FinWise Bancorp Reports Fourth Quarter and Full Year 2021 Results

February 23, 2022 at 4:10 PM EST

- Net Income Grew 19.8% Quarter over Quarter to $10.1 Million -

- Diluted Earnings Per Share of $0.90 for Fourth Quarter of 2021 -

MURRAY, Utah, Feb. 23, 2022 (GLOBE NEWSWIRE) -- FinWise Bancorp (NASDAQ: FINW) (“FinWise” or the “Company”), parent company of FinWise Bank (the “Bank”), today announced results for the quarter and full year ended December 31, 2021. The Company’s shares began trading publicly on November 19, 2021. The Company’s results are discussed below.

Fourth Quarter 2021 Highlights

  • Loan originations totaled $2.3 billion, up 26.4% from the quarter ended September 30, 2021 and more than doubled from the prior year period
  • Net interest income grew to $15.3 million or 13.4% as compared to the quarter ended September 30, 2021 and rose 87.1% from the prior year period
  • Net Income was $10.1 million, compared to $8.4 million for the quarter ended September 30, 2021 and $4.6 million in the prior year period
  • Diluted earnings per share (“EPS”) were $0.90 in the quarter, flat from the quarter ended September 30, 2021 and up 69.8% from the prior year period
  • Efficiency ratio was 34.3%, compared to 33.7% in the quarter ended September 30, 2021 and 48.8% in the prior year period
  • Maintained industry-leading returns with annualized return on average equity (ROAE) of 43.8%, compared to 52.2% in the quarter ended September 30, 2021 and 42.5% in the prior year period
  • Asset quality remained strong with nonperforming loans to total loans ratio of 0.2%

“We had an outstanding fourth quarter and full year 2021, capped off by the successful completion of our initial public offering,” said Kent Landvatter, Chief Executive Officer and President of FinWise. “We made significant progress in key facets of our business, including continuing to implement our successful strategy that has resulted in a highly profitable FinTech lending model with nationwide reach and profitable growth. We are proud of our diverse and federally regulated product offerings that provide millions of dollars in loans to small business owners. We also take pride in our strategic relationships that provide loans across the credit spectrum and expand access to credit for more consumers, particularly those with limited access. Our solid results are a testament to the unique business model that our team has built. These efforts put FinWise in a great position to continue to expand our market share and deliver strong performance for both our customers and shareholders over the long-term.”

Results of Operations

The Company’s fourth quarter of 2021 was highlighted by substantial loan originations across its primary lines of business and substantial earnings growth. The Company maintained its solid efficiency and industry-leading returns.

Selected Financial Data

    For the Three Months Ended   For the Years Ended
($s in thousands, except per share amounts, annualized ratios)   12/31/2021   9/30/2021   12/31/2020   12/31/2021   12/31/2020
Net Income   $ 10,111     $ 8,442     $ 4,616     $ 31,583     $ 11,198  
Diluted EPS   $ 0.90     $ 0.90     $ 0.53     $ 3.27     $ 1.28  
Return on average assets     11.3 %     10.8 %     5.8 %     9.1 %     4.5 %
Return on average equity     43.8 %     52.2 %     42.5 %     39.2 %     28.4 %
Yield on loans     21.6 %     23.0 %     12.6 %     19.0 %     14.1 %
Cost of deposits     0.8 %     1.0 %     1.7 %     1.1 %     1.9 %
Net interest margin     16.6 %     18.3 %     10.4 %     15.1 %     11.0 %
Efficiency ratio     34.3 %     33.7 %     48.8 %     37.0 %     51.6 %
Tangible book value per share   $ 9.04     $ 7.91     $ 5.30     $ 9.04     $ 5.30  
Tangible shareholders' equity to tangible assets     30.4 %     20.4 %     14.4 %     30.4 %     14.4 %
Leverage Ratio (Bank under CBLR)     17.7 %     19.5 %     16.6 %     17.7 %     16.6 %
                     

Net Income

Net income was $10.1 million for the fourth quarter of 2021, compared to $8.4 million for the third quarter of 2021, and more than double the net income for the fourth quarter of 2020. Growth over both prior periods was primarily driven by solid growth in net interest income due to a substantial increase in loan originations, as well as solid non-interest income reflecting substantial strategic program fees, partially offset by an increase in non-interest expense.

