Nonperforming loan balances decreased to $29.9 million as of March 31, 2025, down from $36.5 million in the prior quarter[5]. - The provision for credit losses was $3.3 million for the first quarter of 2025, down from $3.9 million in the prior quarter[11]. - The allowance for credit losses increased to $14.2 million as of March 31, 2025, from $13.2 million as of December 31, 2024, and $12.6 million as of March 31, 2024[30]. - Nonperforming loans as of March 31, 2025, totaled $29.9 million, or 6.1% of total loans HFI, a decrease from $36.5 million (7.8%) as of December 31, 2024, and an increase from $26.0 million (6.6%) as of March 31, 2024[27]. Capital Ratios - The leverage ratio as of March 31, 2025, was 18.8%, down from 20.6% as of December 31, 2024, and March 31, 2024, but still significantly above the well-capitalized requirement of 9.0%[25]. - The allowance for credit losses to total loans HFI was 2.9% as of March 31, 2025, compared to 2.8% as of December 31, 2024, and 3.2% as of March 31, 2024[30]. Strategic Initiatives - The Company is expanding its business model by incorporating Payments (MoneyRailsTM) and BIN Sponsorship offerings, alongside its existing Strategic Program Lending business[34]. - The company anticipates continued growth in interest-earning assets and improvements in net interest margin in the upcoming quarters[49].

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].