FinWise Bancorp Reports First Quarter 2022 Results

April 28, 2022 at 4:15 PM EDT

- Net Income of $10.3 Million -

- Diluted Earnings Per Share of $0.76 -

MURRAY, Utah, April 28, 2022 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Loan originations grew 9.0% to $2.5 billion from the quarter ended December 31, 2021 and more than doubled from the prior-year period
  • Net interest income was $14.1 million, compared to $15.3 million for the quarter ended December 31, 2021 and $8.4 million in the prior year period
  • Net Income was $10.3 million, compared to $10.1 million for the quarter ended December 31, 2021 and $5.3 million in the prior year period
  • Diluted earnings per share (“EPS”) were $0.76 for the quarter, compared to $0.90 for the quarter ended December 31, 2021 and $0.59 for the prior year period
  • Efficiency ratio was 35.1%, compared to 34.3% for the quarter ended December 31, 2021 and 45.9% for the prior year period
  • Maintained industry-leading returns with annualized return on average equity (ROAE) of 34.1%, compared to 43.8% in the quarter ended December 31, 2021 and 43.1% in the prior year period
  • Asset quality remained strong with a nonperforming loans to total loans ratio of 0.2%

“FinWise continued to deliver solid results as our platform’s scalability facilitated another quarter of robust loan originations from our existing strategic programs,” said Kent Landvatter, Chief Executive Officer and President of FinWise. “We also maintained our industry-leading efficiency and profitability, while we continued the buildout of our operating infrastructure to further enhance future growth potential. These results exemplify the strength of our business model which gives us confidence that we can continue to expand our market share to the benefit of our customers and shareholders over the long-term.”

Results of Operations

The Company’s first quarter of 2022 was highlighted by continued strength in loan originations across its primary lines of business, substantial earnings growth, solid efficiency, and industry-leading returns.

Selected Financial Data

($s in thousands, except per share amounts, annualized ratios)   For the Three Months Ended
    3/31/2022   12/31/2021   3/31/2021
Net Income   $ 10,268     $ 10,111     $ 5,291  
Diluted EPS   $ 0.76     $ 0.90     $ 0.59  
Return on average assets     10.2 %     11.3 %     6.5 %
Return on average equity     34.1 %     43.8 %     43.1 %
Yield on loans     19.2 %     21.6 %     13.6 %
Cost of deposits     0.8 %     0.8 %     1.5 %
Net interest margin     14.5 %     16.6 %     11.0 %
Efficiency ratio     35.1 %     34.3 %     45.9 %
Tangible book value per share   $ 9.84     $ 9.04     $ 6.00  
Tangible shareholders’ equity to tangible assets (1)     29.6 %     30.4 %     15.8 %
Leverage Ratio (Bank under CBLR)     19.3 %     17.7 %     19.4 %
                         
(1) Tangible shareholders’ equity is defined as total shareholders’ equity less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholder’s equity. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights as an intangible asset for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity as of each of the dates indicated.

Net Income

Net income was $10.3 million for the first quarter of 2022, compared to $10.1 million for the fourth quarter of 2021, and nearly double the net income for the first quarter of 2021. Growth relative to the previous quarter reflects an increase in non-interest income driven by gain on sale of loans and higher strategic program fees, partially offset by an increase in non-interest expense. Compared to the prior year period, net income growth was primarily driven by increases in net interest income and non-interest income, partially offset by higher non-interest expenses and provision for loan loss.

Net Interest Income

Net interest income was $14.1 million for the first quarter of 2022, compared to $15.3 million for the fourth quarter of 2021, and $8.4 million for the first quarter of 2021. The decline from the previous quarter was primarily due to a change in the mix of held for sale loans reflecting higher average balances from strategic programs with lower yielding loans. Growth over the prior year period primarily reflected strong loan growth resulting in higher balances and an increase in average interest earning assets.   

Loan originations totaled $2.5 billion for the first quarter of 2022, up 9.0% from $2.3 billion for the fourth quarter of 2021, and up 147.8% from $1.0 billion for the first quarter of 2021.

