Financial Performance - Net income for the three months ended June 30, 2023 decreased by $0.8 million to $4.6 million compared to the same period in 2022, primarily due to lower strategic program fees and higher interest expenses [193]. - Net income for the six months ended June 30, 2023 was $8.5 million, a decrease of 43.0% from $14.9 million for the same period in 2022 [199]. - Net income for Q2 2023 was $4.6 million, a decrease of 15.5% from $5.5 million in Q2 2022, primarily due to a $2.2 million decline in strategic program fees and a $2.0 million increase in interest expense [215]. - The company experienced a $10.3 million decrease in non-interest income, primarily due to an 88.1% reduction in the gain on sale of loans [199]. - Total noninterest income decreased by $10.3 million, or 51.2%, to $9.8 million for the six months ended June 30, 2023, compared to the same period in 2022 [242]. Interest Income and Expenses - Interest income increased by 21.9% to $15.9 million for the three months ended June 30, 2023, compared to $13.0 million for the same period in 2022 [198]. - Total interest expense increased by 798.3% to $2.2 million for the three months ended June 30, 2023, compared to $0.2 million for the same period in 2022 [198]. - Net interest income for the six months ended June 30, 2023, increased by $0.1 million, or 0.2%, to $25.8 million compared to the same period in 2022 [202]. - The cost of funds on interest-bearing liabilities increased by 288 basis points to 3.65%, with an average balance increase of $61.9 million, or 47.4%, to $192.5 million compared to the prior year [202]. - The cost of funds on interest-bearing liabilities increased by 325 basis points to 4.01% for Q2 2023, with average interest-bearing liabilities rising by $91.5 million, or 71.6% [217]. Loan Performance - Originations of Strategic Program loans held-for-sale decreased by $0.9 billion to $1.2 billion for the three months ended June 30, 2023, compared to the same period in 2022 [196]. - The average balance of loans held for sale decreased by $33.4 million, contributing to the decline in net interest margin [213]. - SBA 7(a) loans increased to $189.0 million, representing 65.0% of total loans held for investment as of June 30, 2023, up from 61.3% [249]. - Strategic Program loans held for investment decreased to $20.7 million, representing 7.1% of total loans held for investment as of June 30, 2023 [259]. - Commercial non-real estate loans increased to $24.9 million, representing 8.5% of total loans held for investment as of June 30, 2023 [257]. Asset and Equity Growth - Total assets increased by $94.8 million to $495.6 million as of June 30, 2023, primarily due to a $53.4 million increase in net loans receivable [214]. - Total deposits rose by $89.5 million, or 36.8%, to $332.5 million as of June 30, 2023 [247]. - Total shareholders' equity increased by $6.99 million, or 5.0%, to $147.4 million as of June 30, 2023 [247]. - Loans receivable, net, increased by $53.4 million, or 23.8%, to $277.7 million as of June 30, 2023 [247]. Tax and Regulatory Matters - The effective income tax rate for the six months ended June 30, 2023 was 26.1%, compared to 25.1% for the same period in 2022 [180]. - The Company plans to acquire an additional 10% of BFG's membership interests in exchange for 372,132 shares of its stock, subject to regulatory approval [188]. Risks and Challenges - The company faces risks related to potential losses from loan defaults and nonperformance on loans [282]. - The adequacy of the company's allowance for credit losses (ACL) is a critical factor for financial performance [273]. - The company is subject to increased competition in the financial services industry, particularly from regional and national institutions [281]. - The company is exposed to interest rate risk, which affects its interest-earning assets and liabilities [282]. - The company is reliant on third-party service providers for core systems support and other processing services [281]. Non-Interest Income - Non-interest income decreased by 37.3% to $5.3 million for the three months ended June 30, 2023, compared to $8.4 million for the same period in 2022 [198]. - Total noninterest expense decreased by $1.0 million, or 9.3%, to $10.0 million for the three months ended June 30, 2023, compared to the same period in 2022 [244]. - Total noninterest expense decreased by $1.0 million, or 9.3%, to $10.0 million in Q2 2023, attributed to a recovery on the SBA servicing asset and a reduction in salaries and employee benefits [227].