Net Interest Income

Net interest income grew 13.4% to $15.3 million for the fourth quarter of 2021, from $13.5 million for the third quarter of 2021, and increased 87.1% from $8.2 million for the fourth quarter of 2020. Net interest income growth over both prior periods was primarily due to higher loan balances resulting from significant loan growth which drove an increase in average interest earning assets.

Loan originations totaled $2.3 billion for the fourth quarter 2021, up 26.4% from $1.8 billion for the third quarter of 2021, and up from $0.9 billion for the fourth quarter of 2020.

Net interest margin for the fourth quarter of 2021 was 16.6% compared to 18.3% for the third quarter of 2021, and increased significantly from 10.4% for the fourth quarter of 2020. The net interest margin decline from the third quarter of 2021 was driven mainly by substantially higher average held for sale loan balances from strategic programs with lower yielding loans. Additionally, there was a change in the underlying mix of held for investment loans driven primarily by an increase in SBA 7(a) loans. These factors were partially offset by lower rates on the Company’s deposit portfolio. The net interest margin increase from the fourth quarter of 2020 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 $2.5 million for the fourth quarter of 2021, compared to $3.4 million for the third quarter of 2021. This decrease from the third quarter of 2021 was primarily due to a decline in the rate of growth on held for investment loans. The increase in the Company’s provision for loan losses for the fourth quarter of 2021 compared to the fourth quarter of 2020 was due to the Company concluding that a provision was not needed in the fourth quarter of 2020 when the Company determined that its loan portfolios were not materially impacted by the pandemic, particularly as the Company had already recorded higher than normal provisions to position for the possibility of elevated losses on loans resulting from the pandemic.

Non-interest Income

    For the Three Months Ended
($s in thousands)   12/31/2021   9/30/2021   12/31/2020
Non-interest income:            
Strategic program fees   $ 6,082     $ 4,982     $ 2,713  
Gain on sale of loans     1,813       2,876       289  
SBA loan servicing fees     356       337       283  
Change in fair value on investment in BFG     864       266       137  
Other miscellaneous income     14       14       10  
Total non-interest income   $ 9,129     $ 8,475     $ 3,432  
             

Non-interest income was $9.1 million for the fourth quarter of 2021, an increase of 7.7% from $8.5 million for the third quarter of 2021, and more than doubled from $3.4 million for the fourth quarter of 2020. The increase compared to the third quarter of 2021 was driven primarily by an increase in strategic program fees generated from significant loan origination volume as well as the change in fair value on investment in Business Funding Group, LLC (“BFG”). The increase in the latter was primarily due to BFG’s higher profitability and cash position. The increase compared to the third quarter of 2021 was partially offset by a decrease in the gain on sale of loans due primarily to a decrease in the number of SBA 7(a) loans sold. The increase in non-interest income compared to the fourth quarter of 2020 was driven mainly by higher strategic program fees due to significant loan origination volume and an increase in the number of SBA 7(a) loans sold in the fourth quarter of 2021.

Non-interest Expense

             
    For the Three Months Ended
($s in thousands)   12/31/2021   9/30/2021   12/31/2020
Non-interest expense:            
Salaries and employee benefits   $ 6,052     $ 5,930     $ 4,499  
Occupancy and equipment expenses     208       205       181  
Impairment of SBA servicing asset     800       -       -  
Other operating expenses     1,311       1,263       977  
Total non-interest expense   $ 8,371     $ 7,398     $ 5,657  
             

Non-interest expense was $8.4 million for the fourth quarter of 2021, compared to $7.4 million for the third quarter of 2021 and $5.7 million for the fourth quarter of 2020. The increase over both prior periods was primarily due to various factors including increases in the number of employees 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, contractual bonuses paid relating to the expansion of the strategic programs, and an impairment on SBA servicing asset due to the softening of the secondary market for SBA 7(a) loans.