Net interest margin for the first quarter of 2022 was 14.5% compared to 16.6% for the fourth quarter of 2021 and 11.0% for the first quarter of 2021. The decline from the previous quarter was primarily driven by higher average held for sale and held for investment loan balances carrying lower yields from strategic programs. The decrease in net interest margin was partially offset by a change in the underlying mix of held for investment loans reflecting a decrease in lower yielding SBA 7(a) loans. The net interest margin increase from the first quarter of 2021 was driven mainly by a substantial reduction in average PPP loans with a notional interest rate of 1.0% outstanding.

Provision for Loan Losses

The Company’s provision for loan losses was $2.9 million for the first quarter of 2022, compared to $2.5 million for the fourth quarter of 2021 and $0.6 million for the first quarter of 2021. The increase from the previous quarter was primarily due to loan growth on unguaranteed loans held for investment and an increase in net charge-offs. The increase in the Company’s provision for loan losses for the first quarter of 2022 compared to the first quarter of 2021 was due to substantial loan growth and an increase in net charge-offs.

Non-interest Income

             
    For the Three Months Ended
($s in thousands)   3/31/2022   12/31/2021   3/31/2021
Non-interest income:            
Strategic program fees   $ 6,623     $ 6,082     $ 2,953  
Gain on sale of loans     5,052       1,813       2,603  
SBA loan servicing fees     387       356       152  
Change in fair value on investment in BFG     (398 )     864       360  
Other miscellaneous income     18       14       11  
Total non-interest income   $ 11,682     $ 9,129     $ 6,079  
             

Non-interest income was $11.7 million for the first quarter of 2022, an increase of 28.0% from $9.1 million for the fourth quarter of 2021, and nearly doubled from $6.1 million for the first quarter of 2021. The increase over both prior periods was driven primarily by higher gain on sale of loans due to an increase in the number of SBA 7(a) loans sold as well as an increase in strategic program fees due to significant loan origination volume. The increase over both periods was partially offset by a decrease in the change in fair value on investment in Business Funding Group, LLC (“BFG”) due primarily to the softening of comparable company values used in determining BFG fair value.

Non-interest Expense

             
    For the Three Months Ended
($s in thousands)   3/31/2022   12/31/2021   3/31/2021
Non-interest expense:            
Salaries and employee benefits   $ 7,092     $ 6,052     $ 4,895  
Occupancy and equipment expenses     302       208       194  
(Recovery) impairment of SBA servicing asset     (59 )     800       -  
Other operating expenses     1,713       1,311       1,574  
Total non-interest expense   $ 9,048     $ 8,371     $ 6,663  

Non-interest expense was $9.0 million for the first quarter of 2022, compared to $8.4 million for the fourth quarter of 2021 and $6.7 million for the first quarter of 2021. The increase over both prior periods was primarily due to increased expenses from higher employee head count related to an increase in strategic program loan volume, the expansion of the Company’s information technology and security division to support enhancements to the Company’s infrastructure, and contractual bonuses paid relating to the expansion of the strategic programs. The increase compared to the fourth quarter of 2021 was partially offset by the minor recovery and lack of additional impairment on the SBA servicing asset in the first quarter of 2022.

The Company’s efficiency ratio was 35.1% for the first quarter of 2022 as compared to 34.3% for the fourth quarter of 2021 and 45.9% for the first quarter of 2021.

Tax Rate

The Company’s effective tax rate was approximately 25.4% for the first quarter of 2022, compared to 25.3% for the fourth quarter of 2021 and 26.7% for the first quarter of 2021.

Balance Sheet  

The Company’s total assets were $425.6 million at March 31, 2022, an increase of 11.9% from $380.2 million at December 31, 2021, and an increase of 28.9% from $330.1 million at March 31, 2021. The increase over both prior periods was mainly due to growth in deposits to fund the Company’s growing Strategic Program loan portfolio. The increase in total assets compared to March 31, 2021 also reflected an increase in cash from the Company’s public stock offering and an increase in deposits to fund SBA 7(a) loans offset by a substantial decrease in borrowings under the PPP Liquidity Facility due to a decline in PPP loans outstanding.

