FinWise Bancorp(US:FINW)2023-11-12 16:00Financial Performance - Net income for the three months ended September 30, 2023, was $4.8 million, an increase of $1.1 million, or 31.5%, from $3.7 million in the same period of 2022, driven by a $4.4 million increase in interest income[281]. - Net income for the nine months ended September 30, 2023, decreased by $5.3 million to $13.3 million, a decline of 28.4% compared to the same period in 2022[300]. - Earnings per share for the three months ended September 30, 2023, were $0.38 basic and $0.37 diluted, compared to $0.28 basic and $0.27 diluted in the same period of 2022[292]. - Net income for the three months ended September 30, 2023, increased by $1.1 million to $4.8 million compared to the same period in 2022, driven by an increase in interest income and a decrease in provision for credit losses[326]. Interest Income and Expenses - The net interest margin for the quarter ended September 30, 2023, was 11.77%, down from 14.93% in the same quarter of 2022, primarily due to a $12.1 million decrease in average balances of loans held for sale[278]. - Total interest income increased by $7.4 million, or 19.0%, while interest expense rose by $5.5 million, or 676.4%, due to a shift in the deposit portfolio mix[303]. - Interest expense increased by $2.5 million, or 821.8%, due to a shift in the deposit portfolio mix from lower costing deposits to higher costing deposits[281]. - The net interest margin decreased to 12.11% from 13.96% year-over-year, reflecting changes in interest-earning assets and liabilities[307]. Loan Originations and Portfolio - Loan originations decreased by $0.4 billion to $1.1 billion for the three months ended September 30, 2023, and decreased by $3.0 billion to $3.1 billion for the nine months ended September 30, 2023, due to adverse market conditions[279]. - The company has expanded its loan origination relationships to new markets across the United States, contributing to its growth and profitability[276]. - The company retained a greater percentage of the guaranteed portion of SBA loans on its balance sheet in 2023, aiming to enhance interest income amid declining gain-on-sale revenue[1]. - Total loans held for investment rose to $337,635 thousand as of September 30, 2023, up from $236,601 thousand as of December 31, 2022, an increase of 42.7%[1]. Assets and Deposits - Total assets increased to $555.1 million as of September 30, 2023, an increase of $154.3 million, or 38.5%, from $400.8 million as of December 31, 2022[318]. - Total deposits as of September 30, 2023, were $386.8 million, compared to $242.9 million as of December 31, 2022[286]. - Total period end deposits as of September 30, 2023, were $386.8 million, a significant increase from $243.0 million at December 31, 2022[405]. - Noninterest-bearing demand deposits increased to $94.3 million, or 24.4% of total deposits, compared to $78.8 million, or 32.5% at December 31, 2022[405]. Noninterest Income and Expenses - Total noninterest income for the three months ended September 30, 2023, decreased by $2.3 million, or 30.5%, to $5.2 million compared to the same period in 2022, primarily due to an $1.6 million, or 81.4%, reduction in gain on sale of loans[313]. - For the nine months ended September 30, 2023, total noninterest income decreased by $12.6 million, or 45.6%, to $15.0 million compared to the same period in 2022, mainly due to an $8.1 million, or 86.7%, reduction in gain on sale of loans[314]. - Noninterest expense for the nine months ended September 30, 2023, was $28.8 million, a slight increase of $270, or 0.9%, compared to $28.5 million for the same period in 2022[316]. - Noninterest expense increased by 18.9% to $10.1 million for the three months ended September 30, 2023, primarily due to higher salaries and employee benefits[1]. Credit Losses and Risk Management - The provision for credit losses decreased by $1.9 million, or 18.3%, contributing to the offset of the decline in net income[303]. - The allowance for credit losses (ACL) totaled $12.986 million as of September 30, 2023, with 55.4% attributed to Strategic Program loans[396]. - The company maintains a proactive approach to managing credit risk, focusing on early identification and resolution of problem loans[361]. - The Company had a total of $10.7 million in nonperforming assets as of September 30, 2023, an increase from no nonperforming assets at December 31, 2022[388]. Tax and Equity - The effective income tax rate for the nine months ended September 30, 2023, was 26.1%, down from 31.3% in the same period of 2022, influenced by nondeductible wages and state taxes[289]. - Total shareholders' equity as of September 30, 2023, was $150.4 million, reflecting an increase of $9.9 million, or 7.1%, from $140.5 million as of December 31, 2022[318]. - The company’s total equity to total assets ratio was 27.1% as of September 30, 2023, down from 34.9% as of December 31, 2022[443]. Internal Controls - There were no changes in the Company's internal controls over financial reporting during the fiscal quarter[450]. - The Company reported that there are no material effects on internal controls over financial reporting[450]. - The Company is likely to maintain its current internal controls without significant changes[450].