Financial Data and Key Metrics Changes - For Q2 2023, the company generated revenue of $21.2 million, with net income of $4.6 million, translating to diluted earnings per share of $0.35 and a return on average equity of 12.8% [11][28] - Net interest income grew 13% to $13.7 million compared to $12.1 million in the previous quarter, and increased 7.1% from $12.8 million in the same quarter last year [21][38] - The company's tangible book value per common share increased to $11.59 from $11.26 in the prior quarter [31] Business Line Data and Key Metrics Changes - Loan originations totaled $1.2 billion for the quarter, up from $0.9 billion in the previous quarter but down from $2.1 billion in the same quarter last year [60] - Non-interest income was $5.3 million, an increase from $4.5 million in the first quarter but a decrease from $8.4 million in the same quarter last year [39] - The efficiency ratio was 52.7%, slightly up from 52.5% in the previous quarter and 52% in the same quarter last year [32][63] Market Data and Key Metrics Changes - Average interest-bearing deposits increased to $219.1 million from $165.2 million in the first quarter and $127.2 million in the same quarter last year [20] - The net charge-off rate decreased to 3.4% compared to 4.5% in the first quarter and the same quarter last year [36] Company Strategy and Development Direction - The company continues to focus on diversifying revenue streams and investing in its team and infrastructure, including expanding its Banking-as-a-Service product line [14][35] - A definitive agreement was made to acquire an additional 10% of BFG's membership interests, which is part of the long-term strategy to increase equity ownership [15] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for loan originations for the remainder of 2023 due to tight capital markets and interest rate pressures [30] - The company remains committed to prudent credit underwriting and long-term growth strategies despite current macroeconomic challenges [34] Other Important Information - The company bought back 269,690 shares for approximately $2.2 million during the quarter [40] - The effective tax rate for the second quarter was 26.1%, consistent with the previous quarter [40] Q&A Session Summary Question: What drove the step down in SBA loan servicing fees this quarter? - The decrease was attributed to a couple of SBA loans paying off, affecting accruals and deferrals [77] Question: What is the outlook for operating expenses in the next couple of quarters? - The increase in compensation was due to higher performance bonuses, and the company plans to maintain consistent relationships [79] Question: How many shares were bought back this quarter and what is the remaining authorization? - The company purchased 269,690 shares for about $2.2 million, with plans to remain active in buybacks [80][81]

Financial Performance - Net income for Q1 2023 was $3.9 million, a decrease of $5.6 million or 59.1% from $9.4 million in Q1 2022, primarily due to a $7.2 million or 61.3% drop in non-interest income[41]. - Net interest income decreased by $0.9 million, or 6.6%, to $12.1 million for Q1 2023 compared to Q1 2022, attributed to decreases in loans held for sale balances and increased rates on certificates of deposit[33]. - Non-interest income decreased by $7.2 million or 61.3% to $4.5 million, driven by a $4.9 million or 96.3% reduction in gain on sale of loans and a $2.9 million or 44.4% decline in strategic program fees[51]. - The return on average equity was 11.1% for Q1 2023, down from 31.4% in Q1 2022, while the return on average assets was 3.8%, down from 9.4%[39]. - The effective income tax rate for the three months ended March 31, 2023, was 26.1%, compared to 25.4% for the same period in 2022[131]. Asset and Liability Management - Total assets increased by $41.5 million to $442.3 million as of March 31, 2023, driven by a $36.0 million increase in net loans receivable and a $5.0 million increase in interest-bearing deposits[29]. - Total liabilities increased to $297.9 million, a 14.5% increase from $260.3 million as of December 31, 2022, primarily due to an increase in brokered deposits for Strategic Programs[117]. - Total deposits increased to $283.2 million as of March 31, 2023, from $243.0 million as of December 31, 2022, representing a growth of $40.2 million, or 16.5%[122]. - The average balance of interest-bearing liabilities increased by $31.9 million, or 23.9%, to $165.5 million for Q1 2023 compared to the prior year period[33]. - Interest-bearing deposits in other banks rose to $105.2 million at March 31, 2023, up $5.0 million or 5.0% from $100.2 million at December 31, 2022[109]. Loan Portfolio - The total loan portfolio reached $297.7 million as of March 31, 2023, compared to $260.2 million as of December 31, 2022[66]. - The company reported a significant increase in SBA 7(a) loans, totaling $178.7 million as of March 31, 2023, up from $145.2 million at the end of 2022, representing 60.0% of total loans[57]. - Total residential real estate loans decreased to $31.0 million (10.4% of total loans) as of March 31, 2023, from $37.8 million (14.5%) as of December 31, 2022[60]. - Strategic Program loans totaled $46.8 million (15.7% of total loans) as of March 31, 2023, down from $47.8 million (18.4%) as of December 31, 2022[61]. - Commercial real estate loans increased to $17.0 million (5.7% of total loans) as of March 31, 2023, compared to $12.1 million (4.7%) as of December 31, 2022[62]. Credit Quality and Risk Management - The provision for credit losses was $2.7 million for Q1 2023, slightly down from $2.9 million in Q1 2022, reflecting a decrease in strategic program loans held for investment[47]. - The allowance for loan losses (ALL) related to Strategic Programs constituted 55.9% of the total ALL as of December 31, 2022, while comprising 10.3% of total loans[101]. - The ratio of net charge-offs to average loans outstanding was 1.1% for the three months ended March 31, 2023, compared to 1.4% for the same period in 2022[108]. - The ACL to total loans ratio was 4.4% as of March 31, 2023, with nonaccrual loans to total loans at 0.3%[105]. - The company emphasizes proactive identification and resolution of problem loans to maintain asset quality[90]. Capital and Equity - Shareholders' equity increased by $3.9 million to $144.4 million at March 31, 2023, primarily due to net income recognized of $3.9 million[38]. - The leverage ratio under the Community Bank Leverage Ratio framework was 24.0% as of March 31, 2023, compared to 25.1% as of December 31, 2022, well above the 9.0% requirement[145]. - The ending balance of the allowance for credit losses (ACL) was $12,034 thousand as of March 31, 2023, with a provision for loan losses of $2,668 thousand during the period[99]. - The company aims to maintain adequate capital to support anticipated asset growth and ensure compliance with regulatory capital guidelines[40]. - Total contractual obligations amount to $269,761,000, with $225,634,000 due in less than one year[153]. Strategic Initiatives - The company launched an HSA deposit product in 2022 and plans to leverage online and mobile banking to enhance customer service without expanding physical branches[73]. - The company utilizes brokered deposits and a rate listing service to attract deposits, maintaining competitive rates to draw in funds[127]. - Originations of Strategic Program loans held-for-sale decreased by $1.6 billion to $0.9 billion for the three months ended March 31, 2023, due mainly to market deceleration[138]. - The company maintains a disciplined lending approach and monitors delinquency levels to manage credit risk effectively[91]. - The company had $0.7 million in nonperforming assets as of March 31, 2023, compared to no nonperforming assets at December 31, 2022[89].

Financial Data and Key Metrics Changes - For Q1 2023, the company generated revenue of $18 million, net income of $3.9 million, and diluted earnings per share of $0.29, compared to $6.5 million in net income for Q4 2022 and $9.4 million for Q1 2022 [10][25] - The return on average equity was 11.1% for the quarter, and the tangible value per common share increased to $11.26 from $10.95 in the previous quarter [10][10] - Net interest income for Q1 was $12.1 million, down from $12.6 million in Q4 2022 and $13 million in Q1 2022, with a net interest margin of 12.51%, which is lower than 14.27% in Q4 2022 and 13.37% in Q1 2022 [25][26] Business Line Data and Key Metrics Changes - Loan originations totaled $0.9 billion in Q1 2023, down from $1.2 billion in Q4 2022 and $2.5 billion in Q1 2022, primarily due to a contraction in capital markets and conservative underwriting [20][21] - Average loan balances were $290.4 million, an 11% increase from $261.4 million in Q4 2022, but a 2% decrease from $296.7 million in Q1 2022 [22] - Noninterest income was $4.5 million in Q1, significantly lower than $9.8 million in Q4 2022 and $11.7 million in Q1 2022, mainly due to a reduction in loan sales and strategic program fees [27] Market Data and Key Metrics Changes - Average interest-bearing deposits increased to $165.2 million in Q1 2023 from $126.1 million in Q4 2022 and $132.5 million in Q1 2022, driven by an increase in certificates of deposit [23][24] - The company reported that approximately 85% of deposits are insured by the FDIC or are its own capital, with a significant portion of uninsured deposits being its own capital [53] Company Strategy and Development Direction - The company aims to secure additional revenue growth opportunities and diversify income and funding streams, focusing on strategic programs and expanding its footprint in the Banking-as-a-Service ecosystem [12][14] - Investments in personnel and infrastructure are ongoing to position the company for future growth, with a focus on maintaining strong credit quality and risk