The following table shows the loan portfolio as of the dates indicated:

    As of
    3/31/2022   12/31/2021   3/31/2021
($s in thousands)   Amount   % of total
loans
  Amount   % of total
loans
  Amount   % of total
loans
SBA   $ 127,778       46.9 %   $ 142,392       53.6 %   $ 167,824   68.4 %
Commercial, non real estate     3,285       1.2 %     3,428       1.3 %     3,867   1.6 %
Residential real estate     30,772       11.3 %     27,108       10.2 %     21,712   8.9 %
Strategic Program loans     101,819       37.4 %     85,850       32.3 %     44,427   18.1 %
Commercial real estate     4,187       1.5 %     2,436       0.9 %     2,589   1.1 %
Consumer     4,711       1.7 %     4,574       1.7 %     4,807   2.0 %
Total period end loans   $ 272,552       100.0 %   $ 265,788       100.0 %   $ 245,226   100.0 %
                         
Note: SBA loans as of March 31, 2022, December 31, 2021 and March 31, 2021 include $1.0 million, $1.1 million and $65.9 million in PPP loans, respectively. SBA loans as of March 31, 2022, December 31, 2021 and March 31, 2021 include $53.2 million, $75.7 million and $48.0 million, respectively, of SBA 7(a) loan balances that are guaranteed by the SBA.

Total loans receivable at March 31, 2022 increased 2.5% to $272.6 million from $265.8 million at December 31, 2021 and increased 11.1% from $245.2 million at March 31, 2021. The growth in loans receivable over both periods was due primarily to increases in strategic program loans. The increase in total loans compared to December 31, 2021 was partially offset by a decrease in SBA loans. Growth compared to March 31, 2021 was partially offset by a substantial decrease in PPP loans due to PPP loan forgiveness throughout 2021.

The following table shows the deposit composition as of the dates indicated:

    As of
    3/31/2022   12/31/2021   3/31/2021
($s in thousands)   Total   Percent   Total   Percent   Total   Percent
Noninterest-bearing demand deposits   $ 127,330       45.9 %   $ 110,548       43.9 %   $ 100,809   53.5 %
Interest-bearing deposits:                        
Demand     7,919       2.8 %     5,399       2.1 %     6,682   3.5 %
Savings     7,089       2.6 %     6,685       2.7 %     6,882   3.7 %
Money markets     53,434       19.3 %     31,076       12.3 %     17,582   9.3 %
Time certificates of deposit     81,688       29.4 %     98,184       39.0 %     56,556   30.0 %
Total period end deposits   $ 277,460       100.0 %   $ 251,892       100.0 %   $ 188,511   100.0 %
                         

Total deposits at March 31, 2022 increased 10.2% to $277.5 million from $251.9 million at December 31, 2021, and increased 47.2% from $188.5 million at March 31, 2021. The increase from the fourth quarter of 2021 was driven primarily by an increase in money market deposits and noninterest-bearing demand deposits. The increase from the first quarter of 2021 was driven by a significant increase in money market accounts, noninterest-bearing demand deposits, and time certificates of deposit.

Total shareholders’ equity increased $10.4 million, or 9.0%, to $125.8 million at March 31, 2022 from $115.4 million at December 31, 2021. Compared to the period ending March 31, 2021, shareholder’s equity increased $73.5 million, or more than doubled from $52.3 million. The increase in shareholders’ equity over the prior quarter was mainly driven by an increase in net income during the first quarter of 2022. The increase over the prior year period was primarily due to the Company’s Initial Public Offering and an increase in net income.

Bank Regulatory Capital Ratios

The following table presents the leverage ratios for the Bank as of the dates indicated:

    As of   2022   2021
    3/31/2022   12/31/2021   Well-
Capitalized
Requirement
  Well-
Capitalized
Requirement
Leverage Ratio (Bank under CBLR)   19.3%   17.7%   9.0%   8.5%

The Bank’s capital levels remain significantly above well-capitalized guidelines as of the end of the first quarter of 2022.

