FinWise Bancorp(US:FINW)2025-04-30 22:32Financial Data and Key Metrics Changes - The company reported net income of $3,200,000 or $0.23 per diluted common share for Q1 2025, with a decrease in net interest income to $14,300,000 from $15,500,000 in the prior quarter [12][14] - The net interest margin (NIM) declined 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 [14][15] - Average loan balances increased to $565,000,000 from $522,000,000 in the prior quarter, driven by growth in SBA loans and consumer programs [12][13] Business Line Data and Key Metrics Changes - Loan originations totaled approximately $1,300,000,000 in Q1 2025, with a strong performance from the student lending program, although a seasonal softening in demand was noted [4][8] - The provision for credit losses decreased to $3,300,000 from $3,900,000 in the prior quarter, reflecting lower charge-offs [10] - Non-performing assets (NPAs) decreased to $29,900,000 from $36,500,000 in the prior quarter, attributed to effective collection efforts [11] Market Data and Key Metrics Changes - The company remains well-capitalized with a tangible shareholders' equity to assets ratio of 22%, down from 23.3% at year-end 2024 [5] - Average interest-bearing deposits increased to $430,000,000 from $355,000,000 in the prior quarter, driven by an increase in interest-bearing demand deposits [13] Company Strategy and Development Direction - The company is focused on executing its business strategy, including a new strategic program agreement with Fintech partner BACT to provide business installment loans [5][6] - The long-term outlook remains positive, with expectations for gradual growth driven by existing and new programs [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for originations for the year, despite some seasonal fluctuations [8][9] - Concerns were raised about potential macroeconomic risks, particularly a slowdown in consumer spending, but no immediate issues were identified with strategic partners [39] Other Important Information - The effective tax rate for Q1 was 28.1%, up from 24.3% in the prior quarter, primarily due to permanent differences related to executive compensation [17] - The company expects credit enhanced balances to increase by $50,000,000 to $100,000,000 by year-end 2025 [17][18] Q&A Session Summary Question: What is the current expense run rate and expectations for future expenses? - The efficiency ratio is currently at 64.8%, and expenses are expected to remain relatively flat as revenues increase [21][22] Question: What is the outlook for net interest income (NII) growth? - NII is expected to grow from seasonal recovery in originations and increased loan portfolio growth, despite a decline in NIM [24][26] Question: What are the current credit enhanced loan balances? - The credit enhanced portfolio balance was slightly under $2,000,000 at the end of the quarter, with expectations to reach $50,000,000 to $100,000,000 by year-end [33][34] Question: How does the company view the health of its strategic partners? - Management is comfortable with origination levels and does not have concerns about specific partners at this time [38] Question: What is the yield on owner-occupied commercial real estate loans? - The gross yield on owner-occupied commercial real estate is likely around prime minus 100 basis points [65]