management [15][18] - The company is committed to maximizing long-term shareholder value and is prepared to navigate economic headwinds while pursuing growth opportunities [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment but expressed confidence in the company's resilience and ability to maintain profitability [9][11] - The company anticipates that the industry-wide slowdown in loan originations may persist throughout 2023, but remains focused on long-term growth strategies [20][21] - Management emphasized the importance of disciplined underwriting and maintaining credit quality amid economic uncertainties [18][32] Other Important Information - The company's efficiency ratio increased to 52.5% in Q1 2023 from 45.6% in Q4 2022 and 36.7% in Q1 2022, reflecting ongoing investments in infrastructure [28] - The company implemented CECL credit accounting on January 1, 2023, which requires provisioning for estimated lifetime credit losses [30] Q&A Session Summary Question: What is the tone regarding strategic programs on origination volume? - Management indicated that origination levels were under pressure in Q1 and foresee a continuation of this trend throughout 2023, with Q1 potentially being the high point for the year [34] Question: How is SBA loan production trending? - Management noted that while there is growth in the market, demand for SBA loans may soften as rates rise, and there are no seasonal patterns affecting this growth [35] Question: Can you provide insights on expense trends and hiring? - Management confirmed that the decrease in bonuses impacted expenses, and they continue to hire professionals in the Banking-as-a-Service area, indicating a modest growth in expenses moving forward [36][58] Question: What are the drivers of the CECL model for the company? - Management highlighted that the high watermark methodology for the SP HFI portfolio is a significant driver, more so than general economic indicators [40][41] Question: What percentage of originations is driven by the largest partner? - Management did not disclose specific percentages but noted that there is greater diversification among partners compared to the previous year [50][51] Question: Can you discuss noninterest-bearing deposit growth? - Management explained that a significant portion of deposits is insured or consists of their own capital, with growth in noninterest-bearing deposits being correlated with strategic business volume [52][53]

Financial Performance - Net income decreased to $25,115,000 in 2022 from $31,583,000 in 2021, a decline of 20.5%[648] - Earnings per share (diluted) fell to $1.87 in 2022 from $3.27 in 2021, a decrease of 42.7%[648] - Total revenues for the year ended December 31, 2022, were generated through Strategic Programs[414] - Non-interest income increased to $37,411,000 in 2022, up from $31,844,000 in 2021, representing an increase of 17.9%[648] - Cash provided by operating activities increased significantly to $61,153,000 from a cash used of $(9,232,000) in the previous year[654] - The company reported a net decrease in loans receivable of $(17,330,000) for the year, compared to an increase of $41,622,000 in 2021[654] - The company originated Strategic Program loans held-for-sale totaling $(6,974,133,000) in 2022, compared to $(6,335,194,000) in 2021, indicating a growth in loan origination activities[654] Asset and Liability Management - Total assets increased to $400,780,000 in December 2022 from $380,214,000 in December 2021, representing a growth of 4.2%[645] - Total liabilities decreased to $260,321,000 in December 2022 from $264,772,000 in December 2021, a decline of 1.7%[645] - Total shareholders' equity increased to $140,459,000 in December 2022 from $115,442,000 in December 2021, a growth of 21.7%[645] - The ending balance for the Allowance for Loan Losses was $9,855 thousand at the end of 2022, compared to $6,199 thousand at the end of 2021, indicating a rise of 59.5%[718] Regulatory and Compliance Risks - The company is subject to regulatory capital requirements, and failure to meet these could result in limitations on activities and adversely affect customer and investor confidence[372] - Legislative and regulatory changes may increase costs and impact the company's business operations and financial condition[380] - The Bank is subject to various laws and regulations, including the Community Reinvestment Act, which could result in sanctions for non-compliance[399] - Increased scrutiny of lending practices could lead to significant administrative burdens and potential liability for failures to comply with fair lending laws[404] - The Federal Trade Commission has increased scrutiny of financial technology companies' marketing practices, which could lead to regulatory actions and fines[391] Operational Risks - The company is subject to operational risks, including employee errors and misconduct, which could lead to financial losses or regulatory sanctions[362] - The