Asset Quality
Nonperforming loans were $0.7 million or 0.2% of total loans receivable at March 31, 2022, compared to $0.7 million or 0.2% of total loans receivable at December 31, 2021 and $0.8 million or 0.3% of total loans receivable at March 31, 2021. As noted above, the provision for loan losses was $2.9 million for the first quarter of 2022, compared to $2.5 million for the fourth quarter of 2021 and $0.6 million for the first quarter of 2021. The Company’s allowance for loan losses to total loans (less PPP loans) was 3.7% at March 31, 2022 compared to 3.7% at December 31, 2021 and 3.4% at March 31, 2021.   During the first quarter of 2022, the Company’s net charge-offs were $2.8 million, compared to $2.3 million during the fourth quarter of 2021 and $0.6 million during the first quarter of 2021. The increase in charge-offs during the first quarter of 2022 compared to the fourth quarter of 2021 was predominantly driven by the normalization of credit losses to pre-pandemic market conditions and by growth in the Company’s held for investment balances. The increase in charge-offs during the first quarter of 2022 compared to the first quarter of 2021 was mainly driven by growth in the Company’s held for investment balances related to four of its strategic programs.

The following table presents a summary of changes in the allowance for loan losses and asset quality ratios for the periods indicated:

    For the Three Months Ended
($s in thousands)   3/31/2022   12/31/2021   3/31/2021
Allowance for Loan & Lease Losses:            
Beginning Balance   $ 9,855     $ 9,640     $ 6,199  
Provision     2,947       2,502       633  
Charge offs                        
SBA     (31 )     (100 )     (7 )
Commercial, non real estate     -       -       (41 )
Residential real estate     -       -       -  
Strategic Program loans     (2,878 )     (2,379 )     (741 )
Commercial real estate     -       -       -  
Consumer     -       -       (2 )
Recoveries                        
SBA     -       4       11  
Commercial, non real estate     1       11       -  
Residential real estate     -       -       -  
Strategic Program loans     93       177       132  
Commercial real estate     -       -       -  
Consumer     -       -       -  
Ending Balance   $ 9,987     $ 9,855     $ 6,184  
             
             
Asset Quality Ratios   As of and For the Three Months Ended
($s in thousands, annualized ratios)   3/31/2022   12/31/2021   3/31/2021
Nonperforming loans   $ 658     $ 657     $ 789  
Nonperforming loans to total loans     0.2 %     0.2 %     0.3 %
Net charge offs to average loans     3.8 %     3.2 %     1.0 %
Allowance for loan losses to loans held for investment     5.0 %     4.8 %     3.0 %
Allowance for loan losses to total loans     3.7 %     3.7 %     2.5 %
Allowance for loan losses to total loans (less PPP loans)     3.7 %     3.7 %     3.4 %
Net charge-offs   $ 2,815     $ 2,287     $ 648  
                         

Webcast and Conference Call Information

FinWise will host a conference call today at 5:00 PM ET to discuss its financial results for the first quarter of 2022. A simultaneous audio webcast of the conference call will be available on the Company’s investor relations section of the website at https://services.choruscall.com/mediaframe/webcast.html?webcastid=RWKUafDT.

The dial-in number for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). Please dial the number 10 minutes prior to the scheduled start time.

A webcast replay of the call will be available on the Company’s website at https://finwisebank.gcs-web.com for six months following the call.

Website Information
The Company intends to use its website, www.finwisebancorp.com, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Such disclosures will be included in the Company’s website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of the Company’s website, in addition to following its press releases, SEC filings, public conference calls, and webcasts. To subscribe to the Company’s e-mail alert service, please click the “Email Alerts” link in the Investor Relations section of its website and submit your email address. The information contained in, or that may be accessed through, the Company’s website is not incorporated by reference into or a part of this document or any other report or document it files with or furnishes to the SEC, and any references to the Company’s website are intended to be inactive textual references only.

About FinWise Bancorp

FinWise Bancorp is a Utah bank holding company headquartered in Murray, Utah. FinWise operates through its wholly-owned subsidiary, FinWise Bank, a Utah state-chartered non-member bank. FinWise currently operates one full-service banking location in Sandy, Utah and a loan production office in Rockville Centre, New York. FinWise is a nationwide lender to and takes deposits from consumers and small businesses. Learn more at www.finwisebancorp.com.

Contacts

investors@finwisebank.com

media@finwisebank.com

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to, among other things, future events and its financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “budget,” “goal,” “target,” “would,” “aim” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry and management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. The inclusion of these forward-looking statements should not be regarded as a representation by the Company or any other person that such expectations, estimates and projections will be achieved. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: (a) conditions relating to the Covid-19 pandemic, including the severity and duration of the associated economic slowdown either nationally or in the Company’s market areas, and the response of governmental authorities to the Covid-19 pandemic and the Company’s participation in Covid-19-related government programs such as the PPP; (b) system failure or cybersecurity breaches of the Company’s network security; (c) the success of the financial technology industry, the development and acceptance of which is subject to a high degree of uncertainty, as well as the continued evolution of the regulation of this industry; (d) the Company’s ability to keep pace with rapid technological changes in the industry or implement new technology effectively; (e) the Company’s reliance on third-party service providers for core systems support, informational website hosting, internet services, online account opening and other processing services; (f) general economic conditions, either nationally or in the Company’s market areas (including interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation and deflation), that impact the financial services industry and/or the Company’s business; (g) increased competition in the financial services industry, particularly from regional and national institutions and other companies that offer banking services; (h) the Company’s ability to measure and manage its credit risk effectively and the potential deterioration of the business and economic conditions in the Company’s primary market areas; (i) the adequacy of the Company’s risk management framework; (j) the adequacy of the Company’s allowance for loan losses; (k) the financial soundness of other financial institutions; (l) new lines of business or new products and services; (m) changes in SBA rules, regulations and loan products, including specifically the Section 7(a) program, changes in SBA standard operating procedures or changes to the status of the Bank as an SBA Preferred Lender; (n) changes in the value of collateral securing the Company’s loans; (o) possible increases in the Company’s levels of nonperforming assets; (p) potential losses from loan defaults and nonperformance on loans; (q) the Company’s ability to protect its intellectual property and the risks it faces with respect to claims and litigation initiated against the Company; (r) the inability of small- and medium-sized businesses to whom the Company lends to weather adverse business conditions and repay loans; (s) the Company’s ability to implement aspects of its growth strategy and to sustain its historic rate of growth; (t) the Company’s ability to continue to originate, sell and retain loans, including through its Strategic Programs; (u) the concentration of the Company’s lending and depositor relationships through Strategic Programs in the financial technology industry generally; (v) the Company’s ability to attract additional merchants and retain and grow its existing merchant relationships; (w) interest rate risk associated with the Company’s business, including sensitivity of its interest earning assets and interest-bearing liabilities to interest rates, and the impact to its earnings from changes in interest rates; (x) the effectiveness of the Company’s internal control over financial reporting and its ability to remediate any future material weakness in its internal control over financial reporting; (y) potential exposure to fraud, negligence, computer theft and cyber-crime and other disruptions in the Company’s computer systems relating to its development and use of new technology platforms; (z) the Company’s dependence on its management team and changes in management composition; (aa) the sufficiency of the Company’s capital, including sources of capital and the extent to which it may be required to raise additional capital to meet its goals; (bb) compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, the Regulatory Relief Act, capital requirements, the Bank Secrecy Act, anti-money laundering laws, predatory lending laws, and other statutes and regulations; (cc) changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters; (dd) the Company’s ability to maintain a strong core deposit base or other low-cost funding sources; (ee) results of examinations of the Company by the Company’s regulators, including the possibility that its regulators may, among other things, require the Company to increase its allowance for loan losses or to write-down assets; (ff) the Company’s involvement from time to time in legal proceedings, examinations and remedial actions by regulators; (gg) further government intervention in the U.S. financial system; (hh) the ability of the Company’s Strategic Program service providers to comply with regulatory regimes, including laws and regulations applicable to consumer credit transactions, and the Company’s ability to adequately oversee and monitor its Strategic Program service providers; (ii) the Company’s ability to maintain and grow its relationships with its Strategic Program service providers; (jj) natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities, and other matters beyond the Company’s control; (kk) future equity and debt issuances; and (ll) other factors listed from time to time in the Company’s filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent reports on Form 10-Q and Form 8-K.

The foregoing factors should not be construed as exhaustive. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from its forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this release, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether because of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence. In addition, the Company cannot assess the impact of each risk and uncertainty on its business or the extent to which any risk or uncertainty, or combination of risks and uncertainties, may cause actual results to differ materially from those contained in any forward-looking statements. 

 
FINWISE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($s in thousands; unaudited)
 
    As of
($s in thousands)   3/31/2022   12/31/2021   3/31/2021
ASSETS            
Cash and cash equivalents            
Cash and due from banks   $ 414     $ 411     $ 397  
Interest bearing deposits     116,232       85,343       73,825  
Total cash and cash equivalents     116,646       85,754       74,222  
Investment securities held-to-maturity, at cost     10,986       11,423       1,670  
Investment in Federal Home Loan Bank (FHLB) stock, at cost     449       378       378  
Loans receivable, net     190,668       198,102       201,136  
Strategic Program loans held-for-sale, at lower of cost or fair value     73,805       60,748       37,847  
Premises and equipment, net     4,531       3,285       1,488  
Accrued interest receivable     1,347       1,548       1,395  
Deferred taxes, net     1,788       1,823       670  
SBA servicing asset, net     5,225       3,938       3,074  
Investment in Business Funding Group (BFG), at fair value     5,400       5,900       3,873  
Investment in FinWise Investments, LLC     80       80       -  
Operating lease right-of-use ("ROU") assets     7,178       -       -  
Other assets     7,500       7,235       4,300  
Total assets   $ 425,603     $ 380,214     $ 330,053  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Liabilities            
Deposits            
Noninterest bearing   $ 127,330     $ 110,548     $ 100,809  
Interest bearing     150,130       141,344       87,702  
Total deposits     277,460       251,892       188,511  
Accrued interest payable     39       48       218  
Income taxes payable, net     3,696       233       2,847  
PPP Liquidity Facility     952       1,050       79,704  
Operating lease liabilities     7,386       -       -  
Other liabilities     10,281       11,549       6,463  
Total liabilities     299,814       264,772       277,743  
             
Shareholders' equity            
Common stock     13       13       9  
Additional paid-in-capital     54,915       54,836       18,000  
Retained earnings     70,861       60,593       34,301  
Total shareholders' equity     125,789       115,442       52,310  
Total liabilities and shareholders' equity   $ 425,603     $ 380,214     $ 330,053  
             
             
             
FINWISE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts; unaudited)
             
    For the Three Months Ended
($s in thousands, except per share amounts)   3/31/2022   12/31/2021   3/31/2021
Interest income            
Interest and fees on loans   $ 14,275     $ 15,500     $ 8,790  
Interest on securities     39       28       6  
Other interest income     28       25       10  
Total interest income     14,342       15,553       8,806  
             
Interest expense            
Interest on deposits     261       279       297  
Interest on PPP Liquidity Facility     1       2       75  
Total interest expense     262       281       372  
Net interest income     14,080       15,272       8,434  
             
Provision for loan losses     2,947       2,503       633  
Net interest income after provision for loan losses     11,133       12,769       7,801  
             
Non-interest income            
Strategic Program fees     6,623       6,082       2,953  
Gain on sale of loans     5,052       1,813       2,603  
SBA loan servicing fees     387       356       152  
Change in fair value on investment in BFG     (398 )     864       360  
Other miscellaneous income     18       14       11  
Total non-interest income     11,682       9,129       6,079  
             
Non-interest expense            
Salaries and employee benefits     7,092       6,052       4,895  
Occupancy and equipment expenses     302       208       194  
(Recovery) impairment of SBA servicing asset     (59 )     800       -  
Other operating expenses     1,713       1,311       1,574  
Total non-interest expense     9,048       8,371       6,663  
Income before income tax expense     13,767       13,527       7,217  
             
