FinWise Bancorp(US:FINW)2022-11-13 16:00Financial Performance - Net income for the three months ended September 30, 2022, was $3.7 million, a decrease of $4.7 million or 56.7% from $8.4 million for the same period in 2021[180]. - For the nine months ended September 30, 2022, net income was $18.6 million, a decrease of $2.9 million or 13.5% from $21.5 million for the same period in 2021[181]. - The company reported a net interest income decrease of $855,000 for the three months ended September 30, 2022, compared to a net increase of $595,000 for the same period in 2021[192]. - Total noninterest income for the three months ended September 30, 2022, decreased by $1.0 million, or 11.2%, to $7.5 million compared to the same period in 2021, primarily due to a decrease in gain on sale of loans[196]. - For the nine months ended September 30, 2022, total noninterest income increased by $4.9 million, or 21.7%, to $27.6 million, driven by a 51.4% increase in Strategic Program fees and a 19.2% increase in gain on sale of loans[197]. Loan Losses and Provisions - Provision for loan losses increased by $1.1 million or 32.4% to $4.5 million for the three months ended September 30, 2022, compared to $3.4 million for the same period in 2021[180]. - For the nine months ended September 30, 2022, the provision for loan losses was $10.3 million, an increase from $5.5 million in the same period of 2021, primarily due to higher net charge-offs and growth in unguaranteed loans[194]. - The provision for loan losses for the three months ended September 30, 2022, was $4.5 million, compared to $3.4 million for the same period in 2021[259]. - The ALL (Allowance for Loan Losses) was $12.0 million as of September 30, 2022, an increase of $2.1 million, or 21.4%, from $9.9 million at December 31, 2021, primarily due to higher net charge-offs and increased unguaranteed loan balances[257]. Asset and Liability Management - Total assets increased to $384.46 million in 2022 from $308.58 million in 2021, with shareholders' equity rising to $126.45 million from $55.18 million[189]. - The average interest-bearing liabilities decreased to $122.05 million in 2022 from $142.97 million in 2021, with a corresponding interest expense of $810,000 compared to $984,000 in 2021[189]. - The ratio of average interest-earning assets to average interest-bearing liabilities improved to 299.25% in 2022 from 210.51% in 2021, indicating better asset utilization[189]. - Total deposits decreased to $232.8 million as of September 30, 2022, down from $251.9 million at December 31, 2021, a decrease of $19.1 million or 7.6%[278]. Loan Portfolio Composition - As of September 30, 2022, total SBA 7(a) loans amounted to $126.8 million, representing 49.3% of total loans, down from $141.3 million or 53.2% a year earlier[204]. - Total commercial non-real estate loans increased to $13.0 million as of September 30, 2022, representing 5.1% of total loans, compared to $3.4 million or 1.3% a year earlier[206]. - Total residential real estate loans reached $34.5 million as of September 30, 2022, accounting for 13.4% of total loans, up from $27.1 million or 10.2% a year earlier[207]. - The total loan portfolio as of September 30, 2022, was $256.8 million, a decrease from $265.8 million as of December 31, 2021[217]. Nonperforming Assets - Total nonperforming assets and troubled debt restructurings as of September 30, 2022, were $0.1 million, down from $0.8 million as of December 31, 2021[228]. - Total nonperforming loans to total loans ratio was 0.0% as of September 30, 2022, compared to 0.2% as of December 31, 2021[228]. - Total accruing loans past due 90 days or more increased to $254,000 as of September 30, 2022, from $54,000 as of December 31, 2021[228]. Capital and Equity - Shareholders' equity increased by $18.9 million to $134.3 million at September 30, 2022, compared to $115.4 million at December 31, 2021[289]. - Average common equity to average assets was 35.2% for the three months ended September 30, 2022, compared to 20.7% for the same period in 2021[290]. - Return on average equity was 11.0% for the three months ended September 30, 2022, down from 52.2% for the same period in 2021[292]. Operational Changes and Strategies - The company plans to retain a greater amount of the guaranteed portion of certain SBA loans on its balance sheet to enhance interest income and offset declines in gain-on-sale revenue[204]. - The company actively engages with borrowers to provide loan modifications when necessary, particularly during economic downturns[233]. - The company focuses on industries with historically lower loss rates, such as professional services and e-commerce, to mitigate economic shifts[215]. - The company launched a new HSA deposit product sourced through Lively, Inc. in 2022[285].