The Company’s efficiency ratio was 34.3% for the fourth quarter of 2021 as compared to 33.7% for the third quarter of 2021 and 48.8% for the fourth quarter of 2020.

Tax Rate

The Company’s effective tax rate was approximately 25.3% for the fourth quarter of 2021, compared to 24.5% for the third quarter of 2021 and 22.2% for the fourth quarter of 2020.

Balance Sheet

The Company’s total assets increased 12.4%, from $338.3 million at September 30, 2021 and increased 19.7%, from $317.5 million at December 31, 2020 to $380.2 million at December 31, 2021. The increase over both prior periods was mainly due to an increase in cash from the Company’s public stock offering and growth in the SBA 7(a) loan portfolio. The increase in total assets compared to December 31, 2020 was also impacted by an increase in strategic program loans held-for-sale offset by a substantial decrease in PPP loans outstanding.

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

    As of
    12/31/2021   9/30/2021   12/31/2020
($s in thousands)   Amount   % of total
loans		   Amount   % of total
loans		   Amount   % of total
loans
SBA   $ 142,392       53.6 %   $ 125,192       50.2 %   $ 203,317     77.7 %
Commercial, non real estate     3,428       1.3 %     3,955       1.6 %     4,020     1.5 %
Residential real estate     27,108       10.2 %     25,105       10.1 %     17,740     6.8 %
Strategic Program loans     85,850       32.3 %     87,876       35.3 %     28,265     10.8 %
Commercial real estate     2,436       0.9 %     2,357       0.9 %     2,892     1.1 %
Consumer     4,574       1.7 %     4,729       1.9 %     5,543     2.1 %
Total period end loans   $ 265,788       100.0 %   $ 249,214       100.0 %   $ 261,777     100.0 %
                         
Note: SBA loans as of December 31, 2021, September 30, 2021 and December 31, 2020 include $1.1 million, $2.3 million and $107.1 million in PPP loans respectively.

Total period end loans receivable increased 6.7% from $249.2 million at September 30, 2021 and increased 1.5%, from $261.8 million at December 31, 2020 to $265.8 million at December 31, 2021. The growth in loans receivable in the fourth quarter of 2021 compared to the third quarter of 2021 was due primarily to increases in SBA 7(a) loans. Year-over-year, the increase in loans receivable was driven primarily by the growth in SBA 7(a), strategic program, and residential real estate loans 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
    12/31/2021   9/30/2021   12/31/2020
($s in thousands)   Total   Percent   Total   Percent   Total   Percent
Noninterest-bearing demand deposits   $ 110,548       43.9 %   $ 109,459       43.4 %   $ 88,067     53.5 %
Interest-bearing deposits:                        
Demand     5,399       2.1 %     5,398       2.1 %     6,095     3.7 %
Savings     6,685       2.7 %     8,146       3.2 %     7,435     4.5 %
Money markets     31,076       12.3 %     25,679       10.1 %     17,567     10.7 %
Time certificates of deposit     98,184       39.0 %     104,354       41.2 %     45,312     27.6 %
Total period end deposits   $ 251,892       100.0 %   $ 253,036       100.0 %   $ 164,476     100.0 %

Total period end deposits decreased (0.5%), from $253.0 million at September 30, 2021, and increased 53.1% from $164.5 million at December 31, 2020 to $251.9 million at December 31, 2021. The decline from the third quarter of 2021 was driven primarily by a decline in certificates of deposit. The increase from the fourth quarter of 2020 was driven by a significant increase in time certificates of deposit, noninterest-bearing demand deposits, and money market accounts.

Total shareholders’ equity increased $46.3 million, or 67.0%, to $115.4 million at December 31, 2021 from $69.1 million at September 30, 2021. Year-over-year shareholder’s equity increased $69.6 million during 2021. The increase in shareholders’ equity over both prior periods was primarily due to substantial net income and the Company’s IPO.

Bank Regulatory Capital Ratios

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

    As of    
    12/31/2021   9/30/2021   Well-
Capitalized
Requirement
Leverage Ratio (Bank under CBLR)   17.7%   19.5%   8.5%

The Bank’s capital levels remain significantly above well-capitalized guidelines as of the end of the fourth quarter of 2021.

Asset Quality
Nonperforming loans were $0.7 million or 0.2% of total loans receivable at December 31, 2021, compared to $0.8 million or 0.3% of total loans receivable at September 30, 2021 and $0.8 million or 0.3% of total loans receivable at December 31, 2020. As noted above, the provision for loan losses was $2.5 million for the fourth quarter of 2021, compared to $3.4 million for the third quarter of 2021. The Company also determined that a provision for loan losses was not needed in the fourth quarter of 2020. The Company’s allowance for loan losses to total loans (less PPP loans) was 3.7% at December 31, 2021 compared to 3.9% at September 30, 2021 and 4.0% at December 31, 2020. During the fourth quarter 2021, the Company’s net charge-offs were $2.3 million, compared to $1.0 million during the third quarter of 2021 and $0.8 million during the fourth quarter of 2020. The increase in charge-offs during the fourth quarter of 2021 compared to both prior periods was predominately driven by growth in the Company’s held for investment balances related to two 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)   12/31/2021   9/30/2021   12/31/2020
Allowance for Loan & Lease Losses:            
Beginning Balance   $ 9,640     $ 7,239     $ 7,028  
Provision     2,502       3,368       -  
Charge offs     -       -       -  
SBA     (100 )     -       (17 )
Commercial, non real estate     -       -       (232 )
Residential real estate     -       -       -  
Strategic Program loans     (2,379 )     (1,106 )     (628 )
Commercial real estate     -       -       -  
Consumer     -       -       (11 )
Recoveries     -       -       -  
SBA     4       30       -  
Commercial, non real estate     11       10       -  
Residential real estate     -       -       -  
Strategic Program loans     177       99       58  
Commercial real estate     -       -       1  
Consumer     -       -       -  
Ending Balance   $ 9,855     $ 9,640     $ 6,199  
             
             
Asset Quality Ratios   As of and For the Three Months Ended
($s in thousands, annualized ratios)   12/31/2021   9/30/2021   12/31/2020
Nonperforming loans   $ 657     $ 757     $ 831  
Nonperforming loans to total loans     0.2 %     0.3 %     0.3 %
Net charge offs to average loans     3.2 %     1.6 %     1.2 %
Allowance for loan losses to loans held for investment     4.8 %     5.2 %     2.6 %
Allowance for loan losses to total loans     3.7 %     3.9 %     2.4 %
Allowance for loan losses to total loans (less PPP loans)     3.7 %     3.9 %     4.0 %
Net charge-offs   $ 2,287     $ 967     $ 829  

Webcast and Conference Call Information

FinWise will host a conference call today at 5:00 PM ET to discuss its financial results for the fourth quarter of 2021. A simultaneous audio webcast of the conference call will be available on the Company’s investor relations section of the website at https://viavid.webcasts.com/viewer/event.jsp?ei=1526843&tp_key=5f9c7ab843

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:

  • 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;
  • system failure or cybersecurity breaches of the Company’s network security;
  • 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;
  • the Company’s ability to keep pace with rapid technological changes in the industry or implement new technology effectively;
  • 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;
  • 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;
  • increased competition in the financial services industry, particularly from regional and national institutions and other companies that offer banking services;
  • 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;
  • the adequacy of the Company’s risk management framework;
  • the adequacy of the Company’s allowance for loan losses;
  • the financial soundness of other financial institutions;
  • new lines of business or new products and services;
  • 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;
  • changes in the value of collateral securing the Company’s loans;
  • possible increases in the Company’s levels of nonperforming assets;
  • potential losses from loan defaults and nonperformance on loans;
  • the Company’s ability to protect its intellectual property and the risks it faces with respect to claims and litigation initiated against the Company;
  • the inability of small- and medium-sized businesses to whom the Company lends to weather adverse business conditions and repay loans;
  • the Company’s ability to implement aspects of its growth strategy and to sustain its historic rate of growth;
  • the Company’s ability to continue to originate, sell and retain loans, including through its Strategic Programs;
  • the concentration of the Company’s lending and depositor relationships through Strategic Programs in the financial technology industry generally;
  • the Company’s ability to attract additional merchants and retain and grow its existing merchant relationships;
  • 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;
  • 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;
  • 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;
  • the Company’s dependence on its management team and changes in management composition;
  • 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;
  • 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;
  • changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters;
  • the Company’s ability to maintain a strong core deposit base or other low-cost funding sources;
  • 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;
  • the Company’s involvement from time to time in legal proceedings, examinations and remedial actions by regulators;
  • further government intervention in the U.S. financial system;
  • 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;
  • the Company’s ability to maintain and grow its relationships with its Strategic Program service providers;
  • 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;
  • future equity and debt issuances; and
  • other factors listed from time to time in the Company’s filings with the Securities and Exchange Commission, including, without limitation, its Registration Statement on Form S-1, as amended (File No. 333-257929) and subsequent reports on Form 10-K, 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)   12/31/2021   9/30/2021   12/31/2020
ASSETS            
Cash and cash equivalents            
Cash and due from banks   $ 411     $ 410     $ 405  
Interest bearing deposits     85,343       67,696       46,978  
Total cash and cash equivalents     85,754       68,106       47,383  
Investment securities held-to-maturity, at cost     11,423       4,414       1,809  
Investment in Federal Home Loan Bank (FHLB) stock, at cost     378       377       205  
Loans receivable, net     198,102       178,748       232,074  
Strategic Program loans held-for-sale, at lower of cost or fair value     60,748       62,702       20,948  
Premises and equipment, net     3,285       2,484       1,264  
Accrued interest receivable     1,548       1,297       1,629  
Deferred taxes, net     1,823       1,597       452  
SBA servicing asset, net     3,938       4,368       2,415  
Investment in Business Funding Group (BFG), at fair value     5,900       5,241       3,770  
Investment in FinWise Investments, LLC     80       -       -  
Other assets     7,235       8,982       5,566  
Total assets   $ 380,214     $ 338,316     $ 317,515  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Liabilities            
Deposits            
Noninterest bearing   $ 110,548     $ 109,459     $ 88,067  
Interest bearing     141,344       143,577       76,409  
Total deposits     251,892       253,036       164,476  
Accrued interest payable     48       43       195  
Income taxes payable, net     233       823       709  
PPP Liquidity Facility     1,050       2,259       101,007  
Other liabilities     11,549       13,017       5,256  
Total liabilities     264,772       269,178       271,643  
             
Shareholders' equity            
Common stock     13       9       9  
Additional paid-in-capital     54,836       18,647       16,853  
Retained earnings     60,593       50,482       29,010  
Total shareholders' equity     115,442       69,138       45,872  
Total liabilities and shareholders' equity   $ 380,214     $ 338,316     $ 317,515  
             
             
             
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)   12/31/2021   9/30/2021   12/31/2020
Interest income            
Interest and fees on loans   $ 15,500     $ 13,726     $ 8,548  
Interest on securities     28       7       9  
Other interest income     25       16       8  
Total interest income     15,553       13,749       8,565  
             
Interest expense            
Interest on deposits     279       271       331  
Interest on PPP Liquidity Facility     2       8       73  
Total interest expense     281       279       404  
Net interest income     15,272       13,470       8,161  
             
Provision for loan losses     2,503       3,367       -  
Net interest income after provision for loan losses     12,769       10,103       8,161  
             
Non-interest income            
Strategic Program fees     6,082       4,982       2,713  
Gain on sale of loans     1,813       2,876       289  
SBA loan servicing fees     356       337       283  
Change in fair value on investment in BFG     864       266       137  
Other miscellaneous income     14       14       10  
Total non-interest income     9,129       8,475       3,432  
             
Non-interest expense            
Salaries and employee benefits     6,052       5,930       4,499  
Occupancy and equipment expenses     208       205       181  
Impairment of SBA servicing asset     800       -       -  
Other operating expenses     1,311       1,263       977  
Total non-interest expense     8,371       7,398       5,657  
Income before income tax expense     13,527       11,180       5,936  
             
Provision for income taxes     3,416       2,738       1,320  
Net income   $ 10,111     $ 8,442     $ 4,616  
             
Earnings per share, basic   $ 0.95     $ 0.97     $ 0.53  
Earnings per share, diluted   $ 0.90     $ 0.90     $ 0.53  
             
Weighted average shares outstanding, basic     10,169,005       8,255,953       8,035,778  
Weighted average shares outstanding, diluted     10,818,984       8,847,606       8,081,470  
Shares outstanding at end of period     12,772,010       8,746,110       8,660,334  
             
             
             
FINWISE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($s in thousands, except per share amounts; unaudited)
             
    For the Years Ended    
($s in thousands, except per share amounts)   12/31/2021   12/31/2020    
Interest income            
Interest and fees on loans   $ 49,135     $ 29,271      
Interest on securities     47       34      
Other interest income     61       201      
Total interest income     49,243       29,506      
             
Interest expense            
Interest on deposits     1,138       1,583      
Interest on PPP Liquidity Facility     127       173      
Total interest expense     1,265       1,756      
Net interest income     47,978       27,750      
             
Provision for loan losses     8,039       5,234      
Net interest income after provision for loan losses     39,939       22,516      
             
Non-interest income            
Strategic Program fees     17,959       9,591      
Gain on sale of loans     9,689       2,849      
SBA loan servicing fees     1,156       1,028      
Change in fair value on investment in BFG     2,991       856      
Other miscellaneous income     49       49      
Total non-interest income     31,844       14,373      
             
Non-interest expense            
Salaries and employee benefits     22,365       16,835      
Occupancy and equipment expenses     810       694      
Impairment of SBA servicing asset     800       -      
Loss on investment in BFG     -       50      
Other operating expenses     5,536       4,170      
Total non-interest expense     29,511       21,749      
Income before income tax expense     42,272       15,140      
             
Provision for income taxes     10,689       3,942      
Net income   $ 31,583     $ 11,198      
             
Earnings per share, basic   $ 3.44     $ 1.29      
Earnings per share, diluted   $ 3.27     $ 1.28      
             
Weighted average shares outstanding, basic     8,669,724       8,025,390      
Weighted average shares outstanding, diluted     9,108,163       8,069,634      
Shares outstanding at end of period     12,772,010       8,660,334      
             

 

 
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
    12/31/2021   9/30/2021   12/31/2020
($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   $ 72,746       25       0.1 %   $ 54,261       16     0.1 %   $ 40,155       8   0.1 %
Investment securities     8,078       28       1.4 %     1,689       7     1.7 %     1,887       9   1.9 %
Loans held for sale     87,156       7,553       34.7 %     65,273       6,293     38.6 %     29,329       3,597   49.1 %
Loans held for investment     199,609       7,947       15.9 %     173,092       7,433     17.2 %     241,600       4,951   8.2 %
Total interest earning assets     367,589       15,553       16.9 %     294,315       13,749     18.7 %     312,971       8,565   10.9 %
Less: allowance for loan losses     (9,450 )             (8,083 )             (6,753 )        
Non-interest earning assets     24,379               18,822               9,222          
Total assets   $ 382,518             $ 305,054             $ 315,440          
                                     
Interest bearing liabilities:                                    
Demand   $ 7,411     $ 15       0.8 %   $ 5,007     $ 11     0.9 %   $ 6,226     $ 15   1.0 %
Savings     7,573       1       0.1 %     8,818       3     0.1 %     6,775       4   0.2 %
Money market accounts     28,859       21       0.3 %     22,274       21     0.4 %     17,618       21   0.5 %
Certificates of deposit     104,135       242       0.9 %     76,127       236     1.2 %     48,201       292   2.4 %
Total deposits     147,977       279       0.8 %     112,226       271     1.0 %     78,820       331   1.7 %
                                     
Other borrowings     1,437       2       0.6 %     9,365       8     0.3 %     82,016       73   0.4 %
Total interest bearing liabilities     149,414       281       0.8 %     121,591       279     0.9 %     160,836       404   1.0 %
                                     
Non-interest bearing deposits     127,590               107,342               106,735          
Non-interest bearing liabilities     16,315               13,076               5,411          
Shareholders’ equity     89,199               63,045               42,458          
Total liabilities and shareholders’ equity   $ 382,518             $ 305,054             $ 315,440          
                                     
Net interest income and interest rate spread       $ 15,272       16.2 %       $ 13,470     17.8 %       $ 8,161   9.9 %
Net interest margin             16.6 %           18.3 %           10.4 %
Ratio of average interest-earning assets to average interest- bearing liabilities             246.0 %           242.1 %           194.6 %
                                     
Note: Average PPP loans for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020 were $1.5 million, $8.8 million and $122.7 million, respectively.
                                     

 

                         
FINWISE BANCORP
AVERAGE BALANCES, YIELDS, AND RATES – YEAR-TO-DATE
($s in thousands; unaudited) 
                         
    For the Years Ended   For the Years Ended
    12/31/2021   12/31/2020
($s in thousands, annualized ratios)   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   $ 55,960       61       0.1 %   $ 43,892       201     0.5 %
Investment securities     3,298       47       1.4 %     1,622       34     2.1 %
Loans held for sale     59,524       22,461       37.7 %     20,154       10,560     52.4 %
Loans held for investment     198,992       26,674       13.4 %     187,314       18,711     10.0 %
Total interest earning assets     317,774       49,243       15.5 %     252,982       29,506     11.7 %
Less: allowance for loan losses     (7,548 )             (6,706 )        
Non-interest earning assets     17,002               8,130          
Total assets   $ 327,228             $ 254,406          
                         
Interest bearing liabilities:                        
Demand   $ 6,060     $ 53       0.9 %   $ 3,237     $ 62     1.9 %
Savings     7,897       10       0.1 %     6,234       16     0.3 %
Money market accounts     21,964       75       0.3 %     16,327       104     0.6 %
Certificates of deposit     72,311       1,000       1.4 %     57,496       1,401     2.4 %
Total deposits     108,232       1,138       1.1 %     83,294       1,583     1.9 %
                         
Other borrowings     36,363       127       0.3 %     49,044       173     0.4 %
Total interest bearing liabilities     144,595       1,265       0.9 %     132,338       1,756     1.3 %
                         
Non-interest bearing deposits     107,481               80,537          
Non-interest bearing liabilities     11,392               3,941          
Shareholders’ equity     63,760               37,590          
Total liabilities and shareholders’ equity   $ 327,228             $ 254,406          
                         
Net interest income and interest rate spread       $ 47,978       14.6 %       $ 27,750     10.3 %
Net interest margin             15.1 %           11.0 %
Ratio of average interest-earning assets to average interest- bearing liabilities             219.8 %           191.2 %
                         
Note: Average PPP loans for the years ended December 31, 2021 and December 31, 2020 were $36.6 million and $79.7 million, respectively.

 

 
FINWISE BANCORP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
($s in thousands, except per share amounts; unaudited)
             
    As of and for the Three Months Ended
($s in thousands, except per share amounts, annualized ratios)   12/31/2021   9/30/2021   12/31/2020
Selected Loan Metrics                
Amount of loans originated   $ 2,304,234     $ 1,822,942     $ 850,927  
Selected Income Statement Data            
Interest income   $ 15,553     $ 13,749     $ 8,565  
Interest expense     281       279       404  
Net interest income     15,272       13,470       8,161  
Provision for loan losses     2,503       3,367       -  
Net interest income after provision for loan losses     12,769       10,103       8,161  
Non-interest income     9,129       8,475       3,432  
Non-interest expense     8,371       7,398       5,657  
Provision for income taxes     3,416       2,738       1,320  
Net income     10,111       8,442       4,616  
Selected Balance Sheet Data            
Total Assets   $ 380,214     $ 338,316     $ 317,515  
Cash and cash equivalents     85,754       68,106       47,383  
Investment securities held-to-maturity, at cost     11,423       4,414       1,809  
Loans receivable, net     198,102       178,748       232,074  
Strategic Program loans held-for-sale, at lower of cost or fair value     60,748       62,702       20,948  
SBA servicing asset, net     3,938       4,368       2,415  
Investment in Business Funding Group, at fair value     5,900       5,241       3,770  
Deposits     251,892       253,036       164,476  
PPP Liquidity Facility     1,050       2,259       101,007  
Total shareholders' equity     115,442       69,138       45,872  
Tangible shareholders’ equity (1)     115,442       69,138       45,872  
Share and Per Share Data            
Earnings per share - basic   $ 0.95     $ 0.97     $ 0.53  
Earnings per share - diluted   $ 0.90     $ 0.90     $ 0.53  
Book value per share   $ 9.04     $ 7.91     $ 5.30  
Tangible book value per share   $ 9.04     $ 7.91     $ 5.30  
Weighted avg outstanding shares - basic     10,169,005       8,255,953       8,035,778  
Weighted avg outstanding shares - diluted     10,818,984       8,847,606       8,081,470  
Shares outstanding at end of period     12,772,010       8,746,110       8,660,334  
Asset Quality Ratios            
Nonperforming loans to total loans     0.2 %     0.3 %     0.3 %
Net charge offs to average loans     3.2 %     1.6 %     1.2 %
Allowance for loan losses to loans held for investment     4.8 %     5.2 %     2.6 %
Allowance for loan losses to total loans     3.7 %     3.9 %     2.4 %
Allowance for loan losses to total loans (less PPP loans)     3.7 %     3.9 %     4.0 %
Capital Ratios            
Total shareholders' equity to total assets     30.4 %     20.4 %     14.4 %
Tangible shareholders' equity to tangible assets     30.4 %     20.4 %     14.4 %
Leverage Ratio (Bank under CBLR)     17.7 %     19.5 %     16.6 %
             
(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)   12/31/2021   9/30/2021   12/31/2020
Non-interest expense   $ 8,371     $ 7,398     $ 5,657  
Net interest income   $ 15,272     $ 13,470     $ 8,161  
Total non-interest income     9,129       8,475       3,432  
Adjusted operating revenue   $ 24,401     $ 21,945     $ 11,593  
Efficiency ratio     34.3 %     33.7 %     48.8 %
             
Allowance for loan losses to total loans (less PPP Loans)            
    As of
    12/31/2021   9/30/2021   12/31/2020
($s in thousands)            
Allowance for loan losses   $ 9,855     $ 9,640     $ 6,199  
Total Loans     265,788       249,214       261,777  
PPP Loans     1,091       2,303       107,145  
Total Loans less PPP Loans   $ 264,697     $ 246,911     $ 154,632  
Allowance for loan losses to total loans (less PPP Loans)     3.7 %     3.9 %     4.0 %
             
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)      
    As of
    12/31/2021   9/30/2021   12/31/2020
($s in thousands)            
Total Assets   $ 380,214     $ 338,316     $ 317,515  
PPP Loans     1,091       2,303       107,145  
Total Assets less PPP Loans   $ 379,123     $ 336,013     $ 210,370  
Total nonperforming assets and troubled debt restructurings   $ 763     $ 864     $ 1,701  
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)     0.2 %     0.3 %     0.8 %