Provision for income taxes     3,499       3,416       1,926  
Net income   $ 10,268     $ 10,111     $ 5,291  
             
Earnings per share, basic   $ 0.80     $ 0.95     $ 0.61  
Earnings per share, diluted   $ 0.76     $ 0.90     $ 0.59  
             
Weighted average shares outstanding, basic     12,777,237       10,169,005       8,091,186  
Weighted average shares outstanding, diluted     13,567,311       10,818,984       8,335,772  
Shares outstanding at end of period     12,788,810       12,772,010       8,716,110  
             

 

                                     
FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($s in thousands; unaudited)
                                     
    For the Three Months Ended   For the Three Months Ended   For the Three Months Ended
    3/31/2022   12/31/2021   3/31/2021
($s in thousands, annualized ratios)   Average
Balance
  Interest   Average
Yield/Rate
  Average
Balance
  Interest   Average
Yield/Rate
  Average
Balance
  Interest   Average
Yield/Rate
Interest earning assets:                                    
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks   $ 79,855       28       0.14 %   $ 72,746       25   0.14 %   $ 46,885       10   0.09 %
Investment securities     11,263       39       1.39 %     8,078       28   1.39 %     1,750       6   1.37 %
Loans held for sale     94,610       6,765       28.60 %     87,156       7,553   34.66 %     35,349       3,566   40.35 %
Loans held for investment     202,052       7,510       14.87 %     199,609       7,947   15.93 %     223,728       5,224   9.34 %
Total interest earning assets     387,780       14,342       14.79 %     367,589       15,553   16.92 %     307,712       8,806   11.45 %
Less: allowance for loan losses     (10,366 )             (9,450 )             (6,288 )        
Non-interest earning assets     25,096               24,379               11,354          
Total assets   $ 402,510             $ 382,518             $ 312,778          
                                     
Interest bearing liabilities:                                    
Demand   $ 6,344     $ 14       0.88 %   $ 7,411     $ 15   0.81 %   $ 6,287     $ 14   0.89 %
Savings     6,678       1       0.06 %     7,573       1   0.05 %     6,851       3   0.18 %
Money market accounts     31,889       22       0.28 %     28,859       21   0.29 %     17,728       16   0.36 %
Certificates of deposit     87,626       224       1.02 %     104,135       242   0.93 %     50,888       264   2.08 %
Total deposits     132,537       261       0.79 %     147,978       279   0.75 %     81,754       297   1.45 %
                                     
Other borrowings     985       1       0.41 %     1,437       2   0.56 %     87,267       75   0.34 %
Total interest bearing liabilities     133,522       262       0.79 %     149,415       281   0.75 %     169,021       372   0.88 %
                                     
Non-interest bearing deposits     137,750               127,590               89,111          
Non-interest bearing liabilities     11,791               16,315               6,586          
Shareholders’ equity     119,447               89,199               48,060          
Total liabilities and shareholders’ equity   $ 402,510             $ 382,519             $ 312,778          
                                     
Net interest income and interest rate spread       $ 14,080       14.01 %       $ 15,272   16.17 %       $ 8,434   10.57 %
Net interest margin             14.52 %           16.62 %           10.96 %
Ratio of average interest-earning assets to average interest- bearing liabilities             290.42 %           246.02 %           182.06 %
                                     
Note: Average PPP loans for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021 were $1.0 million, $1.5 million and $91.3 million, respectively.
                                     

 

                         
FINWISE BANCORP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
($s in thousands, except per share amounts; unaudited)
                         
