FinWise Bancorp(FINW) - 2024 Q3 - Quarterly Report

Loan Originations and Portfolio - For the three months ended September 30, 2024, loan originations increased to $1.4 billion from$1.1 billion compared to the same period in 2023, and for the nine months ended September 30, 2024, originations increased to $3.7 billion from$3.1 billion[143]. - The company's loans held for investment increased by 16.6% to $418,065,000 as of September 30, 2024, compared to$358,560,000 as of December 31, 2023[168]. - The total loan portfolio as of September 30, 2024, was $433.963 million, with fixed rate loans totaling$123.826 million and variable rate loans totaling $310.137 million[188]. - The gross loan portfolio as of September 30, 2024, included$251,439,000 in SBA loans, representing 57.9% of total loans, down from 64.5% as of December 31, 2023[175]. - Total commercial leases increased to $64.3 million as of September 30, 2024, accounting for 14.8$3.0 million, maintaining a steady 0.7% of total loans held for investment as of September 30, 2024[181]. - Residential real estate loans totaled $41.4 million, representing 9.5$19.4 million, accounting for 4.5% of total loans held for investment[184]. - Commercial real estate loans increased to $35.2 million, representing 8.1$19.2 million, representing 4.4% of total loans held for investment as of September 30, 2024[186]. Financial Performance - FinWise generated net income of $3.5 million for the three months ended September 30, 2024, down from$4.8 million in 2023, and $9.9 million for the nine months ended September 30, 2024, compared to$13.3 million in 2023[145]. - Net interest margin (NIM) was 9.70% for the three months ended September 30, 2024, down from 11.77% for the same period in 2023, and NIM was 10.05% for the nine months ended September 30, 2024, compared to 12.11% for the same period in 2023[144]. - Interest income for the three months ended September 30, 2024, was $18.9 million, a 9.9$17.2 million in 2023, while interest expense increased by 48.6% to $4.2 million from$2.8 million[151]. - Non-interest income increased by 23.8% to $6.1 million for the three months ended September 30, 2024, compared to$4.9 million in 2023[151]. - Total non-interest income for the nine months ended September 30, 2024, increased by 10.3% to $16,882,000 compared to$15,299,000 in the same period of 2023, primarily due to higher origination volume of Strategic Program loans[162]. - Total non-interest expense for the three months ended September 30, 2024, rose by 44.3% to $14,049,000 from$9,733,000 in the same period of 2023, driven mainly by a 50.5% increase in salaries and employee benefits[163]. - The return on average equity was 8.3% for the three months ended September 30, 2024, down from 12.8% in the same period of 2023[234]. Assets and Liabilities - Total assets increased by $96.8 million to$683.0 million as of September 30, 2024, compared to December 31, 2023, primarily in loans and investment securities[146]. - Total assets grew to $661,815,000, up from$513,007,000 in the previous year[155]. - Total liabilities rose to $512.7 million, an increase of 18.9$431.2 million as of December 31, 2023, mainly driven by the growth in deposits[224]. - Total deposits increased to $341,227,000, with a total interest-bearing liability of$341,339,000, reflecting a 4.85% cost[155]. - The company's total deposits grew by 20.7% to $488,659,000 as of September 30, 2024, compared to$404,833,000 as of December 31, 2023[168]. - Deposits increased by $83.8 million, or 20.7$47.3 million, or 49.5%[221]. Credit Quality and Losses - The provision for credit losses decreased by 29.7% to $2.2 million for the three months ended September 30, 2024, compared to$3.1 million in 2023[151]. - The allowance for credit losses (ACL) was $12.661 million as of September 30, 2024, compared to$12.888 million as of September 30, 2023, reflecting a decrease in the overall provision for credit losses[206]. - The provision for credit losses for the three months ended September 30, 2024, was $1.944 million, down from$2.910 million for the same period in 2023[206]. - Total nonperforming assets increased to $30.6 million as of September 30, 2024, from$27.1 million at December 31, 2023, primarily due to several loans in the SBA 7(a) loan portfolio moving to nonperforming status[192]. - The ratio of net charge-offs (NCO) to average loans was 2.6% for the nine months ended September 30, 2024, lower than 3.5% for the same period in 2023, attributed to growth in lower credit risk loans[217]. - Nonaccrual loans to total LHFI ratio was 6.9% as of September 30, 2024, down from 7.0% as of December 31, 2023, reflecting growth in the loans held for investment portfolio[214]. - The company actively works with borrowers to provide loan modifications when warranted, reflecting a proactive approach to managing problem loans[194]. Strategic Initiatives - New strategic lending programs were launched, including partnerships with Earnest for private student loans and Hank Payments Corp. for cash management solutions[146][147]. - The company introduced Payments (MoneyRails™) and Bank Identification Number (BIN) Sponsorship products, which are currently under development[148]. - The company has established underwriting guidelines and monitors delinquency levels to maintain loan portfolio quality[192]. - The company evaluates the adequacy of the ACL on a quarterly basis, considering changes in the loan portfolio and current economic conditions[202]. - The company utilizes a grading system to assess loan quality, with periodic evaluations to adjust risk grades as necessary[196]. Shareholder and Capital Management - Shareholders' equity increased by $15.3 million to$170.4 million compared to $155.1 million at December 31, 2023, primarily due to net income of$9.9 million[232]. - The stock repurchase program authorized the repurchase of 641,832 shares, with 44,608 shares repurchased for $0.5 million at an average price of$10.30 per share since inception[238]. - The company is categorized as well-capitalized under the regulatory framework for prompt corrective action as of September 30, 2024[237].