FinWise Bancorp(US:FINW)2023-10-27 02:31Financial Data and Key Metrics Changes - For Q3 2023, the company generated revenue of $22.4 million, with net income of $4.8 million and diluted earnings per share of $0.37, reflecting a return on average equity of 12.8% [7][42] - The tangible book value per common share increased to $12.04 from $11.59 in the previous quarter [10] - The efficiency ratio improved to 51.3% from 52.7% in the prior quarter, although it was higher than 42.3% in the same period last year [13][53] Business Line Data and Key Metrics Changes - The loans held for investment portfolio grew by 16.2% quarter-over-quarter, driven by strong SBA 7(a) lending [6][27] - Loan originations totaled $1.1 billion for the quarter, down from $1.2 billion in Q2 and $1.5 billion in the prior year [68] - Non-interest income was $5.2 million, slightly down from $5.3 million in the previous quarter and significantly lower than $7.5 million in the same quarter last year [71] Market Data and Key Metrics Changes - Average loan balances increased by 9.4% to $354.6 million from $324.1 million last quarter, and up 34.5% from $263.6 million in the prior year [41] - Average interest-bearing deposits rose to $255.8 million from $219.1 million in the second quarter and $104.8 million during the prior year period [69] Company Strategy and Development Direction - The company is focused on expanding its Banking-as-a-Service initiative and expects to launch a card sponsorship business and payments hub in the first half of 2024 [26][56] - The strategy includes retaining a higher balance of government-guaranteed loans to generate recurring growth in interest income with minimal credit risk [28] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the higher-for-longer interest rate outlook and tight capital markets impacting loan originations through 2023 and into 2024 [8] - Despite macro challenges, the company remains confident in its ability to manage growth and credit performance due to its experienced team and strong capital levels [47] Other Important Information - The company repurchased all remaining shares under the Board-approved buyback plan, focusing on capital deployment to support organic growth opportunities [11] - Non-performing loans increased to $10.7 million, primarily driven by the SBA portfolio, with $4.7 million guaranteed by the SBA [33][77] Q&A Session Summary Question: What is the breakdown of non-accruals this quarter? - $10.4 million of the $10.7 million in non-accruals is attributable to the SBA portfolio, with $4.7 million guaranteed by the SBA [77] Question: How is the rollout of the card programs and payments hub progressing? - The rollout is on track for the first half of 2024, with early successes in staffing and no major roadblocks reported [78][80] Question: What are the expectations for loan growth and capital management? - Loan growth is expected to be stable, but there may be a slight decrease in SBA originations due to economic uncertainty [84] - The company is assessing capital management strategies, including potential future buybacks, while maintaining sufficient capital for growth [87][88]