($s in thousands, except for per share data, annualized ratios)   As of and for the Three Months Ended
  3/31/2022   12/31/2021   3/31/2021
Selected Loan Metrics            
Amount of loans originated   $ 2,511,306     $ 2,304,234     $ 1,013,408  
Selected Income Statement Data            
Interest income   $ 14,342     $ 15,553     $ 8,806  
Interest expense     262       281       372  
Net interest income     14,080       15,272       8,434  
Provision for loan losses     2,947       2,503       633  
Net interest income after provision for loan losses     11,133       12,769       7,801  
Non-interest income     11,682       9,129       6,079  
Non-interest expense     9,048       8,371       6,663  
Provision for income taxes     3,499       3,416       1,926  
Net income     10,268       10,111       5,291  
Selected Balance Sheet Data            
Total Assets   $ 425,603     $ 380,214     $ 330,053  
Cash and cash equivalents     116,646       85,754       74,222  
Investment securities held-to-maturity, at cost     10,986       11,423       1,670  
Loans receivable, net     190,668       198,102       201,136  
Strategic Program loans held-for-sale, at lower of cost or fair value     73,805       60,748       37,847  
SBA servicing asset, net     5,225       3,938       3,074  
Investment in Business Funding Group, at fair value     5,400       5,900       3,873  
Deposits     277,460       251,892       188,511  
PPP Liquidity Facility     952       1,050       79,704  
Total shareholders' equity     125,789       115,442       52,310  
Tangible shareholders’ equity (1)     125,789       115,442       52,310  
Share and Per Share Data            
Earnings per share - basic   $ 0.80     $ 0.95     $ 0.61  
Earnings per share - diluted   $ 0.76     $ 0.90     $ 0.59  
Book value per share   $ 9.84     $ 9.04     $ 6.00  
Tangible book value per share   $ 9.84     $ 9.04     $ 6.00  
Weighted avg outstanding shares - basic     12,777,237       10,169,005       8,091,186  
Weighted avg outstanding shares - diluted     13,567,311       10,818,984       8,335,772  
Shares outstanding at end of period     12,788,810       12,772,010       8,716,110  
Asset Quality Ratios            
Nonperforming loans to total loans     0.2 %     0.2 %     0.3 %
Net charge offs to average loans     3.8 %     3.2 %     1.0 %
Allowance for loan losses to loans held for investment     5.0 %     4.8 %     3.0 %
Allowance for loan losses to total loans     3.7 %     3.7 %     2.5 %
Allowance for loan losses to total loans (less PPP loans)   3.7 %     3.7 %     3.4 %
Capital Ratios            
Total shareholders' equity to total assets     29.6 %     30.4 %     15.8 %
Tangible shareholders’ equity to tangible assets (1)     29.6 %     30.4 %     15.8 %
Leverage Ratio (Bank under CBLR)     19.3 %     17.7 %     19.4 %
             
(1) Tangible shareholders’ equity is defined as total shareholders’ equity less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholder’s equity. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights as an intangible asset for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity as of each of the dates indicated.
                         
                         
             
             
Reconciliation of GAAP to Non-GAAP Financial Measures      
             
Efficiency ratio            
    For Three Months Ended
($s in thousands, annualized ratios)   3/31/2022   12/31/2021   3/31/2021
Non-interest expense   $ 9,048     $ 8,371     $ 6,663  
Net interest income     14,080       15,272       8,434  
Total non-interest income     11,682       9,129       6,079  
Adjusted operating revenue   $ 25,762     $ 24,401     $ 14,513  
Efficiency ratio     35.1 %     34.3 %     45.9 %
             
Allowance for loan losses to total loans (less PPP Loans)        
    As of
    3/31/2022   12/31/2021   3/31/2021
($s in thousands)            
Allowance for loan losses   $ 9,987     $ 9,855     $ 6,184  
Total Loans     272,552       265,788       245,226  
PPP Loans     991       1,091       65,858  
Total Loans less PPP Loans   $ 271,561     $ 264,697     $ 179,368  
Allowance for loan losses to total loans (less PPP Loans)     3.7 %     3.7 %     3.4 %
             
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)
    As of
    3/31/2022   12/31/2021   3/31/2021
($s in thousands)            
Total Assets   $ 425,603     $ 380,214     $ 330,053  
PPP Loans     991       1,091       65,858  
Total Assets less PPP Loans   $ 424,612     $ 379,123     $ 264,195  
Total nonperforming assets and troubled debt restructurings   $ 754     $ 763     $ 1,659  
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)     0.2 %     0.2 %     0.6 %