company relies heavily on its executive management team, and the unexpected loss of key personnel could adversely affect its financial condition and results of operations[363] - Climate change poses risks that could disrupt operations and negatively impact the company's geographic markets, potentially increasing delinquency rates and credit losses[373] - The company may face challenges in managing joint ventures and strategic collaborations, which could expose it to financial penalties and reputational harm[440] Strategic Programs and Revenue Generation - Approximately $61.7 million, or 68.7% of total revenues for the year ended December 31, 2022, were generated through Strategic Programs[414] - Approximately $28.4 million, or 31.6% of total revenues for the year ended December 31, 2022, were generated from Strategic Programs with annual interest rates above 36%[422] - The Bank's relationships with Strategic Program service providers are non-exclusive, posing risks if providers choose to work with competitors[414] - The regulatory framework for Strategic Programs is evolving, with potential new laws and regulations that may negatively affect the business[418] Market and Economic Conditions - The company may recognize realized and/or unrealized losses in future periods due to changing economic and market conditions affecting interest rates and the financial condition of issuers[361] - Future special assessments or increases in FDIC insurance premiums could reduce profitability and limit business opportunities[407] - The risk-free interest rate increased to 3.10% in 2022 from a range of 0.4% - 1.3% in 2021[699] Stock and Shareholder Information - As of December 31, 2022, directors and executive officers beneficially owned approximately 21.5% of the issued and outstanding common stock, totaling 2,758,242 shares[446] - The common stock is not insured or guaranteed by the FDIC or any other government agency, and investment in the common stock is subject to investment risk, including possible loss[457] - The company’s governing documents may have an anti-takeover effect, potentially delaying or preventing acquisitions favored by shareholders[451] Accounting and Financial Reporting - The independent auditor's report states that the consolidated financial statements present fairly the financial position of the company as of December 31, 2022, and 2021, in conformity with GAAP[636] - The company adopted new accounting guidance under Accounting Standards Codification Topic 842, Leases, in 2022[640] - The company maintains an adequate allowance for loan losses (ALL), which may require future additions based on economic conditions[679] Miscellaneous - The company qualifies as an emerging growth company and intends to take advantage of reduced regulatory and reporting requirements for up to five years or until it exceeds $1.235 billion in total annual gross revenue[449] - The company is not required to provide information requested by Part II, Item 7A of the Report under the filer category of "smaller reporting company"[633]

FinWise Bancorp (NASDAQ:FINW) Q4 2022 Earnings Conference Call January 25, 2023 5:30 PM ET Company Participants Kent Landvatter - Chief Executive Officer Javvis Jacobson - Executive Vice President and Chief Financial Officer James Noone - Executive Vice President and Chief Credit Officer Conference Call Participants Andrew Liesch - Piper Sandler Andrew Terrell - Stephens, Inc. Operator Greetings and welcome to the FinWise Bancorp Fourth Quarter 2022 Earnings Conference Call. At this time, all participants a ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |--------------------------------------------------------|-----------------------------------------------------------|----------------------------------| | | | | | For ...

FinWise Bancorp (NASDAQ:FINW) Q3 2022 Earnings Conference Call October 26, 2022 5:30 PM ET Company Participants Kent Landvatter - President and Chief Executive Officer Javvis Jacobson - Chief Financial Officer and Executive Vice President James Noone - Chief Credit Officer and Executive Vice President Conference Call Participants Andrew Terrell - Stephens Andrew Liesch - Piper Sandler Operator Greetings and welcome to the FinWise Bancorp Third Quarter 2022 Earnings Conference Call. At this time, all partici ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |--------------------------------------------------------|-----------------------------------------------------------|----------------------------------| | | | | | For the ...

FinWise Bancorp (NASDAQ:FINW) Q2 2022 Earnings Conference Call July 27, 2022 5:30 PM ET Company Participants Kent Landvatter – President and Chief Executive Officer Javvis Jacobson – Chief Financial Officer Conference Call Participants Andrew Terrell – Stephens Andrew Liesch – Piper Sandler Operator Greetings. Welcome to the FinWise Bancorp Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation ...