UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
 Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  April 28, 2022
 
FINWISE BANCORP
(Exact name of registrant as specified in its charter)

Utah
001-40721
83-0356689
(State or other jurisdiction of incorporation or organization)
(Commission file number)
(I.R.S. employer identification no.)

756 East Winchester St., Suite 100
Murray, Utah

 
84107
(Address of principal executive offices)
 
(Zip code)

Registrant’s telephone number, including area code:  (801) 501-7200
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company         ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          ☐
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of exchange on which registered
Common Stock, par value $0.001 per share
FINW
The NASDAQ Stock Market LLC



Item 2.02
Results of Operations and Financial Condition.

Attached and incorporated herein by reference as Exhibit 99.1 is a copy of a press release of FinWise Bancorp (the “Company”), dated April 28, 2022, reporting the Company’s financial results for the fiscal quarter ended March 31, 2022.

The information set forth under this “Item 2.02 Results of Operations and Financial Condition,” including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits.
 

(d)
Exhibits

Exhibit No.
 
Description
     
 
Press Release dated April 28, 2022


SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, FinWise Bancorp has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
DATE:  April 28, 2022
FINWISE BANCORP
   
 
/s/ Javvis Jacobson
 
 
Name: Javvis Jacobson
 
Title: Chief Financial Officer and Executive Vice President




Exhibit 99.1

FINWISE BANCORP REPORTS FIRST QUARTER 2022 RESULTS
 
- 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


 
For the Three Months Ended
 
($s in thousands, except per share amounts, annualized ratios)
 
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.
 
2

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.
 
3

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.
 
4

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.
 
5

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.
 
6

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
 

7

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

8

"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.
 
9

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.
 
10

FINWISE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($s in thousands; unaudited)
 
Balance Sheet

 
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
 

11

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
 

12

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.

13

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 for per share data, annualized ratios)
 
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.

14

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
%

 
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